The Wolf Of All Streets - Ryan Selkis, CEO of Messari on Why Nothing Has Changed About the Bitcoin Narrative, the End of American World Dominance and the Implications of Helicopter Money

Episode Date: March 24, 2020

Ryan Selkis and Scott Melker discuss (with screaming kids in the background!) cutting through the BS and false information to get to the truth, what we can expect in the coming weeks with regards to COVID-19 and markets, helicopter money, FED stimulus, the potential end of American world dominance and the light at the end of the tunnel for Bitcoin. The best quote from the episode? Ryan - "I can't shout this from the rooftops enough... nothing has changed about the Bitcoin narrative." --- ROUNDLYX RoundlyX allows you to dollar-cost-average into crypto with our spare change "Roundup" investing tool, manage multiple crypto exchange accounts in one dashboard and access curated digital asset content and services. Visit RoundlyX to learn more about accumulating your favorite digital assets when making everyday purchases. --- VOYAGER This episode is brought to you by Voyager, your new favorite crypto broker. Trade crypto fast and commission-free the easy way. Earn up to 6% interest on top coins with no lockups and no limits. Download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe.This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everybody? This is your host, Scott Melker, and you're listening to the Wolf of All Streets podcast. Every week, I'm talking to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, politics, and basically anyone else with an interesting story to tell. So sit down, strap in, and get ready, because we're going deep. RoundlyX.com is one of my favorite companies in the entire crypto space. What they do is they take all your small purchases and they round them up to the nearest dollar and invest that money into any of 25 crypto assets of your choice.

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right, free Bitcoin to try out my favorite crypto trading app. Use promo code SCOTT25. This podcast is powered by BlockWorks Group, the only events and podcast production company I trust. For access to the premier digital asset conferences and in-depth podcast content, visit them at blockworksgroup.io. I promise you will not be disappointed. Hi, everyone. I feel I should mention that the tone of the show will continue to be far more serious over the coming weeks as the world deals with COVID-19 and markets in turmoil. It's a scary time for everyone. So my aim is to provide quality information from informed individuals and to help keep everyone calm in this trying time. Today's guest definitely fits the bill perfectly. Ryan Selkis is an

entrepreneur, blogger, venture capitalist, who's the founder and CEO of Masari in New York City, a firm that is building an open data library for the crypto asset class. But perhaps more importantly, Ryan has been sounding the alarm on COVID-19 for months. He's been far ahead of the curve in trying to get people to take the disease seriously and to prepare for the worst. So, Ryan, thank you so much for taking the time to speak with me today. Thank you for having me. I can hear your kids in the background much like you'll probably hear mine. I think that's going to become the new normal for future podcasting

is that we're going to get a quick window into every guest's life from here on out. Well, I think in general, we want to find the silver linings in the months ahead. And I'd imagine that one of them in crypto in particular would be having a little bit more human element to most of the personalities that are otherwise shit posting or getting trolled relentlessly on Twitter. So it, you know, I think it's certainly going to be eyeopening to see people's bedrooms to the extent that they're on, you know, zoom meetings to see people's, you know, kitchens or, you know, play areas.

I know I've done a couple of podcasts where there's a bassinet in the background. It's, it's, it's, it's not all bad. But, but, you know, certainly, you know, to your point, I, I think, you know, I've, I felt good about our role at Masari and, and communicating updates about this uh, this virus and, um, the dirty little secret about me and my entire career is, uh, I'm not that smart. Hence the moniker of the two bit idiot, but when really, really smart people that have some end domain expertise, like Balaji Srinivasan, who was, uh PhD in genomics and it sold a company for $400 million focused on genetic sequencing. When he says that there's going to be a global pandemic and he's sounding the alarm, I tend to listen, especially when he's one of my investors. So,

I think Balaji's done the industry and anybody that would listen, really a great service. I'm just happy that we and me in particular had a platform to amplify. Yeah. I mean, you know, they always say, if you're the smartest person in the room, you're in the wrong room. So it sounds like you've created the right room, so to speak. So to get right into it, I read your recent medium article, Rip Moon Times, which only 10 days after being published already seemed somewhat like prophecy. How have you managed, you know, obviously I can tell you're listening to the right people, but how have you managed in general to stay so far ahead of the news cycle?

You know, the information access and I think curative ability scales. At some point you do get overwhelmed, but if you think about it like scaling a company, right? Scaling your knowledge base and network is in a lot of ways very similar because I'll go back to when I first got into Bitcoin. The sources for Bitcoin were Coindesk and Reddit. That was pretty much it. And Twitter to a lesser extent,

but crypto Twitter was not that big yet. It was still mostly about Reddit. And this was late 2013. So this is when Bitcoin had just come onto the mainstream consciousness. I started blogging full-time in November of that year before the big spike to a thousand. And I had everybody on my email newsletter. It was similarly structured to how my newsletter is still structured. It's similar to what Pomp does, just quick above the fold, no bullshit, news blurbs. And pretty much all the executives in the industry were subscribers from day one, partly because I met a bunch of them at a couple of conferences and just auto-signed them up, which you're technically not supposed to do, but they were happy about it. And partly because there wasn't a whole lot of news. It was still just all about Bitcoin at that time. And Coinbase had just raised its... It hadn't even raised its Series B yet. This was right before they raised their Series B from Andreessen Horowitz

in November. And blockchain hadn't done their big round. And BitPay was maybe one of the only other funded companies. So if you think about how your knowledge base scales, well, it scales with all of the executives on that team. And the executives are able to scale because their teams have grown and their level up the curators that you're using as the situation gets bigger. And in this case, early February, I would look to investors and, and maybe the handful of experts on, um, on Twitter, just the same way, you know, following the November, 2013 comparison, you go to the executives in the industry for Bitcoin. Well, in this case, you went to the handful of people that were just talking about a period. Um, you fast forward six weeks later,

