TFTC: A Bitcoin Podcast - #553: Preparing For A Dual-Currency Era with Alex Leishman

Episode Date: November 6, 2024

Marty sits down with Alex Leishman to discuss River's new offering of bitcoin interest on cash. Alex on Twitter: https://x.com/Leishman 0:00 - Intro 1:29 - Mechanics and implications of bitcoin interest 10:27 - Unchained & Coinkite 12:21 - The road to River as a primary bank 19:27 - Effectiveness of Trump and private spending 32:35 - Zaprite & SOTE 34:08 - Learning from River’s users 38:30 - Proof of reserves 40:56 - Shareholder influence and activist investors 51:39 - Preparing for the bull 56:57 - Adoption time frame for innovations 1:03:01 -Will bitcoin help us skip Mandibles? Shoutout to our sponsors: Unchained https://unchained.com/concierge/ Coinkite https://coinkite.com/ Zaprite https://zaprite.com/tftc Salt of the Earth https://drinksote.com/tftc Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

We have something coming in, let's say, a month or two. It's going to be like the new standard, I think, for making a Bitcoin or crypto app secure. That's Alex Leishman, CEO of River Financial, revealing a game-changing security feature that could reshape Bitcoin custody. But that's not all River is changing. The interest from your dollars in River now earn a high-yield interest rate, 3.8%, and you accrue the Bitcoin daily. Everyone else is just keeping all of the interest.

We're giving it back to our clients. Today, Alex challenges popular Bitcoin narratives and shares insights on River's explosive growth. He also explains what Microsoft shareholders need to acquire Bitcoin and tells us a controversial opinion about the U.S. dollar. I genuinely believe that we're moving towards a dual currency era. And just when you think you understand where Bitcoin payments are heading. I mean, look, actually, this is going to sound really heretical. This is a conversation you don't want to miss. You've had a dynamic where money's become freer than free.

When you talk about a Fed just gone nuts, 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. sitting down with alex leishman alex welcome back to the show sir hey thanks for having me on it's great to be back it's great to have you back it's been a big week

for you it has been a river getting the bitcoin denominated uh yield bitcoin interest on cash bitcoin interest on cash i don't want to say yield not bitcoin yield it's not it's not blockfi no very there is there is uh this is the smartest application of this idea that people have been striving for for years now the strive for something like this has led to many blow-ups block five celsius list goes on um but it seems like you guys took something that other companies are doing and benefiting um with it for themselves and then giving it to your customers let's just start here and we got a bunch of other stuff to talk about too but this product is awesome oh yeah thanks um yeah um you know there's a lot of confusion just because we're a bitcoin

company and we use the word interest a lot of people immediately assume oh like like block fi where does the yield come from it's like well no actually uh what we're doing is um you know you've always been able to have dollars at river any bitcoin exchange you can have dollars on but everyone else is just keeping all the interest for themselves we're giving it back to our clients right dollars always have to sit in a bank and so what we've done is all the hard work behind the scenes from a regulatory and compliance perspective to be allowed to pay the interest from the dollars sitting on river to our clients and what we do is we auto convert that daily into bitcoin so the interest from your dollars and river now earn a high yield interest rate 3.8

and you accrue the Bitcoin daily from your cash deposits. And so there's no extra risk. We're just simply now taking the interest that we used to earn on cash deposits at River and giving it back to you. And so we think that this is the future of banking, really. I genuinely believe that we're moving towards a transitionary period where we're going to live in this dual currency era where people save in bitcoin but still spend and earn in dollars which means people will still have some dollar or cash savings um but they'd much rather earn interest on that cash in a harder currency yeah i mean this is if you look at tether essentially what they've been doing is issuing their stablecoin and then having liquid reserves predominantly held in u.s treasuries

us treasury notes particularly short-term debt and then that's what everybody has been um basically lauding tether for for the last two years is the fact that they've been able to amass this this large treasury to back their stable coins and they've just been spinning the yield that they're getting from these short-term notes into bitcoin and other assets and in reaping insane profits as a as a product of that strategy and river has decided we're gonna do something something similar but we're gonna let the customers benefit as well exactly yep and behind the scenes it's a fully fdic insured bank account 250 000 of fdic insurance per user um and the cash is managed very conservatively by our bank partner um almost all of it is just kept at the federal

reserve and earns the the federal funds rate so um it's not even being lent out for like corporate loans and things like that very vanilla which is interesting yeah but it's it's this way to very vanilla but um bringing something to market that has been lost for for decades now which is you have cash in account you actually get interest on that that's a that's an idea that's become foreign it's become a foreign concept in the world of banking more broadly not even just within bitcoin um but it is possible to to make sure that your customers are actually um getting a benefit from this and then the whole using the the interest that you accrue from holding it at the fed just gaining the fed funds rate on top of the capital in an account and putting into bitcoin

i think is um going to be a gear shift that like i tweeted out earlier this week like i think you guys are going to set a standard where customers are going to begin to demand this, where they recognize the yield on U.S. dollars isn't as appealing, particularly if it's 3.8% and real inflation is at 6%, 7%, 8%, wherever it may be. You want to make sure that you're accruing interest into an asset that will actually preserve value throughout time. Absolutely. And if you look at what your effective interest rate would have been if you had earned interest, Bitcoin interest on your cash over the last four years. So it's substantially higher than the base interest rate.

