Unchained - The Chopping Block: If Vitalik Is the Pope of Crypto, Is Justin Sun the Inverse Pope? - Ep. 590

Starting point is 00:00:00 If you read what Vitalik is talking about, of like, what are the things that he wants us to go back to? It's things like, you know, thinking about governance again from first principles or thinking about quadratic funding or public goods funding. This kind of stuff is what he generally points to or, you know, enshrining privacy even further. And in a way, he's sort of dismissing, to some degree, the banking unbanked, you know, Tron, super low fees, all that kind of stuff that Tron is actually doing, despite the fact that, yes, Justin Son is not the paragon of decentralization. but he's the practical guy who's getting stable coins in the hands of people in emerging markets. Not a dividend.

Starting point is 00:00:36 It's a tale of two clon. Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. Unnamed trading firms who are very involved. D5 protocols are the antidote to this problem. Hello, everybody. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider's respective on the crypto topics of the day.

Starting point is 00:00:58 So quick intros. First you've got Tom, the Defy Maven and Master of Memes. Hello. Next, we've got Tarun, the Gigabrain, and Grand Puba at Gauntlet. Yo. And joining us today, we have Laura, the CEO of the show. I guess I'll say GM. And I receive the head hype man at Dragonfly.

Starting point is 00:01:16 So we are early stage investors in crypto, but I want to caveat that nothing we say here is an investment advice, legal advice, or even life advice. Please see Chopin Block. That X, Y, Z for more disclosures. So it is the start of the new year. Laura, it's been a while since we've had you on the show. It's great to have you back. How's your end of year festivity's been?

Starting point is 00:01:34 Good. I finally had some time off. I made it up to Vermont and had a really fun time. Vermont. Honestly, actually, you guys, oh, my God. So we ended up going to this alpaca farm. Okay, the alpaca farmer has a crypto podcast. And he started in 2016, which is the same year that I started unchained.

Starting point is 00:01:56 What's his podcast about? He told me that he does it kind of in an edutainment style where he does like songs and jokes. And I don't remember like. Whoa. Songs. Or I don't remember. We are. We need to branch out. Clearly we're, we're, we're going to get multimedia.

Starting point is 00:02:13 This isn't Song of the Day man, is it? No, no, no. No. He's not an alpaca farmer. Well, I don't know. I don't know. Jonathan, like, was someone who I could have seen like over the last five years went from living in New York. to alpagan farmer.

Starting point is 00:02:29 Wouldn't be totally crazy. Maybe we should do a crossover episode with this alpaca farmer. Well, so I know Jonathan. So, you know, that, you know, I feel like I would have known that. But this guy, yeah, he, like, moved from Boston up to Vermont a few years ago and, like, started this alpaca farm. But he knows a ton about crypto. I have a feeling he's an anon that, like, is very active on all the different social media because he was saying, oh, like I posted something on Reddit earlier that day.

Starting point is 00:03:01 And I think he was saying basically that he could tell it was going viral. I don't know if that's exactly what he was saying. But then I was like, oh, I wonder if I could figure out who he is. But the point is, yes. So there are crypto people everywhere, even on alpaca farms. Wow. Okay. I guess that's how you know you've gone mainstream is when you have people from all walks of life.

Starting point is 00:03:22 The other thing that's crazy is I just realized none of us have wished each other Happy New Year, so happy New Year. Happy New Year. Happy New Year. Slightly late, but yes, happy New Year to you guys. Well, so going along with the New Year, we did have one bet that was writing that was going to be adjudicated on the end of the year. And so that bed, for those of you who remember who are longtime chopping blog listeners,

Starting point is 00:03:46 is we had a bet riding on what was going to be the end of year circulating supply of PayPal's USD stablecoin. And so we have the final number. So just to remind everyone, each of us had taken a bet on what was going to be the circulating supply at the end of the year. So Robert bet that it was going to be at 70 million. To ruin bet it would be at 100 million. Tom bet $250 million.

Starting point is 00:04:11 And I bet $499 million. And I think we were doing Price's Right Rules. And so the ending supply of PiUSD was $264 million. And so Tom was right within $14 million of the final number. amazing accuracy. Very well done. Yes, clearly. Thank you.

Starting point is 00:04:31 Thank you. I think they might have been juking the numbers a little bit in order to get Tom to win. But we'll give it to you. So I think you win a pack of Red Bull, I think. So PayPal actually reached out. They're very generously sponsored our bet. And so they are, I think if you give them your address, they will ship you a pack of Red Bull. Congratulations.

Starting point is 00:04:52 Do you even drink Red Bull? Oh, no, you do, right? I do. I do drink Red Bull. Not as I saw Turin who's actually drinking at Red Bull right now. So not as regularly as him. But, you know, it's really this one. This one is also a mega size.

Starting point is 00:05:06 It's 16 ounces. Oh, wow. Is that a mega size? It looks. Yeah. Yeah, it looks like a normal Red Bull to me. Yeah. Well, when you put it closer to the camera, it does look bigger.

Starting point is 00:05:17 I will grant that. Yeah, it makes me wonder. Like, do you, how well do you sleep? You know, for just six hours. a night, something like that. Four to six. That's not good. Yeah.

Starting point is 00:05:31 You need to sleep. I don't know. I just like always wake up. I just wake up and can't go back to sleep. Yeah. If I were you, I would maybe try to drink Red Bull earlier in the day and then like stop drinking it by, you know, like noon. And then and then then your sleep will probably improve.

Starting point is 00:05:50 There's too many things to do in a day though to like sleep that much. Yeah, but there's less to do at night. That's why we kind of orient, you know, society around that. There's definitely not less to do at night. That's the reason you live in New York. I'm a little worried you're going to lose your gigabrain status. Let me put it that way. By not sleeping.

Starting point is 00:06:10 Losing sleep makes you stupid. There are a lot of studies about long-term sleep deprivation that do result in losing brain mass. So it is very much a thing. Like if you look up, especially people who are ex-military, I think that's where a lot of these studies are. done because people in the military very often, they very regularly get like four to five hours of sleep in night. And if they continue that kind of sleep cycle, you can do that for a few years without any, without any issues, especially when you're young. But if you keep doing that into your middle age and old age, it ends up affecting your cognitive performance later in life.

Starting point is 00:06:45 So it is a thing. There are studies also that show like when you are sleep deprived, then your brain is functioning at the level of like a drunk person. I'm excited for us to have Brian Johnson as a guest based on this last two minutes of conversation. I don't even know who that is. You don't know who Brian Johnson is? The longevity guy. Venmo co-founder.

Starting point is 00:07:08 Oh, okay. No. Brain Tree. Brain Tree. Sorry. Brain Tree. Sorry. Brain Tree.

Starting point is 00:07:12 My bad. Both some company bought by PayPal related to our pet. Company own my PayPal. So we're bringing full circle. I just remember it, you know, I just was like, yeah, somehow, somehow PayPal's acquisitions involved. But if you ever see pictures on the internet of like this normal tech bro guy and on the other side is like this guy who looks like a vampire in some ways, that's probably Brian Johnson. An ashy, very fit vampire with very little clothing on. Or pictures of him and his

Starting point is 00:07:41 son holding each other's blood or whatever. There's also that kind of thing. Yeah, it's a whole thing. Laura, you do need to read up on this, but probably not appropriate for the show. Okay. All right, cool. So let's move on to news. So it's been a relatively chill week. Well, I don't know.

Starting point is 00:08:03 It depends on how you count as chill. So there was a massive hack that we're just going to touch on very briefly. So a thing called the Orbit Bridge, which is a bridge between Ethereum and Clayton, which is the chain that was launched by Kakao, which is a South Korean company. So this hack, it was on the order of, I think, 80 million. And the hack was discovered as, I believe, a bunch of the multisig signers were taken over. And people believe there's some speculation that I read from Taylor Monaghan that this may be related to the North Korea, or the Lazarus group.

