We Study Billionaires - The Investor’s Podcast Network - BTC233: Bitcoin & Texas A Roadmap for the Global Financial Shift w/ Parker Lewis (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 this week's episode, I have Bitcoin OG, entrepreneur, and prolific writer Parker Lewis. During the show, we talk about all the fascinating things happening in the state of Texas and how Bitcoin is being used to completely change the grid, potentially getting approved as a strategic reserve treasury asset, and what Parker sees as the next step for adoption in the state. In addition to that, we talk about the progress he's making with his company's Zaprite

Starting point is 00:00:29 in Bitcoin payments. As usual, Parker comes with some really thoughtful and interesting takes, so I have no doubt you guys are really going to enjoy this one. So with that, let's jump right into the interview. 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 the one and only, Parker Lewis. Welcome, sir. Great to have you back here. Preston, good to be. you back on. Good to see you. I look forward to catching up. Yeah, likewise, man. Talk to us about Texas. What's happening down there? Like to think of Texas, there's not just the Bitcoin capital

Starting point is 00:01:19 of the world, but the center of hash, I think if we're going to be more objective, that there's a lot of Bitcoin mining activity going on. There's bills in the state Senate that aren't specific to Bitcoin mining, but are specifically to address how to promote grid reliability with large flexible loads of which Bitcoin miners are principal one, if maybe not the only one. That can be both large and flexible to help promote grid reliability. And then there's also a Texas strategic Bitcoin Reserve bill that has passed the Senate. And then there was a committee hearing last night that was taking what would I call a testimony born against. And everyone who testified, testified for it. So it's passed the Senate. Still needs to pass the House. But it's advancing along. And we're

Starting point is 00:02:04 also hosting a Texas Energy and Mining Summit in two weeks at Bitcoin Park, Austin. So, looking forward to that. So on the Strategic Reserve side, I have read that the House is pretty concentrated Republican-wise. And based on the numbers that we saw in the Senate, they're locally in Texas, it appears like they'll have the numbers for it to go through the House and that this shouldn't be an issue and it should all get passed and approved. Is that what you're hearing and seeing as well? You know, I have, I watched some of the testimony last night and some of the questions that came up, I think would cause me to believe that it might have a little bit of a harder chance. Really? Some of the questions geared toward, you know, this is this people of Texas's money. Why should we gamble that money?

Starting point is 00:02:52 And so viewing it as, if you accept that very few people understand Bitcoin, that it's hard for a consensus of people to get it. the House is larger than the Senate, so it requires more people to form a consensus. So it's just, those are just natural questions. I'm hopeful that it will ultimately pass, but I think that there's still very limited understanding of why. And I felt like the testimony in the Senate and the senator that brought the bill, which it is SB 21, he was keying in on more of the functional reasons why this was important of printing money, which I, you know, there were certain people who testified like Phil Geiger from Unchained or formerly Van Chained, Our Advisor to Unchained, where he talked about the fundamentals of Bitcoin, but I felt like the person who was advancing the bill in the

Starting point is 00:03:38 house, maybe is more like, hey, this is for innovation rather than this is for saving and protecting the holdings that are sitting with the state for the Texas citizens. What's going to maximize purchasing power in the future? I felt less of that. So I'm hopeful that it will pass. Nobody testified in opposition and no one seemed to pose to it. It's just, you know, it took a while to get even a committee hearing to get past the Senate probably two months ago or maybe six years ago. The legislature, you know, Texas is one of the places where the legislature only meets once every two years.

