On The Brink with Castle Island - Weekly Roundup 09/08/23 (The Bitcoin security budget, Visa onboards stables, 2 years of El Salvador law) (EP.449)

Episode Date: September 8, 2023

Matt and Nic are back with another week of news and deals. In this episode:  Ryan Salame pleads guilty Our thoughts on the latest turn of the Bitcoin security budget debate What are the prospects for fees to develop on Bitcoin long term? Is blockcspace a race to the bottom? Visa adds merchant settlement tools for USDC on Solana The significance of Visa's move toward merchant settlement with stablecoins CBOE files for spot Ether ETFs We reflect on El Salvador's Bitcoin law The FASB moves to fair value accounting for Bitcoin Greenpeace files a comment letter on the GlobalX Bitcoin trust Are the ESG tides turning for Bitcoin mining? Has El Salvador's Bitcoin project been a failure?  Sponsor notes:  Coin Metrics STATE OF THE NETWORK — Evaluating the Market Quality of DeFi collateral In Coin Metrics State of the Network Issue 223, we explore predominant collateral types in DeFi lending protocols and evaluate their liquidity & volatility characteristics to determine their desirability as collateral

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 concentrated 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 this episode is brought to you by Coin Metrics. And here is the Metrics Minute. In today's Metrics Minute, we're looking at collateral in Defy. Deposits on major defy lending protocols, AVEN, Compound, reached 20 billion at their peak in 2021. But have since fallen to 3.3 and 1.7 billion, respectively.

collateral on these lending protocols is primarily made up of stable coins and wrapped and staked tokens, which together account for 92% of total deposits. Dow tokens only make up 7.5 of deposits on these platforms. If you look at wrapped or staked assets like WBDC Weth or Steith, these are on chain native in primarily trade on decentralized exchanges. Currently, 70% of WBTC spot volume originates from decentralized exchanges. For more, on the risk profiles of defy collateral check out the coin metrics state of the network newsloader this week that's your metrics minute collateral types on defy i'd have to think at some point in the future there's going to be a huge real-world asset component to that i think you know holding a basket of

securities holding a reet that is represented on chain being able to get a loan against that immediately that just seems like a killer use case you know how staked eath became the main it kind of displaced regular old ETH in DFI use cases. I think that's going to happen. Stable coins are going to be displaced by yield bearing stables, tokenized treasuries, tokenized other financial assets. Because there's just such an opportunity cost in using stable coins. And it's not that much more complex to use something else.

And it's kind of like the use case there that's so obvious is just a quick margin loan. So why couldn't you just immobilize some of your, some of your assets if you want to take a quick, you know, quick buck in the form of stable coins. So, Matt, you're really up against it this week. You are sick. I am coming off pneumonia. Have you ever had pneumonia? No. I was at the end of last week when we were recording the podcast, I don't know if we talked about it, but I was not feeling well. I thought I might be getting COVID and I battled through it on Thursday. COVID tests were negative. And then I went into the office on Friday and by the time I got down sat at my desk I was just drenched in sweat so went home went to bed

woke up the next morning went to the doctor boom big time pneumonia is that something that healthy adults get uh it's something healthy adults that have uh two very young children that are constantly getting sick it's like living in a that'll do it that'll do it uh well you clutch it out you know We can't do Brink Nation without, I mean, what am I meant to just monologue for 40 minutes? You've done it before. You've done it before. But yeah, I made a recovery thanks to antibiotics. Got to sit down and watch some football.

Football season's back. Duke crushed Clemson. That was awesome. The Colorado game was great. I just found out about this whole situation, Coach Prime. Oh, unbelievable. That was one of the best football games I've ever watched, just sitting dying. on my couch watching Colorado against TCU, just all-time great game.

All right. So I went to school in the United Kingdom where we don't have a collegiate culture, sports. We don't have that. So I don't follow college football. So, okay, what I gather is Dionne Sanders, great athlete, he fired the whole team and then he put his children in instead. Is that kind of what? He's called Coach Prime for some reason. Not quite. Not quite, but there's something now called the transfer portal, which it makes it easier to switch schools. And it's becoming a huge thing. It's almost like free agency for college. And so you can turn over your roster very quickly.