Starting point is 00:08:39 It seems to share some signatures with them. I don't know how much there is to really talk about here. But another big hack that took place recently that... a lot of people are freaking out about. Laura, you mentioned that this was the only part of the news that you read this morning. What are your thoughts on the Orbit Bridge Hack? You have the floor. Well, you know, you guys probably already know that I have an interest in North Korea

Starting point is 00:09:03 and, you know, as somebody who's covered the regulatory issue in crypto for a while, I will definitely say when this happens, the U.S. government is watching and it's not a good look, it's not even not only, it's not only that it's a bad look for crypto, but like, it's going to cause problems for you all. And what's surprising is Clayton is like a, you all. Are you're also like this industry, Laura? You're a crypto people like, you're a crypto person. We've had this discussion before. I'm a journalist covering crypto, which is different from, you were just hanging out with a crypto alpaca farmer. I don't even do that. Um, right, but I'm not building crypto things, right? And so I'm just saying, just like the biggest podcast and the media

Starting point is 00:09:53 company and all right. Anyway, all right. Fine. But, but, but anyway, point is, point is that, um, you know, after what happened was Roneido Cash, like, if this keeps happening, it's going to cause more backlash. And the other thing, frankly, that was surprising is like, you know, Clayton is a South Korean, something rather. And so you would think that they would be especially kind of vigilant about these things and yeah it didn't happen so yeah i mean we don't have enough details about how exactly the attack took place but it is kind of i mean you know who has the biggest interest in stopping flows of funds to north korea you might think well the u.s government but it's like even more so the south korean government oh for sure so i'm kind of like is this really

Starting point is 00:10:35 what does this have to do with the u.s like i guarantee you this bridge was overwhelmingly used by Koreans because Clayton, I mean, nobody in the West ever talks about Clayton. Right, right, right. But I mean, the U.S. government just for like national security, because, you know, North Korea now they're developing like a nuclear or whatever they're doing. And so the U.S. government, they don't want. Right. To threaten South Korea, you know. So my point is like, yes, obviously the U.S. cares because they care about everything in the world. But this is really Korea's problem. Yes, but think about it. Nuclear issues are actually a global problem. Yeah, basically

Starting point is 00:11:10 the U.S. and South Korea are allied. So I think that's the deal. But I don't know if you guys knew this. I literally just found this out recently. Seoul is extremely close to North Korea. Did you guys listen to this? I was there in currency or sold the city?

Starting point is 00:11:25 No, no, sole the city. I was there in summer and I remember that you can take the subway to the DMZ. So like we went to the DMZ and it's like astonishingly close. It's closer than San Francisco is to San Jose. You have to,

Starting point is 00:11:42 you guys should listen to this Tim Ferriss podcast that he did with some, um, Korean American guy who like is very familiar. Like I think he goes back to Korea very regularly. It's very educational and like super, super interesting. Um, but yeah,

Starting point is 00:11:57 like I didn't even know that. I'm, I'm Korean American. So anyway, point is that, yeah, I, I think there could be backlash against the industry from the go.

Starting point is 00:12:07 How do we actually go by like, like off ramping this. So, right? It's always like, yeah, North Korea at these funds, even if they send it through a mixer or tornado or something like that, like, who is then receiving those funds on the other end for, I don't know, whatever they need to purchase? Like that part of that. They did immediately sell the tether. I think they sold it for ETH. And then they basically sold out of things really quickly before, you know, there was a lot of coverage of the hack. It's obviously moved to uncensurable assets. But yeah, I mean, I think when we talked to Cryptoagle, he was sort of gesturing at this, that if you are an individual, it's really, really hard to off-empt this stuff.

Starting point is 00:12:44 If you're North Korea, I'm sure that they have a lot of channels that they've pre-established to sell off dirty money, you know, whether it's through Russian exchanges or, you know, exchanges that just have much, much weaker compliance programs. And I'm sure they're getting big discounts for these things. So they're probably getting 50 cents on the dollar or something. Sure. It's just, you know, doing it in size and also doing in a way that, I mean, it's still traceable the other day, right? It's not like, oh, you have some cash. And after a certain period of time, it's hard to know where the cash came from. It's like, no, you can always look on chain and see where this Eiff came from. And so it just like, it seems not very difficult or at least not very valuable, actually, you know, have this stuff regardless. Yeah. But I mean, they don't really have any other way

Starting point is 00:13:28 of getting money. So it's basically why they're doing this. Yeah, anyway. All right. So that's the Orbridge bridge hack. Let's move on to stuff that Laura hasn't read yet. So the one big story this week has been, Vitalik has raised his voice and has written a couple things that have gotten the internet wrapped up in some back and forth. So he wrote a piece talking about calling for a return to the cypherpunk roots of crypto. For those of you enough aware, the term cypherpunk refers to an early movement back in the late 2000s, which describes basically people who were much more, much more radical and much more political in their views that there should be strong safeguards of privacy and kind of almost like a countercultural effort using cryptography to fight back

Starting point is 00:14:21 against government intrusion on civil society. And this is the roots of a lot of where Bitcoin and Ethereum and the early cryptocurrency movement came from. Cypherpunk nowadays is kind of an OG thing. Most people who come to crypto did not come to it for cypherpunk reasons. And Vitalik calls for a return to the good old days. And so he states that he just liked the shift toward financial interests and centralization, the rise of these D-Gen gamblers kind of being the tail that wags the dog in crypto.

Starting point is 00:14:51 And I hope that developments like roll-ups, privacy solutions, zero knowledge proofs, will reclaim crypto's original ethos. pushing for an open and free society, decentralization, censorship resistance, community, collaboration, less of the zero-sum competition of tokens as it seems to play out today in most of these venues, but instead being a non-zero-sum vision for how the crypto industry can work together to build a better society. So this seemed to galvanize a lot of people and the people, the dog coin people mostly ignore this. What do you guys views on Vitalik kind of calling? Is this Vitalik getting old and kind of starting to get all back in the day on people.

Starting point is 00:15:33 What's your feelings on this piece? Tom, what's your take? I don't think he's reminiscing necessarily. I do have to imagine there's a very strange feeling of having helped create this thing that is now like, you know, probably a very perverted version of what you actually want where it's like people making Harry Potter, Obama, Shiba, Pomp, Enu, and like trying to get on centralized exchanges and completely ignoring, you know, you know, the whole self-custody component.

Starting point is 00:16:00 And so, you know, I, I empathize with him, though, like, hey, this is probably not the vision he had in mind when he was building Ethereum initially. I think at the same time, though, like, even from the earlier leaders of like, you know, Ethereum, a lot of the stuff was technically built and you can have, you know, you call that like status, for example, people using status as a form of, you know, censorship resistant, your messaging or identity layer. it's just not very good. It's not very user-friendly. And that's why people sort of gravitate towards these things. And so it feels a little bit old man yells at Cloud maybe where he's upset that things aren't sort of going, I think in the vision that he had initially. But there's a reason for that. It's not sort of an arbitrary choice. It's like, yeah, this is just a genuinely kind of better product that sort of solves problems that people actually have. And so I think maybe that's kind of

Starting point is 00:16:51 the question, just like, how do you actually make this stuff competitive in the market if that's the vision that you want. Yeah, I maybe we'll take the other side of this. So I think one interesting thing I had observed, have observed, and this is just my subset of things I've seen, is that, you know, I do kind of agree with this idea that like Ethereum's narrative dissemination has sort of left Twitter to some extent. Like some of it really is, like there's certainly the people who are like talking about price and whatever on Twitter. But I think like the Ethereum intelligentsia sort of arguably doesn't exist as much on Twitter anymore.

Starting point is 00:17:36 You don't really see as much. You see a lot of like engineering stuff. You actually don't see much research. Like the research content is on ETH research, which is like online forum or on Farcaster or other places. It really has actually moved quite a bit away from from Twitter. And I think there was a bit of sentiment that, like, because of that, there's this vacuum that, like, other chains were sort of filling.

