TFTC: A Bitcoin Podcast - Tales from the Crypt #38: Nic Carter

Episode Date: August 14, 2018

Join Marty as he sits down with Nic Carter, Partner at Castle Island Ventures and co-founder of Coinmetrics.io, to dive into the current state of the cryptocurrency landscape, Augur, blockchain data, the evolving narratives in Bitcoin over time, and how Nic and his team approach investing in this space. Follow Nic on Twitter: @nic__carter Follow Marty on Twitter: @MartyBent Check out Castle Island Ventures: http://www.castleisland.vc/ Check out Coinmetrics: https://coinmetrics.io/

what is up freaks welcome back to tales from the crypt it's your boy marty bent here on a tuesday night the humidity has broken it's finally comfortable out in new york city before we start though uh per the request of john newberry after last week we're going to pour some out for herman hesse his favorite author uh you don't have to do it nick i just had to do this for john just to appease you so john we just poured some out for herman hesse and i don't know if you freaks could hear him in the background but i have nick carter in the studio with me nick welcome to tales from the crypt thank you marty glad to be here well i appreciate you taking the train down from uh boston i know uh makes you a little bit of motion sick

yeah i get motion sickness well it's a genetic thing hopefully this bourbon will help you get over that all right and and beers cheers we're uh we're double fisting uh bourbon and beer cores light and bullet bourbon uh pulling out uh i forget the artist's name not john therigan whatever we're here to talk about bitcoin blockchain uh for those of you that don't know nick carter is the co-founder or excuse me the partner a partner at castle island ventures the co-founder of Coinmetrics and a fellow shitcoin minimalist. Nick has never listened to one episode of Tales from the Crypt, so he's coming in blind.

Nick, the way we usually start this off is, how did you find Bitcoin? Well, first of all, thanks for having me on the show, Marty. Yours is one of the few podcasts I will ever do in my life. The people that know me know that I have a no-podcast policy. Well, I really appreciate that. I'm honored. So I'm violating that, you know, because you put me in your newsletter all the time. So keep doing that.

Thank you. I'm sorry you get inundated with that rag every once in a while. It's a good one. As someone who was born a Brit, I have to inform you that Marty's bent is a vulgar term in British English. Really? Get bent. I mean. Yeah, get bent.

Well, it's sort of extremely vulgar. Yeah. I'm a pretty vulgar person. so it fits bent in the uh like you're you're a master of the english language too so i'm very worried about going into this description but bent the way i use it uh is sort of as an inclination or a tilt towards something well i mean i know what it means in the intended use you know well i am basically telling most of this landscape uh cryptocurrency landscape to get bent uh a lot of what i write about that's an appropriate strategy there's a lot of you know

wrong they need to be straightened out basically uh we're gonna get deep into this first how the hell did you find bitcoin where were you um i was uh where i always am which is just on message boards you know online um i think the first time i saw i was like slash dot 2011 i used to be a big slash daughter um and then uh i was also a big redditor um og redditor i wish i still had those accounts because i could see all the stuff that i would have said back then about it um but yeah i i mean it was posted on on um just like on on the tech forums a whole bunch in the early days yeah i think the first time i was on slash dot was like the third or fourth uh uh upgrade of bitcoin core satoshi's implementation i don't the the dates are

fuzzy for me now but uh i you know i don't really know what it was kind of was interested a little bit curious i was like sort of libertarian so i kind of liked the idea um but i i you know truthfully didn't seriously get into it until like 2015 16 so there was a very long discovery phase for me that uh it's pretty common between a lot of people you first see and you're like what the hell is this not really interesting and then you come back to it and fall down the rabbit hole so what sort of pushed you back into it um so so the the first um the first real interaction i had with any cryptocurrency was dogecoin um in uh in 2013 and i i don't know if you remember but there's a very vibrant tipping culture on reddit on reddit yeah you know i i'm an extremely prolific

redditor um thousands hundreds of thousands of karma you know very proud of my accumulated karma um and and i had like so much fun tipping people back and forth on uh on mostly on the big well on the dogecoin subreddit too and you know those are like there's this fun communitarian thing where we like crowdfunded the uh the jamaican bobsled team and the nascar car the nascar car yeah who uh who just funded another nascar car yeah i did yeah i saw that right but it's like they thought it was original too you can't it's not cool anymore dogecoin did it five years ago that's the face that was on the uh the nascar yeah so it was fun back then and now it's just extremely derivative yeah so i uh yeah people send me a bunch of dogecoin and we had so much

fun like tipping thousands of worthless dogecoin around i mined some dogecoin because i there was a one-click miner you could do and yeah um and i it was so stupid because i melted um a pretty nice macbook because i was overclocking it on this thing um i was in college at the time and that was the end of that uh that was the end of that macbook where were you studying uh university of st andrews in scotland hell yeah so um i i there was you know i minded a net loss because the the sort of hardware depreciation kind of got me that'll happen yeah a relatively new net macbook oh it was it was pretty old at the time so i it was a good excuse to get a new one but that was my first brush really with uh with uh cryptocurrency yeah and i i mean i think i've

been following you on twitter now for a couple years you're a huge monero head at one point at one point your avatar was very monero focused yeah we try and keep that quiet these days are you ashamed of your monero i just have to be a little bit more presentable these days it's true you uh you do look like a nice proper young man in your in your avatar now yes that's right i i uh i now i'm in full color i have a color avi on twitter it's great um yeah so what is the sort of philosophy that drives you towards this stuff like you said you have a libertarian background well not extreme libertarianism but uh definitely you know definitely believe that um that any form of non-state money is excellent bargaining power

um with which to reason with central banks and uh you know potentially convince them not to engage in extremely loose monetary policy um that's that's really my contention on on all this stuff Yeah. And so at one point, again, I don't want to harp on it. You were into Monero. So you think fungibility is a big need for these cryptocurrencies? Yeah, it's essential. It's essential. Gold can be melted down and transformed. You know, it could be, it could have been used for abominable transactions. But, you know, once verified and stamped, it's still the same gold. Gold has no sort of memory associated with it. And, you know, cash, physical cash hardly does. I mean, you could argue that serial numbers are the memory. but i don't think money should have uh memory associated associated with it and uh unfortunately bitcoin has that yeah that doesn't necessarily degrade bitcoin's value proposition too much i'm like fairly optimistic about fungibility enhancements um but uh it's definitely a problem what do you think about um the new wild upgrades have been coming out specifically with samurai

and wasabi like it seems that you can do coin join and stuff within a wallet without a counterparty uh so it seems like wallet ux is helping create a better more fungible bitcoin uh yeah is that are you seeing that too or is there like ways to to skate that system yeah so i mean you have fungibility enhancements at the base layer like obviously that's what monero tries to do um and then you know interestingly you have it at the kind of transactional layer now uh with wasabi and uh samurai's whirlpool um and uh actually samurai has a whole host of enhancements and kind of premium transactions you can make and i'm like super optimistic about that stuff that's awesome yeah but do you think it ever gets to like a consumer ready level where like

that is like the go-to wallet and well most consumers don't really they're not willing to pay up for privacy and those transactions will oftentimes be more uh expensive or more inconvenient you might have to wait for the mixing rounds to occur and all that stuff um but uh i'm pretty optimistic i think the samurai guys are are on the right track and they've like really really you know four-sided ideas about all this stuff yeah i uh am waiting with bated breath to see their ios app if uh apple ever i know i'm i'm stuck with freaking bread wallet on this thing i don't even bother hey i don't even bother with uh phone wallets they're not what are you gonna buy your coffee with you know well the cash app is making it

very easy now another unpaid for cash app ad the best ux i've seen in this in the space to date i ordered my debit card it's uh i use it every day they uh there's a little bitcoin icon you can put on the debit card you can yeah i gave it a crown because it's the king let's talk about that bitcoin is the king you are a shitcoin minimalist what are your thoughts on the space right now there is a ton of confusion i feel like the ico boom is is turning into a bust uh a lot of shitcoiners out there trying to uh trying to validate uh their investment theses from six to seven months ago when everything was at all-time highs it feels like there's a lot of chaos and a lot of people sort of changing their minds uh particularly coming back to bitcoin

i like to think that i've been pretty consistent in this stuff i do too um i uh you know one of my first real long-form studies of icos was uh you know some of you may have read it was my master's thesis um that i wrote um at business school and i did a survey of the top 50 or so crypto assets at the time of which you know 20 or maybe 30 or 40 even i don't know were icos many of which are not in existence today um and i was looking at them from the corporate governance lens so like are these are the are the things that they're selling to investors do they resemble shareholder equity at all um you know what exactly are the rights associated with these tokens and obviously we all know that they're basically non-existent and you know i like to call it pseudo equity

