We Study Billionaires - The Investor’s Podcast Network - BTC171: Bitcoin Tech Update with Alex Leishman (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. On today's show, I have the incredibly insightful Alex Leashman. As we dive into the conversation, you'll quickly discover Alex's deep-rooted expertise in Bitcoin infrastructure and his pioneering vision as the CEO and founder of River. Today, we explore Alex's thoughts on things like ordinals, the tokenization of real equity, and what technologies are potentially enabling people with small amounts of Bitcoin to still be able to take some form of custody with the least amount of trust as possible.

Starting point is 00:00:33 So without further delay, here's my chat with the very thoughtful Alex Leashman. Celebrating 10 years. You are listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone. Welcome back to the show. I'm here with Alex and super pumped to have you back on the show to get into all things Bitcoin. Welcome.

Starting point is 00:01:10 Happy to be on. I understand you just got back from Argentina. I'm curious how that trip went. And obviously from a Bitcoiner's kind of lens, what's happening down there. I'm curious your takes. It's an interesting time to be in Argentina. There's a lot of hope that the new president will make big changes that long term are impactful to the country.

Starting point is 00:01:32 Everyone in Argentina has been through a lot. There's been some early signs of progress, but it's TBD. You know, a few tidbits price-wise. Housing prices are down. Rent is a lot is decently cheaper. What's the food prices have risen. And so it'll take some time to really sort out how the new economic policies really affect everybody. From a Bitcoin perspective, it's always fun to be there because Argentinians are some of the first people to really understand Bitcoin. It was hard for people who hadn't experienced monetary collapse to understand Bitcoin in the early days. there's actually a very strong Bitcoin culture in Buenos Aires and all the other parts of Argentina.

Starting point is 00:02:09 I really enjoy spending time with the people down there, some really talented builders. So like the Moon team is down there, Dario from Moon Wallet. There's folks building all sorts of exchanges. And the interesting thing about Argentina is that people actually save and use Bitcoin and stable coins for their everyday life. It's a very common pattern to save in Bitcoin or save and tether. it's very widely used for moving money, given all of the really strict capital controls. So I learn a lot every time I go. When you're an entrepreneur in Argentina, finance and accounting is probably 40 to 50 percent

Starting point is 00:02:43 of the work in running a business. It's insane overhead. You have to do increasingly ridiculously complex things to preserve your purchasing power and your treasury as your company gets bigger. Whereas in the United States, it probably takes a founder of a normal company that's not a financial institution. it probably takes maybe 5% of their time. They hire an accountant.

Starting point is 00:03:03 They get a bank. It's easy. I always more and more deeply appreciate how much they have to put up with down there every time I visit. Yeah. So it almost seems like that it's a necessity because it's every single person is talking about like what's the best way to preserve my treasury. Is that pretty much the essence of the conversations?

Starting point is 00:03:21 Yes. And there's a number of parameters, right? There's sort of what legal jurisdictions are you exposed to? The smaller companies can get away with just kind of having cash under a mattress, the bigger companies have to are under more scrutiny and there's very strict laws there and capital controls. And so they kind of have to do, you know, what we would consider wacky things just to not lose their treasury, like buying dollar-denominated debt from another big Argentinian company to hold in their treasury because holding dollars itself would be too

Starting point is 00:03:50 complicated. Like, there's all this wacky stuff. And, you know, people there, you know, often stored, Argentinians, I think, are the third largest holder of physical bills, of hundred dollar bills in the world. Lots of companies and individuals there save in literal physical cash, often in their home or often in vaults that aren't at banks. Like there's like vault facilities that people just put their cash in. It's pretty wild. And when you say, you're talking U.S. dollar cash.

Starting point is 00:04:18 Literal paper, U.S. dollar cash, yes. Yeah. The country is actually dollarized. Basically, like everyone really just wants dollars for savings. The peso is purely transactional. or the saves in pesos, it's impossible. And as far as Bitcoin goes, did you feel like you were still kind of in your own little microcosm within the populace there?

Starting point is 00:04:39 Or is it a topic that everybody in the country is talking about? People know what Bitcoin is. In fact, the apps there are very interesting and very widely used, the crypto apps. The apps there are built for transactional use cases. And so, for example, Bello is a very popular app. in Argentina. Manu, the CEO, is Argentinian and awesome guy. And, you know, their app is not just an exchange for Bitcoin and stable coins, but it's also transactional. You can buy things. You can make Mercado Pago is a very common payment rail down there. It's like you can go to a store, scan a QR

Starting point is 00:05:15 code and just pay the merchant with pesos. And so you can have your, your Bello app, you have your Bitcoin balance. You can, you know, on the fly, sell Bitcoin for pesos and then make your payment in pesos from your app. So the crypto apps down there are not purely for trading and speculative use cases. They're often deeply, they're often actually serving as somebody's primary wallet. Wow. What's been the consensus on Malay since he was elected? Because it seems like, I guess maybe this is a U.S. talking point. People saw him go over to the Waffe and give the presentation. And I think it just was like sending off alarm bells like, hey, everything that we maybe thought about this guy has just been flipped on its head.

Starting point is 00:05:56 So like, what are they saying down there with the local population? I don't know that that was something that upset Argentinians. Yeah. Because I think if you actually listen to a speech at the left, it was very critical. Yeah. Sort of their average audience member there. Yeah. So I think that if I had to guess,

Starting point is 00:06:13 that probably actually made him look good to Argentinians. But overall, the sense I get is there's a little bit of unrest here and there from sort of the like the elements on the left, But by and large, the majority of the country is very much like, let's try and get this to work. We just want things to be better. And so there were some protests and strikes while I was there, but it actually turned out to be very minimal, which is a sign that I think people are like, this stuff hasn't been working for us in the past. We have to try this new thing. I listened to an interview with Whitney Webb and she was talking about like one of the prime objectives of the Weft is this idea of public-private partnership.

