Unchained - Is Bitcoin a Safe Haven? Market Correlation, Gold, and Macro Chaos – The Chopping Block - Ep. 823

Episode Date: April 24, 2025

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest in crypto. In this episode, the crew is joined by special guest Joe Weisenthal, co-host of Bloomberg’s Odd Lots podcast, for a wide-ranging, unfiltered conversation. They dive into whether Bitcoin is becoming digital gold, why Ethereum’s value might be leaking away, and how stablecoins are quietly reshaping global finance. Joe challenges the panel on NFTs, DePIN, and whether any of crypto’s big promises have actually delivered. Plus, they debate the rise of MicroStrategy copycats, the failure of crypto social apps, and why Worldcoin’s orb-pilled vision might actually make sense. Show highlights 🔹 Bitcoin = Safe Haven? – Why BTC is acting like gold in a crisis while ETH and altcoins are tanking 🔹 Ethereum’s Value Leak – Joe questions why ETH hasn’t captured any upside from stablecoins or NFTs 🔹 The MicroStrategy Clone Wars – Solana copycats are trying the Saylor playbook… but will it work? 🔹 Worldcoin’s Creepy Appeal – Joe is orb-pilled: privacy is dead, but proof-of-personhood might just work 🔹 The Freeport Theory of Bitcoin – Could BTC be the decentralized answer to offshore gold storage? 🔹 Are Stablecoins the Eurodollars of Crypto? – Haseeb lays out how stables quietly rewrote the financial system 🔹 Ethereum’s L2 Gamble – The panel debates if Ethereum’s scaling strategy caused value to bleed out 🔹 The DePIN Dilemma – Is decentralized infrastructure a dead-end or just early? Joe wants receipts 🔹 Crypto Social Media? – Joe’s skeptical: why decentralized comms hasn’t clicked yet 🔹 Utopia or Bust? – If crypto’s gonna be this expensive, Joe says it better deliver a better world Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Robert Leshner, CEO & Co-founder of Superstate ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Tom Schmidt, General Partner at Dragonfly  Guest ⭐️ Joe Weisenthal, Editor at Bloomberg Disclosures Timestamps 00:00 Intro 01:57 Bitcoin's Market Behavior 06:53 Bitcoin as a Safe Haven 15:56 Economic Value in Crypto 19:51 Stablecoins, NFTs, and Worldcoin 36:00 Blockchain's Value in Social Networks 41:20 Reality of Crypto Utopias 49:19 The Future of Stablecoins and Regulation 54:54 MicroStrategy and Bitcoin Investments Learn more about your ad choices. Visit megaphone.fm/adchoices

How do you think about what's Bitcoin today? It really looks like there is at least some element of Bitcoin being a safe haven. Like if you're like some really rich person somewhere and you look at the world and it's chaotic, it kind of looks to me like actually maybe people are genuinely viewing it as a haven. Not a dividend. It's a tale of two pawn. Now, your losses are on someone else's mileage. Generally speaking, air drops are kind of pointless anyways. Unnamed trading firms who are very involved

I like that ETH is the ultimate Defi protocols are the antidote to this problem Hello everybody, welcome the chopping block Every couple weeks, the four of us get together and give the industry insider's perspective On the crypto topics of the day So quick intro is first you got Tom, the Defy Maven and Master of Memes.

Hello everyone. Thanks again, Robert, the Cryptoconisour and Tsar of Superstate. Good afternoon. And we got Tarun, the Gigabrain and Grand Puba at Gauntlet. You. And joining us today, we've got special guest Joe Weizenthal, co-host of the

Odd Lots podcast. Thanks for having me. Sugged to be here. Yeah, I, that voice, I would say, it's like bedded so deep in my brain. It's on our podcast now. Yeah, exactly. I got a voice recognized on the street today. Really?

I was walking down the street. I was telling you a friend and someone just like over her. Like, I love them. It was very fine. Wait, wait. Is it a blind hiring process? Like, you and Matt Levine have just like, great.

There's a thing, like, Matt Levine, like, really has a voice for podcasts. I just feel like, you know, I have a face for podcast and a voice for silent radio, But yeah, I guess it's distinct enough. It is very distinctive. It's funny when I go out to San Francisco and I like, because people are like, oh, I've never heard your voice at 1X speed before. All you guys are like so, like, you know, optimizing and stuff like that. That is actually correct. I've never heard your voice at 1X speed.

But I like it. I feel like it's even better at 1X speed. So we're early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see chopping blocks at X, X, Y, for more disclosures. So we're in a very weird macro moment, which is part of the reason why we wanted to bring you onto the show. Thank you. Is that we're in one of these moments where everything is correlated, correlations are going to one. And one of the interesting things we've been seeing in the market lately is although

all of sold off, it's been a really rough market for almost everything. But Bitcoin has started to decouple from everything else going on in the wider market. So there are moments when Bitcoin acts like a tech stock. And there are moments when Bitcoin starts to act like gold. And this seems to be one of the moments where Bitcoin has changed its mind about what it is. So initially in the early innings of the macro turmoil, it was really acting more like tech. And now it's increasingly correlated to gold. Gold has done very, very well this year.

It's rallied to all-time highs. Gold is up 28% year-to-date. Bitcoin is almost flat. It's down like 3%. Whereas ether is down like 50 plus percent. Nobody wants to hold the ether. It's just, I mean, even Salana is down massively this year. Salon is down like 25 plus percent.

So what you're seeing is just like Bitcoin is doing its own thing. It's, it's zagging while everyone else is digging. How do you think about, so you had a famous tweet that you posted earlier this year about Bitcoin being three tech stocks in the Trenchco. How do you think about what's Bitcoin today? It really looks like there is at least some element of Bitcoin being a safe haven. Like if you're like some really rich person somewhere and you look at the world and it's chaotic, it kind of looks to me like actually maybe people are genuinely viewing it as a

Haven. And people have talked about it forever and playing such a role, digital gold. But I, but I, you know, rarely have I ever seen much evidence of the price, like actually trading in that way. I kind of think it might be now. I suspect that there are a lot of like people out there in the world with money. And when they think, wow, things look really chaotic these days. I'm like genuinely never been more uncertain in my entire life about how the global economy or the financial system is going to work. I think it's probably more like, I want to have a little bit in a Bitcoin specifically. Bitcoin is up almost 10% over the last couple days, which is like kind of the one of the best performing assets you could be holding right now in this kind of environment. So it does feel like

there's a, there's sort of an affinity trade with gold going on. And it reminds you a little bit of what happened during the Ukraine war. When the invasion of Ukraine began, Bitcoin started rallying like crazy at the same time that most of the stuff was selling off. And again, it sort of seems like, And the same thing happened during the financial crisis is that moments of crisis seem to be. Which financial crisis? No, sorry, the banking crisis. The banking crisis. Like, like, in March 2020.

Wow. For 2020. You're like, you're washing away the remnants of the financial crisis. Sorry. It was crazy. It was born during the actual great financial crisis. I met the banking crisis. But it's like, it seems to be that most of the time Bitcoin is like three tech stocks in a trench code.

But then in moments of crisis, it like pulls a trench code off. It's like, oh, I'm actually an digital gold. I don't know. What do you guys think about it? Well, it was born when the chancellor was on the brink of the second. That's true. That's true. I think right now it definitely is benefiting from uncertainty.

I think I've read, and this could be unsubstantiated, just what I was reading on Twitter, that a lot of the flows were coming from offshore, that they weren't flows from the U.S. People were measuring like the price performance of Bitcoin during, you know, U.S. hours, European hours, and Asian hours. And it was like, no, it's not happening during them. U.S. hours for the most part it was happening when U.S. markets were closed, pointing to potentially foreign capital being scared of the U.S. dollar, right? And moving assets out of U.S. financial assets and into anything else that could hold its value. Gold, obviously, and Bitcoin, et cetera.

But like right now it seems like it's just the anti-dollar trade playing out. And that's what's making people move into Bitcoin. And that could reverse very quickly as well. But it seems like it is tracking gold, and that is the narrative behind it. Anecdotally, like, one of my best friends told me is like, oh, yeah, my wife, who has never owned crypto, sold her tech stocks and bought Bitcoin because tech is too risky, but Bitcoin is not. Is she America? Yeah.