imitation of equity uh it kind of looks like equity kind of pretends to be equity but ultimately there's usually no cash flows whatsoever or governance rights associated with these tokens because if they had those things then they would be beholden to like securities laws because then that would be straightforward securities um so then my view at the time was like well i see those are like caught in this middle ground um between posturing as equity and between behaving truly as equity through you know giving shareholders the rights that they deserve that they paid for which is how equity works and uh you know i at the time i i looked at this i'm like well this doesn't make sense um they're they're doing this impossible tightrope walk um and you know i think you know

what are we 18 months on now and it's very clear that um that it's it's been a colossal failure um and i've yet to see an ico that has has really sort of justified um justified itself um even if it's you know made money for the investors as a capital formation mechanism i think it's basically illegitimate one of the most popular icos of the last three years auger probably one of the first icos after ethereum yeah one of the first yeah probably like the first 10 icos in existence after ethereum launched recently what are your thoughts on what's uh what's happened there there's a couple of few assassination markets many assassination markets already apparently there's a kill

switch that can make it so those payouts don't get paid out if those events come to fruition uh but that is a use case in which some people are pointing to and saying hey here's an ico that that has worked out and uh is actually has a usable app and is being used for the purpose that that it's set out to to fulfill um would you agree with that assessment so i have a lot of thoughts on auger i wrote a blog post on auger and that thing is sitting in my medium drafts and i'm too scared to publish it because people are going to read that they'd be like nick you suck like you know that kind of stuff i'll give a fuck what people think i know um so um yeah i'm actually i have a little bit of word eating to do i need to eat my words on auger because i said it would

never be released and uh it was released so uh congrats the team um for a start because like i you know made a couple markets wanted to test it out it totally works um i i mean we don't really know if the dispute resolution mechanism works that hasn't been rigorously tested but the main market creation mechanism works which is pretty good um and and you know a lot of people speculated that augur would never release because the devs you know made a bunch of money they had a ton of eth um and then like why even bother which is the incentive problem that a ton of icos face and will be fatal to them i'm sure and i mean that's always the the guidance with startups it's like if you raise too much money then you're not going to be like hungry and then you're never

going to produce anything good yeah so um on the one hand um the auger team deserves plaudits because they uh they pushed a you know a functioning product yeah is it fully functioning though because i feel like uh the first the first markets to be made were around the world cup and there was one game in particular where the market ran uh longer than like the game ended but the market was still open for like six hours and people were able to bet on the winning team well that's just the fault of the uh the person making the market yeah yeah so there's no um checks there to make sure that the markets are you know fair good and right now it's just like oracle is sort of like good faith like this is the outcome yeah so um i mean it depends how

in depth you want to get about auger i have a lot to say about auger uh we got plenty of time i mean just go for it so um you know my view of auger is that they need to look at their competition which is um if we're talking about derivatives um and um bets on sporting events um your competition is bookies uh casinos to some degree um and you know normal brokerages and equity markets right like what are the things people want to bet on uh mostly they want to bet on sports uh they want to bet on the prices of assets which is just like typically you do that you know on whatever bonance or on uh on your like schwa brokerage um and then there's some other like kind of exotic stuff that people want to bet on which is i guess where auger uh you know where

you make the case for augur but you know they do need to consider um you know like the the rival opportunity of making a bet at the typical venues which would be a bookie a casino or a like in the public equity markets and i think for augur to justify its existence it needs to be um either better than those um from a cost perspective or ux perspective which i think is extremely unlikely so then it has to compete in a different market which is bets that people can't make at those places right so then that's the argument for augur it's like well you know if you want to bet on something really exotic or strange um then that's you know then you have to go to augur um so then the question is how big is that market um and um you know does the oracle function

perform well enough to justify that and i think the my suspicion is that the oracles will not function at a sufficient standard to um to justify you know people really putting a lot of faith in in the mechanism yeah because the one uh oracle problem that people so they threw out like using official sports league sites as oracles and once you do that you sort of put a target on those sports leagues and the people that run those websites right because if people are making bets on auger and that the bet is going to be it's a smart contract it's going to execute automatically based on what this oracle is saying people pack nba.com and change the score to a game that may not have happened in real life but yeah it's it's inevitable and it's why we typically

defer to bookies or um you know anyone who underwrites a bet we this is why we centralize those services and make them a trusted third party it's because being an oracle is kind of tough yeah and uh and it makes sense that you would defer your trust to someone and i think with augur you know for it to work it needs to be liquid and for it to be liquid there needs to be a significant amount of trust in augur the market itself and the participants so there needs to be like a virtuous cycle like a positive feedback loop there and i'm not sure if it will be able to garner the liquidity and a faithful set of reporters um you know and a good track record of no um oracle failures yeah you're sort of dependent on the technically able people that

are already interested in cryptocurrencies also being degenerate gamblers is that a fair assessment well i mean the everyone's gambling this market it's true but they want to gamble on other things not just finance or financial i don't have a financial asset and then i mean you know like i think it's also a fair question whether the sec will look into this and be like well like there's markets on like apple stock that's a derivative um you know unregulated so like should we do something about that um i don't know like there's there's a few points of failure i feel that they can lean on that um you know the common response to that is like oh it all runs on ethereum so it's fine um but there are other points of failure you know there's like infurer

processes a lot of transactions uh there's a foundation based in the u.s that can probably receive a letter in the mail from the sec you know um there's a lot of ways i think that pressure can be applied if um if u.s regulators decide to do something yeah the infura thing is really interesting to me because i feel like ethereum has found themselves the ethereum project has found themselves in a tight tough spot where they basically have this centralized entity spinning up a lot of the nodes that are securing its network or uh coming to consensus of what its network is like what if somebody were to go to infura's office and just unplug the servers I mean, it's hard to know what the reliance is on Infura,

but I can certainly say it's a source of fragility, right? It's a single point of failure. If you're a decentralized network, ostensibly, you don't want to be reliant on something like that. So it doesn't seem particularly sustainable to me. All right, and that was our Infura bashing for the day. Let's get to Coimetrics, one of my favorite resources in the space. Thank you for building it.

well the thanks are um owed to the developers not me well thank you to the developers that help you with coin metrics so for you freaks that don't know coinmetrics.io uh incredible wealth of knowledge for uh or wealth of data uh blockchain blockchain data in particular uh multiple blockchains bitcoin ethereum bitcoin cash dash monero 64 blockchains yeah there's 64 But what I really like is what you're doing on the content side and sort of jumping into this data that you're providing for free. You guys have an open API, correct? It's all free, yeah.

Yeah, free data and then jumping into it and really trying to dissect what this data is talking about. The one piece in particular that I want to talk about, or not one piece in particular, but one piece that caught my eye was the transaction volume estimates and sort of how batch transactions have an impact on the network. And then the other piece was you diving into the UTXO sets and trying to determine how much actual economic activity is happening on these networks.

So can you tell me, like, a little bit why you started CoinMetrics and how you approach these sort of data projects that you center on send yourself on i would say yeah so i started coin metrics and um when i was in business school as well um i uh yeah i think the immediate pressure was that i wanted better data of course um and i couldn't find it anywhere i like blockchain.info a lot they have great data downloadable um but that was bitcoin specific and i wanted to make cross-sectional comparisons between bitcoin and other assets like ethereum um and you know bit info charts was was popular at the time but it was hard to extract data from it um so then i thought why not you know i just run a bunch of

nodes and scrape the data and publish it and then i found a friend who's a software engineer and he helped me do that um and so the two of us basically put it together this is maybe january 2017 and initially we just had like Bitcoin data and the other UTXO chains and then we graduated and now we have a whole bunch of chains and really I'm very satisfied with the depth of the data that we have right now and we're continually expanding the data set and trying to improve it all the time so yeah I mean it was it was initially just a vanity project in order to get data for myself to analyze so I could have a better purchase of how the blockchains were doing and then I figured well like why don't we just publish it so anybody can use it

and it's always been free no restrictions on reuse everything's been open source including the actual back-end methodology so you never really had to trust coinmetrics you could run the code as well um and take data from a node and uh and use our our parser um and uh and you know find the same exact results so that was the idea was to have a sort of trust minimized source of data and also just extremely easy access to um to you know functional blockchain data which had been demystified and uh you know we we've added support now for bitcoin all the other bitcoin derivatives um ethereum a whole bunch of tokens on top of ethereum um eos uh was one we just added support for that was pretty tough we just um removed support for ripple because we had trouble

with that data set uh-oh ripple was very uncooperative what what trouble were you running into well we were trying to run a node like a full archival node and it's like seven terabytes or something and like we're like downloading it from their website and like they kept banning us and stuff it was just it wasn't going well and then we also had the the data set and there's a bunch of junk data in there uh because it's sort of very idiosyncratic very different um and uh in the end we had to uh the data we were putting out was like just total garbage uh and so we felt that that wasn't meeting our standards so we're revisiting our ripple i mean we're still going to try and support ripple because it's like you know major chain um but uh it is major bill clinton

speaking at their next conference bill clinton you know that's how you know you're you're doing well as a blockchain you get the man who enabled graham leach bliley to come in and and speak speak on your behalf yeah it's fun it's funny how it's funny how like short-sighted they are and how unaware they are, like how self-unaware they are to announce that and just think, like, people are like, oh, yeah, Bill Clinton's on their team. Let's buy Ripple. Yeah, he presided over the longest peacetime economic expansion in U.S. history back in the 90s.

