TFTC: A Bitcoin Podcast - Tales from the Crypt #69: Juthica Chou

Episode Date: May 7, 2019

Join Marty as he sits down with Juthica Chou, Co-Founder and COO of LedgerX, to discuss Bitcoin options, what it was like for LedgerX to navigate the regulatory waters throughout the years, LedgerX's Omni platform, and much more. Learn about futures contracts based on block height, backing into projected price probabilities, and how miners hedge their risk. Check out LedgerX: https://ledgerx.com/ Follow Juthica on Twitter: https://twitter.com/juthica Follow Marty on Twitter: https://twitter.com/martybent Shout out to this week's sponsor, Cash App. Download the Cash App today from the App Store or Google Play Store and start #stackingsats

Well, hey there, freaks. It's your boy, Marty Bent, here on a beautiful morning to introduce you to this week's sponsor. Before we hop into the incredible conversation I had with Jutha Kachal from LedgerX a couple weeks ago, this week's episode of Tales from the Crypt is sponsored by Cash App. You freaks know all about it. It's helping us stack sats. It's also been the number one finance app in the App Store for the last two years. You guys already know, it was the first peer-to-peer payments app to support Bitcoin. It's the fastest and easiest way in the u.s to buy bitcoin no more waiting five days for your ach transfer to come through with cash app you can buy bitcoin instantly and you can instantly withdraw to the

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On top of this, you've got Chipotle, Chick-fil-A, Starbucks, Dunkin', and others. So download the cash app today from the App Store or Google Play Store. Keep stacking sats. What is up, freaks? Welcome back to Tales from the Crypt. It's your boy, Marty Bent. On a very fitting floor for this interview, we're on the 21st floor in Midtown Manhattan.

I'm not going to say the exact address, but I'm very excited for this interview. This is the second interview this week that's been thrown together in the last five days. I'd like to introduce you freaks, the co-founder and COO of LedgerX, Juthika Chow. Juthika, welcome to the podcast. Thanks for having me. Well, thanks for having me in. This is a lovely office. Thank you.

Did you guys pick the 21st floor for a reason? I wish I could say we did, but unfortunately, it was just luck. No, it's very prescient that we're on the 21st floor. I'm excited to learn more about LedgerX. I saw that you were teasing the Omni product earlier this week, so I'm really excited to see the vision that you guys have with that in particular. But before we get into that, this is Tales from the Crypt. We like to get the story behind the person, behind the company. So how did you come to find Bitcoin and be the co-founder of this company?

So it was back in 2011, and actually really credit to my husband and our CEO, Paul. he was he had left Goldman and he was on the west coast uh doing Y Combinator during that summer and that was the first price spike um where it went like up to $30 and came back down um and you know we found it interesting we both are uh math and computer science by training and then worked in finance so we found it interesting as a technological and financial innovation but I think really that turning point was that, so we decided to kind of play around in it. And it took us probably a good four to six weeks to get our money from Goldman through, I believe we used Douala at the time, to Gox to finally buy Bitcoin. And as soon as we got Bitcoin, we were just to

move it back and forth, you know, across coasts on a Sunday night, no problem at all. And so I think as soon as we saw that we were sold and we knew that there was something there, it was early for starting a company but that was when um at least we were uh personally you know committed to to the space were you guys holding your own keys back on in the gox days so well that that was part of it too is that you know we were and we also had our own full-time jobs and we you know i think at least knew enough to know that we didn't feel comfortable with uh with that setup and so um we actually ended up you know selling a lot of our bitcoin because of that um and then buying back in later um so yeah i mean i think now this the space is a lot different but that doesn't change

anything about the elegance of uh you know of what we saw back then yeah it's something that jack dorsey mentioned when i had him on the podcast as well was that he believes that the white paper is a seminal piece of uh computer science and you touched on a little bit too you thought it was a innovation in mathematics and computer science what about bitcoin in particular sort of changes the landscape in your mind? Well, you know, I think if you look at the way, I mean, you have in normal, I'm more of finance as well.

