TFTC: A Bitcoin Podcast - #376: The Texas Hedge with Parker Lewis

Episode Date: November 19, 2022

Join Marty as he sits down with Parker Lewis to discuss the fallout of the FTX collapse. Follow Parker on Twitter Parker's article Shoutout to our sponsors: Unchained Capital Braiins HodlHodl Upstream Data TFTC Merch is Available: Shop Now Join the TFTC Movement: Main YT Channel Clips YT Channel Website Twitter Instagram Follow Marty Bent: Twitter Newsletter Podcast

so freaks it's your boy marty here to introduce this rip of tftc i think you guys are gonna like it was brought to you by good friends at unchained capital man is unchained capital looking good this week not your keys not your coins unchained has built their business around the core tenant of allowing their users to hold their own keys and interact with their platform. Their value prop is being acutely highlighted right now as we have centralized exchanges going down. Obviously, FTX went under.

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you've had a dynamic where money's become freer than free when you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean that's part of the bull case for bitcoin if you're not paying attention you probably should be i'm fucking tired hell of a week hell of a week hell of the last two weeks that's true two weeks contagion and bitcoin uh the pacific bitcoin conference i heard that was really good i'm pretty bummed i missed it yeah it really was uh the the guys at swan did a great job good vibes

heart of bitcoin crashing and you wouldn't know it if you were at a bitcoin conference yeah what was it like being there while the ftx news was breaking and they were going insolvent right in front of everybody's eyes i mean based on the vibes you wouldn't know anything was happening um there were some people who brought it up on stage in terms of discussing it, but, um, it really was a Bitcoin conference. And I think that one of the best things about Bitcoin is that, um, you know, I think one of the things that Saylor talked about when he was there is the need to increasingly differentiate. And I think that, um, uh, that's probably one of the hardest things for people on the outside looking in to understand is like, what is different about

Bitcoin? Why can't Bitcoin be copied? Why, if you could make a copy of a Bitcoin, it's not inflationary um but but that increasingly that discussion of why is bitcoin different will come to the forefront and um you know when i think about the differentiating thing about bitcoin is when you're around a bunch of bitcoiners whether there's people building in the community or just people that actually see bitcoin for what it is that um what is different about it is that when the market's collapsing but bitcoiners are born of the volatility they're they're used to it and and that was the vibe at the conference it was focused on what matters um and what matters is infrastructure education content uh distribution of ideas and

and that's what a lot of what last week was about yeah i totally agree that's what my focus this week has been getting invited on other shows to talk about ftx is to try to draw draw that clear distinction we've got bitcoin and then everything else is noise yeah one of my biggest um one of the things i hate to see is when people say 99 of everything else you know it used to be 95 yeah and now it's 99 it's like uh you know it's bitcoin and 99 of everything else gonna fail but that one percent and that's the kind of mantra of silicon valley old school old world fiat money thinking um and in the reality it is 100 of everything else not 99 not 99.1 100 of everything else you're just a toxic maxi pad um no toxic i hate the term maxi by the way but i'll use it i

do as well i mean that was yeah don't project i was i was mocking these people um but but yeah i I think that the reality is that no Bitcoiner was telling people to put their money on FTX. Not only just not to gamble it, but for the risk of having firms like that taking leverage and realistically creating casinos with unregistered securities, no Bitcoiner was doing that. So somebody was, and they weren't Bitcoiners. No, and they obviously didn't listen to our last episode. Which were recorded right after Celsius. Or any episode.

Yes. Or if they did listen to it, maybe the benefit is that they have to touch the hot stove to learn that I wasn't around Bitcoin when Mt. Gox happened. But I think that knowledge distribution is the most important thing for Bitcoin adoption. Some of that is writing books and essays. Some of the knowledge distribution is time in the market and experiencing pain and that while we would hope to be able to eliminate some people's pain that they have to feel that have fewer people touch the hot stove by communicating ideas, understanding why Bitcoin is different from a fundamental perspective. but if you lose 150,000 Bitcoin at Celsius or however much was deposited in FTX or BlockFi and not say that everything's 100% lost

but right now people can't get their funds. I mean, with FTX, it's 100% lost. They have zero Bitcoin. Oh, okay. Literally zero. How much was deposited? I mean, there were claims of over 70,000 Bitcoin. That's unbelievable.

Isn't it? That's the thing about both three arrows and FTX, which doesn't add up, which is like, how did they lose all the money? You know, like- I want to know, Parker, where did all that money go? Where'd it go? How are you that bad at trading?

