The Wolf Of All Streets - Will China Start The New Crypto Bull Run? | Live Panel With David Duong & Marshall Long

Episode Date: June 1, 2023

Hong Kong is set to open up its economy to cryptocurrencies, allowing retail traders to buy and sell digital assets starting Thursday, June 1. Some analysts have regarded this move as a positive indication, suggesting that China is demonstrating its support for the crypto industry. To delve deeper into the implications of this development, I have invited two esteemed guests to share their insights. Joining us are David Duong, Head of Institutional Research at Coinbase, and Marshall Long, Head of Architecture at Rhodium Enterprises. Together, they will provide their analysis and perspectives on the significance of Hong Kong's embrace of cryptocurrencies. Follow the guests:  David Duong: https://www.linkedin.com/in/david-duong-cfa/ Marshall Long: https://twitter.com/OGBTC ►►OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $10,000!  👉 https://www.okx.com/join/SCOTTMELKER ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►BITGET GET UP TO A $8,000 BONUS IN USDT AND GET MASSIVE DISCOUNTS ON TRADING FEES! 👉 https://thewolfofallstreets.info/bitget    ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   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.

As the United States is raising an anti-crypto army led by Elizabeth Warren, who now says that fentanyl is being paid for in crypto, we need to stop the drug trade in crypto. Oh my God, as if the drug trade is not all done in the United States dollars. She is nuts. But as the United States continues to crack down, China, specifically Hong Kong, is reopening some facet of retail crypto trading today. What will this mean for the market? Is it actually a big deal or is this yet another nothing burger and a long series of nothing burgers in the crypto space? I've got two of my favorite people joining today, Dave Young from Coinbase and Marshall Long, my favorite OG Bitcoin miner on the planet to discuss these topics and inevitably things I

have no idea that we're going to discuss because that's just how Thursdays go. Guys don't want to miss it. Let's go. Now, some of you guys may have missed it yesterday, but we finally launched the Crypto Town Hall. Myself, Rand Neuner and Mario Noffel. And wow, way bigger than we started. And of course, because it was big, it got completely ruffled by Twitter spaces

and died roughly 90 minutes in with no warning. Just got the, your spaces has ended mid-conversation, which seems to be pretty much par for the course there. We knowingly have made the move to Twitter with this audience, knowing that we're going to have some technical issues as they build, but I believe that they are committed to building out different ways for podcasters and people to have conversations moving into the future. But guys, it was huge.

It has over 300,000 views already. We had 10,000 concurrent, 8,000 to 10,000 the entire time. It was absolutely epic. And that's going to continue, of course, after this conversation today. I'm going to be there daily at 10.15. Kill me. But that's not what we're here to talk about right now.

We're going to talk about right now we're going to talk about everything china of course david marshall welcome gentlemen thank you sir i canceled on both of these guys last week because uh my kid had strep throat right before so i wasn't here on thursday marshall had canceled on me the week before because his kid was sick and then when i messaged david his kid was sick so anyone who here is parent, you'll know that we're just kind of three kind of sick guys with three kind of sick kids, right? I just assumed it's because you're better than me. You're more famous than me, you know, so you're just big time in me. That's what I figured. No, it was not that at all. If I was big time in you, then you would have seen me actually show up

on the channel just without you. But the fact that I skipped my own stream, probably a good sign that I wasn't lying. But obviously, the main topic today, David, I want to get into it with you first is the reopening or the purported reopening of China to crypto. Right. And there seems to be this very stark, stark opposition of we have the United States sort of shutting down, it feels like while China reopened. So do you think that this is a big deal? What's happening today? Do you think this is just giving a trial for them to maybe move on to China from Hong Kong? How do you interpret what's happening in Hong Kong right now? I think it's a pretty big development. I don't think that if you're expecting immediate

inflows out of Asia, that's not going to happen, primarily because it's only open for looking at licenses starting today. So as of this moment, no virtual asset service providers have actually been approved for anything, but they are starting to look at it. So if you're a retail investor who wants to trade Bitcoin, you aren't going to be available until some of these exchanges start to get approved. But I think it's a very good step. Certainly, it's really important for Hong Kong because they've been looking to become a technological hub. They've been a financial hub for some long time, but they've so far been unable to break into the engineering space. If you go to Hong Kong, there just aren't a lot of engineers.

Like there's a lot of people who graduate with financial degrees. So they have that experience, but this is a way for them to kind of expand their reach a little bit. So I think it's important. It's also really interesting to see that this is happening at the same time

China put out the Web3 paper, which is also suggesting that in Chaoyang, they're actually putting $15 million worth of, you know, money investment into Web3 paper, which is also suggesting that in Chaoyang, they're actually putting $15 million worth of money investment into Web3 each year until 2025. So I think that we are seeing a change in the sentiment in that region. It seems like China never really flagged. If you dive deep in it, they never really banned blockchain. It was sort of like the assets. But to your point, them building this Web3 paper, it seems like they were always remained somewhat pro the technology, at least for adopting it.