there are much, much better sources of information. And some of the people that I followed initially just have, have kind of fallen by the wayside. So that ability to just kind of cycle through sources and upgrade the quality of inputs to my mental model for what's going on and how this could play out has been pretty important. Now, I should have a major disclaimer there, though, is no one has any idea what's going to happen next. Certainly not me, but it's just too complex a system. There's too many variables. I think the important thing in a situation like this is at least understanding what as many of the variables, as many of the known unknowns are, so that you can kind of develop your own set of assumptions and try to not only do your own research, but contribute research

to what is probably the only meaningful conversation that people are having right now worldwide. Yeah. I mean, it really is the only thing anyone's talking about. It seems that, you know, at the core, you just have a knack for cutting through the bullshit, so to speak, to finding what's actually good information, which is just extremely difficult, I think, for your average person who doesn't have access to those CEOs and that sort of knowledge base. So, as you said, I mean, nobody knows what's coming next, but I think we can draw some immediate conclusions. I mean, what do you think in the coming weeks, uh, we should be looking at specifically in the United States where you and I both are located? I want to stay optimistic. Um, I, I really think that we're going to see some unprecedented activity, uh, and maybe as soon as the next week, uh, I think that, um, we're going

to see, uh, a, basically a cash transfer program that has never been attempted before, something maybe even on the scale of what Andrew Yang had proposed with his universal basic income proposals. I think you will see a wholesale shutdown, more or less, of the U.S. economy. And as part of that, I think you'll also see an unprecedented shutdown of the markets for some length of time. Yeah, I agree. I mean, I think they're going to shut the stock market. I mean, it's happened before, so I don't see why it wouldn't happen in this situation.

Well, I mean, yes and no, right? For days it's happened, not in general, yeah. Yeah, not for like a month, right? For days it's happened, not in general, yeah. Yeah, not for like a month, right? And I do think that you could see a multi-week, if not month-long shutdown of the markets at some point to coincide with whatever the mega stimulus is that comes out. And then the question is, that's not without risk, right? Because the question then becomes what happens after that, right? What if it's not enough or what if you need to extend it? And that's one thing start to go a little bit haywire. And the reason that we're in uncharted territory right now is the US is very unique in the sense that we had a ton of warning. The virus had already spread internationally and had a

chance to embed itself in many, many cities at basically the same starting point. So, you're not just trying to cordon off Wuhan or cordon off New York City. Now, you're trying to play this high stakes game of whack-a-mole and you don't have enough paddles. So what happens if LA, New York, Chicago, Seattle, San Francisco are all within a week of each other in terms of severity, but unique situation number two for the US, we haven't done any fucking testing. So you have no way to know where we are in terms of that trajectory. And in fact, the only way that you're really going to know, unfortunately, is when the hospital start hitting capacity. And at that point, it's already far, far too late. So, I'm trying to say optimistic, but there's a difference between being sanguine and rationally optimistic. And, uh, unfortunately I think that the, the worst is still to come and,

and the worst could be very, very, very bad. Um, not just from a, you know, human perspective, um, and from an economic perspective, which are the obvious ones, but I think the, uh, if, if things are as bad as they could get, and we really did screw up testing as thoroughly as it seems we may have, the American image and self-image, the American psyche could have irreparable damage depending on whether the response at this point immediately today is sufficient or not. It's funny because many would claim that the American psyche was somewhat overinflated in the first place. But yes, I do think it's likely to be a very humbling experience. And it actually touches on the irony here. Maybe that China will be the greatest benefactor of all of this as their

economy is already coming back online and they seem to have nearly eradicated the spread of the virus. They're having single digit numbers of new cases on a daily basis. And so it seems likely to me, as much as Americans would not want to admit it, that China could likely be the superpower moving forward when the smoke clears. Yeah, I think there's some truth to that. To a certain extent, it's going to happen anyway, right? And maybe China is not the superpower, right? Because their political system makes it difficult for them to unite Asia, right? It is going to be very difficult for China to develop the same ties to South Korea, Japan, India, um, and, and other Asian countries because they are so socially and politically different. Um, I think, um, but, uh, you know,

for, for, you know, some, uh, for some reason people are, are under the, under the disillusion that the US is still the only global superpower anyway. So, it's less about China becoming the only global superpower and more just a realization that the US is not alone anymore. And we have at least an equal counterweight in terms of political and economic clout. And that's, you know, in the form of China right now. Yeah, you touched on, obviously, the Andrew Yang $1,000 to every American a month, which seems almost inevitable at this point. What are the long term implications of, you know, the government dispersing helicopter money in that manner? Well, they kind of have to do it, you know, the government dispersing helicopter money in that manner? Well, they kind of have to do it, number one, because otherwise, you know, you're talking

about a depression, you're talking about just mass unemployment and, you know, personal bankruptcies and defaults on mortgages. And I mean, it's just chaos. And to a certain extent, that's probably going to happen anyway. Agreed. But how do you contain it? How do you soften the entirety of the blow, at least somewhat, and then unwind the consequences over a multi-year period.

