The Wolf Of All Streets - Crypto Is Entering The Next Bull Cycle. Here's Why | Jeff Booth, Matt Hougan & Oliver Linch

Episode Date: February 23, 2023

My special guests today are: Jeff Booth (entrepreneur), Matt Hougan (CIO  at BitwiseInvest), and Oliver Linch (CEO at BittrexGlobal). Jeff Booth: https://twitter.com/JeffBooth Matt Hougan: https://twitter.com/Matt_Hougan Oliver Linch: https://twitter.com/OliverLinch ►►NORD VPN  An essential crypto product to protect your privacy and keep your crypto safe!  Sign up on my link below & enjoy the benefits of NORD VPN from just $4 a month.  👉 https://nordvpn.com/WolfOfAllStreets  ►► JOIN THE FREE WOLF DEN NEWSLETTER https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker  Facebook: https://www.facebook.com/wolfofallstreets   Web: https://www.thewolfofallstreets.io  Spotify: https://spoti.fi/30N5FDe  Apple podcast: https://apple.co/3FASB2c  #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

There's a very famous saying, which is, if you're the smartest person in the room, then you're in the wrong room. Well, luckily, I have three people much smarter than me today who are going to share their insight on what's happening with Bitcoin, the crypto market, macro in general, and what we can actually look forward to over the next few years. I think that we've focused largely on the negativity and the bad things that have been happening in the market for the last few months, and it's time to really take a turn and start focusing on the things that we are excited about. I have Matt Hogan, CIO of Bitwise, Jeff Booth, visionary technologist, VC, author. I don't

know, Jeff, you're everything. I don't even know how to describe you anymore. I'm going to just do it different each time. And of course, Oliver Lynch, the CEO of Bittrex Global. His name is not Oliver Lynch. It is Oliver Lynch. Guys, you do not want to miss this one. So excited. Let's go. Let's go. Let's go. But as we do that, I'm going to just go ahead and bring on all the guests. I'm hoping that you guys can hear me because right now I can't hear you.

But I'm going to go ahead and just dive right in the very beginning here with Matt, right? Because, Matt, as usual, I tweeted that we were going to have a roundtable today, and you got me very intrigued. Your response was, this is going to be so fun. I'm so bullish on the next three years in crypto, and I can't wait to share why. Well, now is your opportunity to go ahead. All right. Thanks, Scott. Well, thanks for having me on. And good to see you, Oliver and Jeff. Really excited for the conversation. Yeah, I am epically bullish on the next three years. Look, if there's one thing we know about crypto, it's that it's cyclical. And it's cyclical historically with a four-year pattern. We had great run-up

from 2011 to 2013 and a pullback in 2014. We had a great run-up from 2015 to 2017 and a pullback in 2018. And again, from 2019 to 2021. And then we all suffered through last year. And those cycles happen for a reason, which is there's a major technological breakthrough that drives the new bull market, and then we overreach and reset. The first cycle was driven by Bitcoin. 2011 was when Mt. Gox launched, when Coinbase launched. People could buy Bitcoin for the first time. Massive run-up. Fueled a lot of developer activity. The next cycle was the breakthrough of Ethereum. Ethereum created in 2015. Everyone got very excited. Massive run up and regulatory crackdown. The last cycle was the creation of NFTs, DeFi and stable coins. Right. That's what excited the last bull market. The reason I'm so excited is because I know what the technological

breakthrough is, I think that's going to drive this next bull market. And it's bigger than NFT, DeFi and stable coins. And I would argue bigger from a real world application than even the first start of Bitcoin and Ethereum. And what it is, is scalability. It's the layer two epoch. If you look at crypto, people have always wondered when it was going to go mainstream. It couldn't until I think this year. If you think about how it tried to go mainstream in 2020, it broke. The cost of a transaction on ETH hit $200. You can't go mainstream if it costs $200 to $1.50, it's maybe 12 cents now, by the end of this year, after 4844 on Ethereum, it's going to be a fraction of a penny. And the things you can do when it's effectively free to use a blockchain are so interesting and so exciting and allows you to get into mainstream

use in such a major way that I think this is the three-year cycle where crypto actually penetrates the mainstream, where it actually is used by people who are not listening to this podcast, where it's used in everyday activity. And you're seeing that even today, this morning, I woke up here on the West Coast, still dark outside, and we have Coinbase launching its own layer two through base. This is a massive step from crypto being a niche application to being a mainstream application. It's happening right in front of our eyes. It's happening at an accelerating rate. And I think it means that this bull market cycle, this four year cycle is going to be the biggest cycle yet in terms of user adoption, in terms of aggregate market cap increase, in terms of almost all of the things that we care about. It's not going to be perfectly up and to the right. Of course, there'll be bumps. We can talk about regulation.

