The Pomp Podcast - #401: Parker Lewis & Will Cole on Bitcoin As A Reserve Asset

Episode Date: October 6, 2020

Will Cole is the Chief Product Officer at Unchained Capital and Parker Lewis is the Head of Business Development at Unchained Capital. In this conversation, we discuss the recent trend of corporations holding Bitcoin as a reserve asset on their balance sheet, the macro and micro trends driving this transition, why corporations are the next group after individuals to do this, how businesses can hold their private keys, and what Unchained is building currently.  ============================== Athletic Brewing is re-imagining beer for the modern adult. We love beer. But we also love being healthy, active and at our best. No matter your motivation, if you want to keep a clear head and drink healthier, we are here for you. Athletic makes non-alcoholic beer that you don't have to compromise to enjoy. The beers are fully flavored, clean ingredient, and a fraction of the calories of full strength beer - they fit in any occasion. Check out www.athleticbrewing.com for more details and free shipping nationwide. ============================== Pomp writes a daily letter to over 50,000 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://www.pompletter.com

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Will Cole is the Chief Product Officer at Unchained Capital, and Parker Lewis is the Head of Business Development at Unchained Capital. In this conversation, we discuss the recent trend of corporations holding Bitcoin as a reserve asset on the balance sheet, the macro and micro trends driving this transition, why corporations are the next group of individuals to do this, how businesses can hold their private keys, and what Unchained is building currently. I really enjoyed this conversation with both Will and Parker,

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technology and finance. I break down complex topics into easy to understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, Pompletter.com. All right, let's get into this episode with Will and Parker. I hope you guys enjoy this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any

opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. Super excited. I've got a two-for-one today. I've got Will Cole and Parker Lewis from Unchained Capital. What's going on, guys? Thanks for doing this. Hey, Pom. Happy to be back on the show, Pom. Thanks for having us on. Absolutely. Let's start with Parker, since you are a repeat guest. For those that didn't listen to the first episode, just give us the two minutes on your background and how you got to Unchained.

Yeah, I started my career in the traditional financial world, worked at Deutsche Bank in and around the financial crisis, kind of traditional, both from investment banking to restructuring, ultimately worked for a hedge fund for a long time. That's really where I dug in and started to really see Bitcoin clearly. As soon as I did, I left the old world for the new world, ultimately ended up at Unchained. And a big part of my story of getting to Bitcoin is actually Will and I go back to the days when growing up in Austin. I ended up joining Unchained just about two years ago. I lead our business development efforts, and then I convinced Will to come on. I let him introduce himself, but to come on and join us. Yeah. Thanks, Parker. And thanks, Pomp, for having us on.

Yeah, I got into Bitcoin relatively early on, not really through professional means, but through I was living in New York City after the 2008 Ron Paul presidential run. There was a certain crowd that got into Bitcoin pretty early on. My brother, Napoleon, actually sort of led the way on the Bitcoin charge there. But my background's in product and engineering. I worked at Stack Overflow for the past eight years and recently joined Unchained right after some of the Wyoming Blockchain Task Force work that I was doing, decided that I should put my mouth where my money is and go all in here. And the obvious choice was to join Parker. We go way back, like he said, and Unchained has been a great place to work. Awesome.

And maybe you guys can give us just a quick overview. What exactly does Unchained do? The thing about Unchained is really creating a financial services company for people that hold Bitcoin and thinking about what the financial services world will look like in a world that's built primarily around Bitcoin. And ultimately, for us, that means building on top of keys and helping from a custody perspective, both individuals and businesses hold their own Bitcoin and us helping them both from a technology standpoint. And then what we refer to as collaborative custody will hold one key in a client's quorum. But thinking about that as the foundation, our custodial foundation, and then we build financial services on top of that custody layer. today it's it's lending against bitcoin we're quickly expanding an otc offering we want to expand that to more states but really just thinking about bitcoin is money and the service

to sit alongside money is naturally financial services and it's just a matter of i think the thing that differentiates that unchained in that equation is how we facilitate custody and then how we layer on top financial services got it that makes a lot of sense and so obviously uh we want to do this because there has been this surge in interest in businesses holding Bitcoin after kind of a couple of businesses, probably MicroStrategy is the most famous, have decided to take a majority of their balance sheet that currently sat in dollars and convert that to Bitcoin and start using Bitcoin as a reserve asset. Maybe, Will, you can touch a little bit on just how you guys have seen the interest from companies and kind of your view of this new trend

