The Breakdown - The Breakdown Weekly Recap | Jan 18 2020

Episode Date: January 18, 2020

A single long-form episode with all daily episodes of The Breakdown along with a TL;DR on the week: Monday - Tokenized NBA Contracts & The Hunt For Crypto’s Killer App Tuesday - Mati Greenspan on the Technical and Macro Roots of Bitcoin’s Price Surge Wednesday - Why DeFi Is Surging As The Market Pumps Thursday - Why ‘Crypto Dad’ Is Building the Digital Dollar Foundation Friday - Tyrone Ross On The Next Million Crypto Investors

Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Saturday, January 18th, or Sunday, January 19th, depending on where you are and when you're listening. But either way, it is the weekly breakdown. So last week, I tried a new thing where I spin up. up all of the episodes from the previous week together. It was a request from listeners who maybe don't have time during the week to listen to each individual episode but are going on a long run or doing errands

or something on the weekend. People seem to like it, so I'm going to try it again. And the way that I want to kick it off is just a quick TLDR on the week, right? So if you only have three minutes, you can listen to this and at least sound intelligent when you're faking it over conversation this weekend. So what was the story of this week, this week which started on January 13th? I think the first and most obvious story of the week was the big capstone price boom for the entire markets, really, across the board that happened Monday, Tuesday and into Wednesday. We've kind of stayed flat since then, but we raced up up the charts from a price perspective in the beginning part of the week. And a lot of our conversation was about where that was coming from, right?

Was this just a technical pump? Was this just whales manipulating the market? Was this something more significant? And obviously this had bigger implications in terms of that question. And obviously this had some bigger implications in terms of that question because of the assets that surging, right? It wasn't just Bitcoin. It was also Bitcoin SV, right? BSV screaming a up something like 300% since the beginning of the year and 100% this week, which feels maybe, well, it feels something, right? And so that was a big part of the conversation. Now, it wasn't just limited to why these particular assets were pumping the way that they were. It was also what was happening around it, right? So on Wednesday, we talked a lot about how Defi had responded during

this movement. The interesting thing was you saw a lot more money move into Defi as people basically wanted to get exposure to this market action without giving up their exposure to their underlying eth, their underlying asset, which is a really interesting thing. We haven't necessarily seen a run-up this quick or this fast in the era where defy is fully operational, right? And people can put their money into MakerDAO and Mint Die for themselves, or they can put their money into compound finance. So that was a really fascinating, almost sub-topic from the pump. We did also see a number of other broader themes, right? Longer-term questions rather than just price action.

We kicked off the week talking about the idea of tokenization and securitization, particularly of people, right? We talked about Spencer Dinwiddie and the launch of his $13.5 million bond offering on Ethereum and what that meant about income share agreements and kind of the larger hunt for Cryptos Killer App and whether ISAs would be a part of that. We also had context to talk about the broader battle, which I think is going to define this year between the Chinese digital yuan and other government-backed digital fiats versus corporate coins like Libra or even something like JPM coin versus these decentralized non-sovereign network

coins, obviously like Bitcoin. I think that's the battle for the future of money. I think those are the three actors within it. And this week, the former CFTC chair, Christopher Giancarlo, who's affectionately known as Crypto Dad around these parts, announced the launch of the Digital Dollar Foundation with Accenture, which is basically an initiative to push and design a digital version of the U.S. dollar that can effectively compete with forthcoming initiatives like China's Digital Yuan. So we saw in some ways a very classic crypto week. Price action that spurred a ton of conversation about what that price action meant. And then that kicked us back to larger questions about what's actually going on underlying all this in the market and why should we be paying attention.

With that, I will kick it back over to, well, me, I guess, from earlier this week. And hopefully you enjoy some of these episodes. I think there was a really a lot of stuff going on that's really a lot of stuff going on that's really, that's particularly interesting this week. So have a great time listening. And I hope wherever you are and whatever you're doing, you're having a great weekend. I'll catch you Monday.

Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto and beyond with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Monday, January, 13th and today is a narrative watch around income share agreements tokenization and the hunt for crypto's killer app. So this was inspired by the fact that today is the launch of Spencer Dinwiddie's

tokenized bond for his NBA contract. So Spencer Dinwiddie plays for the Brooklyn Nets. He has been working to tokenize his contract for months now. And after tons of negotiation and really kind of unfortunately a neutering of what he was going for. He has been able to push forward a tokenized bond on Ethereum that represents something really interesting in the context of how fans might relate to athletes and just we think about the way that people participate in the success of others around them. The other part of this, though, is that on this morning's Masari Newsblast, Ryan Selkis wrote about why income-sharing agreements might be an early contender. One of the the contenders over the next few years for a killer app for crypto. So today I'm going to talk about

what killer apps are, this specific context of income share agreements and Spencer Dinwiddie, and then finally we're going to look at some other contenders for quote crypto's killer app, specifically Bitcoin. And we're going to ask about whether in fact the killer app is not these aboveboard mass adoption use cases, but the simple ability to use a non-debassable non-state money in situations where otherwise you would be hamstrung by the local political or economic reality. So that's what we're going to do today. And to start, let's kick it off by exploring Spencer Dinwiddie's contract and his tokenized bond on Ethereum.

Okay, so first let's talk about what Dinwiddie originally wanted to do. And this is Lawmaster, aka Larry Sermak from the Block, put it really succinctly and really well. He said, Spencer's original design was to tokenize 40% of his 34% of his 34, 4.4 million three-year contract, which included potential bonuses, for example, for making the playoffs, as well as a player option for his third year. Most of the upside came from the player option. If Dinwiddie opted out of his third year in 2021 and negotiated a more lucrative contract with his or another team, investors would collect the difference between the original contract and the new one. Further, this is still Larry's analysis here. This could have effectively

led to the creation of real fantasy sports. Investors could bet on the upside of the last year, and players' value could freely trade on the open market based on how the player performed. It would tie price to performance. So that was the original idea. The problem was that there were a lot of hurdles. The NBA really didn't like this. In their estimation, this was a version of gambling. They effectively said that we're not going to allow you to do this, and we will potentially threaten your contract. They threatened termination of his contract if he continued without approval. So they went back to the drawing board and continued to persist. And what they came back with is what is theoretically launching today. There's a couple pieces that it changed. One,

they had to remove the player option. Now, that was the part that was the biggest potential upside. So that's obviously a big deal. Second, the offering is restricted now through Redd to only accredited investors. So the way that the mechanics will actually work is he's selling a $13.5 million tokenized bond, 90 tokens each being sold for $150,000. So the token sale will last for the next month or so. It starts the day, ends February 10th. The tokens won't be tradable for the first year. They'll earn 4.9% interest. The token holders will paid on a monthly basis, and the full principle will be paid at maturity. Now, the other parts of this

to just incentivize participation, because obviously a lot of the big financial upside and the big teeth were taken out of it by the NBA is an experience component. Dinwiddy said that if he makes it to the All-Star game and his tokenized bond is actually gone through, he takes eight investors with him as part of the token holder experience. He's also promised to give Bitcoin to all of his teammates.

And so that's kind of the upside now is a little bit more experience-oriented than just strictly speaking financial. But the reality is that this is obviously for Spencer, and I think for a lot of people watching him, clearly a step one. He tried to do something big, bold, and totally different, had to do something that is still pretty friggin different, let's be clear, but which is within the confines of something that the NBA finds comfortable, that the existing legal apparatus finds comfortable. But Dinwiddie has even in tweets made it really clear that he intends to continue to push this and that he wants it to be the type of thing that everyone can participate in, not just accredited investors.

So going back to Ryan Selkis and Masari this morning, he wrote a post called Shoot Your Shot Dinwiddie, and he starts it by saying, quote, I'm convinced one of the top killer apps crypto will mainstream in the years ahead is the tokenized income share agreement. Okay, so what is an ISA? ISA is something that's been talked about for decades, but the buzz around it has increased, right? Particularly in Silicon Valley, there's much, much more interest in this for a variety of reasons. Effectively, an ISA securitizes part of your future income stream and trades it for cash up front. It's effectively an alternative to debt.

So the places that you're starting to see a lot of interest in this are vocational programs like Lambda School, where instead of incurring a bunch of debt, students that go through the program agree to pay a fixed part of their income over a fixed period of time or a percentage of their income over a fixed period of time. So if a lot of the focus so far, though, has been on the education use case of ISAs and trying to get out of the kind of debt model, which is hamstringing an entire economic livelihood of a generation right now, Ryan is effectively arguing in this piece that this sort of high-profile celebrity ISA, equivalent could really jumpstart that whole industry, right? So he says the fact that the contracts are huge, so it's easier to bootstrap liquidity and interest in the instruments. Second, that the

contracts are fixed in length, so there's more no ability around that. And since careers are relatively short, the payback timeline is short, which makes it a more appealing investment option. And then there's this other element that is more about the way that fans engage with their favorite athletes. This is something that Arjan Balaji, who's an investor at Paradigm also brought up when he posted about this last week, where he said that basically over the last 15 years, we've seen a decoupling of fans from teams and focus on just the relationship with individual players. And he was kind of pointing to LeBron James as a pioneer in this, and that fans are starting to follow their favorite players, not just their favorite teams.