And so he went in, he kind of told a bunch of people that they were not going to be playing much. And so they transferred. And then a ton of his old players. Is that a brand new? That's a new thing. That's a new thing. That's only been around for a couple years. And so now it's just a lot easier to transfer.

used to have to sit out a year if you wanted to transfer schools. And so that's what he's doing. He's a pro coach at the college level, basically. And his son is the quarterback, and his other son is a safety on the team, and they're both really good. How did he get the latitude to play God with this team like that? Just because he played baseball and football sometimes in the same week. He's a great motivator.

People want to play for him. I have to say nothing has ever made me want to watch college ball, but this has actually deeply intrigued me. There's a guy on that team that plays cornerback and wide receiver. He played almost every single snap of the game. It was unbelievable. So the NFL also starts today, I think, literally today. Today is the first game. Yeah.

Yeah. Pats against the Eagles on Sunday. So I, for some reason, I still play fantasy football, even though I don't. follow it anymore. And, uh, you know, here's my theory on auto drafting, Matt. I think you should always auto draft. So because of the efficient market hypothesis. Yeah, but you need to, if you're playing in a two quarterback league, you need to really set yourself up for success. Because if you auto draft on a two quarterback league, sometimes you don't get that second quarterback. Yes. So that's exactly what happened to me. And I have a poverty of quarterbacks and I'm in

trouble already and the season hasn't even started. You should have told me. I could have helped you on that. I've been mumbled. I got Josh Allen and Justin Fields. Yeah, no, I'm in huge trouble. No one wants to hear about our fantasy teams. That's true.

But I'm just saying I want to give comfort to all the auto drafters out there. I've had success historically auto drafting because markets are ultimately efficient. No, they're not. They're almost efficient. A lot of people think they can be active investors. No, you're not going to beat the S&B 500. You're not going to beat the draft, the generic draft rankings, okay? Markets are not efficient.

You know, sometimes you get in there, you do some diligence in the private markets. You realize that an exchange CEO is a total fraud. The thing is with Sam is we didn't know he was a fraud, but we did know that he was just like a very irritating and objectionable person. like that was very clear the veganism the donations the altruism

like everything about him was bad we didn't know the fraud part but we did know that he just sucked as a human being yeah that was enough it turns out that was right in that news we there's some more FTX crime family news this week

it just never ends over there all right should we roll it Music? What music are we doing for them? Is it Godfather? Yeah. Okay. All right. So it's Ryan Salem. He has pled guilty to two counts. Ryan Salem, of course, is the former CEO of FTX Digital Markets. He has, it looks like this just happened. So he has pled guilty to campaign finance. basically campaign, he broke all sorts of campaign finance laws.

So Sam gave him a bunch of FTX customer money, and he spent that on Republican causes while Sam was spending FTCS money on Democrat causes. And it also looks like he's been charged here with conspiring to operate an unlicensed money transmission business, which ties back to 2019 when I guess he was opening all sorts of business. bank accounts fraudulently on behalf of FTX in Alameda. So, yeah, I don't know. Not much else to add. It just continues.

It's a relief to see these names trickle in. I would say there's only two Lusons left. Is that fair to say? Well, so there's a big question here. So if you're going after Ryan Salem, one of these things is talking about opening an account for FTCS at a bank in California. where Al-Mita had an account and they were misrepresenting what they're going to do with it. And so that's a basis for a federal charge here for Ryan Salem.

There's another guy who has not been charged who bought a bank, bought Farmington Bank. Who could this be? What's happening to that guy? So that's hanging out there in the wind. From what I recall, he may have been named after a certain atmospheric phenomenon. on? A little bit different spelling, but he's also a big donor to George Santos, one Romnik Aurora. So really interested to hear what happens with that.

The other one is, of course, Sam Trucoco, which I don't know what's going on with that. But that guy ran Alameda. And it came out this week. They had some sort of a declaration that the boat, the yacht that he actually went off on, it was paid for with FTCS customer money. The name of the boat is too vulgar to be repeated on this show. This is a family-friendly show. This is a Boston guy too.

Sam Trujouca went to Roxbury Latin. Real disgrace to the city of Boston. There's a lot of Massachusetts in this whole situation. Yeah, right. Salem's from Massachusetts too. Western Mass, though. He's from Western Mass. Oh, like the Berkshires or something?

