The Pomp Podcast - What the Cold Card Hack Really Means for Bitcoin | Tillman Holloway & Andrew Parish

Starting point is 00:00:00 A positive to this is that Bitcoin didn't move more than about 1% on this whole thing. That's really what we should be talking about. The custody stuff, that'll work itself out. But the fact that Bitcoin is taking these punches, Saylor keeps announcing stuff every week, and it's just another version of selling Bitcoin, right? Bitcoin doesn't move. Same thing with $100 million cold storage hack. Bitcoin's like, I don't care. What's going on, guys? Today, we got a great conversation with Tillman Holloway and Andrew parish of arch public we go through the cold card and what this means for the hardcore bitcoiners

Starting point is 00:00:31 who now are questioning whether self-custody is actually something that the average bitcoiner can do we also get into what's going on with all of the chinese open source models what's going on with american closed source models we talk about volatility we talk about leopold and situational awareness and the big hedge fund that blew up and then they're giving away a rolex watch yes these guys come every single time they've got gifts and so make sure you pay attention to that apart. It's a pretty cool gift that they brought this time. And so here's my latest conversation with Tillman and Andrew of Archpublic. All right, guys, I think we got to start with cold card. Obviously, that's the big story in Bitcoin right now. Tillman, what's your take

Starting point is 00:01:05 on this? Is this something people should be worried about? Or is this kind of a one-off event and something that people won't be talking about, let's say, in two or three months? I think the old guard, the changing of the old guard has already taken place. Wall Street drives this market now, whether we want to admit it or not. I think what you saw is a public example of that old guard dying, if you will, and the smartest people in the room, the people who were Bitcoin maxis that touted no use case beyond Bitcoin on the blockchain and all these other things that didn't make sense to the rest of us. I think that a lot of that arrogance is coming home to to roost and unfortunate for the victims i mean it's a it's a catastrophe for a lot of folks

Starting point is 00:01:53 but it's i don't see it as being widespread across the community i actually see it pretty concentrated within the maxi community and uh i if you look at the price of bitcoin it obviously doesn't care um and so a hundred million dollars is is still a lot of money but in the grand scheme of things it's not and i think it shines a light to the need for you know addressing risk beyond just kind of the you know what we think risk looks like but i think self-custody from a hardware perspective you're you're trusting a hardware provider at the end of the day you're trusting the form firmware updates that they're giving you you're trusting its ability to interact with the chain. I don't think people recognized that risk or recognized that they were trusting somebody

Starting point is 00:02:40 else in that equation. It is unfortunate because there were a lot of victims that did everything right, that didn't do anything outside of really what was prudent and what was taught to them as being the safest way to self-custody. So it's a tragedy, but it really is unimportant as it pertains to where Bitcoin's going and really who has the reins right now? The Bitcoin community mocked a lot of quote unquote boomers that moved Bitcoin from cold storage to ETFs. And that doesn't look so great right now. They were forward thinking. They trusted the reality associated with, you know, institutional grade custody. We just had a conversation, tillman and i did with with matt haugen at bitwise and when we asked him to kind of break down

Starting point is 00:03:32 because we haven't talked about what you know spot bitcoin etf or institutional custody looks like these days we talked about it a year and a half ago two years ago when spot bitcoin etfs were approved but nobody's talked about it since then it's like 19 to 20 layers deep of security risk measures, custody at, you know, just huge levels that is materially different than how many dice rolls can you do to make sure that you're good to go on your cold storage wallet? Like some of the conversations on, you know, in crypto Twitter over the past two days have literally sounded insane. Like, like not only would I not do that, but 99.9% of people think that sounds insane. And so does it make sense to hold some Fidelity ETF on Fidelity? A lot of

Starting point is 00:04:28 people that have a lot of capital think, that's a pretty good idea. I mean, I think I'm covered there. So I think you asked, will the cold card thing last for a longer time? We all know here that crypto Twitter has the attention span of a gnat. But at the same time, three months, six months, nine months out, you'll see just an uptick in inflows across Bitcoin ETFs because people are still moving money from spots that they've now become a little bit uncomfortable with. And there's no reason to take a risk associated with cold storage when you don't have to. And so I think that's going to be the lasting impact there, in my mind. What I find maybe most interesting about this is this is ultimately kind of a strike at the heart of the most hardcore believers,

Starting point is 00:05:17 right? You get not only one, the people who believed in self-custody and probably still do believe in self-custody, but more importantly is they're the ones who went and took the time to learn about cold storage and about random number generators and really understanding things like air gapping from the internet and just super technical components of this. And so I kind of think of it as, you know, if you were talking about like a kinetic combat situation, a lot of times what ends up happening is the soldiers on the front lines, they are maybe not the most hardcore believers. They kind of, you know, they're looking for a paycheck. They're out, you know, kind of on the battlefield. But if you're able to strike the headquarters, that's where the people who, you know, are the most true believers.