And I think you would generally think about Bitcoin and other inflation hedges as assets that would perform equally poorly during a wholesale panicky flight to liquidity, which is the same thing that we saw in 2008. But once you hit a bottom in this whole scenario, once there is light at the end of the tunnel, and it's clear that no matter how bad and how deep and how dark the worst element of this crisis is, there is going to be something at the other end of the tunnel. The question then is what happens next? And with the amount of printing that's going on and with the kind of direct cash transfers in particular, I think it's hard to imagine that being anything but a net positive for assets like gold and assets like Bitcoin. That's not to say that we couldn't go down to sub 3000 or if things got bad enough, maybe even sub 1000. I doubt that we could ever go back into the triple digits, knock on wood. For no other reason than I just... At a certain point,

I'm a big buyer at that point and I'm a minnow compared to many other investors that have been in this for a long time and probably Ether in particular. Yeah, I agree with that. First week, obviously, of late had effectively a 50% drop in a day. I think it shook the faith, certainly, of a lot of the hardcore believers, but probably not the ones you're talking about who do have that cash on the sideline. The question is, I guess, what would make them start buying? They're clearly not doing it yet based on volume and what we're seeing on the charts or in the market. Yeah. I mean, I'm, I mean, I'm not going to lie to you. Like anyone that sees 40% down overnight thinks, Oh fuck man. But I, I personally, I was actually shocked at how little that impacted me.

Like I felt, I felt, I felt much, much worse in November of 2018, to be honest with you. And, but, you know, a big, big part of and other assets like Zcash before the coronavirus came out of my radar. And I didn't really change anything except I used some cash to buy out of the money S&P puts, thinking there's no way to hedge Bitcoin inexpensively or rationally because the implied volatility and everything is just so out of whack. And you have the, you know, counterparty risk of the exchange. Yeah, you would have the counterparty risk. It doesn't make any sense whatsoever, unless you're like a miner or someone that's doing like large blocks like this. So, you know, my general thinking was that if everything went risk off, um, Bitcoin would sell off, but so with the S and P and, and so, you know, you basically

do this, this kind of synthetic hedge. Um, and if, if that hedge hadn't worked, I, you know, uh, I don't know if my apartment is high enough. I shouldn't actually, I shouldn't joke like that. Strike that first. It's not your real mentality, of course. No, no. Well, A, it's not my real mentality and I'm not trying to make light because I know that there are going to be some people that are taking this extremely hard because we're talking about,

you know, real life-changing swings and savings and kind of personal. And there are people who are all in, you know, to various assets, but Bitcoin, certainly. I think you touched on it. Bitcoin and Ethereum seem like relatively safer bets in this time than the remaining basket of altcoins. Certainly. I mean, do you agree with that? What do you think happens to these smaller projects and altcoins in general if this continues?

I mean, I generally think that crypto will always trade as a basket of assets, but you have long-term decoupling of crap versus interesting assets. There's always, I think, going to be an element of the shitcoin casino that exists where there's just no rhyme or reason. It's just stuff to pump, stuff to dump, just like you have the pink sheets and the penny stocks in the existing markets. There's that fringe element, that gambling kind of shady underbelly of the industry is going to exist in crypto just like it does in broader finance. The question is, all right, if 80% of economic value is Bitcoin, and then another 10% is Ether, and then another, you know, 5 cents of that is the shitcoin casino, what is the other 5% and can that ever grow valuable enough so that it starts to cut

meaningfully into Bitcoin's market dominance. And that would require you to have actually useful networks that are not just monetary assets, but network tokens that are essentially tradable and, and, and valuable as as, as revenue or, or income producing instruments. Right. So do you have a claim on network fees or kind of network cash flows or some other physical or intangible, but real good when you hold a given token. Right. Very, very few of those assets right now. Very few. It's interesting. I mean, I've gotten the friend of a friend calls over and over again

over the past weeks telling me that a lot of the smaller projects in the space and companies were likely forced to liquidate their holdings on that one single bad day, you know, to cover business expenses. Have you heard anything of the sort? I mean, do you believe a lot of these projects are already at sort of at the red line now? It's a good question. I mean, you know, we, we never really, I just, I've certainly heard a little bit of that. I think that's always been the case. It always will be the case where people don't manage their treasury and they get too ahead of themselves. From Masari's standpoint, I'll be transparent. I mean, last Monday before the sell-off, we kind of looked at the market conditions and we had about 5% of crypto on our balance sheet. And it was basically just getting paid in Bitcoin, getting paid in Ether over the years.

But 5% is still 5%. I mean, you're talking about a month of our runway, right? So we decided to liquidate all that. I think everybody at the company has a personal crypto exposure. I did not personally touch any of my, my crypto assets, but, you know, we felt, uh, that if we were ever going to be in a situation where we turned around to our investors and said, you know, Hey, we want to raise a little bit of buffer capital and the market moved against us and we lost, you know, like a couple hundred thousand dollars on our, our Bitcoin exposure. Any mainstream investor would say, don't fucking come to me for money. You're supposed to be building your business.

And the reason you need buffer capital is because you're irresponsible and you're speculating. So I think we were good to get ahead of that, even though it wasn't that much exposure, I think just as we saw in 2018, I'm sure that there are a lot of companies, projects that got caught with their pants down and were taking much, much more exposure than they should have been. Yeah. I agree with that. And I think that's sort of the expectation. I'm curious now, I mean, obviously the safe haven asset and digital gold narratives have taken somewhat of a huge shot of late. Do you think that those can be reignited as markets continue to be in turmoil and things sort of get worse with the global economy? Yeah, I mean, I can't shout this from the rooftops enough. Dan McArdle, my co-founder, laid this out two years ago in a 2018 thread.

