We Study Billionaires - The Investor’s Podcast Network - BTC095: Bitcoin Time Stamping w/ Pierre Rochard (Bitcoin Podcast)

Episode Date: September 14, 2022

IN THIS EPISODE, YOU’LL LEARN: 01:29 - What is time stamping? 11:24 - Is Bitcoin a decentralized clock? 24:50 - Why is time keeping so important to Bitcoin? 51:45 - What does Pierre think about the big SEC announcement about exchanges regulating coins? 59:31 - Why is Bitcoin not performing like an inflation hedge against CPI? 01:10:34 - Correlation to traditional markets. 01:22:47 - When will all retirement accounts start offering Bitcoin? 01:25:54 - Transaction fees. *Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Pierre's Twitter. Pierre's company Riot Blockchain. Pierre's podcast: Noded. Pierre's non-profit: Nakamoto Institute. Related Episode: Bitcoin Smart Contract w/ Discrete Log Contracts Featuring Pierre Rochard & Ben Carman - BTC018. NEW TO THE SHOW? Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts.  SPONSORS Support our free podcast by supporting our sponsors: SimpleMining Hardblock AnchorWatch Human Rights Foundation Unchained Vanta Shopify Onramp Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hey everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. On today's show, I bring back my good friend and Bitcoin expert Pierre Rochard. I've been talking to Pierre about Bitcoin for many years now, and he's probably one of the most trusted, technical, and financial advisors I can think of. You'll be hard pressed to find someone that understands not only the financial implications of Bitcoin, but also the engineering ramifications as well. During the show, we talk about this idea that Bitcoin is the ultimate,

decentralized time stamping mechanism for ensuring that money can't be double spent while also having a finite amount. He talks about the ways in which he thinks proof of stake protocols potentially centralized over time, among many other interesting and important topics. This definitely isn't an episode you'll want to miss. So with that, I bring you the thoughtful Pierre Rochard. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pitch. Hey, everyone, welcome to the Bitcoin Fundamentals podcast. I'm here back by popular demand, Pierre O'Shard. Welcome back to the show. Thanks for having me back on, Preston. Happy to be here. We've been doing this for years. We've been talking about this subject for years. Five years?

It's been a while. I want to start off the conversation. So there was a thread that you were a part of about time stamping. I know Gigi has written about this particular topic and kind of laid this out for folks. And I think for people that aren't intimately familiar with Bitcoin, they would hear that and just kind of say, I don't even know what they're talking about. So first kind of define why this is so important. I think you got to get into time servers and things like that. But explain to people why this is so important and why it relates back to decentralized. naturalization. Yeah, well, I could first answer why it's important to me. Do that, do that. And I just started a new role at Riot Blockchain, which is one of the biggest publicly traded Bitcoin miners

here in the U.S. And I joined about a month ago as their VP of research after working at Cracken for almost three years as a product manager for Bitcoin and Lightning. So a big change of subject area for me from kind of the exchange trading slash lightning payment side to the mining slash electricity side. So what I've gathered from talking to a lot of folks in the mining industry over the past month, and if anyone listening to this is in the mining industry, I'm happy to chat. My DMs are open. We can hop on a call. Happy to talk to anyone, really, and learn from everyone. one thing that I've learned is that there is widespread misunderstanding that part of it is actually just related to the word that we're using mining to describe what the industry does.

So, for example, I was on a panel in Bjarritz at Surf and Bitcoin, and the moderator mentioned that they were on a tropical island and they met the prime minister, I believe, and they had lots of geothermal power, the cheap electricity on this island. And so he suggested, well, you know, you guys could mine Bitcoin here. And the prime minister's reaction was, how do you know we have Bitcoin here?

How do you know there's Bitcoin on this island? And he, you know, I was like, what? People take it because the word mining has always referred to physical mineral extraction from the earth. right? It's never referred to making or

payment processing or monetary systems, you know, except for literally gold mining. On top of that, just lots of different calls with kind of policy related folks where the connotation of mining is one of environmental devastation, right?

That you're going to be, and also terrible working conditions. So, you know, people think about like coal miners going deep underground. Huge respect to miners, by the way, I don't have any negative connotations towards actual physical mining. I think that it's a fantastic industry and, you know, I don't have any animosity towards it, but it is very different from what Bitcoin miners do. And so I was thinking about, well,

okay, what would be a better word? And I've heard phrases like digital mining to try to, you know, kind of move things in the right direction, securing the network, which I feel. to also be misleading or verifying transactions, which I also think is extremely misleading. And so I went back to the white paper, of course, right? Let's see what Satoshi Nakamoto said. And he said two things. One, it's a distributed, it's an example of a distributed timestamping server, or it's an implementation of one.

And it's a decentralized, right, distributed. The second is that he does use gold mining as an analogy. but the specific context in which he's using it is about the subsidy. The subsidy is the part of the block reward from the miners get that goes and adds Bitcoin into circulation, right? So that's what gets cut in half every four years is the subsidy. And that's what Satoshi was analogizing to gold mining, which is, here is how you add the units to the ledger such that you don't have any seniorage,

because senior rich comes from having a monopoly on the issuance of the monetary asset and thus allowing you to have a monopoly profit on the difference between the cost of production and the revenue you get. So with gold mining and with Bitcoin mining, it's decentralized and permissionless. So anybody anywhere in the world that there's gold, they can go mine gold. And so in practice, the gold industry, the gold mining industry does not have monopoly profits, right? It's competitive industry. And same thing with Bitcoin, adding Bitcoins to the ledger. It's hypercompetitive, right? It's actually hard to make money from doing that, hard to make a profit. Contrast it with, for example, like the Federal Reserve, when they go

into their SQL database, they have a cost of production of basically zero, right? And they can just create trillions of dollars instantly. And they have done that. So that was. So that was, was Satoshi's analogy was here is a costly way of adding this asset to the ledger such that nobody's kind of in a privileged position of inflating the supply. So I think that that analogy makes sense, except it quickly breaks down if you try to expand it to describing all the activities that a miner is performing. That is, one, the subsidy, that is the new Bitcoin being added to the ledger, that's not their only source of revenue. They also are earning transaction fees, which are not new Bitcoin being added to the ledger. They are from transactions that are being

included in a block by that, quote unquote, minor. And gold miners don't do that, right? Gold miners don't include gold transactions in their, you know, extracting gold from the earth. So the analogy kind of breaks down at that point. And it also breaks down on the service that they are providing to the Bitcoin network. That is that when they are hashing in order to find a winning hash that has enough leading zeros in it to meet the difficulty that's set by the Bitcoin nodes and the peer-to-peer network, they are essentially creating a decentralized order of transactions and some have analogized this to a clock or timekeeping, which is subject to contract. Here, we're going to get into it with Peter Todd.

