The Breakdown - Crypto Daily 3@3 - 7.12 | Special Edition: Trump Gives Bitcoin A Mainstream Moment

Episode Date: July 12, 2019

A very Trump-y special edition! On this episode, we look at 1) what happened with Trump’s Bitcoin/Libra tweet; 2) the crypto community’s response; 3) the surprisingly with it mainstream media response; and 4) what it means going forward and why we need to build our own public story so that a technology with massive potential to enshrine freedom and individual sovereignty doesn’t become defamed and criminalized.    Note for listeners; the second half or so of this clip is discussion from Twitch live chat. This usually doesn’t happen but with such big news there was quite a bit of excitement to discuss. Let me know if you like this or if I should cut it off for the future.    For those who want to watch, check out the replay at: https://www.twitch.tv/nlwcrypto https://www.youtube.com/nathanielwhittemorecrypto   Follow me on Twitter: https://twitter.com/nlw

All right, check, check. What is going on, everyone? How's it going? How's it going? You guessed it. We are talking Monsieur Trump today. I decided that this is kind of a big enough moment, I think, that instead of the three at three, we're just going to give the entire, usually it's about 10 minutes that this all takes to this very particular topic, right? We'll get into a bunch of different pieces of it. So what happened? We'll get into the response. We'll talk about the media response is really interesting.

And then we'll talk about some like things, thinking forward, going forward, what this all means. Shout out to Crypto Scam Hub for this awesome meme photo. Crypto Mem Central, you can find them here. But yeah, so let's dive in. So unless you are living under a rock or just somewhere totally away from crypto Twitter, you saw this last night. Last night, the internet, at least our little portion of it, totally exploded.

When Donald Trump got on his tweet machine and said, I am not a fan of Bitcoin and other cryptocurrencies, which are not money and whose value is highly volatile and based on thin air, unregulated crypto assets can facilitate unlawful behavior, including drug trade, another release at act. Similarly, Facebook's Libra's virtual currency will have very little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new banking charter and become subject to all banking regulations, just like the other banks, both national and international.

We have only one real currency in the U.S. and it is stronger than ever, both dependable and reliable. It is far more dominant currency anywhere in the world. We'll always stay that way. It's called the United States dollar. So there is a lot to unpack here. A lot of people thought, did he actually write this? seems like someone who had an agenda wrote this, didn't really sound like his normal ramblings exactly. Two, a lot of people noted that this seemed in quite to contrast

his recent kind of push to weaken the dollar. So anyways, you know, I think that for sure, when you look at just what the response of the average kind of participant in crypto Twitter and Bitcoin Twitter, it was bullish, right? So you got paranoid bull. Today is the most bullish day in the history of Bitcoin. The chair of the Federal Reserve called the store of value and the president of the United States tweeted about it. Right. So if you'll remember, we were talking yesterday about

how what a big deal it was that Jerome Powell, the head of the chair of the Federal Reserve, actually made the analogy of digital gold and said that's kind of how people are using Bitcoin. You've got Jeremy from Circle, possibly the largest bull signal for Bitcoin ever. Crypto is now a presidential global policy issue. People everywhere will embrace a mix of sovereign and non-sovereign digital currency. We'll see if that last part comes true, but again, that's kind of the, the excitement is more around this first part, right? That it's now a presidential and global policy issue. Let's head on over to to pop on Squawk Box this morning. I'm going to turn me down for a minute and this on so you guys can hear. The industrial age.