Starting point is 00:06:54 and how what he's doing is actually kind of in harmony with what the WEF objective of public private partnerships are. And so here he is killing a lot of these government entities. But what he is doing is he's pushing them into the hands of like private businesses and entities and people that are controlling these private entities that are now taking on the responsibility of the government. And it's still just more the same. It's just looking like it's not in government hands, but it might as well be because of

Starting point is 00:07:23 the people that he pushed it into in the private sector, which is an interesting talking point. I have no clue, but... I mean, privatization is always, how do you do that right? Yeah, yeah. You know, like, it should have never probably been part of the government to begin with, but you now have this, like, distribution of resources, fairness issue, and it is quite complex. But I think an interesting takeaway for me was a lot of business people were not pro-milis, because a lot of business people in Argentina were actually benefiting from the corruption.

Starting point is 00:07:53 There's a whole swath of the business landscape in Argentina that was benefiting from all the corruption and the capital controls. And they had that access to the central bank where they could basically pull the funny business and it was draining the country. And so anyone who was on the winning side of those things, you know, wasn't necessarily a fan either. So it's quite complicated. And I honestly, I don't know how it's all going to play out. Well, I think you see the same things here. Like, just not at the scale that you're seeing it down there. But we can see the same thing playing out all over the world right now with respect.

Starting point is 00:08:23 to the string pullers and their vicinity to the money printer. Absolutely. I mean, just look at the defense companies in the United States. I mean, it's... Yeah. Oh, it's nuts. It's totally... Some of the big financial companies.

Starting point is 00:08:35 I mean, the distinguishing line between government and private and public in the United States is also quite unclear in those kind of industries. So, yeah. Did anybody have any talking points on why they were seeing the housing prices get crushed? They were going down, but yet food prices were going up. I think this is something that people are. struggling with here or anywhere you go that, you know, G7, Fiat currency, you name it, right, is just creating these perturbations in the economy where sometimes the housing prices are

Starting point is 00:09:05 ripping and then sometimes they're down and the food prices are ripping. It's just like, it seems like everything's kind of losing sense of reality, like what to expect next. You just don't know. More volatility. What were the talking points down there? So my understanding, and I'm not by any means an expert on this stuff, but there's a large omnibus bill that Millay is trying to get passed. And I'm not just clear of the status of it at this point. The goal is to delete something like 200 or so laws and sort of a massive omnibus deregulation. My understanding is that that may have prematurely sort of like eased restrictions without passing on real estate stuff, and so people are already sort of behaving differently because of that.

Starting point is 00:09:50 And so regulations on real estate, I think, were decreased. And that changed the prices. But I think on the food side, and I could be wrong about this, but some of the regulations were actually artificially depressing food prices because of export controls and tariffs and things like that. Other deregulatory measures may have driven demand for things like beef and wheat and soy and other agricultural products in Argentina by potentially opening up international demands. Yeah, it's just wild. And I think that this is just one of many examples.

Starting point is 00:10:21 I think you could go to many other countries around the world that are struggling with similar dynamics to what you saw while you were there. Hey, so before we started this conversation, I'm literally watching Lynn Alden and Mike Green go to battle over your lightning report that you published more than a year and a half ago. What's been, I mean, there's,

Starting point is 00:10:40 I can't even tell you how many times people have referenced this report. Has anything changed in the year and a half? I mean, I think you guys published this in October of 22, so it's not been quite a year and a half, but we're coming up on it. Has there been anything that's changed in the way that you're viewing this? Is it just as strong as it was back when you wrote it? What's your general thoughts? That lightning report really does make its way around. I know that even sort of banking executives at large banks in other countries have seen this thing. And so kudos to Sam on our research team who writes that every year. The short answer is our position on lightning hasn't changed.

Starting point is 00:11:17 In terms of what we've seen on lightning since the report, while we haven't done the deep analysis, Sam is actually about to put out just a follow-up because I think we launched that last October, 2023. Lightning transaction numbers have been relatively flat the last few months. There hasn't been sort of some parabolic growth recently. We're seeing steady usage. And I think some of the early growth was driven by things like Noster, Zaps, stuff like that. We've seen some of that plateau. And I mean, the current reality, more generally, is Bitcoin really hasn't found product market fit as a medium of exchange.

Starting point is 00:11:53 Sending lighting transactions is interesting, it's cool. It has its use cases today. And my take is that this is going to continue to grow as Bitcoin becomes increasingly adopted as a medium of exchange, which isn't going to happen overnight. and it's going to take many, many years. People at the end of the day mostly would prefer to transact with dollars. What we're seeing is a lot of the Lightning Network development activity

Starting point is 00:12:18 is being focused on bringing stable coins to the Lightning Network or facilitating Fiat transactions over the Lightning Network by using the Lightning Network as an instant settlement rail between two custodial exchanges. So there's two different approaches basically being taken to make Lightning suitable for transacting in Fiat, which is still what the vast majority of people in the world want to do. Because when you say that, what's the reason why? Why do people want to still transact in that?

Starting point is 00:12:47 Because it is the world unit of account, the dollar. Fiat is everyone's unit of account still. And it is a much more predictable price. And it's just a, it's a sticky protocol. You are a merchant in some country. Your goods aren't priced in Bitcoin. Argentina. Argentina. They're in dollars. Yeah. They're in dollars.

Starting point is 00:13:08 At the end of the day, everything's kind of just priced in dollars in the U.S. and then more broadly around the world because even though the U.S. dollar has inflation itself, it is far more stable than basically every other, you know, any developing world currency. So that's why, you know, it has a 100 plus years of being this brand and having this dominance and the stickiness and network effect. So what we're seeing is, you know, lightning is winning as a second layer of payment rail for Bitcoin, but the growth in demand for Bitcoin as a sort of payment medium of exchange.