But basically the idea is that in order to have a decentralized electronic cash system that is a ledger, you have to have an order of the transactions being added to the ledger so that you don't accidentally or intentionally spend the same Bitcoin twice. And that's the famous double spending problem that is solved by proof of work and the difficulty adjustment. So it really is about ordering transactions, which again, if you look at what gold miners do, it's completely unrelated, right? Gold transactions are ordered by physical time and space. That is, the gold can only be in one place at a time, and it gets moved around.

Now, of course, the paper gold conspiracy theory, you know, stuff about, but fractional reserves are, we'll get into that. So in my view, I like the word timestamping. I like distributed timestamping. Maybe part of it is just an argument from authority of, well, you know, that's what Satoshi said. And so I was putting out some content of, hey, let's consider this word timestamping as being more relevant and more accurate than the analogy of mining. I think that the mining analogy, we should continue using it when we're referring

to the subsidy and to the lack of senior age revenue from minors. But in terms of the service is being provided to the network, it's more of the ordering of transactions temporarily through time as it happens. Although that's when Peter Todd threw some sand in the gears of my thinking here, which is that Satoshi made a mistake. Satoshi was a genius, but he didn't get everything. everything perfectly right. And he actually did make a mistake of talking about the longest chain being kind of the chain that you build on top of. But as it turns out, it's the most work chain,

the heaviest chain, as they say. So basically, which chain has received kind of the most has hashing power rather than which one has the most blocks, which can be different. And so that was actually a bug that Satoshi had in the white paper that if I recall correctly, in his implementation he might not have actually had that bug. I think that there was kind of a disconnect between

the white paper and the code and the code was correct, which is interesting because nobody reads the code, right? Everyone reads the original white paper that has since essentially been superseded and that, you know, we should probably be amending as a

living document if people are going to take it as canonical. This is like the U.S. Constitution. I love this. So when you talk about the weight versus the longest chain, get into the nuance and explain to people how the code was different than what was written there. So you're just basically saying that the hash rate, the provable work and the energy that

was expended is really signaling to miners that are trying to find the next block where they need to be spending their resources and time to build on top of, correct? Yeah, so for example, you could imagine a chain fork where one side of the chain has a lower difficulty adjustment than the other side of the chain. And so they might be further ahead in terms of the number of blocks, but they're behind in terms of the work, the hash rate. And so it's in a way, it's kind of an edge case, but it's also the case that. So that's one thing. The other thing, though, that is perhaps more relevant to the time chain conversation is that the time on the chain can diverge from what we might call your wall clock time. Now, then we get into really metaphysical things of like, well, your wall clock is also not accurate.

So take that into account. Even an atomic clock, you know, the most accurate, these things drift. there's like time is relative. Then we get into, you know, Einstein and some more advanced physics that I'm not an expert in. But basically, in terms of Bitcoin time, it drifts a lot more than that, right?

And the reason it drifts, so there's a number of reasons, but one of the major ones has been that hash rate has increased parabolicly at times and because the difficulty adjustment only happens every two weeks' worth of blocks, you could have two weeks where the average block interval would be eight minutes, for example, instead of 10 minutes.

And so that means that on average, you're like compressing time by 20%. So it's like interstellar, you know, there's different periods of accelerated time in Bitcoin, which is why things like Bitcoin halvings, we don't know exactly what day is going to fall on in the future. We know what block height it's going to fall on. And so to the extent that the block height is different than the real time, then we can't claim that Bitcoin is a timekeeper or a clock because that from Peter Todd's point of view would mislead people into thinking that they can use block height as a substitute for their system clock for real time.

I don't know that anybody has, you know, made that mistake of saying, hey, let's meet up for our steak dinner at this block height. And then because blocks came in a little bit slowly or too quickly that, you know, they missed their reservation. But it is an interesting point. And if we're trying to be as precise as possible, it's not so much that the proof of work hashers, I think it turns out hashers is like the only sane word we can use here because they're just generating hashes. They are contributing work and the time element of it, the timestamping element of it, is actually secondary. And so they are ordering transactions based on accumulated work and that is loosely correlated with wall clock time. Now, the difficulty adjustment,

does directly use time, but with a lot of averaging going on and a lot of plus or minus. But when you say that, Pierre, I think it's really important to people understand. It's not like the difficulty adjustment is pulling a GPS time from some server. You're saying that it's looking at the speed at which blocks are being found in order to adjust the difficulty. It's not referencing anything to get a time hack, correct? Well, each individual node is using its system time to check the past two weeks worth of blocks and to, well, you know, okay, you make a good point here actually.

I'm being inaccurate because the only, the system time input is, in fact, you're right, by the hashers, or probably the mining pools rather than the hashers. But in any case, let's conflate the two. And so what the nodes are doing is that they're taking each one of those timestamps from the past 2016 blocks and figuring out what's the average interval between those. And you're right that they're not looking at their own clock, except that it's just like layers of nuance, except that when a node is accepting a block, they do make sure that the blocks timestamp is not too far in the future or too far in the past. Now, there are blocks where it looks like there's negative time between them because one had a timestamp that was a little bit in the future,

but it was within the parameters that are deemed okay. And so it is important for your Bitcoin node to have the correct time when it is accepting blocks and verifying blocks so that it can make sure that it rejects a block that's violating the rules and to make sure that it does not reject a block that is not violating the rules. But yeah, so that part of verifying a block does the nodes do refer to their system time.

And that's decentralized, right? Because each node is looking at it from their point of view. And that's true of all the consensus rules that they are verifying in a block. But you're right that on the difficulty adjustment, the nodes are just looking at the timestamps that they previously verified. and averaging the intervals on this.