And, you know, some people will say, well, you know, I could just take, I could earn interest in my regular bank account and then take that interest and then buy Bitcoin with it. But the reality is people aren't doing that. And also a cool thing about this product is you're accruing it daily. So we're kind of like, you know, kind of you're getting the Bitcoin each day before the end of the month. um at a in a normal bank uh your bit your bitcoin your sorry your interest is paid out at the end

of the month so you don't even get that cash you know throughout the entire month we're buying bitcoin on your behalf day by day throughout the month so you get to kind of get some of that bitcoin early it's a dca strategy in a way and you've been tweeting you saying this is a sly roundabout way to speculative attack the dollar let's get into the dynamics of that you think about it applied at scale. Yeah, at scale. Right. And, you know, we're the first ones to do this in the U.S., but we won't be the last. I think that a lot more people will launch this and hopefully down the road, even more traditional firms. There's trillions of dollars in savings accounts in the United States for both individuals and businesses. And, you know, if if we can get

that transitioned over to earning interest in Bitcoin, you end up with this interesting dynamic where you have this basically base demand just sort of sucking up the Bitcoin supply. And the interest rate dynamics are also interesting because when interest rates go up, there's more interest being generated in these accounts. And so that's more Bitcoin being purchased. interest rates go up. When that happens, typically you see sort of more pressure on the Bitcoin price because there's a bit of an inverse correlation between interest rates and Bitcoin price. But now we're basically taking that increase in interest rate and plowing it back into Bitcoin. And the reverse of this is, you know, when interest rates go down, Bitcoin tends to pump.

Well, yes, when interest rates go down, now you're maybe earning a little bit less in interest on on that on that cash but the the bit the interest you have earned in bitcoin is pumping so your effective interest rate uh has gone up so it's a kind of cool dynamic there it makes me it makes you wonder like is now that it's because again it's so simple and it's almost like you've opened up pandora's box because the the way businesses have been operating traditional banks And even businesses in our industry that do this, they've just been keeping all the yield. Now that you guys, again, opened Pandora's box and said, no, we're going to share it with our users. It's their cash.

Of course, you guys are taking a little rip and getting some benefit from it, too. But I think really holding the rest of the industry's feet to the fire, the broader commercial banking systems feet to the fire and saying this is the way it should work and we're actually going to bring it to the market. It'll be interesting to see how people react to that over time. I think, like you mentioned, I think people in the industry will launch similar products at some point in the near to medium term. but um does this um send a signal to the market outside of bitcoin like you should be getting the yield yeah and and you know just to clarify we're actually not taking anything uh we're passing through as much as we can technically we we made it around number 3.8 i think maybe technically like behind the scenes we're getting like a few bips higher than that but we just wanted to make

a clean 3.8 as deposits grow at river um we'll unlock higher rates uh um so uh actually we'll just you know assuming like kind of we we hit those uh those deposit those cash deposits we'll just be passing that back through to our clients so for this episode of tftc is brought to you by our good friends at unchained do you have an old ira or 401k that isn't keeping up with bitcoin rolled over into an unchained bitcoin ira and take advantage of bitcoin's long-term potential while enjoying tax deferred growth with unchained you hold real bitcoin to keep control of your keys reducing counterparty risk to their collaborative custody model while unchained handles the tax forms it's very important they handle the tax forms get started now with no setup fees and no

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checkout why why this product why now because you guys are very particular about i know you a ceo founder of river you're um almost maniacal about how you're building your business as efficiently as possible and being very particular about the products that you offer your clients why this product why now was there demand um is this product something of um is this something that you want to surprise your clients with it was a surprise there was no no one asking for this product this was an example of us synthesizing sort of the vibes of our clients right and really trying to understand what do people really truly want it's sort of like kind of that henry ford quote like if you ask people what they want if i ask people what they want

they would have said a faster horse um this was us really trying to think about okay like what is a magical thing we can build that people aren't even asking for um that would they would really want and so we kept it pretty secret we've been working on this quite a long time because actually behind the scenes it seems simple but there's a bank account behind the scenes for every um for every client uh this is like real regulated banking uh and so um you know getting all of our t's crossed and i's dotted to make that happen was a lot of work and you know we have you know a great big partner um it's been really great to work with them um but uh really what we realized was, we're entering this era where people want Bitcoin cash flows. But also, we also saw that

people had a lot of dollar savings still, you know, yes, on Twitter, it might seem like nobody touches dollars. But in reality, like the vast majority of people still have a dollar savings account, and a cash buffer, especially if they have families, they have often up to a year of cash just in case, even if they're really big Bitcoin believers. And so we, we saw that. And we were like you know what we should help these people um we should build something that helps serve the need of yes i need this cash predictability in my life because that's the way the world still operates but i also want to put like i also want to get keep earning bitcoin um and we saw that we could put these building blocks together to make this happen and i think

the number one question i've seen from people reacting to the launch of this product is this is awesome um i think is what how do you expand the product suite on top of this because you can imagine a scenario in which people have their cash balance on river they're getting um uh the the interest uh into bitcoin developing a stack and then they they don't want to interact with another institution they just want to do everything from river if i can hold my cash here and get um interest in bitcoin from that why don't i just do everything here is that that's the direction you want to take this yeah that's the direction and it's one step at a time um you know it might seem like we should just be able to flip a switch on and all of a sudden

we're like full fiat banking suite takes time to build those things properly uh and safely so um you know it's we're taking it step by step um and so you know in the on our roadmap is you know being able to have account and routing numbers so you can set up your direct deposit into here. And then, you know, we really want to help meet people's need to be able to pay their bills directly from the River account. So, you know, our vision for the future is for River and for society, we believe that we're entering this dual currency era, like I described earlier. So what we're building is the financial application for that future, for this next phase of our monetary system. And so we want to be that app where you can