So let's jump into the economic activity paper that you guys wrote. like so ethereum had a huge mixer right that accounted for a lot of his tit so there's a lot so that's why i wanted to bring you in mainly was talk about data because you're data nerd and you've jumped into this data and you sort of understand it on a better level than most people that i've met and conversed with and the data i would argue a lot of data in this space bitcoin ethereum at any chain uh it's sort of i don't want to say it is a lot of the data is vanity metrics but a lot of what people are publishing and pushing as uh advertisement for these blockchains is sort of ill-advertised and and they're not really telling the full story so with example like ethereum

claims to have so many transactions a day but some people argue that a lot of a great majority of those transactions come from a mixing service that is used within the network so yeah the uh the tail of the mixer is a very interesting one um so um i'm not using mixer pejoratively here i'm just um using it as a shorthand to describe um the algorithmic generation of a bunch of transactions which are designed to obfuscate um the origin and destination of some amount of uh ether bitcoin um i i don't know who is the real time the real uh real world um identity you know linked to the mixer but it to me looks enough like contrived volume that i'm sort of comfortable calling a mixer so um in september uh 2017 someone published a blog post on medium called

huge ethereum mixer and uh it was basically arguing that they'd found um pretty odd patterns of behavior on ethereum and uh i read this with interest most of the comments were saying this is nonsense actually and like oh this is just an artifact of the blockchain um you know this is actually just gdax you're just looking at gdax data um but um this this um argue i think vitalik is actually in the comments there too but this medium post argued that um you know that there is all kinds of interesting patterns whereby there's a single entity which is controlling like 80 of ethereum transaction volume in dollar terms right um and uh i thought that was really compelling and also since i'm interested in the ground truth about the usage of these blockchains

you know it was compelling to me i don't like the the like potential criminality aside this is just an interesting data point because it would mean that um the data i'd been looking at for months was total junk data because it was inflated by a factor 10 or something so then um i eventually found transactions on etherscan that looked super suspicious they they had a very particular pattern it was three in two out and it would go on and and typically they'd be in very precise amounts which were very you know repeated and they'd go on for chains of 10 000 transactions at a time three and two out three and two out three and two out as long as you could click on ether scan and i'm like well this kind of looks like a mixer so um then i set my my engineers on

the task to find out what it was and i i found that several treasuries of high profile icos had been feeding transactions into that single chain right really not naming names so that really piqued my interest really piqued my interest and uh and so then my uh my devs at coin metrics built this transaction graph on ethereum and they created a graph of all the one-time addresses which are addresses that had their only interaction with ethereum being within a 24-hour period entrance and exit um and they um created a graph with all the vertices being the transactions between those one-time addresses and in the end it created a super cluster of addresses which ended up basically being linked to well you can infer there was a single entity doing this stuff

and uh from that we uh recreated the mixer pattern totally um reproduced the result found in huge ethereum mixer and also on this other website called bloxy.info and uh so we reproduced that effort um and found the exact same result between about february 2017 february 2018 about 80 ish percent of all ethereum transaction volume in dollar terms was due to this single entity shuffling ethereum around which is really significant and we felt that you know we had to subtract it from the Ethereum data so in the adjusted transaction volume figure on Coinmetrics

that subtracts out the mixer volume which I think is sort of a more authentic presentation of the data that said we're being a little bit arbitrary because there totally are and like were mixers on Bitcoin which are inflating

transaction volumes but we haven't necessarily done the work to find them yet is it harder to find on bitcoin than uh ethereum because ethereum is what they're they're based off a state and bitcoin's based off a utx yeah they're they're different ethereum's like an account model and bitcoin's utxo but uh my subjective feeling is that there are fewer mixers on bitcoin right now uh and i the reason we went after the ethereum one is because i just kept running into it all the time and it was very evident and it had a very unique

sort of fingerprint so then i wanted to investigate it but um in you know in the coming months we'll be investigating uh well we actually did apply these heuristics to bitcoin which should have subtracted mixer volume anyway so we probably should have subtracted it it might be subtracted in the adjusted estimates so bitcoin the king let's let's get on it like how much economic activity do you think is actually happening on it right now it looks like you're between one and billion a day um on bitcoin that's a good amount which i think would really surprise uh you know no coiners um because they tend to think that these things are just nonsense but like if you look at the data they're really being used and i actually ran the numbers recently and

bitcoin right now is only one order of magnitude away from visa's transactional volume so what It's only one 10x away in terms of dollar value transaction volume per year. So Visa does about $8 trillion a year. That's throughput of volume. Yeah. So when I say volume, I mean like in dollar terms. And then Bitcoin does $800 billion if you annualize it right now. So that's just one single order of magnitude away from Visa.

Obviously, in transaction count, Visa does way, way more. but empirically bitcoin is used for huge transactions like we know that people use bitcoin to buy houses and you know all kinds of crazy stuff i don't know actually but people are moving hundreds of millions of dollars around for some reason probably buy houses i'm sure venezuela north korea and some other despot states are that's something what i want i wanted that's something i want to find out like what are people doing with these billions of dollars and because because your average bitcoin transaction is pretty big it's on average how how big um you can go on quite it's if you go on coin metrics it'd probably tell

you that it's about um 30 maybe 30 000 go to charts um yeah it'd be in the tens of thousands but your median bitcoin transaction is probably um in is in the hundreds but yeah right now what is it third yeah 30 20k ish yeah yeah wow that's surprising yeah so your average bitcoin transaction a it encodes a lot of outputs normally and the peak in january was about 115 000 yeah so so you know bitcoin is like this industrial network it's really not a coffee network um functionally it's used to settle huge transactions between like large capacious economic entities maybe it's exchanges transacting with each other i don't know nah this is the first time i've ever looked at this shard in particular i mean it's more

informative to go to median transaction value value because you know it's very skewed it's a right skew so your median transaction on bitcoin is going to be 230 right now yeah so but if you look at your median or average visa transaction it's really really small yeah so you know people compare transaction count and tps on both networks to me they're it's like apples and oranges bitcoin is a settlement network um that settles you know transactions which might represent thousands of derivative transactions which are related to the settlement yeah it's what you said you want to start using payments per day as a measurement instead of transaction value yeah i like payments so um a bitcoin transaction people don't know this but it can encode 13 000 outputs

that's the record um and as many inputs um is that a spam attack record i mean it was probably some kind of crazy nonsense transaction yeah but uh the important thing is that someone made it so now i have that data point so people can make all kinds of crazy transactions like yeah so so my view of a transaction is that it's like a you know this is the analogy i used in the batching piece it's like a box and inside the box you can put a bunch of envelopes and it's you know it's like a mail truck full of boxes and the transaction is the box but then within that box you have tons of letters right um i'm getting lost in the analogy a little bit but uh the point is that a transaction is not analogous to you know

a transfer of a single unit of wealth transaction can in Bitcoin can encode literally billions of dollars and hundreds or thousands of payments. So I think that we need a, a, an awakening in terms of what this data structure is and how it's actually used. Do you think we're getting better, uh, getting closer towards your ideal, uh, usage of, of this data or do you think, uh, it's getting bastardized no so it's getting better um well you mean the data usage or the usage of bitcoin itself the how people what people uh sort of glean from this data we still have a lot of learning to do yeah that's what we're trying to do with cm we're trying to educate a little bit yeah and it's important because there are differences people try to compare

apples to apples like you're saying well so here's an example right so click over to eos and go to transaction count eos probably has about eight million transactions in the last day but then if you go to um you know median transaction size um eos median transactions are on the order of cents or even less and the reason for this is that eos is like stress testing there um didn't they didn't they just merge a bug into their code that they didn't even realize that up their ram by a precipitous amount yeah there's some ram drama going on yeah um but so there's a there's a huge discrepancy in that those average or median transaction size in eos it's minuscule and the reason for that is just because there's a lot of just like nonsense or stress testy transactions

happening on the network right now it's eight eight percent of a penny right now so there's nothing wrong with that right but it's it's then inappropriate to compare transaction count on eos to Bitcoin's transaction count and you can go to you can look at the adjusted transaction volume for both and you'll notice the EOS is transaction volume on the order of about you know a couple hundred million

a day compared to Bitcoin which is in the billions so so you know it is important to have a take a holistic view and not just to make sort of

straightforward apples to apples comparisons no um and one thing we're gonna segue here one thing that uh has been interesting is seeing how the narratives of bitcoin have changed throughout throughout the years and this is something you just wrote about this week you just published yesterday i believe or monday or sunday uh the visions of bitcoin correct is that what it's called yeah visions of bitcoin so that's actually one thing i'm fascinated by and i'm guilty of too is falling i don't want to say pray to these narratives but preaching and believing in these narratives at some point in my bitcoin journey uh the first narrative being that hey bitcoin is a fast and

cheap uh payments network that you can use to buy coffee and what we came to find is that use case was enabled purely by the fact that the network did not have as much activity on it than it does today. So let's jump into that. Vision's a Bitcoin piece. How the narratives have shifted. Why you guys wrote this piece.