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Back to the show. So you would, to mess with that, you would have to mess with it for two weeks straight, and you'd have to mess with it on a global scale of everybody, individually unique local time for all the nodes, all the versions of the of people running nodes keeping track. Is that accurately described? And then also the miners and whatever time they're referencing as well would have to be completely out of whack. Yeah, that's right. I don't know what would be gained from such an attack other than just trying to disrupt the network. Yeah, yeah. but the

interesting point Peter Todd made was that these references to system time could be replaced with other things and that was give us an example.

Well, the example he gave was an alt-coin, Chia that does this proof of space with the hard drives and Brankone. So, you know, sometimes Peter Todd does make statements where I'm like, okay, this is probably a little bit speculative. But his point still stands that the time aspect of it is an implementation detail, arguably.

Now, Gigi does not agree. And I'm flip-flopping on whether it is an implementation detail or not. because I think that to the extent that nobody has come up with a superior thing, other than system time in order to regulate the blocks and the, you know, time or the ordering and kind of how are we ordering, right? 10 minutes, right, is what we're using. And I haven't heard of a better substitute than that notion of time.

And arguably, this goes back to kind of the metaphysics of it, there is no better thing than time. Because as many commentators have pointed out, time is the scarcest resource there is, more scarce than energy, and certainly more scarce than hard drives or other things that we could try to come up with. And so I do think that time chain still has legs. I think that though there is tremendous nuance in terms of the fact that, hey, look, this is not a substitute for your atomic clock. This is Bitcoin time, kind of like dog years, right? Like this is from the perspective of this system, which is going to be. not really be relatable to other external systems that you might be familiar with. Pierre, so a person who just heard all of that, they're saying, I just don't get why this is

important. So why is this so vital? And then talk about everything else outside of Bitcoin that is referencing a time server that's put out by Amazon Web Services or whatever. Yeah, so I think that from the user's perspective, it's somewhat irrelevant. And so it's like, as long as the correlation between the work and the hashing and the time is close enough, that really the impact on the average user is that they'll think that, for example, a Bitcoin transaction, three confirmations, on average, 30 minutes. And maybe for their transaction, it turns out to be an hour, even though it was included in the first block.

And it's just because of the variance in terms of block time. And so I think that, you know, brings it home for folks of, well, you know, this is a, this is not a process that is as controlled as you, might have in other contexts, but it is necessary for decentralization and that ultimately, if we did depend on a centralized timekeeper, like, for example, there's NTP servers that are, you know, time servers essentially that are centralized, then the people who maintain those servers could reorder transactions on the ledger. And if there's, you know, that, now, arguably, this is what's going on with the whole proof of stake stuff, that they're using

centralized servers as oracles. This, you know, I think that it's true in a sense, but it's really about the fact that they're trying to maximize like throughput. And so, and they're trying to minimize latency. So I think the reason that Bitcoin's relationship to time is decent. is because it is so loose. That is that if we were trying to have a block every second, our clocks would have to be that much more precise, right? Whereas if we're saying every 10 minutes, you know, plus or minus half an hour and really, you know,

even further out than that, if you look at kind of the distribution of hashes, that the, we're making a tradeoff. We're saying, hey, look, we're going to have less precision in time in order to have greater decentralization, greater robustness, and ultimately a more reliable system, ironically, right?

Because some might say that having to wait an hour for a transaction makes it unreliable. But guess what? Your network being down, like Solana has been, for example, or others, and I don't want to throw them under the bus. But look, that's a greater problem than what we're talking about with having to wait a little bit longer for a transaction. So, yeah, I think that Bitcoin ultimately still is dependent on an external time oracle in the sense that the nodes and the hashers are relying on their own system clocks,

but to a much lesser extent than any of the competitors out there. And then especially with regards to stakers, because the fundamental problem with staking is that the stakers do not have to commit themselves to any particular timeline, right, or to any particular history of the sequencing of transactions. And so they can create many different sequences in parallel and then opportunistically reveal one in order to extract value somehow. Whereas with hashing, the hashers are always dedicating themselves to whatever the latest version of the ordering of transactions is, unless they're trying to do a 51% attack.

But that seems to have been more theoretical than actual something people are doing. Now, that's a whole other debate of why is nobody 51% attacking Bitcoin, etc. But I think that's the kind of the practical impact for users, tradeoff between D.S. centralization. When you're thinking about base money and you just look at the world today and you look at reserves, you know, for countries, massive trillion dollar figures that are, is base money around the globe right now, look at the frequency at which it moves from these large centralized banks and government coffers.

it doesn't move very often. And when it does, it's a one-time move and then it sits in the next vault for, and I'm saying vaults, but we all know it's digital units, but it is based money. It's not credit or based fiat units and not credit. So when you look at this tradeoff that Bitcoin's making for deep security and decentralization, but at a slower frequency of settlement, the 10 minute, you know, per bullet, lock, I think you can see why so many Bitcoiners are hellbent on why we're not willing to move on any of these parameters is because the whole goal of Bitcoin is to replace that base money

that makes it that nobody can screw with it. Nobody can change how many units there are. Nobody can go back in time and reverse which transactions are included in which ones aren't. in order to have those qualities, it's rooted around this idea of time and mining these blocks and expending energy that you so eloquently described in nitty-gritty detail there. So, yeah, I just want to throw that out there so people kind of really understand what the mission is and why what you just described is so important. Yeah, and I think that when we talk and think about Bitcoin, sometimes we slip into thinking about it as an experiment or as a hypothetical.

But, you know, when we look at the actual data, even last month, right, we're like in this terrible bear market, even last month, the Bitcoin network, the hashers, you know, finalized. more than $2 trillion worth of Bitcoin transactions. And over the past 12 months, it's north of $50 trillion worth of Bitcoin transactions. These are extremely material amounts of money, even in the traditional financial system.

And so this is not an experiment, right? This is a live global settlement network that is working. And when people propose to fix it, I scratch my head as to what they're going out about. Because if it was broken, it wouldn't be settling trillions of dollars worth of BTC. Like, period. Nobody would use it for that. And it's also, you know, yeah, so it's incomprehensible to me. that, you know, these folks still think that it's like an experiment that needs to be fixed.