Starting point is 00:05:59 And this was, you know, kind of a shock to the headquarters of Bitcoin believers. And so when that happens, what I find very interesting is like the response. And what I've been actually pretty impressed with, I think, is there's a number of other companies, you know, there is Casa, Unchained, many of these kind of like multi-sig type providers who have stepped in. They're not dancing on graves. They're not gloating about this, right? They obviously understand the pain that people are going through, but they are stepping in

Starting point is 00:06:25 and saying, hey, there's a way to do self-custody that may be, you know, a kind of a better avenue for you and let us kind of help you with that. And it speaks to me to the Bitcoin community always rallying around each other and trying to help, which I think is a very kind of noble pursuit. But it doesn't change the situation for 5,000 plus people who are the most hardcore believers who had $100 million of Bitcoin taken from them, right? No, it doesn't change the situation for them. And quite frankly, it doesn't change the situation for retail users moving forward because there's no way, again, there's a trust factor here. Those customers that were using that wallet, they thought they were using a random number generator. They thought it was happening behind the code, behind the curtain.

Starting point is 00:07:13 It wasn't. And so unless you're a coder and you can audit every line of code and you can go to the depths that those hardcore Bitcoiners go to, it's not practical not only for the masses. It's not practical for really anyone outside of the development community. And so, you know, it sounds nice and it sounds like you're a part of something that's more of an occult when you look at it. And, you know, it's like, why would anyone want to, there's an old saying, you know, amongst kind of high net worth folks is like, I want a single neck to choke. Show me a neck that I can choke.

Starting point is 00:07:50 And, you know, when it's your own neck, that doesn't feel good. And so I don't see a lot of high net worth individuals wanting to incur the liability. they want someone else that's a professional to incur that liability. That's why they hire private pilots for their planes. That's why they hire asset managers. That's why they hire these people is to silo out the liabilities that they incur doing it themselves. And so if you look at self-custody, like should it be left to the professionals? I would argue it should. And that's coming from somebody who's been in the space for over a decade and have continued to get heartburn when a transaction takes a little too long or continue to get heartburn when you

Starting point is 00:08:31 know i there there are things that are pitfalls in this space that you don't know about until you fall in them and you don't want to fall in them with other people's money and so you know the the institutions that are coinbase are bit go they have insurance coverage for these types of events like $5 million of insurance, novel thought that we could ensure the isolated event with the aggregate. I mean, but these are things like that should be standardized practice in our space. And it's not been and you ask why. And I think that the community has a lot to be blamed for in terms of the arrogance that we hold ourselves up as being kind of the captains of this space. And we've shunned a lot of developers away from Bitcoin because we've put them to an

Starting point is 00:09:21 ultimatum. If you want to work on anything development-wise on any other coin, you're not a real Bitcoiner. Does that ultimately help the security and the functionality of the Bitcoin-only wallets, or does it hurt it? I would argue that it has hurt it. It will continue to hurt it. The tribalism is over. If you can't get behind the asset class for the functionality and the utility that it

Starting point is 00:09:43 provides and the market depth and liquidity and you know scarcity that everyone's you know attracted to if you're in it because you think the government's bad and you're going to stand against them and it's going to be the form of money going forward yeah good luck i i don't know i got a bridge to sell you too then because i don't think i think that's that's giving us all too much credit individually. I'm not rolling a hundred dice and I consider myself to be somewhat of a seasoned veteran in the space. I'm not doing that. And nor would any of my peers do that. Like they're not sitting around a table. And for those who don't understand what I'm talking about is the solution that these hardcore maxis have come up with is not abandoning cold

Starting point is 00:10:33 card, is not moving their money. If you were on Spaces this weekend, there were very few people that said, yeah, if you're worried about this, or if you have exposure to this, just pick Coinbase, pick Gemini, just throw your, put it on an exchange. It was almost like that was drinking poison to them because it's so against their ethos. Instead, they were saying, well, the entropy or the random number generator was the problem within the software. So you can overcome that manually by getting 100 dice rolls and recording them manually and coming up with your own entropy that's insane that that i mean to offer that as a a solution for the masses i think is is is indicative of really why the problem exists yeah they're they're um there's sort of an aha moment