keep your bitcoin and your dollars we want to be the most uh you know trusted and transparent you know financial institution in the world and we want to give you the financial services you need as we transition to this to this new world let's talk about this new world this dual currency world because i i've been talking to parker um i just recorded with parker about his uh exchange theory value for bitcoin and i think that's um there's many people taking different sides maybe not different sides but there's like a spectrum of how spectrum of beliefs in terms of how long this dual currency system uh exists is it something where we have bitcoin and dollar um living side by side for many decades and people save bitcoin and spend dollars for the majority of our lives

or um does it happen quicker like when i guess what i'm trying to get is like how long do you think this period of the the dual system where people are predominantly saving in bitcoin and spending in dollars exists i think it lasts quite a while and it's always possible i'm wrong um And I'm not, you know, Parker's an extremely gifted sort of like macro sort of analyst on this stuff. And so, you know, I'd love to I'd love to listen to that episode and hear what he says. I'm much more of like just looking at sort of what I see in the business and what I see sort of like on the ground. There's some interesting data points that have sort of influenced this this opinion for me. One was spending time in Argentina.

So I've spent a decent amount of time down there. And as I think a lot of people listening know, their currency is really, really bad. And it has been for a long time. The inflation in Argentina is insane. It's like 100 more percent a year. It's chilled out a little bit with the recent president. But nonetheless, it's still like a total disaster. If you think the U.S. inflation is bad, I mean, Argentina, the prices change every week.

And so, OK, so why is that interesting? So if you look at Argentina, so their currency is totally impossible to save in. You can't put a business treasury in the Argentinian peso. You can't have a savings account in the Argentinian peso and have any expectation that preserves its value even month to month. However, everyone still transacts in Argentinian pesos. And so despite the currency being terrible, all the transactions, at least day-to-day commerce is happening in pesos because it is so sticky it has also the power of the state sort of

pushing this but just the protocol of society is so sticky that even when the currency is trash people still use it to transact and they just save in other things and and sort of swap into it when they need to spend it and so and swap out when they earn it and that influenced kind of my thinking a lot and it's possible that that analogy just won't map to what's happening in the u.s but i just sort of have this hunch that even if inflation continues to really pick up in the u.s people are still shopping at the grocery store with dollars they're just not they're just not saving it much yeah that's i guess that's the big question is how fast if at all does inflation of the dollar rematerialize it seems like it is if you look at the feds rate cut and long-term

bond yields they're going in the direction that you would not assume that they would go in If we're going to have a rate cut regime moving forward, and then you look at the national debt, we're approaching $36 trillion. It doesn't seem like spending is going down. Obviously, Trump's talking big game about fixing up the tax code, increasing tariffs. Yesterday, people were saying he's out there campaigning that he wants to eliminate the income tax, which would be incredible. that combination of of tax changes would be highly inflationary though unless he pulls javier malay and goes afuera across the board which he's also been posturing i guess that's the big question i don't know if we're going to solve it here but like does the if trump number

one gets elected brings a new administration do they have the mandate or the facilities to work throughout the federal government bureaucracy to actually initiate spending cuts that would make that tax regime not as inflationary as it possibly could be? Yeah, well, I think it's going to depend on a lot of things. I think it depends on if they can win Congress, if they can win Senate, House, and White House,

then we're maybe talking about some real things happening. Um, I'm by no means, you know, extremely well versed in the ins and outs of, uh, you know, how things work in DC when it comes to what you can just unilaterally cut from the, in the executive branch and what you can't, I know it's very hard to fire federal workers. Um, maybe there's some loopholes. I think really though, the difference this time around is that Trump is going to have a team that's way sharper and has learned the lessons from the past in his past administration. I think he's going to have fewer like sharks trying to sabotage his administration from the

inside, but I think he's going to see equal or more resistance from, you know, the rest of the, the swamp. Uh, and so the question is how, how effectively will they be able to, um, navigate that? And there's just bigger things like politically, you know, they're like, just, if you do the math, there has to be cuts to military and, and, and entitlement spending. There has to be. So even if they control all the House and the White House, can they make those changes and win an election in two years? That's an open question. yeah and that's it's such a fascinating time to be alive i'm sure anybody could say this at any point in history but truly is right now when you when you look at the juxtaposition of the bloated ineffective inefficient federal government with the private sector in the

united states now like looking at spacex um catch that that 50-story rocket out of the air I mean, you mentioned military spending. That's going to need to be cut. You look at, well, anti-war. I mean, objectively, countries need to be able to defend themselves. And when you look at companies like Andruil and what Palmer Luckey is doing to drive down the cost of being able to produce the military equipment necessary to protect yourself and even go on the attack if you need to. And you just look at what we're doing in Bitcoin. And like the private sector in America, it seems like if we were allowed to just rip through all the red tape and not have to worry about the bureaucratic mess and the federal government was actually thinking about spending, making each dollar they spend go as far as possible, the private market is producing solutions in a cost effective way.