Yeah. And she decided that now. Yeah. I mean, I agree. I think I'm sending this chart around, like Matt from Vanek posted around busy gold outperformance being like four times higher during in Asia sessions than U.S. session. And so it is kind of supporting this idea that, hey, this is Asia, buying gold, de-dollarization. But I think also if you're in Asia, it's like maybe do have concerns about, you know,

hey, if you're in China keeping funds onshore, real sort of custody risk. And so it's an understand about why maybe, hey, Bitcoin is at least a way to sort of diversify your diversification. Yeah. Instead of just buying gold, maybe buying a little bit of Bitcoin too. I remember there were some noises early when the trade war began about countries wanting to pull their goal from the U.S. Oh, yeah. And so maybe there is some, maybe there's some. connection there? So I've thought about this a lot. And, you know, gold is really the original

negative yielding asset. Because either you're, if you have gold, what does that actually mean to own gold? Either you're paying someone for safekeeping in which it's literally a negative yield or you have to hold it literally in your own safe, which means you run some risk of theft or something like that. So it's like, you know, kind of like losing your own keys to your, and you're getting inflated. But you know, you only have like, you know, you only have so much capacity to buy gold. Like, do you trust anyone right now? Like, do you, like, really, I mean, I think it's a crisis of trust. And so you don't really, like, if you actually want to own gold, you can't really trust anyone. But there's a limit to how much, like, you want to have on your

person. And so I do think, like, Bitcoin sort of plays this interesting thing where it's like, you can own it. And like, you know, you might be scared to hold your own keys. And I think a lot of people are. Same exact situation as owning physical. Yeah. But, you know, like, there's no, like, You don't have to worry about the shipment. You don't have to worry about like the size of your safe or something. So it has some interesting properties from like a safe haven perspective that even gold might not have in a moment like this. There's also that I think thread right before tariffs are going live on people trying to import gold from the UK and the US to like get in before the tariffs. Ultimately, even you're buying a gold ETF.

It's going to be physically custodied somewhere. That's right. Oh, there's tariffs on gold delivery. There was fear. The gold was not tariffed, but there was fear that gold could be terror. So there was an imbalance in the market pricing between, like, U.S. and U.K. markets, sort of baking in, you know, anticipation of tariffs. Or the probability. Yeah.

It was something like all the cargo, like excess cargo capacity on commercial flights was, like, sold for gold capacity. There's, like, some crazy statistics. If you look at the Atlanta Fed has a GDP now tracker. And, you know, like mathematically, like exports, subtract from GDP. And they actually had to publish the Atlanta Fed a GDP tracker X gold because they realized that gold imports were skewing their number like the calculations so much. They're too high. They were saying there was like a massive recession because of the imports. But these weren't like, you know, they're monetary imports.

So it's different. But they were being picked up as like goods imports or something like that. So they actually had to publish a GDP tracker X gold imports because they were skewing the way that they calculated where GDP was tracking. Here's my favorite gold fact of the moment. For the first time, the weight of gold for a certain dollar quantity is less than the physical paper stacks of $100 bills. So it is actually lighter to hold gold than it is stacks and stacks of physical paper. Because the dollar is weak and so much. Because the dollar is weak and so much.

So for the first time, you should not be keeping dollar bills under your money. mattress or in a suitcase trying to like travel with them. It's actually now lighter to actually be carrying. I don't even care if that's true. Yeah. Like that's just no such a good line. It's true. It's very apocative. It's very abocketed. So actually, you, you've made me think about this one business that relies so much on non-tariff gold that I hadn't thought about, which is free ports. Like, how are Freeports doing right now? Like, wouldn't the country just seize the Freeport? What are free ports? Have you seen tenant? No. free ports are where people keep oil or sorry art gold a lot of like oh they're like dark

of them as like custodians right don't charge you tax and people build data centers or reports now yes yes but free ports are in my mind the business most affected by all the protectionism like they're the ones where like the host country would has the most reason to seize or cut off electricity or do something and a lot of their businesses built off this like gold storage stuff. Like the Singapore Freeport is like one of the world's top three gold storage units in the world. So how does it work in practice? I don't want to detour us. But let's say there's a free port in Singapore. No, this is good stuff. Yeah, yeah, this is good stuff. I'm not an expert on this. My only knowledge comes from watching Tenet, which is a great film. So there's a free port. It's in

Singapore. Are they saying like nothing is taxed going in? Like Singapore choose it not to tax it. It's like you're in transit and so you haven't landed in Singapore. And so therefore you can custody without sort of going through without paying taxes yeah it's like an opportunity on the u. yeah yeah it's like the same like international waters but you're not actually like in transit you're leaving it at the freeport for like you're leaving you can't take it out of there yeah atosa abrahamian so it's like a duty free shop has a great book is all about this i'm blanking on the name but the amazing book i'm blanking by atosa abrahamian you should check out she talks all about this world of free ports and it's like you know absolutely fascinating like geneva's like a

whole city built upon the Freeport business and all that stuff. Well, the reason I bring up Bitcoin is like Bitcoin is like a way of doing freeports without need. Crypto solves this, right? You don't need free ports with Bitcoin. But Freeport's number of assets in dollar terms was crazy. Like every Picasso's free port. Do you have any assets in a free port?

No. I've just like, would you admit if you did? No. I have a friend who is an artist who all her art, Sarah, who all her art, she sells to people. to people in Freeport. So she's just to like go deliver to Freeport. So she talks about this whole like delivery process thing is like crazy. In the movies,

don't the art collectors like keep the forgery in the freeport and then bring the real one to their... This is in the movie. It's then bring it home. It's like, oh, this is like the real Picasso. And that like, you know, the forgeries, by the way. Yeah, yeah. But anyway, I'm kind of curious, like,

somehow maybe the Bitcoin narrative should be like decentralized freeport. Freeport without being. That's a good one. Decentralized reports. All right. It requires a lot of setup in order to explain. But the type of person who would be worried and buy Bitcoin at the moment and like flip out the tech stocks into Bitcoin and like had enough money would probably be able to get that.

So I've told the story on the podcast before, but when I was in high school, I got a tour of the gold vaults at the New York Fed. And what's really cool about those is like all the different countries have a locker at the New York Fed. And like the IMF has a locker. And you think about that, which is like, and I've really thought about this a lot lately. Think about the implicit trust that like America has built up over the years, such that all of these countries and international institutions are so, yeah, cool. You can hold our gold. Yeah, that's fine. I have it in a locker down in the basement of one of your banks of the New York Fed.

Like, you kind of maybe appreciate what we've built up trust wise with the entire rest of the world when it comes to that. Well, there's an economy of scale there, right? So like it's easy to theoretically move something from one lock. That's right. When they're next to each other. That's right. So like the IMF can move gold to another country. That's right.

Vice versa. Whereas if everyone's holding their own gold, it's actually unbelievably cumbersome to fly. That's right. That's right. So there's reasons why it should be. No, no. There should be kind of centralized.

That makes a lot of sense. Yeah. But one thing I will actually say, actually, if you go to GIC, the Singapore sovereign world fund's office, they have their story of their founding. And the story of their founding is like, as soon as the U.S.

moved off the gold standard. Singapore was like, we're just going to buy, we're going to like have this fund, just go buy as much gold as possible. Oh, interesting. And they have like the transcripts of how they did it, which was like flying to Switzerland and like finding OTC brokers. And they have like all the like time.

If you go to the office, they have like, it's almost like a museum of like the artifacts and how hard it was. Yeah, basically it's a trade log of how hard it was to buy gold. If you were a country looking to like basically build up your initial stash. So I kind of think people must be thinking, someone must be the Singapore right now, right? And the question to me is like, who is that? Who is the one who might be using Bitcoin as the kind of? Well, the one advantage of using Bitcoin is that you never get these distortions in like trade numbers because Bitcoin just instantly comes in and out of the country.