And what may be the compelling narrative of today? Well, I don't think there's anything wrong with believing in narrative because that's kind of the way we operate as humans. Yes. we seize on stories and like very reductive views of the world and we let them shape our interpretation of events and you know we try and you know constrain the world to conform to the stories that we believe um and that is you know like a energy saving mechanism to to reduce our

mental footprint or something to reduce the amount of bullshit we have to refute or well because you can't just try and reprocess i don't know it's hard to take the world as it is we we need to filter it right uh and simplify it um and so that's exactly what people have done with bitcoin and and that's not surprising and um you know the the motivation of the piece was just um to determine what those stories have been over time and their relative influence and a caveat on the chart at the center of this blog this is not based on any quantitative data some people responded with that critique so it's i guess it sort of looks like quantify this well exactly so i guess the problem people had with it was that it sort of looks a bit like data but

what we did was we determined the narratives we you know we like this looks like a good uh post-modernist picture i think somebody like if you put this in painting form somebody would buy it uh yeah at a hefty price i think safedine has a critique of modern art you know arguing that anything that looks like something a toddler could make is not true art you know it's the fiat art is something it's a problem in our world people we need to lower our time preference to fix our art according to safety and there are very few problems that cannot be traced back to loose monetary policy which is uh kind of a compelling view anything about it it i am coming more and more like in in line with safety safety and safety and i wound up the night before the world cup

final in the dallas hotel and i was stealing stealing beers from behind to the bar while talking soccer and low tie preference with him it was an incredible night say for dean is a big liverpool fan um which are you manchester guy i'm a big chelsea fan oh chelsea family's from london okay so you know him and i are football rivals but aside from that he's a nice guy he's okay um so i've created fiat art in this article right this is fraudulent art um it didn't there was no proof of work there right it's not a sculpture i didn't have to sculpt it out of marble so this is not modern art um it's meant to be a representation of all the stories um and you know yeah so as i said the motivation is just to remind bitcoiners that there's an

interesting history there um remind them of the narratives that we used to believe and that now we've sort of let go a little bit yeah so for you freaks out there who can't see the chart that we're looking at there are a total of seven narratives that uh nick and hasu wrote about uh e-cash proof of concept which is probably the first prevailing one uh censorship resistant e-gold which probably prevails is the strongest narrative today cheap payments network is what roger ver and b cash are going after uh programmable shared database uh that's probably why Vitalik left the uh the project it's because that narrative didn't come to play anonymous darknet currency bitcoin is not there yet uncorrelated financial asset this is more

emergent more recently and then reserve currency for crypto uh which has been a big narrative since the altcoin explosion in 2013 so yeah the idea here is that um you know one thing i've noticed is that almost everybody in the sort of broader crypto industry was a bitcoiner at one point um and then they for some reason or other they're like bitcoin wasn't um you know just wasn't doing it for them and then like ah yeah you know what i i'm all about iota now or whatever um so i i was curious as to how this is possible like how could we all be under this one tent back in like 2013 you know and then everybody or so many different factions drifted away and then i mean there is still a staunch set of bitcoiners out there you know you're listening

to them right here um here we are but uh i wanted to know psychologically how it was that there were people that were formerly committed bitcoiners and then they left for something or other um and so my answer to this paradox is that bitcoin is an extremely broad ideological tent and that at that time yes we were united by our shared you know love of bitcoin but we actually had these divergent views as our predominant belief around what bitcoin is for and so we you know and but there weren't enough conflicts back then that those differences came to light and then only subsequently through you know new and later conflicts did those differences emerge and then that catalyzed a lot of exits from bitcoin um so i honestly any um altcoin out there

or cryptocurrency project a lot of them justify their existence by virtue of the fact that they claim to be solving a problem with bitcoin and actually yeah i have some an interesting project planned there are you allowed to talk about it yeah so i don't know if you remember i made this meme of these 20-sided dice yes with uh and each side of the dice had a different flaw with bitcoin on the side and people like the dice and so i'm actually making the dice i love so you know this would be the greatest gift to shit coiners that uh that that has bitcoiners could ever get so the idea is you roll the dice they're only 12-sided because of constraints at the dice foundry design how many sides did you want i wanted 20 but they wouldn't raise the you

know the box size for me so they my dice guy had problems with my design your dice guy's got to get with it yeah bigger blocks of the way so i i'm manufacturing these dice um because you know it's gonna be a fun viral marketing stunt i can put my my funds logo on there which is an extremely good logo um and uh and so then the idea is that if you have a problem with bitcoin you roll the dice and then whatever is you know shows up on the dominant side then you're like yeah bitcoin sucks my project is totally going to fix this so that's what happened with so anyway i'm making 500 of these but the important point here is that this is what happened with every single cryptocurrency project ever they're solving a perceived problem with bitcoin and that's why so many people that

were formerly bitcoiners left because they had a view of bitcoin which which didn't mesh with what bitcoin ended up becoming well i won't even argue that i would say bitcoin didn't end up becoming what they wanted in the time frame that they wanted it i would say a lot of this is because of impatience like i think people are going to be able to get whatever they want out of bitcoin it's just going to fucking take time like yeah i mean we have micro transactions now right right yeah yeah bitcoin is a payments network now through lightning and it just took a while and people are going to be able to build complex smart contract enabled systems on top of bitcoin yeah i think the programmability will absolutely come yeah we're seeing it already exactly and

so that's what pisses me off the most is like i like to preach patience patience patience like people in this space are completely impatient they're either impatient or they're affinity scammers that are just outright like hey bitcoin can't do this if i market that bitcoin can't do this and market a coin that i create that can do that maybe i can make a lot of money my sorry my favorite thing to hear is all icos suck except for my ic exactly mine's good right you hear it from everyone that markets an ico and it's and they do it with a straight face it's like you can't see the because nobody's the villain in their own story man no everybody's the good guy but how do we are we wrong are we too patient we might be the we might be the baddies you know

maybe we're wrong i ask myself that a lot am i wrong sit there at night staring at the ceiling it's like whoa icos are a great capital formation mechanism i don't programmable equity how long do you think this will go on for do you think it has to get to a point where bitcoin wholly proves all these narrative use cases and says all right we can do everything here we have the best network effect or you think the dumb money musical chairs game could go on for a while so i don't think bitcoin's gonna eat everything i used to think that don't think that now okay um why did you think that and why did you change your mind well you know i just i didn't really see why anybody would own anything else um but i acknowledge

that there are some projects which now have momentum and it's not going to go away not a lot of them but some you know for sure um but so the other thing is that i do see there's a difference between the things that are trying to be money which is like bitcoin litecoin whatever monero zcash and then the things that are trying to be neo equity um which is basically all icos and to me those are very actually distinct concepts and i'm trying to push this new taxonomy whereby they are not even in the same bucket because because it doesn't make that much sense for me to compare like the u.s dollar to like apple stock those are completely conceptually distinct things yeah so i think icos should be considered you know relative to themselves and then every all of the new

digital currencies should be considered relative to their own benchmark and themselves uh so i i'm like pushing for a conceptual divorce here no yeah that's uh something matt corral and i talk about a lot like he doesn't think things like ethereum should be compared to bitcoin at all like yeah i mean i think a lot of ethereum fans would tell you the same right um they don't even think of ethereum as a uh as as a money it's it's something entirely different it's a it's an oil commodity ether particularly who knows what it is but uh the definition is changing every but but from the ico world you know i am short term short and medium term hyper bearish but then long term i do like the concept of a corporation which operates according to

algorithmically codified rules um and is essentially equity on the blockchain i actually i really do like that i just haven't seen a good instantiation of that yet so i was pumped about the dow man i loved the dow did you yeah 2016 did you fall for peter the tool tools pitch so steven steven so the dow was like one of the things that got me really fired up i was like wow this is like a venture fund and you vote with your money and like everybody shares in the spoils um so for like 15 minutes there i was like so excited about the dow the dow if it were to come to fruition and not have that fatal flaw that it did have in the code here you're betting on the wisdom of the crowd there like does the wisdom of the

