TFTC: A Bitcoin Podcast - Building Bitcoin Treasuries, Rewards vs Points & DC's Bitcoin Evolution - Bitcoin Alpha 007

Episode Date: March 28, 2025

Bitcoin Financial Services CEO Will from Fold discusses how their company helps customers build long-term Bitcoin savings through rewards programs, sharing how some users have earned more in Bitcoin rewards than their original purchases cost. He explains Fold's treasury strategy as they become a public company, contrasting with speculation-focused crypto firms. The conversation shifts to discussing political shifts in DC with growing bipartisan Bitcoin support, Tether's role in dollar markets globally, and the distinction between Bitcoin's sound money approach versus tokenization of real-world assets.0:00 -Disclaimer0:24 - FOLD SECTION - Will’s cold open2:07 - Building regardless of cycle position8:48 - Adoption of Fold26:02 - Burrito financing vs Fold credit card41:24 - You stack, we stack1:09:29 - DC SECTION - BPI recap and Tether1:22:27 - Adopting political power1:29:20 - Meme coins and real-world assets

The following is for informational and entertainment purposes only and should not be construed as financial advice. This discussion is a presentation by 1031, the leading institutional investor focused on the Bitcoin ecosystem. 1031 has over 10 years of experience in Bitcoin and has deployed nearly $150 million into the leading opportunities in the space. To learn more, visit 1031.vc. And I think it's no doubt that right now the moment that we're seeing is an incredible moment to bring the first publicly traded Bitcoin financial services company to the public markets and a company that is specifically there to show Bitcoin's value as a savings asset to build over time, long term, low type preference to truly make an impact in people's lives. And at the same time, a company that has focused on day one of building our own treasury of Bitcoin will be entering the market with over a thousand Bitcoin. And we intend to aggressively accumulate Bitcoin not only over the course of our daily operating business, but also following in the footsteps of some of those who have laid out the playbook for stacking stats at an even more aggressive rate. And I know we have some people from MicroStrategy here today who we look to as absolute inspiration.

And the first insight that we had when we were starting at Bitcoin 2019 was how can we create the easiest and most accessible way to access Bitcoin just to start learning? Because that has traditionally been the largest and biggest hurdle for you to access new customers. And rewards, not only from my previous background, but I knew was an incredible way to do that. Not only it's one of the most widely participated in financial products out there, almost every household has three or four rewards programs that they're participating in. And so we saw this as an incredible avenue to introduce Bitcoin in a way that removes all of the risk. And what we quickly saw was as years went by, you know, some of our customers have earned more Bitcoin in their rewards from their spending than they had in their savings accounts when they started. We are joined by that strapping young gentleman, honored CEO of Foldwill. Welcome to Bitcoin Alpha.

It's good to be here, guys. It's good to have you. We plan to only do this show when we have high signal to talk about. So you are the first episode that we've recorded in about a month, month and a half. And we like to provide the signal here. And that's why we have you here. And during that cold open clip, you mentioned Bitcoin 2019 when you were thinking of what product would be great for Bitcoin or settled on rewards. And it's funny just thinking back that that comment provided flashbacks for me, for anybody who is unaware.

Bitcoin 2019 was literally in a parking garage in San Francisco. And it's crazy to think of not only where Bitcoin has come between then and now, the Bitcoin conference. It's going to be in Vegas this year, a large spectacle with tens of thousands of people. But to think of where we've come from that small parking garage in San Francisco to today, not only as an industry, but you yourself as a founder and Fold as a company, I think it's a good jumping off point for what we wanted to talk about, which is your journey to the public markets at Fold. Yeah, it's definitely a wild reminder. And, you know, it's wasn't that long ago, but I you we look to, you know, Bitcoin Vegas 2025 is coming up. It has moved around the country as it has. It is grown in size. The the the the types of people showing up, the interest around it is I mean, it's just it was unfathomable to me back in 2019 that we would be here this early.

And I think there's the best part about it is that journey is, you know, we can look to it and say, wow, Bitcoin has absolutely succeeded. And look where we're at today. But I think we all on this call knew that it was definitely a journey full of challenges to get here. And I'd say a bunch of surprises along the way. And again, make sure you survive through your Bitcoin cycles and and opportunity will make itself known. And I think Fold has always been really about that build on solid foundation, build something that provides value to people today and continue to build into Bitcoin. And it will lead the way from there because this is truly no longer a movement confined to a parking garage in San Francisco. This is entirely global and the game board has completely changed. And so I think that's reflected in FOLDS last year of how opportunities have significantly gotten larger and, you know, the challenges, too, have gotten big. But it's a good reminder to think back to the humble beginnings.

It's funny talking about cycles that that conference I remember vividly for for many reasons. First conference I ever spoke at right before I got on stage to speak, my wife made me aware that she was pregnant with her first child. and then also we were in a bull trap it was uh the price i'm not sure if you guys remember it jacked up to like fourteen thousand dollars over the course of the weekend when the conference was held and everybody was very bullish matt and i were telling people to smash by uh during our live rabbit hole recap at that conference nothing's changed and the price uh didn't immediately but slowly but surely fell ultimately to around 3500 on march 12th 2020 and so another 80 correction but to your point being able to build products that bitcoiners want regardless

of where we are in the cycle is very important that's exactly what you've done with fold and rewards and that was another thing that you mentioned in that that cold open clip that we showed is that that was a great time not only to be launching a rewards product but to be downloading a rewards product and using it to get sats back i'm sure many of the people that you've observed to have accum or the the bitcoin they accumulated with certain purchases outstrip the the cost of that purchase at that given point in time where we're built during during that period that that bear market you know fold is at you know what at the 2019 edition of fold is very much a like any other rewards product that was out there we just happened to give bitcoin and one

of the things that we've uh realized over this time is there are so many consumer financial tools that we use every day in traditional finance that have an underlying economics that disproportionately benefit not the consumer, that benefits everyone else besides the one who's using it. And Fold over the last five years has seen, wait, we've been roughly giving away the same cashback rewards level to our customers as they could get on another traditional platform. But because they've earned it in Bitcoin, they've earned it in an asset that has a hard cap, sound money, no issuer, their lives in many cases have been completely transformed. We have people who have been able to dip into that to meet emergency expenses or to

consider a new path for their family in terms of what their financial plan is just off of their rewards. It started a journey for them to ultimately learn about Bitcoin in a way that they demanded from us over these years of, hey, it's not just rewards. Now we're depositing our paycheck. We need to think about building our family, our long-term savings plans. We need to think about how we can manage our paychecks on a given month. And we want to do that with Bitcoin because look at what has done just switching my rewards from miles to Bitcoin. And they start to see what possible impacts it can have. They think deeper about their finances. And if you start

to think deeper. You start to think a lot of the tools that you use every day are not really meant to have you be the winner. They need to have you win just enough and they'll give you some of those scraps. But for Fold and for Bitcoin, we cannot devalue the Bitcoin you earn. We, at the same time, are wanting to provide not only a product that produces different results, but a company that approaches our customer relationship differently. And I think Bitcoin unlocks a lot of that. Yeah. I mean, I think one thing you're hitting on that we're all very excited about, obviously at 1031, both as big investors in fold and investors in the space in general is, you know, Bitcoin is, as you're kind of referencing this apex savings asset, this monetary tool, um, over

time, right. It's not just a question of, you know, adoption, increasing kind of number of people using it going up, but also the penetration into someone's life as they start to adopt Bitcoin, just, it becomes this, this mind virus that you kind of can't stop thinking about. And it starts to, um, you know, become the hurdle rate for anything else, any other investment you might make any other way that you might deploy your money. Um, and so one thing that you kind of, you're hitting on here that I think we've been excited to see is just how much your users, you have grown with your users and your users have kind of grown with you just as that progression takes place in their own financial lives. So, you know, I think it'd be helpful, maybe just

kind of provide the brief rundown for what that's looked like from 2019 to now, like the key ways that you guys have kind of evolved along with your users. And then how did that kind of get you guys to the point where last year, you know, you looked at the opportunity set and thought, you know, now's the time to take the next step and take the leap into the public markets? Well, I think back to our founding story, we, you know, we were there, we wanted to meet the challenge of building long-term savings for Americans. Personally, I had been in and experiencing this myself, it I think is a pervasive, widespread feeling in society today about like, why can't I get ahead? And we were like, could we solve that with the

product? And we knew what Bitcoin could do. We had a vision for what it could be and how it could solve this problem. So we started off with rewards to create the most exposure for as most amount of people to be able to start this journey. And ultimately, like you said, they've evolved, they have seen their net worth grow, you know, over 60% of our customers have over 25% of their net worth in Bitcoin today. You know, when they started with us, that 25% might have been 5%. And it is, you know, as their lives have been transformed by Bitcoin, they've needed us to provide that service. It's because really there's not many other platforms around that can really do this for them. And it speaks into our numbers a little bit. And Fold was there entirely focused