This is a natural extension of that where basically super fans get bought in on a deeper level. So effectively, this is all to say that this sort of action potentially mainstreams the idea of ISAs. But then the question is, where does this tokenization come in and why does crypto matter? Well, let's turn to an article by probably the Silicon Valley investor who's thinking, honestly, the most about ISAs, who's Eric Torrenberg. Eric Torrenberg wrote a piece last year called Life Capital. And he's talking about the entire history of ISAs. If you're interested in this, you should go check it out. But he comes to the point about why crypto. And he says, crypto can securitize so much more than we currently do. In essence, we're

can tokenize ourselves in all future income. Once these personal tokens exist, they can be traded instantly anywhere in the world with infinite divisibility. Arbitragesers and professional traders could create new financial products, i.e. ISAA aggregations and buy, sell with each other to price things to near perfection. So the point about this is that once you introduce tokens, you create a radically different profile for the market where basically market efficiency mechanisms kick in, and instead of it just being a different form of charity or a different form of debt, you actually create entire new economic networks around it. That's why this tokenization piece of it seems so interesting, right? This is an area potentially where it's not tokenization

for the sake of tokenization. Tokenization potentially answers some of the challenges of ISAs, including liquidity, price discovery, et cetera. So what do I think? I think that ISAs are going to be a part of the conversation over the next couple years. I just, I can't imagine that it's not. We're looking for solutions to issues like student debt, and there are lots of them. There's lots of ways to attack this problem. There's kind of the popular Democratic candidate answer of making college free, different structural changes in the nature of education, in the form of how people get trained and what they do. There's this sort of ISA. I think it's going to inevitably be part of the conversation. I also can grok how tokens potentially create more efficient markets around this,

how the tokenization aspect is actually relevant and important, right? It's not just some random thing from people who are looking for a purpose for tokens, but can actually solve problems. Now, how that will bear out in reality and whether the beneficent and useful mechanisms of tokens are how it actually plays out or whether it in fact becomes just another category for kind of abuse and rampant speculation, I think is a much different question. But I can grok that this is why people would be interested in tokens in the context of ISAs. I think another point worth mentioning is just the extent to which the sports domain is

becoming a leader in kind of pushing the ideas and the actual assets in the digital asset space to the mainstream, right? You have Russell Elkong who's in the NFL wearing Bitcoin or BitPay server, BTC pay server cleats and is just screaming about it on Twitter every day. He's hosting conferences. He's getting his teammates on Periscope to talk about it, just really spreading awareness in a big way. You have obviously Spencer, who's going to the next level and actually getting people to participate in a real financial and tangible way while also evangelizing. So that's really interesting to me to watch just what it might do for this sector that so many athletes are seeing these tools, these cryptocurrencies as tools for asserting control over their own careers. But I also think we should

note that ISAs aren't the only place that people are looking for killer apps. So going back to the idea, what is a killer app? A killer app is an technology application that drives mass adoption of a technology. So basically, it's an application that's so valuable to people that they're willing to go figure out how to use a new technology in order to get it. So the Netscape browser is often cited as the first killer application of the internet. Napster is often cited as one of the early killer applications for the internet for people to do p-to-p file sharing. Obviously, social networks were radically killer app in terms of bringing people onto this new Web 2.0 apparatus. When it comes to mobile, obviously photo sharing in the form of Instagram was a huge, huge driver. So these killer applications

are things that take hold in the mainstream and drive people to adopt new technology. because they want to be able to participate in that thing. We talk about killer apps in the context of crypto because often it can feel like a technology in search of demand, right? A technology in search of a need, a technology in search of adoption. Most of the people who are into this industry, it has to be said, are still really, really early adopters that creates a certain amount of insularity,

where a lot of us think similarly. And it's funny sometimes, given how vicious the tribal battles can be, that so much of the disposition of participants in this market is still shared, at least compared to the rest of the markets. So what are the other places that people are looking in crypto for killer applications? Well, one that I heard a lot while doing the breakdowns end of year recaps in 2020 predictions was the idea of under-collateralized loans on D-5. Obviously, at this point, we're now really familiar with over-collateralized loans.

We're seeing a lot of permissionless loans in the form of these different lending platforms. Now people are trying to figure out how to do under collateralized lending in a permissionless way. The idea here is that if people can figure it out, it is potentially game-changing. To allow people to access the resources they need outside of kind of a predatory centralized structure seems like a really valuable goal, especially when you see the abuses. Now, there are huge, enormous challenges for that. In fact, this weekend, there was a massive and kind of very intense to, debate kicked up by Taylor Monahan from the CEO of My Crypto, who was also one of our guests,

actually, on that breakdown end of year podcast about the challenges of decentralized identity and how it can turn into a surveillance system really quickly. So under collateralized loans on defy are something that people are extremely excited about, but there's a huge number of unanswered issues. Another area where people are looking for this idea of a killer app is NFT-driven games, right? So NFTs, non-fundgible tokens are basically unique digital assets. So whereas in the context of digital monies, you want every token to be equivalent to every other token, you want them to be fungible. The idea of NFTs or non-fungible tokens is that you actually want that uniqueness as a property, right? And so where this comes to bear is in context like games, where you

want people to be able to own their own digital assets. You want people to be able to do missions in the game and collect unique things that have value because they are unique. You want people to be able to then control them, right? Not subject to the rules of the game. There's a famous anecdote about Vitalik and how effectively, because of a decision from Blizzard who owns World of Warcraft, Vitalik lost a huge amount of effectively the digital representation of his effort overnight because of some decision.

And it taught him the evils of centralized decision-making, and that was a very inspiring moment. So now what's happening with a new generation of game designers is that they're saying, well, what would the opposite look like? If you were able to actually own, truly own your digital assets, you could do things like sell them in secondary markets in new ways. You could create secondary markets for valuable assets. So you could actually create more economic activity that is currently allowed. You could have a different level of collectability, right? If a certain card was used in a huge tournament, some collector could actually buy that,

actual unique cryptographically verified, unique digital asset. And so on and so forth. There's a lot of other use cases of nifties or NFTs, depending on what parlance you go with. But the point here is that people are really excited about this because it's something that has no equivalent in the digital world. Digital assets are defined by their replicability, right? So this potentially offers something really different here. Again, you have a challenge of, you sort of have to have an experience underlying NFTs, I think, in terms of like a game experience, that justifies the reason that people would care about why they're unique in the first place. So I think that that's one where we can't put the cart before the horse.

You have to have the experience in the environment that creates the demand for the NFTs. But still, it is in this category of people looking for killer applications for crypto. Here's the real rub. The question is whether crypto is the type of industry that is going to or needs to have a killer application in the same way other technologies have. So this is a question that I think was stirred up most recently and in the biggest way by Jill Carlson's end of year post for CoinDesk, which she titled, or actually, to be fair, the Coin desk editor is titled, Cryptocurrency is most useful for breaking laws and social

constructs. And I'm actually just going to jump to her last sentence because it really captures the whole thing. To judge cryptocurrency based on mainstream adoption is to judge it on a metric it was never designed to achieve. And effectively, what her argument is, is that the real killer application for cryptocurrencies is to allow people to transact in ways that would otherwise be censored by local political regimes or local economic mores, basically. the real value is in those transactions, which previously could not have happened otherwise. Now, this kicked up a lot of dust because people reacted. They almost had PTSD of fighting for five years or whatever, the narrative that Bitcoin and

cryptocurrencies were just drug dealer money or terrorist money. They were just for black market activity, right? And that's not really what she was saying, although certainly inevitably, those types of activities are a part of a technology that enables otherwise. censorable transactions to go through. She was talking more about places that have political instability, where this allows people to opt out of the local economic structure. So this is a hugely important point, and I think my take on this, and maybe the place that I want to leave this conversation today, is that I think that this industry is really starting

to outgrow the label that we have put on it as a single industry. One of the things that I saw come up over and over again about Jill's post is that if she was just writing about Bitcoin, maybe it would have made sense. But in the way that she framed it, it lumped in so many other things, these defy use cases, these NFT use cases that have nothing really to do necessarily, or at least only little to do with otherwise censorable transactions, and are much more about new opportunities that simply weren't possible before. New software development paradigms, new ways to think about economic design. I found over and over and over again in my conversations over the last couple months that the

ability for this moniker of the crypto industry to encompass all of these different things is just getting harder and harder and harder. There is overlap. Obviously, the underlying technology flows into all of these different use cases, what it enables flows into all these different use cases. But I do think to some extent we're starting to see the necessary balkanization of these different aspects of the industry, right? And it's not just based on the chains or the underlying protocols. It's based on what they're trying to do. Bitcoin is trying to do something different in many ways than what Ethereum is trying to do. Defi is trying to do something that is different and bigger than just Ethereum in some ways. Dow's are trying to do

something that has in some context little to do with what any of those other parts of the industry are trying to do, although, of course, there's overlap. The point of this is that as industries mature, smaller parts within that industry also mature into their own complete units, right? Their own complete communities, their own complete networks with different understandings of what they're trying to achieve. I think we're starting to see that. So when we talk about crypto-killer applications, I think we need to be precise in our terms and actually start to understand that we may be moving to a world where cryptocurrencies and digital assets are actually working on lots of problems simultaneously and running in ways that are perhaps parallel but diverging rather than converging to some singular thing. So I think this is a fascinating narrative to look at throughout 2020. Obviously, we've got the whole aspect of income share agreements and what that might mean and the future structure of our economy.

and just how big an impact that could have on it, especially in the context of student debt. But there's this question when it comes to crypto of killer apps, which I think is going to continue to come up, right? We've got the mass adoption conference, massive adoption coming up in February. The whole point is to ask this sort of question. So I think you're going to hear more about it this year. For now, thanks for hanging out and listening to my little take on it. I'll be back tomorrow with a normal, here's the news, here's what it means, type of breakdown. But until then, thanks for listening. And I will catch you. you soon. Welcome back to The Breakdown, an everyday analysis breaking down the most important

stories in Bitcoin, crypto, and beyond, with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. What's going on, guys? It is Tuesday, January 14th. And today, of course, we are going to be talking about the price of Bitcoin. It is hovering at 8730 at the time of this recording up 7.66% in the last 24 hours. And of course, this is the latest in a surge that's been going on for the past couple weeks. And my general feeling about short-term price action is that if you zoom out and you think about this new asset and this new asset class holistically, short-term price action is one of the least interesting things about it. However, it is undeniable that these moments where the price spikes, where the market

start to rally and race, they are engaging and exciting and they drive attention and they keep people connected to the markets and they keep people excited. They're valuable and they're important. I even joked online earlier that when the market goes crazy like this, the only thing to do is rampant speculation. So we're going to give rampant speculation. It's due here on the breakdown podcast and ask why the number is going up right now. To do that better, we've actually invited. I've invited Maddie Greenspan, who was previously the head of analyst at Itoro and is now running a new company called Quantum Economics that's all about crypto and crypto trading to give his take on why the market is doing what it's doing right now. So that'll be

first. Second, we're going to look at maybe some of the underlying fundamental shifts happening around the financialization of Bitcoin that whatever happens with this price action, they are factors that are going to be driving the way that investors look at this market over the course of this year. The first of those is comments from the CFTC Chairman. Heath Tarbert about derivatives, and the second is CME options on Bitcoin opening up yesterday. We'll talk about that. And then third and finally, we're going to shift to a different part of the regulatory sphere and look at new comments from the SEC around IEOs.