exist and is it is it wise to follow the crowd is not wise no the crowd's pretty dumb yeah um although you know finance people will tell you that the crowd is correct you know according to efficient markets um but yeah i mean the the dow just it was too early right and i've said this i give it 10 years you know yeah and that's one of my argument for a lot of these projects it's just like you're too fucking early be patient let again i'm a bitcoin maximalist obviously i don't even say i'm biased i'm just saying i have strong views like i think that a lot of people are just way too impatient just let the protocol level of bitcoin and the layers on top of it get built out it's going to take a little over a decade i'm sorry i'm sorry that everything you guys wanted

out of the box is not there in bitcoin time preference exactly and i think everybody's gonna get it but i just hope in the meantime that all these ico scams and everything else doesn't bastardize it so much that it becomes so impalatable that people cannot come back to it you ever worry that you surround yourself with people that have the exact same views as a consequence no you're not exposed to any dissenting opinions i believe me i've got people it's kind of a selection bias on this show uh-huh you should yeah well actually i'm not no i've had do you have some you've never listened to this goddamn show it's true i don't do podcasts i've had ethereum developers on here and i have more planned coming forward that shows a lot of

promise you know that's fair that's fair i had one of the uh one of like the main devs of my crypto on here oh yeah yeah well i'm willow burn shout out shout out the brothers o'burn one works a chain code and one now works at block stack but worked at uh my ether wallet for a while wow and then my crypto that's like the pot of a movie or something it is it is funny the the oberon brother's getting some take on the pod right now i love how uh it's like a a dichotomy between them like and they're in the same space but they have very different views but they're very respectful towards each other and have very very intense and valuable conversations at least the ones that i've been a part of with the both of them if i had a brother he'd probably be like a verge fan

or something i have a cousin who's a ripple fan and i have to yell at him i think everybody has one of those bill clinton's gonna buy our bags man he'll use the speech fees to buy our bags for us that doesn't come cheap so let's jump into castle island uh we can't talk specifics but you were raising a vc fund and what is what is your mentality between behind excuse me between what is your mentality behind investing in this space what are you looking for uh how did you get to this point where this is your approach and are you uh hyper bullish of hardware in the future that's what i wanted to know in particular hardware is great love hardware but uh the highest leverage businesses are software

um that's just the nature of tech investing that's true um yeah so i uh i didn't think um i didn't think a year ago i would be uh working for a vc fund um so it's definitely uh pretty surreal where where did nick a year younger see himself going let's see what was i doing a year ago um a year ago i was just finishing my uh i was just finishing uh my uh my master's degree and mastered in finance uh you were at fidelity correct too yeah then i joined fidelity okay then i joined fidelity in uh in fall 2017 did you get your master's at st andrews too edinburgh which is also in scotland i like scotland it's a great place why are you uh particular towards scotland well um my my family is british even though i don't sound british so i figured i don't you

sound like what is your accent i can't tell it's kind of a mishmash we're how long have you lived in the states like 15 years or something a long time so i'm really it's like a maryland accent i guess i don't know are you in the mass area or well i live in boston yeah yeah so maybe that's where did you live here like growing up i grew up in uh in the dc area okay yeah yeah you got like that northern virginia oh really i don't want to uh i don't want to assume anything that Sounds like you smoke cigs every once in a while. No, I don't inhale anything. You got like a cowboy, hey, what's going on here?

That's just because I've been doing too much talking today. All the podcasts. All the podcasts is the only, I thought this was, we're talking about podcast scarcity. A Nick Carter podcast appearance is probably one of the most scarce things you'll find in the world the most there is one of them even less there's like 60 of one we're not yeah we've got it we've got an hour to go oh yeah yeah okay um back to castle island what's your mentality so actually wait back up a year ago what was your mentality you never thought you'd end up

here so um here's a funny story um i when i went into my master i did a master's in finance and when you start that you typically it was only one year program so what you do is you you jump into the finance recruiting schedule um which is not fun sounds terrible and when i say finance i mean legacy finance yeah old finance we're in the we're in the new world now you know but in the old world you have to do things by their rules uh so you go to class you know you're doing this and that and also you're doing like a whole bunch of interviews at the same time it's just a mess and um it was like september 2016 you apply to all the bulge bracket banks to the goldmans and the credit suisses and uh that sucks and then you go for interviews

also sucks and then uh so what happened with me was i eventually made it through um to the final round i went to a super day at fidelity uk fidelity international they have a fidelity usa and then fidelity international and so then i went to the super day you know you do a math test you do three interviews and then they send half of the people home at lunch which is super brutal because they're sitting there eating lunch and then they just someone comes in they rattle off a bunch of names like get out of here like this is like america's next top model yeah it was rough so i made it to the final round right and then you sit down for two hours and you do a stock pitch so you like you have to read a 10k

which is an annual report for a uh a just a generic corporation um and so mine was like some horrible beverage company which i don't know anything about and then you have to pitch it to uh to like a director of research or something how are their ebit and multiples um they're they're okay okay yeah um yeah they were like just it's just a very very generic beverage company and uh so i i i was like pretty dumb back then so i i totally failed the stock pitch in the end i don't think they uh they hired many analysts that year um so i went through all that nonsense and like didn't make it um and then i'm like all right screw this legacy finance i'm done with you crypto finance here i come um and should we be worried

i mean this was also right in the aftermath of brexit as well so um the london financial sector was in decline so that that's what i blame on me not getting hired into uh into old finance were you going were you gonna move back to london yeah i was gonna i was looking for jobs in london yeah and so then that didn't work so then i'm like all right whatever i'm just gonna focus on crypto stuff and um you know a year later i ended up getting hired at fidelity usa to work on their crypto fund basically uh so it's just like swings and roundabouts you know and fidelity is actually one of the few first banks to experiment like i think fidelity might be one of the first banks to spin up a node and run one?

Fidelity mined a bunch of Bitcoins. Yeah, with 21, with a 21 computer. Not with 21s. No? No. With legit? With legit. I thought they were running 21 computers.

Those things didn't mine anything. I know. Well, believe me. Well, hey, earn.com, 21. It gets a lot of flack. Shout out earn, because I earned a bunch of Bitcoin answering surveys on earn. right shout out earn but the 21 computer in particular was actually wow it didn't uh it didn't net you a lot of bitcoin from a mining perspective it did teach you how to interact

with the bitcoin blockchain from uh the terminal pretty pretty well it was a good experiment for me i have uh an ancient 21 computer everybody's got one that'll one day be in a museum but uh So, Fidelity was mining? Legit? Like, had ant miners running and stuff like that? Not going to say the brand, but legit mining, yeah. Hell yeah. Fuck yeah.

Yeah. Fidelity was like, Fidelity cares, man. Good. At least somebody fucking cares. Yeah, yeah, yeah. So, JPM, you know, Jamie Dimon's out there trashing Bitcoin. His daughter's buying it. Abby Johnson's out here giving speeches at Consensus about how amazing Bitcoin is.

nebby johnson's a saint so the only reason i went to legacy finance to to be an analyst crypto analyst not in the old meaning of the term but you whatever um was because i knew that fidelity was one of the good guys um and they still totally are they're hard to come by in this space especially from uh from a incumbent banking company yeah i mean most of them are really slow to move and pivot and etc and goldman now has like the parade of man buns opening a might have to edit that might have to edit that oh that's not getting edited it's still it's incredible but so so you have a lot of johnny come lately's in finance world you know blackrock's like we're gonna make

an etf now oh larry fink's not abreast of that apparently he'll figure it out soon enough they go where the money is but fidelity you know they're we'll see what happens but you know they they care they do so you're at fidelity it's about a year or less than a year ago now how the fuck did we get to castle island um yeah so i i was sitting there writing uh research reports on bitcoin and ethereum like what what are these things how do they work is anyone using them what are they for um so i guess i was the first crypto asset analyst at a you know bulge bracket bank um meanwhile the other banks are doing uh private blockchain initiatives we didn't bother with that stuff you guys didn't engage with uh yeah so easy what is it r3 yeah we didn't do that

we didn't do that nonsense um and so then uh you know we had the opportunity to spin out the fund and do it as a as a more entrepreneurial build a franchise kind of thing myself and my partner matt walsh and uh you know jumped at the opportunity how'd you meet matt uh matt hired me at fidelity he's my boss at fidelity oh hell yeah yeah that's awesome so uh castle island is um not an island it's a kind of a peninsula type thing why castle island so as a name matt just matt liked it i like it too i had some alternative suggestions but they were what were they what could have been um i liked uh starling ventures i think someone took that already but starlings like they like flock in these like formations and to me that's like a like you know like a

funny analogy for like the the nodes you know i like that i like that i usually like to go when I'm naming prospective companies with Latin words that most people don't know. Okay. What's a good Latin word? What do you got? Acer, like Swift. Okay. Are you like traditional Latin?