Starting point is 00:13:40 Yeah. It's, you know, it's still, it's a slow growth sort of thing. So Lightning Labs working on bringing stable coins to the Lightning Network directly. And then you have companies like Light Spark working on things like the Universal Money Address, which allows two exchanges to, which allows a user of one exchange to send Fiat to somebody on another exchange or app. And Lightning Network is the connector. between those two exchanges and they're settling the trade instantly.

Starting point is 00:14:07 So for example, you could have a river user in the U.S. sent to somebody using a Mexican exchange. And we would talk to the Mexican exchange, get an all-in U.S.D. peso exchange rate, and then send the Bitcoin, our user would pay us dollars. We would send Bitcoin immediately to the Mexican exchange, and then the Mexican exchange would immediately convert it to pesos for the recipient. So you would have this international fiat transaction. powered by Bitcoin behind the scenes without the user really knowing or caring.

Starting point is 00:14:38 And would that be using, you said that that was Light Spark that was enabling some of that, but was it also using the Taproot asset protocol or is it bypassing? It doesn't need that. So those are separate things. They could technically interplay, but they're basically two different approaches for transacting in Fiat over the Lightning network. The universal money address being kind of using just Bitcoin over Lightning to settle off Lightning Network Viat trades, whereas the Lightning Labs approach is to actually make the Lightning Network multi-asset. You could have Lightning nodes with actual dollar channels or a Tether channel, for example,

Starting point is 00:15:16 instead of just a Bitcoin channel. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food. floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year bringing together activists, technologists, journalists,

Starting point is 00:15:48 investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose human rights abuses and building technology under censorship and authoritarian pressures. These aren't abstract ideas. These are tools real people are using right now. You'll be in the room with about 2,000 extraordinary individuals, dissidents, founders, philanthropists, policy makers, the kind of people you don't just listen to but end up having dinner with. Over three days, you'll experience powerful mainstage talks, hands-on workshops on freedom tech, and financial sovereignty, immersive art installations, and conversations that continue long after the

Starting point is 00:16:33 sessions end. And it's all happening in Oslo in June. If this sounds like your kind of room, well, you're in luck because you can attend in person. Standard and patron passes are available at Osloof Freedom Forum.com with patron passes offering deep access, private events, and small group time with the speakers. The Oslo Freedom Forum isn't just a conference. It's a place where ideas meet reality and where the future is being built by people living it. If you run a business, you've probably had the same thought lately. How do we make AI useful in the real world? Because the upside is huge, but guessing your way into it is a risky move.

Starting point is 00:17:11 With NetSuite by Oracle, you can put AI to work today. NetSuite is the number one AI Cloud ERP, trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR, and CRM into, one unified system. And that connected data is what makes your AI smarter. It can automate routine work, surface actionable insights, and help you cut costs while making fast AI-powered decisions with confidence. And now with the NetSuite AI connector, you can use the AI of your choice to connect directly to your real business data. This isn't some add-on, it's AI built into the system that runs your business. And whether your company does millions or even hundreds of millions, NetSuite helps

Starting point is 00:17:54 you stay ahead. If your revenues are at least in the seven figures, get their free business guide demystifying AI at net suite.com slash study. The guide is free to you at net suite.com slash study. NetSuite.com slash study. When I started my own side business, it suddenly felt like I had to become 10 different people overnight wearing many different hats. Starting something from scratch can feel exciting, but also incredibly overwhelming and lonely. That's why having the right tools matters. For millions of businesses, that tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all

Starting point is 00:18:35 e-commerce in the U.S. from brands just getting started to household names. It gives you everything you need in one place, from inventory to payments to analytics. So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready-to-use templates, and Shopify is packed with helpful A.A. tools that write product descriptions and even enhance your product photography. Plus, if you ever get stuck, they've got award-winning 24-7 customer support. Start your business today with the industry's best business partner, Shopify, and start

Starting point is 00:19:09 hearing... Sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify. dot com slash WSB. All right, back to the show. But on the first one with the light spark, the custodians who, like, let's say it was you sending it to the Mexican bank, like the example that you used, you are having to

Starting point is 00:19:38 receive dollars on your end, and then after you receive those dollars, then you're using Bitcoin and then over on the Mexican bank side, they are converting that into pesos on the other side. Okay. Exactly. There's a trade on each end. And with the Lightning Labs approach, the Taproot Assets approach, that's just saying, well, no, we're just going to put dollars on Lightning.

Starting point is 00:19:58 And it'll be more like a traditional stable coin experience that people are used to. Which one do you see becoming more popular, if at all? You know, I think if I had the bet right now, given Tether's popularity, if Tether does, you create a taproot asset, I do think that's going to be pretty interesting and compelling because Because tether is huge. It's already got, I think, 90 billion. Maybe it's close to 100 billion in dollars, or in tether minted. I think if that happened, that would be pretty big.

Starting point is 00:20:34 The thing that I think is lost on a lot is just the total lack of fee and the speed of settlement on Lightning relative to, you name it, blockchain protocol that has optimized for scaling on layer one, the fees are much higher and it's not going to be as fast. So I guess the question comes in, I see you nod on your head, so I think you agree with me. The question really comes down to the reliability of lightning. Is it something that you think large players are going to view as being the best solution with it being the most reliable? Because I think the fees and the speed is self, I think it's kind of speaks for itself, but it's whether it can be relied upon for it to do it every single time is more of the concern at this point.

Starting point is 00:21:22 Absolutely. And on the fee thing, I would say, yeah, for smaller transactions, absolutely. I mean, everything in the space is about tradeoffs, right? There's no perfect silver bullet. On chain transactions have a high fixed cost, but they are, it doesn't matter how much you're sending. Saying an on chain transaction is you're paying based on how much data you're taking up in the blockchain, not how much money you're sending.