Starting point is 00:11:24 that's happening that, again, pushes Bitcoin as an asset, a risk on asset associated with traditional markets. That's going to keep happening. This is another moment that people's eyes are a little bit opened up to it. What Tillman just described about people coming up with additional solutions as opposed to use an exchange or put it in a DTF or, again, just hold it on Fidelity or Schwab or something, you know, in a spot way, that's going to continue to move to that space. It's not in any way different than a guy that's worth, you know, 15, 17 million dollars liquid. Does he hold, you know, 13 of those million dollars in a safe that he's created at his house with a bunch of gold bars and silver and painting? No, that's not what that guy does.

Starting point is 00:12:19 He holds maybe 2% of his assets in a safe at home. So for some crazy reason, he's got to get to it and go hand a gold bar to somebody or some stacks of cash. But the rest of it is at UBS and Morgan Stanley or JP Morgan. And those accounts and the risk associated with them and the backstops to the backstops to the backstops associated with custody. And again, to Tillman's point, a team of advisors that if something is wrong or I'm not comfortable with something, they have somebody to talk to and to discuss and make adjustments and changes inside of a system that they trust. That's going to keep happening with Bitcoin. Again, I'm a positive to this, is that bitcoin didn't move more than about one percent on this whole thing yeah that's

Starting point is 00:13:08 extraordinary like like like that that's that's really what we should be talking about the custody stuff that'll work itself out but the fact that bitcoin is taking these punches saylor keeps announcing stuff every week and it's just another version of selling bitcoin right bitcoin doesn't move same thing with a hundred million dollar cold storage hack bitcoin's like i don't care doesn't of matter. I mean, that's called, you know, we've bottomed. We bottomed at effectively the top of the last cycle. And so where we go from here is probably extraordinary. Today's episode is brought to you by Figure Markets. All right, everyone, who wants a slice of $160,000? Our partner, Figure, is running a promo where they're giving back to their community. From July 27th to August

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Starting point is 00:14:35 MPC custody, so assets stay in segregated wallets, protected from rug pulls, and they've introduced liquidation protection to help manage downside volatility. And for investors looking for yield, democratized prime offers up to nine percent apy paid hourly backed by real world private credit real cash flows and not speculative token emissions figure is building a new capital market on blockchain and now you have access to the upside check them out using the link below you know one of the aspects that i think is uh always overlooked here is i greatly respect the ethos and i think the enthusiasm uh and intensity of the most hardcore bitcoiners like I don't think Bitcoin gets to this point without those people.

Starting point is 00:15:18 And when I think about those individuals, I very much would put them in the missionary category. They are not mercenaries in any way, shape, or form, right? They fundamentally believe in those ethos, and they are willing to roll 100 dice. They are willing to go to the ends of the earth to implement those ethos. And I think it's commendable, frankly, that not only are there people who do that, but also the community of those people is quite large. I think, though, then there is, on the other extreme, we'll label them kind of the Wall Street crowd. They don't give two shits about self-custody or those ethos or any of that stuff. They're looking at this as another financial product they can put in people's portfolio. They can charge fees and go and protect from government printing or whatever. But I also think that there's this middle ground, and it's people who understand the ethos, respect the ethos, are happy that those kind of hardcore maximalists are here, but also can speak the language of Wall Street. And I think I would put you guys in that category.

Starting point is 00:16:14 There's maybe 100, 200 people that I would say that have some sort of distribution or a company, a product, something that tries to acknowledge where Bitcoin has come from and what those ethos are, but also understands that the Wall Street crowd, they need a translator. you can't take the missionary and put them in a room with the mercenary essentially and you know they become best friends like that that just doesn't happen um so i think that's also part of this is like the mercenary crowd or the wall street crowd they're realizing oh wait a second this like cypherpunk movement these ethos like this is real people really are using these cards and my guess is i don't know if you took every single person on wall street that owns bitcoin and you would ask them before you know this past week what's a cold card they might have thought you were talking about like a sub from jersey mike's or something right they had no clue

Starting point is 00:17:04 what it was and so i think that is you know part of this as well as like as bitcoin is expanding and all this transitioning i think it's expanding its user base or it's kind of holder base which you're going to start to see as more and more solutions come to the market because there's new people who need different things right i think that's kind of a a huge part before we continue I always love when you guys come on the show because you guys always bring gifts, which is fun. You guys are giving away a Rolex watch, which I'm not really a watch guy. I wear an Apple watch, which I've been told is not a real watch by our producer, Matt. He's a watch head.