And, you know, finance, economics, you have different central banks that have different trade-offs with respect to how they want to manage monetary policy. And the Bitcoin protocol is a completely new and different monetary policy, you know, management really that is a culmination of a number of um computer science concepts not maybe not particularly any specific one that was a breakthrough but really the combination of them um to create something

that is you know is is really unique and allows unique things that were never possible before and that's how you know it's something that's new and innovative is when there were things that you fundamentally could not do before that you can do now you know you fundamentally could not get Bank account if you just had access to the internet now you can That's what you were touching on before we hit record as well as the fact that it's 24 hours You guys can take collateral of any any given point in time. Yep, exactly It's you know, I think that's one of the the use cases that you know, we at ledger X See for sure that the in the trading space

You know banks and hedge funds and really any customers They're limited by banking hours for when they can move collateral and Bitcoin can move 24 7 365 people deposit Saturdays Sundays at ledger X and can just start trading. So let's Stay on topic a collateral how a Bitcoin as collateral. How does it compare to other forms of collateral in the traditional system? This is having an audible blockchain sort of change the landscape in the collateral world as well Well, I mean the first thing is definitely because there are no intermediaries and like banks you know there's no bank holidays there's no issues of transferring across different different time zones and jurisdictions

and things like that in the abstract having something like programmable collateral was not really possible before so you can envision with payment channels and there are things that we can do in the future that were not possible before but broadly you know I think the ability to transfer it at any time without an intermediary is is the most for us you know one of the most interesting things that we've seen put in play it's interesting to see how how you guys have grown because you've one of the few companies been around for for at least five years now you started in 2013 you've seen you've seen a lot yeah

we we have you know we we really we set out to do what we're doing right now but the regulatory environment was different back then it took us a lot of time to work with regulators to get them comfortable and to ultimately get ledger x approval and so uh we've been around five and a half years but paul kind of jokes that we're a five and a half year old company but we're really only a year old because we really only launched in october 2017 the first like four years was just getting regulatory approval handcuffs on the whole time yeah exactly and uh so how how much has the landscape of the regulatory uh the regulatory landscape changed over the last six years oh it's it's changed a ton you know i think i mean honestly

for me being more on the ground i think one of the mistakes that a lot of crypto companies make is that they don't actually give the regulators enough credit as as far as how much they actually know about bitcoin and about the space and it is um you know all credits to them they really are are quite at least in the u.s i can only speak to to the u.s um they're really quite top notch. It's a completely different environment than it was back in 2013, 2014. I think you guys were wise to approach the CFTC. It seems like commodities guys really got Bitcoin more innately than other areas of the trading world. Yeah, it was a risk. In January 2014, when we decided to go down this path uh it was super risky we went all in on the cfdc we stacked our board with cfdc

people we hired cfdc lawyers we uh we just took that gamble you know our view was that it wasn't you know because bitcoin is not issued by any central uh you know company or government or anything we took the view that it didn't look like a security resembled more like a gold like a commodity you know maybe elements of a currency as well and the definition of a commodity is quite broad so we were highly leveraged towards the cfdc asserting jurisdiction over it but fortunately they did his regulation obviously bitcoin is free open source software a lot of hardcore bitcoiners are anti-regulation anti-state how is it how's it been sort of working uh with the different types of personalities in this space and trying to be a leader

and sort of bridge to these regulators that I would argue are an inevitability to deal with at the end of the day. Yeah, so I would say it's gotten better, I think, because people have realized that in certain use cases or certain contexts there has to be regulation. Definitely in the early days of 2014

we ostracized ourselves a lot for obvious reasons. But ultimately where we come out is that the you know the bridges between fiat and bitcoin anytime you're going to touch fiat or you're going to oversee anything that allows exchanging bitcoin to fiat and back and forth that's going to be regulated just no matter what and so i think now people have come to accept that once you have bitcoin then you can do whatever you want outside of the purview of regulators and i think there are a lot of um very powerful uh elements to that for sure do you see uh essentially just a random tangent i'm interested to get on do you see a closed loop bitcoin system ever evolving like

