Unchained - Why Lyn Alden Isn't a Fan of Trump’s Memecoins, but Neutral on a Strategic Bitcoin Reserve - Ep. 768

Episode Date: January 21, 2025

The crypto world was shaken this weekend when Donald Trump and Melania Trump launched their own memecoins, ahead of Trump’s inauguration as president.  Financial analyst Lyn Alden joins Laura to explain why she’s not a fan of memecoins, neutral on a U.S. strategic bitcoin reserve, and doubtful the U.S. can disrupt itself even as Bitcoin, crypto and blockchain technology hold the possibilities of upending the geopolitical world order. Discussing everything from rising tariffs to reshoring strategies, Lyn offers a sharp analysis of the U.S. fiscal and monetary outlook and explains why she believes fiscal policy now overshadows monetary policy. Plus, hear her take on the TikTok ban debate, her skepticism that Bitcoin’s future security could be at risk as the block subsidy decreases, and her Bitcoin projection for 2025. Show highlights: 02:13 Why Lyn is not supportive of the launch of Trump’s and Melania’s memecoins 10:01 Whether Trump should airdrop his memecoin to U.S. citizens 11:47 Why a U.S. strategic bitcoin reserve sparks debate over its potential to devalue the dollar, reshape trade deficits, and challenge the global reserve currency system 25:09 How bitcoin’s rise as a neutral reserve asset could shape a multi-polar world 27:23 Why she thinks addressing U.S. fiscal issues may require the reshoring of industry and rethinking the dollar system 31:22Why Lyn thinks rising tariffs could disrupt global trade, but might also make the government less able to rely on taxation in a world of portable capital and growing privacy tools 35:16 Whether DOGE will be bearish for bitcoin 39:39 Why Lyn feels that Scott Bessent’s “3-3-3 Plan” faces challenges 42:29 Why fiscal policy now overshadows monetary policy, according to Lyn 48:21 What the TikTok ban debate reveals to Lyn about government control and the push for decentralized social media 52:31 Lyn’s take on MSTR’s plan to increase the number of shares 54:56 Lyn’s view on OP_CAT and bitcoin soft forks 57:20 Why Lyn doesn’t think that declining subsidies pose a problem for bitcoin’s security 1:05:59 Why Lyn doesn’t see value in other sectors of crypto, such as DeFi, aside from Bitcoin and stablecoins 1:09:15 Lyn’s projection for the price of bitcoin in 2025 Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Somnia Network Polkadot Guest: Lyn Alden, founder of Lyn Alden Investment Strategy Previous appearances on Unchained: Does Maximalism Help or Hurt Bitcoin? Lyn Alden and Udi Wertheimer Debate How Will Inflation Impact Crypto? Is Ethereum a Good Investment?  Why Bitcoin Now: Meltem Demirors and Lyn Alden on the Perfect Conditions for Bitcoin Links Trump’s announcement of a memecoin  Unchained: TRUMP Memecoin Soars Then Sinks as MELANIA Launches Balaji’s tweet on the proposal of airdropping $TRUMP Unchained: A Bitcoin Strategic Reserve for the U.S.? Senator Cynthia Lummis Reveals Her Bill Bloomberg: MicroStrategy May Soon Rival Amazon, Alphabet in Common Shares -  Unchained: What Is the OP_CAT Bitcoin Improvement Proposal? - Unchained Unchained: Bitcoin Layer 2s Aim to Attract Ethereum-Like Dapps. Will They Succeed? - Ep.638 Learn more about your ad choices. Visit megaphone.fm/adchoices

Micotrategies kind of served that need well. And I think it's rational that any time they traded a big premium for them to either issue equity, issue convertibles, and things like that to benefit from that premium for their shareholders. And I think that that will kind of go until it exhaust itself in a similar way that GBTC, when that was kind of the main vehicle people had, it traded at a premium. And then there are people that could arbitrage that premium. And that obviously ended poorly for some, for many. I think micro strategy is in a similar position, but I think it's better managed,

which is to say that this is a vehicle that's kind of meeting a demand that has not been met and that that's going to continue happening until they basically have met all that demand. Hi, everyone. Welcome to Unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin. We are now featuring quotes from listeners on the show. Today we have a comment from Winfred Quo on X, wanging on my conversation with Soda Watanabe about Sonium's meme coin blacklist, which sparked quite a bit of controversy. Winfred Quo writes, quote, IP protection does not equal centralization. Decentralization does not mean you can infringe on IP. To hear your comment on Unchained, write a review of the podcast or leave a comment on the episode on YouTube or X. This is the January 21st, 2025 episode of Unchained. You know, Somnia processes over 400,000 transactions per second with sub-second finality and sub-sent fees. Somnia is built to bring reactive mass consumer apps like gaming and socialify fully on-chain.

Learn more at somnia.network. Pocodot is the original and leading layer zero blockchain with over 2,000 plus developers. And the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem, making it faster, more secure, and adaptable. Perfect for GameFi and Defi to build, grow, and scale. Join the community at pocadot.network slash ecosystem slash community. Today's guest is Lynn Alden, financial analyst and author of Broken Money. Welcome, Lynn.

I have to be back. It's been a while. Yeah, it has been. And what a time for us to be recording. We're chatting Monday morning after a pretty wild weekend on Friday. night, hours after Gary counselor left the SEC, and around the time of the crypto ball, actually, President Donald Trump released a mean coin, 80% of which was actually locked up for insiders. And it quickly reached about a $15 billion market cap. On Sunday, the day before inauguration, his wife Melania released her own mean coin, 80% of

87% of which was locked up for insiders. And that actually caused the price of Trump to plummet, which prompted comments that Trump was rugging his supporters. what did you think of the Trump's doing all of this shortly before Trump was to be sworn in? So overall, I'm not really supportive of the whole meme coin space. I think, you know, we've seen different narratives throughout the crypto cycle. So there was ICOs, there was defy, there was NFTs. And this particular cycle has been the weakest narrative so far, which is just memes.

It's kind of like the cynical or the nihilistic end result of a lot of this that's been kind of trying and failing to find kind of sustained product market fit. I guess the best thing that could be said about it is that it's more transparent than the other is basically there's no pretense of a product or technology here. It's just a trading thing. And you're basically speculating to what extent insiders are going to rug you and when and to, you know, how quickly. So it's really kind of in that whole digital casino theme. I don't think it's a great look when we have, you know, presidential meme coins and things like that. But it does kind of fit with their family brand. I mean, they've had a bunch of other products.