on long-term savings and Bitcoin. We stand in stark contrast to other public crypto companies that are about speculation, gambling, and every other asset to give you an opportunity to strike it rich. We have a very different approach, lower time preference. Let's make savings cool. Let's make it fun and let's make savings real. And once you embed Bitcoin out of the heart of someone's savings, you realize you need all of the tools to be connected and seamless with that Bitcoin, or else it sits on an island and it creates fractures within families about, you know, how can we access our wealth? You know, when can we buy homes or when can we pay bills? Are we too over allocated. Folds said, hey, let's let's make Bitcoin in your the center of your financial life

as seamless as your dollars are today. Let's remove all that friction. And you'll see exchange platforms. Typically, you are seeing, you know, 80 to 90 percent of their volume being just Bitcoin buys. And, you know, that will change with cycles and where Bitcoin's price action is at any given point. But Folds volumes for Bitcoin buys is only 50 percent. And you say, OK, what the hell is the rest of the volume doing. The rest of the volume is directly tied to the day-to-day financial needs of our customers. They are using Bitcoin to pay a bill. They're using it to fund a debit card purchase. They're using it to take cash out at an ATM. They're using it to earn rewards. And so you're starting to see what that number shows you is the expansion of Bitcoin, not just

as a siloed savings asset on the side that's not connected to anything else. What you're seeing is what happens when you bring Bitcoin to the center of your financial machinery and it starts to give you value and unlock flexibility and freedom for how you use your money on a Bitcoin standard. And we're seeing our customers more and more adopt to that need. And the more of these products we release, the more it makes that journey easier for those coming and a deeper engagement for those that are kind of already there. And so I love the fact that, you know, only 50 percent of our Bitcoin activity on the platform is from people just straight buying Bitcoin for savings. We love that. We support that. But we're also here to see Bitcoin become a central part of the fabric of

their personal financial lives day to day, month to month and, you know, decade to decade because our customers are here. They're building families. They're younger. They're 35, 55. A lot's going on And they need their financial platform to recognize their commitment to Bitcoin, their position in it, and give them the freedom to live full lives connected to the existing system while we're in this transition period. That – you stuck to an interesting question in my mind, which is Fold exists for Bitcoiners looking for a financial services platform that can put Bitcoin at the center and thinking about where we are in this cycle, what Fold can do now. You guys are a public company. How do you see this evolving over time? You see Fold, what is the percentage breakdown of your user base moving forward that is Bitcoiners coming to Fold because they understand that Bitcoin's at the center of the platform versus people that are curious and just want to leverage a financial services platform that may offer Bitcoin rewards, but it has all these other abilities in terms of getting access to gift cards, getting access to roundups, all of that. Yeah, I think we've seen what previous cycles where you really do not have, you know, the only public company representatives from this kind of side of crypto and Bitcoin have been those focused on the speculative aspects of it and gambling and every other coin.

When we looked at moving into public markets, we looked at it from two lenses. Number one, there are obvious benefits that come to a company that is both building a Bitcoin treasury and in a growth market to be a public company. We get access to resources where we can have a renewed look at M&A about building our Bitcoin treasury out. And that was always exciting for us because we know that Bitcoin cycles. It's incredibly important to take as much ground as possible at each one. There are massive winnings to be had. And so we knew it was important to be aggressive from that angle. But I think more importantly, there was no Bitcoin financial services company represented in public markets that brought reputation, trust and a different alternative, a different brand, a different approach to this thing we call Bitcoin or crypto. And we thought that the conversation was just way too skewed in one direction about one use case, about the speculation and the gambling side.

We knew from our numbers that we were seeing that there was an increasingly large amount of people looking to Bitcoin to add to their savings and they needed the right on rent to do that. And those that have already made this decision are no longer dealing with Bitcoin being 5% of their net worth. It's now 30, 40, 50, 60%. And the platforms that are out there just didn't exist to do it. And those that you could maybe do some things, their primary incentive was to sell you on some other non non an asset that wasn't there to help you build long term savings, but move you as quickly into speculating on the next new thing. So we thought that there was a great opportunity to be that brand. You know, we are really at the top of the funnel. We have the easiest way to start your Bitcoin journey.

Just load your existing credit card and start earning some Bitcoin. We, our audience and customers are families. So we are both used by those that traditionally make the investments in the home, which typically is the head of household, the husband and the relationship. We have the kids that are involved in the reward side of things, and we're increasingly looking at taking over the entire household by offering ways for people to maximize their spending on their bill payments and their major big purchases, which is typically something from the spouse of the household. And so Fold has created a product that brings the entire Bitcoin financial picture and makes it relevant to everybody and allows it to be something that fits harmoniously in these growing households that are not only accumulating wealth faster than their peers, which make them very valuable to us in the market, but also are representative of really a pioneer group. We're seeing this this trend only continue. And I think we're really at the precipice right now where a new wave of retail is waking up and we'll we'll make this call. So, you know, we are seeing in the numbers very similar to what we saw in 2020, 2021, when we saw 200 percent plus year over year growth based on a new these new new entrants coming in to save in Bitcoin. And in full can accommodate the entire spectrum from the rewards to my I'm living on a Bitcoin. So my family is living on a Bitcoin standard.

And that platform really just doesn't exist in a great way today. And to be a public company to tell that story, I think gives us an incredible puts in a great position. One of the things I'm really interested to see evolve over time is just how the corporate partners and the brands are thinking about the space. now that you guys are a public company, you know, how like the nature of how they approach evaluating opportunities to partner with you, how they think about just Bitcoin as a tool for driving growth in their own businesses. You know, we're not talking about a private company that's, you know, had venture funding and may have questionable outlook in its future. We're now talking about Fold as a publicly traded business that warrants being taken a lot more seriously

by these corporate partners. I mean, for us, when we initially invested, you know, years ago, the underlying thesis was very simple. It was just that, you know, Bitcoin is this superior savings tool. It's a superior rewards asset as compared to, you know, credit card points or airline miles. And over time, we thought this would be obvious that more individuals would begin to adopt it. But like the next the next layer of thinking was, at what point do the corporate partners start to realize the benefits of adopting Bitcoin? And in some sense, loyalty programs, you know, over the years and decades have been used. I mean, obviously, it's used for loyalty, but it creates this almost locked in aspect of, you know, you get locked into a certain

platform. But I think that there's a meaningful opportunity for some of these big brands to actually change their mindset, change the perspective that they're viewing, locking in people in loyalty programs and offering ways to participate in this new and emerging asset class. And I'm just curious, what comments, like what reactions do you have based on conversations you're having? How do you think this plays out with some of these big brands and evaluating it at this point? I think it's a great discussion because going back to that parking lot at Bitcoin 2019 in San Francisco, So the big discussions were, will Microsoft or Overstock.com continue to add Bitcoin as a payment method? Will they remove it?

And that was the big kind of brand, you know, how brands were going to interact with Bitcoin. And it always felt a little off to me, partly because I've built marketplaces and payments in the kind of more traditional world where, hey, I don't need to assume the overhead of a completely new POS system on something I barely understand, where there's only a few thousand back then, you know, 100,000 million addressable kind of customers for this. It just wasn't the right fit. And we always thought rewards was the thing that actually made the right sense, because not only is it a way to bring new customers to these programs and these partners, but also for those that are using these rewards systems. The thought was they were going to outperform and not only they would outperform in a way that they would actually have more purchasing power in the future to be even better consumers of these partners. So they would create long term relationships with a customer base that had their purchasing power increasing when the rest of the world's purchasing power was decreasing. We knew this would be a great dynamic. And we've been working with some of the top brands, Fortune 100 companies for five years on our Bitcoin rewards network. And so we've been building meticulously brands that are aligned with Bitcoin, but actually more. They love our customers because our customers have money to spend and they're long term, they're loyal, and they've seen that in the data.

And so I think now it's very much understood that there is not only a large demographic to take seriously things like the election where you saw Bitcoin electorate essentially play a major part in this election that carries over into how these consumer brands see the opportunity. They see it's a movement and identity that they want to be associated with. And so since becoming a public company, however, that has significantly opened up our discussions with them in ways that I thought I understood before the process. But we are now seeing, you know, payout in spades. We're seeing a lot more appetite to go bigger, to learn more, to have more direct conversations about what we can do and collaborate together. and a lot of the space has been de-risked and the value proposition has been kind of identified and so i think you'll start to see a lot of these brands um uh have more overt uh engagement with bitcoin ideally i think we're going to see a lot of that from fold as a conduit for that because

we've been building those relationships and have a great product for them to to carry um but it's going to change everything like you know when we were first talking bitcoin was isolated today bitcoin is primarily isolated to your brokerage account the app store and there's not much else the only other parts are where fold has made some inroads and is in rewards that is a major aspect that's been opened up in terms of the fabric of consumer financial tools that they use and another one is going to be, well, Bitcoin, why is this global money only being delivered and sold and distributed on these app stores and brokerage accounts? We have the rest of the world we can do this with. And we believe that retailers and these retail partners can become excellent