Starting point is 00:18:04 And there's this argument that, hey, this post was a response to that. And so that's sort of the undertone that I had seen a lot of people make, kind of make claims about. Now, I actually think the post was very good at calling out a lot of kind of shitty things within Ethereum. You know, I think Blast obviously got Blast. lasted pretty directly. And I think there are a couple things that Vatollah took very direct shots at, not in name, but by obvious smacks in the face. There's a sense in which there was a

Starting point is 00:18:38 sort of like retrospective angle to this. It was almost like reading like a post-mortem. And the most funny thing was that every single person who, you know, if you go read the quote tweets of Vatalik's tweet was like someone interpreting it differently. So it's almost like a religious text in that way, right? There's like people from Solaniland saying, look, Vitalik values, low fees, like Ethereum isn't meeting its goals and Solana is the real Ethereum. There were people who are in Alt-L-1s talking about how like, oh, like we care about these end users who aren't in the casino, which is sort of not true if you look at their centralized exchange behavior, but whatever. And then there's finally, there was kind of like the

Starting point is 00:19:22 Ethereum intelligentsia who's like, hey, our roll up and road map makes sense, but also let's say fuck blast one more time if we get a chance to. And so there's kind of this very interesting thing where everyone took this script and gave you their own interpretation and you sort of got like almost like this like religious like response to it in the sense of like profit says something. Everyone interprets it differently. So I thought that was a very interesting aspect of this. Yeah, that was 100% where I was going, which is that Vitalik is basically the Pope. And it felt like, okay, I can tell that like the party is about to be back on. And it's like right around just like a big holiday. It's on the Pope to like speak up and say, hey guys, let's remember the moral center.

Starting point is 00:20:12 And let's not get too crazy and let's not, you know, like just, I don't know, throw all the old traditions out the window. And it feels to me like exactly what you said, which is that, okay, everybody kind of agrees with the message. Everybody feels like, yes, you're right. We have lost our way. We should be better people. We should respect the virtues of chastity and patience and blah, blah, blah. But everyone basically finds a way to justify exactly what they were doing before the Pope spoke up.

Starting point is 00:20:40 You know, that's really my feeling about this. You know, I always love the analogy between crypto and religions. and this feels particularly apt in the way that nobody really heard this message and was like, oh, you know what, I've really been misguided in my ways and I should, you know, repent for, I've committed sins against the ethos of Ethereum. Everyone is like, oh, yeah, Vitalik is talking about me and how awesome I am. Yeah, which which was just wild, right? Because it was like people who are completely not, we might have been calling out also.

Starting point is 00:21:13 That's the nature of religion, though. Even like, you know, even the, uh, the thieves and the brigands, you know, they, uh, they, they, they say their little prayer at night and, uh, you know, please let me have a good take this evening. I think the thing, so I read at least part of it and then skimmed the rest. Um, the thing that I thought about was, that's how you know, it's real religion. Is that you look, I, I looked, I skimmed it. I kind of, I got the idea, you know, I don't really, you guys, he published out December 28th. Like, I just told you, I took a trip and then I had like an all day meeting today.

Starting point is 00:21:44 I'm just giving you shit. I'm just giving you shit. But the point is, so, you know, in the beginning where he's, like, talking about, you know, this period when he was a bitcoiner, you know, it just reminded me the way that he started Ethereum was like he, yeah, was a Bitcoiner, was noticing how people were changing things. And he thought, oh, this isn't the way you should kind of progress things. And that's how he came up with the idea of, like, building it around a programming language and making it so people, developers can kind of dream up whatever. decentralized app they want. But, you know, at different times, he's kind of like basically, yeah, called out when the community is getting a little bit too greedy, like that time when he said, oh, if this space is

Starting point is 00:22:31 just about jokes around sharding and, you know, whatever, then I will leave. Like, do you remember this? It was like late 2017, I think. So. I feel like early 2018, because I remember that was when, like, like, like the Samson Mao type people were at their peak. And I remember that was like the one of the main sources of those jokes, if I remember correctly. Okay. Yeah. Yeah. So I mean, I think like even, yeah, just now he's probably set for life financially, but he's so humble and he's,

Starting point is 00:23:04 yeah, just not the kind of person who is going to be like flashing his wealth or whatever. And as we all very well know, the other co-founders of Ethereum made off much better financially than he did. And he doesn't seem to like have any ill will about it even while like other people in the community are upset that like he didn't, you know, make as much financially. So it's just interesting. But the other two parts I want to call out are first of all, he gives kudos to Gavin. And I know, you know, from the research I did from my book, like, you know, I don't think their relationship has been the best. So I thought, you know, that was cool that he did that. And, you know, looking back, I think people could probably definitely say that, like, Gavin never got as

Starting point is 00:23:50 much technical credit as he should have. Like, I think there's a lot of kind of personality issues maybe that came into play there. But, you know, he really kind of, like, took Vitalik's ideas and put them into practice in a concrete way, like with the yellow paper and just, you know, he really was kind one of the main architects of all this of Ethereum meaning. But then the other thing I have to call out is he threw shade at Justin Tron, Justin's son. I don't know if he notices, but he, there's a photo of him in the blog post where he's standing in front of his ad and it says the world's largest decentralized ecosystem. And there's a huge headshot of Justin Sun looking like the innocent angel boy of Atalic standing in front of it. And his caption is, background,

Starting point is 00:24:35 the humble Tron founder and decentralization pioneer, Justin's on bravely leading forth the coolest and most decentralized crypto ecosystem in the global world. So, you know, that was a little bit of sarcasm. But anyway, point is that I don't, I'm not surprised by what he's saying here because to me, it like goes back to why he was even interested in all of this in the first place. One thing I think that is related to that last part is that he does cover the, the fact that Tron has a lot of stable coins. And I think this might have been the first time I have seen that in a

Starting point is 00:25:15 Vitalic communique as well, any form that like that was, you know, mentioned. So I do think there's also the sense in which people are, who look at Ethereum are worried that the main use cases like stablecoins may not live in the most decentralized places. And I think this is, there was also a little bit of that undertone and everything. And I think the Justin something was sort of like the pinnacle of like that part of the essay. It was like, oh, just last bit, just where he lists the values, the number one, one that he put is open global participation. And he put that above decentralization.

Starting point is 00:25:55 So let me get a read from the room. How do each of you guys feel about the cipher. ethos, right? There's there's kind of the cypherpunk aesthetic, which I think everybody in crypto likes and everybody in crypto appeals to. But then there's cypherpunk as a set of philosophical principles that, you know, clearly that's what Vitalik comes from. That's like the very, very old school approach to crypto. How do you guys actually feel about it, right? There's kind of the mood affinity of like, yeah, it's good because it's smart and it's cool. And that's what all the cool kids like. but then there's the do you actually agree with it and endorse it? Or are you more, you know,

Starting point is 00:26:38 financial bank the unbanked, re-invent Wall Street, which are, which I think of two very different camps that aren't often opposed to each other in quite so many terms. But, you know, if you read what Vitalik is talking about, like what are the things that he wants us to go back to? It's things like, you know, thinking about governance again from first principles or thinking about quadratic funding or public goods funding. This kind of stuff is what he generally points to or, you know, enshrining privacy even further. In a way, he's sort of dismissing, to some degree, the bank, the unbanked, you know, Tron, super low fees, all that kind of stuff that Tron is actually doing, despite the fact that,

Starting point is 00:27:15 yes, Justin Sond is not the paragon of decentralization, but he's the practical guy who's getting stable coins in the hands of people in emerging markets. Tarun, what's your feeling about the cypherpunk philosophy? So I still personally think it's like the most important. thing that like if that disappeared you have this like kind of slippery slope type of thing now obviously slippery slopes are not a good debate argument so i'm not trying to say that i'm just trying to give some some some view that like if you if you do start admitting each of these little tiny changes the compounded version of them is much worse than any individual kind

Starting point is 00:27:56 of like oh we're going to be a little relaxed here and i think think especially in a world filled with like increasingly cutting corn cut corners you know like i think the ai world is a great example of a place where corners are cut you know in spherical ellipsoidal lines i think crypto's unique differentiator is not going to be strictly like we're a faster tps chain type of thing on the other hand i do still think that there is a sense in which you have to account, you can't just make validators your number one user profile you optimize for. And like in some sense, Ethereum has gone very far down the line of we don't care about the end user at all. We actually only care about the fact that the end user can be a validator.

