The Pomp Podcast - #1165 Dylan LeClair On Bitcoin, Nostr, Ordinals, Regulation, & The Fed

Episode Date: February 28, 2023

Dylan LeClair is the head of research at Bitcoin Magazine, & the co-founder of 21st Paradigm. In this conversation, we talk about bitcoin, macro economy, Nostr, ordinals, Lightning Network, bitcoin mining, regulation, & more.  ======================= Announcing LYCEUM | Miami, a day-long event on March 4th in Miami Beach hosted by Pomp. We’re gathering an explosive group of experts to engage in a series of bold discussions, covering topics from investing, emerging tech, longevity, space exploration, entertainment and more.The speaker lineup includes names such as investing legend Cathie Wood, NYT bestselling author Vivek Ramaswamy, billionaire Christian Angermayer, master of Contrarian Thinking Codie Sanchez, Modern Wisdom host Chris Williamson plus many more. Listeners will receive an exclusive 40% discount on VIP and Insider Pass tickets with code POMP40.  General Admission tickets are free of charge. Spots are limited so head to lyceummiami.com to buy your ticket today. ======================= Pomp writes a daily letter to over 200,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ =======================

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. We have no advertisers on this podcast, so it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Dylan LeClaire is the head of market research at Bitcoin Magazine,

and he's the co-founder of 21st Paradigm. In this conversation, we talk about Bitcoin, the macro economy, Nostra, ordinals, lightning network, Bitcoin mining, and a whole bunch of other topics that you'll be interested in. On Chain Metrics, the king, Dylan LeClaire, in studio, live. That's what this episode is all about. after you get done listening, jump on Twitter, let Dylan and I know what you liked, what you didn't like, what you agree with and what you disagree with. We always appreciate the feedback

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this podcast is for informational purposes only all right guys bang bang i've got dylan here with me uh you've been on a tear my friend although i can't see your tweets all the time because i think they're suppressing you somehow uh you've been firing for like six months straight i don't know what happened contagion macro issues uh nonsense in the bitcoin markets but nonsense in the crypto markets when you look back over the last six months or so we'll go back pre-ftx and kind of the second wave if you will of all the failures in the industry yeah how do you think about what's transpired like how do you describe what's happened yeah it was uh i mean it was the biggest absolute contagion event in in the big the history of bitcoin crypto broadly um it was

like bitcoin's first kind of native financial crisis uh with no lender of last resort so that was like certainly an interesting uh phenomenon to observe uh as a participant and just kind of a an outside observer of a lot of these different exchanges and uh you know the broad ecosystem uh there was kind of a convergence between bitcoin and macro for all of 2022 and then there was the you know kind of a decoupling but unlike what people suspected it was a decoupling to the downside um and so yeah i mean i think we flushed we flushed everything out for the most part. Certainly could like, you know, the exchange rate of Bitcoin go lower. Like, I still think we actually get a recession. And it's probably what surprised me is that I thought it was going to

happen sooner. I thought, you know, we had this big global bust in asset prices, fastest tightening cycle in history. The base case was that we were going to get a recession and it still is. But I maybe naively thought it would happen a little bit sooner. And I think. Are we in a recession? I think according to the numbers, you know, official government numbers, I don't think we are. The economy actually is still pretty hot in nominal terms. You have kind of like a two-tiered economy. It's like you have the interest rate, financialized economy. So, you know, Wall Street, VC, tech, like we're in kind of like a white-collar recession of sorts.

And then there's like kind of like the blue-collar service sector, which is still like pretty piping hot, right? I mean, you know, Miami's bussing, bustling, bussing. i'll throw data at you ready so the inflation rate in miami is 10 yeah wow right crazy uh miami now has the wealthiest neighborhoods like two of the top five neighborhoods in the entire country uh because home prices have exploded higher yep uh on top of that uh i was reading an article today on bloomberg where they basically were like it is jerome powell and the fed versus the service industry that is going to determine uh the inflation battle and at the same time that They're raising interest rates, and they're destroying investment demand and kind of this white-collar stuff, right?