Starting point is 00:21:44 With lightning, you're paying a percentage-based fee. And that's a very small percentage. So for smaller transactions, it's much cheaper than a blockchain transaction. For larger transactions, it may not be. Now, on the reliability side, I think that lightning B2B, sort of as a way to move Bitcoin between all of these hubs, I think that's quite reliable today and is going to become increasingly reliable as the tech continues to mature and the protocol continues to mature. I don't think the jury is still out on how reliable self-custody.

Starting point is 00:22:17 Lightning is going to be for individuals. And so that's where I would sort of kind of break the Lightning network into two sides is B-to-B custodial to custodial hub-to-hub lightning, very reliable. Self-custody consumer Lightning introduces a whole new host of challenges because, you know, you're trying to send to a cell phone that may or may not be online. And how do you handle all of that? So that majority is a lot there. Yeah.

Starting point is 00:22:42 And it seems like because you have this narrative that's been going around as of recently that Lightning doesn't scale. Lightning doesn't do this. And it seems like there's a lot of bashing from the developer community on Lightning. Do you think that it's because they're taking a mantra from layer one, which is everybody's got to be able to have their own custodial solution. And if they don't, then it's a fail. The whole thing's a failure. And then they're applying that mantra to layer two lightning and that it has to do that as well when I don't necessarily know that it does have to.

Starting point is 00:23:13 And I'm not trying to make an argument for not being done. done or that people can't do it at an individual level. I think people can do it if they really want to invest some time and technical skill to do it. But I don't know that it's a breakdown in the Bitcoin experiment or whatever we want to call all of this. I don't think that it leads to a failure because it's solving a completely different thing, which is payments, and not store value, replacement of money itself, right? Yeah, I think there's a general, you know, I think it's twofold. I do think that that that sort of criticism is a reaction to lightning being oversold in some cases, right?

Starting point is 00:23:55 I think there's like kind of two sides to this. I think that lightning was oversold by some people as maybe being the silver bullet. And of course, people working on it knew that wasn't the case. And so then you have these people sort of criticizing it, flagging the actual challenges with lightning and saying, oh, it's not a silver bullet. And so at the end of the day, the core people building lightning stuff always sort of understood these nuances and things. I I think it's just been sort of a shift in perception and branding of the Lightning Network, what it's actually capable of and a real people just actually starting to realize because it's actually being used now.

Starting point is 00:24:25 And so I think actually all this criticism is a byproduct of people actually using Lightning now and Lightning's increasing, increasing adoption. You know, people don't criticize things that aren't getting attention. I think this is such a great point. And I think that you add to this in that not everybody can, let's say you're a person who has very humble net worth and like it's pretty de minimis or you're in certain parts of the world where there's no way you could have $100,000 worth of Bitcoin and it's a much smaller net worth for this individual. They're almost going to be forced into a layer two solution. And I think many

Starting point is 00:25:02 people in the community are saying they can't custody their Bitcoin because they're forced into this layer two solution. And that's not right. And I think that that's where a lot of the pushback is coming from, which I do have empathy for that talking. point in that point of view. But, and I hate to use the word but after all of that, I don't think that it's that it prevents when I look at all the issues in the world, clown world, right, that we're dealing with today, the thing that really solves clown world is forcing all of these central banks to be pegged to something, right? They're not pegged to anything. They're not responsible to anything. In layer one Bitcoin, even if it's for people with a higher net worth

Starting point is 00:25:42 because of the fees and all the other stuff that we've already kind of covered, that still helps, that solves clown world, right? It really does. Like, I think the layer two stuff is more the icing on the cake from what Bitcoin is truly deeply solving, which is, you know, central bankers run amok that just print themselves into oblivion. I'm assuming you see it the same way and just kind of curious, any other point of you that you might have.

Starting point is 00:26:11 Sorry, I talked so much. No, I completely agree. So, you know, at the end of the day, do we want every human in the world to be able to self-custody their Bitcoin in a censorship-resistant way? Absolutely. Should we be paralyzing ourselves or criticizing ourselves into just endlessly because we can't support that today? No. The Lightning Network is a part of that future. It is not going to solve that future completely.

Starting point is 00:26:40 there's going to be other things that step in. Some of those will be custodial solutions. In fact, the vast majority of people will probably use custodial solutions because, you know, unless society completely deteriorates, people want to be able to trust institutions. What matters is that you can exit if you really need to. And, you know, I think other technical solutions will come along to help people for whom it's very important to be able to self-custody who don't have much money.

Starting point is 00:27:04 We're just, you know, there's just no silver bullet for that. It's a very challenging technical and economic problem. And a lot of the criticisms of lightning are somewhat unfair because they're saying, well, you know, lightning doesn't solve this, but what does? I mean, people used to point to tether on Tron as being this cheap and instant rail, but now it's like a dollar per transaction. You can't have a global decentralized. No one's figured out how to have a global decentralized censorship-resistant payment system that's incredibly cheap to use. It just hasn't been, it's not a solved problem. Do you think that tether is going to issue something on top of lightning?

Starting point is 00:27:39 I hear rumors. One of the things I heard is that Paulo does not like lightning. I don't know if it's true or not. Just a rumor I heard. I don't know. I have no information. I don't know the tether folks. I think it's totally up to them.

Starting point is 00:27:55 I do think the tether folks, from what I've heard, they're big Bitcoin believers. And I don't know Pollo specific opinions on the Lightning Network. But, you know, I'm hopeful. We'll see. The tethers is in this interesting position. They're kind of like the kingmaker of layer two. Like a layer two, now the Lightning Network has been able to be successful without a stable coin to date.