And I am cautiously optimistic that if Trump gets in, we could see this new American renaissance where people realize that people are actually solving problems in the private sector and you have an administration and a team that recognizes this as well and tries to facilitate the private sector solving a lot of these problems. Yeah. I mean, I think what has to happen is there has to be a convincing plan for the American people to see that we can spend less and get more, right? Anyone who's run a company knows that there's a world where you get big and bloated and actually move, get a lot less done and spend a lot more than if you were small and lean. And what we see with the SpaceX is these guys can launch mass to orbit for 100x less, a thousand times less per kilogram than the U.S. government ever could have possibly dreamed of. And they have way less money. And so, like, what if we applied that thinking to the military or to entitlements, right? All of this spending, if you look at the culture in D.C., it glorifies inputs, not outputs. I voted for this many billions of dollars to the military.

I voted for this many billions of dollars to this foreign country. I voted for this many billions of dollars to health care. Why are we celebrating inputs? We need to move to a culture of celebrating results. and when you do that you start to realize that like you know actually you can often get better results when you spend 10 times less yeah no it was an event last year and there was a fund focused on defense tech and they were explaining the cost efficiencies of companies like andrel um in in that defense tech space and they're like you can literally cut the military budget

by 90 and get more done get more outputs that's the red pill though the the reality of the situation is you could probably cut both military and health care spending by 90 and make america safer and healthier that's that's that's like actually like a true statement i agree and i the hardest thing to to actually get to that that a place where we're enacting change that enables that to happen is narrative with the public because public sees cutting military healthcare spending by 90 and they say oh that they they're they've been conditioned via propaganda to focus on the inputs like they they believe that you need billions and billions and trillions of dollars now to actually facilitate this economic activity

that leads to goods and services in these particular sectors. And that's another thing that's making me cautiously optimistic because I do think the propaganda, the marginal return on the propaganda is weakening significantly. And I would argue that it may not even be positive anymore. We may have reached the point in time where the marginal return on propaganda efforts from the entrenched swamp are negative and people are beginning to realize, maybe not everybody, but I do think there is the vibe shift, if you will,

happening. I mean, in a way, what we're seeing really, if you step back, is we're seeing the fall of the old culture this like ossified slow-moving corporate government monstrosity that values input that values more social signal and credentials than actual results and what's happening is the silicon valley type thinking from a business perspective now you know the political thinking of Silicon Valley is also shifting. It was very woke, but now that's changing. But that mentality that Silicon Valley brought to software has jumped into hardware and is now starting to jump.

And these players who are early Silicon Valley people are now becoming some of the most powerful people in the world. And this is almost like the new sort of power shift, right? Like this culture is kind of fighting the old culture. And so we'll see if that continues to work. If Trump wins and Elon Musk truly does become this czar of cost cutting, you know, we'll see like this transition is real. The reins are being handed over to the Silicon Valley type thinkers. Yeah.

What do you have to say to the black pillars who are afraid of this? We don't want Elon having this much effect on the government. I mean, we don't want Peter Thiel types having this much effect on the economy. They're going to leverage their positions of influence and power now that they're closer to the government to benefit themselves. Yeah, I mean, look, I understand the skepticism, but one, we can't let perfect be the enemy of the good. Two, I think if you actually look at Elon's actions,

His values are about as close as aligned with like a freedom oriented sort of like foundational American sort of archetype, you know, as you can get without being like way too picky. So, look, I mean, I think it's easy to sit around and like pontificate and read like philosophy and say, like, you know, I want my perfect sort of like thing. And, but this is what we have. And, um, I think it's pretty obvious, which, you know, like what the future looks like if the existing people stay in power. And I think that the future with Elon types running things is still way better than what we have now. Yeah. Well, how do you think Bitcoin begins to eke into this conversation? Cause obviously we've been watching this play out for the better part of a year now. Um, really the people that have come behind Trump, whether it's peter teal jd vance is obviously his vice president um on the ticket and elon all this

is happening and it's this silicon valley archetype that is coming and really driving a narrative and helping people realize like we can do things better um obviously trump was at the bitcoin conference and saying we're going to do the bitcoin uh act and put bitcoin in the treasury reserve but still i don't know if you're reading this as well to reading it similarly as well but it seems like bitcoin isn't like as part of a focus and i just watch everything that's going on in that that area uh of the discourse right now and i'm always like just lean in a little bit harder to bitcoin because bitcoin can accelerate everything you're trying to do um you know my take is like i don't expect trump to ever get bitcoin um i think i'm not talking

i'm not talking about trump i'm talking about like the people behind him like musk and teal and jd vance and obviously they're they're very they publicly the posture positively in regards to bitcoin but like i'm looking at him like you should have this as like a bitcoin as an integral part of trying to achieve all these goals that you're talking about because it's just jet fuel pun intended on on everything you're trying to do yeah i mean i think that if you look at what they're trying to accomplish it's logical that they're not bringing it up too much i don't know what they actually believe like deep down inside like i think they're they're definitely not anti-bitcoin um but like this is a political game and they will they gain nothing by talking

a lot about Bitcoin. It does not increase their chances of succeeding in this election. And in fact, it probably makes them look more out of touch to the average American to be talking a lot about Bitcoin. The average person in the United States cares about, if you care about Bitcoin, you're probably not an undecided voter. So they're focusing on the things that the average person who's like the on the fence cares about which is economics and immigration trying to draw the trying to explain to the american people this connection between sound money and the problems today i think um there will be a time i think where that happens we've come a long way in that being mainstream discourse but i think for the like for the demographics you want to influence

in a presidential election um it's just way too still academic sounding this rip was also brought brought to you by our good friends at ZapRite. If you're a Bitcoiner and run a business or an independent contractor, you should be accepting Bitcoin as payment. If not you, then who? If we believe that fiat is systemically fragile and is a risk, the rails that that currency runs on are risk as well. You need to begin accepting Bitcoin as soon as possible. Invest in the future of your business. Create a redundant rail by accepting Bitcoin as payment using ZapRite and reduce risk for your business. I've done this for my business here at TFTC. We use ZapRite It allows you to easily create invoices, payment links, or connect e-commerce stores,