But maybe we're just against allowing retail and mining and all these things. I mean, Marshall, listen, you're a miner. Did mining ever really leave China anyways? Yeah, it's interesting. I would say that it mostly moved to places like Texas and some other places, but there is still 10% to 15% of the network in China. It's just dispersed now. You're not having giant places all together. They're easier to hide or easier to bribe in different geolocations. So I still personally think 10% to 15%. I got many friends that are still mining in China. They're just not running giant mega farms. They've kind of dispersed across the country.

Okay. So do you believe that China really is truly anti-crypto or do you think that that was more of a narrative? I mean, you're saying it's more dispersed. So that sounds to me like, as you sort of pointed out the bribe side, right? Like you find a local area. Yeah, listen, I'm not going to say I'm an expert on China. I've done business in China in the past 10 years. Here's what I know to be true about China. China is pro-money, period, end of story. And that is from the top down. And they're, in my opinion, the most industrious and ingenuitive country in the world. And they will find ways to capture alpha across any vertical, crypto, Bitcoin, mining, commodities, whatever. That being said, I think they're seeing the tide turning in the States and they're capturing the upside there.

Okay. That's what I want to talk about because that's my take, but people think that's sort of tin hat. But it seems like we've seen this massive crackdown over the past five months in the United States, all of this regulation by enforcement. David, do you think that China is seeing that as an opportunity? Or do you think that this was just happening in a vacuum? Regardless, they were kind of heading back into the space. Well, the change in Hong Kong specifically started happening around October of last year. So after a period where, of course, back in 2021, China really kind of

cracked down heavily on Bitcoin mining, on trading of crypto assets, you started to see this change and Hong Kong specifically started to be allowed, which a lot of people framed as being a sandbox for China to kind of experiment with this. And it makes sense kind of what we were saying earlier, because I think China is very opposed to capital flight. That's what they're most worried about, or at least among the things they're most worried about. They don't want to lose that control. But certainly, if this is a closed system, that's a lot more amenable to them. And so I think that in some way is kind of what's going on right now inside of Hong Kong. I think the Web3 paper itself that I kind of referred to is also very interesting.

I don't know if you guys have happened to look at it very closely, but it goes deep. These guys really understand the Web3 space. It still seems to suggest that they want to do it within the closed system that China has and that they're comfortable

with, but there is no shortage of understanding of this and do it within the closed system that China has and that they're comfortable with. But there is no shortage of understanding of this technology. I think that they have never given up on trying to better understand technology. Yeah, and they were way ahead before the bans, right? I mean, we've seen their sort of waves of bans. But I mean, Marshall, that was sort of your point, right? I mean, China, it's so funny because before China banned mining, the biggest fear was that all of crypto was going to be in China and it was going to be centralized, right? So they clearly have the knowledge and the understanding. I mean, Marshall, is that kind

of what you were hinting at? Yeah. That's kind of the story of China. Ever since Dean Xiaoping kind of took over and opened China, that's kind of been their MO. And that's across every industry. You see Chinese pharmaceutical companies like front running regulation in the States. If they ban this molecule, there are already four molecules down the road. So this is, in my opinion, no different. Yeah, that makes sense. You talk about the molecules. Well, Elizabeth Warren's talking about the molecules, right? So now she said that effectively her story is that crypto is being used to pay for illegal fentanyl out of China.

She got China and fentanyl into the same claim about crypto, which is incredible. Listen, I have no doubt that there's some truth to it but why does that matter if dollars were being paid which they are the rest of it this just seems like she's going so far down the insane fud train am i wrong like this is crazy marsh, you're laughing. I would love your opinion here. I think she's absolutely lost her damn mind. It's hilarious that now it's just very clear that she's grasping at straws and trying to clump all the boogeymen together into one. Let's kill crypto, right? And now you've got, like you said, crypto, fentanyl, China all together in one claim. I mean, you can't make this shit up. Yeah, I think yesterday I was like, the next claim is going to be like that she is going to launch, that crypto miners are going to launch nukes at daycare centers or something. I mean, it's like better filled with unicorns and puppies and ice cream.

I mean, but David, you guys are operating in this environment. This is the rhetoric you're hearing when you're trying to be compliant. I mean, but David, you guys are operating in this environment. This is the rhetoric you're hearing when you're trying to be compliant. I mean, how? Yeah. So I don't really get political about this kind of stuff, but it does strike me that the position that Elizabeth Warren in particular has is inconsistent across her views on the financial system and her views on crypto. She's been very opposed to the financial system and her views on crypto. She's been very opposed to the financial system. She's been very much on the side of regulating banks and trying to put there.