um closed loop in the fact that people are just using bitcoin it's a universe and either an internet economy maybe meet space economy to an extent i think i think it will really depend on the geography you know i can see i think in some areas where fiat is not as either um reliable or even just where the government isn't doesn't have as much control over it i could see those starting to evolve more and more you know particularly um i think in some of the cross border uh transactions in africa where you know we're seeing developers start to accept bitcoin directly and then um and use it i think in the u.s it'll be complimentary um and i think that's a that's a very fair thing there are things that you know people will continue to use fiat for

there's not a ton of i'd say the everyday person in the u.s doesn't have a ton of frictions with their you know jake morgan chase account uh but bitcoin can be complimentary for sure it's fun to see it evolve i'm actually building a site and we're trying to uh experiment like a closed loop bitcoin uh system uh but it is there are pain points so you need cash at the end of the day so right well i mean and you know we see that ledger x we see that with um even some of our customers ultimately even you know miners for example they have to pay their bills they have to pay their people you know their expenses that exist in cash um so i think at this point it's more the um the bridge and intersection between them that seems to be most robust a lot of the

arguments people will make is that the these use cases and these functionalities will come with liquidity and the precursor to liquidity is infrastructure and being able to get the money into the asset class so where do you think we are right now compared to 2017 compared to 2014 from an on-ramp infrastructure for people with enough money to move these markets well we're definitely evolved from 2014 for sure i think there's just more there's more stability um there's more regulatory clarity there's more uh differentiation between platforms specializing in different things um 2017 was a little bit much in terms of the the price appreciation and i think it's been good to um kind of weed out some of the the craziness and

the crazy speculation and everybody who's still in bitcoin right now is you know they're working on on projects are in it for the long term so i think those are all good but ultimately at the end of the day you know the market cap is still um it's very reasonable for you know companies like ledger x and um and stuff but it's not super meaningful to like a company like goldman sachs and so i think it's just going to be a um a steady cadence whereas the market cap appreciates it'll start to get interesting to maybe billion dollar funds and then you know five billion dollar funds and then ultimately at some point we'll get to really the the mass adoption but we have to acknowledge that at this size, it's not really going to be interesting to the very, very large

institutions. The infrastructure on top of Bitcoin is very important, but also at the, not infrastructure at the protocol level, but Bitcoin at the protocol level is not a hurdle, but it is a factor, something to factor in with the onboarding of the masses. So as an observer, if somebody's been in the space, what do you think about Bitcoin protocol development? Anything you're looking out for? We were talking about Lightning Network a little bit earlier, but anything else um yes i mean i think lightning is is interesting at least for us especially because as we talked about um accepting um bitcoin as a form of collateral unfortunately i'm not actually as up on the protocol as it should be in some of the um bips that are out there but

i think generally you know it's what i find most interesting is that um in a lot of ways a lot of the challenges are political in nature you know now that you have this uh this protocol that's not owned by any any central counterparty and i think we've navigated bitcoin has navigated some of those political challenges already and will continue to over time but i think those are interesting and i think once there's more uh of a track record of having navigated those i think it'll give more comfort to uh broader adoption as well it's one thing i'd like to say on this podcast is that we learn bitcoin is like an expanding universe that we discover every day As we get more blocks produced, more people using it, we're sort of still feeling out the edges of what this protocol can do and how we should interact with it.

And so one narrative that's been floating around more recently is like Bitcoin at the protocol layer should probably serve like this Hal Finney vision of Bitcoin banks that the protocol layer is sort of designated for large transactions and settlement, like a settlement network. and use things like Lightning Network and other second and third layer solutions to leverage the assurances of the protocol. So just curious to see, like scaling this, do you think it's like a reserve currency at the protocol level? Do you think we should try to do as many transactions as possible? Just curious to hear that. I mean, I can see the natural evolution to using,

to having the Bitcoin protocol in the way that is, which is purposely expensive and inefficient, and then having things like Lightning Network to actually make transactions more palatable. You know, I mean, we at LedgerX are doing continuous derivatives trades. We don't settle those to the blockchain for obvious reasons.