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and even though it's not front and center it is the last two weeks have proven that at least the central banking layer of society is worried about bitcoin you had two papers come out from the ecb and the minneapolis fed where both of them sort of admitted like yeah bitcoin is here to stay and it's probably going to go up a lot but you should make it illegal or yeah pigeonhole a better product them what they're selling yeah it really is but speaking of products and selling like i agree with you it probably is a bit too out there and unnecessary to be forcing bitcoin to the front now um and i i do think that they understand bitcoin to an extent i think a lot of them are confused by crypto as well but i do think over time as what i'm getting at is i think a product

like the interest product that you just launched, if that gets built out, gets adoption by River users, and then you develop a track record, and you guys, what you've done historically, but very transparent with your reports and how your users are interacting with and using River. If we get a year, two years of data of people using this interest-bearing account, and you're able to say, here's how much they would have had in cash,

here's how much Bitcoin they stacked, and how much that Bitcoin's worth, that's going to be a, Oh my God, why, why isn't everybody doing this moment? Yeah, exactly. Um, and I think, you know, I think that, uh, I think the, from the vantage point we have and that a lot of Bitcoin Twitter misses is like, you have to meet people where they are, right? If you want to, if you want to orange pill more people, like you have to meet them where they are. We got a few people sort of like criticizing us because we're short bitcoin you're short dollars and like who would ever have a dollar and it's kind of it's like that's fine to have that opinion but you'll never run a business right like you like you'll you'll

never be able to like win people over like you have to take people by the hand meet them where they are and this is a start on the journey to bitcoin and what we're trying to do is like we're trying to lower that barrier to entry right it's like now all of a sudden when people ask what's I don't even need to say you need to take a large chunk of your cash and buy Bitcoin this thing That's really confusing to you that you still don't quite understand I can say if you deposit cash and river that cash is super safe and you just earn Bitcoin with it It's like lowering the barrier to entry for more and then they owe all of a sudden they have a little bit of Bitcoin didn't Have to pay for it

And now all of a sudden they can start learning more they can start playing around with it. And so So, you know, I think sort of like this is like super hardcore ethos where you forget where you were when you started. Right. A lot of people forget kind of where they were mentally when they first got into Bitcoin and they think everyone should just jump to the end of the story. Yeah. What what did the backtest data show? What do you mean backtest? Oh, like the numbers? Yeah. Yeah. It showed that the effective interest rate is like the teens. if you like over over the like last four years um you know it depends on how you do the analysis like if you had earned this interest rate that's what it would have been if you like there were

there was a period over like a year or two where there was a zero percent interest rate more or less so um you know you just wouldn't have earned much bitcoin then but uh it's it's it's like drastically better than any sort of like money market or savings account you could have possibly had yeah that's what that's what i think is really going to be the flipping of the switch moment for a lot of people just seeing the data out there it's like if you have friends using a product like this and they use it for a couple of years and they're like hey um i've been i've parked a hundred grand in this account and over time i accumulated you know every year i accumulated four thousand dollars worth of bitcoin um a year later that bitcoin's worth eight thousand dollars

yeah oh and it didn't make the cut for launch but we're we're launching a calculator for doing exactly this so you'll be able to back test uh any amount any like time frame you want on our website uh and so that'll be launching soon hopefully yeah i mean that's that's only one of multiple products that you launched since we last talked i mean the other other big one um was the last month or two months ago now at this point the proof of reserves massive props thank you yeah we we wanted to do a lot of people think i think from that launch i think we invented the concept of proof of reserve which is not the case i think we're kind of doing like the apple playbook like take something like that technically existed in a user unfriendly way

before and make make it really like tight and like super user friendly and design first and so that's what we did the proof of reserves um we wanted to you know like i like i said earlier our vision is to be the most trusted financial institution in the world and to do that we have to be transparent um and so with proof of reserves we prove every month that our assets uh that we control the bitcoin in our custody exceeds the liabilities the bitcoin that that uh we owe clients um and we're pushing and we open sourced our code that does this um and we tried to make it as easy as possible for people to understand how this works and to verify it themselves and we're you know the reason we open sourced it too is to try and push the rest of the industry

and i've already had multiple exchanges reach out on you know to ask like you know how we did this and get some more insights into like what are the operational implications and things like this so hopefully we see some more people doing this and really what we want to do is i want to move the industry forward so that we don't start getting into a world with paper bitcoin i want to normalize proof of reserves now so that all the other Bitcoin exchanges don't start getting tempted through forces, maybe political forces or economic forces to create Bitcoin out of thin air and start walking down that slippery slope. I think with the emergence of the ETFs and more recently the options on those ETFs, the product like proof of reserves is desperately needed to

keep keep people in check because that's really when options get launched and people see what you can do by by leveraging those financial tools that's when you start to see the paper products come into market yep um and you know this made a splash we're going to keep making a splash we got some of the biggest companies sort of paying attention to this and so hopefully we can make some changes there and get get these guys on board um because i think it's really important for the industry i do as well and uh speaking of big companies making a splash that was uh the last 12 to 16 hours on twitter has been about uh microsoft's board having a resolution um at the next shareholder meeting about an assessment of whether or not