You know? Well, this is something- Because like they try to claim leverage, but it's like, show us the trades, you know? And that's what the restructuring attorneys that get in there are going to have to do. Well, that's why I want to bring this up with you, particularly because your history of your career like at hayman specifically like part of your

strategy at hayman was trying to identify fraudulent businesses and shorting their stock and making the market aware of the fraud like how does a fraud of this magnitude happen realistically a fraud of this magnitude and i guess it's not say only um but it was certainly certainly aided by the fact that there was free money slushing around and that, you know, kind of like on this one, it kind of feels like the, um, what was the woman's name? Uh, Holmes, Elizabeth, Elizabeth Holmes, where, um, yeah, there's ranges of conspiracy theories, but I would just say that people had FOMO. There was free money and FOMO and that Silicon Valley wanted to get rich. And that that allowed for in the context of a private company

with very little oversight. I mean, the crazy thing about FTX is, again, everyone go independently verify, but the fact that they reportedly did not have a board and the likes of Tiger Global, I believe, and Sequoia, Tomo Bravo, Paul Tudor Jones, that they were just throwing money, like that was either FOMO or,

and I would believe it probably was that they thought that it was going to be a 10X or 100X or this boy genius, but they failed to use common sense. Yeah. I mean. But where's the money still? Where's the money? Marty Jones is going crazy inside right now.

Like, where the fuck is the money? Same with Three Arrows Capital. These people didn't even have a bank account until earlier this year. Like, show me the trade statements of them losing all the money. They didn't even have a bank account until earlier this year. Like, how do you invest hundreds of millions of dollars and not, like, diligence? Like, hey, show me your bank record.

In an offshore exchange. How were they able to buy Ledger X? That's a smoking gun to me too. Ledger X is CFTC regulated clearinghouse. The only one, right? Yes. I think it's DCM. It's either DCO or DCM.

DCMG? No, no, in terms of the regulatory licensing. I'm not sure. But I believe it is the only one. So yeah, it's like how were they approved as a purchaser? as an acquirer of that CFTC regulator. So much for regulators. And they will use this to clamp down on regulation, but...

This proves that the regulators... You brought up kind of the work that I used to do. And in this case, and I think there's just like so... It's like in one case, there's an obvious fraud or what appears to be a fraud, right? Like where'd the money go? Like how did so many people miss this? I think most realistically, some people really missed it

and they had FOMO and they were throwing hundreds of millions of dollars thinking that there was going to be a company worth a hundred billion dollars. Um, as ridiculous as it sounds and as, um, reckless and based on the reputation of the people that threw that money, um, it defies belief in many ways. But, but then you have, you have that happening. You have these, you know, grifter short sellers talking about Silvergate. Um, you know, what, what, what I did was I stumbled upon an actual fraud, um, spent two years working on it, combing over, um, thousands of pages, hundreds of financial statements and figuring out that a public company was saying things inconsistent with what was actually

happening. And in that case, and again, it's, it's also to make an example in that case that went on for seven years. And then eventually the executives were charged by the DOJ and convicted. That took seven years. And so like when people are talking about regulation, this regulation, that it's like, ultimately they come and clean up messes. And they, they really aren't there to prevent or uh if they are too often things go go wrong and so when i think about um what might come down um from this it's just an excuse and like to your point the purchase of ledger x a regulated um clearinghouse clearinghouse that like there was a regulator that approved that purchase

right and if all these things were going on in the last 12 months like they didn't even have a bank account when they made this purchase yeah like so the regulators are going to save what you know and and that's ultimately why bitcoin being permissionless censorship resistant permissionless innovation and um that that that will ultimately be what wins um regardless of however or whatever happens from a regulatory perspective. Yes. Are there any silver linings from all this? I think that the silver lining is that

when people go out and educate about Bitcoin and the fundamentals, that is very important work. I've personally found my own writing to be valuable to myself and distill my own thoughts, but have met a lot of people who've benefited from that. The silver lining in this is that more people will understand Bitcoin because of some real world experience rather than some deep fundamental thought.