Starting point is 00:17:40 He says that it's like little boy stuff that I'm wearing the Apple watch. But you guys are giving away a Rolex. Explain how people could win this Rolex. it's archpublicgiveaway.com so you go to that website archpublicgiveaway.com it's all one word and there on the on the site it takes you about 15 seconds to register you put in your name your email address and and whatnot and you get registered for the giveaway now inside of the giveaway that we're doing you have the ability to not just earn one entry but five entries ten entries, 50 entries, if you'd send people to the giveaway, if you put it on social media,

Starting point is 00:18:24 if you'd put it on Twitter or Facebook or whatever it happens to be. And that's also easy to do, right? Because in the giveaway, as soon as you sign up, it's going to have the little avatars of Twitter and whatnot. You just click it. It'll automatically do it for you. You hit post and away you go. So listen, we love to have a great time with our users. Anthony, I don't know if you know this, but based on total users, we're the biggest agentic algorithmic trading community in the world. We've got nearly 30,000 people now that are using our products. And so we love to have fun. We love to do giveaways. We love to meet people where they are. We love to do meetups. We were at your event in January, February of this year. We had 150 of our users that came to that event

Starting point is 00:19:11 and spent time with us, spent time with you, did a VIP dinner, all sorts of stuff. So this is another version of us not just selling a product, but having fun with people, introducing people to tools that really, really matter right now that are the talk of people in finance that are on the cutting edge, the Robin Hoods of the world, the Coinbases of the world are doing agentic stuff and trying to turn people on to it. We are a platform agnostic space where you can talk to people and learn how to use this stuff instead of creating it yourself out of code like nobody wants to do that come to us we'll hand you some code and some software and you can get to the business of doing it right let's talk about robinhood for a second so i i always find it very interesting

Starting point is 00:20:00 and maybe tim and you can kind of elaborate on this but robinhood now uh is reporting that they have a hundred thousand accounts that have been signed up for people to use these agentic trading tools. And I think that they have, I don't know, 100 plus million users probably at Robinhood. So we're still talking about, you know, less than 1% of all of these folks. But when you go and you look at the rise or the explosive growth of AI agents trading all assets, whether it's equities, crypto, you know, any of this stuff, it just feels almost inevitable that almost every investor in the world at some point is going to interface with an agent in the financial market. I would argue that we've been interfacing with them for the last 15 years unknowingly. I mean,

Starting point is 00:20:50 if you look at the volume of every market, 70 plus percent of it is automated trading, is algorithmic trading. It just hasn't been offered to the masses. It hasn't been offered to the retail user. Why? Well, it's been very code intensive. Code has been a hard thing to write, especially with a high degree of certainty of output or outcome. And through AI, that's changing. AI has commoditized software development to a large extent. And so the user experience of having an automated trading agent help you in your trading efforts, it is so wide. And there's so much that can be done there from advisory work. We know CFO Sylvia is doing that type of stuff where it can see across all of your accounts and it can give you specific advice to your

Starting point is 00:21:42 circumstance. It's so wide and so varied. What we want to do is we want to provide people an extension of their will that's very simple to understand and execute. So what did I mean by that? Well, most people don't know how to harvest volatility, yet they know they want to harvest volatility. Well, harvesting volatility is just having traps set or automated trades programmatically waiting for the volatility or for those conditions to be met versus reacting to them. So if you're in a manual reactionary state as a trader, you can't take advantage of a lot of trades that otherwise you could. That's the aha moment. That's why we're giving away the Rolex. We offer our tools for free for people to use, but it's very different than what you've envisioned these tools looking like.

Starting point is 00:22:29 And so it's very important for you to see it for yourself, to use it for yourself, to have us teach you how to use it for yourself. And then you'll see how robust it is, whether you're accumulating Bitcoin or ETH or Solana or anything, or NVIDIA, right? The accumulation of that asset on dips in a DCA intelligent manner is the most prudent way to accumulate allocation, right? To gain exposure. You want a healthy cost curve.