At the same time, I'm like, well, then why are you against crypto? This is actually the asset designed to be sitting outside the financial system there as a response to the over leverage in the system. And don't get me wrong. Of course, we went through our own period of that last year. We saw that we're dealing with a lot of things inside our sector as well. But a lot of what we saw, especially in March, for example, with the rise of Bitcoin and against the US banking turmoil, a lot of it has to do with the fact that you don't know how the system is going to be managed. There are issues both on the fiscal and monetary side. So in response to that, I'm

very shocked to see how strong a position she's taken against this asset class. Progressives should love Bitcoin. I can get that maybe they don't want unregulated crypto banks or things like that, but the asset itself should be a dream for progressives or the far left because of the exact reasons that you just said. So to me, it makes no sense. I don't get it. I mean, Marshall, you've been here for a long time. You've been into Bitcoin for a long time. I mean, does this just get you fired up and you're kind of like, yeah, this confirms every reason that I got into this in the first place? Or is it frustrating? And then we're going to also start talking more about Texas because I know that you're affiliated with Texas blockchain

and a lot of things just happened there actually in the last few days. But what do you make of this aggressive stance? It's interesting because as my time in in bitcoin in general has evolved since 2010 i went from being scared to talk to people about it then being excited to talk to people about it 2012 2013 being confronted with oh isn't that drugs because all you could hear was silk road uh and then you know we go through this oh isn't that drugs? Because all you could hear was Silk Road. And then we go through this, oh, isn't that used for tax evasion? Oh, that's really interesting. Oh, you mine Bitcoin. That's very cool. Oh, are you boiling the ocean? So it's kind of been this road throughout my time in the space. And this is just kind of old hat. I've had many conversations with people that are saying the quiet part out loud. I've had many meetings with people from the IMF

who are saying things like, oh, El Salvador is a step too far. And we like CBDCs because I can turn your money off if I don't like what you say. And so all the things that we have pontificated about as the strong point of Bitcoin and any kind of technology that allows you to own your own assets, it's now becoming very clear that what we thought was going on is actually going on. And we're now very well within the and then they fight you stage. But it seems like it's a very specific group that's in the and then they fight you stage right it's not like we don't

we do have senators congress people even regulators within the sec who take very pragmatic and reasonable approach to this so it seems like this yet again like a very polarizing thing that's happening on one distinct side. And to be quite frank, there are plenty of Democrats who are very pro crypto. True. And that's getting I think that's largely getting lost in the conversation here, because it's so amplified on that side, I would say you actually almost have a balance. It's just that the far left is going so far against it that the optics are bad. I mean, David, do you think so? No, I agree. You know, like, I think it was very apparent,

especially when we saw the Gary Gensler in front of the House Financial Services Committee, I think on April 18th, you know, like there were some comments coming out of Democrat Maxine Waters, for example, that suggested that her views tended to be not as aligned with crypto as they were previously. And I don't think that's true. I think some of those things were kind of taken out of context.

Like like every indication is just that she actually does believe the space needs to exist, but needs to be regulated. And we don't press against that. Like we also think there needs to regulation. It just needs to be thoughtful regulation. I think that's the problem that I think the public hears. They think crypto just wants to be completely unregulated and do whatever they want. No, that's never been the case. But it's interesting. And Patrick McHenry on the Republican side suggested that there could be something coming out by the time June rolls around. So I think we got to wait and see what that's going to look like. And that's kind of always been the case, right? Where it's innovation is front running regulation and the regulators have to catch up by regulating through enforcement. It's been no difference across multiple technologies. And this is just the latest one. The problem with this one in their eyes, particularly in my opinion, is we welcome regulation and a set of rules.

However, I can still do whatever I want. That's the nature of owning my own keys. And I think that's inherently their problem is we have avenues that if we don't want to collectively or we don't choose to individually follow said rules, there is an off ramp to do what we want. Yeah. Good point of that. A good example of that is Mika, right? Because if you objectively look at Mika in a vacuum, it's not that pro blockchain, right? I mean, it's pretty strict. There's a lot of rules there. There's a lot of things people wouldn't like, but I think we're at the point now where it's clarity is better than no clarity, even if that clarity is slightly negative. Right. And that actually should be something I think that regulators in the United States take

advantage of because they can probably take a harder tack right now and still get the support of the industry just by offering some sort of clear regulation or any way for people to operate. Just seems like an impossible, impossible situation to be operating in. I mean, David, even going back to China, I mean, Brian had that great op-ed yesterday or the day before, Brian Armstrong, obviously your CEO, saying that this is a national security threat to the United States to allow China to basically take the reins back here. Yeah, we've been making that argument for a while now. And, you know, it's a little bit different in the United States. I get it. If you look at Mika, for example, what you cited, there's no argument about whether, you know, a certain crypto asset is a security or commodity. our regulatory agencies are bifurcated because the CFTC manages commodities and futures and because the SEC manages everything else. So I think as a result, that battle between these

agencies for regulatory ownership of this asset class becomes a battle and we need to settle that question. But this isn't a question that exists in other places. This only happens in the United States. And this is kind of blocking us from moving forward. And being a security shouldn't be a four letter word. That's the funny thing is that there should be a benefit to being deemed a security if things are done in a certain way. And now it's just become like this blanket attempt to not be deemed a security or for the regulator to use that term as a way to control or wipe out the industry entirely. I want to go back to what you said about McHenry. I was just looking it up. I was trying to see the date. He said basically on April 28th that within two