The service industry is increasing pay. They're increasing prices. And they basically are saying to themselves, if we don't increase our labor costs and also increase our product costs, we're not going to survive. And so he's got to do a lot more to go after that industry. But the people caught in the crosshairs are the white-collar kind of investment class. And I mean, some of these stocks are down 60, 70 percent, let alone, you know, Bitcoin, crypto, whatever. Yeah, it's it's nasty out there. Yeah, it's really interesting.

Like this business cycle is a lot different than, you know, maybe the historical analogies of the past. Like some people are like, oh, it's like, oh, wait, some people are like, oh, it's like kind of similar to the tech bubble. Right. Where you had all these crazy valuations and then they bust. And I guess if you just think back to the tech bubble, right, like everybody thinks about the NASDAQ going down 80 percent. What people don't really think about is two and a half years later, 2002, the S&P 500 was 50% from its highs, right? So like these things do take time. I think that two tiered economy thing is is very, very true.

And, you know, I guess like if you're going back to say like 2021, if you said, you know, the Fed's going to get rates to five and some change percentage and things are going to be able to, you know, sustain for a while, I would have been surprised. That would have caught me off guard. And since then, I mean, obviously kind of realigned the expectations. But I still think that the end game, as in kind of this broad thesis, this big debt, debt, long term debt cycle thesis is is 100 percent accurate, still in play. Like there's just mathematically not there's not a way we can serve it, not like not just the U.S. government, not just the Treasury, but like globally.

Debt burdens are still so high. And the only the only really way out is to kind of let this inflation run hot for a sustained period of time. So it's interesting. They laid out the playbook. They're like, all right, we need to devalue this debt. We're going to let inflation run hot. If you look at what they said in 2020, they're like, we need inflation hot. Inflation came hot, right? Got hotter and hotter. And I don't think what they missed, or not maybe what they missed, but what they didn't perceive was the social and political pressure that would come as a result of that. Not just the U.S., but globally, right?

Just like first inflation crisis in 40, 50 years, right? So there was a lot of political pushback. And so, you know, they instead of, they were still doing QE and zero interest rate policy a year ago, right? Like, I mean, it doesn't feel like that, but I mean, they were literally pumping $100 billion a month into the financial sector 12 months ago. So we're still pretty early in this cycle, and it's going to be interesting to see how it plays out. But I still think we're due for some form of broad economic downturn. How do you think Bitcoin would perform as we get deeper into kind of a recessionary period? There's a lot of people who said, hey, Bitcoin's never lived through a recession before.

If you look over the last 18 months or so, obviously, we've raised interest rates and had that tightening cycle. Bitcoin went down along with all other financial assets. But many people would argue, like, actually, it's holding in there OK now, right? For the last, you know, call it six months or whatever it's been. It's pretty much flat. Yeah. And is your expectation that we've kind of bottomed in this whole down cycle? Could a recession push us lower?

Like, how do you think Bitcoin performs? Yeah, I mean, I like to view everything like probabilistically. You know, a lot of the data we look at, like the on-chain Bitcoin native kind of stuff, like we saw capitulation. There's just no doubt about that. Like you can go through like, you know, all these statistics, average cost basis, whatever, you know, the average Bitcoin holder was underwater, you know, in the fall of 2022. That happens cyclically every single Bitcoin bear market in the same way that, you know, the say the average cost basis, the Bitcoin exchange rates usually like three, four X. average cost basis at the top these kind of local bubbles crashes everyone on average uh is underwater that happened again right so we saw a massive capitulation like we can see it in the

data um there was some form of seller exhaustion right like i mean every lender exchange hedge fund market maker in the space you know the titans of the industry in 2020 2021 basically all blew up right um you know gbtc holding 600 000 bitcoin trading at a 50 discount to net asset value like like that you know if that's if that yeah is that bad yeah if that's not capitulation then i don't really know what is um but i think people kind of mistake that okay we saw capitulation we saw you know as worse as it you know probably gets versus okay and now we're in for just like a sustained period of some chop consolidation like i think people are like okay the worst is over time for up only um and i think bitcoin as a macro asset um it i mean it has matured over the last three