And it's like even, I mean, I don't know if if you move assets custody by Coinbase custody into Binance or Cobo or something, does that show up? Like when does that finally show up into like GDP numbers or something, you know? I don't think it shows up in. It certainly doesn't right now. No, it's like, yeah, it's a good question. But in principle, at someday, there's no reason why it shouldn't. But, but I actually disagree because GDP is trying to measure like economic output. Right, right.

Obviously, you're not a financial. And we use some very simple mathematical shortcuts to be able to measure it, right? Right. But fundamentally moving Bitcoin in or out of the world doesn't actually contribute. It's not productive. assets. You're telling me miners' costs. Don't, I'm not kidding. No, I mean, it's like the actual Bitcoin mind could or should be in GDP.

Right. But like if I move Bitcoin between two countries. Yeah, I don't know what it was about the way the Atlanta Fed was doing about it, that they were picking up gold flows and their data. They were, I don't really know why that was, and they realized that that shouldn't have been included. Yeah. Okay.

So switching gears a little bit. Yeah. We've been talking about how Bitcoin's decoupling, and a lot of crypto Twitter is right now pretty despondent. I mean, maybe the last couple days has started to get a little bit better. But they're pretty despondent about the fact that Bitcoin has been crushing it and everything else been getting crushed. Well, I'm just going to say, this is very funny to me because I see all this like, no offense, chest thumping from crypto people. And they're like, see, we're decoupling from tradfai.

And I'm like, who is we? Because all of you have been pumping all these other coins for the last five years. And I could go to like Coinbase.com and it has a million other coins along there with Bitcoin. So it's like, who is this we that you're talking about? A different subset of the tribe. I'm just going to say, I'm just going to say, oh, we're decoupley. It's like, no, you're really not one slice of anyway. That's my little right.

Which to be clear, increasingly is now like 64% slice. Yeah. It is a big slug. Bitcoin dominance has crested to a local high. One of the other meta narratives going on right now in crypto Twitter is the sense that VC investment, of course, which we're, you know, representatives in our own way, has slumped alongside what's going on broader in macro. There's been less dollar sent out the door.

And recently I got into a TIF online with Gwart, the big sardonic guy who's been on the show before, him basically saying that he thinks all VC investments are going to zero. And that basically there's just these legions of tokens that are all worthless. And it seems like now that's kind of the zeitgeist is that, yeah, Bitcoin worked, maybe Coinbase, maybe stable coins. But besides that, it's all kind of fucked. I would buy any venture portfolio for a little bit more than zero. secondary. If any LPs out there, like, it's going to zero, I'll pay, you know, one cent. Yeah. I mean, I'm curious again, so from your perspective, as a, you know, looking in to the circus, what's your perspective on all this drama playing out in Crypto Land?

I mean, look, I'll be honest. I've yet to see really any economic value generated, like, real. And I've actually been surprised because, like, it's pessimistic as I am about a lot of this stuff. Like, I am aware that NFTs exist. I am aware that some of these other projects exist. So I'm actually, like, surprised that as far as I can tell, if I look at, like, Ethereum, the most dominant of the non-Bitcoin coins, I'm surprised they're, you know, it's like relative to Bitcoin. It's like at the 2018 lows. And I've been really, I'm like, has it not gained anything marginally from all of this activity? And I've actually been, I've almost been surprised that it hasn't like picked up a crude a little bit relative. We talk about this on the show.

Wait off. Maybe too much. But so, okay, let's sharpen that claim. You're saying, look, I'm surprised how little of economic value has been created. What do you feel like was supposedly created that feels like bullshit? What are the unfulfilled promises? Here's the thing. I never, I might have, like, sent me an NFT once.

There might be some random, like, test wallet I have or someone who, like, sent me some. But like, look, I never got it. No, but I get, you know, other people claim it is like, oh, this makes sense. But I would figure, like, enough people are, quote, into NFTs that I would have figured there would be some sort of, like, monetary value that would like, that was, like, evident in the price of the tokens upon which these NFTs trade that would, like, show up in some chart somewhere. Even if, like, I don't get it, which is fine, like, you know, like, I have a bummer.

So, like, of course I don't get it. But, like, I would figure. like, okay, enough people are like kind of into them and like having a collection that I would have figured, do it at least be some evidence that is like, oh yeah, like over time, you know, like Ethereum has accrued some value or Solana, which I guess is outperformed Ethereum over the years, but like it's hard to see, right? It's kind of hard to see. Right. So you're measuring the value creation as accruing to the L1, right, right, on which the value is based. Well, this is like an interesting question to my mind, because I kind of have been like stable coin pill

a little bit. Good. I am. Yeah, and I know maybe we'll talk about that more. Is this because you did the Eurodollar series? Well, like,

you know, Austin on the, yeah, we've had Austin Campbell on my podcast. And like, he has done a good job of convincing me that actually stable coins solve for some real problems

and payments that exist that is unlikely to be solved for by merely upgrading existing legacy financial software. Like, I like, would you say stable coins don't count, though, as crypto?

No, no, no, I'm not going to say that. What I am surprised by is that the actual stable coin usage that exists on like Ethereum, Solana, Tron, etc. does not seem to have produced more value for the holders of the L1 tokens upon which the stable coins move. So that like I am kind of like stable coin pilled and yet it doesn't even seem like the Eith holder.

It also sounds like your argument is if you guys are so valuable, why isn't your price higher? Kind of. Why haven't the L1? I think this is an Ethereum-specific problem because I agree. But I think you were talking about Solana, I'm talking about Tron. And if you look at all the other EVM chains that have stable ones that have done well, like in aggregate, those are actually doing pretty well compared to their 2018. So on around 2018.

But I think Ethereum does suffer from kind of value leakage. Where I think you could, you know, capture the value in EVM, I think that would have done obviously quite well since 2018. problem is like Ethereum's product strategy has been to, does he fragment itself, have these alt-l-1s that are EBM-compatible, have these L-2s. And I think the theory was that that would then eventually sort of roll back into value for the L-1.

And that just has not really ended out. Even though I think also maybe I was kind of, maybe didn't pick this up initially, you're kind of distinguishing like the price and the market price and that being sort of a signaling mechanism versus some kind of abstract like utilities kind of concept of economic value. Right. If you take an abstract economic,

value, they're sort of like consumer surplus that stable coins create could be massive. There could be like billions of dollars of economic benefit. I would describe what Ethereum did as imagine when Amazon moved from first party delivery to affiliate and you could sell products on Amazon. Ethereum did that except it didn't charge a fee. It said, hey, you could, yeah, didn't charge any basically, virtually zero. There's no tariff. There's no tariff.

Could they have done it such that there would be a tariff? Yeah, yeah, yeah. There's an alternative world ready for that. Are we doing this? Tron actually proposed the Ethereum tariff the L2 plan. But even before that, they talked about it a long time ago, decided not to, and then now, only now was it kind of being revisited. I think they just didn't want to be like a lot of the other L-1s that were like built

that in, like, the Pocodots of the world where it was like built into the- Well, they were too commercial. They were so overly aggressively commercial that they made activity extinct. Backwards Land with respect to charging rent when really- charging rent when there was nothing. Yeah, exactly. The direction of payments was the opposite everywhere else. But I'm saying like, I think that types of scared Ethereum people into being like,

no, no, no, no. The only way to be neutral is to charge nothing. I don't think that's the right story. I think the story was that they just weren't thinking about it. No, I think it was very, they did talk about it. I think it was very simple, which was just that everybody in Ethereum felt like they were winning. Yeah.

And that it just wasn't, it's like, you know, you can do basically extremely low taxes when everything's growing like crazy. and you just don't need to think about it, right? Like having the optimal rate of taxation to maximize the amount of rent you're extracting, like optimize the point in the laffer curve is something you only have to do when you're a mature economy. Before that, you're just growing. And all you care about is growth. So it's the same thing with like a tech company, right?

Tech companies, they don't worry about exactly how many fees can the market bear. I think the difference is when they had the first choice of thinking about this. So like, M.EV is so high that we don't really, like, it's growing. And like we have this alternative revenue that's very almost like variable interest. that's growing so fast that we don't need to charge. And then they didn't realize that would get internalized by the vendors. So like Amazon. You mean like have a floor price on blob storage?