And both are valuable, but people losing billions of dollars worth of Bitcoin will tell them, I need to do something different next time. I need to combination of ensure that the people that I'm trusting are trustworthy. What are the signals if they're not? or how do i eliminate trust um because you can do that in bitcoin um and it will also

help expose to the world that there is something different about bitcoin um and so those are two different silver linings um the people that were in the market that got burned um it's not to say certain of them won't make the same mistake again like there are gamblers in the world and there are people who make mistake after mistake, but a lot of people woke up because they, because they got burned. And others who are observing it from the outside, it's becoming harder and harder to come away with a conclusion that there isn't something different about Bitcoin. So that is a market signal in itself. Yeah. But there's one thing you said there, a bunch of people lost their Bitcoin. They never had it in the first place.

Well, for the people who bought it on the exchange, they never had it. Yes. But the people who deposited Bitcoin, they had Bitcoin at some point in time. And they deposited in that exchange. And now the reality is somebody else has that Bitcoin. And it's either still the people at Alameda or they sold it and the market absorbed it. And an important part of this is the thing that makes Bitcoin work. There's a lot of things that obviously make Bitcoin work,

but one of the fundamentals is that it eliminates moral hazard. It is the freest of markets. There is trial and error. You do stupid things, you win stupid prizes, but the people that bear the brunt of that are the people who take misguided risk. Yes. And individually, these people are learning lessons. Not your keys, not your coins.

Don't gamble with your Bitcoin. But collectively, as a market, the market's learning a lesson. This is what a system with no lender of last resort looks like. Yeah. Yeah. One of the jokes about the Federal Reserve System is the price stability mandate. And the saying in Bitcoin of one Bitcoin equals one Bitcoin.

It's like if you figured that one out, you figured something out about Bitcoin, that Bitcoin, because you cannot manipulate the supply of Bitcoin, you cannot manipulate its price. And what that results in is short-term volatility in the interest of long-term stability. The imbalance is immediately being eliminated and we move forward. The herd gets culled. The trial and errors get resolved. and the market finds an equilibrium. In the Fed system and the dollar system, price stability,

it basically rejects short-term volatility, short-term price discovery at the risk of long-term volatility. And so in this world, anyone who's adopting Bitcoin at this stage, which remains very early, has to tolerate all the noise and all the volatility,

but that is the market working. That is a market eliminating moral hazard. Everyone is responsible for themselves. And when you have a market like that, you have a market that has to learn. Otherwise, the consequences are devastating. Yes. That's one thing I worry going back to the lesson

that this is what a system with no lender of last resort looks like. Are people going to point at that and be like, this is why we need the Fed? How do we get out front and say, no, I mean, these are hard lessons that need to be learned. This is not why we need the Fed. This is why we need to construct these financial products and services in a way that ensures that you know that Bitcoin is not being lent out X amount of times behind your back. Well, what I would say is on one account, first, the dollar is wrecking more people and its volatility is wrecking more people.

Globally. Globally, then, Bitcoin could in its totality today or that FTX ever could because FTX is, in the grand scheme, a small blip in Bitcoin's history. And that on a $25 trillion economy, 10% inflation, because that is the volatility, equates to $2.5 trillion. Bitcoin today, roughly $300 billion. It's a nascent store of value. It's both material, but at the same time, still small in the grand scheme of things. But if you think about what 10% inflation means on a $25 trillion system, that is wreaking havoc.

It's destroying people. It's destroying people from an economic calculation perspective. It's literally bleeding a large share of the population out, like suffocating them. So when people talk about Bitcoin's volatility, I point back to the dollar's volatility. The dollar's volatility is financial markets crashing, the credit market's collapsing, the printing of money, the 10% inflation. But then your question about the lender of last resort,

the biggest joke about that is there's nothing about Bitcoin that prevents a lender of last resort. Because if you want a lender of last resort, you will just have to capitalize it. And if you want a lender of last resort and you need to capitalize it with Bitcoin, with a fixed supply, and you're a system of government, then that requires you to tax people. So there's nothing wrong with quote rainy day funds. Now, there's probably a reality that the further that you get away from the people living in an economy,

like a town to a state to a nation, that if you're shipping your money off to a lender of last resort in a far off land, that they're not going to be using that money in a way that directly impacts your life. But that's what a lender of last resort functioning as a rainy day fund. Now that just, you know, an individual has a rainy day fund, a family does, a local community does, township, city, et cetera. But more to the point, if we think about the fundamental, if you want a central bank that is a lender of last resort, fund it with Bitcoin. It's just that you won't be able to get free capital anymore. So that idea, like what would we do without the fed? It's a, it's a misnomer, which is we would just live in a world where you can't print money. Where does the money