conduits for enabling people to accumulate Bitcoin, not just in rewards, but buying Bitcoin directly to. I think you'll see there's great, you know, corollaries out there in the market that Costco is selling 200 million dollars of gold every month. And those are the shoppers who are picking up, you know, their bags of chicken, some bread, you know, five dozen cans of yogurt, and then they're buying some gold on the way out. Right. We think Bitcoin can absolutely play this and achieve similar results because people want to find Bitcoin via places that they are already visiting every day in places that they already trust. Bitcoin is a huge game about trust. And these brands who have built these relationships are going to very quickly be able

to take advantage of that and be very successful. I think Folds building this network for this many years, showing the results, I think we're in a good position to lead that way for them. And I think juxtaposing your position in the market with one of the big headlines of the last week, which is this deal that DoorDash and Klarna did for buy now, pay later for DoorDash meals. So you're talking about extending interest-free credit for a period of time to a user base so that they can get Chipotle delivered to their house. I think when we're talking about brand partnerships and providing brands and users with actual value, this is something that the Klarna DoorDash partnership scares me a bit. Number one, it scares me because it sends an economic signal that not all is well if people need payday loans to buy food. But thinking about what if DoorDash did a partnership where instead of extending a quasi-payday loan to their end users, they did simple roundups, every order if you want to round up. to the nearest dollar and buy bitcoin with that in the app that is something that i feel like

i don't want to go as far as to say this is predatory i think it's market pressures leading them to do the partnership with clarna but in terms of setting your user up to succeed in the long run something like bitcoin rewards makes much more sense than buy now pay later i mean this is a it's a classic it's the which way western man in many cases what you're seeing, I think that announcement, that is a natural innovation coming from fiat-based payments tools out there. It's like, hey, let's bring the debt much closer. Let's not just, debt is not just for the larger purchase. Why not absolutely everything? We're already seeing it with credit card delinquencies and debt up at all time highs. And it is, you know, debt will eat the world.

You know, Bitcoin offers this other avenue and Bitcoin financial service is built with that other avenue in mind. They are very different approaches. Now, they can use some concepts in similar ways, like Fold will have a Bitcoin rewards credit card and you're going to earn Bitcoin. But it's been what we've seen in the data is that, you know, over the last five years or so, we've given away seventy five million dollars in Bitcoin rewards to our customers. Had they used a cashback program, it would be under $20 million. And when you think about that, things like, well, what would happen if everybody instead just had a roundup and a reward built into Bitcoin on all their purchases? What we've seen, and one of my favorite examples is Odell buying a new set of Callaway golf clubs back in 2019. and the rewards on those golf clubs he earned is now worth more than the price he paid.

That is what the outcome of a Bitcoin-focused or a Bitcoin-denominated financial services company, one that thinks in that way versus one that is, hey, actually, the solution here is to just immediately turn to debt. And who knows where that experiment is going to play out? I think these are both equal innovations that are pointing to a different world and a different customer, ultimately. But I think we're going to I think we're going to find the right combo with the upcoming full Bitcoin rewards credit card, allowing you to spend on on credit and earn the Bitcoin reward. I think that brings both both of these instruments together in harmony in a way that puts consumers ahead, which is which is great. I think this is a point that shouldn't be understated, um, specifically just as it relates to consumer psychology. I would say from my experience, fold is like far and away, always

the easiest sell for people relative to virtually any other kind of way that I could get them interested in Bitcoin because it takes the negative elements of human psychology kind of out of the mix when, you know, but with Bitcoin, it's, you know, it's, it's a volatile asset historically. So it's either kind of ripping or dumping. And those are the times when people are focusing on it. And if it's ripping, it's, oh, well, I missed it. I'll wait for a dip. If it's dumping, it's, oh, I knew it was going to crash. This is too volatile and I want to stay away. So if you can turn it into something where people don't have to make the active choice to go buy X amount of Bitcoin necessarily as their first entree, a lot of people still will do that,

obviously. But for people who are struggling with that cyclical view of like, oh, it's going up or it's going down, either way, I'm too scared to buy it, giving rewards, basically turning Bitcoin to house money, I think is a great kind of psychology hack for people to kind of get over that first hump and start having, you know, a relationship with Bitcoin that is more than just kind of on the sidelines. And so that was actually, you know, I was perfect segue what you're about to talk about just with the credit card, you know, the you guys have proven out that story very, very well with the platform over the past five plus years. You know, one of the bigger, I guess you could say gaps are kind of unmet needs in the market today is kind of a more traditional credit

card product. Some have existed in the past and have, you know, unfortunately been wiped out by prior crypto cycle volatility. Certainly seems like there's demand for it. Certainly seems like there's private market fit. So just kind of maybe walk through how you see that further scaling up that vision of getting Bitcoin rewards into people's hands, you know, even more seamlessly than before. Yeah. I mean, the credit card is a obviously ubiquitous financial tool that has kind embedded itself. It is the iPhone and the credit card, right? That's what everyone has on them at all times. And so it really is taking on and kind of redefining one of the bedrock tools that we have. And the idea is, how can we create this tool to reflect the best that Bitcoin can offer?

And the first obvious place that we're seeing, not only it's the most requested feature at Fold, We know that it has been incredibly successful in the past. The previous one that exists in the first year, it had over 100,000 cardholders, was doing two to three billion in volumes. It was a wonderful product that fit that really, I think, will become one of the most important on ramps into Bitcoin, the ETF, spot Bitcoin and then Bitcoin rewards through cards. And so we know the market wants this today. Our wait list is, you know, I think we've already met our essentially met our goal and we're, you know, haven't even launched the product yet. We still have a little bit to go. So we know that the market is much bigger than it was a couple of years ago.

We know that this product really has existing product market fit. And I'm just happy that we're going to be the ones that get to introduce it to the world. And I really look at it as a platform versus a product, because once you start looking deeper into the mechanics of how credit cards work, you start to see that Bitcoin can actually be a really beneficial asset to use in other aspects of the card program. You think of how can you use Bitcoin to lower the cost of capital? How can you lower interest rates with by embedding and interacting with Bitcoin? How can you use Bitcoin as a better proxy for credit worthiness than, you know, a FICO score in addition to that? How can you make Bitcoin related to, hey, I want to save entirely in Bitcoin, but I want to spend on credit. Now, if you can create the ability for these two products to interact of paying off your card at opportune times based on Bitcoin's price,

You can start to think of this really optimizing this very old, very embedded financial tool and just taking the perspective of what can Bitcoin do for this? How can Bitcoin reimagine this financial product? So the Bitcoin rewards card is going to be huge. It's going to be really the first generation is rewards, but we really see it as a platform that we get to continue to reinvent financial services with Bitcoin. And I'm excited to see where we end up on that journey. And on that note, we've talked about the stat multiple times through this conversation with Odell's example, the point at which his rewards paid back or were worth more than the golf clubs that he bought. Have you guys ever thought about having publicly available stats on that?

Like what percentage of rewards have eclipsed their original purchase? I think I just, as a fan, that would be like cool to see publicly. We, we have a few things coming there. We, what we know is that, um, you know, part of our, our, the, the hypothesis is that by allowing people to interact with Bitcoin every single day in this risk-free way, you can get people thinking about Bitcoin a lot more than they would have otherwise. And that's great for a company because you get a lot of great engagement, return engagement. But it's also great for Bitcoin adoption. We frequently see and hear that people use their experience with Fold as the way they pitch Bitcoin to others.

And we've seen that empowering our customers with some of these interesting ways to look at the data that allow them to visualize what has happened, what happens when you're holding money that cannot be debased in a time when all the other money is being debased at levels that haven't been seen previously. Well, it becomes really obvious. And sometimes you just need things like this percentage is 30 percent paid for based on the current reward rate that you earned three years ago. And so we have a good there. We have a whole tab in the app that goes through how much your rewards have increased over the years, what it would have been if you earned it in cash. But we really look at this of how can we actually get these insights throughout the entire experience that arm people with the ability of kind of verbalizing why Bitcoin has changed their life. For us, that's great. And for Bitcoin, that's great. Yeah, I think this I mean, I think the credit card is going to be a blockbuster. You know, people there's a lot of people who love rewards, right? They, you know, they really like the status that they accrue on airlines or they really like the fact that, you know, they they get things for free, you know, without really understanding, like, how does it what's funding it?

How does that all actually flow through to in prices that consumers pay for? But I do think a lot of people have like love hate relationship with rewards, like they feel like a plus. But also, at least in my perspective, I just think they're really annoying. Like they are an asset on on our individual balance sheets, but they become this burden. It's like you got you got credit card points, you got airline miles. First of all, how do you value like, what are they really worth? I have in my head how much I think a credit card point is worth and how much I think an airline mile is worth. But then you go, okay, well, I think I've got some value here. How do I go use it? How do I tap into it? And generally, there's a lot of friction there. If you want to go book an award flight, you can't do it unless you get ripped off on the fees. And so rewards have become this black box like they they purposely are making it more confusing and you know if if you're talking about a credit card and an issuing bank that's getting you to

sign up you know you you mentally justify it because you're paying a certain amount annual fee and then they explain you hey by the way like here's all the benefits you're getting in return And it adds up to way more than what you're paying for it. But I think if you polled a general population, people would not be able to explain, you know, how much do they think they're earning? And that's on purpose, right? Like the more the harder it is to understand, most likely you're getting a raw deal. It's fundamental to the rewards industry. That black box concept is actually supporting the entire thing.