Yeah, that's like, honestly that. you get out there you might as that's like a different country out there well we uh we're making progress um do we know if the main trial is still slated for october is that still slated for october because sam has uh has a new laptop battery so they said uh he was arguing that he wasn't getting he didn't have access to a power cord so they just got him a new laptop battery so i'm glad that got taken care of I do not understand that part at all, but I'm glad he got his battery. He's got his laptop battery now.

So we had a podcast episode this week. You did one on proof of reserve. Yeah, with Lee Bratcher, Lee is crushing it out in Texas. He passed the world's first proof of reserve legislation, I think. I mean, there are regulators that have talked about PR, but Texas is the first place to really ask for it. specifically. Well, Canada might have been ahead of them, but, you know, this bill in Texas is really key. And by the way, it's come into effect. It's officially in effect. So if you're an MTL in Texas above their user asset threshold and you have crypto, you do need to do a proof

of a reserve. So how does one actually, can you do that on your own? How does that work? You can. Yeah, I think it's quarterly. And you send the out of station. into the banking regulator, I believe, and then once a year, I think you have to get a sign, you have to have an audit firm sign off on it. So it's kind of a hybrid structure. Anyway, it's very exciting. I think Lee is one of the most effective sort of state, well, he runs one of the most effective state industry associations with the Texas Blackchion Council. They have a conference in November, which is in Fort Worth, which I will be at. I don't know where that is. I've never been.

But apparently Fort Worth is mining Bitcoin, the city of Fort Worth. So they rewarded them by moving the conference there. That's pretty cool. Yeah. Well, we had an input request from a listener this week that I think we can satisfy. I'm putting you on the spot with this one. Okay. This is news to me. We had a listener of the pod, contact me, told him that I had pneumonia.

He had a bunch of good tips. So I feel like I owe him a favor here. But he said, look, the podcast. is getting a little bit repetitive with the bad news. So I said, I can't control the bad news. It's just sometimes a lot of FDX clean up. We just report the news. But he said, how about mixing in something a little bit educational?

There's a lot of stuff going on, and some of it's confusing on crypto Twitter. One of the things he was curious about was what's this whole brouhaha around the stability of Bitcoin after the Block Award? Oh, but that's so not fun. Yeah, but I feel like that might be a good thing to just explain the fud, because it's kind of good fud. Oh, well, yeah, we always said this was quality fud, right? Even years ago. This actually is a valid critique of Bitcoin in some circles. Undoubtedly.

Undoubtedly. Yeah. So the bitterners, their approach to the problem is to put their fingers in their ears and yell la la la la, la, la, as loud as possible. Well, let's just do an exposition of the problem first, maybe. All right. Well, obviously, Bitcoin consensus is powered by the issuance of new units of Bitcoin. Clearly that we all know it declines every four years by half.

And eventually we'll run out a new Bitcoin. So then at that point, in theory, there would be fees, which would compensate Bitcoin miners to keep the machines going on. And in theory, that's kind of an insurmountable amount of real world resources, energy, A6, data centers, etc. Such that, you know, you can have high assurances that Bitcoin consensus is still going to function as intended. Of course, the risk there is that the fees did not rise to create a sufficient security budget. Now, there's a big debate. people don't know what sufficiency constitutes, and I don't know either. But I do know that zero is an

insufficient amount. Okay. So if there is zero dollars of fees, then there will be very little mining. There might be some altruistic miners here or there. There just won't be very much. And so at that point, it will be relatively easy to commandeer the protocol and mess with it, thus causing the price to decline. And because there's a liquid derivatives market for Bitcoin, I think there's sufficient economic motive to try and interfere with it and a profit on the short side. So these attacks are not very hard to conceive of. And there have been deep reorgs for proofwork blockchains, namely BSV, has suffered significant ones. So I think it's a genuine concern.

Now, we don't know when it's going to strike. We don't know if fees are going to rise or not. But there's been a big debate on Bitcoin Twitter this week about it. I don't really have the answer, but I do think that we need to acknowledge that it is a real potential risk. I think it would be insane to be super focused on an investment and not acknowledge any of the risks. That would just be crazy. So one rebuttal to this fud would be the fee market will develop as a result of some of the layer two scaling that is happening on Bitcoin. So the Lightning Network will get more adopted that will drive more fees or something.

thing maybe like an ordinal's would continue to develop and you'd have more fees. What do you make of those arguments? Fees are a race of the bottom in terms of block space. So there's lots of L1s and whenever certain major L1s have high fees, then there's a spillover effect. People tend to look for alternative cheaper block space. So also fees are very cyclical. So they rise and they fall. So we had a big fee spike in 2017-18 in Bitcoin. big one in 21-22, a smaller one this year, you don't have sustained periods of high fees. So it wouldn't be very amenable to Bitcoin's long-term sustainability if you just had a fee spike and then the fees went away again, right?