I'm actually bullish on regulation. But you can see what's happening and you can feel it. If you're in the dev community, the level of excitement is higher than it's ever been in my experience in the crypto market. And that's why we're up 50% this year. And that's why I think we'll close higher by the end of the year. And I think 2024 and 2025 are even going to be better. I think the four-year cycle is a really interesting topic. And I'm going to preempt this for you, Jeff, and then let you speak. You can eliminate all of the noise from that. And that cycle is still inherent just to Bitcoin,

right? Even without all of the other things that you discuss, Bitcoin has the four year cycle because of the halving. And those cycles continue to be somewhat bigger and bigger. And what you described for adoption, I know Jeff's going to jump in here. The Lightning Network also is now extremely, extremely cheap. So I think this is the first time that maybe Bitcoiners and, you know, Web3 folks are aligning on exactly what you just described. Jeff, I'll let you discuss. Yeah, and Matt, in respect, and again, everybody's going to have a different view, but I have a view that at a base layer, at a fundamental layer,

that if money is not... The existing system we live in is just based on corrupted money. The existing system... The world is deflationary. Technology creates deflation everywhere. And the only reason inflation exists, in other words, theft of your money, is because we give it a

system control of manipulating our money. The only reason. Otherwise, prices would fall everywhere. But we won't vote for prices to fall, right? We won't vote for less money next year in our income, even if it meant real wages going up. So we want to believe the lie that politicians can keep on giving us more money when they're actually taking money from us. And that transition and that viewpoint, when you have misinformation and money spreading around the world, and all money is is information describing what you really want, then what Scott said in the opening is you must have misinformation everywhere. So unless you solve that at a first principle level, at the money, then nothing else matters.

And what Bitcoin did is solve that in layer one and solved it in a way that is decentralized and secure. But to do that, they had to make trade-offs. Because you'd have to expect if the world we lived in was 10,000 times bigger, forwarders a magnitude bigger than Bitcoin, then you'd have to expect the entire world, all of false flag operations, everything from the people who controlled money to try to kill it. You'd have to expect that because there's so much power in owning money. And all Bitcoin did on layer one was that, and it grew really fast. So obviously, if it only did that it would create and and and a lot of people early on in bitcoin uh were getting wealthy in bitcoin and by just by holding it but you couldn't build on top of it then then everyone would say oh wow there's a really great i can

create the next blockchain crypto and i can change this a little bit and I can add scalability to this but that scalability comes with the risk of centralized it comes with centralization because the trade-offs of central it comes with centralization or lack of security one or the other on L1 and so so all of the other cryptos lay in that they have to be centralized by design or they have to be insecure. And then on top of Bitcoin, because it's a protocol, and on top of Bitcoin, Lightning then emerges. And you can't see what's not there until it emerges. Layer one is hardened and then layer two comes out. And we're not waiting for for next year for

fractions of pennies the lightning network is exploding in sats right now exploding in growth um and and and then nostre comes in and nonce nostre is actually i don't know if anybody's looked at nostre go create a nostre account now every it's like a new peer-to-peer web with native money of Bitcoin inside it. And it's exploding. And it removes that centralization of big tech. And there's nothing big tech can do to stop it. And money's native to it. And if you want to see how fast money is moving around on value for value globally um it so i'm i'm super bullish but and but i but i unfortunately i think all crypto all blockchain all of that i think it all goes to zero except for bitcoin um and on top of it and it does because of the design.

Because a network effect on a protocol layer that decentralizes and secures and is secure on top and then you have network effect on the next layer on top as well moves the innovation to that layer that gives the most value. Oliver, what do you think? You're on mute, buddy.

Yeah, three years of doing this, I still haven't got used to the simple button that goes on the screen. I think the reality is a little bit different from the theory. I think there's a lot of ideological conceptions about exactly what Bitcoin was and is and will become. And it feeds into the same sort of ideological macroeconomic theories that we've had about money since, you know, the really early days of economic analysis. And, you know, you can read the same thing that Hayek wrote about, you know, currency,

and the difference between fiat currency and then gold-backed currencies. These are the same discussions that are being had. And I think it's possible to get too wrapped up in that discussion and lose sight of what it is that people actually want these things for and want to use them for. And so I don't think I agree that everything except Bitcoin goes to zero. In fact, I'd probably say the opposite. I'd probably say as scalability increases and use cases increases, all of these communities, all of these projects that we've been promised for so long,

but in many cases have failed to deliver are actually going to deliver we're going to see use cases um and communities and projects not just based on bitcoin but based on a whole whole range of other tokens um really developing and blossoming so that I don't know if scalability is going to be the silver bullet that Matt thinks it is. I mean, I'd like it to be. But I think we are already seeing the bridge between the real world and the theoretical world, that gap being bridged. So I think that's what we're going to see. And I think it matters less the theory behind that

and more the practical realities on the ground for individual users, and especially for big corporates that want to get involved in crypto. So I just want to pick up on that. So if the world had never had money that could be decentralized and secure, and you always had to trust organizations,

trust people that then change the rules on money or it centralized with gold. And then somebody would change the rules. If it's true that you had a money that was decentralized and secure by design, then that would obviously change all the future. and looking through the past of all these ideas hayek and everything else too they wouldn't have even if they had a theory they wouldn't have been able to make it happen because the money wasn't tied to energy or to uh or so so if there was a change and you'd have to go to is that change bitcoin i i would agree with that. If there was a change, then all of our previous models would be wrong because there was no way to deliver that. And so, and that's

Oliver in respect, I disagree and I disagree quite strongly because I haven't seen a valid economic incentive to use a centralized blockchain because of what would happen with that centralized blockchain. I haven't seen a long-term economic incentive that actually matters because it's a higher cost and it centralizes over time. So if failing that, unless somebody can show me why I would want to build DeFi, decentralized finance on top of centralized finance, it's like our existing regulatory system today that says, we're going to protect you from losing money from a system designed to steal your money. Right? Because that's what it is.

