The Pomp Podcast - #912 Udi Wertheimer On Toxic Bitcoin Maximalism

Episode Date: April 12, 2022

Udi Wertheimer is a independent developer and consultant. He also runs one of my favorite Twitter accounts. In this conversation, we discuss his thoughts on the The Bitcoin Conference, Bitcoin mining, U.S. vs. Non-U.S. regulation, toxicity in the Bitcoin community, and what Udi is excited about in the Bitcoin industry. ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= The Pod Pro Cover by Eight Sleep is the most advanced solution on the market for thermoregulation. It pairs dynamic cooling and heating with biometric tracking. Go to https://www.eightsleep.com/Pomp to check out the Pod Pro Cover and save $150 at checkout. Eight Sleep currently ships within the USA, Canada, and the UK. ======================= The world's 2nd largest crypto exchange, OKEx, has dropped the "E" to become OKX, reflecting its evolution from a traditional crypto exchange to a comprehensive, cross-platform crypto services provider. With OKX's decentralized platform and Web3 wallet, MetaX, you have full custody over your crypto. Explore DeFi, NFTs and play-to-earning gaming with the world's most powerful crypto exchange. Visit OKX.com to learn more. =======================

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. Now let's kick this thing off. Udi Wertheimer is an independent developer and consultant. He also runs one of my favorite Twitter accounts. In this conversation, Udi and I talk about everything from toxicity in the Bitcoin community to Bitcoin mining, regulation, US versus non-US states, and what he's excited about moving forward for the Bitcoin industry. I really enjoyed this conversation with Udi, and I hope you guys enjoy it as well. Before we get in this episode, though, I first want to talk about our sponsors. First up is LMAX Digital, the number one institutional crypto exchange.

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Eight Sleep. Eight Sleep is the single best product that I have purchased over the last three years. It completely changed my life. I'm not joking. Pay attention. The Pod Pro Cover, which goes over your mattress by Eight Sleep, is the most advanced solution on the market for thermoregulation. It pairs dynamic cooling and heating with biometric tracking. You can go to eightsleep.com to check out the Pod Pro Cover, and you save $150 at checkout. They currently ship within the United States, Canada, and the UK. I told you, it changed my life. It helps me sleep deeper helps me sleep longer i feel much more refreshed and i have better energy you want to know how i have relentless energy every single day because i sleep on an eight sleep seriously

go check it out eight sleep.com slash pomp today this episode is brought to you by okx ok ex has dropped the e to become okx founded in 2017 with a mission to deliver a cutting edge crypto trading experience okx the world's second largest crypto exchange by trading volume has since expanded its scope alongside the wider industry, adding features from all corners of crypto. If EX is about exchange, X is about intersections. Cross-chain, cross-functional, cross-platform, an interoperable future that's not siloed into isolated platforms and blockchains. The name change and the new look and feel represent OKEx's ongoing move towards decentralized finance. With OKEx's decentralized platform and Web3 wallet, MetaX. You have full custody over your crypto. Connect MetaX in your

browser or within the OKEx app to explore DeFi, NFTs, and play to earning gaming, the world's most powerful crypto exchange. Whether you're just learning about crypto, you're a seasoned DeFi degen, an NFT enthusiast, or a pro trader, you're all invited to a better future. Go check it out today and let me know what you think. All right, let's get in this episode. I hope you guys enjoyed this one anthony pompliano runs pomp investments all views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of pomp investments you should not treat any opinion expressed by pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of his

personal opinion this podcast is for informational purposes only all right friends i have no clue where this conversation is about to go but uh we have the uh the infamous Udi here with us how are you sir hey what's up the Udiverse right here oh we decided the Udiverse what uh what'd you think of the Bitcoin conference um you know the thing I loved about it the most was that it gave this opportunity for the you know a bunch of the people who were around for a very long time kind of built the values of the original kind of structure of this whole thing and put them on stage in front of you know 30 000 people who who who are the community that they helped build it was i think it was really awesome it was like nice to see that interaction between the old and

the new i loved it yeah i i am i also think it was very uh thoughtful in terms of uh there were some very commercial aspects so all the businesses the expo center they're freaking fake volcano right um the the kind of sports center or game day style uh desk you know doing commentary like all that type of stuff uh seems super super commercial but at the same time i know matt odell and a bunch of folks put together like three days of an open source uh stage and uh to me spoke much more to kind of the uh the cypherpunk movement and a lot of that and so uh there's not very many conferences that i think could kind of take those two themes which literally seem at the opposite ends of the extreme yeah and put them into one conference have 30 000 people show up

and everyone walk away being like man that was pretty cool yeah yeah it was awesome i think it did a great job showing like both parts you know like both sides of this so that was awesome what are you most interested in or paying attention to right now in uh in kind of the bitcoin world is there something that you're like hey this isn't getting enough attention or something you think is maybe more important than people realize i think that um uh well how do i say this without pissing off people or should i say it in a way that will piss off people i'm But we have over time kind of put ourselves in this corner where we refuse to look at anything going on

in the larger crypto ecosystem, I feel like, and paint it as immoral. But really, I think that the very interesting thing coming up is the usage of Bitcoin on other chains. I think there's a lot of potential for growth over there. So, you know, a lot of stuff like, you know, various DeFi protocols, lending, borrowing, stable coins, all of this stuff. Originally, they used to use ETH as the asset that backs everything just because of, you know, convenience and the way that things were built on Ethereum. But I think that these days people use so many other chains like, you know, Solana, Terra, Avalanche, Binance chain, there are a ton of them.