Starting point is 00:04:11 So the legislative session ends in like a month and then the legislature won't meet again for two years. Wow. So do you think that they're going to get through a vote before that next two year period? I expected it will, but there's a lot of priorities too. So that's just one of the other questions that took a while. for it to come up in the House. But yeah, I mean, I'd probably be handicapping at 50-50 right now. Wow. Okay. Those are those odds are way lower than I was kind of expecting. And I think I,

Starting point is 00:04:39 when I was proposing the question to you, I think I had it in reverse. So it passed the Senate first and now it's at the House. Yeah. And there's like, what, 80 or 90 voting members. I want to say in the House, if I remember, right? Somewhere in that number. Yeah. Yeah. Okay. Interesting. Okay. Well, that's some good information. You know, passed the Senate without a lot of pushback, and that was interesting to me. Yeah. I'm also just, I come out of from the perspective of knowing that very few people understanding and hearing some of the questions from the committee members last night, which are very logical.

Starting point is 00:05:10 Like, if you accept probably one out of a hundred or fewer people in the United States understand it, why would more than one out of 90 legislatures understand it? So there doesn't seem to be a lot of opposition to it, but that's still a lot of wiggle room for someone to say, hey, I just don't know why I'm doing this. Yeah. So until it happens, it's just like, it's also I train my psychology, even though I know that Bitcoin's going to increase in purchasing power of time, I harden my psychology to prepare for a 50% drawdown tomorrow and then plan my life to account for that volatility.

Starting point is 00:05:42 Yeah. Has any of the grid stability talking points come up in the discussions in the house with respect to the strategic reserve as far as the power of Bitcoin from an engineering standpoint and what it does beyond just being a store of value, or is it just all store of value currency to basement type stuff? Part of it, I'd say, it's shot of the lines that it didn't come into grid reliability, but it did kind of cross the fence of saying, hey, this is a store of value, but also this will be a sign that Texas is open for Bitcoin.

Starting point is 00:06:12 There's a ton of Bitcoin miners that are coming here, investing in Texas Energy, and that doing this will help create regulatory clarity and have benefits beyond just innovation, beyond just store of value, but instantiating Bitcoin in Texas to promote more Bitcoin miners to come. So that did come up. It just didn't get into the level of grid reliability. There's a specific bill that Gideon Powell is working on. Gideon Powell's not in the legislature, but he's somebody who's been active in the Bitcoin mining space that's advancing a separate piece of legislation, which is HB3970 in Texas, which is basically creating a methodology as to how to accelerate permitting for large power projects

Starting point is 00:07:01 and to advantage power projects, not with dollars, but to say if there's generation sites that are above 75 megawatts that bring with that generation a large, flexible load like a Bitcoin miner that sits behind meter and that would be willing to participate in Erkot. controlable load program, then those projects get jumped at the front line of ERCOT permitting to align incentives to basically say, hey, if you're bringing new generation online and you're pairing it with large flexible load that also participates in ERCOT's controlable load programs, that power gets onto the grid first. And at least in the House side in the hearing that was very well received. So those discussions on grid reliability and how things like Bitcoin mining

Starting point is 00:07:47 can promote that are happening in the state legislature. They're just happening on separate bills. Got it. So, Parker, if you go back like seven to eight years ago, I just remember Texas was having all sorts of issues with the grid. There was power outages kind of popping up all over the place. And it seems like there hasn't been as much of that lately. And, you know, as a Bitcoiner, you want to point to this and say, it seems like the grid's getting more reliable down there. Is that actually true, first of all? And then second of all, is there any way that you could point it to Bitcoin mining being a core source to that reliability?

Starting point is 00:08:25 So I would say that if you went back seven years, I think, you know, and again, I referenced my friend Gideon Powell because back in 2017, he was the first person to build a greenfield substation that was, I believe, 50 megawatts expressly for Bitcoin mining. And since then, and there was Bitcoin mining, half. happening in Texas, but not at that scale. And that was around a time where the Bitcoin hash rate in total was about five X-a-hashes. If you go back to 2017, and now it's at 800 X-a-hashes, so the Bitcoin hash rate is increased by 160 times. And that's not necessarily, you know, the machines have gotten more efficient, so that's not power increasing 160 times. But it's