that's popping up of companies converting that balance sheet capital to Bitcoin with reserve assets. Yeah. I mean, most of this is really Parker's domain, right? They're looking at it from a macro sense where they're looking at all their dollars sitting on their balance sheet and wondering, you had a sailor on here, he did a great job. And seeing that melting ice cube and wondering, what the hell am I doing with all these dollars sitting here? We looked into gold, looked into real estate, and finally landed on Bitcoin. I do think that we're going to see a lot more companies take that route. But obviously, Saylor had a pretty sophisticated, long view of

this, right? And it's going to take some time to catch up. And the way I see it is that they're going to be looking at Bitcoin for its unique properties, both as money, but also the way you can hold Bitcoin, the way you can actually own Bitcoin differently from the ways that you hold traditional assets and, you know, in treasury. And I think the challenging thing that businesses are going to find is sort of merging this idea of the way their current financial controls and corporate governance works with, you know, Bitcoin and what makes Bitcoin special, like how am I supposed to hold it? And how do I do it in a way that that takes advantage of Bitcoin's unique properties? I, you know, personally, I see some other things, you know, happening, you know,

like some of the, uh, really strong qualities of Bitcoin around censorship resistance, that, uh, if you see a company being deplatformed for any reason, you know, it's not just, you know, being demonetized on YouTube or something like that. You could have other financial services that refuse to do businesses, business with you. I mean, hell, you know, Bitcoin companies know that more than anyone in the fiat world having trouble getting banking relationships, you know, over the past 10 years. And that as more and more people see the values of Bitcoin as money and start digging into those really core things, the censorship resistance, the monetary policy, that it's going to hit them over the head pretty quickly, that they have to move some of their

treasury into this, or they're going to see from the demand side of their employees or their customers that they have to start transacting in Bitcoin in order to perform their normal day-to-day operations. Parker, anything to add in terms of the macro? Yeah, I think one of the things that I would add, and we'll touch on it, but I think there's two paths converging to one, which is Bitcoin is inherently, or at least coming around to it and seeing it as money, is an inherently individual process, I think. The case of MicroStrategy is interesting, and I think it's particularly important and probably think a lot of people that are paying attention day in, day out to Bitcoin, recognize its importance. But it was probably, in the most

public way, an example of multiple individuals having to, at the same time, emerge into a consensus. But that also recognizing that the foundation of that is each individual in that boardroom or a CEO of a company coming to that conclusion. But the more and more individuals that we know every day are kind of something's unlocking and being able to see Bitcoin, recognizing that businesses are an extension of individuals. And so that there will be this natural progression that, you know, as, you know,

and typically everybody has, you know, kind of cash that they manage personally and then cash they manage as part of their, as their business. And when you think about your current kind of banking suite, if you're just thinking about the fiat world, you generally want to deal with both of those things in the same place.

And that kind of naturally, you know, the longer that you're in Bitcoin, or if you kind of started to pay attention four years ago, then three years ago, two years ago, then you come around to this idea that you're not just speculating, you actually want to earn in Bitcoin, and then you start to think about your business as an extension of it. So I think that path is one where just as more and more individuals hold Bitcoin, then they're thinking as their business is an extension of themselves, that they need to be holding it kind of through an entity. And we've seen that through Unchained as part of what the inspiration for kind of our business accounts were that we'll talk about later,

but that, you know, not the micro strategies of the world, but small businesses that just hold Bitcoin as individuals have started using our application to actually facilitate custody of their own Bitcoin. The second piece of that, that I think is key that someone like Michael Saylor keyed in on that more and more businesses are touching on is the $3 trillion that the Fed printed. And that I think that a lot of businesses knew that things didn't make sense, but when you it's like the bandaid ripping off when you print three trillion dollars you people can no longer ignore that fact and i think you know as will mention but you know kind of to michael saylor's world the melting ice cube um i think that the interesting thing was he specifically pointed

kind of that idea out but that he also pointed out that if you if you start to come around to bitcoin and you start to understand it there's no way that you only put one percent of your money in it and that it's it's not a hedge it's an actual strategy and so it's kind of the combination of that macro landscape of the Fed printing $3 trillion versus just a function of knowledge distributing and those individuals recognizing that their businesses have the exact same problem that they have as an individual. Yeah. And so maybe talk a little bit, either one of you could take this just in terms of this almost like micro type situation where, okay, I decide, yes, as an individual, Bitcoin is for me. Now I realize my business has the

exact same problem. I've got to convert to the reserve asset as Bitcoin. What are the challenges that I have as a business that maybe I don't have as an individual? What are the different things that I'm thinking about from a business perspective? I'll take the first part of this is that from a business perspective, you're not managing the Bitcoin on your own. It's not your money. It's the business's money. So as a business, you have certain financial controls, corporate governance, many people in many positions who are in charge of managing that treasury, managing cash flows, payroll, all those types of things. And the challenge is looking at Bitcoin and wondering, are there the tools, the same type of accounting tools and tools that