and it makes a lot of sense for Bitcoin to be the collateral for those because it's a neutral asset unlike ETH which is very aligned with the Ethereum ecosystem so I think that's a very interesting direction for Bitcoin going forward One of the things that you're talking about

so there's kind of two different things here one is like the mentality and the open mindedness I saw Alex Leishman from River he had a great thread where he basically said real talk, there's a new last few years wave of bitcoin maximalist marketing types who lack deep technical knowledge and simply

autistically screech at every non-bitcoin project you know well hot take to get started on the thread and then he said articulately criticizing scammy projects is commendable sticking your head in the sand and pretending that nothing but bitcoin is interesting or disruptive is very low iq the maximalist marketers basically take the ico playbook and apply it to bitcoin maximalism if you dig deep enough you'll realize that a number of these guys used to be ico scammers go figure bitcoin is changing the world and conservatism is a feature of bitcoin not a bug however a dangerous ignorance and dogma is creeping into the bitcoin space from a small number of loud people who have certainly done very little to contribute to bitcoin

the core devs and wealthy og bitcoiners are almost always way more humble and open-minded than the new maximus marketer types who are grifting noobs think for yourself and resist falling prey to dogma this is the bitcoin way and immediately you know it was almost like a uh um a bat signal like if you're somebody who he was talking about and he tweets that like what do you immediately do you jump in the comments and say a bunch of dumb stuff right exactly and it's like oh okay thank you so much for raising your hand and explaining it yeah so uh i think his main point although there's nuance to the whole thing it's just like the open-mindedness is really really important because one of the things that i think is going to send uh this like

toxic bitcoin maximalist you know kind of corner uh which by the way 87 of bitcoiners own bitcoin plus another asset which is a stat that does nobody wants to talk about yeah but your mind's going to be a mental pretzel if all of a sudden lightning labs and roast beef put out tarot which is a new protocol that is going to allow for the issuance of stable coins and other tokens on top of bitcoin yeah so are we now gonna say nfts are good only if they're on bitcoin uh alt coins are good only if they're on top of bitcoin yeah uh stable coins are good only if they're on top of bitcoin or as i know some of these folks they will say lightning labs is stupid uh roast beef is stupid uh you know safe adine is stupid right they'll go through kind of the

whole thing and they'll they'll just take every single person in the bitcoin community and they'll say these guys are all morons and uh and they don't know what they're talking about yeah yeah we'll definitely have both we'll definitely have both and we always have had both but i think the the clash is going to become more and more uh pronounced and visible to people uh yeah it's it's obviously it's silly like right if you want an nft i think most people don't care if their jpeg is on solana or ethereum or bitcoin or whatever like it's just you care about the jpeg and the community around that you definitely don't care about the technicals and if you're gonna say the jpegs are only good if they happen to be on bitcoin then it's i think it clearly doesn't

make sense and i think yeah i think you're right that narrative is going to collapse because the more visibility there is on this thing it's going to be more clear to people that it's untrue and you know you you said on the thread there was um this note about you know the ogs and the original builders were much more humble and i think it's true you know like when i talk to people who aren't necessarily very prominent on twitter but you know have been building with bitcoin for many years uh they almost always own other assets like almost you know it's it's it's almost obvious because you know they find it interesting and they do they just can't talk about it because there's this small group of people who will ostracize if you dare talking

about owning other stuff there's an individual i'm not going to say who they are very very well known in the bitcoin community very well respected uh i had dinner with them one time and they said uh uh you're free you're lucky you're free right and i said what do you mean and they basically we're we're making the point that like nobody thinks that you don't have intellectual curiosity nobody thinks that you're not open-minded nobody thinks that you don't look at this other stuff they're like for me i have to do it in secret i do it privately yeah i'm not allowed to if i do it i'll get absolutely you know torched yeah but they're like but you already ripped the band-aid off yep and i think that that's it goes back to this idea that the silent uh or i'm sorry the

loud minority uh they do not have the long-term support right and and ultimately what ends up happening is uh again i think tarot is going to be the the camel uh that that or the thing that breaks the camel's back right in the sense of if there are now alt coins on top of lightning are they good or bad yeah that's a tough question that's a tough question yeah that's that's the thing we like you know people are so talk so much about free markets and capitalism but they end up being very much in favor of central planning sometimes it seems like you know at least the toxic bitcoin maximalist side of things what's your take on real bitcoiners is there like is there a definition of a real bit yeah so you know that's actually really interesting i went to

an avalanche conference in barcelona a couple weeks ago shame yeah shame it was even worse i even dared to speak at the conference i know i know and you know you see people who were um Before I went on, my talk was about Bitcoin, right? And before I went on, the Avalanche team made this announcement about how they're going to make it easier to bridge Bitcoin on Avalanche. And I noticed that was the first time that the entire audience applauded because it turns out that all of those crypto people are, most of them are very much Bitcoiners.

They own Bitcoin maybe even as the main part of their portfolio. that's that's very common in the crypto scene and you know it's it's only really the small group of bitcoin maximalists who think or you know you can be a bitcoin maximalist if you want but the toxic bitcoin maximalists who think that um crypto people hate bitcoin it's absolutely not true and i would say that a bitcoiner is you know it's a very simple definition it's someone who owns bitcoin you know that's it's very simple there's still many many people in the world who don't own bitcoin and we need to get to them but there are what 100 million 150 million bitcoin holder in the world so you know they a lot of them are pretty fine with using other chains most of them

are 87 of them according to the grayscale bitcoin investor study right yeah um and then how do you think about uh something like doquan with uh with tara and backing their stablecoin ust with bitcoin Like to me, right, what I'd look at that and I say we're watching a stable coin adopt the Bitcoin standard, and if they end up doing this correctly, it will create the playbook for central banks, stable coins, et cetera, to then all go be able to do the same thing. Very similar to how Michael Saylor created a playbook for public companies to put Bitcoin on their balance sheet. it seems like that is not a 100% accepted viewpoint or framework by maybe this loud minority. Yeah, and that was so surprising to me because when I first heard about,