It would be extremely inefficient and expensive to do. But, you know, to the extent that there are, you know, Lightning evolves, and there are ways that we can start doing it more efficiently, then I think you can see that, at least for us, I can see that in our in our pipeline as um as a setup that works you know that keeps the protocol what it is but

works to um to make transactions better all right yeah so let's dive into like what you guys are doing with your options and swaps what you plan on doing with omni um and like you said you set out on this mission you feel like you're you're sort of fulfilling the mission that you set out on five six years ago now at this point what is that mission and and how did it did it come to fruition We always felt that derivatives were going to be very important to the maturation of the Bitcoin market, both in terms of a direct way for people to hedge, whether they're individuals that are holding Bitcoin or companies that hold Bitcoin on their balance sheet. And they essentially take on the price volatility risk as a way to insulate their end customer, whether it's a merchant or consumer from that risk, which is a very important function. or um even just generally the history of derivatives reducing the introduction of derivatives reducing volatility in an asset class and obviously lower volatility leads to more

stability so we we always thought that was going to be important um you know my background and i think a lot of the products i find most interesting are options in particular so that's kind of what we're known for um that we do have just a buy sell bitcoin product and uh you know it took us a while to get the regulatory approval but ultimately launched it and you know we've seen um i think a lot of whether it's high net worth individuals or miners or companies in the bitcoin space people really using these in in ways that i think you know are helping them grow and expand their business and take on additional risk where they otherwise wouldn't be able to do that and you know now our goal with omni is to open up that product set and that offering and the proven

regulated platform to a much wider range of customers yes that's why I'm fascinated by the options and swaps you're providing particularly for miners because they have a lot of risks that they're taking on and you guys help them hedge that risk so I guess for miners specifically if we could jump into like how ledger X helps them hedge for the future sure so you know we kind of alluded to before miners have bills that they have to pay and you know in the form of dollars and so they have a couple options um when you know they need liquidity so they can you know right now bitcoin's like 5400 so they can sell a bitcoin at 5400 uh which will give them

you know a 5400 worth of cash or they could sell a call option on ledger x maybe a one year call option and they can sell that and maybe collect a thousand dollars and that allows them to collect a thousand dollars today that they can still use to pay their bills and maybe the call option is struck at ten thousand dollars so they don't necessarily have to sell their bitcoin they just pledge their bitcoin if bitcoin ends below ten thousand dollars they get it back and then if it ends above ten thousand dollars then they end up selling their bitcoin at ten thousand dollars Which is still better than selling it at $5,400. So, you know miners can use options and particularly I'll note ledger X options because our options are dollar denominated and that's why our

License was so hard to get but they can use ledger X options to obtain dollars today and and essentially capture the volatility premium that's embedded in the options Rather than just selling their Bitcoin and so it's more for many of our minor customers. It's a more economic you know economically beneficial strategy than just selling bitcoin it's fascinating because the mining world is is ruthless right you're buying hardware you got very low margins if your energy prices aren't aren't in place and i think the emergence of these markets are imperative if we're going to move move forward and uh importantly like decentralized mining like you're going to need people with not as much capital as the big miners to to be able to hedge