Yeah, or other execution fees, et cetera. Like raise fees beyond the market mechanism. Okay. But I mean, you know, like if we're going back to stable coins, if I want to send a dollar of value to Tom, you know, for the most part, aren't I just always going to choose the lowest fee? chain. I mean, like, no. No. Okay. You might do the one that has

the most integration across the ecosystem. So like it's possible that one blockchain is like, oh, it's supported on these 12 exchanges and these 40 custodians and these 90 wallets. And it's like, okay, well, that's the most adopted one, even if it's more expensive. Like, why would I, like, Salon is a transaction

in Salon is a lot cheaper than Ethereum, right? Yeah. Why would I ever, if we're just like, you know, not, not. Now, never. Well, because we both have to have Salana wallets or be customers of platforms that do it. So I'll give you another example, which is more like the repo market or bond market, which is like you might stay on a chain where the yields are higher, even if the fees are higher, because when you're not transacting, you're holding the baseline yield in different protocols,

and you're only removing it from yield when you're doing a transfer. And those might have higher activity because there's more yield, right? So you might be willing to do this tradeoff. Okay, I see. And I think maybe to answer your question two, I mean, Ethereum's product. roadmap has been to scale through L2s, right? So the L2s are very, very cheap, comparable to Solana. And they're like, well, then the L2s will aggregate all the transactions, send it back to Ethereum. That will be an expensive transaction. But we sort of have economies of scale and it

kind of gets aggregated over all the people who are using these L2s. I think, frankly, that was like kind of a novel theory. I think I don't think anyone kind of did the math of like, okay, in aggregate, how much volume do you have to do in order for this to actually like kind of play out. And frankly, I think we still, as an industry, have a kind of poor understanding of price discovery for these assets. Like people always clown on Bitcoin for like, oh, there's not enough economic security and ha ha ha, ha, that's happening. And it's like, yeah, I actually don't think that is like any driver of the price.

Like actually the lesson you should be getting is like, there is something driving the price that is not any of these factors. And like, that's what you should be looking at. Not like, I have some novel theory and then I'm going to like develop some formula. And that's going to be how the price results. And I think Ethereum kind of also came out of, came out from that way of like, how do I get transaction value? how do I use that to discover the price?

Actually, Bitcoin is a great counter example of how that doesn't matter. But to the, and I completely agree. And actually, this is a question for you guys. Like, there is notionally a P.E ratio for Ethereum, right? No one ever talks about it. Not for Bitcoin. Not for Bitcoin.

Not for Bitcoin. I'm not talking about Bitcoin. Well, there is for Bitcoin, but it's abysmal, so no one talks about it. Like, there. No, but it doesn't accrue to like. The chain. It accrues to minor. It accrues to minor.

Sure. But for Ethereum, there is no, like, you could actually, but does anyone ever talk about that? Like, I never see that. Okay, so Ethereum can be net burning ether, right? Outside of the money that the validators make, right, Ethereum the chain can be inflationary or deflationary, depending on transaction volume, right? And fees. And so that P.E ratio can go negative or positive.

And there have been times where it's deflationary. And so it's like, oh, my God, then we can start measuring the sort of PE ratio in our quotes. So actually, I don't think it's the right way to understand it. I think, like, if you own ETH, you have the right to be able to stake it. Yes. So it's a little bit like, you know, if you have a dollar, you can go get the overnight rate at the Fed, right? But like you don't have to.

You can choose it as having dollars if you're in eight. And like the, so the fact that like those people are getting inflated, people who are just owning ETH is irrelevant to the economic value of the asset and principle, right? Okay. So you own some ETH. If you stake it, by definition, you are not getting inflated. You are inflating the non-stakers, right? And so relative to the non-stakers, you are always gaining more ownership over the network.

the network itself is burning some fees. So the overall high is increasing even more relative to the amount that the non-stakers are getting inflated away. So your argument assumes, though, that there's, like, no arbitrage. Like, every time there's a burn, like, the price goes up to compensate for the market cap. And it doesn't really do that. It doesn't do that. Obviously, because, like, there's other much predominating factors.

I think that makes empirical P is kind of weird. Yeah. Do your point, I mean, there are DFI governance tokens that have some sort of buyback and burn mechanism baked in. M. Yeah, MKR, Ave now, where those are very clearly comparable to like stock buybacks. And people do calculate PEPA asset ratios for those. Frankly, though, again, I'm like, you can look at the market and like if you...

There's no evidence that they matter. Yes, I don't think there's a very, very strong correlation or at all. It depends on the asset. It's almost like your token price is anti-correlated to your PEP ratio. Yeah, well, I think... No, that's definitely not true. If it exists, no one wants to buy your token. That's like what it's...

Well, this is... Hold on. hot. I don't think this is the right way to reach the market. The PE ratio defender has logged on. No, no, no. No, it's more than, it's the same thing with tech startups, right? So, like, an AI company starts earning revenue and then all of a sudden, like, its next round

is much more modest than the previous round. Why does that happen? That doesn't happen because, well, your PE ratio is inversely correlated with your stock price. It's that there's actually a, like a collapsing of the wave function that happens when you start collecting revenue. Before you collect revenue, no one knows. Right. Silicon Valley

TV shows sung this up fast actually. But Crypto is kind of in the middle of that, right? So not quite the liquid market and not quite the full, like, oh, I need a next round based on my current. I think it's actually very similar, is that once you start monetizing in crypto, the market starts to really understand, okay, this is no longer a power large distribution. To paraphrase, Joe, what is the net present value of the discounted cash flow of the Story Protocol right now? Well, sorry protocol. I don't know how Story Protocol monetize or if it monetizes. Can I ask you guys a question?

I'm just going to use this as like random things that I've wondered about. That's perfect. Is anyone using like for real, like be honest with me? We may not be able to be honest. Is anyone using like distributed video graphics? Is anyone using helium for real? Is anyone using like these like, is there a real consumption base of these like D-PIN, whatever, things like that? distributed cloud storage are like, oh, this is a good solution for like my storage.

Like, just give it to me straight. Tom, you take this one. I would say mostly no. I would say mostly D-Pen has really struggled to find traction. There are little pockets here and there. And there's always like some caveats or some sort of asterisk around them. But I would say by and large, D-PIN as a category is either very early or it's not not working.

I think really what I think the past five, six years of crypto has shown is like financial applications are really the killer app, even a lot of the social stuff, is also really struggled. And so you need something. I mean, you have the whole sort of thing. Like, what is it render network? Like, that's the video one. I was thinking of render.

Well, that's a whole kind of. Yeah, yeah, yeah. I mean, so the GPU marketplaces, the sort of data marketplaces, all this stuff, they've struggled. Okay. They're relatively small. If you go look at their tokens, their tokens, their tokens reflect that. But they're to, sometimes their tokens do not reflect that.

No, I think today, if you look at this, like, the market is really internalizes, right? So, like, all these tokens are down massively from their, which basically says that the market no longer is giving you infinite rope to tell the story. Yeah. So I think the market has rationalized to some degree. The other thing I think that is also worth recognizing that it's not always obvious in crypto is that market caps themselves can be deceptive. Like they're not one for one with companies.

So when something says like, oh, it has a 400 million fully diluted valuation, that can really mean almost anything depending on what comprises those pieces of fully diluted market cap. Right. So it's not like a company where fully diluted market cap means like, well, all this equity is going to hit the market at some point in the near future. And it's guaranteed to hit the market. Right. In a fully dilated valuation, a lot of this quote unquote market cap may never hit the market in which case, yeah, it's more complicated picture. Yeah. And not just sort of issued

or sort of shared that standard, but also to frankly, price. Like you really have to look at liquidity and the quality of the sources and like all this stuff might be valued like something that should be betraying in NASFIC. It really is more like a pink sheet, you know, stock. And so it's kind of hard to know. All right. So I feel under attack. But I, but I, but I, but I, but I, but I'm just asking questions here. No, no, this is perfect. No, no, this is perfect. So, okay, Deep in, you feel like it's bullshit.