months, they would have basically some sort of sensible regulation deeming what would be a security or a commodity and solving exactly sort of the problem that we're discussing right now. And Cynthia Lummis was there and said, yeah, the House has a much better chance of getting this through than the Senate. Last year, we saw Lummis-Gillibrand proposed, kind of quietly disappeared into the ether, as many would have predicted. That apparently is going to be re-brought back up in front of the senate but it does sound like there might actually legitimately be an answer to this question within a month i think that that's true i doubt it correction but getting getting it through the senate it's

a tough part i mean it's not gonna happen yeah yeah we've always known i like this isn't like a crypto thing this is a washington dc. Like the house is the one who makes legislation, you know, like they're the ones who come up with this stuff, but it's always tougher to get it through the Senate. So I think it sounds like high likelihood can get out of committee, can kind of get maybe even through the house. I think that itself though,

would be a pretty positive step. I think just even having some direction on here, even if it doesn't get through the Senate, for example, I think at least we would have some framework to work on. Yeah. And it would be like publicly out there, right? I mean, it would be a big media news story that there was some sensible or at least some movement in this space on regulation. And that would be a story that we needed to help keep moving things forward. Marshall, I want to talk more about specifically Texas. Obviously, I think we can all argue at this point that maybe most of the movement for now, especially with all this gridlock is going to come at the

state level, right? But you and I sat down actually at consensus. So that was only a few weeks ago. And Texas had kind of turned negative at that point. A lot of the tax breaks that had been proposed or had been there for miners to help the energy grid basically quietly were disappearing. But now as of this week, I've seen some very positive legislation in Texas. I mean, you're very involved in all that's happening down there. Can you give us sort of the summary of where it's at? Sure. So there were two pieces of legislation that were proposed that would disallow Bitcoin miners from enrolling in what I'll just call grid health support systems.

And then there was another one that will tax miners at a higher rate and kind of get rid of things like the Texas Data Center tax abatement and things like this. So both of those have been crushed due in large part from groups like Satoshi Action Fund and the Texas Blockchain guys, Lee Bratcher and Dennis Porter doing great work over there. So we're fortunate that they took such a proactive stance and even got the former CEO of ERCOT to kind of help lobby against those bills. So hats off to those guys. They really hit it out of the park. Kind of sounds to me like Bitcoin is thriving at the state level and crypto is struggling if we're making that differentiation. Because we're seeing this right to mine bill being passed in multiple states, right? And obviously, we talked about earlier how much of the mining hash rate has come offline in China and other places and has moved to the United States and Texas. Is that a clear differentiation? Do you think

at this point that maybe Bitcoin is somewhat safe because it already is a commodity and it's not really a part of these arguments? Or do you think that there's still a major threat here from regulators and legislators? Sure. So I think in general, it's easier to kind of paint the picture of why Bitcoin specifically, Bitcoin mining specifically, you can paint that as a net good because the proof of work algorithm is very energy intense and there's a lot of beneficial things you can do. There's a lot of renewables on the Texas grid. And so when the sun's not shining, the wind's not blowing, the grid has problems in Texas. Texas has almost 50% renewables online, but they're intermittent and you need a flexible load to kind of ride those waves so that the grid can be They can see tons of people working, construction, jobs, tax rates.

Just because it's such an infrastructure intense type of project, it's easier for them to correlate, oh, this is a construction project and this is employing tons of people as opposed to, oh, this is just tax revenue. I think drawing the parallels is a little bit harder. You can't just deploy tons of infrastructure into other assets at this time. So I think it's a little bit easier to paint the picture for Bitcoin because you can bring them, show them, they can get hands-on with something. It's a bit different. Yeah. I had Fred Teal, the CEO of Marathon on, he was like, we're data centers, man. Literally, that's the argument. I was like, how do you get this all done and all this fun? He's like, we're a centers man literally like he was like that's the argument i was like how do

you get this all done and all this fun he's like we're a data center doesn't matter what's happening in our data center we can open data centers right now it's sort of his argument they'd obviously they have this like i think the largest um the largest mining facility in the middle east opening or being built in abu dhabi and he was like it's a data center. And so maybe that's just a more obvious angle. I think that a lot of that environmental FUD and stuff has died down, actually. I really feel like the Bitcoin FUD is dying while the crypto FUD is on the way up. Yeah, you're getting a lot of... I feel like the SEC and the CFTC and David had definitely more color on this. I think that they're playing catch up and they're finally getting to the point

where they're caught up from all the 2017 shenanigans. And now they're starting to think, okay, well, can we try to catch what's coming next? Because I don't think anybody would disagree. There was a lot of BS going on in 2017, 2018, 2019. So I think they're- 2021, 2020. Exactly. And I think that you're seeing them play