Starting point is 00:22:57 but there's also volatility the upside that in the event that you are in profit you might want to take a little bit off the table so that you can capitalize on that so that that purchasing power continues to expand and grow as the dips and the profits get taken and so you set it and forget it and you watch over a long period of time your will of harvesting volatility across not only one asset but now across all these markets and all these asset classes across different timeframes becomes a very easy, manageable solution with automation, whereas otherwise it's impossible manually. What I find fascinating about what's recently occurred is if you look at the Leopold and situational awareness and that whole situation, one of

Starting point is 00:23:43 the aspects to me is, at least the story as we hear it today, is he had very large leverage. He basically got hunted by some of these large Wall Street firms. There was immense pressure on his specific names. And as that occurred, he started to come under and kind of succumb to that pressure. And then there's even a theory that maybe Citadel put out this, like, there's going to be a surprise interest rate rise or hike. And therefore, that really pushed the market against him. And next thing you know, Ken Griffins, you know, making an early morning phone call and saying, you know, thanks for playing the game. And again, I think that Leopold still has a couple billion in his hedge fund i think that he is still uh probably you know kind of lives to fight

Starting point is 00:24:25 another day he's got some capital there etc but i do wonder how much of that trading pressure etc is being done by humans versus algorithms that are written by humans versus it's actually them just unleasing ai driven you know kind of transactions and saying hey you as the ai go hunt this specific fund you know that would be a pretty big story if we find that that's what's going on here is they basically are like unoffensively unleashing agents to go and hunt out positions like that yeah i think there's a just there's no distinction with the difference there i i think that it's one in the same i think the folks that understand the game understand that leverage is an opportunity um and when somebody takes a lot of leverage and the price goes against them

Starting point is 00:25:14 and you know, they can't, you know, make good on the leverage. There's a acquisition of that book that takes place. And so I would make the argument that this is just a large example of what takes place for every trader, right? If you get into a position and you have borrowed against that position, the market can stay irrational longer than you can stay solvent. And when you put people that can profit on the market staying irrational on the other side of that trade, and they have infinite bankrolls, you're fish. You are the sucker at the table. We just don't want to admit that we are. And so why do people like Warren Buffett get the reputation that they do? They chose not to play that game. They chose to adhere to standards that may seem boring when you're

Starting point is 00:26:11 explaining them, but they harness the only tried and true way of making exponential returns, which is harnessing the growth of compounding interest. That is the holy grail of everyone. And so, you know, most of the conversations I'm having with these large institutions, they don't look at Bitcoin as being the greatest asset that's ever been created. They look at it as a competing wrapper. Now they go, you know what? There's a lot of wrappers out there. If I want exposure to Bitcoin, how does it stack up against these other wrappers? And how does 3%, 2%, 5% exposure look like? They're not out there going, this is the holy grail that's going to replace the financial system. That's just not the way they look at it. And so I think what

Starting point is 00:26:55 we're seeing now is we've all been at the same party, but we've been there thinking different, the party's been for different reasons. All the Wall Street guys are there because this provides a lot of volatility, a lot of depth, and a lot of risk in terms of leverage. That's their playground. They love that. They show me where to sign. Whereas the rest of the people at the party have this altruistic notion that this is going to save the small guy. Both can exist at the same time. You can choose to interact with on-chain and only on-chain enterprises. You can barter with your Bitcoin. You can do all that. But to say that it's not valuable to the rest of the world for those other reasons, I think it's foolish.

Starting point is 00:27:45 Yeah. Leverage is the story for that particular story. The saying goes, he who holds the gold makes the rules. So that's also part of that story. When you're leveraged like that, people will seek out your leveraged position uh i don't think we need to sugarcoat the reality of what happened there there was a position to be sought out it was sought out some comments were made about interest rates shake shake shake blow up let me take your assets a 24 year old scapegoat the day before his wedding that that is that that it's pretty simple but at the same time the The beginning of that story starts with, that guy made a bunch of really smart plays,

Starting point is 00:28:30 but then he got smarter than smart. Now let me leverage this thing and really, really goose it. Now you've made yourself vulnerable. And so, yeah, leverage exists in the markets. Now, the good thing is, is that, you know, when we went through the whole financial crisis, a lot of leverage was taken out of things like banks and trading desks and all that stuff.