they should um put bitcoin on their balance sheet invest in bitcoin is how they have it worded i think that's poor wording poor framing should be incorporating bitcoin into their corporate treasury strategy but nonetheless one of the largest companies in the world is officially asking shareholders to weigh whether or not microsoft should put bitcoin on their balance sheet which is pretty massive and bringing it up too because another thing that you guys have launched a research report about businesses holding bitcoin and that was that was full with some rich data um obviously uh you guys are catering uh to and maybe i'm wrong but i think predominantly to a different sector of the business market but

businesses are accumulating bitcoin um particularly businesses that don't need to go through a shareholder vote to to get it on on the balance sheet yes uh a hundred percent and yeah no i think this is a big thing the fact that the shareholder vote is is happening at all and i believe the details are to vote to analyze whether they should um and so but still it's a start basically what i think we're at we're at this interesting point here where to date there we've seen a lot of businesses accumulating bitcoin for their treasury buying bitcoin um we serve largely small and medium-sized businesses um anywhere from sort of like entities like trusts to operating companies construction companies, real estate firms, cleaning companies, plumbing companies buying

Bitcoin for their treasury. And what all these companies have in common, though, is they're run by what I call an orange-pilled dictator. If you look at every company that's bought Bitcoin to date, they're run by an orange-pilled dictator. So really, these companies buying Bitcoin has just been downstream of the owner becoming orange pilled. And so sort of business onboarding to Bitcoin today has really just been an extension of like the individuals becoming orange pilled. So that's a very like quickly growing trend. And what we see, and so what still hasn't happened is the companies like the Microsofts of the world buying Bitcoin, like these run by committee businesses these like behemoths that have no founder anymore there's no dictator there's

like political forces and it's all very like kind of you know who's really running everything it's and so um you know the big companies that about bitcoin today still are run by that archetype you know you have elon you have michael saylor you have jack dorsey um and so we're at this transition period we're like who's going to be the first cfo at one of these like like run by committee companies to say the first principles of the macro environment are different now. What worked before for treasury management is not going to work going forward because the dollar is fundamentally changing and we're entering this dual currency era. Who's going to be the first CFO to have the balls to say that and put their career on the line for that? Because that's typically not

what the CFO role gets selected for is people who are, you know, uh, willing to make big. Yeah. Uh, so, um, that will happen at some point. Uh, the question is when, and when, when, and who is it going to be? Do you have any ideas of when and who it may be? I honestly, I don't, I don't, I think it's going to be, I think it's going to be one person does it and then the dominoes fall. right um uh and i really have no idea on what company that could be and is it the ceo or is it the cfo that's more important for this decision at one of these big companies maybe both um but the cfo probably has to be on board yeah no it's interesting about this shareholder proposal it's an assessment it seems like if you dive into it looks like

um somewhat of an activist shareholder who has a sizable chunk essentially forced it on the docket and that many people are taking that being like oh this is just some gimmick by some zealot bitcoiner who owns a lot of microsoft stock and is trying to like use it as a as a marketing tool but i don't think that should be underscored or excuse me understated i think it is being understated like that in and of itself we're talking about like attack vectors on the fiat system that is one there whether you recognize it or not like it or not think it's a gimmick or not these people exist now and this active bitcoin activist investor uh trend i think is going to accelerate um significantly and so whether it's a cfo um deciding to to make the

bold move to to basically advocate for putting bitcoin on a large corporation's treasury or not i think the emergence of this bitcoin activist investor should not be taken lightly um totally and i think what we've seen since 2020 was you know pre-2020 or so um you know bitcoin was still this thing where we were kind of just memeing, like we believed in it, but who, like, we were all kind of nobodies, right. In the grand scheme of things, we, you know, we had our own thing going on. And then all of a sudden, like, like important people started becoming part of this. Uh, and some of us became more important. And, uh, you know, next thing we know, like the potential next president of the united states is at the bitcoin conference talking about bitcoin strategic

reserves for the u.s and like all these memes that we kind of were just like you know palling around on the internet kind of like you know we didn't really know if this thing would work is real now and so narratives matter incentives matter and uh i don't think there's any slowing down this train at this point there's a lot is it train doesn't stop i mean that that Lynn Autumn meme goes, two ways, the increase in the debt. Riding that train is not going to stop. And the Bitcoin memeing is not going to stop. And it is crazy.

I've said this many times the last few months. This year's Bitcoin conference was an oh shit moment. And I think it was particularly because we had a live RHR and it was packed 600 people. And then Matt and I were reflecting on the first live RHR we did at the Bitcoin conference in 2019. It was literally on picnic benches in a parking garage, like on the roof of a parking garage in San Francisco. And I think as an industry, we should really take a step back and appreciate how far we've come in such a short, that's five years, like going from the top of a parking garage on a picnic bench to this conference in Nashville with the president saying that he's going to put Bitcoin on the United States Treasury. It's insanely fast. Not only should we appreciate it, but we should use that as a checkpoint and think forward what can happen in the next five years.

And I think what we're seeing now, whether it's Microsoft having to have shareholders weigh whether or not they should even assess to put Bitcoin on the balance sheet or the U.S. talking about it. I think that's a product of a trillion dollar market now. And I had James Check on from Check on Chain earlier this week. And I think that's one thing I took away from that conversation is that we've stayed over a trillion dollar market cap for quite some time. An amount of time where it's sort of been normalized. Bitcoin is a trillion dollar asset now. It's not in the middle of a blow off bull top where it touches a trillion and is destined to go back down. It seems like it has cemented itself as a trillion dollar asset.

