On The Brink with Castle Island - Weekly News Roundup 5/22/20 (Bitcoin Pizza Day, old coins reawaken, the Great Bitcoin Energy Debate) (EP.82)

Episode Date: May 22, 2020

Matt and Nic review the top stories of the week in the cryptoasset industry. In this week's episode: The story behind bitcoin pizza day The impact of hashrate futures Genesis Capital's acquisition of Vo1t and what that means for their business Why the DTCC should get into crypto Brian Brooks becoming acting Comptroller of the currency Our analysis of the coins from feb. 2009 reawakening Our theory for why those ancient coins might be moving now The great Bitcoin energy consumption debate Nic gets unblocked by CZ

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. Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And coming to you from our quarantine studios once again this week, did you have a good week? I did, yeah. And today happens to be Bitcoin Pizza Day. So happy Bitcoin Pizza Day to everyone.

Yeah. So explain what Bitcoin Pizza Day is for those uninitiated listeners. So today is 11 years to the day. It's 10 years to the day. It's 10 years to the day that Laslo, who is unpronounceable last name, sold 10,000 bitcoins for a pizza. So he wanted a pizza and he had a lot of bitcoins. And he traded 10,000 bitcoins for one Papa John's pizza.

He actually did this transaction. Two pizzas. Yeah. In fact, he actually did the transaction more times after that. So it's even more than two pizzas. But yeah, he, this was the first. first time to in the kind of the historical record that we know that Bitcoin was exchanged for an actual good or product. So this is effectively the first exchange rate of Bitcoin. Right, which is why it's a

big deal. And people will say, you know, if whatever those Bitcoins are worth now, what a crazy trade. But this is one of the best stories because without something like this happening, we're never going to get to where we are today. So it's a, he's a real hero. Yeah, there's actually a lot of lore behind the pizza story that people don't know, which kind of explains the story in a way. So Laslo also happens to be the guy that invented GPU mining for Bitcoin. That's something that people don't know, or maybe not everyone knows. That is a little known fact. If you look at Bitcoin hash rate, it spiked like crazy in, I believe, July 2010.

Maybe I'm getting the timelines wrong. Anyway, he invented GPU mining. He had a lot of coins. That's why he was able to spend, you know, maybe 80,000 or 100,000 bitcoins on pizzas because he had figured out how to acquire them really cheaply because, you know, if you invent GPU mining, you're going to have a huge advantage.

You can aggressively mine lots and lots of blocks at an accelerated rate before difficulty adjusts. and that's what happened. So that's actually why he had so many coins in the first place. And so the pizza transactions might have actually been his attempt to actually distribute that wealth in the community. So that is one possible explanation for why he was willing to do that. That's a really, I had totally forgotten that he was involved in the GPU mining movement. You know, that wasn't on the 60 Minutes episode, needless to say.

Yeah. Was it Anderson Cooper that was interviewing him and saying? and oh man, you know, you gave up a lot of money here. No, yeah, he gave it up because he'd earned it. And Satoshi actually emailed Laslo and sent him an entreaty to distribute his coins a little bit. So partially we have Satoshi to thank for Bitcoin Pizza Day. Oh, that's interesting. So what's your favorite pizza?

I like New York pizza, which is a chain here in Boston, which doesn't make a lot of sense. So I had a New York pizza last night to celebrate. Nice. I'm partial to Linwood Cafe in Randolph, Massachusetts. I think it's a different type of pizza, Salshore Bar pizza, but it's amazing. I've had about a 45-minute back and forth with some folks at Fidelity today,

so they sent out a happy Bitcoin Pizza Day email, a big flyer and a background that you can put on Zoom, and it had all of their favorite pizzerias. So we've had a little bit of a back-and-forth. Shout out Mike O'Reilly, Poopsies. Pembroke, Massachusetts. When we host Boston Bit Devs, I guess, in better times and healthier times, we get Regina's pizzeria.

And it's just okay. Yeah, it's not like outstanding. It's like fairly good. Anyway, if you come to Boston BitTubs at some point in the next year, you can have Regina's pizza. We will have that pizza. All right. So let's get into it.