And there's a weird anti-consumer relationship that develops from that. There's this concept where I at once want to keep you interested in my product by giving you rewards. But at the same time, I want to make sure you do not amass enough value to actually economically impact me. I don't I don't want your rewards to be worth more. Actually, I'm invested and my terms of service say I can devalue those rewards as much as humanly possible whenever I want at my own discretion. And you think about Foles business models. We can't devalue your Bitcoin rewards credit cards coming out to be 2% unlimited Bitcoin rewards. Once you get that reward, we can't devalue that.

So from a standpoint of now as a company, a traditional rewards company would look at saying, OK, get them the reward. Next step we think about is how we devalue it, because that's how we're going to extract more value from these customers. We're going to actually make the economics work. What Fold has to do is look at saying, well, what if we turned it on on its head? We say, hey, the whole point of this is to build savings. And so we are building a reward system that builds savings. Our benefit is for you to have as much value accrue to you as possible in those rewards. We want those rewards to be worth as much as it can. That means we get to be involved again at another transaction down the line. We get to be involved when you say, hey, Bitcoin did really well this cycle. It's time to take the family to Disneyland. And you use your extra purchasing power to do that. Or you say, hey, it's time to buy a home. I have all these rewards. We have thousands and thousands of customers with serious amounts of rewards in there.

They're like, now what can I do with it? Well, one thing is you could probably buy a house with it. We want to be involved in that transaction. And so it's just a different perspective that we have with our customers where we're here saying we want the rewards you earn to be as valuable as possible. Whereas every other rewards program out there actually has the exact opposite intention for your rewards. And I think that starts to show in terms of a sense of transparency about trust, about about, you know, the that the relationship is right. And so I think it's a good concept of like, you know, one is on the black box. The other needs is as open and transparent as possible.

And I think ultimately, the transparency version is not only going to keep you ahead, you are going to have more value at the end of the day, but also you're going to feel good. You're going to feel aligned with the company that you're doing business with. And I think that's a really dangerous combination for the competition, the traditional providers of these services. It is you're getting beat on trust and you're getting beat on financial outcomes. That's a hard thing to recover from. Yeah, so we generally see in Bitcoin, the earlier that one adopts Bitcoin, the more they have to benefit relative to anyone else. That could be just the individual who decides to buy Bitcoin. It could be a company that decides to put Bitcoin on its balance sheet.

I think it can apply to call it a corporate partner or an airline or a bank that decides to get into the rewards game and participate with you all. And rather than lock people in with their their credit card points or their airline miles, they say, you know what, I'm going to allow you to convert your points to Bitcoin or I'm going to allow you to earn in Bitcoin if that's what you want to do. So I think the group that decides to do that first will benefit disproportionately relative to others that decide to follow that trend. And I think there's a potential that we will see that type of trend, that it will be the first domino finally falls and then more start trickling in. And just like you've sort of seen a domino effect on the Bitcoin treasury company, you know, this strategy, this playbook that that now there's dozens of companies that are incorporating Bitcoin onto their balance sheet. Yeah, I think you point out there is exactly why things will change, because ultimately we can talk about the old the old kind of reward structures and why it has issues. It's not aligned with the customer and everything. But there are problems for those that are running these programs. You know, there are 30 trillion unredeemed airline miles just sitting out as liabilities on airline balance sheet.

They want to deliver great service to their customers. But unfortunately, the way economics and inflation are happening is like the last thing they want you to do is get on an airline. That's the last thing, because it's the most expensive action you could take. And so they're looking for ways in which to deliver value and a bunch of other things. So like the it's not that the world is excellent, even with the existing system that they're benefiting off of. And so I think there's going to be a lot of opportunity to look at two sides of it is, you know, number one, hey, having allowing people to earn Bitcoin, build their savings, we can be we can be a relevant financial brand. if we do that with them, that's great. We can, we can attract great customers, but also we also have all these liabilities on our balance sheet. What if, what if some of that was in Bitcoin, you know, in, uh, during COVID the airlines took out massive loans against their Bitcoin or their, um, their loyalty programs to prop them up when nobody was traveling anymore.

You start to think about what could have also happened at that, you know, um, that crash to $3,500 that we were just talking about, or the major COVID crash for Bitcoin. If one of those airlines had decided to allocate 10% of that liability into Bitcoin, I think they would have seen themselves the power of getting in early and growing your purchasing power amidst the world that is inflating. And we're going to see it happen like a trickle. But I think all of the things are in place. There are great, respected, trusted brands like Fold that are there specifically to help them make these transitions. The market and regulatory kind of environment is very, very different. And so I think the conditions are fertile. It's going

to, again, take one or two of the kind of first movers who will get the majority of the benefits of making that move to come out. And I expect that's going to be a 2025 thing that we see, a major move into Bitcoin rewards from an existing leader in rewards. The Delta Airline Miles card processes 1% of US GDP. These are massive programs, and they're driven by people chasing airline miles. They're driven by people chasing the status and the rewards of airline miles. And I think Bitcoin fundamentally provides a better value proposition that actually delivers on status and delivering value in ways that it's going to out compete. And it's going to be obvious in terms of consumer preference and the airlines and other

loyalty providers are going to understand the benefits to adopting Bitcoin in a couple ways um, that are going to be a, you know, definitely a, a gradually then suddenly moment. I mean, it's a huge operational and marketing differentiator too, right? With very low downside, you think about to the airline business, a famously difficult, highly competitive commodity business, basically that kind of a seat is basically a seat. So you've had the growth of these rewards programs, partially for that reason, you've got Starbucks obviously going through, uh, you know, a massive loyalty program, but going through real difficulties over the last couple of years and figuring out, you know, what's the next phase for the company and the

rewards experience is a huge piece of that question. Like, what are we, what do we want the identity of the brand to be and our interaction with users in that way? And so they kind of, you know, they're looking for a shot in the arm right now as well with the new CEO and restructuring going on. And so you just, you look at these different stories and it just seems like a very strong risk reward skew in favor of Bitcoin rewards for industries and companies that are already like very much in need of you know something like that to to inject some new life into into the business and the story that they're they're telling their customers i for one somebody who bit the bullet and got the american airlines credit card uh would love this because you get

the status and you know what i think everybody got the credit card in the last year because you get the status and you get on the wait list for first class and you're like number 15 even if uh up to the highest echelon of american status i'm in austin american hub flight of philly flying american all the time it's like might as well get the credit card and do it and then you get the points and i don't need the only thing i spend them on is wi-fi they don't make it clear that you can when you're checking out for a flight you never i never maybe i should start maybe it's just me personally but i'm never like oh maybe i should use my my points for this it's only after the fact like oh this is one of the flights i could have used points for and i i just

end up not spending them and then as we've seen throughout time there's likely an inevitable point in the future where they get devalued for some reason or another and i just i just left that money on the table like versus the cold card or excuse me the fold card mixing up uh portfolio companies the uh the like looking at the app it's like ah i i can see my points quote unquote points my rewards going up in value over time yeah it's like uh it's there's there's two points right it's like the negative aspect of the black box and then they also create so much friction so generally whenever there's low friction to use your points you're also getting ripped off um and so to get the most value out of it is very difficult they'll let you monetize it somehow

Now, you know, you can just look on American Express on their rewards and they'll show, you know, you can check out on Amazon, but they'll give you 50 basis points. Whereas if you tried to maximize the value of it on travel or something, you might be able to get twice that. But they'll make it very easy for you to to give away your points at a high margin to them. The, you know, I think where it all ties back is that actually these airline miles are actually airline programs are actually under Department of Transportation investigation right now. And the root of the investigation, it basically says airline miles have become so important to the fabric of American society in terms of how they relate to these miles that people use them and they think about them as savings. They use it as almost their travel savings account, that the argument is the fact that you are debasing them is now debasing a core savings component of the American people. And so this is where it got it. This was specifically under the Biden administration. I will I expect these things might go away. But really, what it's just pointing to is that, you know, people right now are very hungry and need to maximize all the ways to build savings in this world.

It's no longer a nice to have for my savings account. It's so important that, hey, if I don't get these miles, my family's not going on vacation. That's going to really lead to other problems in your life. And so we are seeing that people are hungry for building value. And we're trying to get creative on a lot of tools. Now, you're going to see innovations like the Klarna one where it says, hey, instead of spending anything, just go for free and deal with the problem later. But really, I think consumers generally are getting smarter. Those that are waking up are getting smarter about the tools that they use and what's going to ultimately get them to the place they want to be. And I think they're hungry for new tools. I think Bitcoin rewards will ultimately become a one of the largest on ramps into Bitcoin. And it's mostly because, number one, a lot of people don't have any money to put into savings. So they're not even at the point of I want to adopt Bitcoin.