come from? You know? Um, so I think when you, when you get beneath the surface of that question of like, what if there isn't a lender of last resort, it's just a matter of, are you actually going to fund that lender of last resort? Or are you going to give it the superpower to print money and live in a world where while we all grew up knowing that money doesn't grow on trees at a system level saying, oh, maybe that actually can happen. And that it's just reserved to 12 people that sit around a table and then get to allocate it how they want. So I think that at the end of the day, central banks will be rejected because people do not like taxes. And that when we're on a Bitcoin standard. There will be rainy day funds, but they will be tied to local communities,

insurance, things like that. Bitcoin mining permanent funds. Yeah. I don't know if that is a rainy day fund, but... Yeah, you roll it up into a permanent fund. You use the permanent fund as a rainy day fund. Yeah. As well as other activities you may need. Do you think this is an inflection point in the way that people interact with Bitcoin when they're interacting with a counterparty, a trusted third party? Is this proving Unchained's model?

I think that we generally over-index to the here and now. It is possible, but I wouldn't claim victory just yet. You think the next step is like, oh, we're going to do proof of reserves. Um, I don't, I, I, I honestly believe proof of reserves is, it's not to say it's nonsensical, um, like a fully reserved bank. And if you could prove it, but you're still, you know, when you're depending on trust. And one of the points that peers brought up,

of course, last week is you can't prove that you don't have liabilities. And that is what has caused, uh, the greatest consequence of everything that we've seen here. So if you have 10 billion of assets, but you have 20 billion of liabilities, you might be able to prove that you have 10 billion of assets. You can't prove that you don't have a liability. And that's all dependent on trust. And so I do think, I mean, like, I always just think directionally. It's like, I don't know if it's a critical tipping point, but there are a shit ton of people that learned a very hard lesson. um but i think that if you went back to mount gox again i was not there but i was there but if you were there you'd be like people won't do this shit again yeah you know people people will learn and then and it's remarkable how many scams these people can come up with in narratives that then you're like holy shit like we forgot about celsius you know like that was five months ago i'm not saying we forgot about it but like it feels so far in the past and that when that

happened, there were a lot of people that saw that and left their money on BlockFi, you know? And so, um, what the people that were there will learn, and then there will be another cohort and, and hopefully fewer of them will make the same mistakes as more and more people build up a critical mass of figuring out this constant struggle between trusting a custodian, holding, holding their own keys, where the more people have been in the market, the more they realize that That is the only way to create certainty. Yeah. Yeah, people forgot five months ago.

Yeah. Like Three Arrows is probably dancing somewhere like, you know, about FTX. Oh, Kyle Davies was on CNBC yesterday. Like how do you bring that guy on CNBC? That's a joke. I mean, they're trying to run with the narrative that Alameda used their visibility into FTX's trading book

to target them and their positions. That's what they're, and that's why they blew up. But it's become very obvious that they were taking out on securitized loans. Well, but it's also like, well, where did three hours capital money go?

I'd be like, show me the trades. Show me where you lost money. And that's what a restructuring attorney is going to have to do. Yeah. Because they could have claimed that they lost money and just sent Bitcoin to the Bitcoin version of the Cayman Islands, right? Yeah.

But the fact that he, that guy is on CNBC talking, it's like, that's like, what's the guy from Wolf of Wall Street? Jordan Belfort. It's like Jordan Belfort, like being an authority on anything. Well, apparently he's a crypto authority now. Yeah, right. I know, like that's the thing. And that's also just an aside.

when you cut cable and then you go back and watch like when i go to a hotel like last week when i was at the bitcoin conference um or pacific bitcoin i when i'm in the hotel i turn on cnbc in the morning uh and it's like you can clearly see these are just actors oh yeah you know i've been tuning in all week like it's like when you remove yourself from the financial news and then come back while they're like oh these are like two-bit actors talking about you know just a different subject line and the fact that um the guy from three rows capital who lost tens of billions of dollars five billion whatever it was gets put on a soapbox like that's fucking crazy yeah drunk jim cramer just screaming about random stuff and that's the other thing they were

all pumping FTX. Yeah. He's definitely an actor. Like, like just an actor. Yeah. That guy. So are we being vindicated right now? Should we be dancing on graves? We should be. I mean, I think that we should use the opportunities to educate about helping people not make the mistakes and i particularly feel i'm not particularly i think it's always important to not dance on the people's graves who lost their money you know like they made a mistake and there's a lot of noise out there and there's a lot of culpability in terms of creating that noise combination of selling false promises mark you know um the whole solana bullshit it um i fucking even hate saying any cryptocurrency word but like there's a lot of people rolling

around in really expensive cars living in multi-million dollar lake houses right here in the city that um that have dumped just absolute not just garbage but like scams on uh like telling a story having a program around telling a story and and so i think it's important to recognize that the people who lost money, like it's very easy, like it's very difficult to understand or very easy to understand why people get caught up in it.