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anyway, since it was pretty cool. That is cool. Yeah, we weren't that. There were some pretty cool investors already. Yeah. Actually, we might have been the least cool people on that cap table to begin with, but now we're definitely not even in the top tier. Yeah, that's awesome to see. I mean, you would imagine that they would use their clout and popularity to help some of their portfolio companies get exposure. So super exciting to see. Yeah, very, very exciting.

And then we had a fun podcast week. So we had Tim Kelly on the show to talk about hash rate derivatives. So Tim comes from a commodity's trading background, has built structured products. across a bunch of different asset classes. And so we released that podcast earlier this week. This is a fascinating field, right? I mean, there's a lot going on here with difficulty swaps and hash rate futures. Are you paying much attention to this space?

Yeah, it's growing really quickly now. FTCX, I think, is listing a form of hash rate futures. And it seems like for the first time, miners are going to be able to realistically hedge their exposure to, you know, price, which they could already do, but hash rate, which is something that would affect their revenue. And so mining might turn into more pedestrian commodity production business, where miners don't have this crazy upside and this crazy high beta exposure to Bitcoin, which I think is overall good for the industry. Yeah, yeah, I agree with that.

Next week's podcast, we have our first ever repeat guest. It's one of our most popular guests, right? He's a very popular guest. It's our number one most popular episode. And so we've listened to the will of the people and we've bringing them back. Got to give the people what they want. All right. Let's talk about the biggest deal of the week here.

So Genesis Capital has acquired a Volt, which is a crypto asset custodian based in the UK. And the reason why this is such a big deal is because it comes just as the firm officially announces Genesis Prime. So they're making a big push into prime brokerage here for crypto assets. Prime brokerage has until recently, until basically now, been completely non-existent, really, in crypto assets. And so this is a well-trodden field in traditional assets. And it's a field that, frankly, I think you need in order to see institutional pulls of capital get comfortable with the space. They need to be able to deal with a prime broker. They need to be able to access that type of lending and liquidity.

And it's really just an institutional plumbing category that we've been talking about for a really long time. And this looks like a very, very well funded effort to get in this space. So very, very good news. And I think part of the bigger story here is just look at the DCG portfolio of companies right now. I mean, it's turning into a pretty significant juggernaut.

And you could see this being a publicly traded company in my mind. So you have grayscale, which is the asset management arm. They have over $3 billion in assets under management. Of course, they have the Bitcoin Investment Trust. You have Genesis Capital, which is the trading and lending business, which has been a dominant force in the industry for a very long time. And then you have that venture business, which is broadly diversified across

some of the most promising startups in the space and really giving them some great exposure to protocols and early stage companies. So add Genesis prime to the mix here, I guess. This is great to see. It looks like it's falling underneath Mike Morrow and his team. Couldn't be leading this effort. So congratulations to the team over there at DCG and Genesis. Just a huge step forward for the industry.

And if you want to hear from Mike Morrow, we had him on the podcast not long ago. So we did. We can link to that one. We did. We can link to Mike Morrow. And we also had Michael Sondenshine from Grayscale on the pot as well. So just really exciting. I mean, these guys have been really at the forefront for a very very.

a long time. They do it the right way. They're regulated. This is a great group of folks down in New York here. So congrats to them. One thing on the topic of Grayscale is we were expecting those premium to contract in the trust products, but that's actually not what happened. So it's a pretty interesting turn of events. So it shows that there's a lot of retail enthusiasm for these investment products, which you can hold in your brokerage account, which is offsetting potentially the selling from some of these funds doing this arbitrage trade. Yeah, I mean, it's a product that people want. You can buy it on a brokerage platform. You can put in an IRA. It's a titled security. I mean, it has tremendous advantages. And yeah, if there were an ETF, I think that might be a more

interesting product, but we don't have an ETF yet. And the SEC hasn't gotten comfortable with the building blocks of, you know, liquidity there around the spot market. And so once they do, we'll see. But right now, that's a dominant product. So that's actually it for deals this week, I guess. Well, that was the biggest deal of the week, bar none for sure. I wanted to move into some news, actually, and we don't talk about the dreaded private blockchains on this podcast much, but I did want to talk briefly about the DTCC. So the DTCC, as you know, many people will know, is the central clearinghouse really for many different assets in the United States, the Depository Trust Clearing Corporation. It's a consortium. It's owned by its members,