Yeah. Oliver, if you want to jump in, go right ahead. No, no, no. After you, Matt. After you. I might try to actually split somewhere in the middle, believe it or not, Jeff. When I think about all the applications that can be designed and implemented on blockchain, I think there's a scale to which centralization

and decentralization matters. So if I think about something like truly non-sovereign money, a digital version of gold, if you want to use sort of common layman's shorthand, that has to be centralization. Centralization is all that matters, or decentralization is all that matters in security. And so from that perspective, there's nothing that will ever challenge Bitcoin. And I would add that from that perspective alone, it leaves me extremely bullish on Bitcoin, right?

It tells me that Bitcoin's current price is wrong. There's a world in which it's worth zero, in which case it fails. And there's a world in which it's worth a very, very lot, in which case if it succeeds. And its current price is like an unstable equilibrium only for that single use case. And as you walk down from that use case to some of the more non-monetary use cases, maybe like Farcaster or something, the degree to which decentralization matter decreases and the efficiency and network effects of certain other blockchains and the ease of programming on certain other blockchains matters more. And so I think there's a, I mean,

I think inherently the world is, the future is unknowable. But my best case scenario is that there will be blockchains that are optimized to put decentralization and security first, which are used for these non-sovereign money applications. And Bitcoin will be that. And there will be other blockchains that take on other uses where decentralization matters less

and they'll be less decentralized. It's not a binary to me. It's a spectrum. And those will probably thrive as well because they're easier to program or they have a bigger developer community or they have more venture capital investment or they're more comfortable for regulators to incorporate into the real world and in the middle we'll find other things um you know yeah i i think that's the answer to jeff's question which is like jeff said well convince me that i would ever want to build a dvi uh system on top of a centralized

system and the answer to that is well it might not be theoretically pure but it's easier you can do stuff with it right in the reality is and you've got to remember the vast majority of people even if they buy into the theory of decentralization most people are annoyed at the current system but aren't purists they're not theoretical absolutists and if they can achieve what they want to achieve in a meaningful way in in a quick way, they will be happy with a certain amount of impurity in that system. The difference between theory and reality. And let me make your point. In what you're saying, I totally agree.

But it actually also creates a whole bunch of leverage and people that will just chase money in and get wiped out because they don't know they're not as deep in the structural level of this or the technology of what's going on inside it so they're trusting other people in an ecosystem with money to make inside it inside of one of these and and marketing budgets to be able to to to. And they're not sufficiently knowledgeable on the differences. So I agree with you. And if they think that they can make a whole bunch of money, then the market will go there as fast as it can, and it'll lever there.

So that we agree on. I'm talking about a deeper level. Because I think you know, I'm investing in this space. I'm investing in, and so I've seen, our team has done diligence on 400 different companies through Ego Death Capital. We've invested in five. And so I see what's coming.

Not on, so today there's, most people probably listening to the show do not have a bitcoin lightning wallet and are trading money around the world at the speed of light for a fraction of a penny a penny a fraction and how fast that network effect is growing on on on layer two so they're still talking about bitcoin like Bitcoin was five years ago, right? The decentralized secure money and let's do all this other stuff, easy stuff everywhere else. And they don't even know what's actually happening, how fast that network effect is growing around the world, how fast trade of value is happening on top of this. If they don't know that and what's happening, they also probably don't know about Nostr and all of the clients and everything else.

And you can create a private key on Nostr, on any client on Nostr. And then if you have your followers and everything else on followers, then that client, if you used Damas or Ast astral or anything else doesn't own you you if it if you don't like that client you just move it to another client and you have all your followers all your data everything else so it's not a walled garden of tech so you have a new peer-to-peer internet being built from the ground up with bitcoin as a base as a base layer and many of the things that you're talking about being able to open up in other blockchains already exist and it's exploding in this network,

in this peer-to-peer network. And what's coming, some of the stuff that we're investing in, that's coming on top of this that people can't see today because it's not out yet, is just native. And so it's another puzzle yet is is just native and it's so it's it's another puzzle puzzle piece that just just explodes that growth so Matt I'm really bullish like massively bullish on this transition and I understand I understand if you didn't know it didn't know some of these things what it would look like from the other ecosystem.

And I don't, and I'm not mad about it. I'm not, I'm not, I'm a Bitcoin maxi, but I'm not, I'm not like, I don't yell at other people on their point of view. I just have a different point of view, probably because the ecosystem that I'm seeing and the economic rationale for that ecosystem and how fast that's going to grow. And maybe, maybe I'm seeing and the economic rationale for that ecosystem and how fast that's going to grow. And maybe I'm wrong. Well, you and I actually agree, Jeff. I mean, I run index funds. The biggest holding in the index fund is Bitcoin. It's 68% of the index as well, right? So you and I agree. And I think what's happening on Lightning is extremely exciting. I think what's happening with Ordinals is extremely exciting. I think what's happening with Ordinals is extremely exciting.