facilitate these financial controls available to me in the Bitcoin world? So even if you've taken that leap and you've decided like, okay, our company has a reason to, whether it's holding treasury or use for payments or vendors or whatever it is, do we have the sort of software layer to facilitate all the different use cases that we have? And usually what that means is that even in the fiat world, you don't want to have single points of failure in your business to say someone can just run off with our money, right? And in the fiat world, you do that solely on the sort of software financial controls with a third party bank and accounting software, things like that. But in the Bitcoin world, it's a little bit different. You have some of it built

into the protocol already. So with Bitcoin's native multi-sig, for instance, it's built specifically so you can have multiple people help secure assets, Bitcoin, right? And that native multisig though can only take you so far because it doesn't know about people and your role in the company. It just knows that people that show up with certain information and that information combined allows people to spend from an address to somewhere else. So what you are looking for as a business is something that sort of takes that native multisig, right? Something that Bitcoin has and you can really trust and it's been vetted and verified by experts around the world and has never, you know, sort of failed. And you want to, you know, combine that with the financial controls

that you're used to in the fiat world. I think that's one of the biggest hurdles that people have to get over. And one of the things that we're thinking about a lot, as we build out our, you know, business accounts and corporate strategy at Unchained Capital. Yeah, and how much of this, maybe Parker is like, you try to rebuild the existing world just for Bitcoin, right, and kind of take a carbon copy versus build something that is unique to Bitcoin. And it's more of let's educate the business owner or the individual on this new world rather than we have to make it look identical so that that's the only way they'll be comfortable. Yeah, so I think that's a really good, I think that's what's happening right now

is to a large degree, or to, you know, in many ways, a push and pull, right, between the old world and in the new world. And I think that, you know, at least the way that we think about it is starting from the first principle of security of what will actually result Bitcoin is a new technology, like what are the chances that, you know, the best way to secure Bitcoin, whether for an individual or for a company is identical or very similar to the structure that securing a fiat currency that's controlled and cleared through a central bank. That very likely because it's a different form of money and it's a different technology and moving it occurs via different means and that there's a different degree of finality to it and that there's a different

way that you can store it, that naturally that that would be different. But realistically, because we also live in a world of reality, is that companies have, you know, for regulatory purposes, for compliance purposes, for audit purposes, especially the larger that you go up in the chain and the more constituents that there are that are part of a company, that that old world begins to say, hey, we've been doing this a certain way. And it's difficult for us to deviate from, we need to create this box and make it look like the box that everyone's used to looking at, because there's so many people that have their hand in this wheel. And I think that one of the things that, you know, kind of where we break the molded unchained is we say, hey, that 30 or 40

year old regulation that was form fit to a different financial system, like, yes, we need to be able to replicate certain parts of that such that financial controls can exist the same way that they do in the current world so that compliance can exist the same way so that it can be audited and likely to a greater degree in Bitcoin because you can actually prove that you have Bitcoin or that you have keys to it.

You really can't prove if you're the squares of the world or the Googles of the world that those dollars actually exist. You're only relying on the trust of somebody else. And so what we do is we try to look at the equation and say, there is a security element about Bitcoin. We need to be cognizant of all of those things that are important to various different businesses that, you know, kind of, I think about on three

primary bucks, financial controls, regulatory compliance audit are really four. And that, but that building those type of structures and making something like that kind of legacy apparatus work on top of Bitcoin key. So it's like, it's really, it's not necessarily, you know, what we are building as a hybrid, but it is a push and pull between making a box look like something that the banks and companies are comfortable with, but not casting away the properties that really deliver the ultimate degree of security in Bitcoin, which is private keys. I want to take that one step further too, Pom, which is, you know, it's Bitcoin's native multisig. The only reason you, I mean, it is actually really well built for companies and

the collaboration that companies need around their finances. And if you're not using Bitcoin's native multisig, and you're using something else, you know, whatever it is, because it has to form fit to 100 different digital currencies, or because it's the legacy system that you're using, you're not getting the full benefits of using Bitcoin. Yeah, what's really interesting to me about this is, there is people in the legacy system that are trying to almost adopt Bitcoin into their system. And I think you guys are highlighting like that may not be the best for Bitcoin. And also that may not allow businesses and individuals to use Bitcoin the way that it was designed and kind of benefit from all of the properties it has.