And it's also very difficult to understand why Bitcoin is different. Yeah. You know, and given the state of where many people are with their finances, the promise of potentially being able to put money in a casino slot and get a return, um, is often too great to want to know why you're destined for misery. Um,

and so I, I do think we should be dancing on the graves. We should be dancing on the graves of the FTXs of the world, uh, the Alamedas of the world, the, um, the people who run altcoin scams. Um, there was the thread by, um, Corey, uh, from Swan, um, who organized the conference last week, Pacific Bitcoin. But, um, he was out basically saying like, I was focused on three arrows and then FTX and Alameda, and now it's, uh, A16Z. The worst of the worst. You know, and, and that, those are the people whose graves we should be dancing on. Um, but they're shapeshifters and We'll find a new way to sell a narrative to a pension fund and extract fees. But also, like, there's a human element of it,

and there's a lot of people that lost money that they couldn't afford to lose. And so much of the noise that's created in this space has been created by people who have a shit ton of money. Yeah. And those are functionally sociopaths. Definitely. No, you're talking about, like, going to raise from pension funds. I just think, obviously, you're an advisor at 1031.

From the 1031 perspective, I mean, that's what we've been pitching. It's like, hey, it's crazy that all these crypto funds have billions of dollars in the U.M. There's a pittance dedicated to Bitcoin-only infrastructure. Yeah, we saw how difficult it was. I mean, like 1031, again, the companies need to perform. But in terms of the fundraise, it was incredibly successful. And it was incredibly difficult.

that the work that, um, Grant and Jonathan, you, Matt, Michael did, um, was a huge step forward for Bitcoin. But when you see, and you understand the amount of work that goes in to raising that amount of capital for 30 to 40 Bitcoin companies and what it can do. And then you see like the, I don't know what, I think I saw like Han investments did like a $2.5 billion fund or, um, a 16 does something similar. It's like, these people are lighting money on fire, like Coinbase investing in NFT bullshit, lit billions of dollars on fire, probably at least a billion. Um, the investments in the block by the investments into, uh, FTX that you can literally set money on fire. Um, if you are building in a categorically wrong plane, um, and that if just a

small amount of that capital started shifting to Bitcoin, um, that it would have a massive outsized impact and wealth creation as a function of it. Um, and hopefully more people learn about that. I mean, we were here last night and, uh, the tribe event that, um, you guys in the 1031, I guess I'm part of it too, but you guys have more ownership over it that, um, that event doldrums bear market and here in the Bitcoin commons, a bunch of investors hearing from, founders and members of teams that are building real valuable infrastructure

that and more of that and then the bit devs that followed it that's what reinforces me about Bitcoin the outside world is noisy but when you actually get to get into a room with Bitcoiners and people that are focused on building it becomes very

clear the signal and what exactly is different maybe not exactly but you start to see the stark contrast. Speaking of dancing on grays, at 1031, we've been able to do a little bit of that this week because comparatively speaking, all the companies that we invested in are doing relatively okay.

Most of them are doing great. You guys have had, I mean, it's a bittersweet week for you guys, but you guys had a lot of Bitcoin come your way Because if people finally realize and they go, shit, I need to take control of my keys. Yeah, we did. There's no getting around, though, that this is an incredibly difficult market for all companies in the space, including Bitcoin companies, including ours. We did, just as in the wake of Coinbase disclosing the fact that their client assets may be deemed to be unsecured liabilities and their clients might be deemed to be unsecured creditors in the event of a bankruptcy, we saw more clients than we'd ever seen come through after the Celsius mishap, or not mishap, but whatever happened there. The same thing was true.