Starting point is 00:28:51 But it still exists in this space, you know, trading at the hedge fund level. By the way, the movie Dumb Money is a really, really good education of retail and institutional leverage and levers that can be pulled. I don't know if they intended for it to be a great education, but it's a really good education on all of this stuff where, you know, they show the guy playing the Citadel guy, Ken Griffin, you know, when he's getting phone calls he's having a little breakfast he's playing a little tennis you know he's out looking at a piece of property but he has all the gold right oh you need such and such to cover a position all right why don't you call so and so i'll cover it for you even though i know you've

Starting point is 00:29:41 come to me as a sniveling kid that needs help right so that movie people should re-watch it Ken had an interview that kind of got on replay this week based upon the story and the headlines. And it was about a previous deal where a big book was up for grab. And the manager of the book brought in two competing firms, Citadel being one of them, to value the book and to make an offer. And it had to happen in the overnights, on the weekend, before Monday morning. And the other bank wouldn't mobilize. They couldn't mobilize. And because of that, Ken was the only bidder. Well, when you're the only bidder on something that's going bust on Monday morning, that's a good spot to be in.

Starting point is 00:30:30 Not only does he have the cash, but he makes it available. And he knows when to make it available when there's no other competition and there's blood in the streets. And no harm, I completely agree with the strategy. Now, the question then becomes, like, was part of that induced? And, you know, that's above my pay grade, but I'm sure people are looking at that, right? Yeah, it happens, by the way, it happens, by the way, in trading and hedge funds. It also happens in banking. So Citadel is trading in hedge funds and positions.

Starting point is 00:31:10 JP Morgan is the banker that does this stuff. So First Republic Bank, like two and a half years ago, basically over a week turned into dust. Well, who was the banker and bank that picked up all the pieces and gathered all the assets? They had a huge wealth management organization there with hundreds and hundreds of billions of dollars in assets. J.P. Morgan scooped everything up and, you know, a week later, nobody was thinking anything of it. So it happens in spots where whether it's an organization, a hedge fund, an individual leveraged position, more often than not, you're going to find yourself on the wrong side of it. i um i think it's uh a story as old as time and i don't think we're ever going to find out all

Starting point is 00:31:58 the details but man i hope that a movie comes out one day we will uh we will see um let's talk about um just the ai technology one of the things i'm very fascinated by is uh there's a big conversation right now around chinese open source models or open weight models versus uh these closed source you know kind of model labs whether it's open ai anthropic etc at the same time there is now American open source or open weight type models that are being created. And one of the things that I heard that I thought was very interesting is the Palantir CTO recently said some version, and I'm paraphrasing, but some version of, look, when you look at these AI model benchmarks, those models are competing against the benchmarks. But what I care about is how does this

Starting point is 00:32:42 model benchmark against the task I need it to do? So I kind of don't care what the benchmark says. I care about which model is best for my specific task. And the reason why he was saying that is he was saying that some of these open weight models actually are outperforming the frontier models because they're able to do certain things to customize them with harnesses and proprietary data pipelines and all this stuff to work specifically for them. You guys are right at the forefront of building a lot of this technology. And so maybe, you know, what do you think about this like three headed competition between closed sourced American, open source American, Chinese open source American? And then how do you guys think about, you know, which models to use or kind of which technologies to integrate into your products? Yeah, that's a great question. I mean, I think that's the thing everybody's asking right now.

Starting point is 00:33:29 My take on it is that AI accelerates the democratization and the commoditization of software, including its own AI agent model, right? It's making itself easier from a consumption standpoint all the time. And so to your point earlier, it's like, what gets the task done the cheapest? And I think there's a lot of problems with tasking certain models with things that are way under its functional capacity and tasking models with things that are above its functional capacity. And we haven't found the true way in which to manage those tasks. Right now, we're just throwing every task.

Starting point is 00:34:19 I mean, I'm using, you know, Grok, Super Grok, which is a very expensive service to ask it things about where the best restaurant is in a specific city. I mean, it's stupid stuff, right? And so, you know, when you see this figuring itself out from an economics perspective, I think the thing that I'm most interested in is siloing out the hardware moat that's attached to each one of these efforts. if you have the hardware, you, in my opinion, have control. And so the compute power that's going to go into these data centers, if you own them, that's going to be one piece of the puzzle in which you can monetize. But then the application, to your point, of that utility into industry, into sectors that make a delta improvement and cost savings and or top-line growth, that's where the real change is going to happen. And that's not going to be how smart is