But let's kick it off with a little bit of price talk. So let's talk about price. First, let's get the elephant out of the room and talk about BSV for as crazy as the Bitcoin price movement is, like I said, 7.5% over the last 24 hours, 25% this month, or something like that. BSV is going even crazier. BSV is up 93% in the last 24 hours. It's hovering at 332 right now. It has flippant the XRP as the number three crypto asset. It's ahead of Bitcoin cash. Ryan Selkis says Bitcoin SV is the number three crypto asset, which is great because nothing is

real anymore, which I think is how a lot of people are feeling about this. Now, the BSV stalwarts will tell you this is just real. Other commenters in the market have a very different opinion. Crypto Damijici says, BSV pump is exclusively Asia-based. Most Western US-based traders are uninvolved for two reasons. No Western exchanges listed it, and narrative against Craig is strong. What happens next? So obviously, a more skeptical take. Other folks I saw, say, Pump and Numb scams are back. Other folks I saw suggested that it has a lot to do just with the lower level of liquidity, so any volatility is going to impact the price even more, right? So it's hard to compare apples to donuts type of comparison. It's happening.

So I think that the one thing that I'm not seeing, which is making me happy, is the alt season screaming, right, which has been a characteristic over the last nine months, 12 months, whatever. Anytime the price of Bitcoin goes up, people start to scream about alt season. Despite seeing BSV pump this hard, we're not seeing that. Moreover, I actually think that that kind of characterizes the response that I'm seeing in the markets right now. When I asked people why they think Bitcoin is going up, I did get some answers. And we'll hear some rational kind of thoughts that have to do with both fundamentals and the macro markets and technicals from Maddie Greenspan.

But more or less, most people's reaction is shrug. Don't know, going to enjoy it, not going to put too much stock in it. And in some ways, if this radical 100% 24-hour pump of BSB, to me, suggests a lack of maturation in the markets, right? That's the type of thing that shouldn't be able to happen in a mature market, that sort of crazy swing. On the other hand, the response that I'm seeing of folks to the Bitcoin movement is a sign of a maturation in this market. People are not putting too much stock in it, which feels correct to me. So let's actually get into what some folks who spend a little bit more of their time on price and markets think about this. As I mentioned, Maddie Greenspan, former head analyst for Eitoro now running his own shop called Quantum Economics, which does a bunch of interesting things.

He has a daily newsletter. He puts out educational content. I asked him to explain just why he thinks the price of Bitcoin is surging right now. Hey, Nathaniel, so this is Matthew Greenspan from Quantum Economics to answer your question. and why is Bitcoin rising right now? In the short term, this movement seems to have been triggered by the geopolitical risk in Iran, and specifically the excitement that Bitcoin can now be seen somewhat as a safe haven against political tensions in the world

is quite exciting for many. Since then, however, the move has been carried mostly on a technical basis. We've just crossed some critical resistance lines, We were able to hold above 7,800 and then above 8,000, and this is very encouraging. The next resistance that we have is the 200-day moving average, which sits slightly above $9,000 per coin at the moment. If we're able to cross that on strong volumes, you know, obviously the movement can carry on for quite a bit. The encouraging thing that we're seeing this rally is that it is happening on strong volumes.

The Sari Crypto is tracking about $1 billion per day lately on the top 10 crypto exchanges. As well, the sentiment is pretty good. The Thai shows Twitter sentiment at recent highs. The Fear and Greed Crypto Index is as high as it's been since August. So sentiment and volumes are looking pretty healthy. The one thing that does concern me, however, and I mentioned it in today's QE newsletter, was simply that the blockchain volumes are not there. blockchain volumes remain subdued around $800 and $900 million per day, where we have seen

much bigger volumes. And usually these type of rallies, these speculative rallies, even the ones that are based on technicals are accompanied by bigger volumes on the blockchain. So we'll see where this goes and hoping for the best. So the TLDR on that, in my estimation, is one deepening of the narrative around Bitcoin as a safe haven asset in the context of how it's performed relative to gold and crude over the last couple weeks in the context of the Iran situation, and two, a whole slew of technical fundamentals that are carrying and picking up, basically providing tailwinds to that narrative. So where I actually want to shift to next in the breakdown is looking at a couple indicators

on the fundamental side about the markets surrounding Bitcoin and how they, are growing and evolving and developing. Yesterday saw the launch of options on Bitcoin futures from the CME, the Chicago Mercantile Exchange. And the tail of the tape is actually pretty decent for a first day. There were 55 contracts traded, each contract worth 5 BTC, so a total of 275 Bitcoin worth about 2.3 million. Now, this may not seem very much. However, when BACT launched their Bitcoin options on December 9th, they also saw very little

action the first day, right? This is not the type of product where you're going to see people necessarily race race in. And importantly, those backed options have continued to grow, and CME's launch day trading volume was actually double the average daily volume that backed has seen since then. So it's a pretty strong start. Now, why does this matter? And you're going to hear about derivatives a lot more this year. The reason that they matter is a couple parts. One is derivatives are an essential part of the way that markets price assets, right? By allowing people to get involved with the assets in ways that are more complex and differentiated than simply buying or selling it, you get much a broader discovery of what the market thinks an asset should be priced at. So that's a big piece of it. A second piece is

that these types of instruments are the mainstream way that traditional financial institutions engage with markets, right? Like most traders don't actually trade pork bellies, for example. It's a classic old meme in some ways, they trade derivatives, right, that sit on top of lots and lots of different asset classes. And those derivatives, again, allow the market to price things and to actually understand where different assets and asset classes sit. So for a lot of the folks who are looking at the ways that new and larger institutions, or rather traditional and larger institutions get involved in crypto markets, derivatives are a really important part of that scenario. Now, this is sort of reinforced, I guess you could say in comments from Heath Tarbert. Heath Tarbert is the chairman of the Commodities and Futures

Trading Commission, the CFTC, which is obviously the U.S. body that regulates commodities. He was interviewed by Cheddar yesterday, and he said that effectively derivatives, particularly regulated derivatives and legitimate derivative offerings, will legitimize crypto, which is his word. So he says, by allowing cryptocurrencies to come into the world of the CFTC, it's helping to legitimate digital assets and adds liquidity to these markets. This is, I think, one of the mega trends of this year that isn't just about narratives, but are about fundamental changes in the market structure. Last year, a lot of people thought or said was going to be the year of big institutions

coming in, and it wasn't exactly. It was still infrastructure building for big institutions because they move incredibly slowly. the fact that we're already seeing more of these products come to market in early January of this year, we're seeing policy discussion at the highest levels about them. You're seeing more and more of these big financial actors weighed their tow in vis-a-vis these new products. It's likely that 2020 actually is much more of a year of institutional engagement with crypto and with Bitcoin in particular than 2019 was. Now, the extent to which this is a good, healthy thing for the markets is still, I think, a hot topic with very differing answers.

There are plenty of folks who warn about what happens when financial actors co-opt or start to just flood into a market, whether they're trying to co-opt it or not. And it's particularly interesting in the context of the value proposition of Bitcoin around a limited and fixed supply. That's one of the things that people bring up is a worry, a concern that certain types of derivative products effectively amount to an inflation of the actual supply of Bitcoin because people can bet on it, can get involved with it, without any actual exposure to the underlying. But most people, I think, are relatively bullish, or at least willing to wait and see. So again, it's interesting to see just how much action there is already so early in the year. And speaking of action, I want to actually close today.

by looking over at a late-breaking, just posted sentiment from the SEC. It's what they call their investor alerts and bulletins on initial exchange offerings. IEOs. What an interesting phenomenon. I actually said last year towards the end of the year that I thought IEOs ended up being one of the biggest nothing burgers of the year. And what I meant by that is that IEOs, when they first started to peek into our consciousness, which was the early part of last year. It was definitely Q1 last year. I remember after folks came back

from Token 49, Arjun Bilaghi, who's now at Pantera Capital, wrote a bunch about this. Larry Sermak from the block wrote about just the amount of conversation that was about IEOs and people copying Binance Launchpad. And for the first call it Q1, Q2, people were really excited about this, you know, especially around the Binance IEOs. Now, they really didn't take off in a huge way. the limitations that were kind of self-imposed really limited their ability to create an ICO 2.0 sort of thing. However, when it comes to regulation and enforcement action, the SEC tends not to care whether things are wildly successful if they are in their estimation breaking the law. And so this investor alert, basically the TLDR on it is that ICOs are IEOs and you should stay away from them. So they go into a few different things.

Catherine Wu from Notation Capital flagged a few of the important parts. So one, basically the SEC says that the exchanges that host IEOs likely need to register with the SEC separately as a National Securities Exchange. They really didn't buy the idea that it's okay if you're participating in an overseas platform. If you're a U.S. citizen, the SEC's jurisdiction is about U.S. U.S. citizens, not just U.S.-based platforms. Another quote from them, any offering purporting to avoid the federal securities law because it is occurring on an overseas trading platform, but otherwise allows persons from the United States to invest, is a red flag. There's also issues around a broker-dealer.

