On The Brink with Castle Island - Weekly Roundup 05/12/23 (BRC20 mania, are high fees good for Bitcoin, the Wyoming stable token) (EP.424)

Episode Date: May 12, 2023

Matt and Nic return for another week of news and deals. In this episode:  BRC20 PEPE versus ERC20 PEPE Is PEPE an alt right coin? What's driving up fees on Bitcoin? The relationship between HEX, XEN, and VPMX Bitcoin's circular firing squad The upside of high fees in Bitcoin Why the White House's DAME mining tax is counterproductive What is the $18b tax loophole the Biden admin thinks crypto investors are taking advantage of? What's the deal with blue checks? The difficulty of bootstrapping new social networks Bittrex is filing for bankruptcy in the US The Democratic messaging on the crypto hearing The US chamber of Congress files an amicus brief in the Coinbase v SEC case Texas passes a bill to support flare gas mining The Wyoming Stable Token gets closer to becoming a reality The US Chamber of Commerce amicus brief in the Coinbase v SEC case Can the US government afford these interest rates?  Matt and Nic solve the debt crisis Content mentioned in this episode: Reuters, Cryptoverse: Digital coins lure inflation-weary Argentines and Turks Nic Carter in Coindesk, The White House's Bitcoin Mining Tax Undermines Itself Two Ocean Trust, Revisiting the Case for Bitcoin Nick Neumann at Casa, Hands Off our Self-Custody Sponsor notes: Coin Metrics State of the Network - Bidding on Bytes: A Bitcoin & Ethereum Fee Market Update In this week's report, the Coin Metrics team examines the underlying causes of the recent surge in transaction fees on Bitcoin and Ethereum and explore the implications of this development for the future.

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 Concentuteease. You've printed 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 Matt Carter. This episode is brought to you by Coin Metrics. And here is the Metrics Minute. Today's Metrics Minute brought to you by Coin Metrics. Traffic on the two largest blockchains, Bitcoin and Ethereum surge this week with users paying 230 million in fees to transact on both chains. Average fees on Ethereum rose to 21 per transaction. of the last week, average Bitcoin transaction fee jumped to $15.

On Bitcoin, it was the BRC 20 Mints that drove the on-shine activity to new highs. $685,000 transactions came in on May 1st, shattering the previous record of $498,000 from December 2017. This helped supplement Bitcoin security budget, driving the average per block payout to north of 11 bitcoins. At the height of the BRC 20 frenzy, mentors bid 600 Satoshis per byte to, guarantee their transaction inclusion.

Ethereum had its own surge with Pepe coin, Eurc20. Not to be confused with the BRC20 Pepe coin, two different coins, ballooned to a $1.6 billion market cap. Over 14,000 ETH was burnt on May 5th, the highest daily total since the merge. Wow. What a doozy of a metrics minute that one was. Wow. Coin metrics crushed it with that metrics minute.

What a week in metrics. guys, he's good. We're getting so much more content for the metrics minute. I can't get it all in a minute. We had a problem there. It's rectified. We spent a lot of time with the coin metrics people this week. Big board meeting and then pickleball, which, you know, as usual, I wasn't invited to.

I think you were invited. You just chose not to play. Really? I mean, I don't think I would have been able to go anyway, but it would have been nice to get the ask. Well, I was crushed at pickleball, but I, I realized that that's because I was ill. So it's not my fault. I was sick.

You sent me a screenshot of your, what was that, an aura ring stat? Yeah, my body. That was alarming. Yeah, I thought you were like, do you still have a fever? Yeah, I'm sick right now, but I'm just, you know, the roundup doesn't wait for anyone. You just have to deliver week and week out. I was on a Zoom. I got a touch of it too.

Not a huge fever, but I was on a Zoom the other day and I just started pouring sweat. And it probably looked like I was quite nervous. But it's like, no, I'm just sick. You can work while you're sick here in this post-pandemic world. Isn't that great? Yeah, you just don't have, you can't take a sick day anymore. You still have to show up. Well, anyways, good metrics minute there.

That's a, the Bitcoin fees are flying right now. And the meme coin thing on Ethereum is driving up the Ethereum fees, too. It's quite a, there's no bare market in these crazy shit coins. So I need to clarify something, some commentary in Bloomberg that was wrong. Okay, so Bloomberg was covering the BRC20 frenzy on Bitcoin. And they said that it was Pepe that was driving up the fees on Bitcoin. To be clear, there is a Pepe, BRC20 coin, but that's not the one that's responsible for all the fees being high on Bitcoin. The pepe in question, the kind of big pepe, that's the one on Ethereum, ERC20.