the stock itself when you look at the market capitalization, like the stock that they have, it's very large market cap compared to really tiny revenues. So a lot of that premium is likely basically mean premium. And so it's not that constructively different than other stuff they've been doing. But it's not a great look, especially if we look, you know, if you go years in the future and look back, there's probably going to be a lot of people that, you know, lost money by buying into the hype, whereas early traders and, you know, probably insider's profit. Yeah, I think, you know, it was interesting to see that dichotomy between how the crypto or Bitcoin community reacted, you know, after his speech last summer at the Bitcoin conference versus this past weekend. A lot of people were kind of disavowing. There were some people who were pro, but it was very mixed initially. And then after the Malani meme coin, it definitely was very negative. But one other thing that concerns me is just, you know, I do think there's probably a lot of everyday people who this was their first time really pretty. participating in anything having to do with blockchains whatsoever. And so, you know, who knows where

all this will go, but there is potential for them to not have a good experience. So I know that we just talked about how this is a little bit part of his brand. But what do you think all of this says, you know, the fact that they launched these meme coins now? What do you think that says about what type of pro-cryptop president Trump will be as he, you know, proclaimed himself? I mean, I think the assumption, and this hasn't really changed before or after the meme coin launch is that the SEC and other groups will be less positioned to go after various types of crypto security launches. And so there's kind of an implicit green light there. I would still advise caution because sometimes rules don't apply evenly. And then there's still, of course,

an ethical overlay to the whole thing. So I do think that the administration will probably be seen as a less aggressive regulator of some of this. And so some of this can, can flourish for a period of time. But I think ultimately the narrative kind of burned itself out, which is to say that, you know, NFTs were a narrative, but after there's like a million different NFT projects, eventually that you exhaust demand for that. The same thing happened with, you know, defy, the same thing happened with ICOs. And I think we'll see that a similar thing happened with memes and other, you know, kind of community securities you can call them, which is to say that eventually the public kind of grows wary and kind of the potential buyers kind of get exhausted.

and you either need another narrative or a whole other cycle. I think this is probably the least constructive narrative we've seen in the whole space so far. It kind of boils it down. You know, kind of what we've been seeing in the other cycles is that there's insiders, launch a token, they have some degree of lockup, retail buys in, and what makes that different from traditional venture is that the founders and insiders can get rich regardless of whether their product is ultimately successful. So in traditional VC, you're often locked up for many years.

Your exits are fairly professional in the sense that you either go public, you know, through pretty high levels of scrutiny and disclosures, or you get bought by another company. Basically, they're professionals that look at your project and say, we want to buy this and add it to our company for one reason or another. Could be good reason or could be bad reason. But basically there's, you know, there's some degree of fundamentals tied to the performance of the initial capital providers and the initial founders. Whereas what we've seen in crypto is you kind of separate the financial gains from whether or not that product is actually successful after a few years.

And beam coins kind of get straight to the heart of that, which has already already been there. And what do you think of people who were saying that some of the more quote unquote, quote unquote, launched meme coins were, you know, but more similar. Like, yeah, you may not like this phrasing, but more similar in structure to something like a Bitcoin than a VC coin. However, obviously, the Trump and Melani meme coins were definitely more in the VC style, where they retained a huge percentage. But, you know, there is something, there is another universe in which they did a different style of launch. What do you think of that style? So I think those things can affect the lifetime of it.

I still ultimately think there's kind of minimal or negligible value creation long term from these things. So, I mean, if you take two things and neither of them are really adding value, but one of them is, say, more transatlantician. transparent or more quote unquote fair, then sure, I would classify that one as a little better than the other one. If people have more fun doing that than, you know, playing, you know, a game at a casino, it is what it is. It's not for me to really judge. My only concern is when people kind of enter the space, not really knowing what they're getting into. And, you know, we kind of see, you'll see people disavow the whole space while participating in it, which is not great. It's kind of, it's kind of like an ethical test that people kind of go through. So I don't really criticize traders being traders

or people gambling. And yeah, different meme coins are going to have different dynamics. But ultimately, when we take a step back and say, you know, 16 years into this industry existing, other than Bitcoin and stable coins, what is the value? Basically, the technology is really good for money, it seems. So portable store value and then permissionless medium of exchange, when you need it. So there's not huge volumes of medium of exchange, but there's, you know, for cross-border payments or for some permission types of payments when other ones are blocked, that's a use case. And the other narratives have been relatively minimal. I don't think there's zero. I mean, I think that they're, you know, on-chain swaps and trading, the idea of digital

art, the idea of places, you know, real-world assets, you know, basically different technology rails for how we manage securities. There's something there. But I would say that the overall market is smaller than people think. And, you know, I think we're kind of seeing the tail end of the narratives. Maybe there's another narrative in the future that I don't say. Maybe we have another cycle of narratives. But I think that we've exhausted most of the set of narratives that this industry has to offer at this point. Well, one other thing I wanted to float by you was I saw that Bologi, Sprini-Vosin suggested that Trump airdrop some of his coin to American citizens, or at least to the people who are on his email list. And I wondered what you said.

thought of that. It's sort of like kind of loyalty points type of, type of use. I mean, I think that goes back to there are ways to make more successful or less successful meme coins, ways to make them last longer, ways to boost goodwill in the project versus harm goodwill in the project. So I wouldn't, you know, if someone says, okay, this is your goal, how do you make this meme coin to have the longest life cycle and the most goodwill toward it? Yeah, sure. I think actions like that can extend it. I, I think he also mentioned, you know, basically making that, like, holding that meme coin as an entry into some spaces, right? So it's kind of like you're like, you know, there have been NFT things in the past where you need, you need to have a certain NFT to enter a certain space and be part of that community. So that's, you know, that's a new thing that this technology offers.

So I wouldn't really disagree with that comment in any way. I just think that when we zoom out, it's still the case of what is all of this mean? What does it do besides speculation and kind of. of ephemeral community association, not even persistent community association, but kind of in a moment of time, people feel part of a community. Yeah, yeah, which honestly reminds me of how people, when they talk about this sort of speculative circus, or especially like the alt-coin world, they'll say, oh, you know, it's fun until the music stops. So this is potentially, I guess, a more mild form of that if they feel they're getting some ephemeral benefit in the moment.

So now let's turn to the discussion of the U.S. creating a strategic Bitcoin Reserve because this has been such a huge topic for a while. And it's interesting because, you know, over the summer, people were very excited by this idea. But then recently I have seen a number of prominent people come out and say that they're opposed. One, you know, example that I'll just call out is Nick Carter, who said that he's not opposed the U.S. keeping bitcoins that the government has seized. But he is against the government paying money to acquire more Bitcoins, which is what Senator Cynthia Lemus's bill proposes. She would like to obtain one million Bitcoins. And one of the reasons that he gave, as he were in Bitcoin magazine, was, quote, my main and most important point is that a Bitcoin Reserve would not bolster the dollar. Unlike other countries, the U.S. issues the global preserve currency, other nations can toy around with acquiring Bitcoin. And indeed, if you are, put another way, the U.S. considering a near-term abandonment of the current relatively stable monetary system and replacing it with a monetary standard not based on gold,

but a highly volatile emerging asset would cause utter panic among its creditors. And I wondered, first of all, your thoughts, but then also this wider discussion around what some people are saying who are opposed and those who are for. So I'm fairly neutral on it. I think it depends on size, ultimately, which is to say that, you know, if they acquire some tens of billions or even some hundreds of billions of dollars of Bitcoin, I don't think that really moves the needle relative to the size of the dollar system. I would also wouldn't really, I would agree that it doesn't really bolster the dollar at that point. But I also would say

that that kind of small move wouldn't really panic markets either, other than maybe causing a period of panic buying in Bitcoin itself. So then you get into the whole rabbit hole of how do you do that? Do you do it before you announce it or do you announce it and then let the world front run you before you buy it? So there's obviously when you're at that scale buying, there's a lot of logistical issues. I think if we back up, you know, I've done a lot of work over years on analyzing the kind of costs and benefits of issuing the World Reserve currency. And some of those, some of the costs are kind of front and center of politics now.