So further, the online trading platform involved in an IEO may also be acting as a broker or dealer that is required to register with the SEC and become a member of a self-regulatory organization, typically FINRA. And then here's the real hammer of it. There is no such thing as an SEC-approved IEO. So obviously this amounts to a total banhammer from the SEC on IEOs, which I don't think is particularly surprising to anyone. This isn't the type of offering that the SEC ever seemed like they would be particularly keen on. Now, the question in some ways, or one of the questions, is how this impacts exchanges more broadly. Nick Carter wrote about, in his 2020 outlook, how he thinks that in 2020, these offshore exchanges become pariahs. So he says, the last few months,

former Alcoin casinos in chief, Binance and Poloniacs have kicked U.S. traders off their platforms, although Binance did launch a neutered version for U.S. traders. BitFanex has been Geoffense for a while now. on the heels of a lawsuit, Bitmex may well become more strict about U.S. traders. The honeymoon looks to be ending as exchanges servicing U.S. customers try to avoid the scrutiny of the dreaded quartet, the SEC, CFTC, FinC, and NYAG. It is tough going out there. And he talks about how it's not just the U.S. It's also in the U.K. and in Europe. The confluence of events will see crypto exchanges come under pressure in Europe. Together with the SEC's ever more austere attitude, by the end of 2020, the two largest global

markets for capital may well effectively ban the long tail of crypto assets. While crypto is a global market, capital is unevenly distributed. The exodus of US and EU traders from these platforms will pressure the liquidity of coins that trade exclusively on the less regulated exchanges. Korea and Japan alone are not sufficient to keep them ticking over. The pariah exchanges will continue shuttling from jurisdiction to jurisdiction and hoping to avoid the long reach of the law. They can still function lacking banking and affixed headquarters thanks to the unstoppable liquidity engines that are Bitcoin and Ethereum. this gives them an ability to resist coercion that is unprecedented. That said, the BTCE case study is worth

reflecting on. No matter where you are located, the U.S. probably has a way to sniff you out. I wouldn't want to be running one of these bucket shops in 2020. Obviously, Nick has some strong and well-written language about this, but I do think that this is a major narrative trend to keep an eye on, right? You are continuing to see, I mean, just in the last couple days, we talked about Deribate having to move from the Netherlands to Panama. Now, theoretically, it was to avoid the cost of compliance around the AML 5D. Whatever the issue is, you're seeing just these exchanges have to be in a constant flux of where they operate. So I think it's also particularly interesting in the light of these U.S. exchanges, which are seeing rising regulatory inquiries. We talked last week about how

Krakken had seen double the number of regulatory inquiries in the last year in 2019, as it did in 2018. All of this amounts to just more and more and more pressure on the fundamental trading infrastructure of this industry. And what that does, as Nick points out to the long tail, I think will be interesting to see. But for now, it is just a weird day out there. There's just no way around it. BSV up 100%. Bitcoin pumping in a major, major way. It just feels weird. But I guess it's weird in the right direction. We'll just hang on to the roller coaster and see what happens next. For now, thanks for listening, as always, guys. Appreciate all of your listens and shares. Find me on Twitter at NLW. Subscribe on iTunes or Spotify or SoundCloud. Just look up the breakdown podcast

or my name, Nathaniel Widowmore, and you will find me. And I will, as always, catch you tomorrow. Cheers, guys. Welcome back to the breakdown. An everyday analysis, breaking down the most important stories in Bitcoin, crypto, and beyond with your host, NLW. The Breakdown is distributed by Coindesk. Welcome back to The Breakdown. It is Wednesday, January 15th, and we are going to be talking first today about Defi, what it did during the rally yesterday and what it might look like for Defi's interplay with the rest of the industry throughout this year.

Second, we're going to almost have a cautionary tale and look at what's going on from a slightly different lens and ask whether this rally is really the banner headline or whether there's still big questions for the industry underlying. And third, and finally, we're going to look at a story coming out of the UN warnings about a Korea or North Korea-based blockchain conference and ask about an emergent, or maybe perhaps better put underlying narrative around rogue state money and ask to what extent we should be worried about this. But first, let's dive in on Defy.

So yesterday at 10 a.m., DefyPulse tweeted out, new all-time high for Defi, strap in because the year has just begun. They pointed out a graph that said 739.5 million had been locked in Defi. That number continued to rise throughout the day. Camilla Rousseau, who runs the Defiant, wrote $1 billion held in Defi by quarter one,

TVL approaching $800 million today, a record driven by ETHUSD rally, but also by net increase of assets locked. So what's going on? Part one of the rise in Defi simply has to do with the Ethereum price. The value of USD locked in Defi, if we're denominating that in Ethereum, is going to rise naturally as the price of Ethereum rises.

But the second part of the story is about the way that people were using Defi as a way to go participate in other parts of the market as they started to soar. So yesterday, Brady Dale on CoinDesk wrote, traders turned to DeFi to capitalize on Tuesday's crypto market spike. And basically, you know, he discusses this first part as well, that obviously there's a going to be a price increase when the price of Ethereum goes up. But there's more than that. This article goes into how platforms like compound finance saw a huge influx of resources yesterday. They say compound, which provides an easy way for eth holders to borrow, saw a surge in usage

Tuesday with collateral rising about 10%. Similarly, volume on uniswap, the decentralized token swapping app, is up almost 100% over the day before. Maker Dow has also seen a large jump, nearing 50 million, likely because traders are locking up ETH to create die they can trade with. So that's basically the idea here is that if you want to go get exposure to other things happening in the market in the short term, but you don't want to go sell your actual underlying ETH holdings, one of the ways that you can do that is by locking it up in these smart contracts, taking the die or whatever the asset is that you can then go trade on the markets with without ever having to give up your exposure to Ethereum.

So this is really interesting. One of the themes that I'm seeing come up over and over this year is infrastructure being built that allows people to stay long-term exposed to crypto assets, whatever their crypto asset of choice, while actually using it in the short term, be it for trading or something else. I think that one of the more thriving segments in this industry is these organizations like nexo like blockfi, like Celsius, like crypto.com, that allow people to lock up their assets and actually get other forms of more liquid assets back that they can use to go do whatever it is that they want.

In fact, one of the themes that we're going to be talking about today, and I think recurringly, is really to what extent this will be a continuation of last year's infrastructure building year. So when I did my end-of-year breakdown podcasts, one of the folks who was on was Pritha Kasseretti, who runs True Story. And her argument was that 2019 was a much more behind-the-scenes building year than we really give it credit for. And she thought that 2020 was going to be more of the same. Now, the interesting thing is when we see huge price appreciations like we did yesterday,

it kind of smacks that out of the way, especially when you see the sort of brazy pumping and growth that seems to only be possibly explained by incredibly low liquidity, just making numbers shoot up much higher than they would with a more liquid asset, right? Which is, I think, the case for things like BSV yesterday. I think that those types of pumps actually sometimes distract from the larger frame setting around where we are. So where are we? Well, let's look to a slightly different take on what's going on right now. This is a tweet from Maya Zahavi. She writes, there might be a rally in Alts, but all I hear on the Israeli scene is crypto startups closing and not funding rounds. Same for crypto funds. Nick Carter responds saying, last gasp desperation rally before a

big token die-off led by exchanges getting penalized, in my opinion, we're not getting another 2017. So what these folks are talking about is this weird disconnect between, on the one hand, these numbers shooting up and this rally that we've seen over the last couple weeks, but especially the last couple days is in contrast with the general sentiment, which has felt, I believe, pretty low and dreary is too strong a word maybe, but it's been very flat. The markets have felt flat. It hasn't felt like lots of new people are coming in and getting excited. It's felt like there's been news for sure, but nothing that's going to drive mass groups of participants in. In fact, what we've been seeing as it relates to the drivers of the news cycle have much more to do with these slow, steady increases in the institutional infrastructure for the way that people interact with top flight assets.

And what I mean by that is things like crypto derivatives, options trading. We saw CME's options on Bitcoin futures open up yesterday. We're seeing others get in that game as well. And that was validated. Sue from Three Arrow's Capital wrote yesterday near record volume on BTC options. I expect this record to be broken several time over the course of the coming year. This is the type of thing that we're seeing. You know, Arthur Hayes from Bitmex wrote an article about crypto derivatives yesterday. Binance is continuing to push out new derivatives products. The momentum in the industry is very much not on these alt coins, some of which are pumping ridiculously over the last couple days,

and very much in the way that people are participating in the markets around really, really core assets. But that still isn't necessarily all good signals, right? We are seeing slow, steady growth around things like Bitcoin futures trading, obviously, which is great to see. But there are other key parts of that institutionalization or financialization of Bitcoin that are still lagging, most notably an ETF. Just this morning, CoinDesk posted that Bitwise had withdrawn its most recent ETF application. Now, this isn't exactly surprising.