I think the ecosystem around Bitcoin is evolving in ways that many people didn't expect. So you and I are actually quite sympathetic around that. I think it speaks to sort of a shared acceleration in the capabilities of blockchain that is being missed by the world. People don't understand how tech scales exponentially. And so they apply linear assumptions and they miss it by a factor of a lot. And I think that's one of the things that's happening right now and why people are so confused why the market's up 50%. Because whether you're in the Bitcoin ecosystem or you're in the Ethereum ecosystem, or even

if you're looking at layer zero ecosystems, the same sort of stuff is happening which is the tech is getting better the only place you and I differ is whether um yeah sort of sort of I have a I have an almost agnostic view of how the world will develop uh and and I have a sort of um a different view on the absolute requirement for absolute decentralization. And so I'm sort of an agnostic crypto investor who holds all the assets on a market cap basis. But I do think the important thing is that this technological evolution and expansion of use is happening across the ecosystem. And it's increasing the addressable market for crypto and public blockchains extremely rapidly. And that's to get back to it, Scott. That's why I was so cool.

Go ahead, Donna. Sorry, no problem, Scott. I was just going to say, it sounds like for the first time we're somewhat seeing alignment from all the communities on the grander vision and just now it's brass tacks on where it happens and how it happens i think i'm kind of more in the middle but i do agree jeff when it comes to the money and defy it would be ideal if that was built on bitcoin but i'm also not sure that we need to build games on bitcoin

right and perhaps if there's another use there and we don't really view that as money, it's more a utility and a technology. I guess just if you just double click on that, if the Lightning Network, if it didn't exist before, just like TCP IP to the internet, you couldn't see what was the next layer until the next layer was there. So you couldn't build games onto that. But where would you build a game? If you're an entrepreneur building a new game and Lightning Network right now is a fraction of a penny and you had a bearer asset underneath that that was decentralized and secure forever versus a choice of building a game on something that was centralized and cost

more money where would you build a game i mean i think uh i understand your point i think the answer of where people are building games is on ethereum and ethereum based layer twos right now that's where the bulk of the venture capital money is is going in so i understand the theoretical point but it's it's it's uh's, and it makes me excited about Bitcoin. So I appreciate you sharing it. But it's also the case that like the purest technology stack doesn't always win in these applications, right? Like my family had a Betamax growing up,

better tech. It was better tech, by the way. It was better tech. It was better tech. Yeah, but VHS won. uh it was better by the way it was better it was better yeah yeah but vhs1 and so like and and that lesson has been repeated multiple times uh throughout history um so so i you know i i just say that because there are multiple factors at play here including network effects that are specific to the ethereum ecosystem which i think are pretty strong. Doesn't mean it will win long term. Again, I would hold both. But I think that's the, if there's a gap between us, I think mostly we're both just very excited. I think that's probably. I certainly want the in-game currency to be Bitcoin.

If that's somewhere that we can align, if it's going to be a monetary incentive and there's going to be actual money involved, it's not about the speed or the utility. And I think everyone would be in agreement that Bitcoin would be the ideal money for that. But I want to actually go back to the idea that you presented first, Matt, which is that scalability will be sort of the catalyst for the next massive four-year cycle. I don't disagree, but to me, that's more of an infrastructural or picks and shovels approach or view. And even if we have the scalability, we still need the people, right? We still need the users. We still need the adoption.

We still need people to understand. We still need people to care. I mean, you listen to Jeff, obviously, describe that people just don't know what's coming. Well, it could take many, many years for people to care. I mean, you listen to Jeff obviously describe that people just don't know what's coming. Well, it could take many, many years for people to understand and for us to convert the people that don't listen to these podcasts. So I guess the next question is, if we've actually built this where it can operate at scale for the first time, how do we actually get the billion people to come in and use it and care? And any of you can jump in. Yeah, I have views, but I've been talking a lot. Oliver, go ahead.

I think my views, if I'm going to come up with a buzzword, is respectability. I think for far too many people that aren't involved in crypto, they're still regurgitating 2016's buzzwords, which is that crypto in general is not respectable. It's basically just used by drug dealers and bad actors. And all of the big scandals from last year, there's one thing that people know about crypto from 2022

is you're going to lose all your money and there are loads of bad actors in play. And I think until we as a community can shed that reputation, there's never going to be a massive option. Even if, Matt, you're right, there could be. Even if scalability is what allows that to be, it just won't happen. And so this is where I think, and actually, Geoff, you mentioned regulation.