Starting point is 00:28:16 But every other layer two, all these Ethereum layer twos aren't very useful unless there's tether. Tether can basically make an L2 big or not. The other thing with Tether, when you're looking at the sheer size and I'm looking at who, from a traditional financial standpoint, who's going to buy all this? Who's going to buy all this issuance? And when I'm looking around and I'm looking at people that are very smart and can understand where this is all going very quickly, because they can do the math.

Starting point is 00:28:50 And the math leads to just an unprecedented amount of additional printing and treasury issuance on the very near future. And I'm saying, who will buy this? And the only person or the only entity that I can see out there that's going to buy it are stable coins. Tether being... You mean who will buy the debt issuance from the U.S. government? Yes.

Starting point is 00:29:13 Well, I mean, and that's where... We're sort of in this interesting position, Preston, because we can see that now if the U.S. government wants to continue to spend as they have, they should welcome tether with open arms. I mean, this is like the best thing that's ever happened. Now, but what's funny is sort of it's unclear, because the government isn't this one entity, right? You have the, you have sort of like the O-FAC, AML people who care about money laundering,

Starting point is 00:29:36 but at the end of the day, you have treasure. knowing, you know, doing the math too and knowing that, hmm, okay, Tether's got $100 billion in treasuries. Okay. Interesting. I think that it depends on who wins. Tether's play, has been playing along with the feds and shutting down Tether addresses that are, that the U.S. government doesn't want. I guess where I'm going is how can't they become co-op by the government at this point? Well, I mean, I think sort of if Tether is going to succeed, and not get shut down, it is going to be because the U.S. government wants them to. Yes.

Starting point is 00:30:14 Absolutely. But I think it's easy for Americans to underestimate demand for dollars. I mean, most people in the world to date have not had access to dollars, and they've only had access to some really crappy fiat currency in their own country. So instead of holding dollars, they have to put all their life savings into like a condo or something. Which that in that of itself, the more. capital intensive physical things become, because the currency is melting down, further perpetuates this deep desire and need for more dollars in the system.

Starting point is 00:30:49 Right. And so, like, I'm just looking at all of this. And I'm saying, like, the government desperately needs a tether-like entity, whether they like it or not. And I just, I don't know, it's just getting a little crazy when you're looking at the math and you're looking at how big some of the, and I can only imagine where they're going to be within two years. I mean, I'm looking at the issuance, the treasury issuance that's coming up here in the coming year, two years, and like, and the demand globally for dollars. And you're just like,

Starting point is 00:31:17 okay, so like, this is, this is getting a little wild. Let's change gears because we talked about that way more than I wanted to, unless you, you want to keep going down that path. Oh, that's. Okay. You are so technically competent, Alex, that I have to bring up this bit VM and roll-ups and all this other stuff that I'm hearing about right now, what's your, like, general take on this? Is this, because for a lot of people that are in the space, they hear this, and it's just like more and more jargon just keeps flowing into this space to try to wrap your head around

Starting point is 00:31:53 and keep it all straight. But like, your 50,000 foot view of some of these ideas. It really fits well into this L2 conversation we're having, and by L2, I mean, layer 2. You know, at the end of the day, all of these projects are, working towards a future where you can transact and do things with Bitcoin off of the main Bitcoin blockchain, trustlessly move Bitcoin from the Bitcoin blockchain to these layer two's and back. And these layer twos are, you know, the general sort of direction, these new layer two

Starting point is 00:32:30 projects that aren't lightning are taking is basically looking a lot like Ethereum layer or twos, but using Bitcoin as the base currency instead of Ethereum. For those people who know the eth space, right, they're basically trying to build like the polygons of Bitcoin. And so the general idea there is that, you know, using some clever cryptography and a lot of these guys at the end of the day probably want a soft fork and a new op code in the Bitcoin blockchain, which, you know, obviously may or may not ever happen. And that would, that's kind of needed to make it purely trustless to move the coins back and forth. the idea is to have these layer two blockchains, kind of the side chains vision from

Starting point is 00:33:09 block screen basically, that can do all sorts of other stuff with smart contracts and defy, but instead of ETH as the main currency, it's Bitcoin. I think that sort of for the average Bitcoin user, who's not into defy or stuff like that, these things are only interesting in the sense that if they are to succeed, their impact, You know, my gut tells me the impact is overall positive and that it pulls, it probably ends up pulling a lot of that development away from all the other altcoins. You know, it basically gets to a point where you don't need any other chain. If you want to do all the Dgen gambling stuff, you can just use a Bitcoin L2.

Starting point is 00:33:48 And the reality of the world is there are a lot of people who want to do the Dgen gambling stuff. And so I think the approach of these projects is basically, why not do this, but drive demand for Bitcoin off of the base chain. And that's the general idea. But as far as adding any type of functionality to all the stuff that we talked prior to this point, you really don't need it for any of that, correct? Like taproot asset protocol? Like, you don't need this.

Starting point is 00:34:13 You don't need BitVM and roll-ups for that, right? No, but you could argue, right? It does. So depending on how the layer two is built, it could be another way to transact Bitcoin or a stable coin, using Bitcoin to pay the fees because they might build it more like a polygon instead of a lightning, so you wouldn't need to worry about liquidity and things like that. There is a future where these things are potentially how we help scale self-custody Bitcoin to the rest of the world cheaply, but the jury's still out.

Starting point is 00:34:45 Got it. Got it. I think that that last point was important. Let's talk. And boy, it's brutal saying the ETF work because it has just been so talked about it's just been endless. I'm curious, just your general thoughts on, you know, the big thing that many are talking about right now is just the honeypot that ETFs are and will likely become if the success and the inflows continue to come the way that they have in the coming year, two years, like this is about to get really, really interesting. So what are your thoughts on the ETFs? Self-custody.