As you think about Bitcoin as this unique asset and building that hybrid model, so it's close enough to what they're used to so that they're comfortable, but it also still kind of protects and empowers all the properties of Bitcoin. Where does the adoption come from at the business level? Is this the smallest companies in the private market, kind of small business owners that are looking at this problem? Is this more maybe kind of mid-market type companies that have larger balance sheets. And so it's more top of mind for them than maybe a small business that doesn't have that large balance sheet. Or are we talking about full fledged, you know, Google or Facebook is going to go do this, you know, in the short term, like, like, where do you guys see kind of

adoption coming from? And what's the sequence across the business environment? Yeah, I think that there is interesting, because, you know, one of the ways that that I think Bitcoin has existed to date is that it gives the it gives the smaller guy the first bite at the apple. And so I think that part of that is because when you think about the size of Bitcoin and the relevance of it, it's like, you know, currently Bitcoin has a total value of roughly $200 billion. And that's kind of less than the cash that Apple, Microsoft, and Google hold combined, right? So when you think about just like, you know, it's meaningful to a company like MicroStrategy that has a $1.3 billion market cap, but, you know, a company like Apple that has $90 billion of cash or Microsoft that's

got above $100 billion of cash in short-term investments or the Googles of the world, that when they're thinking about meaningfully allocating to it, it's almost that Bitcoin needs to be worth more to take a more significant stake. If Google wanted to go shift over $5 billion, Bitcoin would be really hard to do now. So I think that's part of the equation. But then the other part of the equation for why I think and really where our platform tailored to, but it will continue to improve, is small and medium-sized businesses, you just have less people and less decision makers. It's a lot easier for small and medium-sized companies to be

nimble and to move quickly. In the case of MicroStrategy, I don't want to say it's just one guy, but you had a CEO that formed a view and then he had his board and other executives within the company, go down that rabbit hole and become convinced. The larger the companies you have and the more that those are institutions, the more people that have to contribute and get on board and become comfortable. And so I think for the reasons of a decision-making standpoint, but then as a market opportunity standpoint and how and why Bitcoin is valuable and whether somebody can take a meaningful share of their balance sheet and allocate it over to Bitcoin. It just naturally, I think, starts with the small to medium-sized businesses and then works its way

up to the Microsofts, Googles, and the Facebooks. But I don't think tomorrow you're going to see those companies starting to fall over. You are going to see, as we've seen with Square, and I think PayPal is soon to be releasing a similar type app where people can buy Bitcoin, that those companies, even the large cap companies that are touching Bitcoin, they are going to start to hold Bitcoin on balance sheet, facilitate their business, whether they're meaningfully moving treasury assets over, I think is probably something that will follow that. Yeah, that makes a ton of sense. One of the problems that I hear from business owners or one of the obstacles they see is they say, hey, I want to have access to a liquid

currency. Bitcoin solves that. That's great. But it's super volatile, right? And so how do I plan my business around one day, I've got, you know, $100 million, the next day, I may have $96 million, kind of on my balance sheet, how do you guys talk through that obstacle? And maybe some others that people may have that are unique to Bitcoin, that don't reside with the US dollar? Like, what's that talk track like? And how do you really educate people on the pros and cons of Bitcoin? Yeah, the, there's a couple things there. Like, first of all, is there's different reasons that the business might want to have Bitcoin, like the treasury asset, you know, that Michael Saylor is talking about, you have to really be bought in and understand the volatility and have a very long

time horizon in mind in order to make that jump. However, you know, if a business has customers that are, you know, there's lots of businesses that have to hold Bitcoin on behalf of their customers and the financial services world and just the on ramp off ramp world. But there's also So if you have any debt or obligations denominated in Bitcoin for any reason, if you're selling things, if you have payroll denominated in Bitcoin, then if you're using that as a unit of account for those debt obligation or for those vendor relationships or payroll, then the volatility doesn't hit you as hard, right? Because your contracts are in Bitcoin, not in dollars. And as that starts to become more normal, and it's not normal right now, don't get me wrong. But there are businesses that have those types of obligations, then you're forced to, you know, have Bitcoin on your balance sheet to meet those obligations. That's one of those things that's just going to creep up on people. The Bitcoin volatility as it's smoothing out, as we have more halvenings, that's exactly what will sort of cause that type of adoption. one other thing i would add there too from a macro standpoint um it's kind of like merging