And then after during the contagion of this week, we saw the same thing as well. Single highest number of consultations come through in a week. The number of Bitcoin coming onto the amount of Bitcoin coming into the platform. That only happens because the way that we've structured our platform is to eliminate counterparty risk. And we do that in multiple ways,

but people would not be depositing Bitcoin into an institution if it weren't built on their own private keys. And that despite that, the way that I think about it is price is a function of adoption. And so we try to manage our business to control more controllables and to make our business less sensitive to price over time. But if price is a function of adoption, then a declining price is fewer people adopting Bitcoin and there aren't nearly as many people adopting Bitcoin and catching a falling knife than when Bitcoin is going up. The people typically adopt Bitcoin for the first time in waves and when the price is moving higher because what they are functionally doing is following a signal that people who had more information sent by accumulating in times like today. Um, and, but this sustained drawdown has, has impacted our business.

It's slowed growth rather than cause our business to collapse. Um, and that did result in earlier today, we announced that we were, um, needing to, to, um, cut some headcount, uh, because I would say while we, um, are less impacted by price, we did not sufficiently plan for, um, the, the sustained drawdown and the slowing growth in adoption, which albeit it is temporary. And we really have to plan for the uncertainty to come, not just in terms of price volatility, but when does the next adoption wave happen? Because that adoption wave drives clients to us. So we do see these big waves of people coming through when there are the um the industry events that make counterparty risk uh top of mind but but also

you know the the broader system is strained and that's also healthy um because it is a stressor it does add to to bitcoin's anti-fragility it does add to unchains but but we are also impacted our clients funds just are not at risk. So, yeah, I mean, let's dive into it. I mean, you're, you're taking on a different role as well, correct? Yeah. Um, and that, that will probably come as a little bit of a surprise to people, but, um, I put out a post earlier today, um, just before we started recording, I'm actually moving to the board. Um, and that, um, that was something that, you know, kind of began as a discussion earlier in the year as to a possibility of the future in terms of me transitioning from my day-to-day role. It wasn't something that

I was looking to do immediately at that time. But when kind of probably late last month, early this month, when our board beginning in earnest talking about the potential need to prepare for winter and to, um, to really reduce uncertainty in our business by being conservative that I, um, restarted discussions about that. It might make sense to make that time now. Um, but the important thing to reinforce both for our clients and, um, for our team is that my, my role is evolving, but it's putting me in a position to ultimately be able to create more value at Unchain and to be able to continue to influence the company in the areas where I am most impactful from a strategy perspective, helping to finance the needs of the business

and also being a key interface for key clients and key partners. And so me, I've been personally running real hard for four years and there's a number of things that I'd like to achieve um, beyond just Unchained. And this affords me the opportunity to do that. But I do just want to say too, but for, for, for clients that, and in the post that I, uh, wrote called Texas Hedged, um, that the whole foundation of our business is based on people holding their own private keys. And that, that is why our business works. That's why in the face of FTX, we never had any exposure to FTX. I can't even like consciously put that, that word in a sentence or Alameda or three years capital or Celsius. We never lent

client Bitcoin. Um, we, we help people custody Bitcoin, holding their own private keys. We help people buy Bitcoin directly there. We do lend against Bitcoin, but we only do it on an asset backed basis. And we do it without rehypothecating collateral. Um, we've never incurred a loan loss. And so Unchained is in a very strong position, but I took the opportunity and, um, you know, I really appreciate Joe and Dhruv being interested in kind of helping meet me in the middle as well as our investors for having that confidence. And there's still some process and technicalities

of making that move official, but that's the plan. Yeah. I'm not going to lie, I was a bit shocked. But this is a... I read the Texas Hedged post that you put out. How was it? it was good it was long everything i do is long it's long-winded i forget you've told me you've told me the texas hedge story before i forgot about it though we are texas hedge yeah i think

all bitcoiners are like when the price of bitcoin collapses um you buy more bitcoin that's doubling down um and if you know you're right then then you're able to do that and that i think about everybody who's securing their wealth in bitcoin for the long term as somebody who is creating value for unchained you become just a little bit more texas hedged if you decide to build a bitcoin company or have a bitcoin podcast or write about bitcoin and that that is what i'm going to do most immediately i don't have an immediate plan other than uh getting my head above water to to to breathe some fresh air but i am going to finish the gratitude and suddenly book version um and And that'll be something I'll try to get done in December.

Yeah. No, you have been running hard the last four years. The hardest working man in Bitcoin is what you've been referred to. I get a little uncomfortable every time you say that. It's true though. But I don't think I've missed a Houston or Austin meetup in like 18 months, maybe dating back. That's when I started going to the Houston meetup.