And it's gotten some pickup. The Fortune magazine just did a write-up with a bunch of folks talking about this very issue of whether crypto is a safe haven. And they cited Dan's 2018 thread, which I agree with, have agreed with, have written about, wrote about in February again, when I talked about, you know, hedging, hedging your coronavirus exposure. Um, nothing has changed about the Bitcoin narrative for a very large chunk, basically for anyone that I know with half a brain, uh, in the industry that knows anything about finance and knows anything about, um, like the history of money and risk assets or anything. I've never heard someone say that Bitcoin would perform well or be just fine, thank you, during a panicky flight to liquidity, like a disaster scenario. That is not the hedge. The hedge for Bitcoin has always been other fiat currencies, right? Will we have hyperinflationary events?

Will the dollar or your local currency lose its purchasing power because governments are irresponsible and have to print their way out of their deficits? There's such a big difference there, right? You're, I, I, I, I really do not know. I want to see, we should name and shame the, uh, the, the, the quote unquote Bitcoin experts that have ever said that Bitcoin would perform well in a disaster scenario where there's a mass flight to liquidity. Cause I just, I've never, I've never seen it. And it's, I feel like it's a nuance that's lost on the mainstream media. It's probably lost on the general public. And quite frankly, it's a missed opportunity because whether or not it's true or not, that crypto enthusiasts, experts, whatever you want to call our community, whether it's true or not, that they had the correct thesis and made that distinction

like I just outlined is kind of irrelevant because that didn't saturate the mainstream. And so now it just looks like, oh, Bitcoin actually didn't deliver as promised. When in reality, this should be arguably the finest hour from a marketing perspective and from a narrative perspective. Not right now during the disaster, right? Because then you just look like an inhuman pariah. Right. But as part of the cleanup, right?

Your currencies may not succeed. Your government's mismanaged this outbreak. And now they're going to inflate away the purchasing power of your money. There's a solution for that. And in every way, that is such a golden opportunity that I think might have been missed because there's been a mass misperception of how Bitcoin would perform in an environment like this. Do I think it would have gone off a cliff 50%? No. Exactly. That's what I was going to touch on. Yeah. I mean, the speed was incredible, but I think there were other forces at work, right? There was probably some, you know, there was forced liquidations.

There was, you know, maybe some behind the scenes structural deficiencies in some of the exchanges. Some of these stories might come out months after the fact or years after the fact, but that doesn't change the general direction of the argument, right? Right. I mean, it kind of almost sounds like there's a differentiation between the value of Bitcoin and the price of Bitcoin, because the price moves, obviously, when these outside factors hit. But, you know, the value proposition kind of remains the same, which is that, you know, if they keep printing fiat, eventually, you know, Bitcoin will truly have its chance to

shine. But you talked about some of the structural deficiencies, potentially with the exchanges. Obviously, I think the big elephant in the room for everyone is BitMEX and that their liquidation engine was basically firing endlessly into an empty order book. And there was a point there, apparently, or allegedly, I should say that it was about 15 million away from zero and they had a mysterious shutdown, which I think you can argue probably was them protecting their ass. I mean, are these exchanges really bad for the space in that regard? I mean, that they can drive price so heavily during this kind of volatility? You know, Bitcoin is open 24-7.

So the ability to do maintenance or kind of stress test the system is, I think most of the exchanges do, you know, they do a fine job. Now, the issue is because it's not as heavily regulated, because you're talking about something where there aren't circuit breakers, there aren't kind of global, you know, cooperatives. You can have some of these issues. But we've also had flash crashes on the New York Stock Exchange. Right. Every day. Well, yeah, every day this week, right?

But even in steady state environments, you've had fat-fingered traders key in a wrong order and the algos have misfired and you've seen this really crazy Vs in traditional market order books. If that happens once every couple of years in the New York Stock Exchange, it should be expected that you're going to have similar kinks and black swan events that move things past the level that some of the crypto exchanges have baked in resilience to actually support and keep business as usual. So I don't read too much into that. Again, I don't want to speculate on exactly what happened because we, um, we, uh, a, we haven't looked at it as a, as a research team and be, uh, even if we did, it probably would take quite a long time to, to unparse exactly what happened. Do you believe that crypto should have circuit breakers?

Uh, no, cause it's, it's, it would be impossible to coordinate. Right. Across all the exchanges. Roundlyx.com is one of my favorite companies in the entire crypto space. What they do is they take all your small purchases and they round them up to the nearest dollar and invest that money into any of 25 crypto assets of your choice. They integrate with your favorite exchanges so that you can round up into different assets all at the same time. And they do this all without ever holding any of your Bitcoin. This is by far the best way to dollar cost average into Bitcoin. You'll never even notice that the money has gone from your account and you'll look up one day and hopefully you'll have made thousands and thousands of dollars on crypto. RoundlyX, that's R-O-U-N-D-L-Y-X.com.

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the switch to Voyager. Visit investvoyager.com or search for Voyager on the iTunes or Google Play Store and get $25 in free Bitcoin when you use the promo code SCOTT25. Speaking of exchanges, you were the first person, I believe, to run the story of the bankrupting of Mt. Gox in early 2014. So you obviously have some experience here. Can you talk about that a bit? I mean, there's not much to talk about really. I mean, I'd mentioned how I got started was just by writing every day and, you know, meeting some of the executives. And when I say meeting the executives, it wasn't this, you know, like, it wasn't this, you know, kind of insider smoke-filled room meeting. Illuminati.

Yeah. When I got into the industry, the team at Coinbase was Brian Armstrong, Fred Urson, Olaf, Charlie Lee, and Adam White. That was the entire team. And there might have been one other engineer there who was very much behind the scenes. And I think still is. So I won't drop his name. But that was the entire Coinbase team. So obviously, they're all executives now more generally. Like Charlie had already created, you know, Litecoin, but, you know, now Adams at COO at Bakkt.