Starting point is 00:35:17 your model. That's going to be how good is the data that you're feeding it that is proprietary and how well have you built out the user experience and what you want as an output within that model. And that landscape is wide open for the taking. I mean, I honestly think that if I was 18 years old and trying to get into business for myself, I'd be looking at the most pen and paper industry I could find. I'd be looking at a very big burden within that space, and I'd be trying to solve those problems with AI and selling that solution to those people. And I think that delta, it's the hardest to capture, but it's the largest. And so whoever can capture that at scale across enterprise solutions and interface, I think they'll be the

Starting point is 00:36:07 folks that win the day. So user experience, user interface, and hardware would be my answer. Those are the three primary things I'm measuring. We're in the first or second inning of the AI movement. And the reason why I say that is because we're still asking questions about which models do this? Which models do that? Open source this, open source that. There's no dominant model just yet. And then at the same time, because the three of us are effectively in finance and tech, we use all this stuff on a daily basis, but 90% of people still don't use this. 90% of people don't sit on their phones and ask Super Grok or a higher end version of ChatGPT any questions, right? They still Google stuff, right? Or they ask their friend or, you know, if you're 60 or above,

Starting point is 00:36:55 you're still scared of this stuff, right? You're not using it in any capacity. So we've got a long way to go here. To Tillman's point about hardware, you know, for the next three innings, they're going to be the big winners. There's going to be pricing pressure associated with, you know,

Starting point is 00:37:10 the big, the anthropics and the open AIs of the world. Oh, by the way, they both pushed back their IPOs. There's a reason for that. You know, pricing pressure is probably causing some stuff on their balance sheet

Starting point is 00:37:22 that they're not super excited to go share with the world in a filing documents. So, yeah, we're in the beginning innings. There's an enormous amount of maturity that's coming our way. You know, I mentioned it before we started the show. Apple's in a pretty unique position to be a hardware part of this because everybody's got these. And right now, that's how you engage with these companies by asking these companies is using their app which apple gets a piece of over and over and over and over again um so it'll be interesting to see how it evolves but we're very very early most people are not using any model whatsoever well i would even argue very quickly that the use case for ai is as poorly

Starting point is 00:38:15 identified as the art use case for nfts is like uh you know don't throw the baby out with the bathwater is all I have to say, because there's a lot behind the curtain from a tech perspective that's attractive and appealing. I mean, even if you look at this most recent cold card incident where a lot of people that are laymen, it's a good question, no harm, no foul, but they'll say something like, well, let's just earmark those Bitcoin and keep them from being spent going forward. And it's a great lesson in fungible versus non-fungible tokens. And it opens people up to this dialogue and this conversation that's good. It's a maturing of the markets, bottom line. So I think AI, we have yet to see what the real use case is. We will.

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Starting point is 00:40:03 join 200,000 Americans on their journey to upgrade their retirement. That's bitcoinira.com slash pump to upgrade your retirement today. You know, Andrew, you're kind of sandbagging here. You've the hot take of hot takes i was just looking around to see how many analysts believe that uh apple is going to be the big winner of ai and uh i believe that your position is that a ai kind of war will be won by apple defend your ideas my friend because that is not a popular take yeah it's it's not hard for me to defend because again pricing pressure right like so so we went through a phase and again you have to be of certain age to remember this where like software was all the rage and you went to a store and you bought software off the shelf

Starting point is 00:40:50 and then you put it on your computer, right? Don't do that anymore. And effectively software is just an update and you don't pay anything for it, right? You don't pay anything for operating systems and all that stuff anymore. Like that's the pricing pressure that's just barely starting to happen with these AI companies, but will happen very, very quickly and will push press down hard because they all compete. They'll be forced to do all of that. They'll be enterprise versions of this stuff for, you know, 40, 70, 80, a thousand companies across the globe. They'll compete for that. And that pricing will stay a little bit juicy for a while, but they want to, you know, they want, they want to be associated with every person on the planet using AI. That

Starting point is 00:41:32 pricing pressure is going to go away. They're still going to have to, and any money that they make associated with a $9.99 subscription, Apple's getting a big part of that on this device, man. There's 4 billion of these things on the planet. There's 4 billion iPhones that people are using. That's a moat. That is a meaningful moat. And they have two other things going for them. You have the biometric security and the authentication that the iPhone provides you when you're logging into things now. I don't know if you guys use that feature, but where you scan the QR code on a computer

Starting point is 00:42:12 and then you self-identify on your phone and then it logs you into, like that is a security moat unlike anything that exists. And if you have AI governance and it can see and peer and manage all of the apps that you have downloaded on your phone,

Starting point is 00:42:31 you talk about a user experience that truly is integrated right now. So if you go and download Grok and you're using it, it has very limited visibility across your ecosystem as a human being. If you go to Claude, yes, you can tie in your email. Yes, you can tie in all these things. But where is most everyone doing most of their business? They're doing it on their phone. They're doing it through their apps.