The SEC had previously rejected the proposal in October. and we're simply reviewing the rejection in the wake of it. So this withdrawal is it's not like a new proposal that had gone through answering that previous set of concerns. The concerns, of course, were things like market manipulation, the inability to prevent illicit activities, the core fundamental underlying things that the SEC needs to be confident in a Bitcoin ETFs were also the subject of a conversation on CNBC's ETF edge on Monday, where there was kind of a difference of opinion in terms of how likely a Bitcoin

ETF was to be approved. The CEO of ETF trends, Tom Liden, put that number at 60%, while a couple of the other panelists put it at closer to 10%. One of those other commentators, Bob Pisani, who's from CNBC, put it like this. Quote, they still haven't figured out that, remember, you're not dealing with the FTC here. This is not futures, different people. The SEC is terrified grandma is going to buy a Bitcoin ETF that is going to collapse and five years later all the people running the SEC are going to get hauled in front of Congress and get asked, are you the guys who approved grandma buying the Bitcoin ETF? So that's obviously the concern is the general conservatism and nervousness of the SEC. Of course, again, the point of this isn't just about a Bitcoin ETF

or any one particular piece of institutional infrastructure. Now, the point of all this actually doesn't really have to do with ETFs. I'm not trying to make a point about the Bitcoin ETF or predictions of when it's going to happen. My broader point is that we are seeing right now a rally on everything, all of these crazy long-tail-alt projects that don't even probably have people working on them anymore. And my point is that we need to, especially in the context of that sort of action, really remind ourselves of where the energy and attention in the space is now. All of that energy that was just splashed all over the ICOs

and this idea of tokenized the world has now found root and found home in a small handful of areas. You do see a concentrated group who are focused on defy. You do see, as we talked about last week, a very concentrated group who are looking at DAWS. You have a number of these new contender smart contract platforms that are trying to improve upon what Ethereum does and be a better base level platform. But that in and of itself is infrastructural.

And then everything else is around Bitcoin, is around these very top flight assets and what different people can do with them, what markets can do with them, what traders can do with them, how people can be on boarded to use them, right? We don't live in the long-tail alt-season world anymore. And I think that's my key point. I also, I guess, want to say that I agree with Maya's sentiment going right back to the beginning of the section, that to me, this rally feels anomalous with the attitude that I was seeing. I haven't watched any new group of people flood in that would account for why there's such

a big run-up, right? This isn't, it doesn't feel like new money coming in, and it doesn't necessarily suggest anything about the overall health of the markets. It just suggests that the money is pumping, and there's a set of reasons why that might be. This isn't to be completely dreary about this. In fact, this morning I tweeted out an article from the Wall Street Journal that showed that this was the best January since 2012, or it made some argument like that. That was the headline at least. And it's nicer to see obviously that set of headlines than it is to see, you know, X number of millions lost in an exchange hack. So I don't want to look a gift horse in the mouth. I just want to be real and thoughtful and conscientious about what it actually means and what it says about this year. I continue to believe that

we are still in a building year and infrastructure year. And of course, there are numerous catalysts, numerous different types of black swan events that could propel a huge amount in. The narrative of Bitcoin as a safe haven continues to grow in the context of larger geopolitical events. In fact, coin metrics who has been tracking this narrative from a data perspective yesterday in their newsletter said that the Iran situation has provided effectively the best evidence of the narrative of Bitcoin as a safe haven asset in its 11-year existence. So there are plenty of things that could change and catalyze this market. But right now, I'm just saying, I think that what we've been seeing over the last

couple of days is more of an anomaly than it is a reflection of the overall health of the market. And lastly, today, I actually want to talk just a little bit about that macro geopolitical narrative, although from a slightly different lens. So the UN has warned about the risks of attending a big North Korea-based cryptocurrency conference. So Reuters reported today that going to the event, just simply going to the event, would be a violation or most likely be a violation of international sanctions, according to a confidential report that is about to be put before the UN Security Council. This will not come as a surprise to anyone who's been watching the news around Virgil Griffith, who is an Ethereum developer who was arrested and then indicted over attending the conference and giving a talk last year. He has been charged with conspiracy to violate the International Emergency Economic Powers Act.

And for the UN, there's good reasons for this, right? North Korea has been accused of basically funding its WMD programs with cryptocurrency hacks. That was another big headline from last year. The question that I wanted to ask is about the narrative of rogue state money and what that potentially does for cryptocurrencies. There has been a conversation going on within the cryptocurrency industry if what it is best at, if its actual killer app is evading economic sanctions, is censored transactions, which includes economic sanctions.

This came up again today in the Market's Daily newsletter, the portion written by Joe Weizenthal. So Joe Weizenthal has been talking about this concept of whether the most important point of Bitcoin is its ability to get around censored transactions, echoing themes that we heard from Jill Carlson in her end-of-year piece for Coin desk last year, and whether there's some inherent contrast between that on the one hand and this emergent financialization. He wrote today about the conversation that he had with a London-based fund manager who invests in the Tehran, obviously in Iran, stock exchange. So this is a quote from the piece. Joe says, responding to a question about sanctions and the difficulty of moving money in and out of the

country, he brought up on his own what he sees as the rising use of cryptocurrencies in the country to circumvent banking restrictions. It was notable for two reasons. One is, as mentioned above, here was someone who was not a crypto person bringing it up, unprompted in a serious manner. And secondly, this is probably the quintessential use case for them, circumventing laws that tell people what they can and can't do with their money. So while I think that many in the space overstate their own impact and importance, nuggets like this strike me as significant.

I'm interested in the dangers of this narrative becoming more dominant. So you have this UN report about attending a conference. You have folks talking publicly on Bloomberg about how they use cryptocurrencies to move money in and out of Iran, which is obviously a country non-grada,

in the U.S. in a big way. You have congresspeople like Brad Sherman who use the context of things like the Libra hearings to make the point that this money is just for terrorists and drug dealers and other criminals and who say that the first time that you see a bombing or a terrorist act paid for with Bitcoin, people are going to stop supporting the whole movement.

This is a dangerous narrative, I think, or it's a dangerous narrative to let it be the only narrative. And I'm interested to see how it evolves in the context of the Iran situation, in the context of our ongoing debates with North Korea, and certainly in the context of our ongoing conversation with China. So this is a narrative to watch in the sense that I think it has important implications for how these crypto assets are received in the U.S., from the U.S., on a governmental level. So today at least, more of a flag than anything concrete, but something that I think is worth

keeping an eye on. With that, we'll wrap up. Thanks, guys, for listening. We will be back tomorrow with more breakdown goodness. Cheers, everyone. Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The Breakdown is distributed by CoinDesk.

Welcome back to the Breakdown. It is Thursday, January 16th, and today we're going to be trying something just a little bit different. I'm going to try organizing things into segments that have a little bit clearer of a prompt just to see how you guys respond. And so we're going to start off with what I think is the most important story of the day. That's where we'll start. Crypto Dad is back. The former head of the Commodity Future Trading Commission, the CFTC, Christopher Giancarlo,

affectionately known in the crypto world as Crypto Dad, has just announced a new project, a new laboratory, a non-profit lab, to build a digital dollar. Basically, Christopher Giancarlo thinks that the dollar risks losing its role as the world's global reserve currency in light of emergent digital currencies such as the forthcoming digital yuan. That's a major concern for him. And rather than waiting around for the Federal Reserve to actually do something about this, especially when they have indicated that they don't particularly see the need for a digital dollar, they have teamed up with Accenture to basically design and advocate for a U.S. Central Bank digital currency.

So the project is going to be called the Digital Dollar Foundation. As I said, Accenture will be providing a lot of the architecture and technology development. But certainly the real story is that a major. major, a significant former government official, right? Giancarlo's only been out for a little more than a year at this point, is now saying that it is so important that the U.S. can compete with not just its currency as it is now, but a digital version of its currency, a digital dollar, that he's making his next big bet in his career on this particular issue. This is interesting, also in light of the fact that, again, as I said, the Federal Reserve has previously shown not a particular

amount of urgency around this issue. So two U.S. congressmen, French Hill, who's a Republican from Arkansas, and Bill Foster, who's a Democrat from Illinois, wrote an open letter a while ago to Jerome Powell, the head of the Fed, pushing for a CBDC and asking whether it was feasible and worth the effort. And basically, Powell's response has been, sure, sure, we're looking into it, but they really doesn't think that it matters, right? That it's an important part of monetary policy. So, CFTC, former chair, is stepping in and getting involved. Obviously, this is a huge story for the singular reason that I think the battle for the future of money is the most significant narrative defining this industry. It has been the most significant narrative in some ways underlying this industry for a long

time, but ever since the emergence of Libra and China's response to Libra, it has taken on a whole new level of significance. Right now, there is a three-part competition for who gets to print, mint, and design the money of the future. Will it be governments as they always have? Will it be corporations who are building their own forms of currency like Libra? Or will it be decentralized networks, things like Bitcoin, that are the money of the future? Will it be some combination? nation thereof. Can they coexist? These are the questions that are going to define a huge part of monetary policy and global economics in the coming years. And I, for one, am very glad that someone at this sort of upper echelon in the U.S. government is diving in. The reality is that China is coming hot and

they are coming fast and they are going to put out a digital yuan which will inevitably increase their global economic influence. And anyone who pays any attention to the way that China comports itself on a global stage has to be at least a little concerned with that. So I think it's important to have competition in markets. That's what capitalism is all about. And I'm glad to see a former high-ranking U.S. official diving in on this digital dollar question. With that, let's shift to our second segment, which is not what's most important, but just something that's incredibly intriguing. Recently, we discussed ISAs, income share agreements.