No, no, no, no, you're, you're, look, it's just asking questions. We're here, we're here to bring out, to bring out the inherent drama. Tell us how you really feel in bringing, in bringing, in Bloomberg podcast person on to the show. Okay. Okay, so NFTs are bullshit. Uh, uh, deep in is bullshit. No, he said the NFTs want to accrue value to. They, do it.

All I said is from what I could tell. Somebody send an empty once and, you know, okay. You guys said. You guys said there. EBS, keep going. Yeah, okay. What else would you say is like, all right, you keep, Cryptobros keep telling me that X, Y, Z is happening, and I'm not seeing it.

Well, I mean, the other thing, well, I'm kind of a World Coin Bowl. I don't own it. Your World Coin Bowl. Tell us more. Tell us more. I think that. Are you scanned? I'm scammed.

Okay. And you don't own any World Coin? Did you get scammed? They might have, like, said, you know, they might have, like, I probably had to download a thing. There's probably, like, one world coin in there. But I actually think that, like, you know, in the world. of AI and deepfakes and all that stuff, it might actually be that we need to have all of our irises

scan. Like, I kind of find that compelling. Like, it's like, oh, and like maybe there should be kept on chain and that's like every human needs a unique identifier. And Social Security numbers are obviously, it's just the U.S. and it's a terrible system for obvious reasons. As everyone knows, like, I'm kind of world coin-pilled. I'm like kind of orb-pilled. Like, I don't know where it's going, but like, I kind of get it. No, for real. Tom, why explain why you're laughing. No, no, I think it's very funny that. It's like the one project you last out. But I also think WorldCoin is cool.

I think the tech is very cool. I think they have optics issues and branding issues, but those are maybe fixable. Wait, so optics issues. What do you think about the creepiness factor of WorldCorp? That's like the most common factor. It's weird as hell. It's like, look, it is. It's like very black narrative.

It is. But look, the way I see it is, that's already gone. Look, I mean, we carry like, you know, a personal tracker around with us at all times. So I'm like, I feel like that's long gone. So you're like a black mirror maximalist. You're like just bring it on. I just think like it's over. Like the idea that we like have any like, it's over.

It's over. So at least maybe I could at some point in the future prove that I'm actually me. Like that's something. Like so I'm kind of a believer in that. But then the other thing like I've often wondered about in crypto that like seems like there could be a shred of potential, but I never really is like sort of like messaging social networking on chain, which intuitively, like, if I really stretch my brain, it's like, I could see it or maybe like sharing, like sending a message to the chain.

I don't know. Like, is there anything there? Why? Why does it appeal to you? Well, I'll tell you why it appeals to me. The whole idea of like the internet communication being run by like four companies or whatever it is, like, really does not sit well with me. Like, I really don't like the topology of the moderate.

So you're an anti-dispopian on the one hand. Yeah. Like, how can it not sit? How can it anyone really sit easy with the amount of power over communication? But you want everyone's eyeballs to be in one. Yeah. These two pictures feel immediately at odds of the other. It's like, but no one like owns those eyeballs. I mean, really like, you know, like, maybe they do. But you know, it's like Elon Musk, Mark Zuckerberg, a few other people just have like an extraordinary amount of control over like the public square. And they could turn a dial on the topics that are allowed. And what could say? And like, if I were to like lose one of my accounts, I would have like no real. Where would you go if, if you got banned from it? I've got banned from X.

God, I worry about that all the time. Where are you a refugee? Like, this is like a real question. I would just hang out in my Discord. I would send emails to people again. You want to go to threads. You'd go to Discord. But if there was a crypto chat, that's where you go.

But could we like the idea of like a genuinely like decentralized a blockchain version of some of these Blue Sky is a little bit in that vein. I mean, it's not blockchain per se. Why can't, why is it there like, could it be a blockchain? Why did you wave away Blue Sky? Well, I have an account there. The vibes are just so awful. It's just like everyone complaining over there.

That's like, it's not fun. When there's bad, you know, like people are real sickos for bad news there. So when the market's down, people get really excited because, you know, they really dislike. Yeah. You know, the politics are very... Blue sky is very left-cove. So, like, if, like, the stock market's down or, like, if Tesla shares are down,

I'll push a chart there. I'll go nuts. Yeah, yeah, yeah. I've never seen more announcements other than my Blue Sky for, like, attack a Tesla today. Oh, yeah, yeah. It's like, it's like all the anti-Musk stuff.

My Blue Sky followers are, like, way up since the market. Really? Oh, yeah, yeah. How many do you have? It's like 50,000, that's pretty good. It's pretty big. But you're, like, intentionally putting bad news on Blue- I was actually like,

Good News. Yes. No, I don't even, you know, the good news. I'm just saying, like, there's a real market for bad news on Blue Sky. I'm just being, right, right. But there's, you know, in the last few months, it's mostly been down here. Joe feeds that market. Yeah.

Are you on Farcaster? Are you casting? No. So what's the deal. Like, is it? This is what I'm wondering. What? What is Farcester?

And, like, could I. Farcester is the answer to, it's the antidote that you are claiming. And are people using it? Not really. Why? It's pretty decent. It's, I mean. , okay, it's not a lot.

50K days, something like that. It's like your entire follower account is the connection between Farcaster and the chain. Like how does it employ the chain? They, so I think, this is my personal bias. Farcaster basically uses the chain as a registry with a bunch of links that then link

off to something off chain that actually host the content or host some sort of thing. So it's nice because you sort of get this like look up almost like a phone book of like, hey, where is everyone's content? But then it's all stitched together off chain, which makes more sense to me actually

from an architecture perspective. Like, you don't need consensus for content. You need consensus when it's scarce to be. Like, I can't be spending your money. You can't be spending the money that I send you twice. But for content, it's like, yeah, if I send a message. Or your username. Yes.

But it takes a while to sort of relay around or eventually hit you or, hey, but if somebody if someone doesn't want to see this, fine, that's fine. That can take place off chain and this can be way cheaper, easier to mediate. But the actual sort of logs and the actual sort of record happens on chain. And that's sort of the farcaster architecture, which I think makes the most sense of all this stuff. See, the thing is I actually have a lot of sympathy. the and towards like true like cypherpunk stuff. But a lot

of it would just solve by signal. I know it's not. But a lot of it just sold my signal. Are you saying Hegseth is proof that it was solved by signal? I mean, look, in the end, like screenshots could never be. They're always screenshots, they're screenshots. But like if I want to like communicate with someone in a way that truly does not run through like a centralized

bottleneck, that's been solved without crypto. Yeah, I mean, you can send a message through the Ethereum blockchain. It's like truly censorship resistant. Or like you can encode any message and like get yourself out there. I mean, but. But it's not worth it. I mean, it could be worth it.

I don't know. Like, it just seems potentially like, I think the problem with social networks is you know the value of your message much later than when you push the message. But blockchains are all the paying up front. Yeah. And so I think that there's like this disconnect and that social posts gain value or lose value after they're posted. Yeah.

Blockchain transactions or financial transactions where they're like kind of like, known up front. And like, I don't, I've never been able to reconcile that. Yeah. Well, I mean, there was all the ideas back in like the late 90s about charging for email to do spam, right? It was like, well, what if we put a one cent fee? Well, hash cash cash was the foundational for Bitcoin. So like, don't dismiss it too much. I mean, I'm not dismiss it. I mean, I think paying per token and AI is like their spam prevention. Yeah. Not much. Yeah. It's so cheap to, too cheap to meter. I think, um, Maybe the kind of silver lining of the way I can see these two kind of fusing actually is

crypto being basically a backdoor to creating a sort of public record, everyone's public, private key pair. And using that as sort of a way to actually, you know, build up that kind of network. Otherwise, everything gets done kind of piecemeal. Yeah, you and I can communicate on signal, but that's going to be separate from, you know, hair or I message key or your email or like, whatever it is. This is like, hey, we should have one big global database that people can actually use to, you know, that is a World Coin, bullish post that you just said. Yeah, damn. I'm like, I'm telling myself.