And second of all, that they have the solution, which, you know, when I look at the problem of settlement times, there are great solutions out there. I think my favorite solution is lightning and this idea of anchoring channels inside of, and forgive me Peter Todd, but inside the time chain, that this is, the way to get instant settlement in kind of a game theoretically secure manner, not to tinker with the base layer, but to build layers on top of it. So, yeah,

that's the direction that reasonable people are going in. And in particular, I'd point to folks like Jack Dorsey or Michael Saylor, who've identified that the Lightning Network is, you know, the best, layer two solution for a lot of the issues that people have with regards to Bitcoin as day-to-day payments. And, you know, I think that this idea of like, day-to-day payments is very distinct

from international settlements, right? Or like trillions of dollars. And part of the disconnect is that me, you know, we're normal folks. We're not moving billions of dollars worth of Bitcoin. To my knowledge, I don't know if Preston's Billions of Sats, billions of sats. Yeah. And so I do find it hard to relate to it. I'm like, what are these people doing?

I get anxiety moving a thousand dollars worth of Bitcoin, right? So the idea of moving billions of dollars worth is incomprehensible to me, but clearly that's going on. We see that from the

network activity and from the data analysis. Now, with Lightning, we're talking about much smaller dollar amounts or value of a BTC. And when I think about when I go to Home Depot, now this number keeps going up, but usually I spend like $100 to $200 when I go to Home Depot. So that is easily accessible to lightning. And sending a $100 to $200 payment over Lightning is not challenging at all in terms of the liquidity or anything like that. We're purely. at that stage of end to one, or sorry, sorry, one to end of distribution, right? What strike is doing with Jack Marlars with, you know, getting all these point of sales systems

upgraded, et cetera. But yeah, there's also tremendous education still needed and also undoing a lot of misinformation that is being spread by folks who are competitors to Bitcoin and Lightning, or just politically opposed to it. And for people who are maybe just listening to this for the first time, Lightning will settle immediately for the two parties that are conducting the transaction and the fees are literally, you know, to them, it's there's no fees because the fees are that minuscule as a tenth of a penny or whatever it might be

in buying power terms. I want to go back to something you had said earlier on proof of stake. and exchanges. So you have lots of experience as an engineer working at exchanges. And I think you, more so than most people I've talked to, really understand the perverted incentive structure on centralization that has already started to manifest itself, but I suspect the trend is only accelerating in a centralized way with exchange. exchanges. Explain to people why that's happening and whether you agree with the idea that it's

accelerating the centralization. Yeah, so going into kind of Ethereum 2 and this wave of staking over the past few years, I did think that the centralization issue would come from exchanges. And then we saw the development of liquid staking, of basically that you can stake your token and have it too. So kind of defeating this idea of you're going to lock it up and it's inaccessible and so that means that you earn this yield

because you're foregoing, using it for other purposes. And instead, because obviously, like all the participants in these systems are trying to profit maximize. And so they were like, well, how do we create a smart contract where, yeah, you put your Ethereum into it, your ether, your eth,

and you're also able to then use that stake to eth for other purposes, whether it's selling it or leveraging up with it or, you know, doing any kind of D5 Ponzi type stuff. and that way you're double dipping, right? Because you could be earning the staking yield, and then you go out and you lend your stake to eat to somebody else, and then you're earning the yield from just, you know,

lending out the asset. And so there are massive, massive network effects with liquidity. So this is why the exchanges that have survived and, you know, were very early in the game, have built up such a moat relative to their competitors is because they have this liquidity network effect, right, where liquidity begets liquidity. You're not going to go trade at a trading venue that has very thin order books. You're going to go find a trading venue that has thick order books. And by doing so, you're increasing the thickness of that order book and you're reducing

liquidity on other venues. And so it's very much a snowball effect, right? Same goes with regards to liquid staking. That is that because the staked eith becomes kind of its own ticker symbol, that ticker symbol accrues liquidity in other parts of the system, whether it's defy or trading, you know, dexes and whatnot. And so if you're trying to minimize your transaction costs, your slippage, you're going to want to stake your eth with the most liquid contract. And so we've seen that Lido has become the biggest one on Ethereum.

And it poses an interesting question of, okay, well, if you're not actually tying up capital to stake, then what is actually going on? What like what stake do you have? And furthermore, if there are centralization points here, what are their incentives? And we heard a lot of noise about OFAC and tornado cash and, oh, well, when Ethereum does the merge, these large exchanges who have to comply with FinCEN regulations, they're going to have to censor sanction transactions and that's going to cause them to get slashed and, you know, there's going to be lots of problems. I don't think that's what's going to happen.

I think that OFAC and whatnot, they realized that it's going down that path would just cause it to become more decentralized. And I think that's what would happen, whether it's with staking or with Bitcoin mining, that they would actually just be driving decentralization and also driving activity away from regulated platforms, which is not what they want to do. but I think that the bigger issue is going to be the pressure to increase staking yields. That is, why earn 4% when you could earn 5% right? And wouldn't you want to be lobbying for increasing the staking yields? The Ethereum folks will say, well, look, our monetary policy, which is very flexible, is to have as little issuance as possible in order to still have transaction finality. So they're looking for like minimum viable issuance, which is reasonable.

But the problem is that there's no way to measure that. And it can be manipulated. So you could see stakers decide to carry out false flag attacks and claim that they got double spent or that somebody else got double spent, and that therefore the yield needs to be increased. Furthermore, if the value of the token is going down, then All Else Equal, shouldn't you increase the staking yield because your security has gone down as well with the value of the token

and also that in terms of the pumponomics, if they're still in this mindset that increasing the yield will cause, more capital to come in and get locked. Increase the, right, increase the capital value of the token. Then suddenly the staking yield stops being about security, and it goes back to being about monetary policy, right? Which is what the Fed does is setting interest rates. And I've even heard proponents of staking explicitly start talking about,

oh, this is now the risk-free rate of this staking, which I don't know if they're correct or not, but to me it's like you've succeeded in recreating in the financial, the Fiat system, right? That's not something that I would be advertising. But anyway, yeah, I think that the pressure to increase yields is going to cause more dilution and in the long run have the same effect it has on the Fiat system, which is just inflation and a reduced purchasing power. And that because Bitcoin is not subjected to those pressures, that there will not be, you know,

consortium of miners saying, hey, let's, well, they did. I remember during the first halving, there was some talk of, hey, let's not do this. Let's not have a having. And they were ignored because the

Bitcoin ethos does not have this idea of having a flexible monetary policy that is trying to target security. And so there's not the kind of social level flexibility. Instead, you have the opposite of intense toxicity.