You said you were bullish on that, as am I. I think seeing all of these things within the context of wider financial services is what brings that respectability. And even though it might be ultimately the end goal to destroy old conceptions of the way money works, borrowing the respectability or the apparent respectability from it is the path to adoption. So that's what's going to get people interested. I love all that. I think there are three potential ways that we can look at history to see

how it's happened. One way is non-monetary applications that are that capture the public interest. If you think about times when crypto has almost gone mainstream, there have really been sort of two. There's NBA top shots and there's NFTs. And the reasons those can scale is because they tap into sort of social site guys. People don't even know they're dealing with crypto applications and there are no regulatory considerations or at least not major regulatory considerations that choke them off. So I think non-money applications could be one of the first ways things scale where people don't even realize they're interacting with the blockchain. Another thing that I see happening is when crypto provides a solution to something people hate. So with finance, that's one thing a lot of people hate banks. But I do

think what's happening in crypto enabled social media, blockchain enabled social media is really an interesting idea of how crypto could go mainstream because people really hate Twitter and they really hate meta and they really hate big tech. And crypto is an alternative to that i think is really interesting and then i think a little bit what you're saying um oliver uh crypto that improves the financial system um maybe even in the background so we don't even notice i think it's probably the third way uh that it goes mainstream yeah and i think both of those. Sorry to interrupt, Jeff. I think when we talk about crypto being disruptive, I'm actually not sure that's really helpful, right? Because disruptive things are scary and are revolutionary and put people off.

I think actually the language of this is the natural evolution, this is the next step, and it's better for these three reasons, is much more likely to meet its mark. I believe that crypto blockchain is an attack factor on Bitcoin. Because when you conflate those two things, and they're very different things, you have to go back to money, right? And you just, money is so, it's superordinate to laws.

The people who own the money change the laws, right? If that didn't exist that way, then where broken money was most evidence, you'd have the strongest laws protecting the people, right? It looks inverse. So when money is manipulated, then society breaks down because all it is, is stealing money from some people and transferring to others. And we live, unfortunately, in a system like that. And we all know we live in a system like that. There's $400 trillion of debt in the world that is unrepayable.

And the only way it's repayable, if we pretend it's repayable, by driving inflation way up, which picks the pocket of some and transfers it to others. Inflation is wage deflation. It's the same thing. So if you have an attack vector on money, and here's where this matters a lot, a monopoly does the exact same thing over and over and over against technology. They put up walls against technology.

So if you had something that was decentralized and secure that actually attacked money, like Bitcoin, then you could expect the people closest to the money monopoly, media, everything else, the existing elite, and elite is just a word for who gets transferred the most money from this corrupt system, right? They would be very against a system that removed that control. They would do everything to stop that system that removed that control.

That's why it's so important from a base foundation. And so you have a whole bunch of that money creating a whole bunch of narratives around this, and then those narratives fail, and regulation goes in and says, so if you can capture, if you centralize one of these blockchains, and the state can capture that blockchain through regulation, it's over.

It's that important. Do you think to some degree we're conflating timeframes then, that what Matt says about a four-year cycle can be true, but with an extremely low time preference, we eventually get to the reality that Jeff is discussing, which could take, you know, 10 or 20 years to really change the money. And therefore, it's sort of two separate conversations. So let me just that's exactly what's happening. That's exactly what's happening. That's exactly what's happening. And people that are close to the money monopoly, people in the US, Europe, and such, see this in everything else, because what ends up happening is, is monopolies change from technology changes from the bottom up. And the people furthest away

from the monopoly benefit from the network effect, because they gain more value. So people in Nigeria, people in El Salvador, people in why it's exploding in these regions, people in Lebanon, people in Turkey that have massive inflation rates and everything else, why it's exploding in these regions and moving really fast there and that technology is driving is because just like Kodak invented the digital camera or Blockbuster or they do this exact same thing. The only difference here is the monopoly is now money. And the people furthest away from the money monopoly are going first

and they're driving this. And in US, Canada, Europe, if governments try and stop this, it's going to be the greatest wealth transfer on the planet from Western democracies to Africa and South America and Central America because of that very same thing. But to Matt's point before, it's exploding. We haven't talked about Fediment yet. We haven't talked about Fetament yet. We haven't talked about what's happening on Layer 3, on what's going to be released this year,

and how fast that's going to grow. It's literally unstoppable. So I'm super excited about what's coming, but I think I disagree on where it's coming. Scott, can I ask you a question, Jeff? I'm really interested in your thesis here, which is sort of you're positing an inevitability to Bitcoin, which is very exciting. And I guess the question I have is there's sort of two ways entrenched systems can react to revolutionary forces. One is to fall and be replaced, which I think is the primary paradigm that you're suggesting. The other one is to sort of adjust and migrate so that people under the existing system are tolerant. So you think of like how China responds to political dissent by adjusting.

So I wonder which of those paradigms you think we're going to see. So when I think about this, I think Bitcoin is a bridge to the other side that people don't know that this is actually happening. And so when I think about this, I think about if your view of the world was, you were an executive at Sears from 1995 to 2010, your world was contracting. It was getting worse and worse, same world. But if you were at Amazon, that world was, everything was, uh, was, uh, going great. That's what we're dealing with here. We're dealing with inevitable breakdown of a system, but we measure the system from the system. We're inside the system. And it's hard to see a new system emerging and what's happening in the new system. And in the new system, what people are thinking that's happening

isn't happening. They think Bitcoin price is going up. It's not. All prices of everything are falling against Bitcoin forever because technology globally and energy and everything else is deflationary. And when you stop manipulating the money, prices fall against it. They just think it's going up just like they think their house is going up, but it's actually coming down in real terms because you're manipulating the money base underneath so bitcoin because it's outside of that system of manipulation it's being mismeasured what's happening because people are measuring it through through the existing their through their existing system yeah i mean there's easy proof of that it's about the denominator if you look at the value of Bitcoin versus the currency in Venezuela or Argentina or Lebanon, it's making consistent all time highs.