These are an idea that's been around for a long time, particularly in the education space, and something that Silicon Valley investors have been getting more and more excited about lately, and which they see as potentially an area where crypto can have a meaningful impact. Now, the light in which we were talking about it had to do with Spencer Dinwiddie's contract bond, which he offered on Ethereum starting earlier this week. He basically securitized 13.5 million of his contract, put it on a bond on Ethereum. It's allowing people 90 people or 90 shares of this thing for 150,000 each. We kind of had this whole debate about what the significance of that was, whether it really mattered without the ability to have non-incredited investors involved.

and we talked a little bit about Ryan Selkis' argument that this represented a potential future killer app for crypto. Now, I think that there's a ton of questions around ISAs. They are not a foregone conclusion. However, in some ways, to the extent that we see the arc of the technology universe bending towards people having more control over their own financial destiny, it's hard not to imagine that we're going to see a lot more interest in the ways that people can effectively tokenize themselves and allow people to participate in their success, make bets on

them, while also finding new ways to fund and finance those projects that they're really interested in. So I noticed this week that Alex Masmesh, who has been speaking a lot recently around under-collateralized defy, that's a real passion for him. He's been working in the defy space for a while. He has just announced a social money created with Role, which is a network that basically allows people to make digital tokens. They say, quote, unique to your online presence, allowing you to own control and coordinate the value you create across platforms. They basically wrote a blog post that's been a month since Alex offered these tokens. They said it's only been a little over a month, but we've seen Alex using the Alex token in some pretty interesting ways,

from signaling his future startup to venture firms, and he showed a tweet where Andresen Horowitz got one Alex token in exposure to Alex. Basically, he was using Alex tokens as a way to incentivize followers. He was using Alex tokens as a way to incentivize people to donate to projects he cared about. He was using Alex tokens as a mechanism to offer his time, and so on and so forth. So again, this section is not about what's important now, but what's intriguing. And why I find this intriguing is that we still live on a personal monetization model that has been more or less the same with some tweaks for a very long time. You either start a business or you work for someone else. And there has been some amount of gray area involved in the sense that you have more

1099 freelancers, contractors, remote workers, right? But you're still roughly in the same paradigm of either here's my time for money or I'm going to build something where I can escape time for money. And I can't imagine that we're not just going to see a huge amount of experimentation with whether these types of tokenized networks actually change anything. Now, the skeptic will say it's just a token for the same stuff. It just introduces new friction rather than just having people pay you $20 for your time. They have to now hold tokens and go to some exchange and, you know, et cetera, et cetera. And I'm not unsympathetic to that point of view.

However, I think that we're at the very beginning of experimenting with this whole idea of income share agreements and people being able to basically create derivatives around their own futures that I think crypto is going to have a role in, rightly or wrongly, and whether it ends up good or bad. So something to watch for sure. Next, I want to talk about a trend that I'm watching, or you might even say a narrative watch.

And that today is the challenge of a key divergence in the industry, which is, on the one hand, the industry's push to be more deeply integrated into the existing financial apparatus. And on the other hand, the industry's push to create more and more powerful tools for privacy for shielding transactions. Are these at loggerheads? Can they coexist? That's the trend that we're looking at today. The stories that contribute to that trend or that narrative are first, Gemini, which is obviously led by the Winklevoss Twins, has created a new insurance company to protect clients against potential losses for coins that are stored in its custody solution. And it has a $200 million coverage limit. This is, I think, a hugely important part of the financialization of this industry and of getting

new people in. I've had numerous conversations with high net worth individuals or even not particularly high net worth individuals who are on the one hand don't necessarily want to just trust exchanges with their Bitcoin or whatever asset they bought or they would buy theoretically. These are people who are kind of pre-coiners. And on the other hand, don't trust themselves to self-custody, right? That's a bridge too far because they either grew up in a different paradigm or whatever it is. They want some trusted custody solution, but they also want this sort of assurance that nothing is going to go wrong. I think this is a hugely important step in the financializations of the market.

And I think it's going to be really, really powerful for everyone who's advocating for new entrants to come in to have this sort of insurance fund normalized. I think it's really important. But again, what we're talking about is a trend that has the financialization of the industry on the one hand counterposed with the ability of the industry to allow for more. shielded transactions, for more private transactions. So on that front, we're looking at a story from Zcash, from the Electric Coin Company. They've just released a new SDK, an improved SDK, that makes it easier for developers to support shielded payments on mobile. There's lots of Zcash wallets that exist for laptop and desktop. Zcash is obviously a privacy-centric cryptocurrency,

but it's often very challenging to facilitate shielded transactions on mobile because there's a huge amount of data needed. So it's a technology constraint to private payments if you're doing them via mobile. Of course, most people if they're interacting day-to-day are doing things via mobile, so this seems like an important area. Basically, Electric Coin said that it has figured out a way to reduce those data constraints on mobile versions when it implements its privacy technology. So it's gone from gigabytes, they say, down to megabytes, which makes it work for mobile phones. So this is obviously a powerful step because privacy preserving technology only matters in some ways if it's available and usable on the tools and the mediums where we're actually engaging with

transactions. Flip that to another story from a different crypto startup, Elliptic, which is a crypto analytics firm, which is going to be testifying to the U.S. Congress that there should be more stringent, more strict AML anti-money laundering enforcement around exchanges that enable privacy coins. This is weird. I don't know anything about elliptic. And, you know, on the one hand, I'm sympathetic to regulators who have to think about money laundering, who have to think about the way that money flows around the world in terms of crime. But at the same time, I got to say it's a little bit like being targeted by your own to have a crypto firm

testifying that exchanges should have even more regulatory enforcement and more stringent regulations around privacy tokens. Obviously, you have organizations in this crypto space like Coin Center who have been working very hard to convince the U.S. government and U.S. regulators that privacy is an integral part of what their job needs to be and that there's nothing necessarily at odds, at loggerheads between privacy preserving technologies and the rules that the AML needs. So I haven't looked deeply into elliptic. It could be. be that this is something that even a group like Coin Center would agree with their testimony, but it just strikes me that we have this really big challenge in the narrative. And this is the

point that I'm trying to make and why this is a narrative watch. You have the greater institutionalization of crypto on the one hand. And then these new technologies which are trying to make it able to continue to preserve or expand the way that it preserves people's privacy on the other hand. And I can't imagine that they're not going to come at odds, both in a practical way, but also from a narrative perspective. And that's why I'm watching it. All right. Now let's wrap by turning to a few things that I think you should be checking out on your own that I've found really valuable and important. First is a little bit of research from Coin Metrics. So Coin Metrics is one of the best data reviewers, researchers in the space. Their newsletter is essential. I highly recommend you

subscribe to it if you don't yet. And the most recent issue, issue 33 from Tuesday of the week. Their weekly feature was all about whether Bitcoin is becoming a safe haven asset. This is something that obviously we've talked about a lot on this show. We had Travis Kling talk previously about how Bitcoin has responded in the context of the Iran situation and what it suggests in terms of Bitcoin's evolution as a safe haven asset. And I always am interested in what Coin Metrics has to say about this because they are highly non-ideological and highly data-driven. So their analysis wasn't strictly speaking, yes or no,

but they said, we have witnessed perhaps the strongest validation of the Bitcoin Safe Haven Theory in its 11-year history, and this watershed moment marks an important milestone in Bitcoin's maturation as a legitimate asset class. They also wrote, and I think this is incredibly important, it renewed discussion about Bitcoin as a safe haven asset

and introduced the idea that other traders are considering it for safe haven capital flows. Ultimately, assets attain a safe haven status by a combination of their fundamental properties and due to game theory-driven consensus among investors. This is exactly what Travis was talking about last year when he was on the show, that effectively safe haven status is not just about the fundamentals, although that has to be a part of it. It's about the idea that other people think something is going to behave like a safe haven asset, and then it becomes self-fulfilling prophecy. So really fascinating read and yet another entry into this ongoing discussion about whether

Bitcoin is a safe haven asset or not. So there you have it. Slightly different take on the breakdown today. I'm interested to see what you guys think. I'll probably keep iterating with this because why not? My goal is to make this as high value, high impact, as useful in value ad basically as it can be for you. So let me know. Hit me up at NLW.

Email me at Wittamore.com. And as always, guys, I really appreciate you listening. Subscribe on iTunes. Give it five stars on iTunes. Subscribe wherever else you subscribe. Do whatever you can. Just share the show. And I appreciate you.

So, cheers, guys. And I will catch you for one more breakdown before we head into the weekend. Welcome back to the breakdown. An everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond with your host, NLW. The breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Friday, January 17th, and today we have something special.

As you know, I want this to be a platform. I want the breakdown to be a platform for great thinkers and thoughts and ideas. And I want it to be as fun and interesting and informative for you guys, the listeners, as possible. And so part of that is bringing on more voices, talking about real things, especially things that maybe aren't talked about enough in the market. So I'm trying something out that I'm trying something out that I'm calling fire Fridays or fire take Fridays where I'm almost going to turn this over to someone

that I respect and that I think has a lot of interesting things to say to give three hot takes basically about different parts of the market than are maybe our normal area of focus. We're going to kick it off with Tyrone Ross. Tyrone is financial advisor in the space. He was early in bringing crypto to his clients. He's working on a number of different projects. And most importantly to me, he's an endless advocate for crypto's power to to transform people's lives and destinies, not just in the early adopter tech sector, but across

the spectrum of investors. I think he brings a really important perspective. And so he gets into three hot takes, one about the importance of financial advisors in bringing in new people to the market. Second, about how many financial advisors and just maybe even some of us in this industry are overlooking the true power of defy as it relates not just to Ethereum developers, but to real actual, no kidding people, which is super interesting conversation. And then third, he talks about why Cash app is the most, bar none, not even close, finance isn't even in the conversation, most important company in crypto. All right, I am here with Tyrone Ross, the man, the myth, the legend for the first ever fire Fridays, fire take Fridays. I don't know what the name is yet,

but I thought it would be really fun to once a week just ask people to tell me and to tell our audience what they think is the most important stuff going on in the markets, right? Or that they think people aren't paying attention to but should be. Or something that people are talking about, but not necessarily in exactly the right way. So this is going to be more raw, more unscripted, more unfiltered, and probably less newsy than the other episodes. And I couldn't imagine anyone better to kick this off than Tyrone. for people who don't know you, tell us a little bit about what you're up to. Yeah, so I am a licensed financial advisor.

Got introduced to crypto in 2015, right around 2017, left the wirehouse, Merrill Lynch, and I was like, you know, I want to go all in, build my whole practice around crypto. So I kind of feel like I was, one, one of the first advisors to embrace it, and the other one to actually build my practice around crypto. What is interesting is, I built. it without being able to custody and or transact on behalf of my clients, which stood out, which was very rare. And then obviously gaining, you know, credibility through folks like yourself, to be honest,

you and Luke Martin and, you know, a few others. I, you know, I got a lot of exposure. Clients came to me from that and I was able to build a practice from it. So the cool thing that I'm doing now, which, again, I won't include this is one of the things that I want to talk about, but just so people know, I'm willing. working with Chris King, who was formerly at Morgan Creek, on an all-crypto RIA to help financial advisors access the passive strategy into Bitcoin through an SMA structure. We are abundantly excited about that.