which are large banks and brokerage firms. So they have been tinkering around with private blockchain technology for quite some time. They had had a deal to do repurchase agreements with digital asset holdings a few years ago. Haven't really kept track of that project. They had another one around, I believe it was credit default swaps with Exoni that I think is much further along and had been put into production. So they announced two initiatives this week to modernize their infrastructure. I think they're just proposals at this point, but they would be using blockchain and kind

of private DLT technology. One is called Project Ion, and it's focused on settlement process for public markets. And then they have something called Project Whitney, which considers some private market digitization. And I guess there's a couple angles here that I think are interesting. One is that this is likely a response to a bunch of initiatives that DTCC members are pursuing outside of the DTCC. So we've seen some of these clearing and settlement initiatives and consortiums. And one way to read this is that the DTCC is just responding to demand to modernize some of these processes around. post-trade settlement and to really just create some efficiencies there.

But I think the other thing would be interesting to get your perspective on is just, you know, what point does the DTCC realize that it's in the prime position here to play a leading role in public blockchain assets? I mean, so many, and especially around stable coins, right? So if you think about some of these wholesale use cases that would require fiat currency on a blockchain to trade and settle just traditional securities, one of the barriers for lot of these institutions is that you cannot effectuate a DVP settlement, it's called. So delivery versus payment settlement on a blockchain without having the native currency on a blockchain as well.

And so one way to do that is to have something like USDC, USDC, which is issued by a coinbase or a circle on a blockchain, that is not going to be sufficient to settle an overnight repo transaction in the billions and billions of dollars, just not big enough. But an entity like the DTCC, in my estimation if we're not going to have a federally reserve like wholesale digital currency issued, then something like the DTCC, which is backed by all the banks anyway, could be really well positioned to get into the stable coin game. So that's one idea. Curious to get your perspective on that. Yeah, I mean, you know a lot more about that than I do, but I will say that we're already seeing this transition happening where, you know, previously you had exchanges, service,

custodians, and so it was all integrated. And now you have these custodians, which are custody and coins on behalf of exchanges, brokers, and individuals. And the coins might change hands, but the actual coins themselves aren't moving on chain. So it's IOUs that are that are circulating. So that's kind of the role that the DDC plays for stocks. Obviously, you know, the stock certificates don't move. but the claims on them move. So we're seeing this evolution towards this model already. But it's with providers like Bicco and Coinbase custody that are doing the plumbing there.

So certainly like a tried and true model, I think that the DCC would eventually wake up and realize there's an opportunity here. Yeah, and you bring up a good point. That was going to be my second and final point on this topic is that being a clearinghouse for, these bearer assets is a big opportunity. I mean, we're seeing this already with efforts out of Eris X and others to create these type of facilities. And so at some point, we're going to be in a world where public blockchain assets are held by a lot of these DTCC members. You know, Fidelity is obviously in this game and, you know, very serious about their efforts, but there will be banks that get a lot more active. And so I think at some point that DTC is going to get pushed further

and further into this public blockchain world. And I view these sort of private blockchain things as just a cost savings mechanism, but also just getting their feet wet around the architecture of some of these platforms. So all in all, I think it's positive development. The DTC is never going to be fast mover here, but it's good to see them doing something. So, you know, that's your DTCC talk of the week. Yeah, one of the most thrilling organizations out there. Just a real, real fast mover.

So here's something interesting. So Brian Brooks, who was the chief legal officer for Coinbase, has now been appointed to be the first deputy comptroller in the office of the comptroller of the currency. Huh, that's a mouthful. Never mind. He's becoming the acting comptroller. So I couldn't tell you what the control of the currency does exactly. I guess they control things.

They control the currency. People seem to be pretty excited by this, actually. You know, he's more crypto-friendly than the alternatives, I guess. So I'm cautiously optimistic about this. I think it's great to see some of these folks move kind of back and forth and get into these, you know, regulatory positions. And then, you know, conversely, I think it's great. to see some of these people that have been in some of the regulatory positions move into the industry.