And in those breaks, Scott, we just don't think it's going to happen here because it hasn't happened here as often as it has in those regions. But it's coming to a town near us it's it's funny to laugh but it's hard not to and one of the other themes i've heard everyone talking about oliver i loved your point about respectability right sounds like uh the crypto industry needs a new pr agent or something but that doesn't matter if what both jeff and matt just said comes to fruition which is effectively that we abstract away the Bitcoin and crypto and all of it, and these just become functioning products that people use because they're better, and they happen to be built on it.

But I don't think we want the term NFT. It's a complex technical term. It should just be some sort of asset that people are trading, something they value. So I think that when we start getting rid of all this terminology and things work, even though they're built on blockchains in the same way that people are familiar with in Web2, that's when, for me, we start to see mainstream adoption. And we can argue over what that should be built on. I think we've had that conversation. But we need to abstract away the term crypto. We

need to abstract away all the complicated seed phrases and all of these things over time for most of these things so that your average person could even use it and then they won't even know it was crypto or care that we uh have bad pr how we how that happens i don't know scott can i reinforce something you just said most people most people living in the system measuring by the system thinking that they're going to work to pay for their house and everything else. And what's happening with the inflation rate and how that's all manipulated. They don't understand the plumbing of the system.

They don't care. They care about what they live every day on top of that plumbing. Until the plumbing is so broken that it's producing terrible results, then they start to think about the plumbing. And even then they don to think about the plumbing. And even then they don't think about the plumbing. They think about, they abstract the plumbing away and they say, it's that person, that person's going to change the, the, the everything or that person. And our political system on top of broken money is just theater. It's just theater. And people are reacting to that person, that person, person. But again, they don't go deep enough on the plumbing. So I, I do. Right.

And I wanted to understand the plumbing of the existing system. And if it had any way out, if it could fix itself and I realized it couldn't fix itself, it's impossible. There needed to be a transition mechanism. But then I went all the way to the bottom on Bitcoin and everything else to say, what could that transition mechanism look like? What would it have to look like to be able to provide that bridge to the other side? And what would that look like? And to make your point, that's where most people having this fight about Bitcoin versus other, that's where they are right

now. And nobody cares at that plumbing level. I do because I want to know if I'm going to build long-term value, where is that value going to be long-term? I care a lot. And I couldn't start the VC fund until I could see, okay, now we can build on top of this that provides other value. But all of that plumbing is going to just be an abstraction. It's going to just give better value.

And people are not going to think about it every day. Right now, we're trying to teach how to use Bitcoin and how to seed phrase. And there's a whole bunch of education. It's really hard. The next layer of this just simplifies. And they're going to get value, tons of value out of things they use every day. And I would just add, Scott, having you and I

and everyone here have been in this industry for a while, it's hard to notice progress. We've actually made progress on that abstraction. I don't know if you remember five years ago, I spent a lot of time talking about SHA-256 and Byzantine general problems and all this deep tech stuff, deeper stack stuff. And no one asks about that. The reason they don't ask about it is it's worked perfectly for another five years, doubled its time horizon. So people just accept that it works. So we're making progress on that abstraction. People have already pushed that stuff behind them. Like you don't ask, people don't ask those questions anymore. And I think we're moving in the right direction.

So again, it's just a matter of time, but I have heard a few people mention Oliver. I know Matt as well, maybe not so much Jeff, bullish on the idea of regulation, right? We're talking about this entrenched system that Jeff discussed. Regulators are clearly a part of that deeply entrenched system. So I find it currently a bit hard to believe that they have our best interests at heart when watching what's actually happened. So would it be fair to say, for me, I'm bullish on the idea of good regulation, but I'm not particularly bullish on the regulators who are doing it at the moment. Well, it depends on where, right? I think in the United States, correct.

I'm sorry. See, and this is the joy of being CEO of British Global, is that we have nothing to do with the United States. We don't have any American customers. We don't allow anyone in America to be a member of our platform. And so I get to sit on the sidelines and take pot shots without really being invested. But I think, you know, I actually have a lot of sympathy for the regulators in the US because it's not their fault. But what are they supposed to do?

If you are Gary Gensler and you've been given an act that was passed 90 years ago, right? If we really think the Fdr in 1933 envisaged blockchain technology and cryptocurrencies then like he was an even bigger genius than we thought he was right but if if all you have is a hammer the whole world looks like a nail right so what is he supposed to do of course he looks through everything through the lens of, is it a dirty tree of security? But there's a famous quote from Antonin Scalia, the former justice of the Supreme Court. He says it must be fascinating and exciting being a judicial activist because you wake up every morning.

You think, gee, I wonder what's unconstitutional today. Right. And I think I think there's a possibility that Gary Gensler wakes up every morning and thinks, gee, I wonder what's the security today. Yeah. But does he ever think about, gee, I wonder who I can protect before they get hurt today, as opposed to I wonder who I can punish after everybody's already hurt today? Because to me, that's what I'm talking about here. I mean, even today, I understand that there may be some friction with the Voyager Binance US buyout, but it was news today that New York DFS, SEC now all want to block that deal, which would effectively just mean that, for example,

customer funds were just waiting to get paid back their 50 cents on the dollar would be used in lawsuits to defend against the SEC. I just I see a very major disjointed effort to protect consumers. It feels like they want to punish bad actors, which they should. But at the expense of the people they're supposed to be protecting. And maybe you have a different view. That's not the SEC's fault. That's not the regulators fault. That's the legislators fault.