Obviously, Olaf is head of Polychain, you know, Fred at Paradigm. You know, the beginning of the Coinbase mafia, you know, really, you know, kind of in November of in November of 2013, that was the entirety. So when I say executives, it's very like hindsight looking. Olaf was a customer support rep, I think for Coinbase back then. So no one knew what they were doing and we were all just kind of making it up on the fly. So it's only executives in hindsight that I say that. It was basically just meeting people that were full-time in the industry. And at that point, and I shared this information on Charlie's podcast a couple of weeks ago because my source finally gave me permission to talk about the story. But Ben Davenport, who's the former CTO of BitGo and was also an angel

investor, he was chief product officer at BitGo. He basically received this crisis strategy draft document from counterparties at Mt. Gox. And they were soliciting Western investors for a bailout and a takeover, really. And he sent it to me. He's like, hey, these guys are going to open tomorrow, but they're short 800,000 Bitcoins or whatever it was. And I just kind of had the story fall into my lap. So, it was less about me studying the exchange microstructure and saying, these numbers don't add up. It was more just, again, who I knew and how I was able to judge information and curate information as it came in versus doing the sleuth work myself.

I gotcha. So to go back, I guess, to COVID and what's sort of happening with the markets now, it's funny, I continue to hear this assertion that certainly on CNBC 100 times a day that this is not an economic crisis, it's a biological crisis, which to me has become somewhat inaccurate. And we keep hearing that it's not 2008 because the banks are well capitalized, which seems to me to discount the likely effects on credit markets and when people actually start calling in for their money. I mean, they're well capitalized for now, seems like a more accurate take. Like that's just, but you can call it whatever the fuck you want. And you can say it's not like 2008, but at some point it does become like 2008. And I think we're past that point. Yeah. Well, but the issue is you can infuse liquidity into the system. You can have your federal

government and federal reserve buy up troubled assets. You can try to liquidity into the system. You can have your federal government and federal reserve buy up troubled assets. You can try to disentangle the credit default swaps and all the toxic waste that was part of the financial crisis and just part of the asset cleanup because they're all intangible financial assets. So you can manage around that even though the exposure was massive. You can't print more antibiotics. You can't print more raw materials and fix some of these broken supply chains. You can't just salvage people's livelihoods when they're out of commission for three months. There's nothing like it that we've seen in our lifetime. So it's not a financial crisis until it is. Is that, you know, a 30-day shutdown of the U.S. and some major countries in the West becomes a, you know, sort of mass human-wide jubilee from work and from, you know, just the day-to-day toils and intermingling that we've become so accustomed to. And it will be tough for a while, but if it could be truly globally coordinated and enforceable, and then you could turn everybody

back online gradually, then maybe you can see a V-shaped recovery. The issue is, I don't know anyone that really trusts our leaders at this point. So, you know, it's either too little too late or, you know, we're going to keep going to the zigzag pattern where you shut down, things get better. You turn back on, things get worse. You shut down, things get better. And, you know, if that happens until a vaccine is developed, it's, you know, all bets are off in terms of what happens next um i don't know what's happening but neither do any of the policy experts you know so uh either either they didn't know a month ago uh and so why should you trust them now right it comes to something that's outside of their domain of knowledge or they did know a month ago and they lied to you a month ago

so why should you trust them now like It doesn't really matter. The key question is there are only tough answers and there might be some solutions, but none of them are easy or politically palatable right now. They just have to be made and we'll see which societies are the most resilient in the months ahead. I mean, it's interesting. You're already hearing stories, certainly in Seattle of a restaurateur who had to lay off almost a thousand people, you know, really almost within a week. I mean, everyone I know in the service industry either is effectively at home wondering if they're going to have a job, but certainly have no paycheck. I mean, even after this is all said and done, if there's helicopter money, most of these businesses are going to close. If you're paying $30,000 a month rent in New York

City for a shop, you can't even close down for a week, much less a month or two. I mean, it seems to me like we're going to have 100 people to every available job when this is all over. So, it's hard for me to see the light at the end of the tunnel, as far as jobs and unemployment, as you've said, I don't really know how they fix that. So, um, I'm just wondering if now we're sort of coming into a new normal with, uh, with what's happening and that sort of things will be fundamentally different when this is all over. Well, you know, I think one of the things that happens, I, I haven't really seen much discussion of this just yet, but I don't know how the Euro survives this, right? So, let's take the US out of the equation. Given everything that's going

on in Europe, they're not that much different from the US in terms of their level of unpreparedness right now. And I would say, you know, the US dollar is still the flight to safety, but given all the political dysfunction in Europe that exists already, to the extent that that persists and gets worse, as this crisis deepens, you're going to see pretty extreme imbalances in terms of debt burden, in terms of the health system burden throughout Europe. And they're already starting to shut borders down. So what happens with that common currency? That is the reserve currency that I think you'd look to see. And it is still a very open question as to whether that becomes the major currency to fall. You know, the yuan is not going anywhere.

The U.S. dollar is not going anywhere because it would just be too globally catastrophic. But the euro already chinks in the armor. You're right. I mean, I haven't heard a single person mention that. So what happens if the euro fails? Everybody goes back to their own currencies. Well, that's the thing. Like we don't, we've not seen that in, you know, in many, many decades.