That's not what you want. You know, if you have an army of mercenaries, you pay them for two months and you're like, all right, guys, go home for the next two years. maybe I'll see you again in a little bit. Like that's clearly not going to be very conducive to your protection, right? So we don't have evidence right now that the fees are rising to a stable, sustainable, high level or to any non-zero level, really. So I think, you know, at this point, the burden should be on the people that claim that the future is going to be different from the past in terms of the fees, because we just haven't seen fees rise. sufficiently to any meaningful level at all for any meaningful amount of time.

And what do you make of the argument that, hey, this is 10, 20 years away. Let's just worry about it then. Yeah, I mean, that's the thing about markets, though. They're anticipatory. Okay. So, you know, if we know that a hurricane is going to strike, you know, for sure, in two years, then you're not going to occupy your property, right? The value is going to fall.

in anticipation of that. If we know that, you know, let's say if you know that a corporate, some corporation you're an investor in has a massive sort of debt liability that's coming due in two years that it can't service, that you should that, you should express that, expect that to be expressed in the price today, right? So the markets price in the discounted future. So even if you may not think it's a worry in 20 years time, markets will anticipate it. I think. So, yeah, I don't know. I think you need to get ahead of these things,

as opposed to just being blissfully ignorant and hoping for the best. I hope he's not a strategy. I would love to see more products that just use the Bitcoin blockchain for arbitrary notarization and timestamping. You know, why wouldn't you want to have DocuSign with a feature where you can actually append to the Bitcoin blockchain as just a total immutable ledger, certain things that have. happened. So I signed this document. I took this photo. Yeah, and with the rise of AI, I think this is

actually going to start to be really important. I mean, I gave a talk about this at the MIT Expo in 2019. I don't know why nobody watched it, but, you know, the Bitcoin is who got really mad at me this week for weighing into the debate, as they tend to do. And I don't know, man, look, we've been talking about it for years. And my time, my solution, I proposed the time was to pursue the scaling model, to create more types of demand for Bitcoin Blockspace, which would potentially manifest in higher fees, and to pursue the insertion of other types of content to increase the data richness of Bitcoin Blockspace, which would also, in theory, drive usage and drive fees. That hasn't really happened. I think we should still do that.

But, you know, the thing is that we haven't seen any blockchain achieve sustained high fees. On Ethereum, it's also very variable. They have a totally different consensus mechanism, of course. But I think it's a very open question as to whether any single blockchain, where the Bitcoin or anything else, is able to do this. And I'm starting to think that actually, no, basically it's a race at the bottom. And block space is being considered pretty fungible across, different all ones, which wouldn't be good for the fee notion at all. Yeah. All right. Well, that was good.

That was education corner. Put you on the spot. Yeah, I mean, I thought you were going to have me share any kind of trivia, not just crypto. I was thinking of stuff already. Oh, you had trivia questions? Yeah, no, we didn't have to go that direction. But hopefully that addresses the, um, the critique that we don't educate enough. Yeah, there we go. Now back to the bad news. Well, actually, there's some good news this week. We had, um, well, we had some deals. Did you see deals? All right. So those deals. We'll, we'll start with those. So, um, Robin Hood has agreed to buy back a certain Sandbankman freed stake in the company for $605 million. Wow. Wow. All right. Well, glad that that happened. Now, who does the $605 million go to? I guess that's the question. Um, that should be to block

as far as I understand it, but he pledged that. I guess he bought it with customer money, though. Unclear. Unclear. Next one up is story protocol. This is a big deal. It's a company that is building a media-focused blockchain network. There is $54 million from Andreessen Horowitz, who led it, hashed Endeavor and Samsung Next all participated. But $54 million financing, that's a big one in this market. Yeah, that's huge. Next up we have Gen 2. There are securities to token startup, they raised 15 million from 0.72. Then we have brinefy. This is a decentralized exchange that uses zero knowledge cryptography. They raised 16.5 million from Pantera, elevation, starkware, good water, and others. Then you've got socket protocol across chain communication network.