So the whole world uses dollars. It's the most saleable money that exists. And it's the most salable currency. But the problem with that is that means the whole world needs dollars. So how do they get dollars? And historically, the way that they get dollars is the U.S. runs a structural trade deficit. That's how we pour dollars out into the world. And it's not even intentional because it's kind of an automatic response of being the global reserve currency,

which is to say that most currencies trade on their trade differentials, like a country's trade balance, as well as industry differentials and perceptions of that economy and how tight their monetary policies run. And the dollar does trade on all those things. but then unlike most other currencies, it has an additional component, which is long-term store of value by nations and entities around the world for lack of something better to hold as far as they see it. That's that big, that liquid, that fast. And what that does, that creates kind of a premium on the dollar compared to its fundamentals in other areas. So if you look at it, if it didn't have that thing and you look at, okay, what does the country's trade deficit look like? What does

their fiscal deficit look like? What do their industry rates look like? Generally speaking, the dollar would trade lower. But because it has that extra premium, it boosted the value of the dollar. And that actually hurts domestic competitiveness in terms of lower margin industries like manufacturing. It doesn't really get in the way of technology. It doesn't really get in the way of, say, health care. And it's really good for the financial sector. We're basically in the dollar exporting business or the dollar security exporting business, but it hurts those other areas. And that's now becoming more front and center. And so one question becomes, if your goal is to reshorstom, and the dollar kind of requires running a sustained trade deficit, those are kind of mutually exclusive.

So ironically, one of the ways that the U.S. could realign its trade is to intentionally devalue the dollar, similar to the Plaza Accord of the 1980s. And one mechanism to do that is to acquire a lot of reserves. They could buy gold. They could buy Bitcoin. They could buy foreign bonds if they wanted to, foreign securities. they could buy all sorts of stuff. Because if you look at countries around the world, if you look at most of their foreign exchange reserve

as a percentage of GDP, they're almost all higher than the U.S. And that's because the U.S. is the axiom of the system. We're the ones that don't really need foreign exchange reserves. But one way to kind of realign that is to say, well, we want to have five or 10 or 15% foreign exchange reserves relative to GDP like other developed countries. That's one option.

I'm not necessarily advocating it, but I'm saying that in this world where the trade deficit is actually starting to be front and center in politics and it contributed to populism for people that are on the wrong side of American industry being hollowed out, I think it takes a lot of reexamination of the structure of the system itself. Well, you know, I think we're at this very interesting inflection point in history because basically there are other countries now who they might view Bitcoin is giving them another option. And so in a way that alone might kind of start to shift things.

And so the U.S. is in this position of maybe needing to question whether or not it needs to disrupt itself in some way, or do you disagree with that? I agree with that. I think so if we step aside from governments for a second, incumbents rarely disrupt themselves. You know, if you're whitting, even if there's kind of cost to whitting or your winning is starting to stagnate a little bit, entities rarely have enough incentive to disrupt themselves. And so they normally get disrupted by startups or new technologies and things like that. And then when we bring it back to the country level, you know, the El Salvador's of the world have a bigger incentive to say,

let's try something different, right? Let's take a shot here and do something a little bit more direct, a little bit more brazen. And that could apply to the Singapore's, the UAE's, the, you know, kind of the smaller of the country you are, the more two-ended spectrum. Either you have a really big current account surplus and therefore a lot of sovereign reserves to do stuff with, or you're at a very troubled state and you say, well, it's hard to get much worse. Let's try some big moves. So I would, you know, if any kind of world leader looks at Bitcoin and is, and likes the fundamentals, acquiring Bitcoin makes sense. I think that that's a normal thing that we would see among more entities. Same thing for corporations. I think the micro-strategy playbook,

is still open for a lot of companies in a lot of different currencies. It's like, okay, what is the micro strategy of Brazil? What is the micro strategy in Europe? What is the microchrategy in country XYZ? There are still low-hanging fruit for entities to be early to that. Now, it would be interesting if the U.S. is an exception that disrupts itself. Some of the most successful companies in the world got that way because they weren't afraid to disrupt themselves. It's extraordinarily rare, but it does happen.

And it's possible the U.S. could do it. It's not really an outcome I would bet too heavily on, but it's certainly possible. It is an interesting possibility to consider. But earlier when you said you're kind of like neutral on the strategic Bitcoin Reserve, you don't necessarily kind of advocate trying to, you know, amass one of these in order to, I guess, partially fix some of the U.S.'s problems, but then also, you know, protect or what's the word mitigate the possibility of it being disrupted by these other countries in this way so i generally think that so it's always tricky because it depends on what perspective you're from

as as just a citizen i don't really care too much whether the u.s buys bitcoin or not um if anything i'd rather see bitcoin spread out among as many non-sovereign entities as possible before the sovereigns get involved. But if I reframe that and say, okay, if my job was to advise the U.S. government on whether or not to do a sovereign reserve or any other country that I was associated with or any company I was associated with, my answer would be yes. Because if my goal is to maximize the value of that organization, in this case, the U.S. government, I would say, well, you're probably going to have a better chance of maximizing yourself if you buy Bitcoin. So it all comes down to the frame that you're working with. I also think that it is, we are at the point where the costs of, the cost of, you're

of running the dollar system as it's currently structured, probably outweigh the benefits, which is to say that the cost to harming the U.S. industrial base is probably worse than the U.S. ability to sanction countries around the world. There's more mechanisms to get around that now, and the industrial base has been harmed enough that it actually is a political matter. It's a military kind of readiness matter, and therefore encouraging other countries to hold neutral reserve assets, and for the U.S. to hold neutral reserve assets does make sense in that regard. So that's something I would advise if the country's goal was to improve its trade balance, is to basically say, instead of holding dollars and treasuries as your store of value,

hold neutral reserve assets. But I think that's good for probably, you know, America as a whole, but we can kind of separate America of the country from America of the Empire or America of the government because what is good for one is not always good for the other. And generally, I like things that are good for America of the country, not good for America of the Empire or America of the apparatus that wants to sanction everyone or wants to run persistent deficits without cost. So it all depends on what you're asking me to maximize. Okay. And just to make sure that I understand, you're saying America, the country, as in like the citizens versus America, the empire, meaning the way it kind of acts in the world from a geopolitical standpoint. Is that the distinction?