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Ponzi scheme, which I think is what you are describing. I just don't, I don't understand how the farce blows up for some of this stuff. the long run. Like, how do you see that playing out? Because I mean, clearly, this is, this is such a disaster. Inflation. That's how it plays out. It's just with inflation now. The pace of which, that's up for debate, right? The finance system started in earnest, you know, in 1971. And here we are more than 50 years later still going. So I think that these, and then, you know, in the context of a cryptocurrency,

maybe they can survive even longer than that because maybe they are more restrained than the Federal Reserve is. How about this, Pierre? So when we're looking at this merge that's getting ready to take place with Ethereum right now, It's very clear. Samson Mao had a awesome tweet this morning talking about how there's a couple dudes in a room that are basically flipping the switch on the change in the hard fork that's about to take place. So do you find regulators somehow? And I'm not trying to promote anything here because some people get all upset like I'm trying to kill whatever, their favorite coin. Do you find that regulators are, potentially going to play also, is that a risk of instead of the inflation argument, is there a risk that regulators can step in and say, hey, listen, like, we know it's these

10 entities over here that are totally controlling the direction of this. They're a security, and now it has to be a registered security, and then they go from there. Do you see that risk playing out? Very well could, but I still think that any kind of regulatory intervention would be met, with further decentralization or at least appearance of decentralization on the part of the recipients of this regulatory attack or pressure or whatever you want to call it, intervention. And so I think that what I took away from Samson's thread is that these are the same people

that are going to be increasing staking yields so that they're increasing their income, right? And so the external regulatory intervention is hostile towards the system, right, the cryptocurrency, and so it gets rejected. But the kind of Ponziomics or seniorage revenues are beneficial to the stakeholders in this cryptocurrency system. And so that form of intervention is more internal. and thus, you know, you can use a difficulty bomb to nuke all of the nodes on the network

and force them to upgrade to your more inflationary version. And, you know, maybe there's a minority fork that tries to, you know, like Ethereum Classic, but ultimately because the stable coin issuers are still on your preferred fork that you go on your merry way. So I think that's where the centralization element leads to inflation rather than the centralization element leading to regulatory intervention and being shut down. Because they get more and more desperate to pull more people in and the cost to do that is the higher and higher inflation rate. And yeah, wow. That is an interesting take. All right.

Well, let's go to, okay, so here's a question that relates a lot to this. So the big news tonight is that the SEC has publicly proclaimed that they have purview over Coinbase, FTX, and Cracken, all the big exchanges. What's your take on that? I think that there is a power struggle currently going on between different parts of the federal government. So it seems as though the legislature, the House and the Senate, the people who are smart on crypto don't like what. the SEC and Gary Gensler is doing. To them, token issuance,

as long as it's far enough away from a security that, you know, it's innovative and that we should have more of it. I think that, well, we get into what I think, but the other part of it is that they want the CFTC to be regulating this. And for the, you know,

because the CFTC, as the commodities regulator, they don't ask for all these crazy disclosures, or not crazy, right? I mean, they're somewhat reasonable. I speak as a former public accountant. Yeah, so I think that the fundamental problem is that you have, on one hand, people who are saying, hey, these are securities, and then on the other hand, people are saying these are

commodities, I don't think they're either one. I think that they are currencies. They're privately issued currencies. Unbacked. Yeah, and except for Bitcoin. I'd say Bitcoin is a publicly issued currency because it again only uses proof of work, only has ever used proof of work

in order to distribute the coins. And so there's never been the senior age, the pre-mine, the pre-sale, the kind of, you know, that kind of stuff. So I think Bitcoin is arguably the only public, publicly issued currency, public currency. Dollars, I would argue, are privately issued currency.

and on the same level as Ethereum and on the same level as many of the other tokens that Gary Gensler is arguing our securities. Now, Gary would probably reply that actually private currency issuance is a subset of security issuance, securities issuance, and that if you look at the securities laws,

they explicitly exclude the dollar, for example, right, it would be interesting that if Janae, not Jana Eelan, if Jeremy Powell had to provide SEC disclosures for his secondary market sales of dollars. But in any case,

there is this policy debate that's happening within Congress about crypto. And then in parallel, Gary is seeing that there is this gridlock in Congress and that they're not able to pass any legislation.

and that he has his view on the market, right? And his view is paradoxically a progressive view that we have to protect consumers and we have to regulate the market. Otherwise, you know, just raw capitalism will exploit people and also the Bitcoin Maxi view that Bitcoin is the only one that's actually decentralized and all of the,

and it's the only one that's a commodity and all of these others are security. So I agree like maybe 30% of Gary Gensler, right? Of like Bitcoin's different. But I disagree that there should actually be government action against even just, well, I think the SEC shouldn't exist as a libertarian, right? And obviously these are my views, not the views of my employer. But it's a very, it's a very nuanced.

debate when we get into it as Bitcoiners of do we agree with Gary that these are securities, but do we also agree with him that there needs to be a crackdown, that they need to be prosecuted and put the jail like we're fined. So with regards to the exchanges, I mean, they are in a very complicated situation because their clients want those tokens to be listed on those exchanges. and if an exchange does not list that token, that client goes somewhere else, right? Might be offshore, might be another domestic exchange,

but they will switch. And so they have this incentive to list as much as they can, but then on the regulatory side, because there's tremendous uncertainty as to whether the SEC will come after, after you are not on a particular token because the SEC has been doing this, you know, people describe it as regulation through enforcement rather than putting out some kind of clarifying document of, hey, look, if these are the bright line rules, if you violate them, then your security.

And the reason the SEC hasn't done that is because from their point of view, there's the Howie test. And whether you flunk the Howie test or pass it will be determined in court, right? So tell it to the judge if you disagree. And yeah, that's, I don't know how this plays out because the reason Congress is a lot more crypto-friendly, right? You might say friendly to unregister securities or however you want to put it, is because their constituents, just like the clients of the exchanges, their constituents are saying, hey look, I love XRP, and Gary is persecuting XRP.

And it's, you know, who's to say that XRP is not the future? And, you know, obviously it's, in their words, innovative and the future of money and digital, blah, blah, blah. And so those are voters, right? And so the Congress people are like, well, I want votes. And maybe they even agree with that person that, hey, look, this is different enough from a security that Gary Gensler is kind of going on his own and that then it goes into a bigger debate about the administrative state and how much power has been delegated to the executive branch, etc. But yeah, there's there's a lot going on there.