They raised 5 million from framework and coinbase. Then we have Trident Digital, a digital asset lender. They raised 8 million from Newform, White Star, CMT, joint effects, and permit venture. And lastly, we have Duro Labs. They're focused on developing the Pith Network. They spun out of Jump Capital. Pretty exciting. Pretty exciting deal week. It's some interesting companies getting started here.

A lending firm, this is started by Anthony D. Martino, who used to be at Matrix Port and Coinbase. So congrats to them. Some interesting stuff happening. So on the deal front, there was what I think is the, sorry, news front. I think one of the biggest news items of the entire year happened this week, which is Visa's announcement. They're going to be settling transaction with merchant acquires World Pay and Nuvei using USDC on the Salon of blockchain.

So look, do I know what all this stuff means? Not really. A lot of people did ask us for more details on this. All I can say is my friends that actually understand this were pretty excited about it. I mean, ultimately, we're just talking about public blockchains as a ACH replacement in a lot of cases here. So it looks like Visa continues to make a big bet. In my mind, the biggest part of this announcement was just that in addition to Ethereum, they're now building this on top of Solana. Yeah.

So part of the race of the botan thesis there, I think, from what I understand, the default here is that there is some settlement risk in these transactions. There's some latency, some delay. if you're doing it with a stable coin, that's effectively real-time gross settlement. So you eliminate some of the settlement risk, presumably eliminate some of the cost for these acquirers. And of course, it lets you transact on a cross-border basis. So it does really evidence the superiority of stablecoins, assuming you can get kind of a full life cycle to occur within the stable coin context, which is already happening, actually. I mean, this is part of my presentation that I'll be giving in Singapore. you know, you're seeing real payments companies adopt stable coins very meaningfully in a way that

hasn't happened before. And people thought it would happen with payment tokens like Ripple or stellar. People thought it happened with Bitcoin. It basically didn't. But it is happening with stable coins. That's an undeniable fact. So I think, you know, focus on some of the names adopting stable coins. And that's where the kind of utility and adoption is going to come from here. It's kind of a crazy market because there are so many financial services firms that want to be in this stable coin game and cannot be because of regulatory considerations. So, you know, Visa is not a bank, for instance. They're not a broker dealer. So they're able to play in this field.

Circle has gone the state-by-state money transmission path. And so they're playing in this field. But we really do need that stable coin bill to get passed so that we can really have these things proliferate even more. Yeah, for now the benefit in the U.S. is favoring the non-bank firms, the PayPal's and the visas. The banks are unfortunately frozen out. And of course, then you're just seeing more activity abroad. So I don't think that's a good status quo for the U.S. It should change. But we have stasis in this country right now. I was thinking more about what you said last week around PayPal going through the New York Department of Financial Services, in that meaning that they can only launch this on Ethereum.

So they can't just spin up a new blockchain that they want to operate PayPal USD on, for instance. They can't do it on Tron. They can't do it on some of these L2s. I think that's a huge competitive disadvantage. You have Circle who's deliberately not gone that path, it seems. They've gone the state-by-state path and they're able to actually proliferate USDC on all sorts of other blockchains. That's a huge competitive advantage. Yes, but it comes to to the cost.

which is, in my opinion, this might be a little controversial. You don't have as good assurances in the case of bankruptcy or liquidation, which obviously we don't think is going to happen with Circle. But the fact that Circle is operating on the state-by-state MTL basis as opposed to Paxos operating with that New York trust charter, the trust charter, my opinion, is more sound from a property rights perspective. So I think they are just different tradeoffs there. Yeah. Well, I guess you just want to get a harmonization, really. You want everyone to be able to compete on the same playing field, but you don't want it to be that you can only just do these things on Ethereum. To me, that's a really bad outcome. Totally. So elsewhere in pretty interesting news, Sebo filed to launch Ethereum spot ETFs for ARC and Vanek. So these are the first spot ETH. ETPs. that have made an application. I think this is going to be really interesting here in the next couple of months here.

So you've got two sponsors here that want to go Ethereum spot ETFs. And I think they're going to use a lot of the language that was used in the case, the gray scale case, arguing that this is a similar asset to Bitcoin and that, you know, if you can get an Ethereum spot ETF, I'm assuming that you do here at some point, that you should be able to get an Ethereum one. I guess the big question here is just going to be around how the Ethereum spot market works relative to the Bitcoin spot market. So let's just assume for a second that the Bitcoin spot ETF gets approved.