Starting point is 00:09:04 grown significantly. And one of the things that happened unrelated to Bitcoin mining was in In 2021 in Texas, there was winter storm Yuri, which would genuinely a hundred-year storm. And a lot of the generation units in Texas had not been weatherized, like they might be in the northeast because we just do not have snow like this regularly. So that problem is separate and apart and something that the Bitcoin mining can't fix. That has been addressed. But then also, in the last seven to eight years, there's been about, you know, I don't know what the baseline was, but it was probably less than 100 megawatts on the Texas grid of

Starting point is 00:09:41 Bitcoin mining specifically, that we're now somewhere between three and four gigawatts based on estimates. And there's actual evidence to show that at times of scarcity, when energy is scarce on the grid, that greater than 90% of Bitcoin miners are shutting off. And there's just a pure economic incentive to do that, that when energy prices get expensive and you're only mining for the purpose of getting Bitcoin, which is a monetary good, that you are making a pure monetary economic decision. Now, if for some reason you have some contract that says you have to have uptime, say you're hosting, and that might be a bad contract. So that might be a reason why certain miners might stay up

Starting point is 00:10:22 or they might just not be a sophisticated. But we do have hard evidence that Bitcoin miners are responding to the incentives that everyone would expect them to respond to purely from a profit law standpoint. And that promotes grid reliability. So it is clear. based on testimony from ERCOT that what I would say is the current state of play is that ERCOT, which is the grid operator, energy reliability or electricity reliability council Texas, they're the one who's responsible for ensuring the reliability of the electric grid in Texas. And in the United States, there's east, west, and Texas, or east west and ERCOT. And there are interconnections between ERCOT and other parts of the United States energy grid.

Starting point is 00:11:02 But ERCOT is really, it is outside of basically the federal government's regulation. or almost entirely. And so a lot can happen in ERCOT from an innovation standpoint because it can move faster, it's deregulated. And so ERCOT, which understands power, understands how if you have, say, a 500 megawatt load on the grid and that you can turn it down when there's a period of scarcity that that helps promote grid reliability. I would say the legislators, the people in the Senate and House, understand those dynamics far less. And so part of it is a process of Bitcoin, miners engaging with legislators. Part of it's a process of ERCOT communicating to legislators. Also, it seems clear that ERCOT, if they had their way, would want to have more control.

Starting point is 00:11:48 They'd almost want to force Bitcoin miners into these programs because that gives them more control. I think there's HB3970 that's being worked through the Texas legislature, creates a more voluntary system. There's an economic incentive to participate because you get your project screen lit faster, but that at least makes it voluntary to opt into something like controlable load resource program, which basically puts your power actually in control of the grid operator so that they can turn it down if they want to, you know, move the direct mechanism. So I'd say that it's clear that Bitcoin mining is promoting grid reliability. Yeah.

Starting point is 00:12:25 It's clear that Erkot understands why Bitcoin mining and why having large flexible loads on the grid, promote grid reliability. There's still a knowledge gap when it comes to thinking about a representative of the understanding those power dynamics because you have to understand the power dynamics, you have to understand that my mind, which is not as easy for someone that's just representing a certain district. 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

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Starting point is 00:17:05 template for other jurisdictions, state, local, whatever, to really kind of copy and paste. The idea, I mean, it seems like you guys are out front way further than anybody else from a policy standpoint on how to like make all this work. Yeah. I think given the nature of the grid and being, you know, kind of what I would say is more autonomous, able to make decisions with fewer people involved, a state versus many, and then also having a deregulated energy market where somebody could build a power plant and have a behind meter deal with a Bitcoin miner or just being able to have a private contract that it allows for faster innovation. And then that innovation can be replicated elsewhere. And like proving, seeing it work, and then saying, okay, let's take the learnings

Starting point is 00:17:52 from that and apply it elsewhere. Let's talk about your business. You have an awesome company here, Zappright. And first of all, just explain it to people if they're not familiar with it. And then I just kind of want to get into some of the trials, tribulations, wins that you've had, and just try to understand it better. Yeah. And then also there's a natural overlap because I remember the companies that we help serve are Bitcoin miners, some here in Texas, but particularly Bitcoin miners that are providing hosting services and are wanting to take payments in Bitcoin and fiat and wanting to gravitate to a platform where they can have one system that facilitates