Starting point is 00:28:46 And those are two very different views. And I think that there's that sort of like a thing that's maybe beyond this slightly more abstracted version of this bank. unbanked versus cypherpunk view of the world is who is the end user you actually care about. Do you care about the end user making transactions? Do you care about the validators? Do you care about the infrastructure providers of other forms like oracles and stuff? Do you care? You know, dot, dot, dot.

Starting point is 00:29:14 And like your preference over who's the most important, who's the second most important, who's the third most important, does impact those technical decisions you make. And I think that's the part where I think, you know, Cipher's. for punk doesn't necessarily mean one preference ordering. That would be my take on this. That's a very good point because I remember back in the day, Ethereum used to talk a lot about the Ethereum stakeholders. And the term stakeholders was meant to encompass more than just tokenholders, right? So there's people who actually own ETH, but that is not necessarily representative of all the people who use Ethereum. And there was a lot of talk about miners also being part of the stakeholders, right and one assume when you read the rhetoric of Ethereum back in those days that they were really

Starting point is 00:30:03 trying to balance all the different kinds of people who were part of the Ethereum party but then when you see what actually happens in Ethereum politics you realize it's not really true right like minors are kind of at the bottom of the totem pole like miners more like Ethereum more or less does not give a fuck about the miners now they care a lot about validators now but in the proof of work days they really did not care very much about minors and minor had very little political input into the Ethereum roadmap. And you realize, again, as you're mentioning Turun, that they care a lot about validators at the expense of, you know, companies in the space, companies in the space don't get a lot of voice. The, you know, end users in terms of ease of

Starting point is 00:30:41 use or transaction fees or whatever, they don't get a lot of voice. The primary voice comes from this, they're sort of like, you know, a little bit of all people are equal, but some people more equal than others. If you run a validator, you are the most equal of all the people in Ethereum. And there is something that's very pure about that in the sense that there is no a chain. If you're a solo staking. A solo staker. Yes, to be clear, not a commercial balladier, but like home staker. Yes, exactly, a home staker. There is something that's very pure about that in that it is one of the few chains that is truly unobjectionable in its commitment to a philosophical ideal. And that helps it in many ways, which is that, look, Gary Gensler would never dare to come after

Starting point is 00:31:24 Ethereum, given the purity that lies at the heart of it, that everybody can see very clearly. And the same is true of Bitcoin. Bitcoin also has this kind of inimical attitude towards end users that, look, we're here to enshrine the decentralization. There is a true cyphorpunk ideology here, and that helps you in a way. But it is very different than almost any other chain. And it is also a little bit different than the rhetoric, right? The rhetoric, they would never come out and say that.

Starting point is 00:31:50 Ethereum would never openly say, yes, the thing that matters most is homesickers. But when you see the political reality of it, it certainly seems that way. Tom, what's your take on the cypherpunk versus financial bank, the unbank thing? Yeah, I mean, it's a little bit like maybe like Brian Johnson. I'm glad some people are sort of pushing this philosophy kind of to the extreme. But for everybody else, it's just not very pragmatic, right? And that was kind of my issue with the post. And it just feels very little kind of luxury and preachy of.

Starting point is 00:32:23 hey, we should be doing these things and then he cites a bunch of products that have been out for a while that no one really uses or cares about because they're kind of shitty and they're not really serving users' needs. And so, like, the wrong lesson to be learning here, which I think of Vittago's learning is, hey, like, we should remind everybody to do the thing that that philosophically were aligned to be doing versus, hmm, like, why are people using these things? What's wrong with them? How can we make a version of them that, you know, fulfills our ideals, but also is something that people want to use? And so that's kind of my issue with this. It just feels like I'm being, you know, lectured to like eat by vegetables.

Starting point is 00:32:57 I'm like, well, the vegetables taste like shit. So why do you make something better that actually you want to eat? And I don't always go into analogy. But I guess that that's kind of, you make a great point. Because I remember he mentioned Swarm, which was like their old IPFS competitor. I've not heard about Swarm in like five years. Yes. But of course, like Vitalik still holds Swarm very deep in his heart.

Starting point is 00:33:16 That's what you say about projects that are just fucking dead. They're not dead. They continue to be developed. up. So, or yeah, it's status as the extension of whisper as if that is a, you know, amazing success. And so, yeah, I think they're learning the wrong lessons from kind of what the market is telling them. That's a, that's a good point. Also, a very, a very product-minded point. So I appreciate you bringing the product perspective. Laura, what's your, what's your, I mean, I know that you're not a real crypto person according to you to your own process. I'm not a bolster. Self-assessment.

Starting point is 00:33:49 Your own self-assessment. You were not a crypto person. But. How would you, how would you answer that question? I have a question. This mention of swarm and IPFS, like this decentralized, you know, data or storage, is that the same thing as kind of like the modular approach where like Celestia is providing this data layer, data availability layer? Is that the same concept? Not quite.

Starting point is 00:34:16 They're related, but it's not quite like. like data availability really needs this notion of verifiability and I can challenge things. So think about like the simplest way to think about it's like, think about an optimistic roll up. Well, you have the seven day challenge period for a lot of optimist groups or it's less, but for some, but let's just say it's seven day one week challenge period. Well,

Starting point is 00:34:38 I need that data that was say there's a function called that was called on invalid input. Well, I need the invalid input to prove to the layer one that, hey, like, this sequencer and the layer two fucked me over somehow, right? Well, you need that data to be somewhere everyone can agree on. The layer one validators, the layer two person sequencer might get slashed the user. And so you need to keep that somewhere that you can slash. And so all the fights about data availability, security are really fundamentally about, like, should the layer one itself be keeping that or can it outsource that?

Starting point is 00:35:15 And if it outsources, it can lower its costs. But you need this verifiable. It's not just storing, right? Yes, yes, yes. So data availability is a little bit different from just storage, right? But it's more like volatile storage that has certain other guarantees that you care about. I mean, it basically sounds like a better version of storage. It's not a better version of storage.

Starting point is 00:35:36 It's expensive. It's different. Yeah. The extra properties you add on top for sampling and for like clients to do stuff are expensive in other resources. So it's not just a. there's resources of storage, but there's a resource of communication, like how much do the nodes have to communicate to prove this kind of invalid state or reconstruct state? And that overhead might not be worth it for all applications. So maybe your NFT dog shit picture, like, doesn't need,

Starting point is 00:36:05 you know, like people don't care that much about it. And, you know, you're not going to do it. But for my uniswop swap, I do care about that. Yeah. It's also like, Celestia is not long-term storage, right? It's not like our weave or our weave is like, we will. We'll hold this data for hundreds of years because they got blah, blah, blah, blah. Permanent. Yes, permanent. They're perma weave or whatever it's called. Permanent needs a perpetual Ponzi scheme.

Starting point is 00:36:29 Never forget that. Somehow, I think the second law of thermodynamics is always missed by crypto people. But that's true. That's true. But the core idea of modularity, I think you are right in pointing that out. The whole idea of modularity is that instead of doing all of this stuff in a single blockchain, let's have another, let's outsource this particular thing to another blockchain. And that is absolutely what IPFS or swarm could be described as is like, oh, okay, I want long-term

Starting point is 00:36:58 storage. I don't know, I don't want to build that in my own chain. It's much easier for me to use another blockchain to do that. That is kind of modular. That is kind of what the idea of modularity is. Okay. Yeah. I mean, my main point that I was just going to say is like, it feels like what he's doing

Starting point is 00:37:14 is just kind of emphasizing. Yeah, I mean, these ideals around like decentralization and whatever. But I think, you know, the person that he has in mind, you know, going back to your cyphor punk question, are people where they cannot trust their government and they need another, you know, resource. They need something that they can rely on that, you know, won't be taken away from them or won't be devalued in some way. And so I think, you know, what he's calling out is like, okay, like a bunch of people are

Starting point is 00:37:44 getting rich off crypto. Great. but let's not forget that this could be, you know, something that would be really valuable to people who are more in like a life and death situation rather than just like, you know, yeah, making, making money. So to my mind, it just feels like he's saying, okay, some of you are kind of taking this easy way to get rich quick, whereas like we could do things that are harder technically that would serve more people. And yeah, I think you're right. It's like a Pope speech and he's just trying to remind people what some of the ideals are and like how crypto can do some good in the world.