four years despite you know the volatility to the upside and the downside i think it is it is more of a macro asset than it was in 2018 2019. um so you know what are equities doing today uh well that's probably what bitcoin's doing with maybe a little bit more volatility and so i think we got some time like i i you know i would be very surprised to see bitcoin i happily i would be you know happily surprised if bitcoin made new all-time highs in 23 um but i have plenty of time we have time right like the the broad thesis of bitcoin as an engineering solution a superior engineering implementation uh for money is is completely unchanged right i think it's just the timeline um and the narratives uh got people a little bit caught off sides right like bitcoin

is inflation hedge and it's like well cpi inflation comes in we see the first kind of bond stock market correlation to the downside in 50 years and and not just like bitcoin crypto investors but like legacy investors right who are like okay we're you know stocks are falling we're gonna long bonds and they got absolutely pillaged right so like bitcoin on a risk adjusted basis actually didn't even do that bad in 22. right like bonds traded worse a lot of equities traded worse um and risk adjusted in 23 bitcoin's like one of the best performers so you know i think the game is unchanged it's just it's a game of accumulation and patience yeah um when you think about the decoupling that's occurred at the start of 2023 explain what's happening there and like how you

you think about that uh well i mean i don't really think there has like i mean maybe like locally like a day or two right um you know decent short squeeze in bitcoin but like you saw kind of a rip in in a lot of these kind of um beaten up names right whether it's like the teslas of the world or tech or equities broadly um we kind of just saw like a general risk on rally um there was why do you think that's happening that is like i'm trying to front run the fed pivot or something else? Yeah, I think there was a belief that I think is reversing that, OK, we're going to see that. I think the consensus in Q4 of 22 was, OK, we got this tightening cycle. Things are really slowing down. The inflation is actually, you know, transitory. We're going to return to

this kind of this mean 2 percent year over year line. And the Fed's going to cut in 23. You saw like, you know, Fed futures, the bond market really kind of expect that, OK, we're going to from four or five percent rates down to three we're gonna ease stocks kind of front ran that um bonds are pricing in a recession and equities are pricing in like this goldilocks scenario of no earnings recession and you know future cuts uh and now all of those cuts that were expected in 23 you know three four rate cuts um that's all kind of been uh priced back out so no cuts in 23 um economy's still really nominally hot uh and i think now 2024 is is when broadly consensus is starting to price in that that real slowdown so earnings recession um you know the fed's like

openly stating we want slack in the labor market you know that is a translation for we want some of you guys to get fired from from your jobs like this is what they want to do they want to destroy demand and so um you know what's interesting is the dichotomy we kind of talked about like five minutes ago between the white collar kind of uh you know wall street vc tech uh you know interest rate sensitive parts of the economy versus like the service industry anybody that's receiving social benefits from the from the government right like anyone that's that's getting social security just got an eight nine percent pay raise right so in real terms like they didn't really get a pay raise but in nominal terms they they feel pretty good they feel you know they got money to

spend um there's still like one 1.5 trillion dollars of like excess savings from all the covid stimulus that hasn't been run through um so there's like you know the consumer despite you know the savings rate being low the consumer still has a good amount of cash to chuck around so the economy is is you know if you asked me six months ago 2023 we're gonna see no recession i would have been very very surprised um but i think the data is showing that you know the us at least is in a pretty decent spot and so that gives the fed some uh some room so i mean to be honest i I wouldn't even be surprised to see 6% rates on the Fed funds. But if you told me that in 2020, I would have said, no way.

So, I mean, that's certainly something that's evolved. What is interesting is things like service worker pay continues to be very strong and increasing. A lot of these local small businesses increasing prices. We see kind of this white-collar recession that you're describing. But when we look at the American consumer, you have a savings rate that has been absolutely destroyed. it's at a historic low credit card debt exploding upwards interest rate on that credit card debt exploding upwards um and it's like all the signs that like the consumer's in trouble and at the same time that we're like on the precipice of a recession and the consumer is

struggling the fed is basically like kind of walking over to the cliff and they're like i'm gonna kick these people off right and like let's see what happens um do you think that they have to just focus on inflation and like whatever pain comes to the consumer uh we just got to deal with it or like can there be that soft landing that they keep kind of pointing to saying like you know we'll put the ship right into the hudson uh like uh a pilot sully over there and like we'll be good we'll all walk out of this thing yeah i think uh you know there was there was increasing belief uh in late q4 early q1 in january time frame where where it was like okay we're gonna go from everyone kind of thought there's a hard landing coming to soft landing to no landing right