Exactly. So, for example, if you say, is the dollar being the global reserve currency good for America, you have to ask which part of America? It's not great for American manufacturers. It's not great for probably most, you know, kind of blue-collar America. It's really good for Wall Street. It's really good for Washington. And for a while, it's probably really good for the defense industry, although now if your industrial base is hollowed out enough, it even starts to, you know, get in the way of your defense industry. So always have to ask which part of America is some policy good for. And the dollar as currently structured is really no different, is how I'd put it. All right. So in a moment, we're going to talk a little bit more about geopolitical issues,

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or leave a comment on an episode on YouTube or X. Back to my conversation with Lynn. So as we mentioned before the break, there is this inflection point that we're probably at where Bitcoin is starting to affect the geopolitical world order. So just right now, where do you think things are headed in the next, I don't know, five, 10, 20 years? Well, I think that, you know, we're seeing Bitcoin reach the institutional phase, which is to say that liquidity is significant enough to matter. I think it's becoming a gold-like neutral reserve asset among corporations, among some sovereigns. I think that's

probably going to continue in the years ahead. And the U.S. is at a pretty significant inflection point for a political perspective, which is to say, do we want to continue the momentum we've been on for decades, which is running persistent trade deficits, being kind of the unipower force in the world, or do we want to start pulling some of that back and focusing more domestically, which sometimes involves giving up some powers elsewhere? And I think when we look at history, empires rarely draw back gracefully. They kind of overextend their borders and then they expend tons of resources trying to maintain every inch of border they have at the cost of much blood and treasure. And the other option is to say, well, we overextended. The cost of overextending are now probably

outweighing the benefits of having extended this far. And so let's let's withdraw from position of strength and focus more on being one, you know, powerful country with our peers, focusing on ourselves, but being a good neighbor, those types of policies are ones I would advocate for, but it always remains to be seen if that's the path we're going to go down or not. And then you have other powers that are rising. China is now a big kind of other power in the world. I think that's going to be around at scale for a very long time. I think some of the China bulls overstated their rise, but I also think some of the China bears overstates their problems, at least in terms of economy and scale and relevance.

And so I think we're entering a more multipolar world. And in that world, neutral reserve assets matter quite a bit. And neutral reserve and neutral payment networks also matter quite a bit. So you referenced some of the major problems the U.S. has with high fiscal debts. And you have a saying about this, nothing stops this train. And we're meeting on the day of Trump's inauguration. And I wondered which of his current economic proposals you think. would help his administration address these issues?

Well, I think that any policies that encourage reshoring are welcomed, I think that the hard part is it's hard to address without going after the roots. I think a lot of policies tackle the surface, which is, okay, so we have structural trade deficits, let's do tariffs. Tariffs kind of address the end result, but it doesn't really get to the root, which is to say that if you don't want to have as big of a trade deficit, you know, there are a few politicians that would say, let's reexamine the structure of the dollar system itself. In fact, the likely incoming Treasury Secretary has restated that they want the dollar to remain the global

reserve currency. Now, they can potentially shift the definition of what that means exactly, but they do like the power to sanction countries around the world. And I think the problem is some of those goals conflict with each other. So then it depends on how they're weighted. In general, I think there's a lot more variance in this administration than most other administrations, which is to say, you know, I can't really tell you six months from now what tariff policy looks like because I can imagine very different outcomes. And so it's more of a scenario you have to react to what happens rather than forecast what's going to happen. But in general, I think anything that focuses more in the economy and less on maintaining kind of dollar hegemony, is probably a good policy. And I think that they have some conflicting things.

And so I would generally, I think the policies that err more toward that industrial side are probably more beneficial. Sort of like a resilience type of policy, which was something people were talking about a lot in the COVID era. Yeah, I think so. It's saying, okay, so other NATO countries should pay their agreed upon percentage of defense. the U.S. doesn't have to be involved in every foreign conflict that happens. That doesn't mean that we can never be involved. There might be ones that we consider quite important to be involved for

various historical reasons or because the scale is too important or because the specifics of that are relevant. And then to say, you know, if our goal is to, if you have two competing things, which is one, we want to but a sanction any country, or two, we want to resure our manufacturing base, which one's more important? And then the overlay there is, okay, so the U.S. government also benefits from being on run deficits, which benefits from the global reserve currency status. So then the question is, if you want to give up some of that privilege to resour some of that, that also generally means the government has to be a little bit more fiscally responsible, which, of course, is it's very hard structurally to do right now.

So I think that either way, any sort of change is disruptive, and disruptions can be painful, especially for winners of the prior era, but even for upcoming winners of the next era, disruptions are still often unpleasant when they go through it. And generally, transitions like this, there's more ways to fail than succeed, or there's more ways to have a less than optimal outcome than the narrow path of having the optimal outcome. And so I do think we're probably entering an era of more protectionism, probably higher average inflation, and more variance where you can do all the analysis you want on a given company or a given asset, and then some sovereign decision could just append that or change the outcome of that investment.

And so politics gets entwined with finance a little bit more thoroughly. And I think that's the era that we're in now. And earlier when you said that, it looks like incoming Treasury Secretary Scott Besson is not the kind of person who's going to question the dollar of Gemini. In that world, are you pro-tariffs or against tariffs or what's your perspective? So I'm generally not a fan of tariffs, but it depends on context. If you replace a domestic tax with an import tariff, that could make sense. in general, if we get to a world of more portable capital and we get to a world of better privacy tools, one of the challenges that the entire structure of income taxes being a predominant

source of government revenue in the world is based on ubiquitous surveillance. It's based on that presumption. It's basically not an accident that income taxes became very kind of prominent at the same time as banking became very prominent, which is to say that, you know, in the 1800s, a lot of people would still exchange like coins for goods and services, and bank accounts was kind of a more niche thing, especially among merchants and wealthier people.

And as we entered an environment where we're in the post-telegraph age, so the whole world's kind of increasingly connected by telecommunications system, starting the late 1800s and really extending into the 1900s, most people have bank accounts, those bank accounts are centralized around central banks, that whole system is surveillable, and so they tax people's income, and that's kind of where the taxation shifted. If we enter a world where capital is more portable, there's more privacy, income taxes become less, like they're more unwieldy to do, and taxing more tangible things can make sense.

So folks who more on property or physical business establishments or borders and things like that. And that's where a tariff policy could be relevant. But in general, things that disrupt global trade, especially at scale, are something I would advise a lot of caution around because a lot of the disinflation we've seen over the past three decades or so is a result of globalization. So when Chinese capital and Russian energy, you know, unlocked the world in the 1980s and 1990s and met Western Capital, that was a productivity boom. That was basically saying, okay, there's all these untapped resources of labor and natural resources. And here's capital.