Do Kwon first made these claims about how he's going to acquire some Bitcoin or LFG is going to acquire some Bitcoins and they were very big claims. And I was really surprised how very few people in the Bitcoin space were talking about this because it looked like this is very big news. this guy's gonna end up with more bitcoins than than sailor potentially um so you know i i started

talking to people and i realized that the reason they don't talk about it is because they don't you know they don't know anything about it literally nothing about how something like ust works but they have a very clear opinion about how it's a scam and immoral and a terrible thing so they literally don't know anything about it anything they don't know what it is they don't know how it works they don't know what keeps the pig if it does there are many risks about ust by the way but they don't know what to explain them so i thought okay this will be interesting conversation to have to talk to dokuan you know have uh spaces about it but um do it in a very basic way so that bitcoiners could catch up get up to speed and i we had the spaces i think a lot

of people tuned in and you know i try to be neutral i try to be like yeah you know uh what you're doing is obviously risky it might not work people might have exposure to the stable coin and end up you know losing money um or maybe it does work but the one thing that i find very interesting in it is that bitcoin is a very very good fit in that use case whether it works out or not bitcoin is a very good fit in there and we suddenly have a new way to use bitcoin that's awesome and definitely i think that more people will will try to do the same thing and you know i get that people say you know ust is uh maybe risky maybe it will not work out and people need to be careful i agree with that uh but it seems like the thing that strikes me really odd is

we seem to be okay with um you know a dictator adopting bitcoin for his country uh we seem to be okay with uh russia using bitcoin to evade sanctions we seem to be okay with people buying harrowing and od'ing and dying using bitcoin we're fine with all of those things they're great but if someone dares to start a stable coin then that's that's an attack on freedom and that doesn't make any sense to me i think you know i'm i'm not here to judge the way that people use bitcoin i don't understand everything about the world i don't know what's going to be a good way to use it or not i think people should use it however they want and if a new use case arises and people find a new way to use bitcoin in a massive way like this you know like acquiring three to ten

billion dollars worth of bitcoin that's obviously good that's obviously good i hope it works out and if it doesn't we learn something you know what's your general approach to like how you say so this idea of like i'm not here to judge how people use it is there a way somebody could use bitcoin where you would say like oh i wish they wouldn't do that you know i think look you know there are things that i think uh people would agree that they are uh universally evil right and i hope that people don't use bitcoin that way but really the the the the truth is that's why we like bitcoin people can use it however they want no one no one's gonna ask us you know one of the interesting things i found out when i had discussions with people about this use case of

terra and people told me like well we shouldn't support this and i was like look they're not asking us they're going to do it you know they're not asking us if we're supporting this if we think it's a good idea they're going to do it they are doing it and and it really mostly makes us look like fools i think if we sit there on our on our little couches and say no this is not a good way to use bitcoin we're against it we're just gonna we're setting ourselves up for failure right because we know that bitcoin can be used however people want to use it yeah it's it's fascinating to kind of think through this, right? Because I would make the argument

that what Michael Saylor is doing is he's basically issuing assets to acquire more Bitcoin. And I obviously think that it's incredibly innovative. I think that he is a pioneer. I tend to think that he will go down as one of the best capital allocators on Wall Street over the last 20, 30 years and doesn't come without risk, right?

Especially now when there's some slight leverage in there and a whole bunch of different things. But so far, so good. I think that he's done a great job articulating his ideas publicly, explaining, hey, we have a cash-flowing business and also a treasury strategy and kind of how he thinks as a public company CEO

who's just been around a long time, right? And understands not only strategically what to do, but also how to communicate those ideas, I think is a key piece to it. If you then go and you take a look at many private companies, they're doing very similar things. So I would argue that many of these private companies that are issuing some sort of equity to investors and then using that investor's money to go buy Bitcoin on their balance sheet, they also are issuing an asset to go and to buy it.

And I hear the argument that the public sector has certain rules and requirements and transparency and reporting regulations, et cetera. The private markets have some of that, but nowhere near what it would take to operate as a public company. And then you have somebody like Do Kwon, which he personally isn't doing it, right? It's the foundation. But again, they've issued an asset and they are going ahead and they're acquiring it. And when you think about that, it's a very nuanced, weird argument to make of, oh, if you issue one type of asset, it's OK. But if you issue another type of asset, it's not OK.

Yeah, right. And I think actually, if I was to switch around and say, hey, you know what? I'm going to be a critic of it. I don't think making a moral argument is the right argument to make. I think your point about the right argument to make would be that it's a risk argument. And so this appeasement or attempt

to kind of make this moral argument, I think actually just sounds stupid. Yep. Right? Because there is no morality in the issuance of assets. Ultimately, what happens is it's a risk. and you can now make an argument of are they disclosing all of the risks are they not do we actually understand uh meaning the the non uh terror community do we understand what the risks

are do they understand what the risks are all that stuff i think is fair uh debate but to me that's more science and math uh uh type argument where it's valuable right either it's true or it's not when you kind of do this like fluff oh we're gonna make this moral argument uh i tend to think that you move to moral arguments when you don't have the ability to make valuable arguments exactly and uh and then it becomes a religious debate correct and the reason why people want to participate in the religious debate is because they never can be proven wrong yep right and so then you can yell and scream all day long and you basically get to uh then claim moral superiority on somebody uh which just is ridiculous yeah it is it is it is uh you know and by the way i

In that spaces that I did with Doquan, I asked him a bunch of the hard questions. It wasn't very original. I knew the hard questions because many other people asked them before. But he was very honest and very open about everything. He said, yeah, one thing that attracts people to UST today is the 20% or close to 20% interest rate that they get.