No, I think that a big part of how we've built Unchained and the brand that we have is on the backs of the Bitcoiners that are on the team. We've got a lot of good Bitcoiners. Our culture is what defines us. If you talk to any of our clients, that will be what defines us. The foundation is multi-sig and people holding their own keys, but there is a real service there. And that building that culture was a combination of that team and being out in front of people and clients and helping them understand why, why Bitcoin is important as well as why holding private keys is important. And so, um, yeah, you know, it might not sound that much, but like when you add up, you know, 18 meetups and 18 straight months in two different

cities and then making time to be in Dallas for meetups and middle of the meetups, uh, I like to think about all Bitcoiners is having some Bitcoin hustle, but, um, yeah, that, that did take a little bit of a toll, but, um, we also create a lot of value. Um, and it's been managing Unchained day to day and helping, um, really have it become the Bitcoin company that it is, has been the most rewarding journey of my professional life by far. And, um, now that I get to go do the same from the board, but have more time day to day, um, to get back to writing. Um, I've literally been trying to finish the graduate and suddenly book version since a bit block boom of 2021 and have made very little progress. Um, but now I'll have some dedicated time to do that. Um, but I also just

want to reinforce for, for clients and everyone, you know, everyone probably chirping on Twitter that um that you know kind of everything that we built we've been right about the big things bitcoin building on top of holding keys eliminating counterparty risk um and that i'm very proud of that's why you know today and i'm a client of unchained um that's not changing um and i only do that because i'm not taking the counterparty risk of my own company and that's what differentiates us and that's the position that every client is in

and just look forward to the future building Unchain but from a different position and getting to hang out more in the commons down here because I am going to be helping

to continue to lead and shape the vision for that for the Bitcoin community here in Austin and finishing the Gradually and Suddenly book and Orange Bill and more people.

Yeah, this is Parker's vision. Great to hear. I mean I think Kaylee yeah you me yeah you always came in

with like the I'm gonna be I'm gonna be in here more often getting more shit done okay so you're the talent

so I'm gonna get less shit done you're the talent no I'm gonna enable you to get more shit done okay good yeah

good yeah no again it's a bittersweet week um because I mean I've I mean I've obviously

obviously i'm involved with a lot of different companies and sectors within bitcoin and it's happening across the board i mean mining is obviously going through a rough patch just bear market i was discussing it with people last night it's definitely the hardest bear market since 2015 and if it continues on this pace it may surpass it as probably the toughest bear market that Bitcoiners have experienced since it launched in 2009. And you have to figure that makes somewhat sense considering this is the first time that Bitcoin has ever existed in this particular type of interest rate environment

with the Fed hiking rates and that liquidity drying up and overall markets freaking out like what the hell is going on. Yeah, I do agree that, I mean, you'll have to correct, you'll have to the 2012 2015 there was a longer bear market right that was like more severe the 20 so the beginning of 2014 is when mount gox happened and so 2014 2015 and the price didn't go back to like a thousand dollars to late 2016 yeah yeah um so i think that you know there's some recency bias in there but um when you think about recency bias was seven years ago no i know saying like this is that this is like the the worst i wasn't even there but i want to check

your you know your your gut instincts on that that um i remember talking to a uh minor in 2017 or 20 no maybe it was 2018 and they were like they're gonna have to introduce inflation like this is the worst market possible um miners are dying you know and now we're here and it's like if you total it up in terms of real purchasing power of that mining reward where where the bitcoin network is able to pay for more security than it ever has before i mean if like we're looking on a trailing basis obviously 2021 would would be more but but over time that that's increasing and there's more hash rate coming online and so someone is finding a way to produce bitcoin cheaper and cheaper hashes are getting more and more efficient and that just at the

same time that those companies are struggling the what is happening underneath the service is that the strongest are getting stronger and that's how i think about unchained too it's like yeah we we are taking a little bit of pain but then what we are also doing is weatherizing yes we are um kind of tolerating and taking the stressor um and that will harden us um and then we will move forward march 12 2020 that was that was more brutal than anything that you know has happened through the three arrows coinbase post there you know i guess what i want to say it's just coinbase but after the fed first started raising rates this episode last week march 12 2020 way worse than that you know but everyone would look here and have the recency bias be like

oh this is the worst yeah not yet it's not 2015 yet 2015 summer 2015 i wasn't even there and i have to was the darkest time in my bitcoin back to it i was like two or three years in at that point i was like holy shit this may this may end people legitimately thought it was gonna end It was right before I came along. There was nobody on Twitter. Bitcoin talk was dying. Early 2016, Brooks Dudley,

we were going to go to the Masters and he made me buy Bitcoin before we went. That was the cost that I had to pay to get a Masters ticket. That's a good friend right there. Yeah.