And let's build a lot of new stuff that really kind of benefits the world. And there were losers from that. I think most people on average were winners. but the loses were if you were manufacturing in the U.S. or certain other countries. And it's natural that they say, well, we don't love that approach. So I generally favor things that are kind of anything that is good for productivity, which would be basically pretty free-flowing trade. But there's a real politic aspect behind it, which is when a country is very imbalanced,

we should expect pushback. And I think that's the error that we're in now. So I wouldn't be surprised as he takes. tariffs. And if tariffs or place certain other taxes, I would support that. In practice, what you probably see is tariffs layered on to other taxes. And so I do think we have more frictions ahead, unfortunately. You know, actually, I'm originally from Youngstown, Ohio, which I'm not sure if you're aware of it. But yeah, it used to be like a steel center. And then I think in recent years, I saw the population is only something like 20,000. So I'm definitely from a part of the world that.

that, you know, yeah, growing up, like, it was definitely a much more democratic place and then swung hard for Trump, who was definitely, you know, appealing to that group. So one other thing that I wanted to ask was there's this discussion about this new Department of Government Efficiency. And I wondered what you thought the prospects were for Doge, which has a very memeable name to have on the U.S. economy. And whether or not somebody asked on Twitter, whether that can even be bearish for Bitcoin simply because, you know, one of the arguments for Bitcoin is its use for anti-depacement. Well, so if the dollar debasement rate slows down, then sure, that can slow down Bitcoin

price gains for a period of time. I generally have pretty low prospects for Doge's ability to meaningfully and sustainably cut the U.S. deficit. And I've, you know, I've published some articles either myself or in collaboration with Sam Callahan, kind of ask. analyzing the different aspects of that, which is to say that a lot of that focuses on the people that work for the government or the waste that's there. And I do think it's a really good idea to one, focus on the deficit, bring transparency to the deficit. I think especially the DOD has a lot of fat that can be cut out and reprioritized. And so that's potentially hundreds of billions of dollars per year in savings. But in general, the most of the deficit is things that are not

actually super tied to efficiency. So they're tied to Social Security being very top-heavy now. They're tied to Medicare and Medicaid. The 2024 GOP official platform, Promise 14, says not to cut Social Security or Medicare or raise the retirement age, which is different than the Paul Ryan era of the Republican Party. So that's hard. And that's who votes also. So there's a reason that promise is in there. Then there's interest expense, which is obviously challenging to cut. And then there's some basic services and then there's DOD. So there's certainly things you can cut and get optimal, like optical wins to say, okay, look, we saved this billion dollar program on, you know, this one random type of fish preservation in a place no one heard of, right? There's lots of little

optical wins you can get like that that are going to make really good tweets. But then the question is, when we look back after four years, is the deficit going to be meaningfully lower than it is now? I don't think so. I don't think they're going to be able to cut. some of the biggest things. And in addition, there's going to push back on a lot of those little niche programs. And then also, one thing I've highlighted is that the U.S. is more financialized than most other countries, which is to say, if you take a country like Canada or Germany and their stock market has a good or a bad year, it doesn't hugely impact tax revenues. It still impacts it, but it's not huge. The U.S. are like tax revenues are heavily correlated

with stock market returns with a little bit of a lag because the stock market is so big and there's so many global players in our stock market and our tax structure is more geared. One, we have more wealth concentration and also we're just more geared to stock market performance. And so any sort of austerity that actually ends up hurting asset prices, you get this weird scenario where then tax receipts suffer and you don't cut as much of the deficit as you thought because you trim spending, but also your income dwindles a little bit. And so it's a really challenging Gordia not to undo. And then the Medicare side, the whole kind of broader healthcare side, you know,

the U.S. spends like by far the most per capita on health care without better outcomes for most people. That's a very entrenched system. I think it's really worth tackling, but I think it takes more than one, the span of one administration to do that. I think it's tied to diet. It's tied to how we prioritize agricultural subsidies. It's the way we, we, it's cultural. Then it, then it's the way our healthcare system itself is structured with the insurance and the, and the pharmaceuticals and all that. There's, there's multiple layers of intertwined power that it would take to really unravel to actually

meaningfully lower health care spending in the country. And I think all of that's a noble goal. But again, I think four years from now, we look back to the definition. And my bet would be that it's still quite big. Yeah, I have a lot of thoughts about the health care thing, which I won't go into now. But I definitely see that there's a lot of change that needs to happen there. I did want to ask you just directly about Scott Besson's 333 plan, which is to reduce the federal deficit to 3% of gross domestic product or GDP, raise GDP growth to 3% a year, and add 3 million barrels of oil production per day, a domestic oil production per day.

And I wondered what you thought of that plan. I think it's a good goal. I think some of those are more attainable than others. I think it's possible to add 3 million barrels of production. I would point out that I don't think right now the limiter on U.S. production is actually government. It's certainly the case that some administrations can be more favorable toward drilling than others. But the funny thing about the prior administration is their words were often against drilling, but then because they wanted to curtail inflation, they actually really weren't in practice that.

much against drilling except around the margins. And a lot of times what we're seeing is that the industry themselves is slowing down their own production. Because what we saw in the 2010s was companies would drill unprofitably, try to maximize every barrel they could get. They would get outside capital from investors to do it. And after the whole thing kind of blew up, they had very little to show for it. And so now we see that the industry is more cautious. It doesn't have as many external dollars supporting it. And so they're drilling out of their own profits. They say, okay, well, we're making a profit. We could pay dividends. We could buy back shares. We could improve our balance sheet, or we can reinvest more of it into more drilling. And they have to kind of, they actually have to weigh

that and say, okay, what is the oil price? What do we expect the oil price to be? What is this supply domain characteristic? And then they make some decision on how much they want to reinvest in the CAPEX. And I think that the industry itself is more rightly conservative with that now. And I think that's actually been the main limiter for why, you know, U.S. oil production has kind of touched around all-time highs, but it hasn't kept surging. In addition, there's also physical realities of well depletion, which is to say that shale oil depletes quicker than other types. You basically get a well operating faster, but then it depletes faster. And they've already got a lot of the low-hanging fruit there. So wells that they do now generally have faster depletion rates than wells from five or ten years ago.

And so that's a physical reality that just makes it marginally harder to get every sustainably higher oil production barrel. But I think it's a good goal to basically maximize energy independence and support energy production. As far as the others, again, that goes back to my comments on Doche. I think it's a good goal to say we want to get deficits down to 3%, but that's harder to do in practice. When you have top heavy social security systems, you no longer have structurally falling interest rates to offset. your interest expense. And so I would take the over on the numbers they end up there. All right. Let's also discuss the interest rate outlook because in late 2024, or I should say in the fall, it looked like people were expecting we would see more rate cuts in 2025.

In recent weeks, the prospects of all that has changed. So I wondered what you thought would happen or should happen and how all this will affect Bitcoin and crypto. I think a problem that the Fed is facing is that there. are not as in control as they're used to being, which is to say that over the past 40 plus years, up until the last few years, the country operated in monetary dominance, which is to say that most money creation was from bank lending, and the Fed's tools are mostly geared toward either encouraging more bank lending or slowing down bank lending. That's a big component of what they're trying to do with their policies.

and we're an environment where fiscal deficits now exceed bank lending in most years. It used to be that would only happen briefly during recessions when bank lending was slowed down and fiscal deficits would increase. But now we see it throughout a full cycle, but just fiscal deficits are running hotter than the net new amount of bank loan creation. And fluctuating your industry rates doesn't really encourage the sovereign entity to spend lesser more. You know, it's not really correlated in that sense.