Starting point is 00:38:20 And look, we, as much as that might sound flippant or dismissive, crypto really needs a pope, right? We don't have a lot of, you know, virtuous paragons to, you know, some people would definitely say there should never exist a pope. I was just going to say, yeah, the bitcoiners, we're going to, well, let's release this clip on social media and see what the Bitcoiners have to say about that. Yeah. The Bitcoiners are Protestant. And that's, that's their big issue. Yeah, exactly. Exactly. There's a whole. The only thing I want to say is like, I think an interesting fact is like if you look at someone like Anatoly who's just completely focused on engineering as like, you know, I view kind of Antolian and Vatelic in some ways as like the dialectic of any of these types of decentralized systems, right? One is focused on is like, well, I guess it's ironic that Solana names their minimum currency unit Lamport.

Starting point is 00:39:12 But one is sort of focused more on these theoretical distributed systems components like Leslie Lamport would have, you know, the researcher would have focused on. And these kind of philosophical things about what things you can and can't agree on, right? And that's that sort of in my mind, Ethereum came out of that school of thought. The Solano School of Thought is like, well, centralized exchanges suck. But what's the closest thing we can build product-wise so that users use it? But also, we only, we care about all these, like, optimizations. And we really care about thinking about these, like, low-level engineering details, but we maybe are not as careful about these other things.

Starting point is 00:39:55 And I've generally found that, interestingly enough, both of them are probably the two in many ways, sort of popes of these two different domiciles. Because, like, Vitalik, by all means, it would not, I suspect, self-enoint himself on the engineering In fact, he's been quite self-deprecating in that way in some previous posts and certainly some research posts. And I think there's always this inevitable tension between the kind of philosophical components of these fields and the theoretical components versus the engineering and product components. And I think this is not something unique to crypto, interesting enough, right? Like, I think the open AI thing was exactly the same type of divide between the engineers and the philosophers. And I think that's sort of the type of thing that we see here.

Starting point is 00:40:46 And I think there's a good argument that you kind of need both types of people being able to describe these long-term visions. And so the dialectic is useful. It's not, it's not, you know, I think Hegel maybe gave it a bad name, but I think it's kind of useful as a rhetoric means. Well, I see, I see your point, but I think actually Vitalik. and Anatoli are actually much closer. I think like the sort of the angle between them is not that big, whereas the shadow of Italic, right, who is like the true inverse of Italic?

Starting point is 00:41:22 I think it actually is Justin's son. I think, like, Justin's son is kind of the, he's kind of the inverse pope, right? Where he, like, puts on the hat, but he's like part of this, you know, this, you know, heretical, coptic religion. And he's like, look, we're just kind of on the run. we're trying to make a bunch of money.

Starting point is 00:41:42 We're super practical. We're doing business deals. Like we're going to sing the praises of decentralization while not really worrying too much about how decentralized we are and caring a lot more about DAUs and fees and end user metrics. And if the metrics aren't good, we just juice the numbers. And in a way, and I kind of want to agree with Tom here on this point, in a way, like, the space needs some of that. As easy as it is to dunk on Justin, like he is the opposite pope.

Starting point is 00:42:09 He is the Pope for it just gets shit done. Just get stuff in the hands of users. Get stuff that people actually want. And you can dunk on him all you want, and there's plenty of legitimate reasons to dunk on him. But that is, that is in a way one of the other virtues of crypto that we have discovered post the cypherpunk era, which is that, yes, people actually do want these things. This is not just a philosophical experiment. This is not just a way of, you know, kind of crafting a world as we might want to see it.

Starting point is 00:42:36 It's not just purely a utopian project. It is also a very deeply capitalist project of people want certain things. And if you look at the discourse of Ethereum, you know, back in like 2015, 2016, 2017, there was a lot of talk about how do you make Ethereum nation state attacker resistant. Like if a government wanted to shut down Ethereum, how could you stop that? And, you know, today I think one of my biggest criticism of Ethereum is that in a way, they're still kind of stuck in that mindset, despite the fact that we've now seen almost a decade of nation states responding to blockchains.

Starting point is 00:43:12 And what you notice in the way that nation states responds to blockchains is that they do not do anything that anyone was talking about on the Bitcoin Forum in 2013, right? They do not aggregate a bunch of hash rate and try to 51% attack things or do, you know, feather forks or anything. They don't do any of that shit. Like what they do is they pass laws and they engage in politics and they ban things and they fight things and they force people to pay taxes on certain things that are impossible to enforce.

Starting point is 00:43:37 That's how governments actually. actually respond to crypto. And so if your philosophy and your thinking about how to construct these systems is not responsive to what you're actually viewing in the world or from your perceived adversaries, then I think that is kind of, you know, shaking your hand at the clouds and not really learning from how the world has changed over the last decade. And so, you know, to be clear, I'm not saying that we should all be more like Justin's son, but I think it's important that there is a Justin Sun.

Starting point is 00:44:08 he sort of orientes us in an important direction in a way that Vitalik also orientes us an important direction too. I just say, why can't you value all of these views simultaneously? They're not, like, so in, they're only not in concordance with each other. If you decide, you know, if you treat them as, like, pure religion versus, you know, sort of

Starting point is 00:44:30 a particular moray on existence, right? And in some ways, that's sort of why I don't, I find sometimes the like really aggressive, like this is, this is why I think the quote tweets of Vitalics, you know, when he posts to this is the most informative thing you can see. Because it's telling you this idea of like everyone, you know, has their particular poll and they like take the projection of this thing onto their thing. And they're giving you their little like view. And that's actually more,

Starting point is 00:45:00 almost more important than the piece itself because that projection is more valuable. because you see how each, you know, everyone interprets it. I just think there's no reason to kind of be, like, live at the, the polemics of, of that. And in some ways, that that's why it's a good piece, right? That's why you're talking about it for 30 minutes. Actually, just circling back to the Vitalik Anatoly comparison, honestly, I actually think they're a lot more similar. Yeah, then Turin was saying, like, I probably agree with his seat. but my spin on it would be that Anatoly is just like the 20 or 25 years older version of Vatolic

Starting point is 00:45:39 than Vatolic because they're both kind of like similarly humble. They're both like obviously super geeky and, you know, techy type people. But I just feel like, you know, I mean, especially obviously I learned through my book, like Votelic was so naive and I mean, he was a kid when he started Ethereum. And it's just so clear when you interview. you anatoly, like nothing ruffles him. Like, do you remember that first, or I don't know if it was the first, but the one really big outage that was like 19 hours or something, do you know what he said about it? He was like, oh, well, we just had a 19 hour block time. Like people were calling it an

Starting point is 00:46:22 outage and he was like, that was just an extra long block time. And I was like, okay, like, that's quite the spin. But I just felt like because he's, you know, in his 40s or whatever he is, Like he has this sort of like, I've seen it all before. Nothing's going to bother me. Like the, you know, the worst shit could go down and like people would be all freaking out and, you know, pulling out their hair. And like Anatoly is just going to be cool as a cucumber. It sort of feels like.

Starting point is 00:46:49 And it feels like Vitalik will probably age into that. And it's almost like you can already see it in his dad. The way his dad, like, he has such a sense of humor about everything. He's like tweeting these like philosophical jokes. And, you know, I don't know. It's just, I personally don't think they're that different. I just think that Anatoly has a particular way of handling things simply because he's older and has experienced more. So.

Starting point is 00:47:15 By the way, Vitalik is about to turn 30. I think within a month, he's going to be 30 years old. January 31st. Yeah. Yeah. So, you know, he's entering that stage. I mean, I don't know if exactly. It's obviously not his 40s.