It should get approved. It's crazy that it hasn't gotten approved. The Ethereum spot market actually is a lot different than Bitcoin because of defy. I would argue. There's just a lot more happening on places like Uniswap and other decentralized exchanges. That doesn't even exist in Bitcoin. So if you look at the total spot volume in just of like stable coins versus Ethereum, I would argue a lot of that is probably on these like defy platforms that you really can't get a surveillance sharing agreement with. So I don't know how the SSU will think about that.

Also, I haven't read the applications, but do you know if they are going to be staking the ether inside the ETP or is it just going to be kind of raw ether? I don't know, but that would be interesting, right? So then you'd have a commodity with a derivative. Yeah, in the same package. That's an interesting question. Yeah, I mean, it's already a security at that point, if it's an ETP. So I suppose it could entail some positive carry. So I guess this will get delayed and they'll have 240 days of total delays or whatever it is.

but the Bitcoin spot thing will happen sooner. Grayscale wrote a letter to the SEC, basically asking for clarity on, okay, we won this case, now what happens? The thing to watch in that one is just, will the SEC appeal, I suppose? Yeah, and it's really not long until we actually hear from them on that, right?

I think maybe within about a month from now, we'll know what their next step is. I think that's right. So in other SEC news, this is always at SEC news, but I was doing a little bit of sleuthing here, as I am prone to do. And there was a comment letter that came in on the GlobalX Bitcoin ETF, the GlobalX Bitcoin Trust, which has been filed on the Sibo Exchange, Sibo BZX, it's one of the Bitcoin ETF proposals. And this is a negative comment letter, someone who does not want this.

it's from Greenpeace. It basically argues that Bitcoin is wasteful to the environment and that the SEC should not approve the Bitcoin ETF on ESG grounds. But I don't think that this applied to any of the other. I didn't see it at least for like the fidelity, the BlackRock ETF proposal. It seems like they're just going after Global Acts, which you ask me that's a little bit tough. But one of your pieces was referenced in this letter, actually.

Yeah, this is actually the fun. thing of all time. So they, first of all, they mischaracterized the way Bitcoin mining works. That's to be expected. They had a line where they said Bitcoin miners have requested 42 gigawatts worth of electricity in Texas, which is totally not at all realistic at all. it's kind of the way it works is people make these speculative applications for interconnection. They kind of spam the system with these applications and there's lots of duplication. So for context, the Texas grid is like 80 gigawatts at peak. So no, it's not the case that there's going to be 42 gigawatts, aka half of the Texas grid

is going to be Bitcoin mining. It's like one to two gigawatts right now in Texas, by the way. That's the amount of Bitcoin. mining. So that part's wrong. Also, Bitcoin miners are going offline in Texas right now because the grid is under strain. So that's actually a great thing, right? It's kind of a capacitor, battery of sorts. It's cheaper overall to have a Bitcoin miner that's willing to curtail their usage as opposed to paying a pigger plant to turn on generation when there's a time of stress. So I'd say it's pretty benign in Texas at least.

But yeah, they did have this funny line. They said, quote, an industry-sponsored paper projected that under certain price assumptions, energy consumption for Bitcoin could sift-touple in just six years. Now, as the co-author of that, and they cited my paper, as the co-author of that paper, Bitcoin Net Zero, which I think aged really well, actually, I can tell you that that assumption holds in the case that Bitcoin goes to, I think that's $500,000 or a million dollars. So that's the price assumption. That's what Greenpeace is calling their shot.

They think Bitcoin's going to be $500,000. It always cracks me up because the environmentalists that worry about Bitcoin's energy consumption are implicitly saying that they're massive bowls. Like they think Bitcoin is going to eclipse the value of all gold, which to them, I say, more power to you, buddy. You're more bullish than I am. Okay? So I'm, look, I support their price target for Bitcoin.

Yeah, let's do it. Let's go to a million dollars. I didn't realize they were so bullish, but poor Global X, huh? Just a total ricochet shot. You wake up one morning. You've got one of eight Bitcoin ETF proposals, and you got Greenpeace knocking on your door saying, look, your bitcoins are way dirtier than BlackRock.