Starting point is 00:35:22 I think I know your opinion on that, but I want to hear it. And the 60102 attack. Yeah, the ETFs definitely make a 60102 attack much easier to accomplish. And by 6102, we mean the government confiscating Bitcoin like they did gold back in the 30s. You know, that's a major downside of the ETFs. To the average person, I would always recommend just buying the actual Bitcoin. It's a lot. Why not have that optionality?

Starting point is 00:35:46 It's just as easy and you pay no custody fees. It's kind of a no-brainer if you're just the average person. If you're an institution or you have a private bank and you need all sorts of extra financial, you need to be able to leverage, trade options, borrow cheaply against it with the rest of your assets, you're running a hedge fund, like things like that. The ETF makes sense. It fits into sort of the existing protocol of the financial system. That's sort of the two different paths. From a honeypot perspective, I mean, you know, there's already been this kind of big open question. Coinbase has already been a pretty big honeypot, right? Like, we're already at a point

Starting point is 00:36:20 where before the ETF, if Coinbase was hacked, right, it would be bad news for everybody. And We're just sort of cementing that too big to fail, you know, custodian. So it'll be interesting to see how that plays out and how that impacts the political dynamics of consensus decisions and forks and things like that. I hope it doesn't, but we just don't know. But it has been interesting to see, you know, the competitors in the ETF space. I mean, I really like the bitwise guys. They said, you know what?

Starting point is 00:36:48 We're going to make our addresses at CoinBased Custody Public. We're going to push them to support Segwit instead of legacy addresses. We're going to donate 10% of our revenues to. core development. So they're really pushing the needle, you know, pushing things forward. I'm a big fan of the Bitwise team. I think we're entering a new era for Bitcoin. And so we'll see how it plays out. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why VANTA is a game changer. Vanta automates your compliance process and brings compliance, risk, and

Starting point is 00:37:26 Trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an Enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security and privacy frameworks. Companies like Ramp and Ryder spend 82% less time on audits with Vantta. That's not just faster compliance, it's more time for growth. If I were running a startup, or scaling a team today, this is exactly the type of platform I'd won place. Get started at Vanta.com slash billionaires. That's Vanta.com slash billionaires.

Starting point is 00:38:09 Ever wanted to explore the world of online trading but haven't dared try? The futures market is more active now than ever before, and Plus 500 futures is the perfect place to start. Plus 500 gives you access to a wide range of instruments. The S&P 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4X, crypto, and beyond. With a simple and intuitive platform, you can trade from anywhere, right from your phone. Deposit with a minimum of $100 and experience the fast, accessible futures trading

Starting point is 00:38:44 you've been waiting for. See a trading opportunity. You'll be able to trade it in just two clicks once your account is open. Not sure if you're ready, not a problem. Plus 500 gives you an unlimited risk-free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets. Visit Plus500.com to learn more. Trading in futures involves risk of loss and is not suitable for everyone.

Starting point is 00:39:14 Not all applicants will qualify. Plus 500, it's trading with a plus. Billion dollar investors don't typically park their cash in high-e-e-old. savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income strategy is available to investors of all sizes thanks to the Fundrise income fund, which has more than $600 million invested in a 7.97% distribution rate. With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years.

Starting point is 00:39:53 Visit fundrise.com slash WSB to invest in the Fundrise income fund in just minutes. The fund's total return in 2025 was 8%, and the average annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income fund's prospectus at fundrise.com slash income. This is a paid advertisement. All right. Back to the show. Any thoughts on the American Banking Association that wrote the letter to the SEC last week about seeking the accounting changes to facilitate custodying?

Starting point is 00:40:41 This is crazy, right? Yeah, it is interesting because in many ways those guys are not on our side and have worked against the industry in some capacity on the regulatory front. I think it's maybe good. I think it's a good thing that the banks are going, hmm, you know, maybe we should not be totally averse to this stuff. And I think what's happening, I think really, like the big change here is that before the banks had an excuse to not support buying Bitcoin for their customers, I said it's not a regulated asset.

Starting point is 00:41:12 We don't have the infrastructure, et cetera, et cetera. But now all their customers have a very legitimate reason to say, you know what, we want this ETF. You better support that or we're going to take our business elsewhere. And I think that's probably what's behind some of these dynamics. The thing that's blown my mind is since the ETFs were approved, you've had the largest inflows by a significant margin of like any ETF product launch that we've seen to date. And I don't think Wall Street was anticipating the demand for this.

Starting point is 00:41:44 And I personally wasn't anticipating a lot of the estimates of like what people thought were going to flow into this in the first couple months have been on. by a massive margin. So I think that the ABA announcement last week was a result of them just kind of like having their hair blown back of, hey, this is insane. Like there's something here that we're missing. We need to be a part of this or we're going to get left in the dust. Seems like you agree with that. 100%. They're looking at their demographics too. All these banks know you have to get young people in the doors. And anyone under the age of 45 now wants to be able to access Bitcoin. And if you don't

Starting point is 00:42:21 support that, you're going to lose their business. It's just the market at work. On the bitwise custody solution, there was some, there was a little bit that we were able to see because they made the announcement, hey, this is where all of our coins are at and we're able to see the behind the scenes. Is there some behind the scenes that you can tell us as somebody that has very keen insights as to what's happening and just maybe some of the things that you've seen over the last couple months that you're able to share with us? Yeah. So I, you know, I think that one of the unappreciated aspects of why Coinbase is the, by far, the biggest selected custodian for all these ETSs is, you can kind of just get everything in one place.