I think that if Gary Gensler overplays his hand, he could destroy the SEC in court and that the SEC would end up, yeah, getting into kind of a self-sabotaging thing of the court would just side against them. And because the court sides against them on an unregistered security, well, then why would the court ever side with the SEC on anything else? That is that it completely removes all statutory authority of the SEC. And it would just be this entirely power agency that just screams of people, but that doesn't actually have any kind of, you know, authority. Literally, like gunfire behind it.

Yeah. Hey, what are your thoughts on this bear market? So, you know, we've been through this before. And I'm kind of curious, just kind of your thoughts on what this go around is like compared to previous rounds. So for a lot of people listening to this, this might be the first bear market. they've ever experienced and had to endure. Talk to us about how you view it optically compared to other ones.

Yeah, I think that the other ones were, in a sense, easier to understand because they did not have a big macro volatility backdrop to them. And so what I mean by that is like the 2018 bear market was, okay, we had this euphoric mania where Bitcoin went from, $200 to $20,000 and now it's sliding down to $3,000 and

that was that was comprehensible because we could look back at 2013, 2014, 2014, and kind of see the same pattern and that there was not anything else going on in the world. It was really symmetrical. Right. Yeah.

And there wasn't lots of geopolitical risk or corona hysteria or money printing, you know, going on. The last money printing session had been when Satoshi really launched Bitcoin, you know, 2008, 2009. And it was just kind of this Goldilocks period of Bitcoin growing. In this cycle, there's a lot of other factors going on. So one is obviously that it seems as though this cycle really kicked off with the very loose monetary policy after March 12th, 2020.

And Bitcoin did flash crash crash to like $4,000 on March 12th. And then it went from $4,000 to $70,000. Now we're sitting at $18,000. So I still do think that there has been like baseline value accrual, right? Because the liquidation low was $4,000 in 2020. And here we are two years later. I don't know if we're at the low yet, but it seems like we have liquidated a lot of people.

And we're at $18,000. So, you know, that's more than 4x multiple. Now, on top of kind of the monetary policy aspect of it, there's the geopolitical one of Russia's invasion of Ukraine, the energy consequences of that, driving up electricity prices, and then having an impact on Bitcoin miners. and on top of that, this inflation that started before even the invasion of Ukraine, I think this inflation was well underway

before that, and Joe Biden's kind of mistaken and blaming Putin for it. But it certainly, the invasion and the sanctions subsequent to it have dramatically amplified these, the inflation specifically in the energy industry. And that has a

lesser effect here in Texas because we can't export all of this natural gas. And so U.S. natural gas is much less expensive than European natural gas. But nevertheless, I do think that it has an impact in terms of capital flows and capital flows that could be going to Bitcoin. I think there's a lot of capital flows that instead of going to Bitcoin are going into financing, because when you have inflation, that increases the financing needs for companies, right? Because now they've got bigger working capital requirements. Like, everything's inflating, right? It's not just your grocery store prices. And so it's sucking capital away from Bitcoin on top of this classic mania, you know, withdrawal that we had. So, yeah, I think that because the bears are on

Twitter gloating that we seem to be very close to the bottom. So that makes me bullish when you start glisting. And I get it. You know, I was gloating when we were at 70s. Oh, yeah. We were tap dancing. Yeah. Everyone plays their role.

I'm just observing that they are gloating right now. And so that's that we might be due for reversal. Now, the problem I think is that the inflation is, it seems like it's going to accelerate further. And that going into the winter here and the way things are working at in Europe, it's ugly. It's really ugly. And it's made far worse by severe policy mistakes on the energy side of listening to Greta Thunberg and other ill-informed, quote-unquote, environmentalists. But it's basic math. I'm sorry to interrupt you. This is such basic math, right? How, how How is it possible for people to be this lost on something that's such an easy calculation?

And like all this neutral by 2050 stuff, like, people, like, can they not see the basic trends and the increasing demand requirements that are coming, right? And just not do the basic math. I just can't understand how so many people can be. duped. Like, how is that even possible? I would argue it's the public school system, has indoctrinated folks. When I was in, I think it was kindergarten, I remember hearing about global warming, and, you know,

they're cutting down the rainforest, and we've got to write a letter to our senator. And I remember typing up a letter to our senator, maybe not kindergarten, maybe it was second grade. It was certainly in elementary school. It's your fault. It's your fault. Just, yeah, it's my fault. I shouldn't have done that. But I was told to by my teachers, right? And it's only in high school that I deprogrammed myself and realized, oh, actually, you know, I came to the same conclusions that Alex Epstein did with regards to fossil fuels and the moral case for them. Now, I did it with far less data and thought that, then he did, you know, he did a much better job. Unbelievable. That book is unbelievable. Because he's one of the few people that talks about the opportunity cost of not using it, which I don't know. That's another thing I can't understand. How can't people say, okay, well, if we're going to cut back on this and these things are so evil, right? What are your, what's your other opportunity that you're going to replace it with? Well, you're going to get out there with a shovel and you're going to dig because you can't use a tractor.

Or, I mean, it's just one example of many where he's outlining like, okay, well, let's go down that path. Like, what is the opportunity cost of not using it and what does that world look like? And then his deduction that it's basically anti-human policies was kind of the eye-opening moment for me when I was reading that book. I was like, hold on a second. Like, he's exactly right. He's exactly right. Like, how can anybody refute it in a different way? I just don't understand how anyone could.

It is insane, dude. In 2005, I read George Reesman's book, Capitalism. And I specifically remember a paragraph where he talks about how socialism, communism, Marxism, they were very popular because they promised people a higher standard of living. and that environmentalism would never be politically popular because it promises a lower standard of living. And at the time I thought to myself, yeah, that's correct. He's right.

This will never become a thing. And this was back in 2005. And here we are, 17 years later, not only did it become a thing, but the outcome. Yeah, it's just very clear. And then I see people on Twitter who are like, oh no, this actually confirms our hypothesis that we need to move away from fossil fuels because Russia cut off our natural gas. Like, no, you don't understand you could have had fracking domestically.