And he was very open about it. It's obviously not scalable and it's not going to stay 20% forever. It's going to drop down. There's definitely a question of what happens when it goes down and how it happens. It's obviously very open on the risks for the UST de-pegging from the dollar.

All of those things, they're very open about them. And then yeah, you have to evaluate if you're okay with that risk or not. And every person can make the decision on their own. I myself do not really have an exposure to UST, to be honest, but people can choose what they want. so you know it's um it it seems like a very easy very easy decision to make not sure why there's even this need to you know if you don't want it don't buy it move on like why why do you even

want to talk about it if this is if you think that this is not a good risk to take the other thing that uh i find very troubling is uh the inability or uh lack of desire of uh conversation so this whole idea of uh you know somebody says hey i'm going to use bitcoin in some way and immediately getting screamed at scammer fraud you know all the nonsense right yeah and nobody stops to say well how does it work yeah right what what exactly why are you making that decision right uh and you may if you have that conversation come to the conclusion that you that you believe it is a scam that it is a fraud that it is whatever but coming to that conclusion without actually talking to the person doing it

is like all-time laugh-out-loud funny to me, right? And I can say this as somebody who, when I saw him do it, I messaged him, I did a call, I learned about it, I wrote a whole thing, said, hey, is this accurate? Then got feedback from people, then did a podcast episode with them and said, listen, explain this to me. And I got to the end and I said, similar to your point,

there's risks here, just like there's risks in all of this. But I think that this is a net positive and will pioneer a new potential use case is bitcoin as collateral right for stable coins yep now maybe i'm wrong that's fine right i'm very clear that i didn't go buy luna or do any of this i don't own ust or any of that stuff but it's interesting i'm watching i'm paying attention yep yep but the people who don't go have the conversation i literally have more information than they do exactly yeah exactly they're telling you you're wrong but they don't know what you're talking about because they didn't

not only can they not they just don't have the same information yeah right and so like i really respect people who go and say to somebody hey what you're doing i don't understand i'd like to learn more about it and they go and they understand it and then they turn around and then they say okay you know what i don't think this is going to work yeah fine well the market's going to decide whether it works or not right and if people want to take the risk and and have the ability to allocate their capital that way that's their free choice yeah but the the whole idea of like shaming people for how they invest their money is the most anti-bitcoin thing i've ever heard by the way if you don't agree rather than complaining which is what politicians would do

if you are actually emotionally psychologically invested in trying to see bitcoin do all these great things that we all think it could do then build the alternative right well build the alternative or educate these people yeah but don't do it don't shame them right instead say hey have you thought about this point have you thought about this risk etc and that's not what i think is happening right now right no no it's not no i think people just don't you know they don't understand what it is you know i think one of the common uh arguments that i get from people is that um you know something like qst and and the many other you know digital assets are are bad because they break security laws and there are two things that really bother me with that one is

I don't understand how the you know how the Bitcoin mindset went from being you know free market and building things that are supposed to improve the structure of the market right now to just saying well it's illegal so we're not going to touch it

I don't understand how that happened because that doesn't used to be the case but also you know I understand you know I'm not so I'm not American I'm here visiting the studio but I don't live here and yeah Yeah. Yeah. It's awesome. It's been an awesome week. And you know, the, the, the security laws in the U S I understand if some Americans like them, I,

I don't care about them. I'm not an American, you know, I don't, I couldn't care less. So I think, you know, if, if, so by the way, so are like 7.2 billion people around the world. They also aren't American and don't give a shit about American. Exactly. Exactly. Exactly. So, you know, most of the world doesn't care about the U S security laws. So if, you know, if americans want to stay in that kind of regime then that's fine i don't like maybe it's the right thing to do i don't know i don't it's none of my business but i think for everyone else it's very

obvious they're not gonna avoid some investments just because the u.s security law is incompatible with them that that's i don't care as an american i really care about security right but the other 7.2 billion people around the world they don't care yeah to your point yeah Yeah, yeah. And of course, I mean, if those other currencies and other assets and whatever get in trouble because of U.S. security laws, then of course that has implications

for international people too. But I think long-term, going forward, I don't care. So how do you guys think the Maxi scenario plays out in the future, right? Because in my mind, maybe it's 5% or 10%, but most of Bitcoiners aren't really that kind of toxic Maxis, right? Whether they own other stuff or they don't,

they don't shame people they don't do these things so do you guys think that by the way that just self-correct toxic it's just another word for asshole yeah right like i think that i'm now officially rebranding toxic maximalist as just no you're being an asshole you're an asshole you can be a kind maximalist you can be a rational maximalist you can do all that type of stuff yeah but wearing the badge of like i'm an asshole in every other context in the world whether it's personal relationships business investing anything else is not a sustainable good idea yeah yeah because there's plenty of bitcoin maxis that are just quiet about it right that just only own bitcoin or whatever it is and don't say some of the or they just say i believe that you should

only should you should only own bitcoin i think it works for me but they don't bully people for having other interests you know so is this just self-correct over time where we we get to a world where you're basically looked down upon even more and more and more until it self-corrects and we don't have anyone like that cancel culture ends when the cancelers get canceled right yeah and that's that's the path that we're heading on here is that you now are at 87 of bitcoiners own something else it used to be 100 of bitcoiners only on bitcoin there was nothing else to own really right and now it's all the way to 87 eventually i think that the the toxicity is going to become a smaller and smaller percentage because what you're doing is