Like, oh, this is all of a sudden they might they might actually do this. And I think with with kind of you see like China opening up there, you know, shoving money out again, they're printing, you know, the consumer is still pretty strong. Like you're talking about the service industry that's still piping hot inflation, which is, you know, part of the dual mandate. We could debate, you know, I think that's a different story about like whether that mandate is even

not worthy. But, you know, they're they're kind of their dual mandate of maximum unemployment and 2% inflation. Or, you know, what's the official wording of that? Price stability. It's not, I mean, price increasing isn't stability, but that's another story. I mean, we can have that debate about whether that's even the right goal to have. Do you think it is? I think it's, you know, part of this Keynesian economic paradigm, which is, you know, everybody's kind of been raised in and brought up in. And so, like, the Bitcoin perspective, the Austrian perspective kind of looks outside of that box almost like you know from like a fourth dimension

it's like we're looking in on this in this system this incumbent system like you know this is this is the matrix but this the world we're in right I'm not naive and like I'm not naive enough to to not understand the game that's being played right so the feds you know the fed despite you know the labor force participation dropping after COVID right this official data says unemployment's at 50 year lows, right? So 3.4%, 3.4% numbers. Yeah. And so small business down the street can't find anyone to work. Yeah. And so it's certainly a really interesting business cycle. And I think they're going to, they're going to really, and who knows, maybe they don't follow through. Maybe, you know, Powell kind of, as Arthur Burns reincarnated, you know, the Fed

chair that in the face of inflation, kind of backed off and let it rip, right? That would certainly be very, very interesting. But I think, and this is political, right? I think they were embarrassed by the transitory call on 21. You know, inflation is transitory. Don't worry, guys, they were dead wrong. And because of that, their credibility was kind of shot a little bit. So they're going to, I think they're going to try to reinforce that, their dominance, I guess, on the market. And I think they purposely want to inflict pain. So, you know, financial assets, um i you know some people are pretty bullish for 23 i i think stocks and bonds continue to be correlated i think they struggle um i think bitcoin could have periods of decoupling or

relative strength but i i don't suspect a raging bull market um at least for the time being um you know so bitcoin if we look at the on-chain metrics i think it's 73 percent or so of all bitcoin in circulation hasn't moved uh in over a year or somewhere around there whatever the date is uh data is today um that would say that we have a highly illiquid market yep uh but in order to get that raging bull market you need some sort of catalyst when you look out over the next couple of years uh some people may point to the having others may point to other things what do you think could be a catalyst to kind of set off the next you know true bull market and kind of not just sideways or the stoppage of going down but actually to go back up hey guys what's going

on. I hope that you're enjoying this conversation. I wanted to interrupt for a second to tell you about an event that we're hosting on March 4th at the Miami Beach Convention Center. It's called Lyceum Miami. And I've gone and asked some of the most popular guests from this show over the years to come in person at the event. It's going to be awesome. We have everyone from Kathy Wood to Vivek Ramaswamy, Chris Williamson, Cody Sanchez, and many, many others. I also even have a couple of surprises for each one of you if you show up. The best part about this event is it is completely free to attend. That's right, all general admission tickets are free. You simply need to go to LyceumMiami.com. LyceumMiami.com will get you free tickets on March 4th at the

Miami Beach Convention Center. And if you're a big baller and don't just want to get a free ticket, you can also get a VIP or an insider pass. If you use the code POMP40, you'll get 40% off. They get you all kinds of cool things like the night before a cocktail with the actual speakers and a couple other perks. Go check it all out at LyceumMiami.com and use code POMP40 if you want to be a baller. I can't wait to see all of you there. Go ahead and click on the link in the description and let's get back into this conversation. Yeah, it's pretty interesting because we were talking throughout 2021, 2022. One of the things that surprised me during the second leg of the kind of the double bubble in 2021. You know, Bitcoin hit an all time high of