Yeah. And, you know, we I would say today our products like our options and our swaps are not they're taking things that worked in the traditional world and we do some amount of innovating to make them work for Bitcoin. But they're not particularly Bitcoin specific. But some of the products that we have in mind for further down the line, I think, are like transaction fee contracts, hash rate contracts. Those are things that really are Bitcoin specific. And we actually recently announced our we have a halving contract that we'll be launching soon, you know, around next year's halving. And I think those are the things that are both interesting, but also will be really important to miners and folks in the space. Let's dive into like a fee fee contract or hashing contract. What would that look like? And why would somebody engage in this? so you know we actually i'll talk about our happening contract and then you know it'll tie

into how fees would work uh so the way that that one works is it's a binary wager on when the happening will occur so obviously miners you know let's say a bunch of computer power starts coming online and it happens a lot earlier than miners are exposed to that and on the other side to the extent that you believe that if the mining as the mining reward is halved transaction fees would go up higher to compensate miners anyone who's just any consumer facing company or anyone who's transacting on the blockchain frequently would face risk on the other side no it's uh it's fascinating i'd never so that's the having contract is that the one that you were teasing yesterday oh no that was december 2020 excuse me so the having's about probably around memorial

day next year yep and actually what's what's really cool about it is the way that we're going to um launch it is there'll be a number of different expirations in which you know folks can speculate hedge and speculate on when the happening will occur so we'll be able to back out a forecast for when the market actually thinks the happening will occur i just had an idea go off my head are you guys going to start uh measuring expiry dates via block times you think or block heights more particularly well so this is so funny it's funny that you asked that because this i call at the Havening contract, if you look at our formal filing on our website with the CFTC, it's a block height contract. And it's beautiful. I mean, there is no, I firmly believe there is no

contract in the world that is as difficult to manipulate as this contract that settles to the Bitcoin blockchain. Right. Because you'd have to, you have to screw up the difficulty adjustment. Exactly. Exactly. It's irrefutable. And that's where I think when we talk about like hash rate options and some of those i mean we'll just settle to the difficulty and everybody agrees on it you don't have to worry about you know oh did was the this centralized exchange you know move this price around or anything like that that's why i'm fascinated by you and your husband for starting this because you traditional and it seems that i mean it seems that more and more people from the traditional financial world are coming around to bitcoin but it seems like such a fundamental

it seems like something fun to play with for for somebody who's financial minded so what do you thing it's going to take to sort of convince the uh i don't want to say luddites but uh the the the uh the old timers in the financial world you know honestly interestingly enough the the people that i do see who are convinced it's usually because their kids are playing around with it you know there's there's something to that where i mean and that was the same with um because at the time when paul and i got into bitcoin as i mentioned he was at y combinator but i was still working at goldman in new york and just being able to send it send bitcoin back and forth to each other it's just i think once you play around with it um and then you like see it on a block

explorer and it's just super cool um but you know i don't it's just really hard and i have a lot of great things to say about goldman but it's really hard for me to see them it's really hard for me to see you know innovation in this space come from an institution like that just because of institutional you know factors that make it difficult for them to be as nimble as you know a startup like us can be yeah the the y combinator uh upstart probably has a better chance of being nimble and and so that did that benefit you early on with the with the regulatory stuff where um i mean honestly so the regulatory space is very everybody knows each other and so we were outsiders so it took us a while to gain the trust of the regulators um and really to prove to them

that we want to be regulated um so it took us a while uh but now that we've navigated it i would say now it's we have a much better understanding and i think um hopefully a much better mutual respect for each other both the regulars for us and obviously us for them what type of clarity are you looking for obviously relationships and there has been more regulatory clarity up to this point from when you first started obviously we still have ways to go um for me in particular i think around taxing and and uh securities with the sec and sort of de-alienating between the different regulators and jurisdictions and stuff like that so what as a ceo of an options company What are you looking at?