you're expanding the total pie and more and more people that come in they're not going to have the appetite for that type of uh mentality where you jump on the internet and yell and scream and go crazy all day long like it's just not the way to operate in life and i would actually argue that it's anti-bitcoin right from an ethos standpoint bitcoin is all about anyone from anywhere in the world can use this system it's apolitical it's accepting of everyone regardless of who you are where you come from what your education level is what language you speak how you grew up any of that stuff but then there's this little small group of people who actually end up taking the completely different approach if you do not agree with every single thing that i agree with and do

exactly what i say for you to do i'm going to shame you yep yeah there's this hilarious video from the bitcoin conference there's a bunch of people on stage and they were trying to talk about other currencies um probably in a bad way so they asked they kind of asked the audience to raise their hands if any of them own ETH. And the expectation from the panel, it seemed like, was that no one will raise their hands, everyone will shrivel into their chairs, even if they

do own ETH, they will not say anything about it. Almost the entire audience is raising their hands proudly, and the panel was kind of shocked. And I think it's already happening. I think it's already, like, people are not as ashamed as they used to be

to talk about those things, and I think the cancelers are already well on their way to getting canceled, I think. How do you think about how Ethereum fits in cryptocurrencies in the world? I've never been an Ethereum fan, and I'm not an Ethereum fan now. I think that the interesting thing about Ethereum, I think it kind of chooses all of the bad trade-offs and puts them in one place. So it's kind of like, you know,

Bitcoin focuses on being very reliable and decentralized and neutral, and Ethereum tries to adopt some of that also adds some centralization of course we know that ETH is an asset that has changed a lot over the years and will continue to change over the years so it feels to me they inherit Bitcoin's inflexibility and slowness to adapt

which for Bitcoin is a good thing but Ethereum has to compete against all those other smart contract platforms that are very fast, not just fast technically in the way they work, but also fast to adopt, fast to change, and Ethereum can't do that. We're still waiting for Ethereum 2.0 for three, four years, and they're always fighting the war of two years ago.

I think it's just a bad set of trade-offs. I much prefer something like Solana, Avalanche, BNB Chain, a bunch of others, because they can adapt very quickly to the way the market changes. they don't pretend to be decentralized so they don't have to do everything slowly so I think it's better

most people when they want to buy an NFT they want to take a loan or whatever they don't care if the infrastructure is semi-decentralized or not, they just want it to work and it goes back to this idea that most things in the world don't need to be decentralized I think every Bitcoiner whether you're on one extreme of the end or the other agrees that proof of work provides for

decentralization and secures the network and uh there's a very specific reason why bitcoin needs to be decentralized as it gains global adoption and it's important that we keep it decentralized yeah many of these other use cases for technology right whether you call it a blockchain a database whatever they're actually not pursuing the highest degree of security uh you know as like the ultimate goal and in terms of decentralization they're pursuing performance and i always use amazon as the example like imagine if jeff basil's like i'm gonna build the most efficient company in the world and i'm gonna do it decentralized like no that's not how it works like what do you do you build a super centralized hierarchical structured business that literally spends all of its time

from a command and control centrally planned drive efficiency yep and they get immense performance out of that and so ultimately many of these other things are going to end up being centralized regardless of how you cut it because they need the performance that's how they're going to compete and it just feels like those two things are so different that when we compare you know bitcoin versus whatever it's like trying to say like should i buy oil or amazon stock like sure they're both assets you could buy but like it's not amazon for shopify it's amazon versus oil right that It doesn't really make that much sense. Yep, yep, yeah, I think, yeah, exactly.

They just, you know, if you want to build a business, this isn't the world's decentralized infrastructure. This is a business, you know? And if you want to build a business, it needs to be efficient. It needs to be efficient technically and also efficient as a business in a way that, you know, like Ethereum just takes,

it's very difficult to lead it, right? So if you were to try to see Ethereum as a business, it would be, you would probably say that it's a very inefficient business, I think. So yeah, that's the way I think about those things. And you know, we're all like, we're all fine with, you know, I took an Uber to get here, right? I think a lot of people-

Shame! Yeah, exactly, you know? Because for some reason, like, what am I supposed to hate things now that are subsidized by VCs? Like, why? I don't know if it works. I don't care, I just want to get here.

i don't i don't make a statement about how vc economy works we're gonna actually this entire episode what we're gonna do is we're just gonna rebrand things so if you say you're toxic that means you're an asshole right i like ass coiner if if you hate vcs we're now gonna call them risk capital right because guess what if you want to do something you what are you gonna do are you gonna go to your parents to your friend down the street the bank none of them are gonna give you money to do this the entire job of the venture capital industry is to risk capital on shit that shouldn't work but if it does it'll be really valuable yep and so this whole idea of like quote-unquote vcs are bad sure there's bad people in every industry by the way have you seen wall

street right like there's a lot of bad people there but guess what if you want to buy a stock you're paying wall street to help you do that yeah right and so this whole thing just ends up be in this weird weird situation where it's like maybe we don't need all the extremes in life like we would be better off just saying hey we probably need some risk capital especially really really early on from people who that's their job is to do this and they have the uh ability to underwrite risk they have the ability to allocate lots of capital etc but we probably don't want them to do everything yeah so we actually maybe we do want some of individuals to participate maybe we want some corporations to participate maybe we want some users to participate whatever

but like saying that we want zero of anything of any of those groups is bad yeah and i think the knock against venture capital historically probably was not their fault but more regulation in the united states is that the average person was at zero so the average person couldn't invest in these deals and venture capitalists could rather than say like oh no those people are bad i think what we should say is like let's open it up so that everyone can participate yeah right and you know whether people liked it or not a lot of the ico stuff was trying to do that right it was deemed i think rightfully so given the way that it was and what the rules were unregulated right and so obviously uh that's pretty much been pushed outside of the united states and