Different coin. And there's an interesting moment this week where Coinbase said that it was an alt-right coin, and then they actually retracted that later. So they apologized to the Pepe community over that mischaracterization, because Pepe is just sort of more of a general icon these days. It's been reclaimed. So on Bitcoin, the main culprit for the fees is a coin called V-P-M-X. All right. I've never heard of that. Well, let me make it a little simpler for you.

VPMX is a coin created by the Zen XEN community, which is the coin that you may have heard of because that's the one that's been spamming all these other blockchains in a similar mechanic. The hex guy? Yeah, so this is an offshoot of the hex community. So we're in the weeds now. So I explained this to a reporter with the information,

and oddly, he didn't include this in the article about it, which I was shocked by. Because I think there's five people in the total listening audience right now that are still following us. Yeah, so now we've gotten back to Hex, which I think, I don't know, I kind of follow Hex, but mostly because I know Eric Wall, and he's obsessed with Hex. Oh, my God, you should have him back on.

You should have him back on and do a full episode on Hex, Hex is one of the craziest Ponzi skins in the entire space. So he's like a full-time hater of the hex community. I think he's the only person that understands both Hex and Bitcoin. So when I was trying to unpack all this VPMX stuff, he was the only person on the planet that I think could actually answer. I remember when you went real deep on BitConnect back in 2017. It reminds me of Hex.

Yeah. I mean, Hex is a lot bigger, I think, than BitConnect ever got. but more people know about BitConnect. Big Connect was less sophisticated. Veritasium. That was another good one. I still get chirped by the creator Veritasium, Reggie Middleton,

which doesn't make any sense because I correctly identified it as basically a fraud. And then he, I think, settled with the SEC over it. So obviously I was right. So I don't see what his grievances. But he's still mad. So we're doing this again, I guess. on top of Bitcoin now.

Yeah. So to understand Bitcoin, you do have to understand, don't understand the fees on Bitcoin, you do have to have some knowledge of all these scams, I guess. So that's what's happening right now. People minting these tokens using the ordinals and inscriptions protocol. They figured out how to mint tokens. And they called them BRC 20s.

If you're wondering if there's BRC 1 through 19, there are not. They started with 20. That was good. That was smart. That was good branding. Yes. I mean,

obviously a homage to ERC20, but it's done in kind of a much more idiotic way, such that it deliberately drives up fees. And so that's why fees have been high on Bitcoin lately. Someone was telling me that some of these projects that are driving up the fees are associated with Bitcoin SV or their teams that used to be building on Bitcoin SV and now they've moved over. Yeah, so here's a weird thing also. That's actually true. And I think the reason is because BSV people kind of know how to build stuff on Bitcoin because they were just totally willing to do that on the greater block space of BSV. And so once it became possible to use the more block space for transactions, they were the natural devs that had that skill

set to do that, which is a really weird outcome here. Such a weird social situation that now some of those people are back in the fold on Bitcoin. And everyone's accusing everyone else of being a big blocker. I haven't actually seen anyone advocate for larger blocks. But the, man, the turf wars kicked up in a high gear again this week for sure. People are, yeah, the infighting.

It's like the pirate ships just shooting at each other, just driving around in circles. You've got to be shooting outwards, guys. So I wrote and coined us this week saying that the high fees were actually good for Bitcoin. I know people didn't like that. the high fees because, you know, whatever, the global South now is priced out of Bitcoin. My point is it's a market-based system. So you can't prescribe a certain level of fees.

To say that there's like an appropriate level that fees should be at is to deny the market-based nature of the system. And it has to be a free market because, you know, Bitcoin, the protocol is open. Anyone can transact. So you can't really interfere in the market. protocol and say this transaction is not allowed. So the fees will settle where they will. And what this does do is it creates a new pressure for people to use lightning and other kinds of L2s, which I think is necessary. That's the direction this should go. So and it adds to the security budget. So overall, I think it's a good thing, even if the BRC 20s are unlikely to have an enduring impact. I think it's a great thing. And I continue to say that just notarize

arbitrarry data onto the Bitcoin blockchain is a really compelling use case and will add to the stability of the network in the days when the block reward becomes a lot less relevant to the miners. So I'm here for the high fees. Yeah, I remember talk I gave at the MIT Expo in 2019 giving a bunch of examples of protocols that were embedding data in Bitcoin with the idea that that would hopefully add to the block reward and add to the sustainability of the network, all those things are gone now. I mean, the one at the time that was big was very block, I think, if you remember that one.