And the last time that you had, you know, mass currency failures like that, it was, you know, the global economy looked very different. It was much less interconnected. So, you know, all bets are off. I read actually something this morning that's going around that the expectation now should be effectively 18 months of this. And you touched on it before, it's really just biding time until a vaccine. But that there's actually a case for everybody, you know, being in self-isolation for 18 months, which sounds absolutely absurd, but seems to be almost somewhat realistic. Even if it's, you know, staggered through cities and people come out for a month and go back into isolation for two months

or, you know, whatever that pattern is. I find that to be an almost impossibly long time. I think that the vaccine cycle will get shortened just because this is such a globally existential threat to so many of our systems. So, I feel like those timelines will get it. You're already starting to see some of the timelines get accelerated. If they can find a vaccine, it will basically be every single – let me put it to you this way. If we saw an asteroid coming to us and the whole world had to build a laser to shoot the sun out of the sky, you would bend rules and you would work on a very accelerated timeframe. Because if you didn't, the whole world was going to end. Now, that's not necessarily the case with this, because even in the worst case scenario, you know, you're still only talking about single digit percent of the world population, you know, actually, you know, succumbing to this and probably much less than that. But I'm saying even in the super worst case scenario.

But it's bad enough for the global economic system that at some point you have to imagine that those timelines are going to get accelerated. Now, where exactly times can be compressed, I don't know. I'm not an expert in that field, but we've already seen trials fast-tracked and they're underway in Seattle. They're underway in China and elsewhere. this deepens, you know, you'll, if this deepens or the death rate, you know, hikes up rules will get bent. Um, and, um, and, and every single, uh, inventor and, and potential contributor to the solution we'll see, um, we'll see their, their efforts get fast tracked.

Yeah. I mean, they've, we've already seen them, I think, skip animal testing and go straight to, you know, live testing on humans. But,. But at least as the rules stand now, I believe it's 12 or 14 months that they have to track anyone to make sure that there's no long-term effect. So yeah, I do think it can be compressed to some degree, but that it's still, I think people have to realize that we're kind of digging in for a pretty long haul here. So speaking of back to Bitcoin, do you think that the halving narrative is now completely dead? The bullish halving narrative, I guess I should say. Not necessarily. I think that it still matters, but I don't think that it's going to have the

same catalyzing effect that it was otherwise likely to have. What are the potential negative effects at this point? Well, I also think that the narrative around the quote-unquote mining death spiral are vastly overstated. There's a pretty – there's a chasm between mining farms that have the S9 kind of old ASIC chip technology and haven't yet upgraded or now having delays or issues with their supply chains in terms of upgrading their farms, and those that have the S17 and equivalent kind of next generation ASICs,

the latter group is still going to be able to mine profitably into the kind of low thousands of dollars. So you might see a 50% fall off in hash rate post-having if things kind of continue on their current trajectory. But that'll normalize. It's not going to seize up the network. And quite frankly, if it did, I think that'd be one of the areas where you'd see an emergency hard fork, which is not without risks, but I feel like that would be one of the few existential threats to Bitcoin that would be overcome via the hard fork and the consensus algorithm. Something that's interesting that I've

noticed of late, which is the opposite of what I would have thought. I've probably had 15 people call me in the last week and ask me if it's time to buy Bitcoin. And I mean, random people not involved in crypto at all. Is that something you've experienced? Because I would have expected somewhat for retail interest to have completely died on that drop. And it seems that actually, it's sort of is sparking interest. Yeah, I mean, I've certainly seen it too, I think. And so maybe going back to our earlier thread, this narrative of Bitcoin as an inflation hedge versus a disaster hedge, you know, maybe there is some staying power to that. Because, you know, the first thing people see is the sell-off last week.

And they say, holy shit, well, that's not a disaster hedge. But then you see the response this week and you see the S&P start continuing to tick down. And Bitcoin is more or less, you know, at least temporarily stabilized. Well, all of a sudden things are moving so fast that people forget that we just had a halving of the price last week because the S&P is down 30%. And the S&P is, I'd say, a much more mature index than the Bitcoin price index. So all of a sudden in that same time period, you're talking about trillions of dollars of new stimulus, including helicopter money. Now people are thinking, okay, maybe we could see inflation. Whether or not that's true or not, and by the way, I don't think that's true.

I don't think that we'll see hyperinflation as a result of this temporary stimulus. Not here. Yeah, not here, exactly. But because people are conditioned to think more money equals inflation, I should be thinking about gold, I should be thinking about some other inflation hedge. Bitcoin is now firmly in that conversation. And I think that's important. And remember, Bitcoin is only $100 billion asset. You know, in reality, there's probably only 75 billion of float right now. What are we at? Like, you know, we're 94, according to OnchainFX by Masari, we're at 94 billion in market cap, but, you know, that's including Satoshi's coins. That's including, you know, the 10 to 15% estimate for data.

Right, they're not circulating. So, you know, you're talking about $75 billion in float. I mean, look at some of the public companies right now that are trading north of $75 billion. that could be a digital era substitute for gold for the same use case, do you think that is worth more than 1% of gold's market cap? If the answer is yes, then it should be part of your basket of assets for an inflation edge. I agree. What about national digital currencies like digital yuan, things like that? I mean, how do you think that those moving forward in light of what's happening, do you think they're more likely to happen? Do you think they're likely to affect Bitcoin? Well, I think that they were always likely to happen. What the impact on Bitcoin and cryptocurrencies are but it's just a very different use case.

The digital dollar, digital yuan, very different from Bitcoin right now. In that case, Bitcoin's volatility is a feature, not a bug, because it's already been dismissed as a credible currency. It's a good value transfer mechanism, but because it's so volatile, it's never really taken seriously by world economists as something that could replace the dollar or the yuan or any stable currency. And in the grand scheme of things, that makes Bitcoin very resilient and dangerous as an insurgent currency, because by the time it ever became a gold standard, it would have already subsumed so many other longer tail fiat currencies. And that's basically the hyper-Bitcoinization narrative in a nutshell, which honestly, I don't know how I feel about it one way or the other, but I've been pretty outspoken that if Bitcoin hits gold in terms of its market value, you're literally talking about a half million, $750,000 Bitcoin.