Starting point is 00:47:31 but I think he's entering the kind of elder statesman phase of his career. And I do agree with Tarun in the sense that I think Vitalik is going to be, he's going to be the cyphor punk guy, right? I don't think he's going to become more pragmatic in the way that Anatolia is. Like, hey, guys, let's just build the thing and build the NASDAQ on chain and blah, blah, blah. And, you know, let's just do what we have to do in order to make those tradeoffs. Yeah, that reminds me. And I mean, you're right.

Starting point is 00:47:57 He's more corporate than Batalik. But anyway. Yes, very much. I mean, he works at Qualcomm, right? Like, he's had real jobs, you know? Vitalik has never had a real job. Talik has never had a real job. Yeah, yeah, which is great, right?

Starting point is 00:48:09 Like, that's part of what makes Ethereum Ethereum is that, you know, Vitalik is so much at the heart of the culture of how Ethereum has become what it is. But, you know, look, I think the answer, as Turin was saying, is that you do need both because you need those voices. But the reality is that, like, yeah, people listen to the Pope and they're like, oh, you know, the Pope said, you know, don't. you know, don't steal and don't have ill will or envy in your heart. But people kind of take it in strider.

Starting point is 00:48:37 They're kind of like, yeah, you know, yes, but I will also go look at shopping catalogs and, like, you know, still fall as celebrities. And so I think most people do end up somewhere in the middle. Most people do end up hearing these messages and internalizing them and kind of calibrating them in their own way. And I think that is part of the work of Vitalik. And I think in a way, the way you know that it's working is precisely maybe what Tarun said, which is that everyone quote tweets it and has their own little spin on it to say, ah, yes, here's why I'm virtuous, just the way the Vitalik was saying. Maybe that's, maybe that is the positive result of sending this kind of message,

Starting point is 00:49:14 is that people are reminded of their own idea of virtue, even if it's not necessarily Vitalik's form of virtue. Yeah, I will say the one funny part about those quote tweets is there's particular individuals who I find funny where they're like constantly tweeting about people overly virtue signaling on Twitter and then they quote tweet and write their own opinion. And I'm like, well, what do you think you're doing? But, you know, whatever. That's their, that's their own lack of self-awareness, I guess.

Starting point is 00:49:42 Name names, Terun. Yeah, Turin. Yeah, come on. You can't be calling up people. There's a lot of quotes. You can go read them yourself. Okay. Okay.

Starting point is 00:49:52 All right. All right. All right. Well, let's move on real quick to Turun's favorite topic, which is the Bitcoin ETF. I can see. Turun is just celebrating internally as we shift gears. So ETF seems to be imminent. There's a lot of excitement right now. Bitcoin just hit 45K. Yeah, Turin, go ahead. Did we talk about the redemption piece, the fact that that changed last minute and like it's cash redemption now versus in kind. Because I actually think that's kind of fucked up

Starting point is 00:50:22 personally. Yes. So basically what we've seen from some of the disclosures or some of the forms or whatever there are, is that all of the ETFs are going to be cash redeemed, not in kind redeemed. So this is pretty weird. Most ETFs are redeemed in kind. So when you redeem or mint an ETF, so for example, if you have the SPY ETF, SPY ETF, which attracts the S&P 500, contains all the companies in the S&P 500 in the ETF. The ETF is like a basket of all these company shares. In SPY, when you redeem the ETF where you mint a new ETF, you basically put a bunch shares in the basket to create a new a new share of the ETF, or

Starting point is 00:51:00 when you redeem from the ETF, you take all the shares out. And so you don't actually go sell the underlying things on the market. Obviously, that would be annoying and it would cause some slippage. Well, in the Bitcoin ETF, apparently the SEC is not comfortable or is not quite given the rules to the authorized participants

Starting point is 00:51:16 of the ETF to show them how could they compliantly as broker dealers manage Bitcoin? Apparently, they've not been given any guidance on how to do this. And so as a result, all the ETFs are going to be cash settled. So when you mint new shares of the Bitcoin ETF, you send them cash. And the Bitcoin ETF sponsor will themselves buy the Bitcoin with the cash on a spot exchange.

Starting point is 00:51:39 And when you redeem the ETF instead of, okay, the authorized participant gets a Bitcoin. Instead, the issuer will sell the Bitcoin for cash and give the authorized participant the cash. Now, this is less efficient. Now, at the end of the day, I don't know how much it matters because, you know, obviously, The authors, participants aren't just going to sit around holding the Bitcoin. They are going to hedge it or sell it. But it does make the ETFs less efficient. And so this was something that a lot of people got annoyed by.

Starting point is 00:52:08 That said, the ETF, it's very clear the ETFs are coming very soon. Bitcoin has rallied to 45K. We've seen now some of the ETFs get seeded with capital. It looks like BlackRock is going to have 10 million in there. Bitwise is going to have 200 million. Wisdom Tree, 2.5 million. And there's just been, right now, I think Polymarket is, pricing the likelihood of approval the next two weeks at 88%.

Starting point is 00:52:30 So it seems like overwhelmingly, it's pretty much at this point to be a sure thing that the ETF is likely going to be approved, or the ETFs, plural, are going to be approved very, very soon. So any comments on the ETF? Tarin, I know you have a, I know you have a lot of thoughts. Well, I'll say something about the in-kind versus cash creation, which is, I don't know if you guys picked up on this. I think it was James Seaford on my show who talked about this.

Starting point is 00:52:55 but basically, so this actually affects gray scale the most to do it in cash. I don't know if you guys, did you catch wind of this? So, okay, so I'll just explain it. So what happens is that anybody who's in GPTC, of course, what, you know, when they, you know, just as anybody, when they were to sell an investment, they would, you know, pay taxes on that, right? But the thing is that with GPTC, if you already currently own it, you are going to be, once they convert into an ETF, because of this cash creation or redemption, all the holders of GBT will have a tax event this year, even if they hadn't been intending to sell their shares. Do you understand?

Starting point is 00:53:39 So, like, if the in-kind had been allowed, then if they had stayed in GPTC, they wouldn't have necessarily had that tax event this year, but now everybody will. And what I was saying to James is my thought is that this is, so it's not only bad. for grayscale just because this happens to all the holders of GBT. But it's also bad for them in the sense that if any GBT holders were thinking of switching to a different ETF issuer, then this gives them like more of an impetus to actually just do it since they're going to have to have the taxable event anyway. Whereas like if that hadn't happened, then they might have been like, well, just stay in it a little longer until it makes sense for me to, you know, have this kind of taxable event. But it does

Starting point is 00:54:25 feel to me like, you know, since there are some GVD scale holders who probably aren't happy with Grayscale, they're probably, you know, not happy that they weren't able to redeem before, like, whatever, like, they will potentially see more outflows than they would have. That's just my theory. But, yeah, no matter what, I think you're right, it's like a worst experience for every single participant. It's like all the back end people. Plus the, you know, in my opinion, this probably raises fees because there's just like a little bit of extra. I mean, it's not a huge amount. James Sefer was saying it's like just, you know, I don't know, a really small amount of basis points like one or two or whatever. But regardless, it does feel like it's just a worse choice for everyone involved. So anyway, but yeah, it's going to affect Graceville the most. Yeah, that makes that seems really bad for me. Yeah, actually. Yeah, I think the thing I just don't like about it is it's, it's kind of like not a clean structure. And there's an argument that. The authorized participants it favors the most are actually market makers in the designated market, which is Coinbase.

Starting point is 00:55:33 Because all of those market makers now know the flow they have to cross against. And so it just like kind of makes it like, okay, the ETF creation redemption arm really concentrates into Coinbase market makers and like no one else. It feels a little bit like a free money gift to them, which that to me is the more, you know, like I know the SEC like, is run by a bunch of clowns most of time in the last few years. But like, this feels like absolutely stupid. Like if your fucking mission is consumer protection and you're just giving market makers free basis points like this, like you are brainless. Like, I don't know what kind of fucking idiot comes up with that structure.