I remember that one. They were a huge consumer of block space for a time, yeah. So hopefully there's kind of more sophisticated uses of the block space in the long term. I'll even take these unsophisticated ones because it does mean that people are more likely to use lightning and other things like that. So I don't have a huge problem with it. Well, you got to get the exchanges using the lightning first. They've been really reluctant to do it. And it's been five years of lightning now.

So it's probably time. They've got a lot of other stuff going on. You also did an article about the White House's Bitcoin mining tax and why that's just such a ridiculous premise. Tax is not smart. Not a smart tax. So it's going to drive a lot of Bitcoin innovation elsewhere, that's for sure. I mean, it's just, it's so perfectly counterproductive.

I think we said this last week, but I got some data from our friends at Luxor, because the Cambridge data is unfortunately out of date. I asked Luxor, okay, where are people mining? They told me, in order, U.S., number one, followed by China, to be clear, Russia, Canada, Kazakhstan, Indonesia, Paraguay, Norway, Norway, Venezuela. and a smattering of other places. We know that there is state-sponsored and or sanctioned mining in Russia, China, Venezuela, Iran, North Korea. We don't have like hard evidence in all cases, but there's plenty of circumstantial evidence.

So by pushing miners out of business in the U.S., there's still the same amount of Bitcoin that gets mined. that simply advantages everyone else that's mining Bitcoin. Much of the time, it's these adversaries of the United States. So you are literally just funneling money into their pockets by doing this. Not to mention they're mining less energy efficiently, right? So from the CO2 perspective, it doesn't make any sense either. From an emissions perspective, it's also counterproductive. It achieves the direct opposite result that the Biden admin wants.

if you look at the carbon intensity of generation in Kazakhstan, in Indonesia, I mean, frankly, in China, these places, they produce energy, yeah, with a higher emissions intensity. In the U.S., where the mining is, it's like hydro in the Appalachia's, hydro in upstate New York, wind and solar in West Texas, obviously grid mix in a lot of these places too. The U.S. grid is actually pretty clean by global standards. We have lots of natural gas, which is also fairly clean, relative to coal, at least. So you're taking mining that's being done with relatively clean energy, and then it's going to be done with coal in other countries.

So don't know what the hell the Biden admin is doing here. It's not. It doesn't achieve any of the objectives. And also, the tax wouldn't raise money because the miners would just be out of business in the U.S., they would just go elsewhere. They're not going to pay a 30% surcharge. While we're talking about this Biden administration view, I mean, obviously this has been a disastrous SEC policy, but there's a tweet this week that Biden put out, he said

it's basically an infographic. We can link to it in the show notes, but he said kind of taking the posture of Democrats versus Republicans, for Democrats, we think Congress should cut tax loopholes that help wealthy crypto investors to the tune of $18 billion versus Mago Republicans think Congress should cut food and safety inspections to the tune of $15 billion. Is this $18 billion just a totally made up number? And so there's, to be clear, there's no tax loophole for anyone in crypto whatsoever. So much to the effect that Twitter actually put out a disclaimer like they used to put on Trump back in the day that basically just said, like, this is actually not a factually accurate tweet.

this is like just a gaslighting tweet. Yeah. So I think they're referring to the tax loss harvesting that you can do with crypto, which isn't a loophole. It's just the way the law works. So I don't see how it's valid to put a number on that and say it's a loophole. I don't know how that would even be calculated. Yeah.

So that was pretty surprising to see them try and characterize crypto in such a nakedly partisan way where it shouldn't be partisan. It shouldn't, but it is. It's really the calculus that the Democratic Party is seemingly decided on is that they can just use crypto as a campaign issue in the negative sense. I could see that backfiring. I agree. And there is a very interesting piece in Reuters today, sorry, last week, showing the rise

in crypto ownership actually worldwide from July 2021 to today. It's risen in basically every country that they cover. And if you think about, I don't think they covered the U.S. in this, because this poll covered more emerging markets. If you remember, NIDIC did a survey, I think it was in February of 2021. They found 40 million American adults held crypto. If it's risen in line with the rest of this with the rest of the countries in this poll it's like a 15 to 30% increase then you're looking at tens of millions of Americans that are holding these things surely that demographic is bigger than the relatively small set of people that just absolutely hate crypto I mean how many of those people can there be that makes sense it just yeah it doesn't make any sense so it just