But this specifically can reach an entirely new segment of potential Bitcoiners that can start their journey in a way that people are already looking at these as their savings accounts. We just follow up on it and make it into a real savings account. So I think it's ultimately just a major opportunity at the right time when the world is hungry for alternatives. And I think Fold is in a great position to be kind of at the tip of the spear leading that. And that's a big, big thing to win. This theme of incentive alignment between you guys and your users is maybe a good chance to segue into another big topic for the Fold story. You guys have a great kind of tagline on some of your marketing materials recently where it's like you stack, we stack. You know, you want you guys want to help your users stack as much Bitcoin as possible so that you guys can in turn stack as much Bitcoin as possible on the corporate balance sheet.

So for those that aren't aware, Fold under ticker FLD is now a top 10 U.S. Bitcoin treasury company with the latest update from a couple of weeks ago. you guys are close to 1500 Bitcoin on the balance sheet. And, um, and that opening clip that we, that we played, you know, you mentioned wanting to kind of aggressively continue to pursue that strategy, um, which you can only do, uh, if you continue to, to satisfy users and grow that user base. And so, um, yeah, just curious how, you know, high level thoughts on what principles kind of guide, uh, your, your approach as a company to building that Bitcoin treasury. And, um, you know, why are you so excited about that as, as a lever for the fold story over time? I mean, if our main goal and mission is to build long term savings through Bitcoin and we were a company and I was a founder that didn't have our own personal reserve in Bitcoin, it would feel backward.

It wouldn't feel right. And a lot of this has actually has flown through my own experience is that, you know, I have I have been living on Bitcoin standard for a long time. And I wanted to find out, wait, what's an easier way to have people kind of get to this state faster? And that's a lot was the reward strategy to do that. So personally, I've always been deeply invested. I'm, you know, I'm here to support my customers to do the same. And, you know, Fold as a company has always had a treasury strategy from day one. You know, if we are here because we believe Bitcoin is the fastest growing network and

is the best performing asset today and will continue to be, it would be foolish. not to hold our own value in Bitcoin. The outcome of that would be we have accelerated Bitcoin adoption, but all of our competitors got wealthy because we didn't hold any Bitcoin. It would be very backward. And so I think it is both a testament to our commitment to incentive and alignment with our customers. We practice what we preach. It's also a deep belief of what we believe will be true about Bitcoin and its adoption trajectory. And in the past, holding our Bitcoin on our balance sheet

has been incredibly, incredibly helpful in times coming close to saving us where because we have held it for so long, we extended our runway quite a bit. We were able to make choices in the past that at times we may have been way more defensive and thought a lot smaller and gone inward and not achieved some of the growth goals that we had. We were able to either maintain status quo or get more aggressive because of that treasury. And so we've always had elements of that. And as we

moved into a public company, there are other benefits that accrue to businesses that are building a treasury like we've seen with the similar micro strategy. But I think at the end of the day, Fold is still excited to take advantage of those tools to build our treasury, to leverage our equity, to bring more value to shareholders with Bitcoin. We just did that with a convert not too long ago and we'll do more. But I think more central to our story is that this is the only thing that makes sense. This is how we are aligned with our customers. This allows us to show the skin in the game of our vision and vision for the world and what the world will be in the future. And there's not much more we could do to demonstrate that. And so I think it

brings a level of authenticity, of trust that is important for us in addition to the value that we have. And, you know, even before we became a public company, we really were thinking a lot about our treasury of we're building Bitcoin denominated financial services. When you are holding people's money, when people are holding their money in Bitcoin and using services to either use that Bitcoin in various ways, there's a lot of things about the traditional financial system that don't really work because they're fiat denominated and trying to be applied to Bitcoin services. So we always thought that also the treasury would be the backbone of allowing us to build the new framework and tools and services to make Bitcoin services better.

Bitcoin denominated insurance, Bitcoin collateral and loans, driving down the cost of capital, being able to sell Bitcoin more efficiently. Having a large treasury will increasingly give us the ability to add more value to our customers because of that treasury and have a better business because the economics are going to be better. And so, you know, first and foremost, Bitcoin is, we hold Bitcoin in treasury because we believe Bitcoin is superior money. And that is the only thing that makes sense to hold our long-term savings in. The second is the new wave of Bitcoin financial services will require large pools of Bitcoin to be able to augment these services. And the more you can do that directly, the more benefits will accrue to those who

own both of those elements. And then thirdly, is the drive more value to shareholders based on what we've seen with the likes of Strategy and Semlar and others. And so I think we have a nuanced look about our treasury, but it really just reflects where we've come from. Always have been building a treasury, being aligned with our customers, and ultimately trying to build the best Bitcoin financial services company. And when you think about that, you have to have a treasury and it has to be big. Yeah. I think those are all great. I mean, it's comprehensive answer. All arguments we agree with. That second one, though, I think is one that most probably just don't appreciate or haven't been thinking about. You know, you're seeing the trend in the public

markets right now of all these companies announcing their Bitcoin treasury strategies and a lot of people wanting to jump on the bandwagon. And I do think there will be some positive impact to the companies of that, not just because they will hopefully accrue that value on their balance sheet that grows over time, over the long term, but it will also allow them to really start to appreciate the opportunity cost that is Bitcoin, right? Like if they're holding Bitcoin on their balance sheet, then even if it's a company that fundamentally has nothing to do with Bitcoin, perhaps they'll be making better capital allocation decisions going forward. So there should be some positive externalities to that. But at the same time, it is something that

I'm curious to see how it evolves for some of these companies that are just, you know, announcing their, their Bitcoin treasury strategies. And is this going to become some potential exposure to them because they've taken on leverage in ways that they, they or the market don't fully understand that could, you know, flip upside down on them. But that being said, I like we think that the most interesting aspect of of that second argument is just the way that Bitcoin can can become productive for business, how it can, you know, how you could use it to attract better financing, better rates, better offer, better services that you otherwise could not have. And I do think that that's an aspect of the treasury strategy that most people overlook. Yeah, I think, you know, there's and there's going to be a lot of things that come out of this. Right. I think I think you're exactly right. Anytime you're getting this kind of rush, like we're definitely seeing it's going to come with.

There's going to be people on the spectrum there that are going to are going to get flipped upside down. Right. We have cycles and it's a hard thing to manage. but you know the the the pure focus on you know bitcoin for share i think it's good and it makes sense for for many but i think there's also opportunity here for us to develop a metric and a way of looking at our our treasury as being accretive to the operating company so that like what has what efficiencies what um what new margin has our treasury brought to our our operating company and be able to show that and expose that to tell our story. Because I think right now we are focusing on one small, but obviously big in terms of volume, part of the Bitcoin treasury

story. Ultimately, and the best part is not many are thinking about the Bitcoin treasury in the way we're talking about it here today. And so I think that's really where our edge is going to be. It's going to show up in how we make decisions, how to build our treasury. But I think it's incumbent on us as kind of first movers here is to make it transparent about what like what is the value here and as we're getting to report on that i think that's going to drive a whole another um uh you know wave of of companies that are looking at the treasury not just to maximize sats per share and leverage yourself up but also wait this can make this can give us better products for our customers this can get us better margins for the company and uh it's gonna that

will lead to its own push to integrate bitcoin in its own way yeah i mean i can't stop thinking about the airline example like imagine if they were to replace points with bitcoin rewards and they were able maybe that's how they go about stacking bitcoin they take their cut from the rewards program put it in the bitcoin over time they accumulate enough to get a lower cost of capital that they can then go and reinvest in a product and service that desperately needs reinvestment. I mean, it's pretty clear that the airline industry is one of the dogs in terms of the quality of service and its decay over the last two decades. And you think about entering Bitcoin as a tool to lower cost of capital, to introduce that opportunity cost that Grant was

mentioning into your decision making and then if your clients are coming to you because they want the bitcoin rewards all right you got a bigger base more capital let's make the product better at the end of the day like a simple example like that maybe we're idealist here maybe we're a bit naive but i think we've seen it enough and at many different levels from our perspective at 1031 watching many companies develop a treasury extend their runway reinvest fold being a perfect example that 1031 we hold bitcoin on the balance sheet it's helped us out immensely as we reinvest in our business i've seen it with tftc as well um and i think that is replicable replicable beyond just the bitcoin economy and i think over the next few years we're going to see that begin to play

out obviously like you mentioned similar strategy doing their thing but i think really bringing it it back to the operating business is going to be the next progression of this theme in public markets specifically. And talk about how it's all related, right? So Fold today helps people essentially build their Bitcoin treasury for their household. But all the same tools are used by businesses, right? So exposing Fold's existing product set, business credit card, business checking account, payouts, business debit card, rewards, and operating your company, your business. One of our most requested after the credit card was our business suite. Say, I want to operate and start building my Bitcoin treasury for my company. And we have a million

dollars in receivables and payments per month. We can earn a lot of rewards that way. We have our revenues that are coming in that we can balance between Bitcoin. And these services just don't exist yet in really mature ways but you know by the end of this year they certainly will and all these things just are kind of are just will trickle down deeper and deeper into something that is conceptually true and a good thing to do to being a couple clicks set up and you're off to the races and you know that's where we think fold can also kind of have this loop of you know we our treasury is also going to help you build your treasury and again that incentive alignment and nailing that because we know the appetite is out there and so airlines will come but first you know