and gone elsewhere but but i think that this whole mentality of like zero sum ends up being a really bad way to view the world right it's like can we actually have a more of an abundance mindset and say hey if they can participate rather than say no we don't like them just say how do we get everyone to be able to participate right right yep and to me that feels like it's a much more sustainable thing and also a less um uh kind of conflict controversy driven like this is the boogeyman and uh and we need somebody to yell and scream about yeah yeah i think you know there was some in the bitcoin history there was a lot of these ethos of you know we kind of needed an enemy and Bitcoin was a way to fight against

maybe the government, maybe Wall Street and I think especially if you've been around since then then you know that we won from being an internet based joke we turned into a force that no one can ignore we won and we don't need to pretend to fight people anymore

everyone knows that Bitcoin is a very significant thing It's not going away. It's going to continue to change the world. Everyone agrees. We don't need that fake enemy to bring new people in. What we need now is to find why the next 100 million, the next 500 million, the next billion people will get into Bitcoin and just give them what they need

and what they want in order to onboard. We don't need to scare them about the boogeyman because it's not the case anymore. We already made the world better. Let me ask this question because I want to provide as fair of a debate as we can. What do you agree with? This small, loud minority.

What do you agree with that they say? So I think that's a great question. I think, and you know, I considered myself part of that group for a long time. And I think that the focus on keeping Bitcoin this neutral thing that isn't owned by anyone and encouraging things like self-custody where it's possible and where it's useful to users.

It not always is, but where it is, encouraging it, encouraging this idea of self-sovereignty. I think that's great. And that's important for Bitcoin's future too. There needs to be a certain group of people who are very focused on that and we don't want them to disappear. However, we also need to understand

that for most people in the world, they're not here for ideology. They're going to use Bitcoin because it solves a problem for them, not because they're ideological about it. Having the ideologues on board is great, but we have to understand that they're not going to be the majority.

They're not going to be the ones who push this forward from now on because we're just at a different scale now than we used to be. When you think about regulation and bitcoin mining what are your thoughts there it seems like uh maybe bitcoin mining with the whole esg stuff peter teal obviously took a pretty big swing at it at the conference saying that esg is equivalent to ccp uh which we were talking earlier it's like a great meme yeah um what's

your general sense about mining esg and then the regulation that may or may not come yeah i mean so again i'm not american uh it's none of my business to intervene in in you know in american policy decisions, I do think that generally speaking it would be a mistake for any country to try to ban Bitcoin mining. I think we've seen that with the attempts in China and the attempts in Europe. They're either unsuccessful or they just hurt the economy.

I think it's a mistake and if the way to go is with cleaner energy, I'm obviously supportive of that and I think that there are a bunch of experiments in this area and maybe they succeed. But I don't think that banning it is going to help anyone. It's just going to hurt the countries which choose to do it. Yeah, I agree. What other questions you guys got?

If the US decided not to accept Bitcoin or kind of adopt it in the manner that other countries are doing it, what is the reaction? Do other countries just get so far ahead that the US can't keep up or how does that demographic work? Yeah, that's a good question. I wouldn't imagine that the US is going to be the first or among the first to do those things anyway.

It's probably going to be way, way down the line and we're going to see other smaller jurisdictions experiment with it first, like we already are and it's probably going to continue for quite a while. And that's fine. Bitcoin might not immediately solve the same problems for Americans as it can for other countries. So it's fine if the US isn't the first one to do it.

But yeah, down the line, I think you'll see in all fields of life, people become more mobile and they're willing to move to the place that they're going to get the best benefits and that fit the best way to what they need and want to do. So yeah, you're just going to see people move over and businesses move over to the countries that were more supportive, in this case, for Bitcoin.

Joe, what do you got? Yeah, I mean, that was my question too around how this plays out. I guess I'll move to the ETF. What do you think happens with the ETF? That's a good one. Oh, man. I don't know.

I don't know. It's so unfair, it feels like, right? Like, why do we have the silly futures ETFs and we don't have a spot ETF? I don't know. It's protection. Yeah. Let the SPAC goes public.

Yeah. It's all about protections. Yeah. I mean, I don't know. Again, I don't look, as a non-American, I don't, like, I can buy a bunch of other ETFs, you know? I don't have to buy the American one. I don't know.

I don't know why it is. Obviously, people who are invested in something like the Grayscale Fund, that's a real problem. It seems silly. It seems silly to me. But all I can say is I hope it gets resolved. I don't know. We've got a couple of charts.

You won't be able to see them from where you're sitting, but just trust me that I tell you what they say. they're on the the correlation there's really just one um it's the correlation between bitcoin and the nasdaq and uh on this chart uh there's a guy lawrence mcdonald who says uh since 2020 bitcoin tied at the hip with the nasdaq 100 index 40-day correlation between the two reached a record uh in recent days and they use a quote from a bloomberg article that says uh uh increase uh in the correlation further erodes the argument that bitcoin works well as a diversifier one that's been held up by proponents as a key to its appeal and so when you start thinking about

bitcoin today um one of the things that's interesting in this chart uh which you can't see is that it basically the correlation is uh positive and negative he's going green red green red green red right and really it ends up showing that it was non-correlated but pretty much since uh let's see what is the date here pretty much since uh i don't know two years ago year and a Africa, whatever. It's all green. It's positively correlated, right? Since 2020. And in a significant, significant way to now it's at an all time high. Is that because the economic environment changed? Is that because there's more like Wall Street institution people and this is a risk asset to them and they treat that just like their tech stock? Like, why do you think that's happening?