I love hearing those numbers thrown out. Let me tell you, man, it gets me excited. Yeah. And by the way, there's a certain point where Bitcoin goes to a trillion dollars. It goes to a zillion dollars. The numbers stop mattering because on a long enough timeline, these fiat currencies are going to lose their purchasing power. Maybe the US dollar won't for a very long time. But if you think about Bitcoin versus the Argentinian peso, well, yeah, Bitcoin is going to be like a, it's going to be worth a trillion pesos or, you know, a gazillion, like whatever, like it doesn't matter. Like in Venezuela already. I mean, you look at Venezuela already, right?

Yeah, exactly. Um, so it's, um, I, I, I don't know, I, I think that, uh, until people recognize the, and kind of fully come to terms with the gravity of the situation, um, it's, it's still gonna get darker from here, but, um, you know, I'm, I'm getting slowly more bullish that, um, that, you know, the West is moving in the right direction in terms of these shutdowns. I think it's still too late for many people. I think you're still going to see a lot of suffering. I'm still, you know, personally worried a bit, even though, you know, our family's, you know, young and, um, and relatively healthy, it just, it doesn't seem like this, uh, virus necessarily discriminates and you can have outlier cases where it just completely, um, knocks you off your feet. I mean, it's definitely, even if you do recover, you know, having your lungs permanently damaged

isn't really something I'm talking to do list. Right. I was just going to say that. And, and obviously, you know, I mean, the one silver lining for now is that it hasn't affected our children. But, you know, with incomplete information, you always sort of question whether that can change or, you know, whether a bunch of 40 year olds are going to start, you know, dropping dead in mass and completely change the narrative. So it's just really it is really a scary, scary time, especially when you're generally getting inaccurate information. I wanted to just touch on something that you said, you coined the term in your Medium article, the chaos capacity curve, to describe the tipping point for a given community. Can you explain that idea? The chaos capacity curve is basically just a ripoff of the flatten the curve meme that I'm sure most people have seen at this point. Everywhere.

So on most of these charts, there's a line that these two bell curves intersect with. And on the left part of the chart, you've got the bell curve, which is basically, we don't take any mitigation strategies. This goes haywire and we kind of cross this threshold of maximum support in the healthcare system. And we just run out of health system slack. And then on the left part of the chart, or on the right part of the chart, you have this nice, neat little bell curve that kind of sits underneath the line. So that line is usually depicted as a straight line. In reality, it's a curve. And the reason is you can surge healthcare capacity or lose healthcare capacity depending on other variables as well. or any military like we saw in China where they put up hospitals in 10 days gets involved,

you can rapidly increase your capacity, your chaos capacity, as it were. So you can basically provide more area under that curve before the healthcare system breaks. Likewise, if you lose capacity because you're too slow, there's an accelerating negative impact because you weren't testing and your doctors didn't have enough personal protective equipment. So that line is far from static, right? If you have reinforcements, it can be an upward sloping line with more area under the curve. If you lose personnel and you don't have the personal preparedness measures or any reinforcements, it could, but we intuitively know them to be true. It's just a matter of simplifying the message. And I think that one chart has probably done more good than just about anything else from a messaging standpoint that's been communicated by health experts and epidemiologists so far. Yeah, that's interesting. I mean, you talk about

flattening the curve, which is, as you said, sort of the meme. But I think that, you know, we have examples like Italy, where that has not happened. And it seems that the United States is probably far more like Italy than they are like China in terms of responsiveness or what to expect. I mean, they're seeing, you know, the Daily and the New York Times recently with a Italian physician. I don't know if you listened to it, but he basically said that, you know, he's the director of the respiratory unit at a thousand bed hospital. And, you know, in under three weeks, over half of those beds are being used for coronavirus patients. They don't have any, you know, resources, no masks, no ventilators, no anything. And they're basically just completely overwhelmed in under three weeks. I just don't see how that

doesn't happen in many, many American cities. It seems like we're already at that tipping point in a lot of places. We just don't realize it yet. I mean, I just, I just don't understand how we, uh, we, we stop the train at this point. Uh, and so it's, it's, it's really a bit crazy. Did you buy, have you by any chance looked into any of the Italy stories? Uh, I've, you know, only when it was first breaking, um, you know, to, to be honest, I, I've tried to tune out as much as possible because I just know that we're going to get, you know, completely inundated, uh, pretty soon. I've, I've tried to, to the extent possible, um, limit the, uh, the overwhelming human, uh,

exposure to this and just try to think in terms of, of, you know, numbers and, um, and what the, you know, what, what the different scenarios could be that play out because you can, you can drive yourself crazy looking at this stuff. Otherwise. Yeah. I think most people probably are, especially when they're sitting at home and, uh, don't have much, much other to do. So I do, uh, there was one very hilarious thing that you wrote in your medium article that I wanted to point out and get your take on. You said that bitching is something we Americans are really good at. It may even be our leading unofficial export. What did you mean by that? What are the implications of that in this scenario? Well, just that it was going to be a bit of a canary in the coal mine for when things really

got bad, right? When the bitching changes over from, it's just the flu. This is bullshit that I can't go out in public. And you can't take away my rights to bitching about the government and the healthcare system just being overwhelmed. And I need this for my family or what's going on, blah, blah, blah. I think for better or for worse, that's when you're going to know that we've hit a transition point in the crisis. And you can probably, um, as you monitor that and you see all of the like petty concerns fall by the wayside, it will probably mean we're, we're kind of two weeks away from the darkest period is at least my thesis and how I'm thinking about it.