Starting point is 00:43:01 You have this battle tested custody. You have all the prime brokerage and order execution. You have the most liquid U.S. regulated exchange all in one place. So the operations are simpler if you go with Coinbase. Now, my guess is what happens over time is more people as they get, as the ETFs get small, and used to the operations of buying and selling Bitcoin, custody it, you know, all of those things. My guess is they probably start to split up their custody a bit. I do think if I was running one of them, I would be splitting it up between a number of institutions just in case,

Starting point is 00:43:40 but that does add complexity to your operations. But I think we'll see more of that. I think we'll see more custodian diversification. So yeah. Yeah, I think that's, important right now? Custody's hard. It's a hard thing to get perfect. You're constantly trying to defend against the longest tail risks you can think of. And there's no such thing as zero risk. And with Bitcoin, unlike pretty much every asset that the financial industry is used to,

Starting point is 00:44:10 one hack and it's all gone. There's no recourse. There's no government. There's no money printer to bail you out. Like the Bitcoin's gone. Every other ETF, it's a security. It's a centralized ledger. So there's a hack.

Starting point is 00:44:21 they just revert it. And so it's actually the first time we actually have something like this. I mean, the most comparable thing is like a gold ETF, and you're trying to defend against someone stealing the gold. But humans are pretty good at securing physical things at this point. That's a multi-thousand. We have thousands of years of knowledge for securing physical things. So securing physical gold is kind of relatively straightforward, and it's also kind of hard

Starting point is 00:44:45 to steal a lot of it. With Bitcoin, I mean, humans only have like really 30 years of any. real experience trying to secure something digital. We're still very new to this. So it's an interesting dynamic. One of the things that I'm seeing a lot online as well is just this, the amount of coins being soaked up by the ETFs being 10 times the amount that's coming, that's being mined on a daily basis, just for the ETFs alone, not even talking about the other, you know, marketplaces. and then I'm seeing charts of OTC balances and the OTC balance is being drained. Is there anything that you can talk to us about here or that you're seeing that you're able to

Starting point is 00:45:29 to talk about? Yeah, I saw that chart about OTC balances and I kind of don't know how that was calculated because it's not like OTC desks are all just, they have a sack of coins and they're just selling them over the course of years. They're buying them here and selling them here. So I don't really know sort of what was behind that calculation. The one I saw was a glass note chart and there was a lot of people kind of up in arms about the glass note chart.

Starting point is 00:45:55 There was like, there's no way this is the number and it was like a really small number of coins. But the trend on that particular chart, if let's say that they do have access to that one source and there's probably many, many more, the trend was definitely down to the right with respect to the balance on hand. So kind of maybe the trend. Could you talk about a trend? Yeah, and that seems to have been a year-long trend or so, which I think correlates to just an upward ticket price as well.

Starting point is 00:46:21 But, I mean, it is interesting. You know, at the end of the day, I can say with confidence, I mean, what we're seeing at River is people are just generally buying and holding. There are days where we see a good chunk of sellers. As the price goes up, right, some people sell, right? Some people and institutions need cash for one reason or another. Sometimes they're, you know, I've done well enough. I kind of want some dollars now. I want to buy a house.

Starting point is 00:46:42 I want to take my principal out and now just. Let the rest ride. There's always more sellers as the price goes up. But I do get the general sense that we're coming to a point where people are kind of like, I'm not selling anytime soon, right? We're going to see where this goes. So I don't know how much supply is going to be there if these inflows continue like they do. I think you're right.

Starting point is 00:47:02 I think this last cycle most were not satisfied with the price action that they got. I think the conviction of the long-term holders after this last cycle is way stronger than anything I saw on previous cycles. What do you think about institutions now being able to allocate to Bitcoin because of the ETF approval? Is this just a talking point? Or do you think that there's some validity to that? I think it's valid. I think it's also, I think the pipeline fully hasn't been opened yet. From what I know, we're still in the early days of the ETF being sold, right? These financial institutions at the end of the day are often like selling products to their customers, so the people they're managing wealth for. And so the ETF is still very new

Starting point is 00:47:47 for most of the big, most of the big private banks and institutions, they can't yet sort of, the advisors can't go tell people, hey, you should buy this ETF. It's not yet part of any real model portfolio in the United States. I think we're still in the very early days of, you know, this institutional pipe and it's going to continue to get bigger. Microshattage is an interesting thing, because if that hits the S&P 500, then what, right? Like, that's an interesting dynamic as well. MicroStrechtage is an interesting company in contrast to an ETF because unlike an ETF, which has to follow these very strict rules,

Starting point is 00:48:23 Micro Strategy is basically, you know, running itself as a smarter ETF. They're opportunistically borrowing against their cash flows and issuing shares to buy more Bitcoin. They're sort of, and they've actually outperformed Bitcoin in the last year alone. So that's another interesting, The speculators alone on micro strategy from a derivative standpoint are providing tons of alpha for them to take advantage of. A couple weeks ago, the price of the common stock got down to parity and actually went below the treasury value of the Bitcoin. And you had tons of short sellers that stepped into the market, sold the stock short, only for the price of Bitcoin to recover with the ETA.

Starting point is 00:49:09 like once GBTC stopped selling off, the price recovered. And what you saw was this blowup from the derivatives traders that were selling it short, which then put a $200 per share premium on the treasury above the treasury value, which I have no idea what micro strategy did, but I know if I was sitting in the seat, if I was the CFO and I'm sitting there in the seat, I know exactly what I'd be doing in that scenario, which is take advantage of the people that sold it short and issue common stock and buy Bitcoin with the proceeds and rinse and repeat until they do it all over again and sell it short again, I guess. It's wild. Yeah, things are changing quickly. I don't know how it all plays out, but I'm quite bullish,

Starting point is 00:49:57 but, you know, Bitcoin always surprises us. Yeah, it's wild. Hey, I know from following your account, You talk about AI. Recently, you had a post about Google kind of needing a leadership change, and I got a smirk because I figured you're saying that in reference to the struggles that they're having from an AI standpoint, but I'm kind of curious to hear your thoughts on this. I know this is a little bit off topic, but I love picking your brain on anything happening out in the valley. Just as a CEO, as I've sort of built the chops, I also get better at sort of pattern-matching,

Starting point is 00:50:30 effective leadership at other companies. not to say that I'm really the best judge of things, but from what I can tell, Google just doesn't have strong leadership. It seems to be a culture of multiple competing factions and a very messy, and that shows in their product strategy and in their marketing,

Starting point is 00:50:48 their AI strategy is, in my opinion, sort of unforgivably fractured and crippled. They have lots of different AI products. Every time they have a blog post announcing something new, It's like, is this real? Does this exist? Can I use it? It has a new name.