Starting point is 00:18:29 all of that. And so to think about Zappright, we're a Bitcoin payments company, like a Bitcoin Payment Gateway. We enable both Bitcoin payments and Fiat payments through one interface. We're never actually in possession of anybody's funds either on the Bitcoin side or the fiat side, but we're building commerce tools that sit on top of wallets and custodial accounts or non-custodial lightning nodes and custodial lightning service providers, as well as giving people the ability to seamlessly integrate the ways that they're already accepting fiat like Square and Stripe and PayPal authorized.net so that for people that value Bitcoin, they can have a way to request payment in Bitcoin or accept payment in Bitcoin that has one operating flow, one payment workflow

Starting point is 00:19:18 that presents both Bitcoin payments option to pay as well as Fiat options to pay, such that if somebody understands Bitcoin and we're really targeting the audience of people that understands Bitcoin, that has a priority of Bitcoin, and that has the understanding that they need to invest in dual rails to have redundancy, and that their expectations are also aligned that when they first turn on Bitcoin payments, they're going to be expecting to receive a small percentage that will grow over time, and they're going to invest in that as a channel, but that if they wanted to accept Bitcoin payments and they had to have a second workflow, that they would be much less likely to do it. So our goal ultimately is Zap-right

Starting point is 00:19:56 is to bring down the barriers to accepting Bitcoin by creating a unified checkout with Bitcoin and Viat, and then targeting those markets and the commerce templates where we believe the most likely adoption of Bitcoin payments early will be. And then we build out the commerce tools that match those markets. We've got invoicing templates, so anybody that's selling their gooder services and issuing an invoice to be paid. We have an API that's incredibly powerful that a lot of companies that are Bitcoin-centric are utilizing and building into their custom applications. We're working. We support a lot of people that do Bitcoin events, so we're working on a native tickets feature that will be people already using ZapRite for essentially selling

Starting point is 00:20:41 tickets to smaller events, but we're going to be releasing in the next few weeks. a ZAPRite native ticket solution. So just trying to meet the Bitcoin economic system where there is demand for payments and growing that system by providing more seamless tools. So we're a business podcast with Bitcoin focus. And so my question for you is as an entrepreneur building something from nothing, what's your best advice going through the whole ZAPRite? Just as a business owner and somebody that's starting from literally scratch, what kind of advice can you give for people that are trying to do the same thing? So I would say vision is critical in testing your assumptions around that.

Starting point is 00:21:19 So it's like, is there a market for this? Is there a need? If you build the tools, will they come? And then being incredibly focused and really knowing who your customers. And so what I would say is from day one building ZapRite, our customer are people that understand Bitcoin. And that might seem obvious, but a lot of early tools for Bitcoin payments were really geared towards saying auto conversion to the Fiat.

Starting point is 00:21:44 thinking that people are going to demand Bitcoin payments for the cheaper cost. But if somebody doesn't understand Bitcoin and doesn't understand its volatility or doesn't understand actually how to incentivize or communicate to their customer-based aligned values to actually drive payment in Bitcoin, they don't realize the benefit of it. So in our case, but what I would say, extending to somebody else, like knowing who your customer is and making sure you're delivering the product in a focused way that actually provides the best solution for whatever. that sub-market is. Because if you try to be everyone for all people, you end up not having the ability to have focus with limited resources, but then you ultimately deliver a worse product that doesn't solve the problem, the bar that it needs to, to actually drive the adoption of what you're intending to do. Yeah. How much have you guys been using AI to assist,