And so they can slow down bank lending to offset fiscal-driven inflation, but that's not necessarily an outcome that they want either. That just means that the U.S. government becomes the largest share of the economy because you're slowing down private sector access to capital while the U.S. keeps pouring a fire hose of money into the system. And so I think generally speaking, industry rate are kind of less impactful than most analysts have come to believe over the past 40 years. It's not to say they don't matter, but it's just it's a smaller.

component than if we were having this conversation 20 years ago. In general, the market has seen a little bit stickier inflation, a little bit stickier economic performance to the upside in a good way. And so that kind of says, well, maybe the Fed doesn't have to keep cutting. But basically, when we talk about 50 basis points in either direction, I think that's less impactful than the market thinks. And the bigger questions are ones we discussed earlier, like what's going to happen with the fiscal situation. That's a bigger component, in my view, toward the economy and asset price performance than 50 basis points from the Fed. Same thing with tariffs. If we wake up tomorrow and there's 20% tariffs across the board on all imports, that alone, you know, that's more than

100 basis points difference in either direction than the Fed. So I think that most of the big questions there's more centered around fiscal and the Fed is more of that marginal actor at this point. I think another relevant question to look at is, is the Fed going to stop quantitative tightening this year? I think they most likely will by the end of the calendar year. I can see some scenarios where they push it in the early 2026, but my base case would be by the end of 2025. They've ended quantitative tightening, not because inflation is necessarily back to its target, but because they'll run into the liquidity floor of the U.S. banking system and therefore have to go back to structural balance sheet increases in a similar way they had to do at the end of 2019. So I think we'll probably see that. And that could open up some industry narratives.

If you still have inflation above 2%, and the Federal Reserve is gradually increasing their balance sheet, what kind of narrative does that send? So I think there's a lot of moving parts more than just interest rates. And earlier, you know, we discussed the fiscal situation. But I don't remember if I asked you directly, like, what do you think ideally the U.S. would do to address the fiscal situation? I think that there's no near-term way out of it. I think you either have to go back on campaign promises and say, hey, we actually are going to cut Social Security and Medicare and all that. And then ironically, when you cut those things, you probably hurt your tax revenue.

So you save less than the deficit than you expected. Generally speaking, when countries are this highly indebted, there's some degree of default that occurs. And if it's an emerging market, that could occur nominally. Basically, if your liabilities are unprintable to you, that defaults. can occur nominally, whereas if the liabilities are printable by you, it generally happens through debasement. And so I think that the way this generally plays out in history is private sector debt gets

rotated onto the public sector and then partially inflated away. And there's fairer ways to do that. There's less fair ways to do that. And I think it's a messy situation. And so I don't really see clean ways out. I think you can start by saying, okay, well, let's do a fine-tooth comb on all these different spending projects. how can we streamline them? How can we cut out the fat? How can we add more transparency to either the DoD as well as other programs? How can we tackle health care spending? I think that's a massive thing. How can we encourage health rather than sick care? And I think that's a huge error to target. But it's one of those things is that that takes a couple administrations worth of time to really turn the boat on. And by then you've probably run years and years and years and more deficits.

So I would say start going after the big structural things like bad health and bad sick care and bloated DoD spending and see how far that gets us. Yeah, definitely with you on how you phrased the issues around our health care currently and how they could be resolved. Before we move on to, so yeah, I just want to wrap up a few more geopolitical things before discussing more Bitcoin-related things. I have to ask you, I know this is indirect. correctly crypto-related, but it is geopolitical. This past weekend, at the same time, the crypto world was

kind of, you know, eyes glued to the whole meme coin situation. We also saw that TikTok went dark due to a ban, which then got reverted when Trump promised to give the company another 90 days to work at a deal. And I wonder what your take was on TikTok. Do you think it should be prohibited in the U.S.? What do you think of Trump's idea to make it a 50% joint venture with the U.S. company? What are your thoughts there? So for the first question, I do not think it should be prohibited. I don't think the government should be able to say which apps and platforms we use to communicate with each other. And I'm not a fan of TikTok. I'm just saying even as not a huge fan of it, I don't really support banning it. I do think the concerns around data security are valid, but I have the same concerns around U.S. social media companies. And so I, you know, I think that that's, it's not great optics of doing that. And I would basically say you can, there's ways to. to maintain that risk that are more elegant than just basically banning it or making it U.S. owned. So, yeah, not a fan of that kind of ban or that kind of government power.

I also think that similar to how, so in payments, you can be blocked from making certain payments or you can be deplatformed on certain payment networks. And Bitcoin and, you know, to some extent, stable coins and other assets can be workarounds for people in those situations. there are now technologies that can do that for social media. So one of the ones I've been interested in is Noster. It's a protocol that this stands for notes and other stuff transmitted by relays. And different app developers can build different clients to interface with it.

And they're interoperable in a similar way that different webmail providers can still send emails to each other because they're using the underlying simple mail transfer protocol. So they're interoperable ecosystems built on open source foundation rather than entirely closed ecosystems, I would like to see social media shift in that direction. There's still very tiny usage of these tools compared to what we see in these big centralized silos. But the more that these things happen, the more I think at least having a foothold on technologies like Noster makes sense. And we've seen some really big people mention that. I believe like, you know, Mark Andreessen mentioned it on Rogan's podcast briefly. We've seen other people say, you know,

it's kind of like how Satoshi said maybe maybe get some Bitcoin in case it catches on. It's kind of like maybe have your own sovereign social media encryption like a private key and some familiar with these types of technologies in case you need it one day and that you always have a fallback. And the other cool thing is people are now really up in arms around algorithms. So one of the one of the critiques that people have around TikTok is are the algorithms influencing, say, USU, in a way that is undesirable to the U.S. and pro-China. And again, I think that's a valid concern. And people point out, so on X, you know, on Twitter, to what extent can they tune the algorithm

to be supportive of whatever the owner wants versus other things? Or can he boost voices he likes? Can he suppress voices he doesn't like? And the answer is, yes, he can. And there's evidence of that happening. And the cool thing about technologies like Noster is that you can pick your own algorithm. There's no central algorithm for how content is ranked or discovered and different clients. And there's even clients to have algorithm marketplaces that you can construct your own algorithm. Or you can say, okay, this other person made this algorithm. I like it. I'm going to use that algorithm.

And I think that those, it's kind of worth promoting that type of openness. I don't really have high hopes that it's going to change anything the next few years. But I think every time one of these things happen, one of my response is going to be that there is technology out there and there's some tradeoffs with it in terms of user experience and stuff. But there are technologies out there that can kind of make this question irrelevant because it's very hard to ban those things in a similar way that is very hard to ban Bitcoin. And they can kind of get around these types of blockages. Yeah, I definitely think that is the future. I just am not sure how quickly we'll get there. but I would hope it will be sooner rather than later. We'll have to see. I did also want to ask

because another big newsmaker in recent weeks as, well, Michael Seeler, he's always a big newsmaker, but, you know, Microstr Strategy is now proposing to increase the number of MSTR stock units to 10.3 billion from 330 million. The shareholder vote is actually occurring the day that this podcast airs, but it is expected to pass. And I wondered what you thought of that. Is it a good idea, bad idea, and, you know, why or why not? I think as long as their stock trades at a premium to their net asset value, it makes sense for them to issue more securities to narrow that gap. That's kind of pretty fundamental.