Cause once people are properly scared and have no distractions and are taking like the self-isolation seriously, that's when, you know, this spread will subside and then you'll naturally see gradual dissipation. A lot of pain in the interim period, but the gradual dissipation nonetheless. Unfortunately, it doesn't seem like people are there yet when you see, you know, a full Disney World and beaches at near capacity. I think we're pretty far away from most Americans getting to that point. And it's interesting. I think that a lot of it is this just general distrust in information and where they're getting it. I don't know how we change that, but I think that there's a huge portion of the population that just doesn't trust the media. So they believe that everything is overblown.

I mean, do you agree with that? Yeah. I mean, I think the fourth estate has failed. I think our government has failed. I think this is going to, in many respects, cause a reset of a lot of our Western institutions. From my perspective, I guess, if you're more of a capitalist and agile government, I hate saying libertarian because it basically gives people the connotation that you're just a bit of an anarchist. I really, I can't remember Taleb's exact quote, but it's perfect, right? It's like, I'm a communist

at home. I'm a Democrat locally. I'm a Republican at the state level. I'm a libertarian at the federal level, something along those lines. Um, which I think is, which I think is accurate. And you're seeing that play out, right? Because the federal government is just, especially in the U S it's just, it's, it's so far behind here. It's just asleep at the wheel. Um, and you need, uh, more of a federated response to something like this or at least less less bureaucratic bullshit at the early phases. And really, when you actually need the federal government to step up, you need it to be from a military response standpoint. Imagine if the testing and the initial decision-making for how best to monitor and treat for these diseases and evaluate patients was done with much less FDA intervention, with much less federal overlord

artificial barriers in place. And instead, the only thing the federal government was doing, which is what it should be doing, basically military triage and rapid response fighting this thing as if it was a war and right? And a bioterror exercise. I feel like that would have been a scenario in which the federal government actually performed well versus trying to coordinate all these localized responses and the CDC not having the right fucking test kits. And then the FDA is getting in the way with approval for other private solutions. It's just been a disaster and it's kind of really exposed how inept the, let's put everything in the hands of the federal government. They'll know what's best mindset really is when it comes down to it and there's

an actual crisis. I agree. So just, I know we're getting up against it. So I just want to ask you, how's it going for you personally with your kids trapped in an apartment? You know, it's the, the silver lining is it is springtime. So we're trying to be safe and we have our, you know, provisions and protective equipment and, you know, we're not really interacting with people. We've got a balcony, uh, which is nice. Um, but it is nice out. So, you know, when, when we can, we, we try to get out of the house and, you know, go for, go for a walk and, and, you know, let the kids run around, um, in empty space for as long as possible. Uh, unfortunately I'd imagine that's going to come to a screeching halt in the next couple of weeks, but we'll still have the balcony area and,

you know, we'll try to just batten down the hatches and hopefully wait for this to pass. Yeah. I think the silver lining for me, it's interesting. I mean, obviously it's only been like a week of doing this and they've already now in Florida, they're closing school still effectively the end of April. So we've got, and I think it'll be much longer than that. But the silver lining for me really has been that spending more quality time with my kids. I think I'm far more engaged when I'm not really worried about what I might be

missing on the outside or what else is going. And I hope that people, you know, can really sort of capitalize on this quality time that we wouldn't have otherwise had. I mean, that has to be the only positive aspect of it really at the moment. So, um, you know, I just really hope that, uh, everyone is able to keep their mental health together and really spend some time with their loved ones. Um, so where can everybody find you after this, uh, to keep following you and your takes on on what's happening i am at two-bit idiot all spelled out um very very fitting uh does does anything call out the utter absurdity

of trusting official sources quite like having at two-bit idiot being one of the handful of rational fucking people that were, uh, actually studying this and taking it seriously six weeks ago. Like if that doesn't, uh, just like there's, you give,

you give a man a mask, he'll tell you the truth. And it just kind of exposes just how, uh, completely, uh, overwhelmed, uh,

our society is with bullshit and false information. Anyway, less about me and more just a macro comment. But the site- Well, maybe this will clear some of that out. Maybe we will eliminate some of the bullshit from society when this is all said and done. Well, that wouldn't be a bad thing. But I just wish it didn't come at such a great cost. And then as a company, we're Masari.io.

And we have a number of tools that we're going to be releasing specifically to help people track the coronavirus key stats, news and updates since I've been tracking this so closely anyway. And it's been, you know, really in high demand and all anybody really wants to talk about so leveraging our charting tools and and kind of advanced screeners and and alerts tools to um to give people an up-to-date view depending on what region they're in or or that they're studying for uh for some of the open source um data that is available uh and then last but not least we announced last week uh we will be hosting an entirely virtual event series. We already have 100 confirmed speakers out of my closest friends that I'd worked with previously at CoinDesk on the speaker side. And most of the major investors and industry executives will be participating. This is mainnet.events, mainnet with two Ns,.events. And that's going to be a virtual summit that we host in June with 50% of our profits from the event going to third parties, whether those are relief efforts or

to causes within crypto that are critical infrastructure providers that might be taking a wallop right now, given the market conditions. So lots of good stuff coming out at company level. We're as prepared as I think we're going to be for better or for worse. And hopefully we all pull through this, but we are otherwise going to continue to try to crank out good content and keep people informed. Well, thank you so much for taking the time and for all of your insight. And I hope that people really do choose to follow you because you have, as I've said before, a few times been far, far ahead of the curve. So thank you very much for all of that. Thanks for having me, Scott. Hey, everyone. Thanks for listening. New episodes go live every Tuesday at 7am Eastern Standard Time. Links to our Apple and Spotify channels are in the show notes. You can also follow me on Twitter at Scott Melker to continue the conversation. See you next week.