Um, and that just psychologically has people thinking differently about it. Totally. And it's gotten these important institutional stamps of approval. Um, you know, sort of like the black rock stamp, sort of like the powers that be have almost like gone. Okay. We're like kind of okay with this now. And, you know, as much as, you know, I think inherently we're sort of like anti-authoritarian

or sort of like kind of skeptical of this kind of stuff in Bitcoin land, that's been a really big needle mover for just institutional adoption. On the other side of things, I see now like the types of clients we see, it's like these aren't necessarily like Twitter, deep Bitcoin, cypherpunk people anymore. It's like, you know, mothers who instinctually understand something's kind of not right with the system and feel like they need some Bitcoin. Maybe they can't exactly explain how the Fed works or, you know, they, you know, couldn't like spit out inflation numbers and stuff like that. But they like deep down inside their instincts, tell them like something's kind of off, like this Bitcoin thing is like, you know, it's scarce, like this is what I should be

doing. There's something there that just like kicking in in people's heads. And it's no longer this sort of, you know, anarcho-capitalist, but really like plugged, highly online thing anymore. It's bigger than that now. Yeah. And that, I mean, speaking to the aversion to institutions and much larger pools of capital coming in and going back to the fact that we're truly another market cap, like if you want the price to go up,

like the amount of money you need to come in is significant. And it's not going to be from your wage cuck DCA or moving forward. like retail got us to this point and now that we're at a trillion established as a trillion dollar asset going up into higher stratospheres is going to take these large amounts of capital like it or not yeah i think that's largely true um but i also still think there's a lot left of the retail demand to unlock um you're right about sort of just the the market dynamics and the need for the big money but there's still a lot of retail left to come to this thing yeah what do you think this cycle is like yeah are you feeling bullish right now are you bullish

uh i'm pretty bullish i'm pretty i'm always bullish but uh look what i selfishly love like another six months to get more stuff built uh yes um uh what we've seen interestingly is so we had the big price run up in february and march and those were like march was a huge month for us But and then the price is just sort of like, you know, kind of like stayed, you know, in the 50s to 60s. And but what we've seen is like sustained high business, like the boringness of the market over the last eight months, seven months hasn't slowed down the people sort of coming to this. It's just at a new elevated rate. And so. That's an interesting observation.

and i think it means like the people showing up now are i think they're more like permanently here and i think we're really just like starting to just get like mainstream society coming into this thing yeah so i'm very bullish i am as well i am as well i'm talking about like preparing for the bull market from a company infrastructure perspective that's something i love following on twitter because you are uh again maniacal about making sure that you build the the technical architecture of your company as efficiently as possible and you're obsessed with this code based elixir what is going on with elixir and how does it how does it enable you guys to to scale when the bull market comes that's the programming language we use and um it's a programming language

which is built on this kind of platform from the 90s called the Erlang Open Telecom Platform. It was built by Ericsson to power high-availability phone systems. And what somebody realized about 10 years ago was you could build really great Internet software on this thing because it's meant to basically be highly reliable and support lots of simultaneous people using it. And so I kind of realized that early on

this would be like the perfect tool to build a uh a bitcoin company on and it's turned out to be quite true and it allows us basically without getting too technical it allows you to use your compute resources much more efficiently than a lot of programming languages for this kind of software and it also allows us and what that allows us to do is to keep everything in one place so you don't need to build this like sprawling like set of systems that need to to talk to each other, which is much harder to maintain. You can kind of just have everything in one place. And so that allows us to keep things simpler

and move faster and be more secure. And so what I really push on at River is simplicity. But in terms of what's left to build to keep preparing for new levels of scale, it's a lot of automation. It's a lot of like that iceberg beneath the surface. You know, the reason we're not shipping a new feature every week is because I would say like 50 to 60%

of our developer time is building stuff behind the scenes to keep everything running well and safe. There's lots of systems that we need to keep upgrading around payment processing automation, fraud detection, tooling to help our customer service operate more efficiently and serve larger amounts of clients. All that kind of stuff is like sort of like this big iceberg beneath the surface of the water.

And the app, the river app you see is like the tip of the iceberg for what's actually going on behind the scenes. So there's always more to build there, But we have some cool features coming down the road. You want to tease any here? I'll tease, let's see. I'll tease something.

We have something coming in, let's say a month or two, that's going to make, it's going to be like the new standard, I think, for making a Bitcoin or crypto app secure. um uh it's gonna be i think a real game changer for security uh and make keep you safe from uh pretty much any attack you can imagine and so uh that's all that's all i'll tease for now we have a cool name for it too but i'm not gonna give the name i like that tease i like that tease that makes me feel comfortable yeah no i think i again just observing you build this company

be as transparent and public about it um i love your elixir tweets and um when you think about like if this wave of retail is coming and historically each new wave is bigger than the last and we've seen companies like coinbase i mean it's the easiest one to pick on because they continually fuck it up like once this wave comes that their systems can not handle it i think having a focus on building simple systems that can scale is extremely important if you're if you're looking to be there when when these waves are coming yeah you know i've never worked at coinbase and i i don't have like super detailed insights into you know how their systems operate but i i do have a hunch that a lot of the issues that they face is because they over complicated