64,000, crashed to 30,000 after the China thing. And, you know, like Elon kind of double bubble. Yeah. And then we, you know, in hindsight, obviously, FTX had something to do with it. You know, there was, you know, some other shenanigans. The altcoin ecosystem kind of helped inflate, reinflate that. But it was really interesting because I'm looking at all this data, right. And, you know, Bitcoin, there was there was days where Bitcoin's up 10 percent, stocks down, bonds down, VIX volatility up in legacy markets. And it's like, what is going on? At the same time, we're looking at this data, and it's like, holy crap, 60%, 70%, 80% of

the supply isn't moving. Whoever's in this market bidding this is having to fight for a super small part of this pie. And so the decoupling, or at least the theory of a decoupling, looked very, very real. And I think in hindsight, what I got wrong, at least a little bit locally, as we drew down, was that supply can remain super, super constrained. And that supply inelasticity cuts not only up, but it cuts down. It cuts both ways. So 80% of the supply doesn't care. They're price agnostic buyers.

They're holders. They don't give a crap about the exchange rate. But that 20% or even the 2 million coins on exchanges that trades every day, whether it's market makers or hedge funds or speculators. Wash trading. Yeah. Because of that inelasticity, not only in a raging bull market is it a clear beneficiary, but in a bear market, that supply and elasticity also leads to downside volatility. So I think that supply being super, super tightly held and very, very liquid is fantastic for a bull market when there's marginal inflows. But if there's any marginal outflows or people are just trading this like it's a derivative of the S&P 500, that supply and elasticity on a day-to-day basis doesn't really matter.

And on the margin, if you have people that are continuing to acquire it and buy it and hold it and not sell it, that's going to make a difference. But I think, you know, the next, like, it's really you need that, you need that kick. You need that spark. What do you think it could be? I think, I mean, the obvious one is, like, you know, monetary easing. Like, you know, we have a recession and there's some form of fiscal and monetary response. But I think, you know, eventually it could just be, like, at least the last couple months, it's been somewhat of, like, a seller exhaustion short squeeze, right?

It's just like supply set at the margin for any asset. This is an absolutely scarce one. It's tightly held. There's just not enough coins to go around. I mean, to kick it back to a trillion-dollar asset class is going to take a little bit more inflows than we have currently. But I think we see the SEC coming down a little bit. As much as I kind of have the ANCAP side of me, the libertarian free market maximalist side of me, I understand the world we live in. And I understand that, you know, the regulatory environment is going to keep some institutions, you know, that are bootstrapped by this stuff on the sidelines, at least, at least locally.

And I think, you know, this stuff gets cleared up a little bit. I, you know, who knows what they do with the stable coins, all of this. But I think, you know, we got a little bit till some of that's figured out and some of the big boys, you know, the public companies, the big institutions like Bitcoin is very, very illiquid, like we said. And that's that's a good thing. But if you were an institution, say an insurance company, and you want 50 basis points, you want 1% of your portfolio in Bitcoin because you're looking at it and you're saying, hey, in a bear market, it does well risk-adjusted. In a bull market, it does well risk-adjusted. Let's get a sliver of this thing. And you have a $500 billion portfolio as an insurance fund, and it's long duration.

You have payouts for the next 40 years. I mean, try deploying $1 billion into the Bitcoin market. You're going to send the price up. And likewise, if you had a billion dollars to sell, the illiquidity is going to cut the other way. And so you can see, it's kind of fun, you can see whenever Saylor over the past year is on the tape, it's like, oh, there's a Coinbase buyer. And it's just like you see in the data, there's someone just chipping away, buying every second. So I think it's still very, very, despite being 13, 14 years old, the good news, or maybe bad, depending on how you perceive it. But the good news is it's still very immature, still very early, and it's still very nascent.