feels like a losing political issue so elsewhere in castle island content this week. You sat down, this is our second interview with Halborn, Stephen Walburl, to discuss Infosec in the context of public blockchains. Yeah, Stephen's the CTO and the co-founder over at Halborn. They're doing just an awesome job in the cyberspace. It was fun to talk to him about just some of the attack vector, some of the things they're seeing. World's a scary place out there. So if you're, you know, doing something in the defy world or even the, you know, the Tradify world, too, you better be, you better have a great internal team or you better. to be leveraging a firm like Alborn, I think.

All right. Well, plenty of deals this week. We will start with one from the Castle Island portfolio. Talos, the leading provider of digital asset trading technology, has acquired D3X systems. They're a developer of institutional technology to support systematic investment strategies. Super exciting acquisition here. You know, bare markets are about consolidation. And this is two great companies coming together here.

and this is on the portfolio management side. So really excited to see what the Talos product looks like with the addition of D3X here. So congrats to Talos and D3X. Next one up is AnteMetal. This is a cloud cost optimization platform that raised 4.3 million from Framework, Chapter 1, and IDO. Next up we have Artifact Labs and NFT Marketplace. They raise 3.25 million from Blue Pool Capital and Anamoca. Next, we have web protocol, a cross-chain bridging protocol.

They raise $7 million from polychain and lemnis cap. And then our friends over Blockworks, of course, well-known crypto media company. They raised $12 million from Tentie Holdings and Framework. Next is Pudgy Penguins, the NFT Project. They raised $9 million from 1KX, Big Brain Holdings, Kronos, and others. Definitely a trend here, the NFT projects raising venture capital. Kind of surprised that's still happening. Try explaining that to your grandparents.

Then we have Cookbook, Smart Contract Registry. They raised $2 million from Mac Venture Capital, SuperScript, Tagus, and Alchemy. The last one is Odsey Network. This is a decentralized wallet developer. There is $7.5 million from blockchain, rubic, and node capital, along with Falcon X, it looks like. Before we get into the news here, what's the deal with these blue check marks? Yeah, so you applied and you paid, you paid for Twitter Blue and you do not have a check mark.

I mean, everyone's given a lot of crap to the people that are paying for the blue checkmark, but I said, you know what? I'm going to pay, I want a blue shark mark. I'm like one of these sneaches that doesn't have a star on his belly in the Dr. Seuss context. And I don't know if I even applied. I mean, they charged me like 100 bucks and I still don't have it. That was like two weeks ago. Wait, what's the doctor? Dr. Seuss thing. You need to explain that.

There's a Dr. Seuss book called The Sneaches on the Beaches, and it's all about two groups of people. One of them had, there were sneeches with stars on their belly, and then there were sneezes that had no stars, and the stars were better. And so they had machines and all the sneeches that didn't have the stars, got the stars. And then the ones with the stars decided to take them off. They also had a machine. Really? Just a, it's an allegory. So that's interesting. So in this case, what's the equivalent? Having had a blue check under the legacy system, and then the blue check system gets,

it gets too crowded and thus devalued as a social signal, and then you move to blue sky, basically. Well, yeah, correct. I think the thing would be all these people that already had a blue check and didn't have to pay for it. They are the sneeches with the stars, and I kind of want to be on that beach with them. So I'm not ashamed to admit that I paid for it.

I don't know how I got my legacy blue check. Actually, I don't even know how that went down in the first place. So they- It just showed up, right? They stripped it from me. And then I wanted to do the longer tweets to, what is it, 280 characters? Not enough.

And then they also haven't verified me. So the system ain't working, Elon. It's not working. I don't know. They need to hire back a couple people to just go through and just put the, how hard can it be to move the button? So speaking of blue sky, though, have you tried it out? Is it really a thing?

Is it like, is it going to be a thing that I need to get on? Maybe, yeah. I mean, so think about the people that hate Twitter. It's basically the most insufferable people on the planet. And they all moved to blue sky. So they weren't people that were banned from Twitter. We're not talking with the gab demographic different. They were people that were on Twitter, but they disdained Twitter.