I don't know any Latin. You don't know any Latin? I mean, I think I was meant to learn some in middle school, but, you know. I took five years of Latin, and I could not. That is an excessive amount of Latin. I took a lot of Latin. eighth through senior year in high school uh did you learn all the declinations the declinations the uh uh see i can't even pronounce it now the verbs the declensions not that's what that's

what's wrong with declinations i learned i went to a french school so i learned latin in french well it's best to learn latin first and then you can spread out from there so i found learning spanish after learning latin was a lot easier well because it teaches you about um the because Because the subjunctive is itself a declension. Declension, yes. Yeah, so it's the foundation of Spanish, almost. Declension, I'm trying to think of the word for verbs. When you break down verbs, what the hell?

I can't think of it right now. I took five years of Latin. It's very useful for grammar, though. And it's true what they say. I can read Latin better than I can speak it. If you gave me a Latin phrase, I'd be able to be like, eh, I know four words in that. You should have a reading of Latin on your next podcast.

We're going to read the Catiline Conspiracy, jumping into Cicero. Cicero's Catiline Conspiracy. Catiline tried to take down Cicero, and Cicero had one of the best orations of all time that was written in Latin and then translated by a bunch of high school students in North Philly around 2008, 2009. um so if you guys are ever interested in learning land i uh i suggest starting out with cicero's kettle line conspiracy there's a really good trilogy on cicero um like a fictionalized trilogy let's jump into it we talk a lot about books here oh yeah yeah oh as long as it's not

sapiens man no the only vc to never read sapiens is sitting across i don't read sapiens um yeah you know that i'm trying i forgot who wrote it but it's like imperium um the great great like fictionalized history of cicero's life yeah roman history fascinates me because it's very analogous to american in the modern age i think because we're right at the precipice you know right at the fall that's coming didn't know his fall into his too late exactly you can only tell in retrospect but like people don't like to talk about this the bit that i like about roman history is uh what they did to carthage man that was like not cool let's jump into it well they just like carthage you know dared to stand up stick up to rome and then they just

utterly obliterated it in every way possible right well they were only able to do that until uh their armies got so spread out and so spread thin and their currency uh as a as a not a reaction to that but at the same time as their army was getting spread thin their currency was as well oh yeah there's a there's a story in there about the devaluation of the denarium for sure yeah they were dumbing down the denarium they were melting it down and never devalued the denarium man just don't do it don't do it you know that's why we need coded sound money and that's why we're here talking today dollar is the denarium let's jump into that though so a lot of people think

not the denarium in particular but the dollar in particular a lot of people think it's a sacred golden cow that'll never be touched how could something like the denarium happen to the dollar in your thoughts is something like that happening well and there there are certain notable candidates for congress right now which are you know pledging to um finance um almost unlimited government expenditure by virtue of some mysterious taxation which is just going to materialize um there's some there's this idea that these unfunded liabilities are going to pay for themselves somehow through the productivity of the usa as if we haven't already mortgaged our future um you know through the trillion dollar iraq warren etc um multi-trillion i i

where's safety and when you need them you know safety for congress i think you're you're referring to a woman who is in the bronx and i keep this i keep my podcast appearances non-political okay we're not going to jump into but yeah i mean more generally there's this idea that the you know the u.s isn't like a household so you're not bound by the same constraints but you can't just continue with this uber loose monetary policy and not have any uh consequences at all no i would agree too but with that being said have we had any consequences up to this point like that's the thing like people have been trying to call tops on equity markets like tops on uh the u.s dollar per se like well for decades now

like hey this isn't sustainable this isn't sustainable is it a an instance where it's just sustainable until one day it's not and it all comes down to one day or is there like a a realization where and this sort of ties into my bitcoin thesis like i've been saying since 2013 like there's gonna be a great rotation from fiat denominated currencies to cryptocurrencies and over time that has evolved to fiat denominated currencies to bitcoin in particular like well if you look at monetary tightness um um i i think the u.s is actually um doing better than its peer central banks so if you look at the ecb or the boj um or the bank of england um it's absolute nonsense what they're doing uh and the fed looks like an angel relative to them well

well most important part in that is relative like yeah so where does relativity come in a collective mania has seized on all the central bankers of the world as they tried to recover from 2009 um but like the u.s comparatively has actually been a bit more restrained so um i don't expect the dollar to to fail imminently i i expect uh emerging market debt to to to be the first source of the contagion i think you're seeing that a little bit in chinese markets right now yeah what's what in particular i've been following chinese markets recently uh there's just a huge amount of uh of sort of shadow banking in china so it's hard to keep track of the debt and you You know, if you're an economist in China and you make a negative macro prediction, that's frowned upon.

So it's essentially layered fragility upon fragility. And not to mention the ruling party in China predicates their legitimacy on the continued almost double-digit economic growth of GDP there. So they've kind of backed themselves into a corner. You know, they refused to enter a recession in 2000 or 2009. and um at certain point you know you you do have to face the music though and uh chinese uh you know debt ratios uh consumer debt to gdp corporate debt to gdp are are truly extreme right now so i i think that's likely and not just china but just emerging markets more generally and i think that's likely where the next crisis actually comes from uh you know the financial crisis in

09 was catalyzed by the u.s and it percolated to the world from there i think we'll see the universe this time yeah but i would also say i completely agree like i think it's going to start maybe china who knows exactly where like but with that being said like i don't think the fed can can unwind what they've what they've wound no i don't i don't think it's possible i don't think they can raise rates to the market reaction would be disastrous i don't think they could ever go back above three percent or something like that who knows what's i we're in an unprecedented monetary regime and the path forward is more unprecedented monetary let's dive into that the only path forward is cheaper and cheaper not cheaper and

cheaper but you cannot raise the interest rate over a certain point which would make it literally impossible to pay back the debts you've accrued in that low interest rate regime we've sat through a long nine-year economic expansion and we haven't raised rates exactly we haven't given ourselves that shot of because if they do they are fucked well it's because uh we never deleveraged from 2009 almost we we didn't want to take our medicine um and as as a consequence we're sitting here more leverage than ever and uh the asset price explosion you've seen is is a consequence all right so here's maybe the question i'm getting at relatively speaking in 2008 so america's policy or the federal reserve's policy in 2000 excuse me let's go back 2007 2006

before Lehman Brothers failed. Comparatively to what it is today, is it as robust and as sort of, I swear to what I'm looking for. Do they have the optionality today that they did in 2006 before? They've fired all the bullets that they had. Exactly.

They've got nothing left in the chamber. Yeah. How does that play out? that's what everybody's wondering right now uh negative rates abolish cash and start confiscating you know bank account savings cyprus style who knows it's we're in a completely unprecedented monetary world but that's but that's what you just i completely agree and i see and that's what scares the shit out of me because you said comparatively speaking we're well off like very well off but if you were to have this conversation in 2006 2007 like hey 10 years into the future

we are going to be a decade into uh 25 to 75 bips federal fund rate regime uh and we sort of need to raise these rates like what's going to happen and be like uh well it's because monetary policy or credit cycles are 10-year cycles and political cycles are four-year cycles so okay um it's short let's dive into this this is interesting well just it's my view that you know mediating your um electoral system through these shorter cycles leads to a culture of short termism which in of itself um ends up exposing you to bubbles just by its very essential nature um and that's you know in my view part of the reason we have these disastrous credit cycles because long-term thinking is discouraged because why would you want to reward your successor

exactly as opposed to spending big today how do we fix this uh do we fix it i don't see it fixed within our without altering the the nature of the the federal system in the u.s i mean just the government in general or the way the federal reserves set up well yeah i mean ever since we um have bretton woods in 71 um we uh we've been in in this boom bus cycle with actually extreme monetary shocks which were which are more significant now than they were before so if anything we're getting worse at monetary policy right there's a great study by uh deutsche bank long-term asset return uh jim reed it's pretty ironic um yeah but but it's it's super good and and you you read through this thing you realize

that um ever since bretton woods 2 was implemented um we've been dealing with more economic shocks not less yeah and it feels like there's the economic shocks have been working on a fractal so you get from like 87 to the latin american and russian currency crisis 97 to the recession of 2001 the recession of 2008 and it's like sounds like technical analysis to me all right all right ta is frowned upon but it does seem like it's becoming more frequent and more more powerful with every with every correction yeah i'm not calling the top i we know there's no use in calling times there's no use it's just like a an observation of like and that's like one thing that i think about a lot because we were just born into this like we literally just like