Starting point is 00:22:38 and how much of this is a game changer in the entrepreneurial space as far as startups go? So we are. I'd say it's very early in trying to figure out how much efficiencies actually gained today versus how much we invest in it today to gain efficiencies in the future. And so one example of that is our engineering team relies on AI, not to vibe code, but, and it does require significant training to be able to get output that doesn't actually slow you down, but that actually accelerate. So thinking about using it, a senior engineer,

Starting point is 00:23:21 using it as a tool of the equivalent of having junior engineers sitting below, but relying on an AI tool to write code and then be able to review it and make edits to it in a way that actually accelerates rather than slows you down. And so I think we're very much still in the learning process of that, but fine tuning it so that it actually can and is is being operationalized to debt. So, you know, it is an investment because the first, it requires an investment of time

Starting point is 00:23:52 and the first output of it doesn't actually accelerate. But in Nate Kitsky, who's our CTO, could speak more to it, might be worth having him on the show at some point. But we are leveraging it and we're leveraging it to be able to write code and basically accelerate development with fewer resources, limited resources, and getting more throughput and output. Yeah, that's a great point on the training and just like it's an investment in time, an effort to kind of get the model performing the way you need. It's also a consideration of like, do I host my data locally?

Starting point is 00:24:27 Do I just ingest it into these mammoth cloud base, call it chat chept or whatever, and let them basically organize this and as their models get updated that they can continue to just ingest all of my data. It's a lot more challenging to do that locally, curating your own data sets. so that you're not giving up all that information to the big conglomerates. But man, what a time that we're experiencing with all this AI stuff. It's getting wild. Yeah, what I would say is like from I see, what's clear is that it doesn't replace engineers,

Starting point is 00:25:00 but it can help accelerate engineers. So you might need fewer of them, but especially when you're building something that hasn't existed yet, when we're thinking about data architectures, that what it is good at or seems to be increasingly proficient at is, have known surface areas, but that you still need good engineers looking at a problem to try to create an efficient solution, and then guiding whatever those tools are to then write code and being able to manipulate it, to understand what is actually underlying so that you're not bringing things into your code base that aren't well understood, and that could create problems

Starting point is 00:25:38 that you don't know they're creating until it presents in a bug that then creates an out. So it definitely straddles a line, but it's certainly an accelerant and I only expected to be improved over time. Yeah. Recently, you gave a presentation. It was called Bitcoin, not Crypto. I have a bit of a contra take on this, but it's not, I guess it's not much of a contra take, but I have a nuance to this that I want to discuss with you. But I first want you to explain what you were trying to accomplish with this presentation and why you think it's important.

Starting point is 00:26:09 And I guess another name for it could be Bitcoin, not blockchain. But go ahead and take it away. Give us the summary of it and then we'll get into some of the nuance. Well, this was a presentation that I did in collaboration with Drew Bonsle from Unchained. We gave the presentation in person at University of Austin, which is a new university in Austin that is designed to promote a different model of education, more freethinking, more challenging of norms. So they've started a Bitcoin endowment.

Starting point is 00:26:40 So just as an ethos, University of Austin aligns very well with Bitcoin generally. And so that was a logical place to give it. But most people that understand Bitcoin or people who are listening to this podcast that don't understand Bitcoin, there is a massive sea of noise that makes Bitcoin more difficult to understand. And the specific noise that makes Bitcoin difficult to understand, and it's not exclusive to this, but what I would say is that it's set back significantly is all of the noise that's created by the other 1,000, 2,000, 50,000 cryptos. I referenced in the presentation

Starting point is 00:27:18 that there's probably 2,000. I think, if we're being more honest, it's probably 50,000. Yeah. Different variants that people have copied Bitcoin. And then there has historically been this trend of Fortune 500 companies or Fortune 100 companies that have tried to develop blockchain tech to no avail. And that if there wasn't this narrative of blockchain tech and there wasn't these other 49,99 cryptocurrencies, and there was Bitcoin vis-a-vis stocks, bonds, fiat currencies, gold, understanding Bitcoin's role for the average population would be far easier to distill. But also, it's a market test, and people oftentimes learn through the market and the existence of that noise also provides an education. And what we were intending to