There's no reason for you to be reliant on Russian natural gas. On top of that, you could have just not shut down the nuclear power plant so you could already built. That's all you have to do. It should not shut them down. They're already built. And the whole thing about nuclear waste and all this. and Chernobyl. I mean, history is just so ironic, right, that you have Chernobyl, which is now in Ukraine,

but at the time was in Soviet Russia, created this wave of anti-nuclear in Europe that now is the reason for the utter destruction of their economies and the continued success of Russia. It's absolutely astonishing. It's unreal. And boy, it's amazing how people have replaced qualitative feelings. with quantitative analysis backed by data and mathematics. I just shake my head. As an engineer, at heart, I'm looking at just like basic calculations.

And I just can't even wrap my head around how this movement and how decisions were, strategic decisions were made on such a grand scale and supported by so many people. It's just, it's mind bending. And now I hear European politicians talking about how they need to tax the super profits of these energy companies that are taking advantage of the situation. I'm like, you guys are just not going to stop digging your hole. No business sense, right? So now you're leading to having literally no business sense on, you know, capital infrastructure

investments that need to take place through the retained earnings of the companies from these boom times. And then you're also seeing the energy companies, they don't trust the policies being put in place. And so then they don't even want to make the capital investments. So it's like, oh my God, the density, the intellectual density is unbound. And I'm using density in a sense that, you know, it's not compact with a lots of thoughtful. All right, Let me go here in a different direction. What are your thoughts on the correlation that you're seeing between the price of Bitcoin and equity markets?

Yeah, I think that Bitcoin and equity markets have always been correlated when they are not decorrelating because of Bitcoin going parabolic. And so I just see it as the fact that Bitcoin is not in an adoption wave right now. And it just decorrelates when there's an adoption wave. So there's, I don't see it as like a permanent state of affairs, and it certainly hasn't been in the past. Trying to time, when is the next adoption wave? I have no idea. Maybe some of these energy companies will put some of their profits into Bitcoin because that way they don't get seized by governments, but that might be wishful thinking. And Bitcoin is in many regards, it's just walking, marching to the beat of its own drum.

it's the hardest thing to time. One of the questions was, what did you think when Preston, you know, said that he had sold his Bitcoin in 2017? And, you know, my thought was that I just, I've never been able to time the market. And so I don't have any intuitions as to like when the next big rip is going to be and whether,

now I can acknowledge my own sentiment, right? So what I thought when I heard that you sold was that you were right because I was euphoric. And so clearly we were at a local top. And the, you know, the, but the euphoria is what prevents me from trying to, you know, make a trade. It's like, how can you do that when you're thinking that it's going to the moon? And right now, I do feel like my own internal sentiment is like, oh boy, are we going to like 10K? like, is this going to grind lower? So once, you know, I'm feeling bearish, again, might be an indicator for those traders

out there who are trying to time the market that things are about to turn around. I did a different, this cycle. Like, I guess from the very beginning, and you and I had talked about this, where I always thought during this four-year cycle that it always had the potential for the global bond market to literally break. And so I didn't, I thought there was more risk being out of the market because of some type of major event that could happen while you're sleeping and you like wake up in the morning and it's up some ungodly amount that, you know, made it a bad decision to be out of the market.

But one of the things that that I guess I have done different on this cycle was pretty much at the start of this year, 2022, all the free cash flows that that I, personally make have just been kept in fiat. I never sold any Bitcoin, but all of my free cash is I just keep stacking in cash in U.S. dollars in particular. And I'm just waiting for the Fed to pivot, right? I'm just waiting for them to, I'm waiting to wake up and read in the Wall Street Journal that central banks have collectively decided to, you know, add $5 trillion worth of $5, $10, $15 trillion of stimulus into the economy. I mean, wherever Bitcoin's out at that point, that's when I take the cash I've been stacking

since the start of the year. I just pretty much take all of it and buy Bitcoin and add it to the Bitcoin that I didn't sell from this previous bull market. I don't know. And the top on this last one was really different, very, very different. I know Caitlin Long was talking about how she thought it was the derivatives market that basically they cut the head off of it, off of the moves like we saw that we had seen previously. And I guess I agree with that.

I don't, it's too hard for me to be able to analyze why or, or whether that would have even been a scenario assuming there wasn't a derivative. I'm curious what you think on that idea. Yeah, it kind of reminds me of the question from one of our audience members was on the, on volatility. And one of the, you know, the debate has been over time as Bitcoin adoption increases, what happens to its exchange rate volatility.

Because obviously, its volatility has been a source of tremendous criticism from people saying, hey, look, this is utterly unusable as a currency because you're in the supermarket and it goes down 50% and you don't have enough money to buy groceries. And I see two schools of thought. One is when we get to 100% adoption, we won't have any volatility.

It'll just be a steady increase in purchasing power due to increases in productivity. And just if you look at the ratio of goods and services to the money supply, because Bitcoin's money supply is not increasing and the goods and services are increasing, you just have steady deflation like you did in the 19th century under gold. And I think that that's one possible outcome. The other outcome, which is that if we do look at the history of the gold standard, we do actually see tremendous volatility in the purchasing power of gold because any time you have an asset increasing in value, that you inevitably get momentum traders and people who leverage up, right, until it unwinds.

And so you always have an oscillation around fundamental value. And that, I see that is just inevitable. And it's one of the kind of, from a monetary economics perspective, it's one of the arguments for fiat currencies, they'll say, well, we need an elastic supply so that the value of money is not bouncing around so much and Bitcoin's inelastic supply makes it unsuitable and it'll never be suitable even at 100% adoption because it'll continue to be volatile. And I actually agree with them. So I agree with them that at 100% adoption, Bitcoin will continue to be volatile. I disagree with them that that

disqualifies it from being money or from being a usable currency. With regards to long-term obligations, you can always just hedge using derivatives. And so if, and people do that all the time with, you know, agricultural products or whatever it is. But Peter, it'll be volatile relative to what? Another currency? So you're. Well, to goods and services, right? So for example, to wheat or to, you know, commodities to.

If you were going to go and buy a car, you think that the price swing would be what if you're in a hyper-bitonized world with a fixed supply? Yeah, so I think that you would have situations where there's a lot of supply of money, which would cause the Bitcoin price of cars to go up. And then you would have a deflationary contraction where the price of cars in Bitcoin would go down a lot. And so that might be like 30%, 50%. And that's, I guess the per capita. I would draw is, look, like when we have a financial crisis like 08 or like with COVID, you do see tremendous volatility in the purchasing power of the dollar with regards to specific goods and services.