And right now, that premium kind of represents various pools of capital that want Bitcoin exposure that's hard for them to get it directly. So if you're running a bond fund and you have to. happen to be bullish on Bitcoin, how do you express that view? In the past, you'd have to, it's kind of like your personal account is very different than your public portfolio. You say, well, I hold some Bitcoin, but I can't really do that in my bond fund. And microchrategy has been a way to do that with those convertibles. Same thing. If you run a stock fund and your only mandate is you have to own stocks and you have any bullish on Bitcoin, you know, there's now securities that you can

buy that give you exposure to the thing that you're bullish on. And so microchratage's kind of served that need well. And I think it's rational that any time they traded a big premium for them to either issue equity, issue convertibles, and things like that to benefit from that premium for their shareholders. So it's kind of rational that they're doing it. I think they're going to keep doing it. I assume the vote's going to pass, but we'll see. And I think that that will kind of go until it exhaust itself in a similar way that GBTC, when that was kind of the main vehicle people had, it traded at a premium. And then there are people that could arbitrage that premium. And that obviously ended poorly for some, for many. I think micro strategy is in a similar position,

but I think it's better managed, which is to say that this is a vehicle that's kind of meeting a demand that has not been met and that that's going to continue happening until they basically have met all that demand and that they've exhausted that excess demand and the premium kind of settles back closer to net asset value and they've reached whatever their total adjustable market is. All right. Well, I did also want to ask you about a few directly Bitcoin-related things. One is that the Bitcoin community is discussing adding the OpCat operation code to enable more programmability in Bitcoin.

And this actually was originally introduced by Satoshi Drakamoto later discarded. by him. But it's now being revived, or this proposal to institute it is being revived due to how ordinals and runes have taken off. And I wonder, do you think Bitcoin should adopt this? Why or why not? So I have no firm view on Opcats specifically. I did partner with Steve Lee and also Ren of Electric Capital. We published the paper on Bitcoin Consensus. People can look it up at like, you can Google Bitcoin Bcap GitHub and you can find that on GitHub. And we also were open to contributions, and that kind of analyzes how the consensus changes and what some of the risks are of contentious changes. And that, again, that paper takes no opinion on any given soft fork.

I generally am supportive of some of the most conservative covenants that have been proposed, the ones that most developers don't really consider there to be much risk associated with, and then they kind of differ with each other on which one they want to do. And some of the more aggressive or some of the more expressive ones have a little bit more contention with them. And, you know, I don't really have a firm view in any given covenant. The concern I would have is that covenants that can boost centralizing types of MEV or minor extractable value on the network, I think is not good. But I also see why people do want more, you know, trust, minimize pegs and things like that for other types of L2. So while I do think that Bitcoin

would benefit for a little bit more expressivity. I don't have any firm view on which specific path to do. And I think one of the challenges that before it kind of reaches a big scale, the covenant proposals have to agree with each other. So generally speaking, prior changes were made after there was a lot of developer consensus and not much opposition. And right now, there's multiple different covenant proposals. And they range in how conservative they are versus how sweeping they are. And so while I do support covenants to some degree, I don't have a firm view, especially on some of the some of the more contentious ones, including op-cap. Well, it's something that has been long discussed in Bitcoin is the potential risks posed by not only the declining block reward, but then, of course, certainly when the block subsidies ceases, which is obviously quite far in the future. But there are some people who say that this risk due to the declining black reward could, you know, occur as soon as in the next decade or so.

And I wondered what your thoughts were on that. Like, do you think that poses a risk? And if so, why? But if not, then why not? I don't think it's a large risk. And I think it's mostly a question of adoption. So if Bitcoin becomes the world's best ledger for settling value by the 2030s or the 2040s, there's a cost to use that. and, you know, it doesn't take much cost to have a pretty robust network. And a lot of people will

say, okay, well, if the block suburb is low, you can do this type of attack. But those types of attacks are a lot harder than theory crafting on paper because they involve actually getting data centers, actually getting miners, actually getting electricity to fund all that, and these really big, often transparent attempts at attacks. And in addition, there's reflexivity, which is to say that if at any point the network gets censored, that can jack transaction fees up to basically say, well, look, I mean, you know, I was paying next to nothing to send a transaction, but a cabal of minor pools have now blocked me. Well, now I'm offering a big bounty to say, look, if you, I want to send a million dollars on chain and I'll pay $1,000 to do it. Who wants to mine that? And then you can

get kind of shifting mining responses to that. So there is a market signal that can happen should you run into some of the negative consequences of low fees. In addition, when we look at, when we look at what is Bitcoin competing with, right? So right now, you know, one of the biggest settlement networks in the world is Fedwire. That's basically, it's the foundational settlement layer for the U.S., but then also because the U.S. is the globalism of currency by extension, there's other capital flows going through it. And they literally settle a quadrillion dollars of value per year. And they do it with the best. the transaction throughput of Bitcoin. It's kind of funny how similar they are. It does about the same

annual number of transactions as Bitcoin is capable of doing. The average transaction size is something like 5 million. So if you do 200 million transactions per year at 5 million average transaction size, you get a quadrillion in settlement value. Bitcoin is less than 1% of that. And if Bitcoin reaches 10% of that, reaches 20% of that, you know, maybe in the future overtakes that as a as a global decentralized version, but let's not even get that far. Let's just say it 10x is from here or 50xes from here. That's a lot of demand for block space. So often, you know, when fees are high, we'll see a lot of narratives around Bitcoin's got to scale better. These high fees are a problem. When fees are low, it's like, okay, what's going to happen

with security in a few years? You know, that's bad for Bitcoin. And I think a lot of proponents of other blockchains will use any kind of scenario that's happening on Bitcoin to say, here's a problem with Bitcoin, buy my coin instead. And I think it's, I view it as a market-driven thing. I think that it comes down to adoption. If Bitcoin is not get widely adopted in the 2030s, 2040s, 20-50s, transactions fees will be low, mining rewards will be low. The network is still probably hard to censor that point.