It shows that it's a serious field. I mean, you see this with Libra. They hired the former FinC director, Robert Werner, is their new GC. So that comes on the heels of their big CEO hire. The HSBC executive, I believe, it came from. So it's great to see these type of movements. You wouldn't have been seeing this three years ago, that's for sure. Yeah, it's like the slow normalization of crypto. you know, and that permeable barrier between industry and regulation. I'm, you know, I'm a little nervous that it means that some of the larger entities in crypto are able to have more sway with the government.

But if this means that we get unified regulation for crypto exchanges, that's only a good thing. And if it means the banks become friendlier to crypto, that's also a good thing. Yeah, I think it's a little bit too early to be worried about regulatory capture on behalf of the crypto companies. That would be a good problem to have. It's never too early to be worried about that. Did you see, well, there was another kind of big story that you played a big role in. So you did see it. Talk a little bit about what happened on Wednesday with these 50 bitcoins moving.

Man, so I was recording a podcast when that happened. and I started getting a bunch of DMs, like, did Satoshi's coins move? Did they move? Like, I heard Satoshi's coins moved. And I was really trying to keep my cool. And I had to wait an hour until I could actually get out there and investigate. So it was like a really stressful time. And so, yeah, what happened was some coins from February 2009, which is one month after Bitcoin was started, moved.

And this is pretty unusual. So the last time that coins from February 2009 had moved was in August 2017. So it really doesn't happen that often. And the Twitter bot whale alert had it tagged as possible Satoshi address, which is, I mean, I guess every coin is a possible Satoshi address, right? But it seems that, you know, based on the preponderance of evidence, it's more likely than not that it is not Satoshi. address, although I'll caveat all this by saying it's impossible to know for sure one way or the other, which coins Satoshi mind. So there's a huge amount of uncertainty. But what we do have is this analysis by Sergio Lerner, who's the founder of Rootstock. He did this analysis back in

2012 and then developed it over time, basically finding a particular pattern in certain blocks which he used to ascribe a whole bunch of blocks in the first year of Bitcoin to a single large miner, which was active from day one. And so he effectively guessed that this was the footprint of Satoshi. Satoshi was acting as the steward of the network, running a bunch of miners to make sure that Bitcoin had good uptime, and then eventually left when other people took over and started mining. So he called this the Potoshi pattern.

and if you look at the pattern you can see that this block in question was not part of that pattern i think it was block something like three six five four and uh that block was was not part of this pattern we can get into the details of the pattern but uh yeah suffice to say are the best estimates that we have and again the estimates are just you know statistical guesses basically indicate that this is not part of the blocks, which are suspected to be Satoshi's blocks. So it seems to be the case that it was just another early miner. So there's a couple, that's a good explanation. I want to talk about a couple different angles here, but maybe one is just explain why this

kind of matters and why people freaked out that it might have been Satoshi moving the coins. So Satoshi, if you conduct this analysis, which again, some people, like Greg Maxwell will say this analysis is totally invalid, right? So it's not something which is overwhelmingly understood to be the case among Bitcoin experts. Although I would say if you ask, you know, 10 sort of high profile Bitcoin developers, you know, probably a majority of them will buy this analysis. And when you hear about Satoshi having a million coins reported in the press, this is what they're referring to. This work basically by Sergio Lerner, which was then repeated by other NADs, BIMEX research, repeated the work. Now, the actual magnitude of the

coin hoard is under debate. So BIMX research thought it was more likely to be in the 600,000 range. Sergio Lerner thinks it's in the 1.1 million range. Either way, it seems to be the case that based on these findings, Satoshi has, you know, between half a million and a million coins. And, you know, the interesting thing is that aside from one or two early test transactions, these coins have never moved, right? So all the coins in these Coinbase outputs, which were mine in 2009, have not moved. And so that's why there's all this speculation about the return of Satoshi. If Satoshi does come back and they have to make some mortgage payments or something,

you know, are they going to sell off 900,000 coins? And so it also has to do with the circulating supply of Bitcoin, you know. What is the supply of Bitcoin? Is it 18.7 million? Or do you have to discount it by 15% to account for all these potentially lost or inactive coins? So that's why this matters. You know, my best guess is that these coins are not going to move again. But it's hard to know either way.