Yeah, so I definitely agree, taxes. That's something that comes up from our participant base a lot. So regulatory clarity around taxes. I would like to see more clarity internationally. I think that the U.S. That's asking a lot. Well, you know, because otherwise what it does is it puts companies in difficult, like startups in difficult positions because you know we you either you want to know okay if you

are going to operate here are a clear set of rules and regulations and guidelines to operate by and then okay if you don't do that then don't operate but instead it puts startups in difficult positions because we don't really know can we operate there and if we start operating and you change your mind you know things like that so I would like to see that in the U.S. I think we're getting pretty close i know that the sec there's some questions about what's a security and what's not um but at least for bitcoin in the u.s i think we're pretty good in terms of you know where what falls into the states what falls into the cftc um and then you know hopefully on taxes soon yeah the tax stuff is it's daunting well yeah and so the tax so part of the reason so we talked

about omni from the point of view of a retail license but for us one of the really critical parts is that it allows us to do futures and currently we do swaps and swaps do not get beneficial tax treatment and it's really a relic of dot frank it's a lot of the they changed they literally made it very clear that commodity swaps do not fall into this and it was designed for interest rate swaps and credit default swaps but our swaps are part of it so part of the reason we're doing futures is that futures have clear taxation in the US as a commodity futures and so that'll give both clarity as well as beneficial tax treatment to to our customers something is actually another part of this industry which is a sort of exchanges and custodians like providing

their users with like good information about what they did on their platform in a given year some are better than others and sort of what's your approach with the the customer experience of of trading on your network and and letting them know what happened at the end of the year we i like to think that we we do a pretty good job we provide monthly balance statements of all your activity and balances the same way that uh you would get from a bank um so i i'd like to think that our customers are pretty happy with that um and we and keep in mind we get you know ledger x gets audited um we went through our second full audit this year was completed uh again received an unqualified opinion which is a clean bill of health and so we are we are held to

extremely high standards what's that auditing process like you know it's it's very it is a lot more involved than i actually ever thought before i went through our first one i didn't realize how much they go into it but um you know to the same way that i was saying that people don't give regulators enough credit i think they don't give auditors enough credit either our auditors are I mean, they're running their own node. We had to sign, they picked a whole bunch. They're running their own node? They picked a whole bunch.

Yep, they're running their own node. So they verified everything. They won't even use a block explorer. Like they verified everything themselves. Wow. Yep. They made us sign message for a bunch of addresses and then they ran verify message themselves.

And so it was pretty intense. I didn't realize the auditors were that up to speed. running nodes pulling the blocks themselves making sure you weren't feeding the bad information yep exactly that's crazy yeah it's great to see yeah and you got to think for them like an auditor like this technology is like inherently interesting to them right because it's a an auditing system i mean it's crazy because yeah exactly it's um actually it's funny because paul wrote a blog post last year at our after our first one was like literally called auditing and auditing technology but it's crazy because having gone through it you look at what they do for u.s

dollars which is they sometimes you just ask the bank like hey do you have the dollars that they say you have and then for bitcoin it's like they can just run their own node it's it's really cool yeah this is um so somebody's come from like uh a derivative desk at goldman and creating sort of uh not really yeah well margin putting value at risk with with us dollars on those desks and making sure there's not too much synthetic. How am I trying to phrase this? So Bitcoin basically makes it so that you cannot be, your reserve ratio has to be sort of in line.

How does this change compared to like the desks that you were working on before with the collateral that you're using? So, you know, I came more from like the, just like the equity option side. interestingly enough having been a trader i only realized after starting ledger x that i actually knew very very little about what was happening at the infrastructure level in terms of the clearing and where uh you know how things were settling and where funds and uh and stocks are being held

uh but you know as it pertains to us um kind of come back to this fact that because we can accept collateral 24 7 365 i think it just generally is more efficient for the system and less risky for the system um at goldman you know we used to have to over collateralize by up to 40 sometimes at 4 p.m with the clearing houses because you didn't know something was going to move overnight and if you tried to submit a trade for clearing if there wasn't enough collateral then the clearing houses would decay the trade so i think this is you know i think bitcoin allows um you know much more uh efficient robust trading what's the world with 24 7 365 markets like like how how much different is it then you're touching on it here like obviously there's stark differences

and the availability to collateral and liquidity whenever and does this open up a lot of sort of untapped economic activity in your mind well you know i think yeah i think the biggest thing is the especially the efficiencies of like everybody around the world trading the same thing which is kind of what happens in fx but it's like fx you transfer the risk across uh i see it as you know it's 24 7 365 which is functionally true uh but in practice i kind of see it as two markets we have like us hours and asian hours so it's like very uh very peaky in that manner um but it's it's good i mean i think it's it shows how bitcoin is really a global phenomenon talking about asian hours and us hours one thing i pointed out or somebody pointed out to me earlier this week was