Like, we don't really see other small tokens get censored that often. But it becomes more achievable when Bitcoin is small and it becomes less relevant. But if Bitcoin does grow in adoption and has some constraints on its on its block size and bandwidth overall, I would expect to see a fee market develop when the network is 10x or 20x bigger than it is now. And just to understand, so in that world, it would be more like a settlement layer for large transactions and kind of the everyday person might not use the first layer to transact, then where do you see kind of the majority of transactions going? Either on L2s or on hybrid layers, federations, depends on what covenants we might have in

place or not in place by then. But I think basically various L2s as well as banks, basically that people will still be using custody at that time. I think that's not really how people like it to go. that the vast majority of people are fine with using entities like that. And when we look at compared to what it's competing with, so Fedwire is a fully closed thing. You can't choose to build on top of Fedwire. You have to be invited to use Fedwire, right? It's a permission centralized thing. And Bitcoin is basically an open source, decentralized, permissible Fedwire, which is

anyone can build different types of solutions on top of it, given the constraints of the system. And I think that's already a massive improvement over Fedwire. You know, you go back to Hal Finney in like 2009, 2010 was talking about Bitcoin banks building on top of Bitcoin. When you go back to Nick Zabo, he talked about how he envisioned Bitcoin as a two-layer system. Like when he was doing Bit Gold, so his proposed design was very similar to what Bitcoin ended up being. Kind of the missing piece there was the difficulty adjustment. But when he envisioned it, he, you know, he's got really good quotes about this.

where he said he envisioned layer one is a settlement network and then a bunch of Chalming Mints or things like that running on top of it to provide various types of retail scale transactions, often with better privacy. So I think that's the way to go. And I think that there are, you know, there are expressivity changes that can further make that possible. But I think even the existing tool set is pretty good for what it gives us compared to the current system. People can build all sorts of L2s on it. They can build federations. They can build, you know, we'll see what happens, with BitVM. There's all these, I think there's a lot of untapped design space to allow various types of pretty

creative L2s and things to exist on the network. And are there any particular L2s that you feel are best positioned to become more popular? Not at the current time, but I am, I do find the BitVM technology interesting. I'm also, I, you know, I think that no matter what emerges, I think lightning ties things together pretty well, which is to say that channel-based settlement and transactions are very valid in that world. In general, I think that certain things can be overpromised, which is to say that an L2, even if it can have a trustless bridge to Bitcoin, is not as trustless for the small transactor as they might say, because if push comes a shove, they might not have the means

to unilaterally settle on chain, which is to say that if they're transacting, you know, $50 worth of Bitcoin on some L2 and in that future, you know, 10 or 100x more people are using Bitcoin and therefore fees are higher, fees could be $50 per base layer transaction. And even though in theory you can settle on chain, the cost of doing so, you know, would be prohibitive to a lot of small entities. And so I think that L2s are still not as trustless as people think and that there's still some degree of trust involved in a lot of this, which isn't necessarily a bad thing because people can then choose who they trust. In Fedwire, you can't choose who you trust. There's only, you know, regulated banks can build on top of it. It's all kind of one monopoly.

And with Bitcoin, it's this open world where people can build things and they can trust what they want to and they can not trust what they want to. And, you know, the realistic thing is that the more resources someone has, the more they can put resources into minimizing their trust, including using the base layer itself. And I think any technology that gives people as many options as privacy as possible is good. Last two questions. I know at the beginning that you said that you feel like Bitcoin and stable coins are the only real applications of blockchain technology that have served a practical purpose and also found product market fit. And I wondered, somebody on Twitter suggested that I asked you if you had to compose an altcoin reserve basket, what tokens

would include or another way to phrase it is just, is there anything else that you feel as interesting in the crypto world aside from those two things? Or promising? The short answer is not particularly. Anything that any, any, whatever the best rail is for running stable coins and running, you know, some degree of real world assets. is probably going to outcompete other things that are not doing that as well outside of Bitcoin. But one of the points I've made, if you look at the ETF industry, right, ETFs have been wildly successful. I don't have the number in front of me, but it's something like what, like $15 trillion in

ETFs or something like that worldwide, somewhere in that ballpark. It's over $10 trillion, I believe. And then you look at, okay, who are the issuers of ETFs? So in the U.S., the biggest ones are like Black Rock, State Street, in Vesco, and you say, okay, well, what are their market capitalizations, right? So BlackRock is $150 to $200 billion. And they have a big non-ETF business. They have a really big active management business. So let's just say half of their market cap is ETFs. So less than $100 billion, maybe $70 billion. And then, you know, State Street, that's one of the biggest custodian banks and also an

ETF business. Their ETF business is probably worth 10 billion of their market cap. And then Investco has got a tiny market cap. And then you can add some big European issuers. Probably all the issuers of ETFs are under $250 billion in market cap for their ETF businesses. And that's despite the fact that it's, they're running trillions and trillions and trillion dollar product. So basically the value accrual that has gone to the underlying rails or the underlying issuers of, of, what has been a very successful thing has been pretty minimal. And I generally view that in the crypto space as well, which is to say, you could have a trillion dollars of stable coins flying around.

And I still don't think you get a ton of value accrual as a percentage of that going to the rails that those things are running on. And they actually kind of work similarly, which is that if you're a big ETF issuer, you're running these big ETFs, you have a lot of volume happening, you have a lot of assets under management, kind of like total locked value, and that's all flowing around, and you're making a profit, and what are they doing? Well, they're off, they could be paying dividends, or they could be buying back their own shares, and we see these other protocols kind of working similarly. And so, sure, wherever action's happening, that's going to do better than where actions

not happening at all. But I think that those are not like, in the long run, trillion dollar opportunities or multi-tillion dollar opportunities in the same way that Bitcoin is. So it's not to say that defy has no, I'm not saying there, there. Same thing for digital art. It's just that those are markets that I view is way smaller than money itself and portable capital itself. So that's why, you know, while I do pay attention to any coin in the top 10 or top 20 to see varying degrees, what, you know, what's happening technically?

where are things happening? I do pay attention to that, but in terms of investable things, I still viewed as primarily Bitcoin. All right. Well, since I know you are very focused on Bitcoin, I would be curious to know. Maybe not the most creative question for a January episode, but what would be your price projection for where Bitcoin could go in 2025? I think we'll see new highs. That's not too aggressive of a call because we're chopping somewhere near all-time highs last I checked like an hour ago, I would like to see over 150,000, but my specialty is not really near-term predictions. I think most of the things I look at suggest that this cycle is not over yet. So when I look at various on-chain things,

such as market value compared to on-chain cost basis or the hoddle wave, so what percentage of coins have not moved in over a year? Generally, when you get a really big bull market, you start to unlock some of those longer held coins. And the number that is unlocked has been notable, but it's still smaller than prior bull runs. And that ratio of market-valided cost basis has not reached extremes that would concern me at this point. So while I don't have a great answer for the next 12 months,

my general answer would be higher. We could see over 200,000, but I tend to like more conservative targets. I say, let's break new all-time highs. let's get further into the 100K. And it's possible that my bullish view would extend into 2026. But I think that we still have higher to go this cycle. And I still think the risk reward looks pretty good in owning Bitcoin would say an 18-month view.

All right. Well, it has been a pleasure. Where can people learn more about you and your work? So I'm at Lindaldon.com on Twitter at Lindaldon Contact. And people can also check out broken money on Amazon or wherever else you might want to buy books. Great. Well, thank you so much for coming on Unchained. Thank you. Thanks so much for joining us today. To learn more about Lynn and her book,

Broken Money, check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Matt Pilcher, Juano Renewicz, Megan Gavis, Cameron Gavis, and Margaret Goria. Thanks for listening.