came out like hey this is the system i was born into like what the fuck is going on here and there's nothing up until this point i would argue i think we are trying to actively change the structure uh through which we live our lives but for the first 20 years of our lives we were just thrown into this like hey you had to react to the way the system works and you know who wrote my macro economics textbook when i was uh i dropped out of econ in uh in undergrad i did philosophy instead millican uh but uh the author of my textbook was uh paul gregor himself who wrote an awesome op-ed today really great piece on bitcoin you know he demonstrates a sound understanding there's no intrinsic value it's just you know the bit that gets me is how he

resolutely refuses to actually learn about bitcoin he doesn't need to he doesn't need to all these years he's a fucking op-ed journalist in the new york times his salary is paid for he doesn't give a shit yeah i think tuleb has a word for those guys and iyi iyi man but so the the new myth in this one is that actually making a transaction in bitcoin is extremely costly because you gotta mine to make your transaction it's dumbfounding how dumb like let's just say he he doesn't care to learn right yeah do you think that's a that's like a a guard for a lot of people that well yeah because you can believe a falsity much more easily if you refuse to actually learn about the ground truth that's true so that's why people don't want to know

facts about bitcoin's usage for instance they because it interferes with their view of the world uh no coiners or actual bitcoiners no coiners okay they don't want to know that bitcoin does two billion a day no because that doesn't make sense to them how could anyone trust that system two billions of dollars a day go through but isn't that crazy like to have that view like how can anybody trust that system where my mind i don't want to say it's convoluted but it's got to a point where i'm like how can anybody trust this traditional system like yeah i had this great so the only thing i bought with my crypto takings was a couch right from uh crate and barrel some real high roller stuff i mean i would you know i'm fine with the ebay couch life

right or not ebay but that crate and barrel light couch life though with uh ikea so i'd be totally fine with an ikea couch but the girlfriend was like no um we're going to crate and barrel getting a custom couch so you know with my verge and iota takings just kidding um so when we bought a couch and i had a great great traditional legacy market story um you know how when you make a big purchase at a store you're always like terrified because you think they're gonna decline your card and then you're just gonna look like an idiot yeah yeah yeah happened to me so uh we're we're buttoning down this like expensive couch purchase and the guy's like sir your uh your card's not work and i'm like i promise you know i like have a job i'm good for it bro um and uh and it didn't

work because my card like thought that it would that my bank could not believe that i would be buying a couch they're like no nick you uh you don't buy couches dude you buy like pizza you know beer you you like clearly you do not buy couches you're not the kind of person declined so i uh i was i was redacted in front of my girlfriend in front of her parents oh no like wow parents were there this nick fella like yikes like i thought you said he had a job i thought you said he was a vc so um so i went home till two of my legs called my bank it's like hey can you unfreeze me because then the whole thing stopped working fraud alert um so um you know it several days later i finally got the thing like unblocked and like went back i'm like yeah

i'd like the couch now please it was a mess it sounds like a terrible experience it was not good and you know what it was the fault of uh probably ultimately the federal reserve you know i hold them responsible you know what janet janet if you're listening out there i know you are will you please stop this madness we're just trying to buy couches out here so janet spoke at my um commencement when i graduated really the janet yellen grant was uh you can fact check this san andrews 2014 commencement speech janet yellen how inspired were you i didn't know who she was at the time you didn't know janet yellen was at that time i didn't pay attention are you fucking kidding me no i

I wasn't paying attention, but I reflected on that many years later, and I'm like, huh, Janet Yellen spoke of my convention. I was like 10 yards away from her. I had one of the Hyatt airs speak at my graduation. It was the most boring graduation speech. That's really fun. Hyatt, like the hotel? The hotel, yeah.

That's pretty cool. It was like, eh. Yeah, I didn't even go to my graduation when I graduated from business school. I freaked my parents out. That's a story for another We're not gonna get into I graduated But

Good job Yeah They I signed up for a graduation Procession Way later than I should have Oh I see So I was not placed

In alphabetical order And my name Comes very Very early in the alphabet What Galaxy Where are they doing? Yeah they're in New York

They're here in New York They do all kinds of stuff Who works for them Other than Michael Jordan Novogratz I actually met A girl that works for him Last weekend we had a very long

Interesting conversation I think they went public in Canada Like this week No previously They pivoted From becoming a fund to becoming a Merchant bank correct Big time

yeah i mean they're funny things like block fi which i'm kosher with me um it's funny you say kosher that's like block fi is like the better version of salt right yeah exactly yeah i think salt's kind of falling apart right that's what i hear that's the word on the street i'm not here to that's inevitable for pretty much every uh ico though yeah and i talked to drew from unchained last week and he was really uh unchained capital in austin and he's really illuminating on what they're doing from lending a perspective and that is a needed service on top of bitcoin big time yeah i mean i'm in the camp i'm not in the uh the extreme austrian camp i'm in the camp that um i have credit creation on bitcoin is actually acceptable uh i'm in that camp too as

long as the underlying monetary system that's being that the credit is being built on top of sound i think that's totally agreed yeah i mean i i think bitcoin banks will eventually be a thing i believe some evidence of that um how finney predicted this how if how predicted it you know let it be probably gonna come true how new man you see you look into the chart of the narratives how was on the digital gold camp from day one it might uh make sense to pick some up if it catch a steam you know yeah one day right yeah yeah yeah how new so peace out we're gonna bring you back to life we know you're frozen right now all we have to do is meme bitcoin into being the global monetary standard and then you know your your holdings will eventually be able to finance

r and d to bring them back i think this is possible we can do it we're gonna we're gonna bring back how we're gonna bring how back to life and we're gonna get ross out of prison it's gonna happened before we die my um measure for bitcoin success is the day that we free ross honestly and i think that's gonna be one of the key days in bitcoin history because he is a non-violent offender and he just got completely expunged of the charges for hiring a hitman yeah that basically led to the lights the thing that was the bad thing that he allegedly did but according to the u.s court of law did not do right has not been dropped so um hang on why is he in life without possibility of parole there's a lot more double life two lives think about it two

lives andrews brevik got 32 years right um yeah like uh sweden or something yeah yeah so that dude only got 32 years and not automatic um life yeah what yeah yeah like possibility of parole but probably won't get it but like on the over here in the usa ross ulbricht who wrote some code for a website is getting railroaded by the usg so that is you know when the first bitcoin president gets in what is a bitcoin president president who owns bitcoin that's true they i think actually wouldn't be surprised if trump owns bitcoin probably got some probably got some somewhere i went to the trump tower today why because i was trying to find coffee to get coffee with uh with my boy matt

and uh there's like no coffee shops around there yeah you met in the middle of hell trump tower is in the middle of hell yeah that place really like just the the whole neighborhood 53rd and madison really like very a lot of tourists i i don't know new york right so yeah so you went to the worst part so i went to the nearest coffee shop which is starbucks in the bowels of trump tower and it was amazing because you have the escalators where um he went down you know when he started his campaign and there were like 200 tourists just going up and down the escalators they're like like i'm like trying to start my campaign oh my god and uh so i went to the starbucks uh it uh it was unremarkable that sounds very unremarkable and sort of depressing if you ask me yeah uh the

whole thing seemed like it was from the 80s actually it hadn't been updated in a long time that uh trump has a very cheap 80s gold aesthetic you know he's stuck in the in the guppy boys stage of his life and the escalator was very narrow yuppie not guppy very narrow escalator where did where did all the freaks come from marty to be honest shout out my buddy zach he would call us all freaks he was a friend he would just refer to us as freaks and sort of for zach you know pour some pour some in my mouth for zach okay he started that and i sort of like just like right when i started the podcast it was like a buzzword for me i was like yeah you fucking freak what happened to barstool marty man bitcoin marty still a thing i think bitcoin marty will be back

at barstool's offices at some point when the bitcoin price rises above twenty thousand dollars bring back bitcoin marty at barstool if you're listening pff commenter pft commentator bring back marty bro okay i've i left barstool on the best of terms possible you know we uh i'm not on brand for them bitcoin is not on brand but bitcoin is very niche bitcoin is a sport all right it's a blood sport it's an intellectual blood sport you're just shitting on the prez dave dave if you're listening i'm sure you are dave's a freak like the rest dave's dave's a freak but i miss barstool love barstool bring them back fellas i don't know much about uh barstools brand you know or content strategy but uh you know marty marty over here marty i like marty

marty uh he uh he knows his stuff i try i did actually this is a funny thing that i can't say now i'm pretty sure i can disclose somebody tried to convince barcelona to do an ico and i literally had to go to them and be like if you do an ico this is the dumbest thing you could fucking do in the world good job i think everybody has a story about a deflected ico you know it's uh it's important it's something you have to go through and some people fail right because they they do the ico telegram kick hypercube routing man but then you know the the rest of us which are slightly more strong-willed resist the lure of the ico right well it's not even a lure to me it's like what the fuck are