things. What is one thing, prediction, idea that you have that you think most people would disagree with in our industry? I guess I think my most heretical opinions are one sort of around this dual currency era. I think that commerce primarily stays in dollars for the foreseeable future. I think that sort of a Trump presidency that's effective and reigns in the financial health of the U.S. government, which is still a big TBD, actually like makes that even longer. And so I think that's just a reality. So and I think that it doesn't mean we should never keep building cool like Bitcoin wallet stuff and, you know, keep trying to make Bitcoin work as a medium of exchange. We absolutely should. I think, though, it's really important to be pragmatic and

realistic and understand time frames um i think the lightning network is a great b2b uh custodian to custodian uh rail um i don't think it's the answer for self-sovereign p2p uh transactions i think we need something different um so maybe that's another one uh I think Nostra is cool uh I think there's like I think I see it as the backup to Twitter um and I think that it will stay that way unless Twitter if Twitter continues to be run by Elon um uh and so I think Nostra will maybe have its time you know in the sun if that changes uh but I'm kind of skeptical about that in the near future but I could be wrong um I would love to see Nostra thrive. Um, and I'm glad it exists. So I think those are my most heretical opinions.

Going back to P2P payments. Is there anything people are working on right now that you think is purpose fit for that particular use case outside of Lightning? Um, absolutely. I mean, look, actually this is going to sound really heretical. Um, objectively the best p2p payments experience today is tether on tron or some like shit coin chain um uh sending dollars kyc free internationally uh is what the vast majority of the world wants and it's by far the best ux today and there's no like liquidity lockups or anything like that it just works is it centralized yes but it's just it works uh you know and like that's all people care about at the end of the day um they don't care about the ideology behind it um so like

that's really an objective truth the question is like can we get bitcoin that good um and we should try uh ecash is there i think a really like cashew and these like infetti and these ecash projects are really cool. I think there's still big open questions. There's like both a sort of pragmatic regulatory perspective. These things are technically centralized. And so will they be able to scale and serve lots of people without getting shut down? Open question. But I think the bigger thing is the bigger thing holding Bitcoin back as a medium of exchange is just economic. People don't want to get, people don't want to use Bitcoin to transact. Like I think the thought experiment is, let's say we had a perfectly self-sovereign zero fee way to transact Bitcoin

P2P with like no censorship resistance whatsoever. Would Bitcoin be a popular transactional currency today? I'm skeptical. Honestly, I'm skeptical. I think like the dollar is still like the global unit of account. That's what people still want to transact. Will that be the case forever? No, that will end someday. And we need to be ready for that. And we need to keep building for that future. But, and maybe that's an e-cash, maybe that looks like e-cash. Maybe that looks like a combination of e-cash, lightning, you know, centralized custodians, and it's all just kind of working in symbiosis. And there's no like silver bullet, self-sovereign, censorship-resistant rail but like the emergent sort of like group of these things effectively gives people that

um there's arc uh which i think is another like tbd project i would love to see it succeed um so yeah that's my take on it yeah i'm excited about arc i think um i uh did the demo for second which is building their their asp and their um their arc protocol and i talked to alex berg a lot about it he seems to be wholly convinced that the combination of arc and lightning could significantly increase the user experience and improve the user experience around lightning particularly channel management channel management is the biggest hurdle for lightning to scale in a way that that makes it easy for individuals to reap the benefits in the same way that the b2b use case is reaping it right now channel management just needs to be automated and

um something that people don't even have to think about and i think the the people building arc are pretty convinced that that is a solution to to make that possible then we need i mean then they say like if you really want to take it to uh it's for this positive extreme you need needed something like covenants um version to bitcoin yeah and you know i've admittedly not been stayed super close to the covenants uh debate i need to do more reading on that um because you know if you know if it turns out that you know we really do need covenants to scale bitcoin um then that's an important conversation to have uh i just need to do the reading to really understand if that's the case i do as well um i need to do deeper dive

let's end it with um some inspiration are we going to win are you optimistic i'm optimistic are we getting mandible are we getting mandibles are we are we getting a better future what's that mean mandibles is uh it's a book that basically says we're going to go into sovereign debt crisis and things are going to be a Mad Max scenario. Oh, interesting. Okay. Well, I sure hope not. I view Bitcoin as a way to bring back institutional trust.

And I think that what my hope for is that Bitcoin helps lead to better and healthier institutions, both in the United States and globally, because it shifts the balance of power back to something decentralized, back to the people. And it deletes some of this corrupting, ossifying power that central banking has given the government. And I want to live in a country where I can trust the institutions. I want to live in a country with effective institutions. I don't want to live in a Mad Max situation. And so my hope is that politically we win. I hope that Bitcoin helps accelerate that political culture shift. um and the economic and sort of macro monetary shift to to keep these institutions in check and

so i very much think we're gonna win i wouldn't be building this this if i didn't and um you know i'm gonna keep acting as if that's the case well you're crushing it sir i mean the last three months of alone you guys have uh brought very valuable products to market um very excited for um this cash interest product into bitcoin i think it's a game changer like i said earlier it's going to set a standard it's a forcing function to force others to to provide this to their customers which will benefit everybody in the long run proof of reserves talked about for the better part of a decade now i think fidelity wrote their paper on it like literally 10 years ago at this point and you guys are bringing it to market and the type of bitcoin company you want

I see that's what you're building, Mr. Leishman, leading by example and forcing everybody to come with you. Well, thank you. I appreciate that. We have a lot left to build and we have a long way to go, but we're going to win. We are going to win. Peace and love, freaks.

Okay.