Starting point is 00:56:13 Well, wait, one question, because I thought that actually it also benefited the big banks to have cash. Because if you recall, like originally all the applications said they were going to do both cash and in kind. And I thought the reason for that was because the cash option allows the banks to participate, whereas, like, otherwise they wouldn't, you know, if it were only inclined, then I, you know, I don't think they would have been able to because they can't hold digital assets. But, you know, all of the applicants, I think, wanted to do both. But now it's like only the cash. So then it does, isn't that beneficial to the big banks or no? Am I misunderstanding that? Or maybe. I mean, that seems like marginal. But yeah, I agree. You're right. Probably does.

Starting point is 00:56:59 Yeah, I mean, the crazy custody rule is what prevents banks from being able to touch the stuff in the first place, though, which is also because of the SEC. Oh, no, no, that was the OCC, right? OCC. Yeah, that was the OCC. Sorry. This is just more this idea that, like, if I'm a market maker in Coinbase, right, say, I'm a big market making firm. And a lot of those are the U.S. market making firms because, like, It's basically very hard to market maker and Coinbase as a foreign entity for all the regulatory reasons. So there's good reason for it. But there's not that many of them who are doing it. And those market makers now know that they're getting this free flow on creation redemption. Like every time there's new cash coming into ETF. And there's no one else who can actually fulfill the other side because there just has to be the ETF rules are like, well, the nav of the net asset value of the ETF has to equal what it.

Starting point is 00:57:53 index is tracking, right? And I just feel like this structure exists to like cause consumer harm strictly because who's bearing that those basis points of law? So it's like the ETF holders. So it's like actually idiotic if your mission is really like, oh, we're like trying to help consumers. You're literally just causing an extra slippage. Like it's it's just like it's one of these things where it's like I don't understand who who like why like you're adding this because you're just like, okay, yes, we're afraid the author has participants. So in K. I see. First of all, your authorized participants and your market makers overlap so much. You know, it's like you could easily just add.

Starting point is 00:58:30 Yeah, right now, June Street and JPMorgan are the named authorized participants for the shares. It's kind of ridiculous. You're favoring those people in such a in such a way that's like, you know, I think that Arthur Hay's post maybe about like the ETF is kind of like going to maybe destroy Bitcoin. I mean, that's there's some of the hyperbole I would say in there. there's some truth to this idea that like the SEC is just basically picking favorites and like you know if if I were an aggrieved person with infinite capital I would be suing them because like this is this is like a very dumb decision like and goes against a mandate look I in I don't often come to the defense of the SEC but in defense of the SEC you know they were more or less

Starting point is 00:59:13 cornered by the courts to have to approve the Bitcoin ATFs so I can imagine that the amount of, you know, for my understanding of the rules around Bitcoin custody for broker dealers, it's actually the broker dealers themselves who are like, look, we don't want to touch Bitcoin because we don't actually know what the rules are. And they're, you know, if you're talking about J.P. Morgan, maybe, you know, whatever, we'll play more fast and loose. JP Morgan, as an authorized participant, they're like, look, we will absolutely not do anything that there are not very clear rules around. And so the SEC just may not have had time, right? literally there was an impending government shutdown in November that obviously was averted.

Starting point is 00:59:51 Then they had to ram all this stuff through end of year when, you know, they're closing out their end of year books. And so I can imagine there wasn't enough time for them to actually just write out clear rules and get, you know, industry input and blah, blah, blah, of like how broker dealers deal with Bitcoin. So I can imagine that that will change once there's more time and, you know, things just kind of settle down a bit. But clearly there was a frenzy at the end of the year of like, you know, the court's

Starting point is 01:00:16 pushing back and and them having all these impending deadlines that they had to get these things ready for approval in pretty short notice. That would be my first cut assumption. Except for the fact that they should have approved the ETFs long before this. So it's like, yes, yes, granted, granted. But insofar as they were like, look, we hate ETF so we don't want them to exist. Once you get to that point that, okay, the courts are forcing their hand, I don't, I don't know how they could have come up with. But just because the court forces your hand doesn't mean you do something. that's like against your mandate. You know, like, I feel like this is like just purposeful, like, you know, sniping.

Starting point is 01:00:53 And like it just feels like, it feels like Gary Gensler's YouTube videos. They're just like purposely exists to like twist a nail or like twist a little screw. Not because there's any good reason to do that, not because there's an ethical or moral reason. It's clearly he has close to zero. You think it's a fuck you to consumers and that he is like, yo, let's get more money to James Street. It's a fuck. It's kind of a fuck you to crypto in some ways. Yeah. Well, broadly speaking. So I agree that it's maybe, well, okay. So if it's intended to be a fuck you, it would be intended to be more of a fuck you to crypto.

Starting point is 01:01:29 But, you know, in terms of what I mentioned earlier, like this screws gray scale over the most. And because they were the ones that sued the SEC to get this to happen, there were people on my show. But you think it's a fuck you to gray scale. No, well, I don't. But there were. people on my show. It might have been James Seaford again, because he's been on, you know, multiple times, obviously, because of the ETF thing. But I think he said like, oh, you know, there might be. And this was like well before this whole cash and in kind thing came up. But I remember at the time, he said that he was wondering if there would be something that would

Starting point is 01:02:01 happen that would kind of screw gray scale over four political reasons he said because of the lawsuit. And this kind of fits the bill. Again, this is highly speculative. But it's just like everybody's saying. And it's like what everybody said even before when the SEC was not approving the ATFs. And their logic was that, you know, there could be potential market manipulation. And then everybody was like, okay, but the derivatives, they're based on, you know, the price of the derivatives is based on the price of the spot. So it doesn't make logical sense. And again, this goes against the logical sense. Like in kind just is a lot more efficient for everybody involved. It's a better way to do it. And that's a way.

Starting point is 01:02:44 typically how commodities, ETFs operate. You know, I don't know if there's literally any of them that are done in cash. And then second, you know, just handling enough, the one that's, you know, that's going to be hurt the most is Grayscale. So I hate to put a conspiracy

Starting point is 01:03:00 theory out there, but I just want to. No, no. I mean, look, it does make sense when you put it. Yeah. What does it show for if not the unfounded conspiracy theories against the government? Well, it's not even a conspiracy theory. It's just like putting some bits and pieces. together. I actually think that if I remember correctly, and so it's been a while since I was actually

Starting point is 01:03:19 trading, but I remember there are ETS that are commodity ETS that do do cash, but it's more because there's no inventory, right? It's like, oh, like, ha ha, it's like impossible to get uranium tomorrow, like enough, right? So like, okay, fine, you can, you can do this. Yeah. If any, if there's any commodity that's easy to get immediately, electronically, it's Bitcoin. Exactly. So it's like, I don't think some of the known excuses make sense. Yeah, yeah. Okay. Well, by this time next week, very, very likely the Bitcoin ETF is going to be approved. And we're going to be in this new post-ETF world, which I know TURUN is very eagerly awaiting. So to close out the show, predictions for what happens with

Starting point is 01:04:05 the ETF, do you think it's going to be like, okay, rally time or is there going to be a sell-off? You'll be like, oh, well, there's an ETF now, now what? What are your views on what's likely to happen? Turin, why don't you go first? Because I know you're the most excited about this. I think the interesting question to me is like how much of this like traditional equity interest moves from like Coinbase miners, micro strategy into Bitcoin ETF. Because there are a lot of people who are like sort of regulatoryly captured,

Starting point is 01:04:34 make these like kind of indirect bets. Probably micro strategy, the biggest one. Right. Well, they just announced while we were doing the show, this huge tender offer to sell a bunch of shares. So I don't know how closely related to the Bitcoin ETF that is, but the timing is a little bit south. But yeah, I think the rotation will be interesting.

Starting point is 01:04:54 I think the other thing I'm kind of curious about is, and this is more a side speculation type of thing, of like how much the options market on the ETF evolves and like whether you know crypto options have always been this like holy grail that never really has reached its potential and so given that people love trading options in inequities especially right now you know the zero day to expiry options or like which didn't exist you know basically didn't exist a few years ago now have like over 50% of volume I kind of think that if the there's ever a time for crypto options to like be in the spotlight, it'll come from this. So like

Starting point is 01:05:35 that to me is my sort of side thing I'm looking at. And maybe, you know, I don't have a strong. True. Price predictions. That's what the people want. I think we are going to have alt season. You think we're going to have old season. Okay. Yes. Which means what he means by that is the Bitcoin price is going to go very high and it's going to leak out to alts. You know, you can, you can make your own assessment. Well, that's clearly what that means. No, that's, yes, the Oracle of Delphi has spoken.