That's a good, that's a good carrot on the stick. It is. Some Masters tickets. Yeah. So I guess I want to wrap it up on the topic of

What are your thoughts on, again, markets learning a big lesson right now. The main lesson is a lot of these exchanges and counterparties do not have the Bitcoin that you believe they owe you. Does this create FOMO? Does this really drive home the scarcity of Bitcoin for people? Obviously, the people get wiped out. Maybe they try to get back in. Most are probably likely in a scenario where they can't recover the position

that they lost but do you think for people sitting on the sidelines watching this who've been waiting maybe waiting for a particular price target to begin allocating to the space or seeing what's going on and be like oh crap there's actually not as much bitcoin liquidity as i thought there was yeah i mean i do i mean i think that what happens naturally in these periods of Bitcoin's falling knife. That's how Bitcoin gets priced. And that's where equilibriums are found. And so I do think that Bitcoin is now starting to get to levels. And I do generally not like to think about price all that much, but it is a function of impacting our business and it impacts Bitcoin. So you can't get around it, but that when Bitcoin starts to get cheap and everybody,

you know, there is no market really. It's each individual that's pricing Bitcoin. And that when an event like last week happened and Bitcoin's down from $20,000 to $17,000, that is the market stepping in and catching a falling knife. And from my own experience and just people that I'm talking to, seeing people starting to wade in for the first time as well as see people who had started to accumulate at the 50s and 60s coming back in. That's price discovery. and I don't necessarily think that it's an inflection point. I think that the inflection point will come when the Fed reverses course and a whole new market of people

will have seen that Bitcoin did not die and that everything that Bitcoiners have been talking about because the counterparty risk is the counterparty risk and the silver lining there and what people will learn is I need to take this seriously and that there's no way to get around the fact that the only way to create certainty is to secure your own Bitcoin keys. Otherwise, someone else is securing their own keys and you can't know how exactly how that's

happening or whether they are going to give you a Bitcoin or whether they're not. And then trust exists on a spectrum. The only way to create certainty is holding private keys. And so I think all of this is very important, but the macro, more people probably figured out Bitcoin when the Fed printed $3 trillion, then the people that were probably a relatively, I mean, probably maybe there's millions of people, but, um, there's still relatively few people who will find the signal through that. And so what I'm looking more toward is what is happening in the dollar world. You know, people cheering 7.7% inflation, albeit the dollar is falling apart and people can't see it because they don't understand um what the economic ramifications are of the largest

currency system in the world being as volatile as it is yeah yeah all right all right we're gonna figure it out we're gonna win we are gonna win i should say i do it because this is on my mind i'm not shocked that's what's happening uh with you moving to the board at Unchained because I've known we've talked about behind the scenes um I said I was shocked earlier but I was like yeah I know that there's a lot of people that are going to be surprised um but it is something that I wanted um and it's it was a it was a good way um to create value for Unchained and for me to be able to um pursue some wants and needs that I have. And also just a reinforcement to the team too. Um, and to our clients for this matter,

like I couldn't have done that or couldn't made that decision if not for, um, all the strong leaders that exist on the team. Um, Phil Geiger, Trey Sellers, Cam Stromey, Justine, um, Matt McManus, Jevi, um, Brian Milstein, like our whole team is like full of rock solid Bitcoiners that aren't just enthusiasts, but know how to execute Michael Tanguma, um, you know, would find that those people are all there and that's what afforded me the opportunity. Um, and I'm still be at every meetup. So, and I'll be at the commons. Um, I'm going to be at the Houston meetup on Monday, um, be there with my partner, Dave Alza cross. Um, and so I think that there will be a lot of people just with what's going on in the market kind of concerned. But, um, when,

when people or the people that actually have the signal or clients, they know how to get ahold of me and, um, and I'm going to be around. So, um, I do know that, that, that it's a bit of a surprise, but, um, that I think people who understand me probably know that, uh, once they, once they know that, that, that it's also not a surprise. Yeah. I'm excited for this chapter. I'm excited for the comments. Yeah, this is good for the comments. It's not good for my ability to get work done, but we're going to accelerate you. Okay. It's going to be the accelerated. My project is going to be your acceleration. All right. It's been a long week. Let's go have some beers. Let's do that. All right. Peace and love freaks.