um that it is a globally liquid asset but it's not it's not nearly as liquid as a lot of the legacy assets so you know the good news is it's early um the the bad news is like you know the big boys uh can't really come in because of you know regulatory because of public perception you know people say oh bitcoin but like they perceive it as like crypto ftx fraud you know i can't touch that thing um so you know i think obviously education is important these are long-term things um and that that's you know that's the the battle we're facing when you think of regulation is their uh potential oversight of stable coins the most surprising piece of what's transpired over the last couple of months like obviously there's things around uh three euros capital

around terra luna around ftx right like like things that obviously had issues in the last year or two um but then something like stable coins i think a lot of people look and they're like sure i thought maybe that they would go after some of the coins or all of the coins or whatever but stable coins never really seemed to be the thing that people pointed to was like i think regulators are going to have a problem with that or they're going to think this is you know outside of uh kind of the fence that they want this stuff in is that the same way you read it yeah it's interesting because you know i i think that the dynamic has changed a little bit now with this interest rate environment right stable coins in a zero interest rate policy world isn't the most

lucrative business right you're just you know kind of tokenizing some dollars some short duration treasuries um and you know there's the compliance costs and all this other stuff um if you want to operate in the us obviously there's the tethers of the world and and whatnot but uh with rate with short end rates at five percent i mean having a multi-billion dollar stable coin is a profit puppy right um you know coinbase like just reported their revenue i forget what the numbers were but a lot of their revenue is just from their circle program they just they just have a bunch of cash uh their users have cash on the platform they don't pay them interest and they just they just get that that short-term uh interest rate um you know tether now is this reporting like a bunch of

profits because they have a ton of their their cash and liquid treasuries um so from the regulation perspective um it's it's clear that uh stable coins is a very lucrative business and i think you know the next five you know this maybe this decade you're gonna see a lot of the legacy incumbent players want a piece of the pie right like you see circle teaming up with blackrock you know uh not only like is our stable coins uh a path to monetize treasuries for the u.s government right it's a structural buyer of of of u.s debt um and that's a good thing they want that you know they want more buyers like if you just look at the past 30 40 years it's always the the government's always trying to figure out okay who's going to be the buyer of our debt you know

the Saudis, Russia, China, right, and, you know, the Fed, obviously. And a lot of those sovereigns have kind of stepped back a little bit. Stablecoins, like, it's a $100 billion market today. It could very easily be a trillion-dollar market tomorrow, or not tomorrow, but, you know, the next few years. And so that's a big market opportunity, not only for, like, the U.S. government and to find structural buyers of the debt,

but also for the legacy players who just get the tokenized dollars or, you know, a stablecoin on a blockchain and then get that interest expense. So I think there's there's kind of that regulatory pressure is partially because there is a lot of interest to capture this business. And it's a political game. Right. It's a regulatory game. It's a political game. And the crypto incumbents, despite, you know, being relatively in a much better place than they were, say, in 2016, 2017, 2018, are, you know, still just kind of drops in the bucket compared to the legacy titans. What is your take on Nostra, I guess how you pronounce it, and Ordinals? Yeah, Nostra is really cool.

I'm on Nostra. I don't post much, but it's exciting and it's growing unbelievably fast. For those that don't know, it is a decentralized social site that basically allows you to use public address and send messages via kind of peer-to-peer relays, very similar to Bitcoin. Yeah. So, it's, yeah, public-private keys. I think that the basics of the protocol have existed for, like, two decades. But it was just, you know, just kind of this novel implementation of this technology. So, kind of similar to Bitcoin, like, the technology existed for a while.

It was just someone kind of, like, finally just, like, putting the pieces together and introducing it in a different way. It's very exciting. It's, like, you know, you can send lightning. You can, like, zap people's stats. You know, it would just, like, basically, like, you see Twitter is, like, implementing Twitter coins. I don't know if you saw that. but you know they probably are spending all this money to implement this like their own coin and this all this program and meanwhile we have this very very basic like if you look at the nostre

or the the damas um app on on uh the app store that's just like an implementation of the nostre protocol they built it on top it's like a ux um it's like five megabytes it's tiny right um and so and use like relays to do it so it's not the most user-friendly thing like like my mom's not going to sign up for for noster and and as easy as twitter because if if i ask you right now like hey what's your profile yeah you basically are going to tell me a pub key yeah right which you probably i'm assuming don't have it memorized no and so therefore uh it's not the same thing as like hey follow me on twitter at whatever right and so that's some of that has to be fixed doesn't necessarily mean it's not going to work it's just like uh it has to get to the point where it's so

user-friendly that you can get even more mainstream adoption than people who are willing to kind of overlook the ui ux stuff yeah and like i you know for the for like three i think two or three months i saw jack dorsey posting about it and he was you know back when there was probably a couple hundred users he was on that i i logged on created a thing um and he's on there you know five hours a day and he's you know chucking bitcoin at developers and and you know setting this stuff up in africa and i'm like you know jack's pretty smart guy created two massive companies uh founded two you know Twitter and Square very, very, very early to Bitcoin. And then that implementation with Square, like this guy knows what he's doing.