like always thinking about or at least the way that i like to contextualize it is always thinking about the convergence of the individual to the business because and i think poppy uh correct me if i'm wrong but i believe you make this point that in many ways volatility can be your friend right and that there's a there's a difference between store of value and volatility and those two things are not mutually exclusive. And that just as individuals deal with the volatility, and Michael Saylor was also somebody that talked about this key point, is my business is generating cash. And I know in various different scenarios, all weather, I'm going to be generating cash. I'm figuring out how to preserve the value that I've already created today, but doing that in a

world where I'm protected in all weathers. And that's the same way that individuals think about it. I think me personally, what I convert over to Bitcoin, I'm doing in a way where I'm never planning to convert those back to dollars. I'm managing my own personal balance sheet in a way where I'm always going to have the number of dollars that I need and increasingly shifting my internal treasury over to Bitcoin. In many ways, the other thing from the macro standpoint that I would bring up is, look at what happened in March. It's interesting because if you look at the balance sheets of Apple and a company like Microsoft, you'll notice that they're holding a relatively smaller amount of cash than they are cash and marketable securities. And so what those

marketable securities are typically, so like, you know, kind of don't quote me, but it's around the order of magnitude of like Apple's got, you know, say 30 billion of cash and 60 billion of short term marketable securities. What those are typically treasuries or investment grade credit, Right. So investment grade credit dropped 25 percent in in March, along with high yield. So and then if you look at if you look at Microsoft, it's similar. Like they're actually holding a smaller amount of cash and they're dealing with the same problem that the Michael Saylors of the world are dealing with. And they're they're not just holding cash. They're moving it into investments, whether it be in T-bills or treasuries or or other corporate debt. And so they may, I think they're probably underestimating the fact that volatility can also arise in those traditionally non-volatile assets in a bad way.

And what they're looking at in Bitcoin is the volatility has generally been your friend in Bitcoin. There's fundamental reasons why that is. And if you're managing your balance sheet in a way where your business is generating cash, you're building up more and more allocations to not just cash, but then figuring out how to split that allocation between Bitcoin and dollars or euros or yen. That naturally, the way that you think about managing that treasury for your business is the same way that all individuals today in Bitcoin have to deal with it. Yeah, what's really interesting is you know that you're going to guarantee loss over the long term when it comes to dollars, right? Your purchasing power is going to significantly decrease. With Bitcoin, it has only increased over long periods of time. And I think that you guys, like I, believe that that's a trend that is only getting started.

And so it really does come down to kind of just what is your belief in terms of these two assets? And then also, what is that time horizon, right? I think Parker, in the first episode we did, just like really lowering your time horizon, right? And frankly, in the private markets, I think one of the advantages people have is they're not just looking at the next quarter, right? And kind of what's that earnings call and kind of how do I manipulate my reporting so that the stock price kind of continues to stay inflated and go up. Private business owners have a significant advantage here, right? They can do that long term planning. Talk a little bit about how you guys interface with the legacy system, right? So another thing that people will kind of talk about that I hear a lot is like, hey, it's really hard to buy a lot of Bitcoin, right? So you described kind of an OTC desk, some of the other things that you guys may be doing, but just how do you see if a business does have a large balance sheet or throws off a

lot of cash, they're not likely wanting to buy, you know, $10,000 worth of Bitcoin, right? They're not going to go and kind of let a market order rip on Coinbase either. And so kind of how do you guys think about serving those types of needs in that financial service bucket of your customers? Yeah, the way we're looking at it right now is, yeah, we're running kind of an OTC style size, you know, $50,000 minimum type buys, both for individuals and businesses. And when you look at, you know, whether you're an individual or a business trying to, you know, manage your personal treasury or your corporate treasury, we are trying to connect all the pieces you might need in order to, you know, sort of fulfill that dream, right? So if you're a smaller business and you're trying to duplicate what Michael Saylor did, then we can help you both, you know, that on-ramp from turning your fiat into Bitcoin, but also solving that custodial problem from the very beginning. And of course, where we're coming from on the custodial side is that we want you to participate in your key management, right? And so, yeah, we can help you obtain the Bitcoin, but more importantly, we can help you keep it secure once you have it on your balance sheet.

And we can help map your current financial controls to something that works with Bitcoin on our system. So when we think about that, it's, you know, who has access to the physical keys and the physical world? That's up to you. We have no control over that. But once you want to manage that, we're your partner, we're your software coordinator, we're your wallet coordinator that can allow you to set different permissions for different people, whether it be, you know, types of things that we're working on right now. You know, imagine that you want someone to be able to author a transaction, but not necessarily be able to sign a transaction or be able to sign a transaction, but not actually be able to broadcast that transaction. Those types of controls are not something that's native to Bitcoin's protocol. So we can provide the interface that allows you to set up those types of controls for your business and then take advantage of Bitcoin's native multisig with a two or three quorum, maybe other quorums in the future to split up those private keys. But always what we would suggest to companies is to take advantage of the fact that you can, in this world, participate directly in the ownership of the currency, and you should be holding private keys, just like we preach that to individuals.