But it's not, no one really owns the World Coin. Like, it is a chain, right? Like, what is the, I thought. No, I mean, I agree with you. Like, the data is encrypted and in such a way it can't be retrieved by. You can't replicate it without their device, though. And I think that's where. Oh, yeah.

Right. There's like a supply chain. Are they open sourcing there? They are. The hardware should be, but it's not yet. Oh, it's not. Okay. Yeah.

But so what's, what strikes me the most about your impression of crypto because I'd say among people who are in the traditional financial media, you're like at the very first percentile of knowledge about crypto in terms of your engagement with it. Obviously, you've been around it for a long time. And what strikes me is that like what seems to have most brainwormed for you of all the stories you've heard about crypto over the years is the very utopian vision that crypto and blockchain fundamentally allows you to fix the ills of society. And some of those are around identity. Some of those are around like social media. And this is a big story that was told in 2021. It was promulgated by almost everybody in the

crypto universe was that all of society is going to get reinvented by decentralized tech. And I think for people in crypto land, I think most people no longer believe this. They maybe believe this in targeted ways, you know, things like World Coin. I think there is a real, there's a real story there that people do find credible, although it's yet to prove itself in practice. But for a lot of these things, people just don't have the same level of credulity in CryptoLand as they do, as they did before. But the meme itself is so good that it's hard to be like, wait, hold on, guys, you promised me that you were going to reinvent society. I guess the way I would put my perspective, it was like slightly differently, which is that

like, even Salana, like, blockchain seem like computationally costly databases. and if I'm going to use a computationally costly database, I better get something really good out of it. And so I would like sort of flip it around the other way. Not so much that like I think the chain is going to bring Utopia, but we're like, if I'm going to pay this much to use the chain, it better bring about Utopia. Otherwise, why am I pay?

I like that frame. I think of it is, you know, you're not paying that much, paying a couple cents or whatever. And a couple cents for like the security around. A couple cents of utopia. A real financial transaction. that's measured in even the hundreds of dollars. Yeah, well, that makes sense.

I mean, you spend more buying a bottled water at a convenience like a debit or credit card. Well, I think this also gets back to this idea of like deferred value creation, which like social networks are all about versus like upfront value, which is like finance, right? And like that's where I've never really been able to make personally this. How would you have any non-financial applications? Right.

Do well. What made you a stable coin convert? Because I feel like that is maybe the other, like the other polarizing subject where people would say, well, you use them, though. It's just a database. Like, why don't you just use, we're moving dollars around. Like, but you seem very, very convinced by it. Yeah, I would say two things.

I actually, I do put stock in this idea that being able to hold dollar on your phone from any country is, that's powerful, right? So like, I don't know how big that market is. And I suspect that there are going to be limits within any given country. you know, people like Argentina or whatever. I suspect that any regulator within that market, those markets over time will try to place limits to the degree to which one can move money outside of an regulated financial institution into a stable coin. Nonetheless, that seems like a powerful idea to me. And then furthermore, just this idea that there might actually be

something that blockchains or a chain could do in terms of like, integrating databases in a way that will like literally from like different financial institutions, they'll like literally never happen if it had to be like an upgrade or some sort of share. Like I find that to be fairly plausible. And so what I would I would actually go a little further and say like, you know, a stable coin is just the most rudimentary like tokenization of an asset, right? It's a token that dog. So it does not seem implausible to me completely that one could have. You know, I think they're like regulatory issues because they usually want to know who owns what, et cetera.

But they're just in terms of like a database upgrade that then maybe other types of funds, you could have this sort of like common architecture for them to trade. You should learn more about super state. We'll take that off. Okay. Like I could, you know, like there's like part of me that's like I'm open to that. I'm open to that idea. But then the question to my mind is still like, let's just say, you know, tokenization of certain funds or money market mutual funds or whatever.

like actually were to take off, does it, do we know that it actually accrues to the token holders the L1 on some level? Like, it seems unproven. Yeah. Probably unlikely, honestly. I kind of think generally, the more successful those are, the less the L1 can extract. Well, so the L1 makes its money on flows, not on stocks. Yeah. So, like, if you just have a ton of assets sitting there, but they're very low velocity.

Yeah. Right. Right. Right. Right. Great example. Yeah. Yeah.

Or you have like money markets on chain, right? Like money markets on chain. Well, people are just sitting in the money market. Yeah. Right? You're not constantly trained. This is why, like, I wrote a piece in like probably 20, 21 sort of. And I was like, I really think the winners, and so far they have in terms of actual

businesses are like the circles and the tethers. That's who like really is making a lot of actual money. Well, tether much more so than circle. Yeah, no, that's, yeah. Yeah. Well, but so I kind of have this like black pill theory that I'm playing around with about like the real meta story about stable coins. You know, one story is that, oh, you know, there's like this regulatory hack and

blah, blah, blah, whatever. And like you implied, it will get brought into this financial domain and regulatory domain more and more over time. So it almost becomes more, more demure than it is today. Today, it's like kind of like, okay, it's breaking up the boundaries of the law. And the other way you can think about it is that part of the reason why stable coins emerged, in the same way, part of the reason why your dollar emerged was as a response to the over-regulation of the existing system, right? And, you know, in tech, a very common thing that you do is when you have a system that's like, you just kind of broken, right?

There's all these constraints on it. You don't really know why they're there. And it just sort of sucks. Instead of trying to fix it in place, you do like a rewrite, right? You do a second version and you just slowly start moving traffic over to the second version. And the thing is in politics, in law, in regulation, it's very difficult to remove things. It's very difficult to look at the edifice that you have and say, how long it takes to move dollars and settle them and how expensive it is and how hard is to move them internationally.

and all the regulation and all the sanctions and all this other stuff, like, it's hard to remove any of it. Because the moment you do, you'll be accused of being a turncoat or being a North Korean sympathizer or whatever it is. But if you just create the second system and you put a bunch of gobbledygook around it that makes it extremely opaque and difficult to object to, then you can kind of just like have a second system and start over. And that second system just starts bearing more and more of the load as we realize, like, oh, actually, we didn't really want all the things we were getting out of the first system, but we can explain it using a different story of why the second system is arising. And so it's like, you know, regular dollars are not treated like cash, right? But simple coins are treated like cash in that anybody can just hold it and like there's not

this pretense that, of course, you have to proactively prove to the government that you're not committing a crime by holding this thing, right? Like with cash, that's the model. The model is that, no, no, no. It's we ask, you don't have to affirmatively tell us. And the idea is that, well, maybe that was a mistake. Now, you can't actually say that, right? Because then, okay, you're, you know, the natural security cohort is going to come after

you and run you into the ground. But stable coins are like so new and novel and shiny that it's kind of like, well, I don't I can't argue with this, you know? So that's my good. I actually find that very plausible and compelling. I think in 20 years, we may look back and see like, oh, wow, stable coins are just like eating more and more stuff. And they're becoming increasingly, like, adding more of the accoutrements of the old

system. Yes. I mean, it is weird, right? Because, like, if I own a tether, tether has money in regulated institutions. It's just one layer removed. And so I've always had this, like, question of like, because, you know, years ago, like, I don't know, 34, remember, like, there was Liberty Reserve, which was like. And I was like, it doesn't seem that different for, like, this thing, like, went to prison. This guy, like, went to prison, I think. Yeah. Yeah. And it's like, totally. And it's like, I think. But to, but to your point. maybe it just like there gathers its own momentum and there is this separate set of... Look at the Stablecoin bill in Congress, right? So if you look at the Stable Act, which is the one that's in the Senate, for a long time, the dominant conversation in Congress was how do we ban Stapoints? Because obviously they're used for crime and terrorists and this and that and buying drugs

online or whatever. And that's not the conversation anymore, right? Why did the conversation change? I think part of it is in some sense like this concession that, hey, maybe the system that we have is actually not fulfilling, all of the goals, some of which are unspoken, about what the dollar system is supposed to be doing for us. And one of the things we're supposed to be doing is getting other people to use the dollar. And stable coins, right, I was just showing a chart earlier today at the conference we were about that. Tether last year was the seventh largest buyer

of treasuries. Yeah. It bought $33 billion of U.S. Treasuries. China dumped about $50 billion, right? So stable coins really matter now in terms of the global demand for treasuries. Because every Chinese citizen who's buying a tether while their government is dumping the equivalent of that dollar is buying back the treasury that their government is selling. So as a way of absorbing global demand for treasuries and basically financing the debt of the government, stable points are really, really powerful. And so all of a sudden, this conversation is flipped. You go to Congress, Congress is not talking about everybody who owns a tether has to tell us who they are and prove to us that they're not committing crime. But that was the conversation five years ago.