Why is he so obsessed with this thing? And I think it's because Jack I mean, Jack was in the middle of the storm with Twitter, with the political pressure and understands the reality of running a, you know, a public forum social media company. You know, we we don't even have to go into all the stuff that happened. 2020, 2021, the censorship. I mean, hell, I lost my back when verification was like a, you know, kind of a credentialism thing. I was like official journalist for a media company.

Bitcoin Magazine's a verified media company. I was, you know, a journalist, posted some COVID wrong thing. I lost my verification. And they said, you know, I got an email. You're no longer notable. And it was essentially like it was a warning shot. It was like, hey, like and for me, like Twitter is like a pretty important part of my career and what I do. And so it was like, all right, like it was almost like I self-censored because like I don't want to get banned off this site.

It's very integral to what I do. And you saw a lot of people like prominent scientists, whatever, that it got banned. So there's there's problems with centralized social media. And I think the reason Jack's so obsessive with Noster and not obsessive, but passionate and funding all this development is because the idea of a, you know, a decentralized identification system and social network is very, very powerful. another kind of rabbit hole is like deep fakes and artificial intelligence like pomp both of us and you way more than myself have hundreds thousands of hours of of uh live video out there for the internet um i don't know if you've seen like the the joe biden donald trump kind of deep fakes where they're talking to each other and saying saying funny stuff i want someone to put me in the video game with uh biden trump and like you can throw somebody else in there and just like

two on two and uh let us go at it but like it's it's funny but it's also a little scary in the sense of shit like i mean this is relatively new technology i mean i guess they've been building it behind the scenes but extrapolate it out right just like the general trend of technology where it's going in five years from now it's probably going to be trivial to fake a video of yourself saying something and whatever it may be right it could be as malicious or or you know fun as as you want to envision um but how what's like how do you verify what's real and not in a world where it's it's at it costs nothing to create a fake of something right so and so and we've we're already like we're not screwed but you're you're 10 000 hours of content's already there right maybe you

could try to scrub it all but you can't you can't scrub it so so the decentralized identification as a concept as like okay this is a public private key verification system for me and what i say and what I post, right? Like, I think that's not even just with Noster, but in general, you're going to need something, um, like that to, to verify publicly in the future. And so I don't know what that world looks like. Um, but you know, that trend, um, is really something that has caught my attention recently. What about ordinals? Are you a NFT Maximus now? I don't have any NFT Maximus. I think it's interesting. Um, you know, it's a very, it's the, the surprising thing was that a lot of extremely smart uh bitcoin uh technologists developers uh you know like luke

dasher jr like creator of the segwit implementation you know kind of solution to the block war uh drama conflict in 2017 um and a lot of the guys that coded up taproot didn't see this coming um and you know some of them are even saying like you're you're cheating the code right but i don't think that at all i think it's a novel use of block space um this is a free market and if someone wants to pay up to put a jpeg or whatever on a blockchain then uh it's a public it's a public marketplace right and so a lot of people are saying this solves the fee problem i never thought there was a fee problem to begin with it's been near all-time lows right for quite a while yeah well i just think that in you know the difficulty adjustment um and you know the the trend of