Yeah, so people are worried that they'll, you know, they'll be dumped on the open market and there'll be a kind of a short term to medium term negative impact on the price of Bitcoin. The other interesting thing to me here was just the time lapse between when the coins moved and when the market dumped. So the market dumped, what, $400 or something like that? But what did you make of the fact that it was such a big lag? It really didn't dump until that tweet from Whale Alert. Yeah, and I think that the crafting of the tweet is the reason in part for the dump, because it's likely that some smart traders have alerts set up, tracking the coins which have this Potoshi pattern, so the rumored Satoshi coins, and they do have sell orders set for when

those coins move. But this wasn't in those coins. This was just another early set of coins. And so I think, you know, to set up an bot, which would do an automatic sell or, you know, a short, based on the movement of coins that just simply happened to be early coins and are otherwise not notable, would have been a little risky because under normal circumstances, you wouldn't have expected the market to react to that. But because Whale Alert claimed that there were Satoshi coins or implied that they were Satoshi coins, there was a bit of a panic. you know so if we're up to me if i were configuring a bot like this i would set it to sell if any of the the sotoshi coins moved and not the others so you it would have been hard to to predict that people would respond this way to non-satoshi coins moving right because it happens and the other times

it's happened and happened with no fanfare yeah this is it's interesting it's almost like having a satellite image tracking troop movements or something like that or you know people building up artillery on a border or something like that. And these are the types of things you can trade against in this industry. One thing that I like is that these coins sat there for 10 years, over 10 years, completely inert. And, you know, the owner was able to move them with no trouble whatsoever. And the protocol worked as planned.

Everything worked perfectly as we would expect it to. It's just another vindication of the property rights. the Bitcoin has set up. It's kind of beautiful. Maybe he or she just wanted to buy some pizza ahead of pizza day. It could have been anything. I had this kind of conspiracy

that it was being done to delegitimize Craig Wright's claim in his trial because Craig Wright had claimed in the course of his trial that he had, so he published a list of addresses that he purportedly controlled,

but then also told the judge that he didn't have the ability to access them. So by moving these coins, this individual was effectively forcing Craig into having told a lie in court, right? Because he's proving... Was this one of those addresses? It was. It was. So this was in the list of addresses that Craig had claimed that he controlled most recently. So this individual was basically revealing Craig's claim to be false because Craig later came out or Calvin, Craig threw Calvin Air. came out and said, no, this wasn't us. That's my theory for why this person actually moved the coins. Make me think that Craig Wright might not be Satoshi after all. That's crazy talk.

All right. Well, that was, it was, it's always interesting to say. I remember a few years ago, there was a, people thought that some Satoshi coins moved. It was a big deal. This is another big deal. Hey, you know, it was a fun couple hours there. Let's talk about a coin desk piece that you wrote this week. the last word on Bitcoin's energy consumption. So this delves into some of the criticisms that Bitcoin mining is wasteful. And I guess do you really think this is the last word? Because I think we're going to have a lot more words

about this in the future. Well, I said it's the last word. So that actually makes it the last word. So no one can actually write. This is your last word. It's certainly my last word. Well, I can't guarantee that. But the debate's over as far as I'm concerned.

This settles it. So sum it up for the folks who haven't read the article. What's your take? So there's been a lot of handwringing over the years about Bitcoin's energy footprint. And some of that's warranted and some of that's not warranted. And what's interesting is this debate is completely identical to the people that decried the cost of the gold standard. Because the gold standard entails pulling lots of gold out of the earth. And a lot of people are very offended by this idea. It's like, what are we doing? We're like spending a lot of energy just pulling these inner rocks out of the earth and then we're going to put the

the rocks in other vaults back in the earth? You know, like, what do we achieving here? I think Warren Buffett has a good quote about that. So people that don't like gold, they don't like the resource cost of gold extraction, right? And so then it's exactly the same thing with Bitcoin. People that don't like Bitcoin don't like the resource costs of Bitcoin extraction. But what they miss, of course,