Yeah, Parker, anything to add there? The only thing I'd really add there is kind of like one of these core ideas. I think that a lot of us as individuals experience this, not to a person. And I think we're also, you know, both individually, myself and Will, and also as a company at Unchained, we recognize that there's going to be a range of solutions and that there's no one size fits all. But that in the current legacy world, we effectively live where both as individuals and as companies, by default, we must take the counterparty risk of another institution. um so you know kind of you know if we want to send dollars kind of over the internet or digitally to the fed ultimately we're relying on on a bank to do that or an extension of a bank to do that and that in bitcoin we don't even though we recognize and expect that they're going to be

full custody options and they'll probably be like a more um kind of tailored managed service that looks identical to the legacy banking system, that there needs to be solutions that do not require other institutions or businesses to have to take the counterparty risk of other businesses by default. And that one of the things when we're interfacing with businesses is helping, you know, kind of from a white glove standpoint, but really, you know, sometimes from just a consulting standpoint, even though we don't separately charge for it, it's helping them because we deal with all these problems ourselves of how we manage private keys internally. Now, there's

certain things that we can't disclose for security reasons, but what we provide those businesses with resources to help them get over that hurdle of, okay, if I want to store these keys, how do I do it? What are the best practices? And then we have our software application that allows them to do that in a world that feels more akin to something that they're using kind of in a traditional banking suite today. But then I think to your point too, it is kind of helping me that bridge from the fiat world in terms of currency conversion increasingly. But then once they come over into our world, giving them the tools that if they were managing their treasury in Bitcoin, and they have all those same tools that they need, and then as the applications for Bitcoin evolve,

we'll be layering on additional services. So today, it's helping people just hold on to that Bitcoin as a group of people, which is a problem if they're dealing with Bitcoin keys that was not solved. And today, I wouldn't say it is solved, but we're taking great strides through the release that we just had last week, and we'll continue to improve it. But then naturally, those businesses are going to be buying and selling things in Bitcoin. So whether it's be helping, you know, Bitcoin companies that are holding their own keys, run BTC pay servers, or, you know, helping them facilitate payment of payroll that we were just thinking of that world that individuals run businesses, businesses have individuals, for those that need to store their own private keys or want

to or don't want that counterparty risk by default, that they can and we can kind of just as Bitcoin evolves, we'll be layering in those services. And we recognize that it's not just going to be happening overnight, there's going to be a logical progression from individuals to businesses to payments to payroll, that those things will all be have natural and we'll need to replicate that. But that when we're interfacing, in many ways, we think of ourselves as as the partner for these businesses in Bitcoin, and we'll be helping them solve all their personal business needs. How close are we to people paying their employees in Bitcoin? Like, is that something that seems, you know, short term? Or is that something that we got still work to do?

Hey, Expensify had at least used to have an option to get paid back in Bitcoin for whatever expenses you're reporting. So, you know, enough people are doing it already, right? But no, I mean, I think it's just going to be a demand side, enough individuals, you know, negotiating that into their contracts will probably start at smaller businesses. We've, you know, we've seen with plenty of them. I think Blockstream sort of famously did that from day one that you could negotiate part or all of your salary in Bitcoin. We'll see that keep on popping up. And I especially think it will pop up the adoption curve in the financial services world, right? The OCC news, Wyoming's SPDI stuff is that you're seeing businesses that are banks and financial service

providers that are getting the demand from their customers that they want to hold Bitcoin, transact in Bitcoin for a myriad of reasons. And that those companies themselves who are already in the financial world are going to sort of lead that demand and the individuals that are part of those companies will lead that demand. Got it. And so as you guys think about what's going on in Wyoming, talk a little bit about that. Well, I know you've got a whole bunch of information there, but share what you can in terms of just like what's going on and kind of how popular that'll be and what the advantage is. Yeah, I mean, that's how we met, right, was in Wyoming last year. And that was when the, you know, sort of the final bits of the SPDI

legislation was coming together. So yeah, I was particularly involved last year. But, you know, just in the last few weeks, we got the big news, which is Kraken got the first, excuse me, banking charter for a special purpose depository institution in the state of Wyoming. And I think this is a bigger deal than, you know, even though people made a big deal of it on Twitter, you know, there are dozens of applications that are still, you know, waiting to go through. We're going to see them trickle out here. And this is a really big first step. And I think that, you know, where a lot of the problems have been just getting, you know, in a free market to compete with currencies, you know, we want Bitcoin to compete on a free market level. We need jurisdictional certainty