Yesterday was such a big day in that you have to remember, you know, gold, for example, is a $7 trillion asset. It's been around for thousands of years. Bitcoin is $200 billion. It's been around for 10 and a half years. And we have the Federal Reserve chairman talking about their alternatives to each other. And you have the president coming out

and acknowledging it, right, talking about it. If you had said 10 and a half years ago, the president of the United States is going to be tweeting about magic internet money, we would have never ever envisioned that day. And so I think that what we're seeing is a shift in what we trust. Do we trust the humans or do we trust the algorithms? them. So this is obviously kind of a pretty big deal. I think Palm did a really good job of

summarizing. If you said 10 and a half years ago that the president of the United States is going to be tweeting about magic internet money, we would have never envisioned that day, right? I love this one. So one of the questions, obviously, when this comes up is, what's the price action going to be? Well, it didn't move at all. In fact, if it moved any there, I went up a little bit. But crypto Cobain, King Kobe, said, I summon the old gods. I summon the new gods. Together, I request one thing of you in defiance of the United States of America. Pump it. So you had like, it was a very big day, right?

Brian Armstrong from Coinbase Achievement Unlocked. I dreamt about the U.S. President needing to respond to growing cryptocurrency usage years ago. First, they ignore you, then they laugh at you, then they fight you, then you win. We just made it to step three, y'all. So, oh, hey, we got a raid from Chris. Thank you. Welcome, guys. So this is a, it's a daily chat podcast.

We just got a raid from someone on Twitch. So this is the benefit and the downside of multimedia. But so we got some new people. We're talking about Donald Trump and Bitcoin and crypto yesterday. So, yeah, so this idea of then they fight you, right, and being at that stage. So Ryan from Masari made this point as well. Then they fight you. We're on to the final bosses.

And this is interesting because a couple of weeks ago, a couple of weeks ago, I had retweeted or reposted something that Naval wrote like two years ago about how Bitcoin eventually eats all of the networks, right? It eats all the monetary networks. And I asked, you know, what has changed in your perspective since then? And he said, I can't call timing, but it feels way too early for the endgame to me. Bitcoin hasn't faced the final boss yet. And there are many suspect tokens rising alongside indiscriminately. So this was just a few weeks ago, June 21st. And then I thought it was hilarious. Naval's tweet, about

Trump was just a retweet with a giant Mario final boss gift. So anyways, that wasn't obviously the only response, wasn't memes and fun responses. It was also a lot of really serious stuff. So, Niraj from

Coin Center wrote, without cryptocurrency, a caches of surveillance society. And you saw this a bunch. A lot of people who were taking kind of the educational tone of view, using the fact that so many eyeballs were going to be on this on this tweet to actually try to educate, at least if not the president and even if not his aides,

maybe the people who were coming and checking out this conversation. You had Caitlin Long, who just crushed it, who wrote about what Wyoming is doing and how basically arguing that he's been misinformed by his aides. And I think this is something that's really cool. A man with three clocks, yes, it is a daily stream on Twitch. And so, so, yeah, so Caitlin was also featured prominently in a really good article in the Wall Street Journal. And I think this is the second point that I wanted to make about this.

Media coverage has been kind of impressive as compared to a lot of things that we've seen previously. So Stephen Rusololo, sorry if I mispronounce that, wrote a really great piece. It had quotes from Caitlin. It had quotes from Palm. I've grown up a lot of different folks, kind of making some of these points about the idea that it's powerful that there's such a lot of attention around this. I want to go one more time to Squawk Box because I think it's so notable to see this shift in how the media is talking about it. So I'm going to mute myself again and pull this back up. Who has the biggest vest in interest in the things staying the way they are?

in the government. They have no control once they lose control that. Exactly. So again, this is like you're talking about a show that a couple years ago was just basically watching different coins pop up and seeing what was happening and just totally market-focused to something that is talking, you know, relatively eloquently for mainstream media about what the impact is and why they're talking about Bitcoin and what the implications are. I think it was cool because it runs kind of encounter to something that Ben Hunt was talking about today on Epsilon theory, where he's basically arguing that the media, the way that they've talked about Libra, has been largely not like what you actually need to know about Libra, but how to think about Libra. His argument is that Libra is a huge force for co-opting the power of Bitcoin, basically. So the media was really cool. So anyways, I wanted to get, I guess, just the,