is that a lot of people do like gold and Bitcoin, and they think it's a good idea that those commodities, exist. For gold, it's a physical commodity. For Bitcoin, it's a synthetic commodity. And because the world values these things, they value non-state stores value, as we know, people are going to spend money and effort and energy creating them. In the case of gold, it's by filtering gold through, filtering gold out of the Earth's crust. In the case of Bitcoin, it's filtering, you know, golden nonces out of a probability space. Same thing, basically. So, you know, there's necessarily a cost to the creation of Bitcoins because Bitcoin has this fair issuance mechanism whereby

nobody has a privileged access to the flow of new Bitcoins. You just have to pay effectively market rate through mining. And that's why there's so much energy devoted to mining because Bitcoin is worth a lot and new bitcoins are created every 10 minutes or so. So it's pretty obvious to me that there are resource costs and there's no alternative way to introduce a new synthetic commodity to the world without mining. We haven't discovered a better way. Air dropping doesn't work. It just leads to people that are protocol proximate getting privileged access to all the coins. You know, if you think about how Satoshi could have distributed the coins, you might have said, well, he could have just sent some to everyone on his email list or

sent some to everybody on the cryptography mailing list. Then there would have been like 80 people with all the bitcoins. The system wouldn't have worked. So proof of work is the fairest launch method or issuance method that's ever been devised. It certainly entails some resource costs, but that's literally the point. It's hard money. It should be hard to acquire. So that was one point that I wanted to make. The other one is that Bitcoin's energy is misunderstood in a couple ways. So one, energy is not a globally fungible thing. Energy actually exists in a stranded setting, and it's kind of a patchwork the world over. We don't have a global clearing price for energy. We have local clearing prices for energy. This is because it's expensive to transport

and because different geographies have different level of aptness for being used for energy generation. And one of the biggest market distortions in that global market for energy is places like the Sichuan province in China, which had a massive overabundance of energy because China had this big emphasis on energy independence. And they spent a huge amount of time and effort building tons and tons of dams. and they ended up with like two times more energy than they needed from hydro. And the thing is about hydropower is you can't save it up forever because the river keeps rolling. So you have to let it out at a certain point, which is called curtailment.

And instead of just wasting it, a few enterprising folks in Sichuan realized, well, we can effectively use Bitcoin as a sink for this energy. We can monetize this otherwise waste energy. and this isn't even a new idea. This is what happened in Iceland with smelting aluminum. Aluminum is a commodity that requires lots of energy in order to be refined. And so this is kind of an old idea, taking otherwise wasted energy and putting it to work in a commodity like aluminum and now into Bitcoin. And we say the exact same thing with the stranded natural gas at oil wells in places like

Texas and Canada. So Bitcoin is a global buyer for energy, which monetizes the stranded or otherwise curtailed pools of energy, which can't make it to the market for some reason. And that's something which is missed in the debate. So Bitcoin isn't necessarily depriving anyone of energy anywhere because it's able to monetize this energy, which is in these little pockets, which can't make it to market. Now, that's not all of the Bitcoin. Some of the Bitcoin out there, is mined with grid energy. But you know, you do have to understand the nuances before you can just issue these blind critiques.

So that was the point of this article. Yeah, I think the, that last point around understanding the nuances before jumping in with the blind critiques is very well said. Maybe we'll just start sending this article to people when they have the blind critiques. And then we'll say, we'll talk, we'll have a discussion about this after the, after you read the article, if you still have some critiques. Sure. Yeah. And like, you know, I didn't get into the numbers because like that's really not the point. I mean, sure, yeah, Bitcoin consumes a lot of energy. It's not like depriving anyone from the ability to turn on their Christmas lights or run their fridge or run their PS3 or whatever. That's just not the way the energy works. The world produces too much energy. We live in a time of energy abundance, believe it or not. And in some places where that energy is really cheap, it's funneled into mining Bitcoin, which is a pretty great. usage for it because Bitcoin is this amazing financial network, which settles billions and billions

of dollars, and it does it in a neutral and apolitical way. So as far as I'm concerned, that's an amazing use for this energy. And, you know, basically my conclusion of this article is it just comes down to whether or not you think Bitcoin is a valid technology or not. I think it is. So I think it's a super valid use of the energy. And again, you don't see these people going around complaining about other super energy intensive industries because they don't have data on them. It's hard to get data on other industries. Bitcoin is very easy and it's very transparent. So Bitcoin is the object of criticism, whereas other super energy intensive industries are ignored. Yeah, it's a free market. You know, every 10 minutes, there's a new block with new