Twitter under Elon's administration. And so it's basically the worst people in the world. Is there any crypto content there? Is there any reason why I would want to be over there? Yeah, there's tech people for sure. So I don't recommend it. I don't recommend it. With any social network, it's the anchor tenants that really matter.

You know, that's make a break. Unfortunately, this is just a very bad set of initial residence. It's a hard thing to get bootstraved. I mean, I'm on Farcaster. I like Farcaster, but that's a very closed community. It's all crypto people, really. It's the same with Noster. I mean, it's just Noster is getting traction,

but it's just all Bitcoiners. So I think it's virtually impossible to start a new social network from scratch today. No matter how decentralized it is or whatever, there has to be a reason for people to be there, but it means you have to rebuild your digital homestead literally from scratch. And that's very annoying.

Yeah, they're tough to get going, but man, once you do, those are, they last a long time. LinkedIn is still just a jugger. So first up in news, BitTrex, everybody remembers BitTrex. They were recently charged by the SEC for running an unlicensed securities exchange. They've also filed for bankruptcy now. Yeah, that's too bad. I mean, not shocked. I'm not sure there's much to add there.

I think they were going offshore or not enough. still are or not, but they are no more. One of the kind of early crypto exchanges, though. Yeah, classic exchange in the Halcyon days back in kind of 2016-17. All right. So next up, I did want to get into this just crazy scoop that Eleanor Tourette over at Fox got coming out of the financial services and House Ag committee hearings this week. So there's some key messages from, let's see who it's actually technical.

from. So it's two Democratic members on the House Financial Services Committee, and it's from the House Financial Services Committee, the Democratic side, minority staff. And so it just has some talking points on how to think about crypto. So I'm just going to read you the key messages. This is crazy. So message number one, while Republicans claim that they're working to provide clarity in the markets by carving out space for the CFTC and crypto, they're simultaneously undermining and hand-stringing the agency by proposing to cut its budget. Republicans are proving that they aren't really serious about protecting investors and consumers. Okay, whatever.

Number two, committee Republicans are trying to pass pro-crypto legislation in June. Well, news flash, we're about to default on our debt. Blah, blah, blah. Okay, whatever. Number three, Republicans have decided to embark on a partisan pursuit of sweeping digital asset legislation that erects entirely new legal frameworks for the crypto industry when neither of the Biden administration investors, SEC, nor any other financial regulators is called on Congress to do so. That's not true. Number four, the problem is in ambiguity. It's

mass noncompliance with existing laws and crypto companies can't be left off the hook. That's not true. There is massive ambiguity. That's crazy. That goes on to say we can't invent new accommodating regulatory structures simply because crypto companies refuse to follow clear rules of the road. Talk about lying. Number five, is it a turf war if no one is fighting? Both the SEC and the CFTC are aligned on the fact that the SEC is the regulator to determine if crypto assets are securities, and the SEC has made clear nearly all crypto assets are securities. End of story. That's just not true. The law does not allow the SEC to just say what's a security and not. That's why we have with the courts. That's just, that's a lie. As regards to the turf war, there is a brutal

turf war going on between the CFTC and the SEC and the politicians affiliated with either entities. So that's definitely not true. And then lastly, number six, under Chair Gavis, the SEC has built up the strongest enforcement team to go after crypto criminals, protect investors, blah, blah, blah, blah. Unfortunately, committee Republicans want a reverse course and tie the hands of the SEC, blah, blah, blah, blah, blah. Anyways, you get the drill. I was shocked that this thing was actually circulated. This is a bad leak for the Democrats. Yeah, this was written by the angriest no-coiner that exists. I don't know which staffer. Maybe I presume one of Maxine Walters. staff wrote this, but it is bananas. I mean, it's just full of complete misrepresentations.

In particular, the line that, you know, the U.S. financial regulatory system is somehow static and doesn't need to change. It is constantly evolving to admit new realities of what financial products exist, constantly evolving. It's just an insane, a historical take of theirs. Yeah, I mean, to suggest that we don't change our laws to reflect new technology is just cataclysmically incorrect. You didn't even have, you know, credit default swaps are a fairly new financial instrument. It's not like they just sort of said, hey, you can't have these. There was laws that came into effect. You didn't used to be able to hold risk assets in pension funds.