If this thing is going to exist, of course, it has to get folded into the banking system. Why is that not the conversation anymore? To me, the obvious answer is that people realize this actually serves a need that we have because the existing system, nobody can actually fix it in place. Yeah, but five years ago,

stable coins were also this big, and now they're... Right, right, exactly. Which is part of the persuasion of the story. But I also think there's a... That might be an optimistic version to think that, like, Congress, there's like an entity called Congress

that's actually thinking of this through, as opposed to a bunch of people who have become friends and gotten wine-digned by crypto industry lobbyists who are like, just like and want to be on the side. There was a stablecone bill on the floor before this last election cycle. Yeah. And that was also bipartisan in favor of state of corn legislation. I mean, I hear your point that, hey, someone is feeding people in D.C. Like some of these perspective and these lines. and I think I would maybe

kind of appreciate that cynicism again like five years ago and it's like, oh yeah, yeah, then everyone's going to have this like tokenized dollar and it's going to finance the end. It's like, okay, you're on drugs, like no. But now it's like empirically, it is the seventh largest buyer and it's like you can't deny this. I will say you brought up Liberty Reserve, right?

We think about the history of Liberty Reserve. Hold on. Do you want to explain first what Liberty Reserve is? Liberty Reserve was a private cash system that was founded in the late 80s, early 90s, 90s actually. And it, you know, the founding, went to jail because the U.S. It was like email sign up and you could just send money to anybody with an email.

And then people realized one of the main problems with it was like there was no cryptographic guarantees. There was sort of no permissionlessness. Like you kind of effectively had this gating thing. You could shut down the service. And that sort of arguably spawned Bitcoin and some indirect rate, right? Like eCash, Chalmy and ECash came out of that. Hash Cash, if you read the paper, sites Liberty Reserve.

So the fact that you have this permissionless sort of like, like substrate was almost a necessary condition, which I think had to get learned by many failures. So I would say like, yes, it's Liberty Reserve, but it had to get the path dependence of like learning, oh, you need a cryptographic thing. Oh, you need sensors. Yeah. Oh, you need some way of making sure that one person was not stop. I guess the way I sort of resolve it in my head is like actually the decentralized money problem has been solved so long as you don't expect it to be pegged to the dollar, which is Bitcoin. So then basically like you can have the true like more or less peer to peer transactions. What you can't the only thing you don't get is

the free the price you pay a volatility. There's maker now. There's maker now. You pay a volatility tax. Well, you're sort of having a volatility tax. And for the most part, actually it's been negative tech because the price of Bitcoin has gone up. But by and large, if you want to conduct transactions, you can actually do it in a truly decentralized way. You just can't have the guarantee. But how's that different from a stable coin? Right. Well, what's different is that the moment you actually have a working real existing stable coin, you have to, at some point, you have to interact, interface with the real existing regulated financial system. The sponsors of the stable coin does. As of this point, the users do not, right? The users don't. That's right. And they won't have to even. But the users do

Sometimes because when the users engage in criminal activity, then the tether or whatever, like, deletes their account. And so that is the moment where they get, that is the moment where they interact with the law. Right. I mean, that feels like a better system, though, right? Doesn't it? It's like you're, you know, innocent, proof and guilty versus like, hey, you know, show me you. Well, it is, it is private law enforcement, basically, which is also a bit of an anarchist, you know,

crypto anarchist dream. Yeah, yeah. Yeah. If I put my quarter under the radio and you get the, you're familiar with this? No. Oh, it was like this like, it's like a piece or a joke on like it was like libertarians dream. And it's like it's like this fake kind of story about those like policemen who like puts his like quarter into the radio to like get a call. And then like he goes on the street, but like he didn't pay the.

Yeah, it's a freeze. Sponsored by McDonald's. Yeah, yeah. Yeah, yeah. Yeah, I've never heard that. That sounds pretty incredible. Okay. Well, we wanted to briefly also touch on micro strategy.

strategy strategy strategy there's no micro anymore yeah it's just strategy they re-branded they rebranded you missed that you missed that yeah it's just like two months ago it is confusing when you read about it now because it's just like strategy yeah well i will never stop calling it micro strategy but they can they can do their best i just don't call it like facebook well and also the yeah the the the ticker's still msterr right yeah yeah so like yeah what what no they change micro strategy they name i'm sorry micro strategy done okay if sailor ever comes on the show I'm excited. Saylor, bring it up.

If you want to rename strategy, you got to come on the show. The podcast that I really want to hear someone do is an episode about micro strategies and non-Bitcoin business. Let's talk about the business intelligence. I'll give you the short story of my strategy's business. They used to be what Palantir is. Then Palantir beat them at it.

And now then they had they gone to go out. Well, that doesn't help me because I don't know Palantir does. But they used to do the very same defense contracting. Got it. It's kind of got beat out. Okay. So micro strategy, there's now a number of micro strategy copycat. So microchartage is buying a bunch of Bitcoin, obviously.

But there's now been in the emergence of these new affiliate type, or sort of micro strategy affiliation moves of companies that are trying to do the same thing with Solana. So there's one called Soul Strategies, which I believe is trading in Canada. And then there's another one called OPEXI, which, and there's another one, Janover, also known as Defi Development Co. So there's a few of them now that are starting to emerge. There's a meta planet, which is in Japan.

So there's the micro strategization as a broader phenomenon that's taking place now. A little bit. I have very strong opinions about this, which is you cannot do this with a fragmented liquidity base. Because basically the micro strategy game is I'm underwriting bonds against my equity. And the more of these things they have to do it, they're fragmenting their capital base. They're not going to get the same ability to borrow. But they're all competing to be number one, right? It's a race right now, at least for Solana.

The thing is, I think micro strategy is immaculate conception. They're the first one. No one else is doing it. Okay, fine, Tesla bots and Bitcoin, but there's really no, no one else trying to do this leverage strategy. But meta planet's in Japan, right? It's like a totally different. No, no, no, no.

But I still think that fundamentally, the credit worthiness of these issuers is going to be, you're going to look at all of them. It's not like the lender. I actually disagree. I'll take the exact opposite side of this view. So here's why. So micro strategy, as I see it, is a structured trade, right? Micro Strategy is a company and it's using a corporate wrapper, which is a weird wrapper for what is

essentially a structured Bitcoin trade. And if you're buying micro strategy, you're like, oh, I'm buying it at a premium because I'm not buying the Bitcoin it owns. I'm buying this weird packaging of a complex derivative, a very exotic derivative in which the exotic derivative is going to go out and issue debt to buy more Bitcoin. And there's some expectation of how much they're going to do in the future of this. and the value is also tied to the volatility of the asset itself, and it's like this crazy exotic self-referential thing.

And I think, and think is in air quotes because, like, I don't have any data here. But, like, I think you can copy that and run the similar strategy or playbook. And it could or should work for other assets or even within the same asset. For the same reason being that's not. You work for non-crypto asset? That's not my claim. I was doing some research before the show, and they do have micro strategies for other assets.

It's like a copper micro strategy. There's a uranium micro strategy. Do they trade above NAV? I don't know. I just saw it. I think it might. It's not working. So to Raj, my claim is more that if they were a single entity

with the same assets of all of these, you would have a much higher premium to NAV than the ones that's fragmented. Because the problem is you have to lend to the separate ends. When you say the same entity, Do you mean like one entity doing sole? Only, if there was sole strategy only and like all the assets from all these. So they acquired, let's say they acquired all the other microchristy, yeah, yeah, yeah.