It's like you can tell when BitMEX, some BitMEX, when they close out, they do their what you're all's once a day at 9 a.m. And you can tell in the mempool that BitMEX is closing out their trades. That's fascinating. And they're obviously batching like once a day. So when it comes to actually transacting on the blockchain, what's your strategy for being as efficient as possible? John Newberry coming in from Bitcoin Optech and yelling at you. We batch as well. And then again, we also don't settle our, you know, we settle our trades to our internal ledger as everybody, you know, does.

So we settle for most of our trading activities, just the internal ledger, which is obviously, again, cheaper and faster than the Bitcoin blockchain. And then when we do need to touch the blockchain, we batch it. Do you have like a set cadence of touching the blockchain? Like, or we're going to do it at this time every week or. Yeah. Internally. That's something that, because it's something you have to think about, right? Yeah, you have to think about using it when others aren't

Yeah, as do as do individual users as do I'm sorry. I'm just like rambling in my head here. No, this is fascinating Beyond trading and in sort of options and swaps markets like what good do you see Bitcoin bringing the world? Like you're talking about remittance sending it Well, I mean I always come back to just and I I'm not purporting to have experienced this obviously myself in real life but in my understand stick there's two billion people in the world who are unbanked and it's for reasons like They don't have an appropriate like birth certificate, which actually my even my family in India doesn't have They don't live close enough to a bank. They can't meet account minimums, you know, there's

Fundamentally something that is now possible for them That wasn't possible before and especially if you look at places like in Africa where they may not have infrastructure but people have cell phones and so with the cell phone they can now you know accept payment and if you believe that it is in a way a fundamental human right to be able to accept payment for providing goods and services then you have to believe that bitcoin is just a really good thing my wife works in advertising she works with a couple of Venezuelans one of which decided to use bitcoin to send back to her parents for for medicine that in particular like proves that this is there's something here oh totally and you know i i'm not like a i'm not really very well versed

in like macroeconomic theory or anything but i mean at the very least when you look at something like venezuela you have to at least acknowledge that having an alternative like bitcoin is a good thing again not saying that bitcoin needs to replace everything but having an alternative is a good thing it's a good thing it's a heavy thing right because the uh the light we've been talking about the lightning network like the lightning network torch went from wales to iran to israel and i think somebody tried to send it to gaza but um but it's really like abruptly in the face like you're dealing with regulators as well but there's also like things that they can't do like they can't stop that and i think that's something i'm very interested to see going forward

like maybe the second decade of bitcoin's life is uh how do governments react to this this sort of something they have to confront abruptly it's yeah like especially trump just announced another round of sanctions against these countries and now there's european countries and the eu saying hey i don't we don't know if we want to go along with that and so like you're saying can we get the world to get on the same page may not look like it and maybe we don't even need them to because there's nothing they can do about this yeah i mean and and how they i totally agree it's it'll be interesting to see and i think you know part of the reason that we end up starting ledger x in december 2013 is that in november 2013 i don't know if you remember this but there were

these senate hearings about bitcoin and digital currency in the u.s and that's essentially where they said that where they made it very clear that they were going to be open to regulating bitcoin and the reason is because they didn't want it to go overseas and so not only do you have how our government is going to react but now you have all these nation states that are wondering what other nation states are going to do and uh i think it's it's an interesting dynamic but it's certainly powerful that people can move you know whether whether governments like it or not at the very least you have to acknowledge it's extremely powerful that people can move currency you know across borders without intermediaries yeah no it is right because it's uh it's like a whack-a-mole