I agree. We need legislation. I agree with that. Because the most successful regimes are making progress on this, and there are a load of them, including the EU, including, it looks like now, the UK and Dubai and BBI and

maybe even Hong Kong, we've seen in the last few days. They're getting to grips with this and saying, okay, what we had was not fit for purpose. It was not protecting people. It was not designed for the real world. So how can you blame the regulators in the US when they're working with tools that are 90 years out of date? Can I ask a bigger question on this?

And it's fundamental, and this might also drive the emotion in Bitcoin maxis that at least know the plumbing at this level. So I can have a debate on it without the emotion, but this might drive others emotion in it. But I think think about this if the emergent so we we all know what we've said there are 400 trillion dollars of debt in the world that's unrepayable and so every single person we elect all over the world is effectively based on a lie that that can be repaid and can manipulate money to repay it and that manipulation of money is theft from some people to others. It's literally theft. We don't vote for it.

Nobody has a vote in it. It's just a made-up entry that steals money from some people and transfers it to others. We live in that world. Ask yourself, what would the emergent complex behavior of the world look like in a world based on theft? And you would see a mirror reflection of the world we live in getting worse and worse. And if that theft had to increase at a rate to protect technology going the other way that's supposed to give us more and more for less if it had to transfer centralization more and more theft it wouldn't the mirror reflection of the world just be a mirror reflection of that theft and all of the song and dance of this regulator's

good this right trump's good biden's good this wouldn't all of that just be just nonsense in that noise? It is nonsense, but yes. It's the signaling noise. I can't even listen to it anymore. And then you just have to ask yourself the other system. Because all Bitcoin is is a ledger. It's based on truth. It's a decentralized, secure ledger based on truth. So what would the emergent complex behavior of society look like based on truth?

And what you see is two different versions of a world and people moving to the new one. And yes, people that are moving early will do better. But that's what's happening. All of the rest is noise. You cannot fix the system from the system. Thoughts on that? Well, I mean, I think I have maybe more of a short-term view, and honestly, a little bit of sympathy for regulators. That can be true eventually in the in the short term.

We have, say, centralized custodians that hold a lot of assets for crypto and those can be made better. And I think what we've seen from regulators so far this year is not great, but it's not a death knell. And there are elements of it that make sense and are good. And I think from a short-term crypto investor's perspective, all you want out of U.S. regulators right now is not a death knell. And as long as that's the case, the market can continue to march higher. And that's why I think it's continued to march higher. If I think about the Kraken staking rule, not a death now. If I think about BUSD and Binance stable coins, not killing, if I think about the custody rule, again, elements of good and bad.

So I think that's the short-term perspective. Jeff, I think you're talking toward a much longer-term perspective, again, to get to those two timeframes. Yeah, and I just think it happens faster than we think because of the incentive and what ends up happening. perspective, again, to get to those two timeframes. Yeah. And I just think it happens faster than we think because, because, because of the incentive and what ends up happening. Cause I can tell you what I can tell you is this. I actually can't believe I get to work with people I get to work with in the,

this, in, in this ecosystem. And I can't believe how optimistic and hopeful and everything else. And it's in integrity. it is there as well it's literally like i'm it's literally like i'm watching what i knew was going to happen in the existing system that i wrote about and you're building a new system with people that are building a new system that that and more and more people are moving into it all the time, it feels incredibly optimistic. It feels incredibly hopeful. You just, truthfully,

that's actually why I don't want to debate in an anger way about anybody with crypto or anything else. I would love them to see what I see because it's super, super hopeful. I would agree that I think everybody here is hopeful. And Jeff, I would almost even argue that since we know that these other things are not going away, if you are a Bitcoin maximalist, that at this point, basically anything that detaches people to the system eventually pushes people towards Bitcoin anyways. I think we've seen that. It's like we saw what happened last year has pushed people towards Bitcoin anyways. Yeah. I think we've seen that.

It's like we saw what happened last year has pushed people to Bitcoin. It's pushed people to self-custody. It's pushed people to take their money off of exchanges. It's pushed people towards decentralization, whether Bitcoin or otherwise. So I would say that right now we're still so small as an entire community and ecosystem that a win for one is a win for everyone and eventually it probably whittles down to very few yeah and just a double click on when you have an

inflation rate and people are hurting and they and they're thinking how do i get make more money and this isn't just individuals it's all people what they do is they take risks to be able to do that without understanding those risks because they think they can make a whole bunch of money. And if you think about venture funds or pension funds, they're taking the same risks because what they're doing is they're trying to beat the inflation rate in real terms. Otherwise the pension funds are insolvent. And so you have this massive money making the whole system more and more fragile because the system is based on fragility, right? That's, that's, that's the, the incentive and incentives run the world. Like that's what, these aren't bad people.