Starting point is 01:06:13 Laura, I know that you are big, you're the biggest D-Gen on the show. As the, as the biggest crypto person, what's your take? Where do you predict things are going? Well, probably just on the news of the approval, there might be like a bit of taking of profits. but yeah, I don't know if you guys listened to this interview that I did with Rick Edelman, but he's kind of this like guru to financial advisors. And his organization has done surveys on, you know, what percentage of financial advisors own Bitcoin, what, you know, what percentage of them would like to allocate some of their clients'

Starting point is 01:06:47 portfolio is to Bitcoin. And it was something like some huge percentage of them. It was so, sorry, I don't remember, it was either 47% of them or 70% of them. 37% and the numbers are swapped here, but one or the other of those percentages is what the is the percentage of advisors who own Bitcoin themselves. And then the other one, whether it's 77, I think it's 77% are waiting on ETS to allocate for their own clients. And, you know, financial advisors in the U.S., they control, I forget it's like trillions of an assets. So in that regard, like it feels like, you know, probably some of them they're not going to allocate right away.

Starting point is 01:07:35 But within the first year, we're going to, I would expect like a huge amount of inflows. And there have been a few people on my show. I literally think if I remember quickly, I think two different people came up with like roughly 150 billion as they're kind of like estimate of the first year of inflows. So, you know, hopefully I didn't get that fact wrong. No, I'm a little worried. There's no way it's $150 billion. That is insane. Okay, sorry.

Starting point is 01:08:02 Maybe that was three to five years. So maybe it was like $50 billion for the first year, two of them. One was Alex Thorne and the other, if I remember correctly, was Matt Hogan. Yeah, you're right. I think it was $50 billion for the first year. And then it was three to five years where they were saying $150 billion. So, you know, I'm not sure exactly obviously how that will translate into price. But obviously, it's a lot of money coming in.

Starting point is 01:08:25 So, you know, there's only 21 million coins. So, you know, or and even less than that that are circulating. Yeah. Wait, actually, I have a slight, I have a question for you. Do you think that that means ordinals will be less popular? We can answer this after, but because fees will go up so much. Wait, I'm sorry, fees, fees from the Bitcoin. Yeah, let's suppose there was 50 billion injected in the first six months and price doubled.

Starting point is 01:08:52 Wait, but no, hold on, hold on. Because these fees are not coming on chain. We just established everything is cash settled, right? So there's no on-chain footprint. No, no, no, no. I know, I know. But Bitcoin price going up, the NFTs are like reflective to a certain point. But at some point, or the fees price people out, right?

Starting point is 01:09:08 And like the question is like, will the ETF actually be bad for ordnals or not? And like the on-chain. I don't understand how you're- It seems pretty orthogonal to me. Yeah, I don't get the connection. Let's say the ETF cause the inflows. the inflows cause price to go up by 2x, 3x, right? At some multiple of price, the fees start pricing out the current ordinal user,

Starting point is 01:09:31 some of the current order. Right, there's obviously some ordinal. Well, you're assuming, like, but like it might cause many people to drop out of the fee market too, right? Like, you know, I don't know on the totem pole. For sure. For sure. That's where the least valuable. That's where the speculation comes in.

Starting point is 01:09:45 Yeah. Is like, does the ETF crowd out these kind of native usages because it makes a price too high? I think as the price increases, it just means that ordinals will become more like Ethereum NFTs and yeah, it becomes like a high-end market rather than a kind of random. Which is interesting, right? Because it kind of started the opposite way for ordnals. Right. Yeah.

Starting point is 01:10:08 Sorry, not to front run your prediction, Tom. I mean, it might tamp down, especially BRC 20 activity. Like, I could see that the NFTs maybe keeping pace, but the BRC, the meme coin. like the activity there slowing down. I don't know. I feel like if anything is always just like when things get crazy and blocks goes credit than anything, people, that's like when prices go more crazy, but people are willing to be like $100 to do a swap.

Starting point is 01:10:35 And so I don't know. I guess I just will see, but it feels to me like it's just more sort of fuel the fire. These generally feel kind of like sell the news kinds of moments to me. But in this case, it does feel very material on that. there isn't really a good sort of, you know, competitor to look at Bitcoin ETF in terms of fitting that need or demand in people's portfolio like GPTC, you know, micro strategy. Coin McQuaties. These are all kind of flawed in different ways.

Starting point is 01:11:03 And so it does feel like a pretty material event. At the same time, almost kind of like anticlimactic, I feel like the entire time I've been in this industry. People have been talking about the ETF and when the ETF's going to get approved. And now it's coming up soon. And I don't really care. It's, you know, it's been so long and it's like, you know, kind of a boomer instrument for boomers, but I'm happy for them. So I'm having a drink on them tonight.

Starting point is 01:11:28 Great. Yeah, my only prediction is I think immediately after the Bitcoin ETF, I think ETH Bitcoin is going to rally because I think immediately the next narrative in line is ETH. And so I think people will very quickly get bored of Bitcoin or, you know, Bitcoin might do fine or it might dump a bit out. after the ETF is approved on, as Tom was mentioning, it's kind of like, okay, now what? You know, the ETF is here, now we just wait. And crypto markets are very impatient. If I've learned anything about them, they don't like to wait.

Starting point is 01:11:59 And so I think immediately there will be interest in rotation and say, okay, what's the next big story that we can get excited about? That would be my guess. But, you know, we're not traders for a reason because we're not good at it. So I would assume that I'm probably totally wrong on all these things. What do you think the timeline to the Aether ETI? if you were to like guess say say from the day of bitcoin oh i actually i know the answer it's something like may again it was either james or maybe eric vultz one of them on my show who told me

Starting point is 01:12:31 because it's all based on like the you know there's like a starting clock that begins when when an application is filed there's like different deadlines but yeah they one of them said it was may something yeah i'd heard by summer but i don't really i don't really know i haven't any of the details, but I'm sure we will all be talking a lot about it on the show for the rest of this spring. Yeah, but ether ETFs could be quite interesting because, you know, due to staking, you can probably do things a little bit more creative in terms of like, oh, there's no way they'll be staked. No, no, no, there's no way they will be staked. Yeah, maybe down the line. Like you, you give, because so basically for the Bitcoin ETFs, they're going to be competing on price,

Starting point is 01:13:14 but for ether ETSs, they could compete in other ways. True, yes, yes, yes. So if BlackRock launches an ETF, there's definitely not going to be staking. But if there may be other, you know, bitwise or something might be like, cool, these are a staked ETH or an STEth ETF, which is actually that might be, STEth might be too dicey, but, you know, I don't know. Given the way the SEC has positioned themselves around staking, it might be not doable. Yeah, I kind of feel like.

Starting point is 01:13:44 that's a post-Gensler type of thing. I think it's going to be like the most vanilla thing first. Yeah, for sure. Yeah, but this time next year, we might be in the post-Gensler era because obviously it's an election year. Yeah, we'll see. I'll see. Sure.

Starting point is 01:14:01 Anyway, all right. That wraps for this week. Laura, thanks for coming on and sharing your wisdom and energy with us. Thanks for having me. Hopefully by this time next week, we're going to have a Bitcoin ETF. So if you guys out here from us by then, happy Bitcoin ETF if it in fact does come. I guess 12% chance it doesn't or something.

Starting point is 01:14:18 I think there's like a delay between approval and listing. So yeah, we should have the approval. But the party is going to be on hopefully by the second. Yeah. So until then, I'm sure we'll have a lot more to talk about. But thank you, everybody. We'll be back next week. Hi, everyone.

Unchained - The Chopping Block: If Vitalik Is the Pope of Crypto, Is Justin Sun the Inverse Pope? - Ep. 590

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