And there were laws that were changed to accommodate that. So, you know, the alternative investment category is largely a phenomenon of the last 30, 40 years. There's all sorts of laws that were enacted. Speaking of which, on the topic of the SEC's, you know, whether there's ambiguity or not as to whether things are a security, just end, as we record this, the U.S. Chamber of Commerce, not the Digital Chamber, the Crypto Policy org, the Chamber of Commerce filed an amicus brief in the Coinbase versus SEC case. on the side of Coinbase. Really?

On the side of Coinbase. And they say in that brief, as it stands today, nobody knows for certain which digital assets, if any, are securities under federal law. So directly contradicting this memo. The Chamber of Commerce, that's a big get. Yeah, I haven't had the time to fully digest this. But they apparently stand with Coinbase on their case. Wow. Do you think they have the shield? Do you have the shield yet? Did you mint an

an NFT shield? Oh, I don't know. What's the shield? Oh, you don't know about the shield? The shield is like Coinbase has an NFT stand with crypto and you mint a like a shield. I have no shield. I haven't done it yet, but I'm gonna. Okay. No, not yet. I'm gonna get it. The gas fuse are too hot to get the shield right now. So reading this, I felt for a second that the public and should let the US default on its debt. That was a level of anger that I don't say that. Don't say that. We don't need that.

Just send that. I don't know. It's tough times out there. Tough times out there. There's not a lot of people that know what they're doing in these, these offices, unfortunately. At the state level, though, there's good work happening in the states. Texas passed a bill pertaining to flare gas mining, I believe.

So credit to Lee Bratcher and the Texas blockchain count. I think probably the strongest policy organization at the state level doing incredible work over there. Do you think this is just turning into a state's rights issue ultimately? Yeah, I think it is. You have the, you have like the New York trust license is under attack. You have the Wyoming banking issues and the Wyoming trust thing is under attack. And you really just have an overzealous federal government here that's kind of attacking the states. Yeah, no, I agree.

I mean, the states have been proposing their own banking structures that would let crypto firms do business as banks, and they have been stymied by the federal regulators. The Bitcoin mining thing is also turning to estates versus federal battle. I do think that that is one of the main battlefields here is the question of what rights to states have. And historically, states have had the right to charter new banking institutions. That's been a key right that's been reserved to the states.

I don't think the federal government has the right to trample on them and strip that from them. So I think that's a narrative that is powerful. I agree. Speaking of Wyoming, there is a state, Wyoming stable token was passed in March, which is pretty exciting. Maybe we'll get a Wyoming stable coin. I hope it has a little buffalo on it. Oh, man, that would be great. So I don't think we've talked about this actually on the podcast.

We've spent a ton of time talking about it individually. But basically this law, as I understand it, and correct me where I'm wrong, but Wyoming passed a law that allows the state to issue a stable coin. And the way that they would presumably do that would be that they're functionally running like a USDC competitor, right? So I don't think that I haven't seen any design considerations. I don't know how far along they are. But is there a world where Wyoming becomes one of the largest crypto startups here? I think it's possible.

I mean, the stable coin, as I understand, it would not be interest bearing. So the state would be accruiting all the revenue from the underlying securities, which if you look at interest rates, around 5%. And in return, holders of the stable coin would get to use one that is issued by a state, which I think has a pretty good credit worthiness overall.

Yeah. So I don't see why this wouldn't catch on. Plus, it would be cool to use a Wyoming state, like the state of Wyoming. stable coin. That would be awesome. I would use it. This law stipulates that this can exist as soon as July of this year. It might be a little bit later than that. There's a lot of technical stuff to figure out. But one of the coolest developments at the state level in some time. I mean, how cool would that be? So you'd have a Wyoming US dollar on chain. I think that would

be really popular. I mean, why wouldn't people use that over using, you know, say, and offshore unregulated state of one. And this is not them issuing a new currency because it is dollar denominated, the collateral is dollars. It's tokenized dollar. So they're not trying to create some new alternative currency here. It is just a tokenized dollar instrument.

I mean, and the whole reason it works is because you can't pay interest. So it's just a, you know, it's kind of like an arb. Yeah, it's not a. security. There's no interest being passed through. I think the SEC's arguments about BUSD being

a security were totally fallacious in the extreme. So I don't think there's any question as to whether a non-interest-bearing stable coin is a security or not. Certainly not. I don't see any legal issues here. I think the state of Wyoming is it liberty to issue a stable coin. Let's get it done. Yeah. What do we got to do? I mean, do they have like a custodian and how's that going to work? We got to figure out. We got to have someone from Wyoming come on the podcast. Well, they are invited to come on the show and to make the case. I like it.