Bitcoins and Fidelity's Bitcoins. Tough. Yeah, let's see. Is there anything else that's stupid in here? Yeah, I mean, there is. We're not going to go through it because it's basically every other talking point. They talk about resurrecting fossil fuel plants. That's not really something that actually happened. They're referring to the greenage installation or to stronghold mining. In both cases, is they're always misrepresented by environmentalists. I refer you to the episodes that we did with both Greenwich and Stronghold in the past. But yeah, I didn't think we need to spend too much time on this. Frankly, I think that the ESG tides are turning on Bitcoin mining as we get more data on, well, first of all, the energy consumption for Bitcoin has not skyrocketed lately

because of the price action. Second of all, miners are becoming better about being clear about their energy uses and using renewables. And third of all, miners are becoming good about doing this curtailment, turning off when the grid needs them too. And so all those things combined to mean the Bitcoin mining is fairly benign presence on the grid. So at least I'm seeing the pressure abate a little bit on the ESG side. Yeah, I'm certainly seeing that as well. In other kind of wonky news this week, so this FASB rule is now official. Did you see this?

Yes, though this is kind of a rare good thing to happen in the accounting world. Typically accounting rules are weaponized against the crypto industry. FASB came to their census here and actually did something good. I was trying to explain this to someone this week. And the way to think about this is that the new rule says that you get to hold Bitcoin at the price that Bitcoin is worth currently. So it's very common sense. But the old rule was difficult.

So let's say that you bought Bitcoin, your micro strategy, let's say you bought Bitcoin at 50,000, and it goes down to 30. And you'd really be in a position where you could never kind of market backup. So you'd hit 30, but then it goes back up to 40. You'd be keeping it at 30. So you'd be recording an impairment. It really just didn't make sense. So right now it just says market at what it's worth.

Yeah. It's absolutely insane that Bitcoin was considered what, indefinite intangible or something like that, like the same way you would treat Goodwill on your balance sheet, which doesn't make sense because Bitcoin is a highly marketable liquid commodity that has a price attached to it 24-7, unlike a lot of other kind of securities. It's the most priced commodity that exists. It trades in every market globally. So there's no argument whatsoever that you would not be able to fairly price it. So yeah, FASB basically, came around to what should have been an incredibly obvious take on the thing.

Now, what I don't want to see here is a bunch of publicly traded companies that own Bitcoin marking to the coin market cap price because that's a joke. So I've been on this and this is almost an advertisement for coin metrics, but you really need to mark to a compliant reference rate. So you can't be coin market cap. You mark to a bunch of inputs there that are unregulated offshore venues that have a ton of wash trading. They misreport their stats.

You can't do that. That is true. You're going to need to be in a position where if you hold this stuff, you need to buy a reference rate from someone like a coin metrics and you need to just market at what it's worth. And you have to have the inputs to that reference rate be regulated exchanges like Coinbase and not have these offshore bucket shops be feeding into that. So I will be on the watch for publicly traded companies that are marking to CZ's reference rate.

That's a joke. No coin market gap, guys. Okay, so today is the two-year anniversary of something pretty funny that happened in the past. Do you know what it is? No. It is the two-year anniversary of El Salvador passing their Bitcoin law. Oh. If you recall, September 7th, 2021.

And not to pump my own bags for anything, but somehow I interviewed Bokele on Twitter. Oh, that was two years ago. That feels like it was five years ago. That was during the height of COVID, no? Yeah, it was. And I just did a Twitter space to talk about the law, which was being debated in Salvador in Parliament at like midnight, for some reason.

I don't know why I was so late. And basically Bikale's brother showed up on the Twitter space. We were asking him questions. And Bikale himself showed up and I think it was like two hours back and forth. What a crazy night that was. I remember that. That was insane. That's before the rampant human rights.

its violations, which to be clear, I did not know that they were going to do that. Some people have implied that I'm in cahoots with that's the only time I've talked to Bikale, to be clear. And I didn't expect it to happen. I didn't know he'd be showing up on the Twitter space. So yeah, less in there, you know, never endorse, you know, a head of state who might turn out to engage in sweeping human rights violations. I don't recommend it. Is he popular down there? Incredibly. Yeah, I mean, to his credit, you know, the crime in El Salvador is more like a low-level

insurgency. It was like they'd actually lost control over parts of the country to cartels. So you could say that it was justified to incarcerate such a large percentage of the country's population, but obviously you're going to get false positives in that, too. But he's actually very popular, even in other parts of Central America, too. A lot of people want their heads of state to pull a bouquet now. Well, I know you have a couple tricks up your sleeve over the next couple of months with heads of state who we've been in touch with, who actually somehow, somehow listened to this podcast, which is crazy. That's true. We had heads plural. But yeah, so we'll see what we can do. Hopefully, I don't make the same mistake again.