you people doing like how do you think just like why would someone give you money for nothing man let's get back to let's get sort of legitimate here castle island what is your investment strategy what are you looking for in particular in the market right now as a vc in the bitcoin cryptocurrency space man so we like only got to civ like late on in the podcast huh that's it happens like drew was on last week for unchained he literally like we walked to the bar and was like i literally forgot everything i need to say about my company i was like that's the way it works drew is great i like his i love drew it's great you'll you'll really like you should listen to the first tales from the crypt episode next week when he dives in how he how he dives

into how he created those uh huddle waves you know my policy on podcasts i know i know i know so uh civ castle island um not a castle not an island um and that's you know that's sort of on theme right because we're like the anti-vc we're not doing ico pre-sales we're not doing ico flips um we're actually investing in equity um as opposed to just buying up a bunch of tokens um we uh we're focusing mostly on the protocols we think were sustainable and and bitcoin is one of those i mean you know if not the key one um you know we're internally benchmarking ourselves against bitcoin uh that's that's the goal i'm setting myself ab reform the asset itself and um i you know like that's not an easy challenge at all but to invest in

startups building on bitcoin you do have to benchmark that against bitcoin so we just have to expect that bitcoin is going to continue its advance over the next few years but there will come a time when your average startup dollar invested in bitcoin startup outperforms bitcoin because bitcoin can't grow forever but it will inculcate a world where you know this amazing economic institution exists that startups can build on top of so i think there does come a time where startups start to outperform bitcoin but even if you look at the coinbase seed round did not perform bitcoin really there's very very few bitcoin related startups that outperformed the underlying how far from that future are we obviously not too far i wouldn't

be raising for fund if you know i didn't think we were there so i i you know i think bitcoin still has growth left in it but i do think there are amazing generational businesses that can be built on it and and the way i think of bitcoin is i think of it as an institution so you have other institutions markets are one uh corporations the state um and i think bitcoin is a radically new institution altogether that enables economic coordination in a way that hasn't existed before and it enables people worldwide to transact with each other without having to depend on any other third party for trust and that sounds trivial but it means that you know if you for whatever reason are penalized by the u.s uh financial system you can still transact you know you're

russian you want to buy property in dubai you can do that um for the first time ever you know you're like a business in singapore you need to transact you know send money to a subsidiary in venezuela or something you can do that too and that hasn't really existed before and it's not just about arbitraging you know jurisdictional rules um it's about transacting with third parties in a way that doesn't require you to trust anyone involved in that and i think that's big and i think that's why they're roughly two billion dollars transaction volume on bitcoin a day and i don't think bitcoin the protocol will subsume all the potential use cases i think many companies will be built that uh mediate your you know interaction with the blockchain itself

and uh and provide you know extremely useful services you've got wallet companies you've got startups building on litecoin right now you got hardware companies you've got like nodes as a service you have hardware physical plug and play full nodes you've got third parties that will work as a broker for large transactions you know you have smart contract structuring companies that just structure contracts i mean there's an enormous wealth of startups building on bitcoin right now that has gone completely unappreciated and has been lost in the narrative about icos and about new protocols i don't think you need to build any of that functionality into the base layer all you need is a very predictable functional

um you know economic settlement network that does what you think it's going to do and you can build all kinds of crazy stuff on top of that right you just need that fulcrum of certainty at the end of the day that allows you to to base investments and future uh projections off of correct like there's there's a lot of research that shows and i mean i'll share this on twitter there's a lot of research that shows that gdp growth is strongly correlated with interpersonal trust bonds in a society interesting how can you derive that well you you take a survey of individuals and um gdp growth is easily ascertainable so um you know with that insight And there's also really interesting research that shows that capital markets and debt markets develop commensurate with the insurances that are granted to markets through regulatory structures in a bunch of countries.

So, for instance, civil law countries tend to have less developed capital and debt markets than common law countries because common law countries are just a little bit more favorable and enable, you know, stronger market assurances there. So it really comes down to, in my view, you know, what are the institutions that enable markets to thrive? And one of them really is bonds of trust. And it's just an amazing relationship between societies where people tend to trust each other and GDP growth. And I think that blockchains extend those bonds of trust to the entire world, rather than just concentrating them in a few lucky locations. And that's what I think this revolution is. It's a new institution, which is available to anyone, regardless of where they happen to live, and their regulatory regime. that was beautiful um that was beautiful and the one question i'll ask is like so this is again going back to anachronisms and stuff like that like people are so set in their ways of how they've grown up this is really a new way of thinking about how we structure ourselves and and how we conduct commerce like how do you see the how do you see that like the societal shift towards realizing that these are probably the

ways in which we should structure ourselves happening structure ourselves happening well i think a lot of people make the mistake um about extrapolating all the transaction volume from an economy to a blockchain like well look bitcoin only handles 300 000 a day so it won't work i mean that's trivially true but i think the real way it manifests is that you have a bunch of intermediaries that sit between you and the settlement network the blockchain um and they um you know they were they act as banks essentially but um you know the underlying asset is this sound commodity money um and the banks in this case are basically exchanges in my view exchanges are banks um and the market is sorting out the ones that are reliable and the ones that aren't

so like you know something i've been wondering about is how does the country bitcoinize i think you just need a critical mass of entrepreneurs and businesses that are willing to mediate um interactions between individuals and between the settlement network um and um if they do that successfully then they can um they can you know lead that bitcoinization so you don't need every individual to be to be broadcasting every transaction of the market blockchain you just need a shift in consciousness between people that trust the uh you know the unbacked paper currency to trusting a commodity money which is which is sound and i think that i don't think it's going to happen in the next year or two but you know longer term there's a huge incentive for any

entrepreneur to build an exchange right there's obviously a huge opportunity there in a ton of countries worldwide there are people that are underserved by bitcoin and uh i think it'll eventually start to manifest itself and then it'll be a real threat to central bank policy especially among the weaker central banks so do you think it's just a matter of timing as a pit do you think it's inevitable uh do you think it's inevitable there's never been a real threat to central banks before um you look at um zimbabwe what happened there they dollarized because the dollar was a heart of money now imagine that that is available anywhere with an internet connection uh you can now bitcoinize

you know with even less friction right so why like assuming bitcoin reaches some stability why wouldn't it put pressure on weak central banks like those in turkey or iran or maybe saudi arabia that's one thing people aren't jerry when people aren't talking about i think particularly right now like turkey's like on the on the brink of we might see a sovereign default in turkey right so i i think they'll come under pressure um within the next five years probably huddle people make sure you're huddling it's crazy though like we should wrap this up soon but like again i'm trying to like kind of stop saying like but i'm trying to get at the core of how the core of the gravity of this situation and how how much it means for us as individuals

being alive now in the course of human history like i was talking about this at lunch today like we again i say this on this podcast a lot but like the inflection point we were born at not many people get this opportunity i would i would refer to as an opportunity to be boring at an inflection point like the one that we were born into now where you have sort of a transition from the industrial to the information age and we are literally the pivot generation into this new wage and the amount of opportunity and value creation and wealth that could be accrued because of this inflection point is massive uh i guess i just wanted to pontificate there a little bit well i've been pontificating all night so yeah it is your turn well we have to go meet people

at the honky tonk bar down the street nick this has been one of the most pleasurable conversations i've had in a while thank you marty what uh do you have a parting note for the freaks out there uh thank you for breaking my duck with regards to podcasts um i'm honored that you came on you know i i like the sound of my own voice so this is pretty key there that's one thing we didn't get to talk about maybe we'll talk about the second time you're on tales from the crypt is uh your z your uh z con talk which i really liked on governance that was a fun talk i also haven't given many conference talks so that was a little bit nervy you did very well um yeah um parting notes um if you're an entrepreneur and you're building a business

which relies on the assurances that public blockchains generate I want to talk to you I think that we can build something together where can we find you CIV man

on the island is not an island out there in Boston is there a web address yeah I think we have a website now I'm not exactly sure what it is CastleIsland.vc, I think. Also, my DMs are always open, so I get a whole bunch of garbage in there,

but sometimes some good stuff. How much garbage? Endless. Yeah, CastleIsland.vc. Nick double underscore Carter, correct? Yeah, Nick single underscore Carter was already taken. That's unfortunate. It's goddamn NICs.

So find him on Twitter. uh castle island if you're looking to build a company hey if you're looking to build a media company a podcasting company talking about bitcoin hit up nick carter um nick i am beyond flattered that i am one of the few podcasts that you or one of the only podcasts the only one right now the only one i'll never do another podcast i can't i can't uh can't Articulate how how honored I feel thank you for coming on has been a pleasure peace and love freaks