And that if it was just with regards to a basket of goods like CPI, that I don't see that as being inherently more problematic than with regards to the price of an airplane ticket. right, which has bounced around significantly or the price of filling your tank of gas. Now, the... See, I guess from my point of view, Pierre, like I see so much of the volatility in the price in today's, you know, fiat's is just based on the fractional reserve system itself in the fact that you have credit blowing up and you have credit expanding. And, I mean, that's what's putting the waves in the...

in the broader macro context, right? And I think, you know, a lot of people have kind of pontificated on like what a hyper-bitcoinsized world would be and how much less credit would be in the system. And when you're looking at those waves and those volatility that are naturally going to happen anytime there's credit induced into a system, with a much smaller pool of credit, I just don't know that you're going to get that much volatility in the price. Now, between now and the, then when you're still living in this world of fiat currency with abundant, obscene levels of credit, I think that you're going to continue to see these 70, 80 percent annual volatility in Bitcoin. Yeah, credit and also adoption, right?

That if you've got lots of new entrants into the monetary system, that even if we assumed there was no credit and there was kind of a hard money policy, the ways of adoption would still cause Bitcoin's value to go up too quickly and then crash. But so that's where if, you know, at 100% adoption with a lot less credit with, in my view, no fractional reserve banking, then that would be a counter argument to my view of continued volatility. You know, we could have a steady. And contrary to the gold standard, where under the gold standard, they did have a tremendous

amount of fractional reserve banking because it was just so inconvenient. to actually transact in gold that you leave your gold at the bank. So I see lots of arguments for and against the long-term volatility and it kind of, it plays into the argument of medium-term volatility that is that with each wave of adoption,

should we expect the next wave to have a lower amplitude, right? And so this is, you know, people will say, oh, all of Bitcoin's big gains are behind us. and that going forward it's diminishing marginal returns, smaller and smaller gains, because we're essentially hitting a ceiling on adoption.

I think we're pretty far from the ceiling on adoption. One, because I think the ceiling is like everyone in the world, you know, having 80% of their balance sheet in Bitcoin. But even if you were to take a less aggressive stance, like we're, you know, in single-digit percentage, percentages of adoption at this stage, less than 5%, arguably less than 1%, if you kind of dollar-weighted by value. So there's the adoption side, as you mentioned, the derivatives as well could be playing a role. But also that it might just be the case that this particular cycle was different than past cycles and future cycles.

And then the next cycle might be below the lid off of it. Yeah, just far greater than 2017 or 2013. And because we're always trying to pattern match against the previous cycle, we're bound to be surprised by the next one. When it comes to retirement accounts, when do you see people having a one to five percent position across the board? Like when does that become commonplace? Do we see that soon?

Yeah, so this actually turned into a policy debate because retirement accounts are semi-regulated by the Department of Labor here in the U.S., and I'm sure there's similar situations abroad. And so they were saying, hey, look, you can't put retirement accounts into Bitcoin and specifically with regards to fidelity that had kind of floated this product. So I think that it's actually going to cause a political debate of, is Bitcoin a good investment? And we'll see politicians taking sides on that, which is bizarre because that's usually

not something that politicians debate is investments. But they are being put into this position because from the point of view of a lot of folks in government, Bitcoin is. a tool of anarchist libertarians and that it should be, its adoption should be dissuaded, should be slowed down. And so by whatever mechanisms possible, I think that this will be fought in the courts as well and that regardless, people who are well off don't just have tax advantage retirement accounts. They also just have standard taxable accounts. And so, I think the broader question of like retirement just even outside of the 401k IRAs situation.

I think that, yeah, I haven't seen any good numbers on where we're at with that in any case, right, of what percentage of people's, what they see as their retirement assets versus what they see as a lottery ticket. Right, right. And you'll hear people say, oh, people buy Bitcoin as a gamble, right? Oh, it's going to go up 10x. And so they have these unreasonable expectations about returns. Whereas their investment account, they think about it as like 8%, 9%, you know, on average over the next 30 years. I haven't seen any credible surveys on what people's time horizon is for holding Bitcoin and what their expected returns are and what percentage of their portfolio it is. and kind of just seeing that since 2015 and seeing how that evolves. Hopefully one of our listeners will go employ Gallup or something to do that. But we could look on chain at hoddlewaves,

but that doesn't tell us about the rest of their portfolio. Any closing thoughts or things that you want to make sure we cover? No, we covered a tremendous amount. Maybe next time we'll talk about transaction fees, but, Oh, yeah, we were going to talk about. Yeah. In short, give us the one-minute version of why you think the transaction fees are so low. And how do you see that persisting here in the coming five years real fast?

Yeah, so interestingly, they're not low due to a lack of demand. Demand has been very robust for Bitcoin transactions. They're low because blockchain.com, the biggest non-custodial transactional wall wallet adopted Seguid. And so it dramatically reduced its on-chain footprint. And we also saw people, instead of using tethers, USDT, on this Bitcoin Omni network, they've been moving to Ethereum and Tron, which I think is good, actually, because I see that as kind of parasitical or negative externality that they're foisting onto Bitcoin node

operators. But those two are the big factors, and then I'd say a minor factor at this point is still lightning. But it has raised this debate about, oh, are transaction fees too low? And are they not paying for the security system? I'm writing a piece on it with Joe from Blockware. So maybe I'll come back on with Joe and we'll discuss our research piece on it because it's a constant source of debate on Twitter. Oh boy.

Are you saying that you want to bring back smaller blocks? No, no. I think low fees are great for users and that they show that we're scaling well. So I don't think that there's a security problem here. Pierre's here to help and he has solved Bitcoin. No, it's really Peter Wola. Pierre, Lord, I love having you on the show and I love our chats.

I don't know. Do you have anything that you want to highlight other than your Twitter account for people to follow you? And anything else? Just highlight it right now. Let them know. Yeah, follow me on Twitter at Bitcoin Pierre. And I'm now in the mining industry or the hashing industry or time stamping industry or

whatever we end up settling on. So feel free to reach out. Always happy to learn from others. to share my knowledge as well. Thank you, Pierre, for making time and coming on the show. Thank you, Preston. Looking forward to the next one. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application

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