Well, you know, you just got to be careful in picking your dictators. I know. So, you know, the funny thing is two years on, I think we can say that the adoption of Bitcoin in El Salvador was not a success. I think that's, I think we can be honest. I think it was cool that they did it. But there's clearly not meaningful usage. I mean, why would you transact in Bitcoin? That doesn't make sense anyway.

and the price of Bitcoin is actually down 27% over the period. So I think they've lost money on their purchases. Look, it might still work out in the long term. But for now, I think we can say it has not been a success. I think we're allowed to save that. Maybe he should have had an eye towards what the U.S. was going to do from an interest rate policy that would have impacted your view on Bitcoin, I think. But the other thing is, of course, just FTCs.

So it would have been hard to predict FTCX. Yeah, look, we didn't know. It was a bold experiment. And I think it was cool and exciting. And it clearly brought a lot of attention to El Salvador. I mean, Buccaille is probably one of the best known heads of state in Latin America, period. But, yeah, I mean, the Chivo app, I don't think it has that much traction. All right.

So I had a new idea for a new second. that I was thinking we could do. We test this out, see if the listeners like it or not. It's going to be, it's going to be called. We already have the metrics minutes. I don't know what we're going to call this one, but the question is, um, guess the total volume that traded on Prometheum this week. Okay.

All right. That's, I don't know. So I'm going to let you, I'm going to let you guess just total volume. I'm counting everything like every digital asset security, every token that is on that platform. Just guess, guess the total aggregate volume. And so you have to give me a hint though, which, what are the tokens in question here? Well, they can do anything. I mean, they can do, they can do, any token.

Any token. Like, so I'm just going to look at zero. Is it greater than zero? I'm going to look at some of it. Just to give you a sense, so trading volume in the last 24 hours on Binance for, uh, four billion dollars in change. Coinbase, okay. A little bit under a billion.

So, you know, Prometium, keep in mind before you guess on this one. This is the only SEC sanctioned venue. This is a seal of approval from Gensler. Yeah, this is Gary Gensler's favorite. They're the only ones with the stamp. Okay, in the last week, I'm going to say $100,000 worth of transaction. No, close. It's zero, actually.

Oh, it's zero. Okay. Yeah, that's zero. That was my second guess. But maybe next week, next week. I mean, they're probably going to be. knocking on Cracken's door next week. Crackin's in the three position, but I'm sure they'll get there pretty soon.

Permetium is probably listening to this podcast. They're probably going to do a spite trade now, just to mess with us. Just do a trade. Which actually might be funnier. If it's $10 next week, that would maybe even be more entertaining. I mean, honestly, the OpenX Exchange does like orders of magnitude more volume than permithium at this point. So really just get it going, guys.

Yeah, we'll keep watching the numbers any day now. Let's keep an eye on that. All right, I think that's it. Any other news this week? Well, no, I think that's it. We have some great guests. We have some great episodes lined up. If I can get around to editing the episode,

we have Peter Johnson on stable coins. Oh, nice. Yeah, he did Pomp. Mr. Stabrocoin. That's a good. Stablecoin, they call him. I listened to him on Pomp. I thought that was good.

Oh, I see. Okay. So Pomp front ran us on that one. But that was a great episode. You know, me and Peter, we just love stablecoins so much. Just you love the U.S. dollar. It's very patriotic of both of you. Yeah.

There's somebody to be said for it. That's what people want. That's the blockchains are all about dollars. Okay. It took us 14 years to figure it out, but that's what they're for. Therefore, settling dollar transactions. All right. Well, I need to go fix my block clock.

Alex Thorne taught me how to do it. So I'm going to go do it. I think you just unplug it and plug it back in. No, I tried that like a ton of times. There's something like you have to enter 10.2. A bunch of stuff. I don't know. He sent me in the direction.

That's true. All right, everyone, have a safe and healthy weekend and we will see you on Monday.