that the financial services and bank type companies to exist in order to allow Bitcoin to compete on an even footing. And Wyoming is essentially, you know, selling sovereignty here. It's a big deal what they're doing here, not just creating the new corporate formation of a special purpose depository institution, which is, in essence, a bank charter. You are eligible for membership in the Federal Reserve Group of Banks if you're an SPDI. But it's also those connections to the fiat world that allow these Bitcoin businesses to grow and not have to go through all the hurdles that every single exchange, every single financial services company, every single payment process has had to jump through. Being a bank in the United States

is a really big deal. It also really helps on the custody side where there's kind of this gray area of digital asset and Bitcoin custody. There's a lot that's been going on in South Dakota, but we know that these are rules that are set by the SEC on what's considered to be a qualified custodian. And then the state banking commissioners are the ones that actually enforce that.

And that's kind of a gray area right now. And Wyoming has provided absolute certainty through their legislative groups. And not only did they do the corporate formation of the spdi they also set up a chancery court um which means that they're going to have precedent and legal you know sort of backing the same way delaware did with llc little known fact wyoming actually invented llcs and then got kind of outflanked by delaware because they set up the courts and they got all the sort of precedent and uh sort of certainty that businesses needed in

order to incorporate their wyoming really has that going for them with the spdi it's really the killer app of um of corporate formation and then why you would want to do business there it's really cool what they're doing like i think that's been my big takeaway is like not only is it just impactful um and kind of really serves as this uh this foundation for a lot of people i think that it's just absolutely uh something that is so ambitious and courageous uh and it takes special people to go do it so it's pretty cool to kind of watch that all come together Yeah, and I think one thing that I would add to that too, because it's, you know, knowing that, knowing the work that, you know, kind of people like Caitlin Long and Tyler Lindholm and there's others on the Wyoming Blockchain Task Force joined, Will was on it last year. But that, you know, it was three, four years in the making, right? And they did, they put in all the legwork and it really laid the foundation for one of the largest crypto exchanges to become a bank and to do that in Wyoming.

And so it's just a testament to a lot of the work that those people put in. But now you're seeing just probably equally as big around the same time as the OCC news basically saying, hey, if you're a nationally chartered bank, it's OK to custody Bitcoin and giving that green light. And since then, we've already had an inbound from a Texas-based bank that's interested in providing Bitcoin custody. So I think the trend around this aggregate of all the things that are happening from crypto exchanges becoming banks, banks looking to custody Bitcoin, public companies starting to hold Bitcoin, all of this positive momentum feeds off itself. And I think that, you know, I don't think that it's probably getting the attention in the mainstream that it is, but that's just natural with Bitcoin. But that in six months, probably every, not every bank, but most banks will figure out that they need to have a Bitcoin strategy. And increasingly, large companies will be thinking the same thing. You asked earlier, Pomp, about like what's going to drive this adoption?

What do businesses actually need? I think about it like a sort of three-layer stack, right? You need the regulatory and sort of the jurisdiction that's going to give you certainty that your business can operate as a going concern and the rug's not going to be pulled out for you. Wyoming is providing that, right? They're leading the way. And the other states are going to copy them. Like, they're going to copy them almost exactly just like they did with LLCs. Then you need to actually be attracted to an alternative to U.S. dollars, yen, you know, euros, right?

And Bitcoin's providing that. And lastly, you need all the connections, right? You need the connections of your corporate strategy and corporate governance to that core protocol so you can operate seemingly smoothly like you would have in a fiat world. And that's what Unchain is trying to provide. And that stack there of jurisdictional certainty of the core Bitcoin protocol and software solutions like Unchain put together, that's what drives businesses to say, we have what we need to make the leap. Yeah, I love that. I want to spend the last couple of minutes with both of you just outlining how you think that this kind of plays out over the next 10 years, right? It's going to be hard to kind of make a prediction, if you will, in terms of percentages of businesses or anything like that.