Starting point is 00:51:06 And now there's like five different AI things that Google to keep track of. The blog post is written by like three people at Google. It's like, who's running the show here? And like what's happening? Whereas in contrast, you have AI, you have one leader. They ship a product. And it's very clear what it is. And so I think Google's really dropping the ball here.

Starting point is 00:51:23 My guess, if I was a betting man, I would bet that they don't have to have a new CEO within a year or two. and if the board is smart, they bring in somebody who's going to act like a founder, whether they're a founder or not, they're going to find their Satya because they need it or it's, in my opinion, kind of game over. It's just going to be a slow, like...

Starting point is 00:51:41 I agree with you. Yeah. Okay, last random topic here, just because I'm curious. Apple Vision Pro, what are your thoughts? I think it's going to be a really big deal in five years. Okay.

Starting point is 00:51:56 Because of the form factor or what? The form factor, yeah, I think this concept of spatial computing is going to open up a whole new category of ways to plug in. I think it impacts business and remote work, probably more than the consumer side initially. And then it kind of spreads into consumer world. I don't know exactly what it looks like. I think that the devices have to get cheaper and slimmer and smaller and better. and what we haven't seen yet is the creative army of developers shipping stuff for this. And so I think in the next few years we'll get a sense of what these things can do

Starting point is 00:52:32 once developers have time to build new software. Yeah, I think it's that. And then I guess my concern with it, which I agree with you, I think you're more years out, like it's five years out from it becoming a thing. And I definitely think that this is going to be a product category. I'm just, I guess, concerned to how you get there on the hardware side, because I think you have to push the battery, you have to push the compute off the head like they did, but which means it has to be wired. And like, how do you do that? How do you get around that form factor not being that way? And I don't know that you can. You see what I'm saying? And so like if you get it down to a, like, Facebook has these glasses. I have not, I have no idea how they actually perform. But like the form factor on that seems way more viable. But I highly doubt that it's even.

Starting point is 00:53:21 remotely as capable as what the Vision Pro went out because you need all this hardware and infrastructure in place to allow it to do what it's doing. You agree? Yeah, I mean, I think this is something that's going to be at people's homes. And really for me, in sort of the professional world, I think it has, if it makes, if it connects people better, if it allows people to unlock more creativity or feel like they're in person together, or it truly does bridge those digital distances. Instead of talking to a screen, you're immersed in, you're with your colleagues, you're with other people. If they're able to accomplish that, even if it requires being plugged in and you to wear this thing at your house, I mean, that's pretty interesting. And instead

Starting point is 00:54:05 of experiencing a 2D world, you can sort of experience a 3D world with this interface. I mean, it's hard to predict how this plays out. Maybe it's Apple's Lisa again. Maybe it's Lisa too. We'll see. I don't have one. So I'm waiting. I'm going to wait a few, generations personally. Nothing was earlier than Google glasses on this particular topic, though. Yeah. All right, Alex, I don't have anything else. Is there anything else that you wanted to talk about that you think is important happening

Starting point is 00:54:33 right now or that you just want to highlight? I mean, I think overall Bitcoin is in this adolescent phase. Big changes are happening in its life. It's trying to understand it all and figure out sort of what it is now. It's not quite at maturity. It's not quite sort of this beautiful, grown person who knows who they are. But it's also not a child anymore. It's not this baby little toy project.

Starting point is 00:54:59 And so, you know, I really think we're in the adolescent phases of Bitcoin, and there's going to be a lot more drama. So well put. Hey, for folks listening, you've got to check out all the articles that River puts out. They are phenomenal. I'll have a link to that in the show notes if people want to dig into some of the reports. Any other things that you want them to check out on the website? We'll have a link to your Twitter handle as well, Alex, and also the River Twitter. Anything else you want to highlight?

Starting point is 00:55:29 No, I think, you know, the only last thing is, I think it's important as new people comes to Bitcoin. They always remember that at the end of the day, there's this software project that a Bitcoin core that is powering this whole thing. In many ways, it's a thankless job. These developers are doing this because they love it, not because the pay is amazing. I always remember remembering that this whole empire being built is being built on this open source project that people have worked on and put blood, sweat and tears in for the love of it, and not being afraid to sort of like dig into that, see what's happening, see, you know, what's really powering all of this. Love that. Shout out to the core developers and, oh, my goodness, the amount of work and energy and thankless work and energy that they poured into. It's stressful, right?

Starting point is 00:56:17 Especially now, like imagine you've worked on Bitcoin and it started as this project and you've worked on it for maybe years for free. And all of a sudden, the biggest ETF launch ever is now like betting you did a good job. It's actually a pretty wild thing. So yeah, it's an interesting dynamic. Love that point. All right. Well, always a pleasure chatting with you, Alex. We definitely got to do it again.

Starting point is 00:56:45 And thanks for all you do. Thank you, Preston. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for We Study Billionaires. The Bitcoin-specific shows come out every Wednesday, and I'd love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you

Starting point is 00:57:06 can leave a review, we would really appreciate that. And it's something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening, and I'll catch you again next week. Thank you for listening to TIP. Make sure to follow Bitcoin Fundamentals on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional.

Starting point is 00:57:42 This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication. or reprocasting.

We Study Billionaires - The Investor’s Podcast Network - BTC171: Bitcoin Tech Update with Alex Leishman (Bitcoin Podcast)

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.