our fold customers a lot of them are entrepreneurs business owners and are eager to do this right away and you know it's going to be one of those you're seeing you know at the bottom up moving and just the top down is also making there will be some uh you know early movers there and uh you know soon bitcoin will eat the world and i don't think that that world is is very far away yeah absolutely um well look i think uh before we uh shift gears in terms of conversation i think this one like the discussion about fold has been has been great i mean one of the things i i really love about fold uh and our involvement with you guys has just been that you all have continued to evolve and grow with the market. Um, yet our original thesis,

uh, when we first invested still very much remains intact. You know, like I could, I, what I, if I would have written it down on a napkin, uh, four or five years ago, whenever we first invested, uh, I think everything that I would have written on that napkin is still the exact same. Uh, and we're very, uh, proud to, I don't even know what the count is at this point, like invest in you guys four or five times and, um, continue to grow our, uh, involvement and participation with you guys, uh, over the years and get involved with the, uh, the public listing and now even involved, uh, uh, post that, uh, at the board level. So, uh, we couldn't be more happy with supporting you guys and what you're going after and uh you know excited to

see where it goes from here we uh absolutely mutual i don't think we could have imagined uh the partners that 1031 has become uh to us and absolutely not just pivotal in being there in terms of you know moments when we we we want to we want to expand and you helping unlock the capital in which to do that. But also the attention to the product and helping us open other doors that, you know, I think folds story while we're telling the same story, we're just telling it on a massively larger platform than we have prior. And I think that has a lot to do with the partnership and collaboration we've had with 1031. So it's been a hell of a ride, but wouldn't have wanted to do it with anyone else.

feelings mutual it's been one hell of a ride it's only just beginning to a certain extent it's just the beginning for bitcoin for for fold for 1031 the the possibilities are endless and i think it's almost a that will you don't have to stay on you're very busy man we're gonna we're going to talk about other topics particularly this this shift in perspective um on the industry from dc specifically but it's it's i don't want to say it's unnerving but it's like holy crap i can't believe that things seem to be as good as they are right now in terms of where bitcoin is from its institutional stamp of approval and the the positioning of bitcoin at the federal level and at the state level here in the united states where it seems like this current administration

is very willing and eager to implement bitcoin into what they're doing and it it's almost poetic that we're here talking to you and talking about this topic too you're transitioning to public markets really taking it to a larger audience but bitcoin uh the asset has really taken that next step into uh being taken seriously on the geopolitical and at the federal government level. And it's really our time as an industry to level up and meet the sort of demands of Bitcoin being in the spotlight. And it's a much bigger thing. I never thought that my first time going to D.C. would be to get in a room with a bunch of senators talking in earnest about Bitcoin as a strategic policy and defense tool. And yet there I was. And so I think it's

been a phenomenal journey. But we're definitely not in Kansas anymore, as they'd say. So guys, it was great to be here today and chat about Fold and Bitcoin. I'll let you to the larger topics that you're getting to thank you will keep crushing our brother see y'all will reeves what a gentleman what a stud yeah no it was funny because he was in dc grant you were there matt jonathan were also there but again that's a couple other things we wanted to touch on while we're recording an episode is some stories from the road and i think the most recent trip where multiple of us were in the same place was dc at the bitcoin policy institute event co-hosted with senator lummis really trying to shift the overton window

particularly about the bitcoin strategic reserve and ways in which the government could go about acquiring one why they should do it and as i mentioned right before will left it is it was crazy being in that room and will mention it with senators and you had rokhana obviously senator lummis senator justice from west virginia one of the representatives from alaska all up there saying we're all in on bitcoin american needs bitcoin and it was honestly surreal seeing that that level of discussion um in dc especially considering what the discussion was like only six months ago when biden was in office yeah i mean we we are this is grant's favorite topic by the way yeah so this is a politics show so politics is grant's favorite topic he loves it

even more than bitcoin so that's why we want to make sure we always hit on the politics while he's here i'm ready to chime in but i mean yeah like 12 months ago like the the two constituencies in the federal government were those that essentially couldn't pronounce Bitcoin, right? Like they, you know, had no inkling of understanding of what it was other than, you know, digital tulips, like maybe. And the other constituency actively wanted to kill it, you know, and push it offshore as much as possible and attack Bitcoin mining and attack any company, even at the banking level that was, you know, doing business in or around Bitcoin. And so, yeah, it's certainly wild that basically 12 months later, you've got

bipartisan consensus that Bitcoin is strategically important and something to take seriously. And yeah, a lot of it's pandering. Yeah, a lot of it's just going where the votes are. But it says something that Bitcoin is even enough of a voting block and a voting issue that they feel that it's profitable politically to spend time doing that and to coming to, you know, events like the one that Bitcoin Policy Institute held in D.C. So pandering or not, it's certainly a very fast sea change that none of us were expecting. It is. And I don't agree with all this guy's policies. He was I think I believe he was out there talking about putting a wealth tax on people earlier this week.

But Ro Khanna spoke at the event, too, and that he honestly his presentation or speech, whatever we're calling it, was the most refreshing because it was just like straight to the point. like bitcoin is technology i don't know why we're having a big fight over this of course the united states should embrace technology and i thought that was an incredibly succinct and profound way of positioning bitcoin in dc and as i mentioned don't agree with all these guys policy and obviously i'm incentivized and for him to pump bitcoin but earnestly that was the most refreshing take on bitcoin i've heard from a politician sometime it's just technology the u.s should be leveraging it yeah um no doubt look i uh you know there's a hundred

angles we could we could attack um from from dc last week um you know i think one that's maybe in bitcoin circles flown under the radar just a little bit is um paulo autorino the uh ceo of arduino i'm i'm an i'm an idiot american so he's gonna have to forgive me for my mispronunciation. But in any case, making the trip over to America for the first time ever to give a great talk with Jack Mallers of Strike on Tether, their strategy, how he thinks about what they're building. And through all of that, also, you know, indicating that they still view Bitcoin as kind of the apex asset, despite having hundreds of billions of dollars of Tether minted over the last, you know, five plus years.

And, you know, it's just notable given that he would feel the need to do that, the desire to do that, given who the secretary of commerce is and Howard Lutnick and his firm's relationship to Tether and custodying their many, many treasuries. And, you know, the fact that some some new data last week showed that Tether was the seventh largest net buyer in the world of T-bills last year. And I wasn't saying they jumped up to let they were 16th in the world. The last time that list was was made public and to jump up nine spots in less than two quarters is insane. Yeah. I mean, I think there's some nuance between like the total amount of like balance sheet treasuries. they have versus like just what their net buying was last year but either way right like i mean being top 20 here as this kind of you know uh digital pirate ship yeah pirate ship thing that

launched you know just a few years back and um you know china japan dumping uh treasuries aggressively over the last 10 years including last year while tether is you know just uh coming on stronger than ever um you know whether you like it or not whether you like stable coins or not I think we're all decidedly neutral on the, the value of stable coins. Like that's not really the point. Um, it's, it's pretty clear from recent signposts that, uh, there's a lot more interest in, in DC in how, um, you know, I think policy even said in this talk, how, how Tether can extend dollar hegemony, uh, you know, globally. Um, so, I mean, that's, uh, not directly a Bitcoin take, But given that Tether is one of the most aggressive stackers of Bitcoin in the world, it kind of is.

Right. Like if you if you're you're bullish on overall Tether volume expanding and minting of Tether expanding, you know, that's a pretty good one way valve into Bitcoin likely over the coming years. yeah i mean really pulling on that thread of powell he basically came to the event and put forth his argument for why tether should continue to exist for anybody who's listening who's unaware there there was a an article in the wall street journal a couple weeks ago and it has become abundantly clear that uh circle based in the u.s went and circle and tether have two very different trajectories launched not too far away from each other but circle went the route of becoming as compliant as possible integrating itself into the banking system checking all the boxes from kyc aml sock to all that and it seems like they're a bit but

hurt that tether is significantly more successful than they have been to date and then you have tether which as we mentioned has been this quasi pirate ship um purveying the the waters of global dollar markets uh for the better part of a decade now or more than a decade they launched in 2014 so almost 11 years now and has taken the market by storm it's 146 billion dollar market i believe right now and paulo is basically saying you may not like us there may be a lot of theories about what we do as a company however the proof is in the pudding we are on the ground in these places around the world providing people with access to dollar instruments in the form of stable coins and one thing i can tell you from being on the ground in these places is that we are directly competing

hand to hand with brick stations that are trying to get their digital currencies into the hands of the people that we're we're coming into contact with in emerging markets and in markets with high inflation rates and so his pitch was essentially if you kill us you're basically taking out boots on the ground in these emerging markets where BRICS countries are directly competing to get their digital their digital fiat instruments in the hands of these individuals and So if you want the American dollar to remain the reserve currency in the world, in these places at least, you're going to need Tether and our boots on the ground. I thought it was actually beautiful, and the anti-ESG, anti-woke capitalism capitalist in me was cheering him on because he said you have all these NGOs that have spun up and really beat the drum of we're going to solve the banking situation, emerging economies. We're going to bank the unbanked.