I think then they would be able to borrow more and they'd be able to get a higher leverage ratio. I agree with that. And I just don't think that I think the fact that there's five of them trying to start at the same time. But that's common. That's like the whole is lower than the seven of its part. Yeah, what you're describing is like, yeah, there's returns to consolidation. They might cannibalize each other for a while and then they all merge. I mean, the other thing just, and I agree, cold take to nonsense.

For me, the whole thing, all these things seem like nonsense to me. But, you know, it sounds a little bit like, oh, there was only Bitcoin once. So that was the American conception. And now you can't have any more. And now there's 100,000 of those. Yeah, I agree. They're just ETFs, okay? And they're just...

Well, they're definitely not ETFs. Fine. No, but I understand. They're not ETF like financial products that use a corporate shell. By the way, not financial advice. These are not ETFs. Please don't buy the thing. They're ETFs.

They are basically exotic ETFs. Yeah, they're corporations. That happens to use a corporate shell. Yeah. Right? And you can have a lot of ETFs that all run the same strategy. You could have a lot of 3x levered Bitcoin ETFs, right?

You could have 10 of them that sort of work, right? Or even for soul. I think you can have a lot of them that succeed. Okay. So we were talking about this before we started recording of like your deep, profound confusion with what micro strategy is. I mean, I'll just say like, strategy.

Strategy. Look, I'll just say we recorded an episode of the odd lots, with Matt Levine, who explains these things better. And I was like, oh, yeah, that's really interesting. And then I walked out like, I said, I don't get it. So that's where I'm at with this. So when I saw that this was going to be on the list of like things that we're going to

talk about, I was like, I'll let you guys talk about it. I have no insight into what where the value actually accrues here. Okay. So can you try to like Eli 5, what exactly is micro strat? It's an exotic derivative. What actually am I buying? Yeah. Okay.

What you're buying is a bucket of Bitcoin. Yeah. Okay. And there's a bucket of Bitcoin there and micro strategy borrows money to buy more Bitcoin, right? And if you're looking at this package, you say, I can only lose one X my money. But actually, because it's in essence levered up and going to continue to lever up, I could make 5x my money because I think that they're going to continue to borrow and buy.

Right. So you're not even looking at it in terms of the current package of like how much Bitcoin and how much debt is there. you're saying, well, what's it going to do? And, you know, sailors on TV going nuts and talking, you know, crazy game. And you're like, well, I think they're going to lever this up to the moon. And so you're looking at it as this weird packaged product. Yeah, I would also say they're able to issue these bonds at like zero or close to zero rates because it's, hey, there are these desks that have a bond mandate that also wants to be going to.

So it's not zero. They're convertibles. And the option value embedded in the convertible is a cost to microstratory. Sure. In the way that like equity options. Sure, sure. Fed's got a high rate. No, no, no, no, no, no, no, like squash all this stuff.

Okay, right. How will get fired if they're going to. I want to add one other tiny microstructure thing, which is that in pure crypto markets, almost all the types of ways to get derivative exposure like micro strategy have much higher liquidation risk. Yeah. Because you're extremely spot liquidation risk exposed. Micro strategy is like, oh, well, they're negotiating with the bank who maybe will, liquidate on them or dictate the coupon. So your liquidation risk is so much lower that in some,

again, not financial advice. Or life advice. But it is actually in some ways safer than the people doing the same thing on finance or like trying to replicate. Much safer than. Right. And I think that there is some truth to that discrepancy that there's someone slightly off the risk curve from like the finance user who's like, I want the same thing. Well, so there's also there's this other element, which is that micro strategy is so big that they can move the market. And crypto prices are reflexive and auto-correlated so that it's a very momentum-driven market.

And so if you have somebody who's so big that they can themselves move the market by creating the self-fulfilling prophecy that, look, I'm going to lever up and buy more, then they sort of become like this whale that, and for Sailor, he's getting on TV, he's proselytizing. So there's multiple elements

to what makes micro-strategy so effective at what it does. That's also difficult to replicate without having the same very, like, persuasive, charismatic, energetic figure at the head who's not just doing this financial engineering, but also making it so through his effect on markets directly. Yeah, but at a certain point, it actually becomes counterproductive. Like, you actually mentioned the Laffer Curve at some point in this episode.

Right. Imagine if micro strategy slash strategy owns 100% of Bitcoin. It would be worth zero, right? Yeah, that's right. Right? And so the value of Bitcoin increases as they own less. And so there's a question of where on the curve is all. optimal for strategy. Can I just say too? It's really funny to me that like conferences and

even TV networks and like they continue to host Michael Saylor. It's like, yeah, I get it. I know he's bullish on Bitcoin. Like I've heard that one before. Like I'm always like and I have to say like it's the Bitcoin specific podcasts that exist. And I'm like, how the hell are you more bored as hell right now with these conversations? Because I've been hearing these same thing. And like, and it's It's funny because it's the Bitcoin specific. They have nothing new. Joe, what's your seed oil consumption like? They pivot to like talk about me.

Yeah, but like, isn't that just like what are people talking about on like Christian podcasts? You know, like the Bible is 2,000 years old, you know? Well, like how it interacts. Yeah, sure. I mean, people in. It's very funny to me. There's like there are these content makers in Bitcoin. And like it's, look, they've succeeded.

But man, they've had a new thing to say in years. I agree. Verses like equities where like. Like every single day, it's so different. And there's like so much to talk about, you know. But actually, to your laugh for a curve point, I wonder if that like bleeds into the dilution. Like there's some level of like strategy dilution that basically is like they can't really borrow effectively.

And that's the market. I can't wait to find out in like what that's a short point is. Which would be off. I actually think there's a lot to write about this. It's like a very interesting idea. You will definitely have to revisit this at some point. Hopefully. Anytime.

Yeah, hopefully before the end. But I mean, what is the end? What does it even look like? Yeah, I don't know what the end. Do we get a little heads up? I'd love to be invited back on for that episode. Okay. Here's my, here's my, you know, this is not life advice or financial advice.

This is a joke. I'm being sarcastic. This is not actually what I believe, Wank. Wow. Okay. I'm cutting that out, by the way. I think that micro strategy slash strategy is going to get so big that it's going to become too large to fail.

And it's going to fail. and it will get purchased or absorbed by the U.S. government as the United States Strategic Bitcoin Reserve. I like this. Wow. In one fell swoop. I was going to say Sailor gets hit by a bus or something. And I feel like that would also be extremely bad for the market. But this is funny fan fiction.

You guys need to like make the AI generate a comic strip. You know what Sailor needs to do? He needs to take one for the Tigam and lose the keys. You know, they're just like all those coins are burned. Would that be like the Bitcoin Press go up or down? It would go up so. I think so. Yeah, he needs to, he needs to, yeah, he needs to put the keys on a boat somewhere.

I feel like it's very allowed to see. No, I think it's like equity holders get, get nothing. You wipe, wipe all that. In principle, like in a rational market, that's true. No, it has like, Satoshi, okay, if Satoshi sent all of his Bitcoin, like, to a burn address and it was like, now it's permanently burned, nothing would probably happen because everyone assumes that, like, those coins are gone. Yeah, exactly.

If sailors sent everything to Satoshi were a burn address, yeah. Then you'd be like, well, there's a lot less Bitcoin than we thought there was. Right. And like he spent billions of dollars to build that stake. That's incredible. I love that this is sort of like returning to the like first century AD where you like burned all your objects to take with you to the afterlife. Like an Egyptian tomb.

Yeah. That would be a great way to go actually. Yeah. Burn your Bitcoin alongside you. It's like fuck my children. Fuck the shockholders. Fuck everybody. Buried with like a smashed ledger.

Yeah, that's beautiful. That's beautiful. This is what they talk about on Bitcoin podcast. Exactly. All right, all right. On that, we're at time. We got to wrap. Thanks for having. That's a blast.

Hopefully we can have you on again. Anytime. Markets are melting down. We'll all come on your show. Yeah, we'll do it. We'll make it happen. Amazing. All right.

Well, thanks, everybody. We'll be back next week.