We still haven't done our, remember we used to talk about going out there and doing a big conference? I've never been at the state of Wyoming. Oh, it's beautiful. I've been once. I heard that they have like a frontier day, like some kind of frontier festival, which I'm interested in seeing, like rodeos and such things. I'd love to go there. Yeah, I'd love to go to go to a rodeo.

We definitely have to get out there. It would have been nice to celebrate the launch of all these crypto banks, these speedies out there. But alas, it was not meant to be. It's not over, though. I mean, Wyoming did sign on to the custodia case. I did see that. Yeah, that's interesting. They're doubling down.

Yeah, it seems like the Wyoming. Wyoming has not been treated fairly here. In other news, Franklin Templeton continues to make strides. They previously announced an SMA project. product with Eaglebrook. Today it came out that they're launching another blockchain focused venture capital fund. So good to see another blockchain focused VC fund on the scene here. So some some reading recommendations. Maybe we can put these in the show notes. They'll be in our newsletter. But Joel Revel over at Two Ocean Trust, I thought he put out a very thoughtful piece,

revisiting the case for Bitcoin. So kind of looking at how Bitcoin stacks up in a diversified portfolio, looking at historical returns. Very data-driven analysis. So worth checking out that blog post on the Two Ocean website when you get a chance. Other good articles, Nick Newman over at CASA wrote an op-ed on self-custody, hands-off our self-custody. So talking about how important it is to maintain the ability to hold self-sovereign your Bitcoin and other crypto assets, well worth a read.

And then Arthur Hayes is the denominator, his latest blog post, which those are dense, man, but his takes on Macaro are very interesting. Every time he writes something, I read it. All right. So, all right, I have a bone to pick with this blog post, Matt, because... Arthur Hayes blog post, really? Yes. So Arthur Hayes opens his blogs with a colorful little anecdote most of the time.

And this one is, I don't actually understand the connection of the anecdote to the substance of the piece, which is about basically the Fed printing trillions of dollars, which I agree with. this one's about who pays for bottle service at the club and basically he developed with his friends a rule set for who pays and if you're a guy and you have a drink then you're in for the bottle you have to share in the cost of the bottle I know for a fact that Arthur doesn't follow that rule what because when I was out with Arthur

I paid for the bottle and what he didn't pay so to be clear this is not He's not always abiding by his own code here. That is some salacious news. That's wow. I agree. I was not expecting that anecdote to go in that direction. And he's substantially wealthier than me, I believe.

So, you know, that ain't right. And I'm not one to complain about this, but the anecdote was right there in the article. So, you know, had to say it. I think your first mistake is going to a club. I don't know. I don't get the appeal. I was for it was for business purposes networking okay that's uh well I mean it's still a good anecdote yeah well worth well worth to read it is a good uh it's good blog post all of his stuff is good

he's one of my favorite macro theorists at the moment along with uh Luke Roman of course who I think has been on the money lately I mean the thing in Arthur's blog post here is just like what's What's the reaction here? You're going to have the regional banks are still so screwed here if they don't cut rates. But if they cut rates, you're going to have inflation ripping. I don't really know what they can do. I guess you could have this bank term funding thing cover commercial real estate, but that just seems like a stretch.

And that's expansionary at the balance sheet level too. So it's like we haven't had a bank fail this week. So everyone's kind of taking a deep breath, but this thing is not over. It's not just the banks that are in trouble. It's the US government itself. I hate to say it. But as of this week, interest payment on the debt, it now exceeds military spending as a line item in the budget.

I believe 30% of our debt in the U.S. We brought down the term of the debt over the last couple of years to save money. Now 30% of the debt is due to be refinanced at these enormously exorbitant rates. You add in the fact that tax revenue is disappointing to the downside this year. that we have a likely recession coming, bank lending slowing down, less credit creation, possible recession ahead also has possible implications for tax receipts. The government won't be able to finance itself at these interest rate levels for long. Something has to break.