We're going to make sure that these people have access to financial tools, but they literally have nothing to show for it. Whereas Tether, I believe the stat that was thrown out there, has sped up 400 million wallets globally. And that is 400 million wallets that have had access to dollar instruments in the form of stable coins. And then obviously the demand that giving these people access to stable coins produces for treasuries is something that is top of mind of the U.S. federal government as they try to figure out what to do as you see this multipolar world beginning to form where sovereign nations that were once strong buyers of u.s treasuries are are beginning to dump them i think it's just um a strong argument a strong message um and they're clearly flexing their muscles um i think also advertising on twitter and putting that usd.cool website and

sort of like uh effectively marketing to i mean i don't know like what the target audience of that was if it was beyond just us twitter users but like that to me seemed like a little much um i think it's i think it's the politicians right because you have these two acts stable and genius act i believe the stable act would sort of cut tether off at the knees they're trying to signal like hey politicians be careful which bill you actually pass because if it's the wrong one you're not going to have a foothold in all these markets that we're in anymore and it's going to be very hard for somebody like circle to go do that especially considering the kyc aml um sort of a straight jacket that that would be thrust onto the market with the stable coin or the stable bill

if i'm a if i'm at treasury department or if i'm a politician um kind of thinking through some of those dynamics you know i hear paulo say something like we have decentralized the holders of u.s debt right and he made a great point in the um the fireside with jack that you know with china with with Japan, with any sovereign, effectively a guy, maybe a committee, wakes up one day and says, you know what, it's not in our interest to hold so much U.S. debt. Let's diversify into other assets, gold, whatever it may be. With Tether, if they're spread across the world with millions, hundreds of millions eventually of holders, of individual holders, the same dynamic does not play out, right? So that can be, especially if, as in if the product community is proliferating,

um, a valve for treasury demand that can't just be kind of unilaterally turned off, um, overnight or, you know, the course of a year or something, if, uh, some, some sovereign decides that it's no longer in their interest, um, to hold treasuries given, for example, what, uh, what they saw with Russia's treasuries a few years ago. Right. Um, so the, the reaction function, um, to, to news among tether holders is going to be very different, um, and thus tether as well. Um, and so, you know, if I hear that and I hear there's effectively growing demand synthetically for a wave of new U.S. debt in a world where a lot of my holders I've been relying on for the last 30 years to fill that role is kind of declining, you know, I'm interested in not cutting off at the knees

that offshore market for potentially like trillions of dollars of new issuance over time, especially given how much debt needs to be refinanced in the next couple of years. yeah and to be clear stable coins are inherently unstable unstable they run on the dollar and bitcoin is certainly distinct from stable coins but with that being said as we mentioned there's been clear product market fit and at a time especially with tariffs going on right now You can easily see one country who is finding themselves on the wrong end of a Trump tariff because he doesn't feel like we're getting a fair deal, saying, you know what, we're going to get back at you by dumping our treasuries, like having that latent demand. And it's only going to be increasing from here as other central banks and governments continue to debase their currencies. The dollar milkshake theory is that all these currencies will fail up into the dollar.

And if you're the U.S. government and you really care about dollar hegemony and you want to make sure that they're failing into the dollar, you better make sure that you have instruments to make that as easy as possible. And it's inarguable that Tether running on Tron is the way in which many people in emerging economies get access to the dollar system. Download a wallet and either exchange their fiat currency for Tether or have somebody send them Tether straight into a digital wallet. Yeah, so I mean, look, we're not entirely a politics and stablecoins podcast. We're all Bitcoiners at heart. We run a Bitcoin fund, and it's our bread and butter. And we think remains the most interesting, compelling investment opportunity, both the asset and the ecosystem in general, over the next several decades. So none of this should be taken as stablecoin apologia, more just a clear recognition of where the winds are blowing.

And acknowledgement, too, that that could have potentially positive downstream implications for Bitcoin over time. Um, though the flip side is I'm not sure any of us are highly enthused about, uh, further, uh, finding a new valve for funding, um, runaway, uh, fiscal access at the federal level, which may be the, the unfortunate knock on effect of a proliferating stable coin market. Yeah. Well, I mean, one of my one of my takeaways over the last several weeks was, you know, well, first, when when BlackRock filed for their ETF, right, it was like, oh, well, the suits are coming. Right. This is like we sort of we've been waiting for it. And people were really expecting the suits to just infiltrate all these Bitcoin events. and sort of my Bitcoin events, the Bitcoin ecosystem, Bitcoin just as an industry. But one of my takeaways over the last several weeks was it's sort of like the other way around,

that the Bitcoiners are infiltrating these suit events. And it's like the DC, whether or not it was a lot of pandering, I do think there are some politicians that clearly understand Bitcoin to a pretty advanced level. Others are just being rallied by people to pay attention. Um, and you know, we were at the, uh, the Cantor Fitzgerald, uh, technology conference in New York. And I mean, I ran into more people, more Bitcoin people there than, um, I, I used to run into,

uh, like people that I knew in the traditional finance world at, at just typical finance conferences. It was there was a ton of Bitcoin people at this suit Wall Street event. And that just made me think, you know what, actually, like we're just becoming more relevant. And naturally, over time, there's going to be more involvement in some of these different areas, whether or not it's it's a positive or negative thing. I think I don't think you say one one way or another. It's one of those. But it's just over time, there's going to be more activity that way. yeah i think um i think that's certainly true i mean matt said i don't rabbit hole recap two

weeks ago i got in trouble people weren't happy with the framing but we are the swamp now which is hilarious hilarious framing but it is i think uh particularly as it pertains to the industry's interfacing with dc i mean we've said this on many different shows but it bears repeating especially during the biden administration and as you mentioned 12 months ago it was a much different landscape than it is today and i think the industry has become really wise to the fact that you may not care about political power but political power definitely cares about you and with that truth in mind like if political power cares about you you better put your best foot forward to to make the case for bitcoin and fight and elbow get your way into the room to make

sure that they don't blow this opportunity not only for us as individuals us as an industry but america more broadly because bitcoin presents an incredible opportunity for the country if if the government does anything and just lets us alone lets us do our job funding companies and those companies going out and building products and services to get bitcoin into more hands and products america will be just fine the sbr if and when it ever materialized that's just icing on the cake for letting individuals companies um get bitcoin into the hands of everyday americans and we mentioned it with will the sort of fork in the road that we're seeing which way western man the example with will was doordash clarna's partnership versus fold and what they're doing

doordash clarna sort of exacerbating the high velocity trash economy and pushing people further out on the risk curve by taking payday loans and fold sort of trying to bring people into a lower time preference less risky um believe it or not many people don't believe it's less risky but time has proven that it is less risky mechanism of accumulating bitcoin slowly but surely over time whether that's via rewards or roundups to make sure that they have better purchasing power But John, you and I were in New York, and I think we had a conversation that showed the fork in the road that exists in Bitcoin and broader crypto about the future and the opportunities that exist for both Bitcoin as a distinct industry and crypto as its own industry that sort of has different types of end consumers that they're targeting and ways of monetizing that are distinctly different from what's happening in Bitcoin. Yeah. You know, Marty and I were at a dinner in New York sitting across from a respected, well-regarded and successful kind of trader within broader crypto. and you know his the thesis he was pitching to us which frankly i don't unfortunately entirely

disagree with um is that you know the the next big meta to invest in um in crypto broadly or just anything is kind of the the gamblification of of everything in society um so taking kind of the sports betting prop betting mantra um that attitude and extending it to just anything you kind of see this with the growth and certainly in meme coins, but also, um, zero day to expiry options that have proliferated in the last few years. Uh, people just kind of wanting that, that hit of gambling on, on everything that they do in their lives. And, um, you know, to maybe to illustrate the point, um, you know, I, I told him, uh, initially I hear where kind of where you're coming from, but certainly feel like we're, we're probably in the eighth inning of that

given, um, if anyone's following broader crypto and I don't necessarily recommend you do, but there's a meme coin platform called pump.fun that allows, uh, users to spin up meme coins. Um, and, uh, unfortunately, very sadly, um, in the last month, uh, someone, um, you know, took their own life and did that to basically generate a meme coin. And then at a meme coin was, was made out of that, you know, very sad event. I told him, well, if you're seeing that, then that's got to be the eighth inning of this kind of gamplification kind of trash economy, instant gratification mindset. Surely we're kind of coming up on the end of that. And his response was no, no, we're in the second inning. You'll know that it's the eighth inning when thousands

of people are doing that. Right. So a very kind of dark outlook for, um, where a lot of society may be going. And unfortunately I, in, in the short term, you know, I don't necessarily know that he's, he's wrong on that. Um, if people are doing, um, you know, layaway, uh, installment burrito financing, right. Just, just to get by, um, drowning in debt, feel like they, um, you know, can't achieve anything resembling the American dream, feel like a house is out of reach for them, feel like, you know, a marriage and kids is, is out of reach for them. Um, then yeah, you'll see, I would expect you've seen this in prior, you know, kind of, uh, societal collapse episodes. Not that we're necessarily anywhere close to that, but as things kind of deteriorate

in people's lives. They, you know, they want to take the, the one shot quick bet to riches, um, because they, you know, feel like they don't have anything to lose. Um, and so, you know, the kind of, there's a, there's a thesis that says, let's build basically tools to kind of fully just enable, enable that, um, you know, growth and, and degeneracy and gambling. Um, and that may well be kind of profitable in, in the short term. Um, and then there's the lower time preference kind of Will Reeves type thesis, which says, um, you know, another life is possible. Uh, let's, Let's see if we can build on the soundest asset that mankind has ever discovered or has ever been invented and, you know, build out a fairer monetary system, financial system and greater opportunity set on top of that. Um, and so I think, you know, I tell that story just to indicate that that's kind of the tenor of, I think, where we found things over the past few weeks at a lot of conferences and a lot of our travel is, um, there's definitely still, um, you know, a, a desire for the, the one shot path to, um, being a, being a billionaire, the yield conversation, um, the, the crypto yield conversation is, is stronger than ever.