Bitcoin's being minted. And if you have cheap enough energy supply, then you have a good chance of winning that. It's sort of an auction every 10 minutes that's conducting itself. So there's a clearing mechanism here that's very well understood by the free market. Yeah. And if you want to, you know, unseat Bitcoin or defund it, then produce a better alternative, which has better settlement insurance is more private, more censorship resistant. That's the way you beat Bitcoin here. Produce a better alternative. Did you read any good blog posts or see anything else this week? You want to highlight? The Coinbase, the Coin Desk 50 got a lot of critique for their ordering. I guess in the end, it turns out they weren't ordering things in the order of

notability. But I still thought they highlighted 50 pretty interesting companies and projects. We had three of our portfolio for other companies on there. So thank you, CoinDesk. Yeah, BlockFi, Coin Metrics, Kasa. I saw Fidelity Digital Assess was on there, too. It was a good list. Next year, let's let's aim for 10. See if we can pull that off. Did you read them? So Fred Wilson had a good blog post. Do you read that one? He talked about the book American Kingpin. Have you read that book yet? Nick Bilton's book about the Silk Road.

I haven't because I heard it didn't do justice to Ross Elbrecht, so I'm boycotting it. I think you'd enjoy it. It has a lot of the DMs. He got access to them. But that's not really the point of the blog post. So Fred Wilson was talking about a lot of new technologies finding mainstream adoption. initially with a product market fit that's more on the edge. So criminals using disruptive technologies first.

Couldn't agree more with this, right? I mean, if you have a new technology that isn't seeing some early adoption from French groups, then you're probably not looking at a disruptive technology, actually. You know, look at the telephone, look at the internet. And, you know, Fred Wilson's point was that's the same with crypto and with Bitcoin. So spot on, I think. That's fair. like to burn Hobart's piece in Coin Desk. So this Coin Desk opinion setting section is really

blossoming into something interesting. Yeah, not that you're biased or anything, right? Yeah, you know, what's interesting is like I set out to write one every two weeks and I pretty much stuck to that. And I don't think anyone else did. So then it looks like I'm monopolizing it a little bit. But that's just because nobody else is on the same cadence. I like the direction that they're going, though. I think CoinDesk is putting out some great content. Obviously, I'm a little biased since you're a contributor, but I find I'm reading it more and more.

Yeah, I mean, they have some really good writers. They have JP Koenig. They've burned Hobart now. So he had a good one. So he said PTJ on BTC. Bitcoin is now the macro big bet. and he basically summarizes the Paul Tudor-John's position explains why it makes sense. Byrne has also come out with a pretty simple investment case for Bitcoin in the past,

contextualizing it in words that I think regular finance people will understand and putting some numbers to it. So it's as good a Bitcoin valuation as any, which is rare to see. You don't often see people making Bitcoin valuations. It's more just like, do I want exposure to this or not? But I'm still of the school of thought that you can, you can't value it with cash flows, but you can kind of set a price on it,

which you think is appropriate. Yeah, yeah. Burns putting out some great content. I thought that was really good. And there were a bunch of good podcasts this week. I got a kick out of CZ going on Larshin's podcast. She gave him a little bit of a hard time, talking about some of the regulation and things like that.

Tom Chippis was on FinTech Beat with Chris Brummer. I thought that was really good. Tur was on Ryan Selkis' show. Masari Unqualified Opinions, that was really good too. So some great content being put out there from the bunkers. I actually got unblocked by CZ this week. I don't know what I did to become unblocked, but CZ, if you're listening, thank you.

Thank you for welcoming me back into your warm embrace, yes. Well, he might have wanted to read some of your stuff around the Satoshi coins moving. There we go. you know I'm building bridges over here. All right. So I think that is it for the week, a busy week in the industry. And we have a couple, I think, good podcasts coming down the horizon, definitely a good one coming out on Monday.

We've got a long Memorial Day weekend. So everyone enjoy that. And we will see you next week.