catch up here and they've dug themselves out of the hole from 2017 and they're starting to it's just an easier target you know it's like five guy teams you know you've got you know maybe one ceo and and two other people running businesses it's a real easy target for these big three-letter associations to kind of go after as opposed to you're going to go after something that you can't really prove is a problem. You want to talk about, oh, Bitcoin's hurting the grid. You can't prove it. And there's huge, well-capitalized players. You want to go after a dozen small person teams. I think it's just an easier target in general. Yeah, I tend to agree. You brought up, obviously, the move of Ethereum from proof of work to proof of stake. David, we've talked about this quite a

lot in the past. I think actually we talked right when the upgrade was happening and both of us was sort of on the side that this is a bullish event, not a bearish event. Everyone's not going to withdraw and start selling. Well, that's what we've seen, right? I mean, talk about, I know you have some of the data, but like, how long is the queue now, inflows versus outflows? What's happening with the Ethereum proof of stake? Oh, it's, I mean, it's insane how long the entry queue is compared to the exit queue. I mean, we're talking about a 30 days entry queue at this moment. I think last I saw it was somewhere in the order of north of like 50,000 pending validators coming trying to get in whereas it's around 1800 people trying to actually exit uh and this was meaningful especially since uh lido only about a week or two ago actually enabled

withdrawals so like the imbalance on this is definitely in favor of ETH, but you aren't necessarily seeing it kind of put into the ETH price at the moment. You know, you've had that, you've had a run up of activity that's been causing a lot more ETH to kind of get burned in terms of supply as well. But it feels more like, you know,

ETH is moving in sympathy with Bitcoin. Just we're in a low liquidity environment. It's been that way probably since at least post-March, probably since beginning of April. And a lot of that, I think, had to do with the fact that we already saw the completion of the US banking turmoil was kind of resolved. Not really. We still haven't fully resolved it, but there was that. The regulatory ramp up, of course, noise surrounding non-Bitcoin crypto assets, I think, made people a little bit nervous. And then also, you know, not for nothing, but I'm sorry, Binance actually stopped their zero fee trading on Bitcoin, which also kind of reduced liquidity there.

But that had kind of effects on some of the other crypto assets as well. So I think these things have kind of depressed volumes somewhat. And, you know, as a result, I think ETH kind of got affected by that. But all coins in particular, I think, were negatively impacted. Yeah, it's been interesting. I mean, we don't obviously talk about price action too much. But usually, if you saw this sort of like large move up on bitcoin in past cycles you know obviously went from 16 000 to 31 000 in a matter of months and then this sort of sideways consolidation stability you would see these massive alt seasons in the past right you would see just like coins pulling three four or five x's i guess we had a meme coin trend and we've had some ai coins but it does feel like there's no money to flow out of bitcoin into these other things because there's just no liquidity in volume.

I mean, it's a factor, too, actually, because you said the meme coin trend, but it's not just a meme coin trend, right? It's like new technology. It's BRC20, BRC721, like all these kind of new things. It does show that there's innovation on Bitcoin's network as well, which previously didn't exist. I mean, like that cycle that we tend to see in terms of Bitcoin to ETH to all coins, like it, it doesn't necessarily capture when there's actual innovation happening.

So all of a sudden now all these other upgrades are, are looking like real prospects on Bitcoin network. And, you know, maybe Marshall knows this better than myself, but like prior to this, like people were like, oh, Taproot. What's anyone doing with Taproot?

It just went for a year, year and a half with no one doing anything on it and all of a sudden it was like, well, we're doing ordinals. I think that now that we see the fruits of those labors, people are a lot more excited about Bitcoin than they have been in a while and that's a factor as well.

I don't disagree with that at all. It's the first time in a long time that anybody has done something, I would say, outside of let's focus on Bitcoin being the world reserve currency. Let's focus on Bitcoin being just stable money, just block, block, block, and that's it. It's the first time in a very long time. And to David's point, you're starting to see all kinds of interesting things coming out. You've got effectively, you could call them NFTs on Bitcoin now. You've got altcoins on Bitcoin now. What taproot has kind of opened Pandora's box of all the things that can be and should have been on Bitcoin? Yeah. So what, are you a wizard, Marshall? Are we going to see you in a wizard outfit? Listen, I'm a Bitcoin miner. Okay. And all this stuff is good for me. So you

guys put whatever you want on Bitcoin. It's a free market. You want to pay to play, go for it. And I'm going to take your fees. I don't care what you do. How much does this solve the future issue? Okay. We have to live in a theoretical world where ordinals and BRC20 continue for the next hundred years being popular, right? But there's always been the thought of what happens when we mine the last Bitcoin and there's no miners, you know, rewards

and why would miners continue? I mean, we've actually seen now a flip at times of miners making more revenue from ordinals and BRC20 tokens than making from the actual mining rewards. Yeah. So the first time you saw this was 2016 and 17, but that was just transactional volume. People were getting excited. They're putting money on exchanges. They're buying all coins, this, that, and the third third now it's a bit different people are burning effectively burning bitcoin to get other things on top of bitcoin so you know the it's interesting i don't know how long the legs are for it but but i'm here for it and it's interesting right