Starting point is 00:42:57 And so when you have AI incorporated into the app store, I think you're talking about use case unlike anything else that anyone's focused on. And it's already there. Yeah, I'm not talking about, you know, share of something. I'm not talking, you know, does OpenAI have 40% of the AI market or does Apple, Siri have 37? I'm not talking about that. I'm talking about revenue, right? I'm talking about revenue. Like no matter what revenue models do for AI companies up or down, sideways or over time, press down, because that's just how markets work.

Starting point is 00:43:33 Apple's just going to keep making money because you've got to download it on here and then use it on here and then pay for it on here. So, you know, it's a thesis. By the way, I'm not going to completely co-opt this thesis. I've got a buddy in the in the wealth management space named Josh Brown. he's been talking about this for about a month so you know i'll just cop to it i co-opted it from him but i agree with him i think apple ultimately is going to win this movement from a revenue standpoint because you got to use it on this stuff i mean the user interface yeah for sure when um when you guys think of this what's the big risk of this huge ai trade uh agentic trading

Starting point is 00:44:19 all this stuff like obviously as uh business owners and technologists you think about how to mitigate risk like what are the things that keep you guys up at night i think the risk is trying to bet on one horse and st try instead of trying to bet on the entire space i think we're in such an early stage of this race that whatever you make on the winners that you do choose will dwarf the losses that you take betting on them all and so i i'm looking at it as uh you're early you can make the bets based upon this company or this company or that company i would argue that uh it's just better to bet on the space as a whole and if you really want to get nitty-gritty you look at the supply chain of that space and you start betting on the hardware providers and the

Starting point is 00:45:08 you know if you if you believe in robotics um you know it's not hard to deduce what's needed to build a robot right um and there's a lot of companies that are focused on that uh and you know that's why we've seen such parabolic growth in like uh sandisk for example you know it's hardware that's very needed for an industry that's now recognizing the true value that it has as a component in a bigger picture. And no different than the commodity price of silver or gold going up because it's being industrially used and consumed. Same thing applies for chips of all types, shapes, ball bearing. You can get nitty gritty as you want, but this industry is not going anywhere. It's going to continue to expand. And I think the U.S. has an obligation to its

Starting point is 00:45:58 people to print a lot of money and invest in this technology. I think we would be foolish not to. that's going to be a whole nother podcast episode i i'd add from an arch public standpoint you know to just be really simple as you use our tools and we talk about a gentic let's call it investing people people probably are rightfully i'm not too sure about that i want something jumping onto my account and can i does it can it go wild something bad happened well you know obviously with the work that we do it's user-driven software you just turn it on, turn it off. Like you have that control. You also have a bevy of people at Archpublic to talk to and say, Hey, I need to turn it off. And they walk you through that step

Starting point is 00:46:43 right there while you're on your account doing it. And they, they, they help you turn it on and off. Right. So there's a simplicity to some of this stuff amongst all the complexity and amongst the reality at two, three, four, five years from now, there's going to be agents all over markets. right um you well the same way that we hope the the future of crypto doesn't involve us describing crypto yeah i think ai will be the same thing we won't be going well ai that it'll just be like i got this done and you're gonna know that ai was a part of it and it's just the question is which model yeah it's um it's pretty interesting uh remind everyone before i let you guys go uh how can they win this uh this rolex and then uh where can they go learn more about arch public free to

Starting point is 00:47:28 enter no purchase required we would love to schedule a zoom call and show you what we're doing but it's not required and you can enter by just entering your information on archpublicgiveaway.com you can also come and book a demo at archpublic.com our software is completely free to use and we'd love to show you how to use it so you're going to get hands-on real world knowledge into what automation looks like for the retail user and how you can use it to your advantage fantastic amazing guys i appreciate you guys as always i always learn something we have these conversations obviously arch public is an incredible product that you guys offer to folks and And, uh, uh, we'll do this again in the future.

Starting point is 00:48:10 Awesome.

The Pomp Podcast - What the Cold Card Hack Really Means for Bitcoin | Tillman Holloway & Andrew Parish

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