um seems like people did not learn a lot of lessons from past cycles unfortunately no they did they're just implementing them well they're gonna implement it better right you know real crypto yield has never been tried right um just just like real communism and various other uh you know real things that have never actually worked out um so you know that that conversation is still continuing but just highlights you know the i hate to say you know we're so early uh it's It's such a meme. But I do think, you know, we are quite early in society and financial institutions, big pools of capital kind of understanding like what the long term play is here. Do I want to invest behind a couple of years, maybe of, you know, a one shot path to to riches that, you know, probably has a negative expected value because vast majority of those will end in, you know, zeros and tiers? Or do I want to look at what's happening with events like the BPI conference, with the SBR executive order, with the way that conversations are moving at the highest levels of governments around the world?

And do I want to look at maybe how Bitcoin plays into that, what that means for the pathway for the monetary system over the next, you know, hundred years and, you know, maybe invest behind that much stronger, more pervasive, longer lasting theme. So that's the as I see it, that's kind of the big differentiation from a lot of the conversations we've been having the last month or so. yeah that's i mean that's pretty consistent also with what i saw at the canter uh conference i mean even though i ran into a lot more bitcoin people there than i ever expected the conclusion wasn't that all right well people found the bitcoin signal like another conclusion was that you know, cryptos back. And I mean, I was listening into discussions. Uh, there was one in particular where if I closed my eyes, I, I could have sworn I was listening to Sam Venkman Freed, like the, the word salad crypto mumbo jumbo nonsense about, you know, wallets and

tokenizing real world assets and, um, all the, you know, all of the solutions that they've, they've found for, uh, expanding crypto use cases, uh, to me, I was convinced that, you know, this time is not different. Um, we, you know, the people in the space will not make the same mistakes, uh, but they will, you know, they'll make similar mistakes or variations of the mistakes that have been made in the past. And where have we seen those? We've seen those, um, with people not understanding counterparty risk and not understanding leverage and especially combinations of both of those two um and so i think we'll see it again um but you know at the same time i you know we saw some data earlier today uh from carta on um fund performance which we haven't fully

digested yet. But I would say overall, as would not be too surprising, private capital funds have not done terribly well over the last five to seven years, particularly vintages from 2020 onwards. And I think there's going to be a pretty significant distinction between, you know, those that have misallocated capital and hopefully groups like ours that I would say, if you look at the top decile benchmarks out there, they're not very impressive and would suggest that we feel very good about how our funds are performing relative to those benchmarks. And so I think over time, people will start to realize that there is a difference and taking a longer term approach and fundamentally investing behind first principles, businesses that have sustainable

business models that can actually make money, you know, the pendulum will swing back. It may not be swinging back in the mainstream mindset just yet, but over time, I feel pretty confident about it. No, no. I know we got to wrap up soon, but I do want to touch on this real world asset and the reemergence of defy staking yield collateral that is manifesting in in broader crypto because i think it's to your point grant a going to be a massive kerfuffle for a lot of people because the the lesson that has been learned is being implemented this time around is you can't have sushi swap and and uh what are the other tokens that came up yams whatever the defy as it was implemented last cycle was wrong because you had all these ephemeral crypto tokens that were just

spinning up out of the ether and you found that the volatility of those underlying tokens was such that it made those protocols insecure unstable and ultimately illiquid this time around we've got real world assets we're tokenizing the real world assets you know them you live in them you've touched them you talk about them every day we're bringing them to these protocols we're allow you to get partial shares in them and then you can use those real world assets a digital representation of those real world assets in the form of a token we launched um to to then implement that into defy and use that as collateral and trade it partially and get yield on that and i think that completely misses misses the point too me on paper seemed good i actually had a call

Somebody called me randomly earlier today asking me about a real-world asset platform that spun up on Polkadot, and they're going to tie gold to a token. They're going to allow people to stake it and all that, and I talked the guy off the ledge or didn't even have to talk him off the ledge. I was just trying to explain the dynamics of this market to him, and people are very confused. And I really – if you're out there and you're curious about this and you're sort of open-minded and you're joining this podcast to hear the Bitcoin perspective, I would go read Parker Lewis's Bitcoin is the Great, Definancialization. And I think that's what a lot of people in DeFi, particularly those who are focused on the real-world asset tokenization theme, that is going to be – it's going to be big. People are going to spend a lot of money on it. People are probably – some people are probably going to make a lot of money on it. But I think in the long term, they're missing the forest for the trees.

Bitcoin, and I think Fold's a perfect example of this. Bitcoin as a savings vehicle, you finally have money that does not get debased over time, allows you to de-financialize your life. You don't need to go out in the risk curve and create all these collateral products to generate yield. You have better money now. You can just save money. And guess what? it increases the purchasing power over time because it's scarce uh people are missing that though and particularly what i would worry in the medium to long term for these world world asset

um defy protocols is what you're looking to tokenize main focus is on real estate and you're going to be tokenizing this real estate putting it in these protocols and i think what we're going to see over the next decade is a demonetization of real estate and flow into bitcoin which is a representation or an expression of that definancialization people will recognize are recognizing already i've got plenty of data i can show you of people selling properties that they own rental properties the airbnb craze of 2020 a lot of those people bought houses spun up airbnbs realized it's uh an arduous business that comes with a lot of costs and a lot of headaches and many who are first movers are beginning to sell those properties and put it

to bitcoin and i think that trend is only going to continue and you're you're beginning to tokenize assets that are being um their their price is being corrected to their correct value which is a consumption good with maybe some premium on aesthetics location and all that and it's going to be a big theme calling it right now there's going to be a lot of money poured into it there's going to be a lot of tokens spun up it's going to be a lot of people flashing look at what we did we revolutionized finance. We brought all this to the digital world. But Bitcoin is the great de-financialization and all that is noise in the medium to long term. The best thing I can tell you if you're interested in RWA protocols is A, yeah,

read the Parker essay and all Parker's essays. Also read, there's a great Bitcoin author named Gigi Pseudonymous, G-I-G-I. If you Google Gigi memes versus the world or Gigi bananas on the blockchain. Um, I think that it's a very succinct kind of summary of why, uh, those systems just make no sense and don't work. And blockchains are not optimized for anything that needs to be any data or any transaction that isn't endogenously enforced on the blockchain itself, right? If it needs a, um, an enforcer, like a court or police or something in the real world, then you've just invented a more complex kind of database basically, um, to, to, to store records. Um, and you know, it's worth remembering, even if we, even if we granted that there's

some more efficient way to tokenize equity, to tokenize bonds, to tokenize real estate and provide, um, you know, access in that way, the value of any of those tokens will be entirely and exclusively related to the cash flows that can be generated from the underlying, right? People don't want, people want Nvidia stock. They don't want a specific NASDAQ token that is, you know, only traded on the NASDAQ and And thus, you know, that token that, you know, share that's on the Nasdaq has value for some reason because of that. They just want NVIDIA. So if NVIDIA is on Nasdaq, if NVIDIA is on NYSE, if NVIDIA is on exchange I just made up, people just want the NVIDIA.

They don't care about your token. They just want the underlying. Right. Same things, same things here. And that's why Bitcoin is fundamentally different. People want the endogenous ledger unit itself with Bitcoin. It is an entirely closed system where the map is the territory, and that's fundamentally different than putting bananas or real estate or NVIDIA stock or anything else on the blockchain. So important to remember that as that craze inevitably heats up this cycle. You heard it here first. Clip it. Come laugh at us when it's blowing up.

Not when it's blowing up, when it's very popular a year from now. But we call our funds low-time preference funds for a reason. We'll come back to you six years from now and be like, ha, remember that craze? Remember when we thought that was going to happen? We'll be here. Gentlemen, we got a long rip-in. It was a while between recordings.

I'm happy that we took some time to really dig into things here. Shout-out to Will. Thank you, Will, for joining us.