I think that's, it's precisely because of the institutionalization of Bitcoin and, and, and the acceptance of Bitcoin as an asset that's appealing for institutions since exactly around that time of mid-2020. And, you know, there was this, maybe it was kind of the sailor in micro-strategy things and maybe it was a bunch of other things, but eventually there was this green light

for a bunch of institutions to just jump in and get on board. And that means, you know, when they need to cover other positions, they're probably going to need to cover Bitcoin too. And the other way around, when they're going risk-on, that are probably going to acquire more Bitcoin. And you know when I think this is,

I think this is an anomaly. I don't think it's going to stay that way. And you know when I think it's going to change is when more and more crypto protocols adopt Bitcoin and start using it. So what we need is more other sources of big money that come in and see Bitcoin as something that's useful for them,

not just the Wall Street institutions, but also maybe the crypto protocols from the rest of the world. And I think that could balance things a lot and maybe bring us back to being a de-correlated asset, which I'm sure will happen eventually because there are a bunch of people who will realize that Bitcoin is useful for them

other than just financial institutions. But it'll take time. But that's definitely one of the reasons why I think, again, it doesn't matter if we do or do not support something like Terra acquiring Bitcoin. It doesn't matter, they're going to do it anyway. but it's why I think it's positive either way whatever happens

I think it's positive that we have this completely entirely different field who is much more aligned with our values than Wall Street institutions are gets more Bitcoin holds Bitcoin for the long term I think that's awesome for us the idea of financialization of Bitcoin

I think in my opinion is inevitable just because as it grows in size it provides the same benefit to a Wall Street hedge fund the bank as it does an individual a public company whatever um do you worry that there's like significant downsides to the financialization like like are there things that you're like man it is inevitable but we got to be really really careful or pay a lot of attention to this aspect of uh the financialization of bitcoin i mean for for a while uh things can be a bit rocky

um but i wouldn't be worried long term and when i'm thinking about bitcoin i'm always thinking long-term so i wouldn't be you know i wouldn't be worried about it um i think they happened to be um somewhat early in adopting it maybe and maybe some other things will be later um you know like nation states like crypto protocol they talked about like there's a bunch of different interests that can find use in bitcoin so the institutions were first that's fine uh they're not going to be the last so i'm not really worried about it you know when you guys think joe john uh of your friends how many of them have majority of their investments in bitcoin versus or like maybe just crypto in general right versus they still have stocks bonds gold real estate whatever

i mean it depends there's certainly like a distinction between people who are heavy into the space and people who aren't or the people who aren't like spending majority of their time looking at digital assets whether it's bitcoin or something else uh they still all have most of them at least have other things too um i would say though that as the price is appreciated it's become a bigger portion not only from like a notional dollar amount of hey this is how much i invested and it's up but they're starting to allocate more money to it also so so they're not rebalancing and also allocating more to it yeah john what about you yeah i think people who are in the space they definitely own it they probably have a majority of their net worth in it because

they understand the asymmetry of it they're younger they have all the things that i talk about why i have majority of it but then people who aren't in the space no i don't think they're really investing in the crypto right they just don't know about it it's speculative they're just like i don't know it i've seen it gone up i've seen it draw down 50 so a lot of them don't um but i've definitely had more and more conversations over the last year about i think most bitcoiners overestimate like vastly overestimate how many people even know what the hell bitcoin is oh really yeah like in the united states i don't think most people like the average american knows that the government even prints money no that's probably true yeah if everyone knew that there

It wouldn't be 45% of Americans that had no investment in assets. It's not a knock against Bitcoin. It's a knock against financial education in general. So I think that if they don't know the baseline kind of stuff that you need to own investable assets, the role that inflation plays in your overall net worth and wages and all that kind of stuff, then how are they supposed to understand what Bitcoin is

and what it does for you? Now let me ask you this question. If you went and you asked every single Bitcoiner at the Bitcoin conference to describe, I don't know, we could pick three elements of Bitcoin, and describe how proof of work works, describe how nodes work, and describe how Bitcoin as an investment

theoretically would work. What percentage of people do you think would have a high degree of proficiency? At the conference, which is a subjective term. But yeah, I think that maybe I'm giving too much credit here, but I would think that the majority of people would at least be able to understand it enough to articulate kind of the overall process.

You think over 50%? Yeah, but to your point, And I think that there is certainly a portion of people, I don't know if it's 1%, 5%, 10%, 25% or whatever, that are simply interested in Bitcoin because they like the community, they like the memes, they made some money on it, right? And once you make money and it's gone up,

you start to get more interested. So there's certainly an aspect of that. But I think if you're going to a conference, right, I think that that number is probably higher than you would just see online. So I agree that the conference is higher. My point in saying that is it used to be 100%. Oh, yeah, it's definitely not.

Because when there was no kind of user experience, user interfaces that made it super simple, you had to be technical, most people understood it. A lot of people actually did a lot of work before they ever even bought Bitcoin. They went and understood how does the system work. They looked at it from more of a computer science perspective, whatever.

So actually that percentage is going down. And it will continue. Of course it's going to continue to go down. But that's the point, is that one of the other aspects of the entire community is that in order to get mainstream adoption, you have to understand that everyone's not going to be the same, right? Like that's why it's considered mainstream and you were an early adopter.

It's like literally they are different than you. They do not spend their time on Twitter and Reddit and, you know, YouTube or whatever, finding out about the next alternative currency. That's not what they do. What they end up doing is there's going to be a whole portion of people who literally their financial advisor tells them like, Hey, we're going to put 2% in Bitcoin. And they say, why? And they go, cause it's good if inflation happens. And they say, okay.