the last couple minutes to my take. So first, I do think that this is actually a pretty huge moment. The elevation to the national stage, you know, even if it is just via a tweet, and maybe even one that was kind of planted by, you know, someone else, plus the fact that it's such a huge issue for that's been coming up in congressional hearings with the Fed chair, I think does mark a new moment for this industry. I won't be surprised if in the future we look back and kind of divide it until, you know, before Trump tweet after Trump tweet, kind of a thing, broadly speaking. I think second, it feels to me very much. And this is, I'm definitely not the only person to say this. In fact, Jerry from the head of coin center makes this point as well. I feel like this is much more

a response to Libra and to Zuckerberg, who is sort of a nemesis for Trump, his historically. And as someone that I think the administration and also just kind of the U.S. establishment in general fears in terms of that power, I think this is more about Libra than it is about Bitcoin. And you kind of have to mention Bitcoin when you mention Libra. But to some extent, especially in the context of Jerome Powell's comments yesterday, it really, really feels to me like this is a this is about Libra and about what the the threat that Libra represents to the US dollar third I think that it feels to me like we haven't really had to as an industry as a space we haven't really had to think about our kind of global advocacy position like

certainly there are organizations like Coin Center who have been thinking about that and who've been working really hard to make sure that, you know, people in Congress are informed and they have all the information they need. But we haven't built broad-based advocacy movements. In fact, we've kind of been like very internal facing. Jeffrey Tucker makes this point, while crypto people have been raging against each other for no apparent reason, a real problem has revealed itself. The U.S. President has an opinion on the topic that was common six years ago, but now one hears about rarely. He's talking about how cryptos are just for unlawful behavior. And I think that the point that Jeffrey's making that I agree with

is that there is effectively like the world is going to come at crypto now. The cat is out of the bag and if there was any question after Libra, this I think pretty much seals the deal. And that doesn't mean that we need to present some like united front that's not representative of reality. But it does mean we need to think about the stories that we're telling broadly speaking to the public about crypto. Like this is a technology that represents at core one of the most powerful forces for sovereignty, freedom, individualism in history. Like you could not get a more inherently freedom-loving technology for lack of a better term than Bitcoin. and the cryptocurrency movement broadly that it unleashed.

I think that we need to tell that story, and I think that we need to go advocate. And I think that when we do it work, so I'll have one example of that. So one of the folks that Libra did spend time with in advance of launching was Mark Carney, one of the governors from the Bank of England. And he was advocating even yesterday about why it's so important to have these new technologies create an event.

for consumers, right? This is basically a, you know, a central banker. He's tipped maybe for the head of the IMF as his next job who's talking positively about Lieber because people went and spent the time. And I think that this is a really important moment for us to maybe kind of rally and do something. So I'm going to leave it there. I'm going to jump into some of these questions. For those of you who are hanging out on the podcast, I appreciate that. the time. It's the first week of the podcast. I hope you've enjoyed it. Please hit me up on Twitter at NLW if you have any comments, thoughts, ideas, reflections. And now let's dive into some conversation. So let's see. So Chris asks, I don't want to give it that much power to Trump

about Bitcoin, but you think it's that big. So yeah, so I don't think it's about Trump necessarily exclusively in terms of how big it is. I think it's about the Office of the presidency, which regardless of what you think about Trump, he does inhabit right now, making Bitcoin and cryptocurrency is an issue worth tweeting about. That is what's big. What's big is that every congressional representative, every senator yesterday had someone on their staff if they didn't have it yet out researching Bitcoin and crypto and figuring out what they're supposed to do about it. And maybe Libra was making them do that already, but I think this is a whole different level. So yeah, so I think that it's, I think that there's

a major effect there. What else? Yeah, and then I think, I guess the other thing that was interesting that I just wanted to mention is, you know, the immediate response, I don't know, whenever you have like a political story, there's always like the day one response and then the day two response. And the day one response is about like, you know, just the excitement and what's there. and the day two response is is how how people respond to it more broadly. Like what the counterpoint is, when all the obvious stuff that's been said is no longer said, the day two story is what comes up after.