It's not going to be austerity. We're not going to slash entitlements. There's just only one exit valve, which is monetizing the debt. and printing dollars. And sometimes I feel crazy because it's like a relatively small set of people that believe this. But there is no other alternative

unless there's some kind of miracle of productivity and GDP growth just kicks off like crazy. But I don't think demographics point to that at all. Yeah, I don't see anything in the near to medium term that would have a huge productivity growth. But I mean, if this was a household,

this is the type of household that would be going through the trash and seeing if there are any aluminum cans that you can bring to the Redemption Center for five cents or trying to sell you know gold jewelry and things like that and it makes you wonder if there are things that the U.S. could do from that perspective. There's obviously a huge gold inventory. There's a lot of land. I don't think we'd want to necessarily do that. But yeah, it's you can't do anything other than devalue the dollar ultimately and just solve the denominator. Yeah, I mean, if this is a household, it'd be a household with two incomes where they're pulling in 150 grand a year. They own a Porsche SUV. They own an Audi.

They have 400 grand in student loan debt, 200 in credit card debt. The only difference is that the debt is denominated in their own token. And then so the easiest thing to do is to just print the money. I mean, it goes back to Brad Sherman's thing, and we can. I guess I'll put this in the newsletter, but Brad Sherman, the cranky congressman who hates crypto, made this kind of diatribe around how crypto people just invent their own money. And he said the U.S. government does too, but we're the U.S. government. It's like, that's true.

Yeah. But as Luke Roman says, quote, there's no military on earth that can beat the U.S. So that's true. We have all the aircraft carriers, et cetera. But compounding interest is undefeated all time against M. And we are spending more in interest than we're spending on aircraft carriers right now. All right. So I have an idea.

Okay. I think we should do an acquisition here. So when in doubt, when you're in the dire straits, just go buy something. So how about here are my two ideas. I just came up with these. Okay. Greenland and Siberia. And I think what we should do is strip mine them and put Bitcoin mines there.

don't you think we should just sell Alaska back to Russia at this point? I mean, if we would need to raise cash. I don't know. I've never been to Alaska. I still want to see it. You'll be able to visit when we sell it back. Not of Russia. No, I'm not going there.

You can still go to Russia, I think. No, I'm not doing that. I mean, there's a risk that you become a political prisoner. Yeah, I'm not doing that. No, I'm not trying to get rid of anything. I think we should get more stuff. But that we should make it more productive. Acquisitions are capital destructive.

We should just be divesting. I think we go low ball offer. I think we say, you know, it's an equity deal. It's not a cash deal. Here's my pitch. The future participation. I think we sell Guam. I don't even know where Guam is.

Guam's about to tip over anyway. Exactly. It's teetering on the edge. We don't need one. We sell Guam. Puerto Rico. I mean, we. We can get rid of Puerto Rico.

That's on the table. Everything's on the table. That's fine. Alaska, never been there. Don't even know if it's real. The Dakotas, you know? No, we're keeping the Dakotas. Those are great.

No. Things that are in the lower 48, off limits. We keep. Okay. The U.S. We could merge with Canada. Yeah. What about that?

No problem with that. I actually went to the Maple Leafs, Panthers, playoff game yesterday. I didn't know that. With a fever? Good Lord. I know. It was, yeah. I was feeling okay at the time, but probably not wise.

So game four, Panthers were up 3-0 at home. Panthers are the favorites to win the Leafs win. Oh, man. There were like three Leafs fans. Imagine coming from Toronto, flying all the way down. You're down three zero in the series. you still come thousands of miles to Florida to watch the game. And they won.

Yeah. Hockey fans are the best. I haven't watched any games since the Bruins got trounced. By the Panthers. That's exactly right. Yeah. Yeah. It's terrible.

So honestly, a lot of respect to those Canadians. I mean, who makes that trip? That's crazy. It'd be such a diehard fan to do that. Yeah. So those are the type of people we want. They're productive people. I, in principle, I support the merger.

all right so we're going to workshop this we've got acquired greenland acquire Siberia divest Alaska merge with Canada get rid of Puerto Rico and all these other what's the other one they're getting rid of Guam we don't we don't know we didn't even know we had that one but that's yeah let's get rid of it sometimes I forget we uh we still own a piece of Cuba we have Guantanamo Bay we could get do we someone wants that just make us an offer yeah make us not for stuff paying down. Did we just solve the debt ceiling? I mean, the debt ceiling is coming up.

I think it's within the next month. I think we could call Galaxy Digital. They've got a great banking team. We'd get them working on this. I can't follow the debt ceiling stuff. I know Biden did acknowledge the minting of the coin recently, which a certain portion of Finch went crazy for. Do you see this?

No, but I don't think that's going to happen. Biden did acknowledge the coin. So all measures are on the table here, clearly. All right, so we're at time. We will see you next week. Have a safe and healthy weekend.