But just how do we see 10 years from now the world in terms of the businesses that have started to use Bitcoin as a reserve currency? Maybe what that macro economy could serve in terms of a tailwind potentially? And just kind of how you guys as a business, you know, at least today are thinking about evolving to kind of continue to serve customers with those financial services as they adopt Bitcoin more and more over the next decade. You know, from my perspective, you know, I think we probably have a forward looking view or, you know, a view that, you know, that believes that business adoption is going to start happening a lot quicker, right? When we literally were sitting around the table making the decision around these investments in early 2020, late 2019, recognizing that there was going to be this wave, and that realistically, as it is with everything in Bitcoin, the infrastructure has to be built and in place in order for the wave to really happen. And that that's happening in parallel to just more and more individuals finding out about Bitcoin and spending the time to learn about it and how they can utilize it to empower them in their own lives and in their business. So I think that realistically, kind of, we have a view that is slanted to this happening far quicker. I personally have a view that we're hyper-Bitcoinized in the next 10 years. I think that, you know, that's, you know, kind of probably crazy to a lot of people, but it speaks, I think, mostly to how quickly both infrastructure is the pace of infrastructure being built and not just at Unchain, but at, you know, kind of all the incredible things that are being built on top of Bitcoin by any number of people. and just how quickly knowledge distributes.

And that is naturally increasing by multiples, if not exponents. So in my view of the world, practically every business is holding Bitcoin in the next 10 years because they're going to be using it more on a day-to-day basis to facilitate the commerce that we're used to facilitating with fiat currency. yeah i'd second that uh you know i think that you you mix in that with uh uh you know the power of having 50 states and the 50 states trying to out compete each other to attract businesses um to attract uh talent to work there um you know wyoming might have a head start but it's you

know in 10 years everyone's going to be doing what wyoming's doing like they are going to be copied. And when you have those two things put together, the Bitcoin or those three things, Bitcoin at the core protocol layer, increasingly getting more secure, more hash rate, more feature filled, that you have more infrastructure being built on the sort of enterprise and business account layer. And you have these 50 states out competing each other constantly that in the next I think it would be very rare for companies not to have exposure to Bitcoin, both on their balance sheet and in terms of their obligations to their vendors and people that work there. Yeah, absolutely. To wrap up, I just want to ask you both, there's going to be a lot of business owners that are listening to this and kind of just maybe in 60 seconds or less, what's each of yours pitch to those business owners as to why they should take a look at using Bitcoin as the reserve asset for the balance sheet? i think it's the best way to preserve wealth um i think that's the solution that or conclusion that

um that a micro strategy came to um snap is another business we have many businesses that are private that we wouldn't disclose the names of that are already doing that as well that the short answer is yes bitcoin is volatile but the fundamentals of bitcoin dictate that that volatility be in your favor because everything is built on the fundamental demand for Bitcoin and the reason why it's the best way to preserve wealth. It is the only form of money that can verifiably provide you with a finitely scarce supply. And that as more and more people figure that out, you're looking at that equation, which is a finitely scarce supply with a currency that can't be manipulated by anything that's entirely decentralized versus the melting ice cube.

And knowing that volatility does not equate to a store of value and looking at the purchasing power of the dollar and knowing that it declines 2%, 3% every year and knowing that the Fed has printed $3 trillion, but they're also going to have to print trillions more in order to sustain the credit system. And if you're a business that has cash on its balance sheet and that is generating quite a bit of cash to add on to that, that if you're not considering Bitcoin to be stored on your balance sheet and to be a treasury asset, you really should be thinking about it at the very least. And there's a lot of resources out there to go down the rabbit hole. I think that's great. Will? I would just say as central banks around the world gleefully compete with each other to see who can debase their currency the most, that Bitcoin is going to emerge as the only option. And if you're a business owner and want any help going down that rabbit hole, reach out to me. I love it. You guys are doing a fantastic job and obviously building products that people need. Where can people find each of you on the internet and where can they find out more about Unchained Capital?

I'm at Parker A. Lewis on Twitter. So at Parker A. Lewis, you can find us through Unchained. Our website's unchained-capital.com. And like Will said, if you're a business or actually an individual, we want to be there to help you with all your personal business needs. And if you're thinking about Bitcoin, we have resources, there's a lot out there. I write a series. It's on our blog called Gradually Then Suddenly. You can learn about Bitcoin there. But if you have specific needs related to Bitcoin financial services, how to custody Bitcoin, please reach out. I'm easy to find on the internet, on Twitter, or reach out through our website. And I'm at Will Cole on Twitter. And yeah. Awesome, guys. Listen, thank you guys so much for doing this. This is fantastic. I highly suggest anyone who is thinking about converting their balance sheets to using Bitcoin

as a reserve asset, please reach out to Parker and Will. They're doing fantastic work. They've got a great product that can help you. And generally, they are some of the most knowledgeable people in the space. So they can definitely kind of get you up the learning curve, help you understand the risks and how you can mitigate those with their products and a little bit of education. So thanks so much, guys. we'll have to do it again in the future thanks mom i really appreciate you having us on pump