And so I think that there are a couple interesting day two stories. One that I think is interesting to explore a little bit more than has been is, what if this ratchets up, right? So you've got folks in the Bitcoin in the crypto space like Nick Carter, who have been thinking a lot about, are we in for the criminalization in some way of Bitcoin? You know, I think Nick actually made a prediction. Let me see if I can dig this up. I think it's under here. Yeah. So Nick said this is a couple months ago. I guess in March prediction. In the next 12 months, a high profile Western government will criminalize Bitcoin ownership. Justifications will include terrorist financing, owned by regimes like North Korea and Maduro, that's Venezuela, dark net markets, right? So the same crime arguments.

So I think that this is, you know, whether this is true or not, I think this is the stage that we're at where this is the conversation. And so I think that it's an interesting point to think about whether, you know, what that actually looks like, right? Like one of the things that especially Bitcoiners, even more than other crypto folks do is they like to think adversariali. and wonder about where the potential attack vectors are. So there's a really cool thread going on over here. A lot of people have pointed out that miners might be targets, on ramps and off ramps might be targets, just making it really difficult and kind of hard to bank.

It's already hard to bank for Bitcoin and crypto-related startups. But there's certainly ways to make that a lot harder, right? So that's an interesting kind of counterpoint. It's like, okay, day one is all excitement. Day two is, you know, what happens? What would they actually do if they wanted to ratchet this up? I think the other interesting counterpoint is that, you know, the loudest political response to this actually wasn't from the left.

At least I didn't see much from the left, probably in part because it's folks on the left. This is in the U.S., obviously. I don't know where people are from. Democrats who have been calling issue with Libra, you've got to. Brad Sherman, who's been probably the most vocally outspoken antagonist to Bitcoin in the U.S. government in some ways. You know, so they're not going to just all of a sudden jump on the Bitcoin train because, you know, Trump, who they don't like is also against it.

But you did see, you've seen a lot of, you've seen a lot of folks on the right side of the aisle, particularly the younger constituency for whom Trump represented, again, this Let's even hold aside politics in really direct terms, but just in terms of memetic narrative terms. Like the set of Trump supporters for whom he represented a break with the past and a disruption to the traditional power structure, there's a big overlap of that group and folks who are excited about what Bitcoin does through the traditional structure, right? This is the group who's not excited when Trump starts talking about how we should manipulate our currency to compete with China and the European Union because they've been doing it as well. This is the set of folks who, you know, they're just not thinking like that. So I've seen a number of people. I think I even had someone retweet that said like this is the one issue I disagree with Trump on,

which is pretty fascinating. So that's another kind of day two story that I've seen. Chai City Crypto. I feel like Trump will backtrack on this in a matter of days. I don't know. This isn't a man who really likes backtracking very much. It's interesting to think about maybe what would a backtrack even be for him. I don't think it's impossible, but I would expect it to see kind of shifting.

He has to feel like he gets something to, you know, he has to win something. So maybe it'll be because Libra complies with everything. Criminalization is a possibility, direct threat to UST's power. It is, although it was so interesting to see how Jim Powell was commenting on, let me see if I can find it actually. I bet I can. So yesterday, so the question, is for those who are still listening, it's a direct threat to the U.S. dollars power.

And so yesterday, in testimony, Jim Powell said, or he was asked directly if a cryptocurrency system were to become prevalent throughout the globe, would that diminish to remove the need for a reserve currency? Powell, things like that are possible, but we haven't seen widespread adoption. If we do see it, you could see a return to an error in the United States where we had many different currencies in the so-called national banking era. Also, almost no one uses Bitcoin for payments. They use it more as an alternative to gold. It's a speculative store of value like gold. So again, this is one of the reasons that it feels like to me that this, that Bitcoin is getting

lumped in that Trump tweet storm with Libra and that the real fight is maybe with Libra. Yeah, Bitcoin hurts U.S. ability to sanction. This is another. comment. I do think that that might be part of it. To the extent that Trump actually is antagonistic towards Bitcoin, that would be my best guess about why, right? That it somehow undermines his ability to engage his foreign policy, right? That it is, that, you know, it's a way for countries to avoid sanctions like we're seeing in Iran. So, yeah, It's pretty interesting. Dexes are much needed in the space.