There are some really big names that are involved that I can't name, but we've had some really big meetings. We've got a solid team. We're working hard on that. As you know, I've never been a fan of a Bitcoin ETF. I never will be, but I think this is finally the way that financial advisors will be able to access Bitcoin cheaply, efficiently, and more importantly, very easily for their clients. So excited about that.

Amazing. Well, I'm sure we'll hear more about that in the weeks and months to come. But let's dive in. So I asked you just three hot takes, basically, three things that are important to you that we should be talking about. So why don't we just dive in? What's the first one? Number one is FAA's financial advisors will be the major crypto theme of 2020, trying to get financial advisors in the pool.

If you haven't noticed that already, it's super evident. Grace Gale is going all in with their piece that they just put out. Here's what you should be talking to your financial advisor about, so on and so forth. Then you get bitwise, shout to Matt Hogan and the whole team there. They put out their survey that they did what I believe 400 financial advisors saying that, you know, financial advisors are getting more questions. from clients, financial advisors are really starting to warm up to looking at investing in, you know, crypto, especially Bitcoin, but the issue still remains regulation and there's no easy, accessible way to do it. So you have the choices of which is either wait for a Bitcoin ETS. I think it was announced yesterday Bitwise pulled their application. They're going to resubmit it. I do think if any the ETF gets approved, it's them, by the way, but there's a little other story. But moving forward, I think what you're going to start to see is we are the conduit between more investors for them. They want access to our clients. What they do know is financial advisors are not educated on this and could really care

less. What they don't know is there's only one word that matters to financial advisors, and I said this in my live, is fidelity, period, hard stop. If you don't get fidelity on board, it's a non-starter. I know this firsthand personally. I know this from my experience with clients and other financial advisors. It's fidelity, end of story. Trust is the number one thing in our business, hard stop. So if Gemini may be the best place to custody your assets and your digital asset, but is a financial advisor or a legacy institution to have been around 100 years

going to take their clients' money and trust a startup with that? Right before coming on with you, I think the news was just released that Gemini, They built their own insurance company to add, I believe, up to $200 million in coverage, which is groundbreaking. Here's the thing. That's fantastic. Trust. Our legacy institutions, RIAs, right? IA, RAs of those RIAs, investment advisor representatives, going to trust that.

I don't think so. So I can keep going on and on about this, but I think as you'll start to see, and again, I found out personally, again, I share something with you that I can't share. But even, you know, a lot of folks who are putting together large events in the space are starting to realize that they have to start to embrace the financial advisor community because, again, we are just the gatekeepers to more people coming into the space. You've seen this over and over and over again when people want to impact the financial world some way. It takes them a minute to catch up with the fact that one of the key gatekeepers are the people that are already trusted to help people make financial decisions. I saw this

with the social impact and social entrepreneurship world where, you know, it had been brewing for a while, but then you saw in the mid-2000s, you know, what has now turned into ESG, we were calling double bottom line and triple bottom line. And for a while, people just weren't talking to, they were talking to the money in the sense that they were talking to big corporations as entities, right? But they weren't talking about where people were actually allocating their capital. They were trying to get meetings just with like the actual philanthropist rather than going in through the door of, well, who's making the recommendations to these people. You started to see a similar thing where all of a sudden, I remember distinctly, a lot of folks who are in the financial advisor world personally, they took it on

themselves to get interested in it. They started blogging. They started writing about that intersection, and it triggered something where other folks in that industry started to realize that was a door. Now, there's obviously been a lot of things that have changed, but 10 years later, that's a much bigger conversation. And I think it is at least in part because the people who are advocating for some of those more impactful type investments actually got together with the financial advisor community and made it more of a thing. So for me, it's always felt like that was an inevitable step to the extent that we are always looking for where the next money is going to come from to keep building out this space. Yeah, absolutely. I mean, and I was saying it's before in 2017,

team, all of that retail that flooded in, those were our clients, right? Like either future or current clients, and they were doing that and experimenting, and advisors didn't know. Now, here's the thing. There's the other side of that. The financial advisory community are ill-prepared for if and when we get back to the highs, ill-prepared. There are a lot of financial advisors that are going to get fired, period, because they're

just not prepared. They think it's going away. They're not taking it seriously. So I think once now the infrastructure is better and it's more sound than it was in 2017, but still not enough, again, where you feel is on Matt Hogan said this. Everyone's focus is getting on the institutions, but the infrastructure is not there for financial advisors to put 5%, 10%, not of an allocation of a crypto portfolio, but 10% of their client tell, right? Their book of business into crypto.

So until we start thinking like that and then the folks that are building, start thinking like that, it's a no-go. All right, that's a great start. That's number one. Give me your number two. Number two, shout to the block and the report they put out yesterday, but I believe defy is severely underrated. I think what is going on at defy is supremely impressive.

You can start anywhere, but I think in their report it was saying that it was one of the themes that was underrated and people think that it's just a lot of hype. Here's the thing that you learn. When you come up in the traditional finance world, one of the things they tell you when you're at a wirehouse or any of these large firms, you are financial advisors, lead with lending. If you're struggling to get business, because people will always tell you what their rent is, what their mortgages, what they owe in their car. You lead with lending. If you lead with liabilities, if you lead with that type of the balance sheet, that side of the balance sheet, it's a more robust conversation. And I don't think folks that are building and defy are doing this purposely, but I think they realize, okay, well,

Here we have an asset in EAT that folks can collateralize and then they could use that, you know, to convert it to die and then to do whatever it is that they want to do. I've personally had clients who've gone through that whole process and paid down student loans that have bought houses, right? Like, this is a real thing. This is happening. Also, I've been saying for a long time that I believe as a financial advisor

and those of us in financial services community that the future of our business is being built on Ethereum, hard stop. Now there are a lot of things going there, E2.0, what's going to happen? I get all of that. But if you just look at it from, again, the lending standpoint, the ability, you look at what State is doing with Ray, right? The robo advisor for yield. That's so impressive. Again, do I think at some point there's a meltdown?

For sure, it has to happen. A lot has to get wiped out. But as you just mentioned in your piece, along with the run-up to start the year, right? The amount of money locked inside the D-5 is at an all-time high. That's not an accident. There's actual some use cases here. I do think some of the collateralization rates have to increase a little bit, right? The ratios have to increase. So I do think there are some things that have to be worked out. But I think we're going to look back 10 years from now and go, holy cow, like that was super impressive what's going on here. The whole decentralized exchange movement, people being able to lend, people being able to bank themselves, which is another thing that I don't think if I had to have one B of this, that I actually had to come to because of the people that I fight for, I almost feel like, and I've had this conversation with Carlos Sassavado, shout to him, he gave me the shirt, but about maybe Ethereum is the way, right? And using how you can use ethas money is something that is a

conversation we should be having with those that are unbanked, not as opposed to, but in addition to Bitcoin. The robustness of what is going to happen in DFI, not only for individual folks, but also, again, as financial advisors start to look at how our business is going to going to start to grow and clients are going to come to them with lending options that are outside of our normal scope of business. It's super impressive to me. And I think, again, I continue to be amazed at Maker Dow. That is an impressive project. You know, the whole governance structure there, the way people are actually starting to learn more about it and then be able to, you know, iterate off of it. To me, I just think it's super underrated. Yes, there is going to be some type of

monumental event and it may all come crashing down, but I think what's going to be left is going to leave a solid infrastructure to where moving forward, I personally don't think it's going way. Two quick follow-ups. I think this is extra interesting because a lot of the folks who are the biggest cheerleaders for defy and who are the most excited about defy aren't necessarily coming from financial backgrounds. They're the folks who are the hackers, the tinkers, the developers, the builders who are passionately excited and stuff, but it's more been in that camp of, this has incredible potential for the future,

but is something to be tinkering with now, I guess. It sounds more dismissive than I mean to be, but you know what I'm saying. It's not the hardcore financial people who are just looking for how this is relevant to their world and to their business right now. So that's the point that I'm saying. I guess the interesting question is maybe going a little bit deeper

on just when you're thinking about it vis-a-vis your clients, what it offers that is so different. what it offers that is different than what is available now and why that is valuable, which ties into the second question, which is the amount of collateralization required. Because one of the key themes that I've been talking with a lot, you know, I had a bunch of people on for end of the year type stuff in 2020 predictions. And one of the big themes was moving from these over collateralized loans to undercollateralized defy loans as a major priority, which obviously introduces a whole new type of risk, but it also opens up whole new avenues for types of people who right now can't use it. So when you're talking about

people who are paying off student loans or paying down houses, I think that there's obviously so much value. And we even saw this the other day, you know, people being able to collateralize their eth without having to give up exposure to that underlying to stay long-term invested. But at the same time, there's this whole set of people who don't have ETH to start with to collateralize, right? For whom right now, DFI isn't a viable opportunity. So it's a very long-winness. way of asking, like, one is what is it offered now that's different? And how do you see the future in terms of the collateralization question and who it's available for? Here's the main thing. The friction part is frictionless. So when you look at having to get a loan or borrow in the traditional

finance world, it is clunky, right? It is a lot of friction. There's a lot that goes on there where, again, let's just stay true to the ethos of crypto. It's me to you. No third party. We can do it right here. So I think the fact that it's quick, right, and again, try talking a 28-year-old that has access to Ethan could do that. Try talking him out of that and saying, hey, you should probably go down to the local bank of America. So that part of it, again, I've had this conversation with financial advisors and they think I'm nuts. Like anyone if I, they think I'm completely nuts. But when you see it in a very small level and seeing it done, it's super impressive, right?

the friction. Again, fees, we can talk about that. Collateralization rates are, quote, unquote, again, in the traditional sense, high. But if a client has a ton of Eath and they're looking to do something with it, it's almost like how drawbridge, which I think is probably the most impressive lender out there, if I have a client that's sitting on 20 million gain in Bitcoin and they don't want to sell for the capital gains, and then they want to just leverage that, they should be able to do that. Same thing. If I hold a bunch of ETH, why am I just going to sit on that? And there's options for me to actually leverage that to get into the crypto ecosystem and release some pressure in my own personal financial life. I think those are the things that make it impressive for me because, again, out of my purview, having conversations with clients and folks about it, they're actually saying, well, I've got a million and a half of EF. When am I going to sit here? Right. And then the next day you know, they're showing me all the intricate ways. And I'm like, okay, right, I got to get up feet on this. So again, the fees is frictionless.