that's funny because i remember 2016-17 that that's when I started. And I remember, I think my first Bitcoin transaction was from Coinbase to Bittrex because somebody told me I needed to buy the ripples. You know, that's when you pluralize everything, buy the ripples and the Ethereums, right? But you had to go to Bittrex and you had to do it in Bitcoin. And I remember my first Bitcoin transaction took like 31 hours or something. If it even went through or got stuck in a menpole yeah i had no idea if i had just literally i was like i didn't know anything about the tech i didn't know what i was doing someone's like buy bitcoin because you got to

buy this thing i knew nothing about it and it was terrifying and i thought i'd just like set my money away to some scammer somewhere in the world insane iane. I mean, and so, but so it is different that that was literally, like you said, that was just because you people were moving so much Bitcoin around to trade. Right. It's a, and now it's a bit different. People are trying things. People are,

it feels a lot like Ethereum in the early days where people were just kind of throwing stuff against the wall, seeing what fix, what, what sticks. And you know, taproot has kind of enabled that. And there's a few other things coming down the pipe as well for the first time in a while for Bitcoin development outside of let's make Bitcoin more secure and more interoperable and these kinds of things. So it's interesting times for sure. And I do think, David, I want your shake on this. Do you think that this is actually carving out anything from the Ethereum ecosystem or Solana, whatever smart contract platform you want? No, and I think that that's kind of a misunderstanding about the BRC token standard itself.

Because of the name that sounds so similar to ERC-20, people kind of make it comparable. But no, ERC-20 is designed so that you can actually interact with smart contracts but that's just not how brc20 works brc20 works through the inscriptions process excuse me inscriptions process so you know you you need to like actually mint with a limited mint you need to actually uh keep track of how those those you know mean coins or other brc20 tokens kind of move by kind of keeping them off chain and keeping track of it on paper to kind of say like, oh, all right, like I'm moving this amount to this person and so forth.

So it's different. I think that we will start seeing that there's going to be more L2s growing on Bitcoin, for example. Maybe this will give a shot in the arm to Lightning Network. Things like that, I think, are completely plausible. You know, like I think David Marks is coming in here at a good time to kind of bootstrap liquidity on the Lightning Network. But I don't think this is going to try to take market share.

I think they're doing different things. I think that Ethereum, it's got a tougher upgrade roadmap for sure. I think that like the Cancun upgrade with, you know, EIP-4844, total dank shorting, all that kind of stuff. It's going to be really meaningful, but the kind of, not the good stuff, but like the interesting stuff is kind of going to be outside of that. You know, we've got Eigen layer happening. People are talking a lot more about MEV burn. You know, the idea of single slot happening. People are talking a lot more about me be burn You know the idea of single-slot finality like all those things

I think we haven't really come to a consensus yet on like what we should be doing about that how should be implemented if at all on these things like Metallica came out recently and it actually had a bit of a critique about About restaking on a theory of has scared me. That was scary. Honestly, I thought that was scary. Keep going. I don't think it should be scary, but, you know... Can you recap it?

I can't say that I follow the news, but I'd love to hear that. Effectively, the idea is just that if you're going to use Ethereum as a security as a service, effectively, you know, like you have to run the risk that you may optimize

for a protocol that you're backing or not, you know, the idea of like eigenlayer or restaking is that you're going to support all these middleware layers. But what if you optimize for the middleware layers? Could you potentially cause a reorg on the chain in order to optimize for that? That's kind of the risk that you run. so i think it's an important one i think probably we will see that

that gets absorbed because it's you know you have to test these things you have to think about these things um so i i'm not worried about it in fact if anything i'm like i'm glad someone's bringing it up now yeah i just thought it was like a public paper from vitalik who's like the creator of ethereum saying hey guys don't break my chain it's kind of how it's just like my first read thought it was like a public paper from Vitalik, who's like the creator of Ethereum saying, hey, guys, don't break my chain. And it's kind of how it's just like my first read of it was that I was like, oh, God. But you're absolutely right that it will be dealt with. But you don't want, I think, publicly people pointing out ways that it could effectively mess up the chain. But that means, Marshall, does that mean that everything being built on Ethereum would be

quote unquote better on Bitcoin? I mean, it'll be more secure. But I asked Jeff Booth this recently, and I couldn't really get a good answer. I was like, at the very least, like as a Bitcoin maximalist, can we say that there's a benefit to Ethereum other chains because they're a test net for what can be built on Bitcoin? Because you even said this reminds you of the early days of Ethereum. Well, why do we need to be back five or six years again? Well, people get excited for new things, you know,

and there's a lot of Bitcoin, maybe not maximalists, but Bitcoin sympathizers that are very interested in seeing what can be done on top of Bitcoin. That's kind of always been the case. And now that there's some tiny amount of functionality, people are just in the exploratory phase right now. I don't think anything has come out that is interesting from a long-term standpoint. I think that most Bitcoin maximalists would say, if you just take Ethereum for what it is, as the EVM, like a decentralized world computer, And that's it. It's not necessarily money or anything like that.