And they move on with their day and they don't even think about it. And so I just think that understanding the changing nature of the industry and ecosystem is really key to understanding Bitcoin over the next five years because you can't simply just look back and say it was completely non-correlated. It's going to stay non-correlated forever. Well, obviously, that's not true for the last two years, right? And then if you look and you say, okay, well, who holds it? I don't think the same people who hold it today held it three, four years ago. And so as all these things change, like you got to get comfortable with the change. like it's um uh special forces uh in the u.s military they think a lot about like comfort

and chaos right like if you can be comfortable in chaos then you're always in a state of control because you can uh adapt and you can be uh adaptable to to the changing environment well just think about the how the communication has changed right if you look back there's like old message boards of people communicating about bitcoin it's like the same 10 people and they're like oh shit it went from eight cents to six cents like six cents to ten cents and they're all you community came back and forth and now we have uh jr taking his salary in bitcoin and they're announcing and it's getting literally one tweet is getting 50 million 100 million plus impressions and all these people are learning about it maybe for the first time or hearing about it more he

owns an nft he's not a real bit shameful shame shame he must own a house too he's a he's a terrible bit corner but but i do think that that's i think that was one of my big takeaways from the conference also was just uh uh there's a lot of people who didn't know what bitcoin was two three years ago awesome the types of uh folks are changing right when i saw we i think we're talking about before you got here when i saw uh the apple app store search ads team was there there's a zero percent chance they were there in 2016 yeah right and economic development teams from out of state flying they're trying to convince companies to move like it's different yeah and that's not good or bad i don't think right it it's probably both you just got to be

comfortable that the world is going to change underneath our feet and actually the people who have the rigid mindset and and they're not willing to understand that well it's funny because odds are low that uh they're going to be successful bitcoiners obviously want the price to appreciate and more people to adopt it right one bitcoin equals one bitcoin dude but you get my point And how do you onboard, to your point earlier, hundreds of millions or billions of people without kind of doing this mainstream education and trying to get more people involved? And every time that you're toxic or you say this industry or this other crypto or whatever it is is shut out, you can't look at this, you can't do this, you're shutting off potential people that you would potentially onboard into the system. So it's kind of like this thing where you're only hurting yourself in the end. Everyone wants to know why you have sunglasses on inside.

The lights are so bright. somebody said he will burn their faces off if he makes them off his laser eyes it's like the x-man thing i was just looking at your twitter and i love your pinned tweet it says whenever you're not sure what to say just say metaverse yeah i lost it i lost the golden opportunity to say it now it's the answer for the sunglasses question i'm actually in the metaverse all right last question and then we got to go is uh when you think about everything that's transpiring around this is there uh a word of caution that you have around any of the industry that you're like man i really don't think people understand the risks associated with x and there's

a lot of talk of scams and and you know all this stuff there's obviously a lot of risk in a lot of things like what is the area where you're like you know if people pay attention to one thing uh they're probably mispricing riskware i think you know one of the this is like a very long conversation but one of the things that um kind of scare me the most especially with the kind of smaller coins they're usually not in the top 10 or top 20 and they're not even listed on exchanges and they're only available on these automated market makers like uniswap um they give you this number and i i'm not gonna get into too many details but they give you this number which is like the current price uh but it's it's really it's the current price of the marginal coin that

you can sell right now, it's not the price of all of the coins you might want to sell, and of course not all of the coins that other people hold. A lot of times you end up, people look at their Blockfolio app or what have you, and they see this number and they say, oh, I'm now worth such and such because I own such and such coins. But in reality, this whole thing has maybe a liquidity of one or two million dollars, which is nothing.

So I would say it's important for people to understand, especially if they're dabbling in these smaller coins that's really a game of musical chairs and to really try to understand the dynamics of how they work because otherwise they might have a very skewed perception of what their portfolio actually is

which can be dangerous You guys agree? I completely agree That was like a wide eye It's what we were talking about was it the squid game coin or whatever where the guy made the trade where he had billions of dollars worth

of one of these meme coins, but he couldn't liquidate his money out, right? So it was essentially, it wasn't worthless because he could get something out, but he wasn't getting out the $8 billion or whatever. I mean, this is true in the public markets. Yeah, it is. It happens a lot of different places,

but definitely it's on, everything that happens in finance is on steroids in the Bitcoin crypto world. Yeah, I think small retail investors usually aren't used to seeing it because they don't have the big enough portfolio to move a market like Apple, right? But when you go into a very small market like the Squid Game coin,

then yeah, you might, you know, with your few thousand dollars, you might actually crash the market. So yeah, so that's, I think people need to understand those dynamics and many times they don't. I tend to think that you're more right than wrong. I appreciate your courage and conviction of saying what you believe. It's interesting that you have to do it in the face of people who want to shame you. so yeah yeah well thanks for having me keep the shades on the haters i will i will i will they

don't know who i am i could be anyone i could be anyone it's a job comedian anytime you say it's a funny account yeah i'm a comedian you just didn't get it if you actually think about it comedians are the last protected uh species on the internet is uh tim dylan he can say anything on the internet well sometimes it got slapped so maybe it's changing but yeah but he got slapped in person see the key is to be a keyboard comedian as long as you say it on the internet no one's gonna slap you but like tim dylan literally sometimes he tweets things and i'm like man that is laugh out loud funny people are gonna be bad

i'm like yeah he did that was a good one i know he's typing it up laughing to himself i'm sure he had the same thought when he had said yeah oh yeah he's like that's funny all right my friend thank you so much for coming on we have to do this again when uh when you don't come back to america after uh after you got shamed out of the uh yes of course of course all right buddy see ya yep appreciate it thanks so much for listening to today's episode i really hope you guys enjoyed this one make sure you're subscribed on apple spotify or your favorite podcast player and if you're looking to try to transition to get a new job in the bitcoin or crypto industry we've got you covered. Head over to palmscryptocourse.com. We've developed a curriculum with the top teams

across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to palmscryptocourse.com to learn more and I'll meet you guys for the next episode.