It's quick. When you look at now, some of the UXUI is getting better, Dharma and D-YD-X and compound is they liked it. The ease of use is actually getting better. Remind me the second part of your question. I think you were saying- The second part was collateralization and how it becomes available for more people.

Because basically what I heard from your first part, which I agree with is that the transformation, even if the quote-unquote UI is clunky, the transformation of the experience of getting alone is unfathomable compared to what exists now, right? For those people who do have that collateralization, which I totally agree with. So the second part of the question is, how should we be thinking about opening that up to different sets? Because, I mean, again, I feel like there's two minds and I can't resolve them for myself, I guess. One is, it feels incredibly important

to have that as something that we're looking towards. We're really trying to have this asset class be transformational, not just for people who happen to get into these assets. we have to be thinking about stuff like that. The second part is that I can't imagine that we're not going to accidentally rush it. You know what I mean? Like from creating systemic risk. Because it is so obvious,

like I worry that we're going to push too fast too far in terms of these collateralization ratios. That's already happened, right? Multi-collateral die. All of stuff. Like, it's happening. They're pushing the boundaries here. And you look at all that, you know,

the smart contract risk, all that. There's a lot of risk. And it's essentially, you can look at it as being the house of cars. for sure. Again, there will be a calamitous event here where it all comes crashing down and what's left will be a good foundation to build. To that point, what I was saying before, I think to bring more people to it, what we're going to have to do is, again, going back to my three E's that I'm pushing all year is exposure, education, empowerment. We're going to have to expose people to say, hey, Bitcoin has this big brand, but start having more conversations around ether to people that may not know about it and get educated on it. And then, and educate them to, okay, well, here's what you can do with ETH, in this ecosystem where you are able to, again, borrow, lend, whatever. That is incumbent upon us that are in those environments and that are front-facing with those people to educate them on it,

going back to financial advisors and those of us that have clients that are doing it and those that are walking into the market and getting exposed to ETH, what it actually means to hold ETH now is just different than, okay, I'm going to hold it and do whatever else. But I agree with you. And cryptos like that already. A lot of the large hands, they hold most of the crypto. They move the market.

Let's not fake like they don't. That's just what it is right now. But I think as we start to expose more people to it, financial advisors, those of us are the gatekeepers, and then those of us that go into the South Bronx, Brower County in Florida and Detroit, all these places where I go, it's a really good conversation to have with people say, hey, don't have to go here, here and here. You know, I've mentioned this to you before, those that are using Sue St. sues and all these other things to bank themselves, right? Trust between one another. Hey, you could do that same thing through technology. But not only is it a education on the asset, it's an education on actually how they use to technology. So there's a lot that has to be done on that, but I think we can educate those folks while the really smart, important people continue to build it out

and make it actually something that, again, I feel in 10, 15 years time, right? You go right on. I can get a loan for whatever I can borrow whatever and do whatever it is that I need to do. And again, frictionless, no long, K-Y-C, you got to wait two weeks, two months, three days right now. I think that can't be underestimated. And yes, there are things in between that that makes people nervous from my world, but I just think, again, when you've seen what I've seen, you've experienced what I experienced, that ability to do it now and have that money in the moment where it's like, okay, I'm a couple hours from eviction. I have an honor uncle who needs money in another country.

Whatever, to be able to do that now and not have to wait, go to a payday loans, whatever the case may be, but to do that right now, I think it's super impressive. Love it. Yep. No, I agree. All right, Fire Friday, first edition ever. Let's finish it off. Number three, what you got? This bothers me so much, and you know I was going to end on something hot, but I cannot believe that people do not understand that cash app, Square crypto is the most important company in crypto. It's not even close.

It is not even close at all. I'm sorry, finance, whoever. It's not close. Coinbase, you name it. There's a lot of good companies out there. The most important company in crypto right now is square, hard stop. Here's why. For one, you look at their open source project, bringing in Matt Corallo.

That's huge. They're simply saying we're all in on Bitcoin. We're going to build it. We're going to tinker with it. We're going to have a small team that's totally dedicated to this. That's for the folks who are literally all in on Bitcoin and what that looks like. The other part is this. There's a couple levels to it.

One, right now, it is the easiest, fastest way to get Bitcoin. And on top of that, a person buys it. It goes right into their cold storage. Next thing, they told you, they said now, not only could you withdraw it if you want, You can hold it there, but now you can withdraw it, and you can onboard it if you want to. The other piece, they cleared up the issue where they were taking, basically, they had that markup. They took the markup out now and basically they're showing you what the fees are, being super transparent. That meant a lot to me.

And again, those of us that are in the world have clients buying Bitcoin on cash app, super duper, duper important to be able to have that transparency for tax purposes and a lot of other things. The last piece, which is super important, if we're really talking about what matters here and getting more people into crypto and getting more people into the banking system to move them along to hopefully they are being defy, they are giving people bank accounts. They are literally banking the unbanked. There's a reason why, if you look at the map of where Cash App is having success, it is deep in the South. A lot of people there use Cash App. The other thing is this. Their education is best in class. when they just released that they would allow folks now, and again, this is just a caveat to that,

that now you can buy stock on cash app, the video and literature that they put out on what is a stock, there hasn't been a financial services company ever to make it that clear and simple. They did the same thing with Bitcoin. They make it very easy for you to understand. So when you package up everything that I said and then compound that with a lot of people who are supposedly the big names in our space don't even know the full capabilities of what Cash App can do without a doubt the most important company in the space by a very large margin. And I think that will only continue to grow once they start to actually move forward into

maybe they do integrate lightning, right? Maybe they do make it easy for folks now to do micro payments. There's a lot of things that I think they're going to iterate on here and it's just going to continue to get more and more and more robust. But again, taking it back to my selfish reasons is being a fiduciary. And I was just having this conversation with an advisor out in California who has a client who owns a lot of crypto and he's super nervous. I said, first thing you need to figure out, where does that client own that crypto? And then I will let you know how panicked you should be or not. But if a client says, okay, well, I've been dollar cost averaging into Bitcoin on cash app, I'm like, okay, I feel very comfortable with that, that it's safe. And then, you know,

you look at the stack sats thing, the whole ecosystem and the people, how they're drawing people in, any way you shape it, want to cut it, be honest with ourselves, the most important company in crypto. It's not even close. Amazing. You know what? One of the common theme, if I had to like pull it out from all of these different points today, is I think a lot of folks for the last couple years have had this notion that the important growth in this space is all going to come from institutions, right? It's the institutions who are circling around the edges, the institutions who are like looking to get involved, they need these custody options. They need these insurance options, right? They need to feel safer. And a lot of what you're saying, the undertone of it is that there are so many more people who we would call retail investors from the upper echelons of society who's just their financial advisors aren't paying attention to this and they're more conservative by nature to down to the bottom people that it could be really useful, really helpful change their financial destinies for who haven't been exposed.

who don't have the tools yet, but that seems like it's getting better. And a lot of what you're saying is pay attention more and aid those efforts around all of those new individual investors who could be part of this space. Yep. If we do this same thing on December 31st of this year, again, we'll be able to weave that same theme. It's going to be a lot of the things that I've mentioned, starting with, again, trying to get financial advisors into the party.

Again, I think Defi continues to evolve. And lastly, again, from being, all over the country now and talking to people, and I leave some money on my cash app just to demonstrate for them. They are completely blown away. And I would leave with the story. I was in a Waffle House in Charlotte.

And I had a shirt on and said, buy BTC. And the woman, she's ringing up myself. And she goes, BTC, what's that? And I said, Bitcoin. She goes, oh, that's on my cash app. And then a bunch of people in the Waffle House, like, oh, I have that too.

It's like, so when you see that, I'm like, I left there and I'm like, okay, this is bigger. I need to pay attention to this. still because it's there. People know it's there, and you'd be surprised at the people that don't, but it's amazing to see how it's literally just starting to expose people to what is the Bitcoin brand, simply the brand, right?

And then there it starts to become an education around what it is and how it actually works and what you can do with it. So I think we'll start to see this a lot this year, is that the institutions are not going to move, guys. They're not. They have no interest. They don't. We got CME, Bitcoin futures, and, you know, all that great.

We need to see a little bit more infrastructure. Fidelity has to do a little bit more. But the bottom line is the wall is high for them, and they have no reason to peek over. But there are a lot of folks who I've been reading, been seeing things, right, looking at your work, listening to podcasts, doing all that, that are ready. And, again, have financial advisors or not that are gatekeepers. But that's really the theme here. We have to get more of these people to understand some of the things. that are going on here, get them excited about being part of the crypto economy, not just Bitcoin.

Love it. All right, Tyrone, you're the man. Thank you so much. First, Father Friday, couldn't have started better. Really appreciate you. I had a great time talking to Tyrone, and I will catch you on Monday with a regularly scheduled breakdown. Have a great weekend, guys. Cheers.