That's a cool project and that you can build cool things on that you can't build on Bitcoin. I don't think any Bitcoin maximalists would disagree with that. I've talked to the most vocal. If you phrase it and you take the money part out, I think that Ethereum is a really cool place to do very serious work on. I think it's a little bit more than a test net for Bitcoin. I obviously agree with that, but I was just sort of trying to get a little ground in between saying, can we at least admit that all these things that are being on Bitcoin now are a result of things that are

being tried elsewhere. Yeah. And it's interesting because you still have this bifurcation in the community. There are some people saying, oh, Ordinals is so stupid and you shouldn't be putting this stuff on the chain. But that's also the same people who are freedom loving individuals like most people in the ecosphere and so it's it's funny where one person says oh you should be able to do whatever you want and then they're complaining that people are paying to do what they want in a purely free market enterprise and they're against it so it's uh i i think there's a bit of uh taken from one to the other so Dare I say that they want to be able to give permission to use their permission lists? Yeah. I think most rational people would agree with that.

Bitcoin is what you want it to be. And it's built that way. It's an open market. It is an open ecosystem. It's a pay to play system. And as a miner, I encourage you to play. Absolutely. David, but you made the best point because I hadn't really thought about it when I was saying, we haven't really seen this quote unquote alt season or sort of this move to other things. I guess we have, it's just in a very different way. Yeah. I think people are still building and there's a lot of other things going on in the world, right? It's not just this. There's AI.

People are trying to figure out what the intersection between AI and crypto is. People are trying to do other stuff. So that's still going on. But I think that this is just a possible path where previously we weren't really testing the limits of Bitcoin itself. Now we realize, oh, actually, you know, there's some place for this to go. We thought it was just Bitcoin and full stop. That's not necessarily the case anymore. Now, Marshall, on the flip side, then obviously it's pay to play. You're a miner. There's a benefit to it. But how much does this affect the case of Bitcoin as, you know, money for remittances for the little guy when you've got 400,000 transactions stuck in a mem

pool and need to pay 10 times the fees to get your transaction through. I mean, it really kind of kills that, right? At least in the short term. Sure. I think I've personally been through my own journey of what I think Bitcoin is. I used to be super excited to kind of spend Bitcoin and show people what Bitcoin is and get Bitcoin. And then I thought, okay, I'm never relinquishing any coin ever again, because every time I have, it's bit me in the ass. I mean, I've got laptops that are worth like today's money, millions of dollars. It's insane. And now you've got these layer two things that are, you could say illiquid or hard to use, but I think it's early days for things like Lightning, things like Taro that are interesting things to allow remittances.

And you've got companies like Strike who are leveraging those to make the user experience much more palatable. So I think the Bitcoin base layer congestion will only drive innovation on layer two things. And I think Ethereum's had interesting things with fees go on. I'm not going to, I don't know much about that, but I've heard all kinds of complaints about that too. And so I think it's just kind of a circular problem where your chain has a lot of base usage, they build a layer two, or your chain gets intermittently popular. There's all kinds of reasons why there might be network congestion, and that just drives innovation, in my opinion. What I love to point out at this point is, effectively,

nobody I know likes Tron. It has such a negative... nobody likes it. But a majority of crypto transactions are happening on Tron because it's cheap and it's fast, right? I mean, I don't know what the numbers are on stable coins. Last I saw it was like 65, 70% of stable coin transactions happen on Tron, right? Because ETH also is way too expensive and way too clunky. So the only thing about layer twos on Bitcoin is it seems like lightning's been around a really long time and still isn't great. And there's people who claim lightning is great. I don't get it. Maybe I'm missing something. Maybe I'm using it wrong. You can't move large volume through lightning. There's just not enough liquidity between peers.

I think fundamentally the system is designed differently. It is supposed to be decentralized. It's supposed to be opt-in. Anybody can get into it. Those design choices really hinder development speed, I would say. However, long-term, it could prove to be more robust. So I think for small things like remittances, it works perfectly fine. You know, you want to pay somebody in coffee, don't use base chain, use Lightning, it'll work. You got things like Moon Wallet and Strike and Wallet of Satoshi that make these things very easy. But yeah, if you want to shove large volume through Lightning,

it's not going to work. Interesting. So then knowing that most people care about cheap and fast and not about security feels like there's still going to be a whole lot of innovation and interest elsewhere. I agree. I mean, Solana,

I looked at the statistics. I had no idea. Lately, you kind of get this impression that Solana died with FTX. Not the case, but their transactions are Dwarf Polygon and Ethereum and all of the others basically combined. Yeah, after they lost their order book, a lot of people were kind of sour on Solana, but they've rebuilt. And I think that you are seeing that a lot of these

I would say alt L1s are finding probably other means of actually distinguishing themselves, whether that's a separate kind of programming language in the case of Aptos and Sui with move programming language, or whether it's, you know, like trying to come up with a subnet on Avalanche that caters only to institutions with Evergreen. You know, I think that like all these these different L1s are trying to figure out what their actual niche is, in part because they realize now that they're competing like more heavily with like your your Ethereum's even Bitcoin networks now, particularly the former given that the L2 kind of landscape has grown so rapidly. It was only an experiment about a year and a half ago.