They're trying to, they're trying to increase the hurdle rate to make sure they're solvent in a system that is insolvent. And it drives further and further and further. That's what people don't know they feel in the existing system. And when you talk about venture funds and everything else, and they can make a huge return in these crypto investments, at least in the short term, and then sell them out. That's what people are feeling, right? It's just follow the money. Oliver, what would you say right now, since you are obviously the CEO of Bittrex Global and touch basically everywhere, not the United States, where is the most favorable jurisdiction right now for legislation or where are you the most hopeful? That's a really good question. So I think the early adopters of regulation are still

in the lead. Betches Global is regulated in Liechtenstein and in Bermuda, and we picked those jurisdictions because they were the first ones to take crypto seriously and engage with it as crypto. I think the least successful jurisdictions are the ones that are trying to engage in discussions about trying to analyze crypto from a traditional framework and is it a security is it a commodity is it derivative the answer is kind of no it's none of those it's crypto so what what i look for in and it's been a a real kind of rush in the last, I guess, two, three months on jurisdictions pumping out proposals for new regulations. And what I look for as a metric of success is the is that they are the world's first crypto specialist regulator. Now, I don't think you actually need to have a specialist regulator.

I think you can perfectly sense where you're going to do it from an existing financial services regulator. But it's interesting that they have obviously done a market research that says that is a good sales point. That's a good marketing point. And I think what is necessary is for people to have confidence in the system is the classic example um there is a sense when it's this kind of ad hoc sporadic you know all of a sudden someone's eating their cheerios this morning uh okay what do you guys call the fruit loops i don't know um weenies sure um whatever it is that they've eaten this morning they've eaten a lot of it because there's a lot of activity actually i don't think that gives people confidence that there's a guiding line at work here.

So, yeah, I think there are a lot of candidates for it. Leading the pack are still, that's why we're regulated in Lichtenstein and Bermuda. The EU's MECA regulation has a lot of good points if they can actually ever finally get around to adopting the exam thing. And the UK looks like it may be engaging on that basis as well. So the next year, there's going to be, we're going to be spoiled for choice. Spoiled for choice sounds very positive. Not necessarily what I expect. I know we've only got a few minutes left. Matt, I want to ask you, timeline on an actual spot ETF approval?

If you had to guess. Put everyone on the spot here. Yeah, as Oliver would tell you, they already exist, just not here in the U.S. I know, I'm so U.S. centric. I'm sorry. In the United States, yes. It's not going to happen this year, Scott. That's what we know. Bitwise doesn't, I mean, we don't know that,

but that's what we believe. We don't have an application for a spot Bitcoin ETF. As you know, I was the CEO of ETF.com. So this is a space that I love. We think it's just a hard path forward right now. And the market's going to find other ways. Crypto equity ETFs, futures ETFs, SMAs. But a spot Bitcoin ETF or a spot crypto ETF strikes me as unlikely this year. Eventually we'll get there. But this year, I have my doubts. Jeff, do we even need one or are we past that point and everybody should just be self-custodying? So I think right now, I think people should self-custody. I think that's what people should do.

But I think some of, and that's actually why I'm really bullish on Fedament and Feddy, because it brings a middle way of self-custody. Because right now you have self-custody, which is hard for people, but the gold standard, and you have exchanges. And Fediment, that type of system, brings self-custody or shared custody, I think, to billions. I think it's actually one of the things that is an enabler for billions of people to join. Oliver, any final thoughts that you'd like to share

before we go? you get the floor well look I think the the self-custody versus on exchange custody point is going to be very misleading ultimately because I think if we go back to what we're saying earlier on the ultimate goal is that people barely even know the crypto exists and that it just fades into the background and enabling them to do things. And I think the problem with self-custody at the moment is it's extremely clunky, extremely cumbersome. The people watching this podcast may well be able to do it. But I mean this in an entirely unpatronizing way. The vast majority of people in the world have no time, the inclination or the technical know-how to do it.

So we need to work out whether it's essential. And if it is, work out a way to do it much better if we're going to get people to actually engage. And I do think that that is happening, to Jeff's point. I'm seeing a lot of it. I know he's seeing a lot of it. I'm sure all of you guys are as well. We've talked so long that Matt was able to go from nighttime

to daytime. That's probably our cue that it's light outside. The zombies are gone. I really appreciate all three of you, the hopeful tone. Really trying now, as I said at the very introduction,

I want to focus on the good and not the bad because I think, as we've all pointed out, it's largely noise. And if you just zoom out, we're just in another four-year cycle and things are only going to improve moving forward. And I think to me, that's sort of the lesson I heard here. We can eternally debate where it'll be built and how it will be built.

But I think we all at least know that it will be built, which to me is extremely, extremely encouraging. Thank you, Oliver, Jeff, Matt, all three of you. I learned a ton. I know everybody else I can see in the comments really enjoyed this conversation. So you're all welcome back anytime. And thank you once again, everyone else. I will be back tomorrow at 930 a.m. Eastern Standard Time.

On Fridays, as always, we will do the weekend review, which should be exciting. We can talk about all that noise instead of the signal, I guess. Matt, Oliver, Jeff, thank you guys very much. Thanks, guys. Thanks, everybody. Bye, everybody. Let's go. Bye, everybody.