Yeah, I think that this is definitely going to, I guess maybe we'll post this one last thing, and then I'll wrap up because we've been talking for a while. Jake wrote this, not kale. So Jake from Coin Fund wrote an essay just a couple of days ago, actually, about what are the pressures, creating momentum for decentralization. So in this piece I talk about how different problems with regulatory and certain user privacy and public governance are economically driving systems towards increased decentralization.

I do think that when you see more interest on the highest level and when governments look like they're going to get more and more involved, you are going to see there's a natural push to have, to have the counterbalances structurally built in, right? So, I mean, this is what Pomp was talking about, I guess, again, as well. The last kind of clip that I had from him on Squawk Box is he's saying that it's kind of, it's too decentralized to fail. He used the words too big to fail. But what he really means is that it's really difficult to go after everyone you need. I mean, this is what folks, especially who are excited about Bitcoin, have been thinking

about for a long time and have been aiming at for a long time, is to design a system that is systemically able to avoid pressure and conscription from forces like the U.S. government. I think that you are going to see just more and more of a bifurcation, I guess, between on the one hand the folks who are trying to operate entirely legally, regulatory, right? So yesterday we talked about Blockstack and you now both doing SEC sanctioned token stales through the Reg A Plus exemption. You're going to see that kind of side of things.

You see Gemini who's talking about regulated crypto. You're going to see all that set of folks who's really trying to work within the system. And then you're going to see the exact opposite. You're going to see folks who are moving offshore anonymous founders, using Dow's, Dexes are going to continue to grow in importance, and they're going to go the complete opposite direction. I think the thing that is going to have the hardest time,

in that least the short and medium term is the stuff in the middle. So yesterday, actually, even Vail, which was kind of a user interface on top of Auger, made this point. So they shut down after, you know, six months after being really, really lauded in the community and something that people were really excited about. And one of their analyses, one of the reasons they said they shut down was that they tried to operate in this kind of in-between space that wasn't fully regulated, you know, and fully kind of compliant, but also wasn't. fully off the books with Anonymous and everything. And that's a really difficult space to be. So, yeah. So I think this is a, what's exciting to me, I think, maybe to wrap up is that this is

creating a whole new set of conversations as well as really supercharging a lot of conversations that we've gotten away from. Right. Like I think this is the stuff that, you know, I'm not a person who thinks that the markets don't matter and that price action doesn't matter. Because I think all of that action is what gets people involved, excited, and kind of hooked. But then people stick around for the revolution. And I think that focusing on, this focuses our attention again, on some of the revolutionary aspects of these technology and of these monetary systems that is really transformative. And it's our job to protect and preserve it. So maybe I guess I'll end with Jill Carlson, just maybe a different take on the final boss question. There is no final boss for Bitcoin.

As with freedom, we have to be vigilant in its preservation. We must constantly fight for it and defend it. We must be watchman in the walls. I think she's dead on, right? Like even if we beat the final boss, whatever that means, there'll be a new boss that arises. When you're fighting for freedom, self-sovereignty and liberty, it's a never-ending fight. That's the history of human existence and experience has taught us, and I don't think anything about that is changing. Just so happens we have better tools than we did before. So with that, thanks so much for the raid. Thanks for hanging out for podcasters. If you stuck around, let me know if you liked the kind of commentary or if I should cut this in the future. And yeah, I'll be around to chat more about this.

I'm sure this story is not over. So thanks, guys. Talk soon.