Now it's like in full force. And a lot of people think like ZKBMs will change that, for example. So there's just so much going on that I think some of the other ones are saying like, well, what's our edge now? And how do we kind of set ourselves apart? Marshall, you think that we'll see all these assets bridged between Bitcoin and these other layer ones and layer twos? Now we know that they'll all probably be bridged amongst each other, all the proof of stake, but do you think that we'll actually get to a point where

Bitcoin becomes a part of this sort of greater ecosystem? I don't know. Bitcoin's done a good job of kind of segregating itself from that for a long time. Um, most of the people in the community, I think would say that, uh, maybe, uh, I, I think the,

the mission of Bitcoin is, is a little bit different. I think it's, it's, it's interesting because it's boring. If that makes sense, Bitcoin's boring, but that means it's got long-term legs to be a store value or P2P cash network.

so, uh, remains to be seen. Jury's still out. Preston Pyshko 06.00 And what do you think, David? Do you think that we'll see all those assets bridged and actually see it become a bigger part of the ecosystem? David Collum 06.00 I mean, there's a separate question about the payment side of things and how tokens are used for that. And the challenge I always have with any asset, and I think it comes to the fore pretty sharply for Bitcoin, is there's this idea in economics called Gresham's Law,

which really kind of says higher value assets. Effectively, you can't necessarily be a store of value and a payments asset together. Those two things kind of go against each other. And that's a challenge I have because, you know, Bitcoin in particular is such a versatile asset in terms of it being what some people perceive as an inflation hedge. Other people believe that it's the future of payments and other things. And I don't know what the right answer is to that.

You know, like the question of what is Bitcoin is still something we haven't resolved. And that's in some ways a good thing. You know, we've seen that like in March, Bitcoin was completely a store of value and those store value properties definitely were reflected. And maybe part of that had to do with the fact that, you know,

some of the guys leaving their deposits from Silicon Valley bank were kind of a lot of tech startups who were amenable to Bitcoin. But now Bitcoin performed like a risk asset after the idea that we might have a resolution to the U.S. debt ceiling crisis. And that's working in Bitcoin's favor. You know, it started rallying immediately after the news came out on that. So we haven't resolved that question, but I think it's tough for me to ignore the first principles of economics. And for me, those two things, store of value and payments, they aren't consistent with one another. originally China. I mean, very clear that we should not expect any huge volume coming in from China this week, right? I mean, you made the point that there's really no exchange. I think it's OSL and one other that were even available. I think Binance even said they weren't applying or trying to become available. So I just want people to know, don't expect everyone in China

to rush and buy Bitcoin today because you read a news story that uh it's being opened up do you guys think that maybe we're just gonna have another boring summer i mean before we wrap up my prediction is that we just are kind of really boring until they happen to be honest but uh do you think it's just gonna be another boring summer it's what kind of always happens i think we're probably gonna see that um things are gonna be slow my my guess is we're still gonna be be dealing with, on the macro world, the idea of recession. I think that, you know, the credit crunch we're currently going through in the U.S. is a much bigger problem than the U.S. debt ceiling one, which seems like it's kind of getting resolved. But, like, two things are going to hit, like, probably once we see the debt ceiling issue resolved. One is liquidity is going to be thinned out across most asset classes because the US is going to need to rebuild

its Chartered General Account balance. That's like a trillion dollars over the next year, probably like half of that over the next quarter. So I think that that's going to restrain liquidity and that's going to be tough for a lot of risk assets. And then I think we're also going to have to reckon with the recession, which is coming a lot sooner than we previously expected because of what happened with the banks. And probably we'll see things look a lot better by the time we get to like mid Q3 into Q4. And I'm still constructive on Bitcoin.

I'm constructive on ETH as well into year end. But I think that the next probably two, three months are going to be tough. Yeah, Arshal. Yeah, I agree. I think we chop sideways till the weather gets cold for all the same reasons David just outlined. It's what I mean. Every summer has been just, last year, it seems like it's always kind of that way. So, yeah yeah well maybe uh you guys can go outside and touch grass and jump in an ocean or something guys thank you so much uh both awesome guests again i apologize to the to the audience and to both of you for canceling last week was definitely uh beyond my control everyone of course twitter space is in 25 minutes it's on my account today

it was on mario's yesterday for the cryptoo Town Hall. Got some incredible guests. I don't have the list, but it's big. Scaramucci, I know, is going to be there. John Deaton. Quite a few others. And one of your favorites, guys, Dave Weisberger is going to be joining, of course. He's here every Monday. So, David, Marshall, guys, thank you so much. Everyone else, I will see you here

tomorrow when we review the news. And Marshall, David, I look forward to kind of hosting you guys on Spaces as well, if you're amenable. Yeah, absolutely. Awesome, guys. Thank you so much. Bye, everyone.