you try to smash it down in one place it's going to pop up in another exactly um being from india what are your thoughts on the indian government what they're doing uh it seems they're being pretty harsh on on bitcoin companies you know honestly i haven't even actually followed that as as much as i should are they being pretty bad yeah i think they're they're not allowing cracking down on bitcoin exchanges yeah i think unicorn has to close up shop oh geez yeah i mean ultimately it's that's it's the risk anytime you know anytime you're touching fiat in particular because the government's you know to the extent they control the banking system once they get the banks then they can get the businesses and that was even in the early days i mean 2014 like

banking was a nightmare for Bitcoin companies and it kind of goes to show the power of just how you can really suck the oxygen out of the space by just you know cutting down on the banking side right is that something you worry about now not as much now it's a lot better well I shouldn't say a lot better it's better there are some banks that are publicly known for being very active and involved in the space and what's nice is they um they can get really involved in understanding the different businesses so they can feel comfortable about what you're doing and um and so it's better now but it's like 2014 i think we spent i personally spent the first like six nine months of the company just focused on getting a banking relationship yeah now it's uh again

another so another on the same topic do you think there's a threshold at which there's like a point have no return and it's like okay it's here it's a thing like what does the world look like at that point where everybody just has to throw their hands up and submit to the fact that bitcoin is here and probably going to be here i mean i kind of think that if it wasn't going to be here it just wouldn't it would already not be here you know i mean whether it's like the price action or what i think everything you know we see enough people and companies who are in it for the long term we see enough um you know funds like i'm a markets driven person and if it wasn't going to be here i think the markets would have made it not here um so i think we're already at that point

it's just a matter of it is still a you know maybe like a series a stage company and so it's just a matter of it maturing and um and growing over time solely but surely that's what we say a lot here it's happening it's like you said like you've seen vast changes over the last six years and it seems like things are are trending towards progress and good things all right let's send it on your december 2020 uh 15k call options so you tweeted this is this is the reason why we're sitting here i saw this tweet and uh said all right i gotta i gotta speak with you about what you guys are doing so december 2020 15k call options traded at 100 to x implies there's a 25 chance bitcoin is above 15k at the end of 2020 you said eight percent

chance by the end of 2019 correct yep um so how are you able to derive this from these contracts i guess for the preceptor so you know one of the great things about options you know options have a they have a time duration in the future and a strike price and we can use the same models that people use to price options particularly like black shoals model so typically if you're a trader you'll put in a bunch of inputs use a black shoals model and it gives you a price so what i do is i look at the price put a bunch of inputs and back into um you know certain interesting information and what i think is really more uh intuitive you know i was an options trader and the options data is incredibly rich but it's extremely hard to develop you know intuitive

understanding of what it means i can tell you that trade traded at 425 dollars but that doesn't mean anything to you and so we are both working on actually it's on our website we've launched the Ledger X Oracle which is designed to do a lot of what I do with my Twitter which is just make it intuitive easy to understand but it's real markets and real pricing and I think it's important for I mean one is it's interesting but two is it's also important for a lot of whether it's trading shops or investors or people building businesses or people risk managing businesses. Those kinds of things

are important for them to kind of understand and have in their planning and their view of the world. That's fascinating. I mean, Bitcoiners are degenerate gamblers. A lot of them are at least. So putting

probabilities on price at certain dates in the future is always fun. It definitely perks people's ears up. Bitcoin Tina is probably yelling right now it's going to be higher 25 chance that's it no there were definitely i think there were some people who responded like like i think it's 90 i was like that's great but the model's not saying that i think 25 is a pretty high chance yeah i think it's pretty good jessica it's been a pleasure uh before we part here you have a parting note for the freaks out there anybody interested in bitcoin uh interested in trading bitcoin on ledger x come trade options

on omni and omni 10 000k minimum correct yep that's correct yeah um which it'll come down over time ten thousand dollar minimum not ten thousand okay that was a great conversation thanks for having me on such short notice thank you peace and love freaks