Bitcoin usage and adoption, there's going to, I mean, just the nature of the difficulty adjustment and mining incentives, there's going to be an equilibrium for fees in the future. If there's no fees to pay up, I mean, people will use Bitcoin to transact. I think that it's valuable enough. It's already won the censorship game and there's nothing else immutable. So people will pay to use Bitcoin. If there's not enough fees, miners will stop mining. You know, a queue of transactions will clog in the mempool. An equilibrium will be found. Now there's an additional driver for block space demand. You know, that changes the equilibrium, but it doesn't really change the fundamental kind of truth that Bitcoin has this, you know, open public thing that anybody can

utilize. So I think it's cool. You know, maybe I'll mint an inscription or ordinal. But, you know, a lot of people are having fun with it. So what's interesting to me is both of those seem to have brought a lot of attention to Bitcoin. I think that there's this one impact of like there a whole new class of bitcoiners showed up between like 2020 and 2022 right i think uh some of the data was like uh half of all bitcoiners showed up in 2021 right and so they only knew really the economic conversation around bitcoin and now there's multiple examples with both of those and other things that are happening where people get like re-inspired and like oh this could be you know uh kind of this really powerful technology this could be used for a lot of different things

and it's hard to measure what's going on there. But I think Nostra has 700,000 people who have downloaded it now or something, 700,000 users. Wow. Like, it's a big number, right? Whatever the 500K, a million, whatever it is, it's a big number. And then the ordinals I saw, there's tens of thousands, I think, that have been created at this point.

And so, like, you look at that and you're like, I don't know very many companies that have brought that many people to use their products on Bitcoin like that in a long time. And so it's pretty impressive to see, you know, what they've been able to do. Yeah. I think it's cool that, you know, there's a certain cohort of people in crypto broadly that not like to hop from thing to thing, but like, you know, the crypto native class, it's like, OK, you know, we're going to mint NFTs on ETH and then hop to Solana and then do this on DeFi and whatever. And those people in general for the longest time have been like, listen, Bitcoin's cool. It's the biggest thing. it's the most liquid thing it you know uh kind of takes the direction of the market either way

it's king but it's boring as hell right and like i'll say this as a bitcoiner like bitcoin um i mean not its exchange rate but like if you're trying to report on what bitcoin does every day it's like okay well you know 900 bitcoin remind we found a bunch of blocks right like you could write the article the day before like yeah you can just copy paste it every day it's like oh bitcoin's operating right like uh and you know there's an occasional soft fork that's exciting but like fundamentally this system is just does what it does and it just continues almost recovering twitter yeah conversation more than you do the actual blockchain yeah yeah um and so it is interesting that there's kind of a technological debate to

it and a new class of of investors excited to utilize this thing i think that's really exciting So it's still very nascent. You know, I I'm not really like I mean, certainly like could these things appreciate a whole bunch? Yeah. But, you know, the the speculative art stuff that doesn't interest me like that. I think that does a disservice because it's a new novel thing. But like, you know, I'm I'm not so much of like a collector myself. Maybe that'll change. We'll see. All right. I want to do rapid fire questions to end it here. Bitcoin hash rate hits new all-time high in 2023 if there's a recession or hash rate goes down? Yeah, hash rate just keeps chugging.

I mean, it's at all-time highs right now, like 300x a hash a second. I think it's a bunch of ASICs on the sidelines waiting. Like, you know, if price ticks up at all, you're going to see more of that come online. I think there's a structural shortage of rack space after all these mining blowups, Core Scientific, Celsius, all this um you know they're all miners um and so this this stuff takes time but yeah i mean it's

certainly mining is the most brutal competitive business in the world um and and you have to be a top tier uh operation to survive multiple cycles china continues to be abrasive towards bitcoin or they reverse course realize they made a mistaken comeback uh i'm not uh not a china expert but i i you know communism and bitcoin don't mix um it's oil and water uh so i'd be surprised if Xi Jinping, you know, open arm embraced Bitcoin. But, you know, who knows? New York, Nashville, Miami, Austin, San Francisco or L.A.? Never been to San Fran. Been to L.A. once. Pretty bullish on Nashville. Bullish on Miami. Bullish on New York. You know, I guess I'll just go with Nashville because that's where

B2C Inc. is from. But, you know, I got to love the no tax jurisdictions, too. So Miami, me i'll give it a runner up there tank top or hawaiian shirt both for those that are only listening that's what he's wearing uh would you rather take the vaccine or buy ethereum i would load up on eath all right where can we send people to find you on the internet you can find me on twitter at dylanleclair underscore dylanleclair.com uh yeah it's been a fun one all right i appreciate it very much we'll double do it again cheers