Starting point is 00:28:13 present and educate through this presentation, Bitcoin not crypto or Bitcoin, not blockchain, is helping people understand why Bitcoin was the real signal, but relative to those other 2,000, 5,000, 50,000 copies or different variants of Bitcoin, as well as why block blockchain tech is a false promise. And in order to do that, we had to help people understand what is a blockchain in the context of Bitcoin, how does it solve the problem, and how could it, or might, maybe why it can't solve other problems. And that through helping people distill down that noise that they would be able to understand Bitcoin and find the signal through them. Let's take a quick break and hear from today's sponsors.

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Starting point is 00:32:36 was a bit of an advantage to have all of this noise in the background? Yeah. I think that that is a fair take. It allows Bitcoin to continue to advance in a way where all of the focus isn't just necessarily swear on that. And that also, I'm somebody who believes, not just everything happens for a reason, is that inevitably and unavoidably, when Bitcoin was presented into the world, that people would try to copy it.

Starting point is 00:33:04 Yeah. That part of that is just a natural inclination for people that genuinely have curiosity to try to innovate when they see new innovation come along to say, I want to figure out how to make this better or perceive a limitation in it. But then the other side of it that makes it natural unavoidable is that for the entire span of human history, people have been trying to recreate gold without the work. Alchemy. There's also snake oil salesman.

Starting point is 00:33:31 So part of this is unavoidable. Well, when I talk about the education, some of the way that people come in to understand Bitcoin is that they got lost in the noise and they started buying crypto and then they learned that Bitcoin is different by the market test and that it might be harder to understand if that market test wasn't there, if they didn't have to touch the hot stove, that they touched the hot stove and they learned not to do it again and that there's something different about Bitcoin through that. At that same time, we still need people to understand Bitcoin, And that it might be best inevitably that all that noise existed so that Bitcoin could kind of

Starting point is 00:34:05 advance and not just be the one thing that is more clearly competing with all these other currencies that it could have attracted more attention earlier that potentially could have stymied it. I think that's fair. However, if the world remains in the dark about Bitcoin and the light bulb doesn't actually turn on for people that are producing real things of value, that their ability, to continue to be productive and to produce those things and to produce the basic necessity that we need will not continue in the way that we've taken them for granted if people don't start to understand sound money.

Starting point is 00:34:39 So I think both of those things are true at the same time. And just like podcast exists or books exist that people benefit from being in person and being able to have a dialogue about it and then also to distill down otherwise very complicated concepts because one of the things that I described in the presentation was if you try to understand Bitcoin and you had to individually go to Bitcoin, crypto one, crypto two, crypto three, crypto four, crypto to a thousand and you had to evaluate each one of those individual projects rather than distill it down to a few guiding concepts that are foundational to the way that money works and the way the economic systems work, you'd never be able to arrive at a coherent answer.

Starting point is 00:35:25 So through that presentation, we were helping to distill down the core concepts to allow people to better evaluate Bitcoin vis-a-vis the feel and to have those guiding principles to then say, okay, these things are true. The ideas like money does converge to one due to the nature of trade, the best form of money is one that has a fixed supply. And then on the technical side, that it was actually the fixed supply, and this is an idea that Drew puts board that I believe to be true as well, that the fixed supply was actually of a thing that allowed the technical architecture to work, and the absence of that fixed supply

Starting point is 00:36:00 being what caused prior iterations of attempts at digital money to fail. And so getting those ideas out there so that we can create whatever the universe of people that understand Bitcoin is to double and triple and quadruple over time so that the economic system can actually be built is necessary. One other like maybe contrarian take on a lot of this is the tokenization of fiat has been, a pretty important role in the growth of Bitcoin itself. We're now seeing like Tethers trying to put stable coins on lightning and some of that's being built on top of Bitcoin and I kind of suspect it's going to be built a lot more on top of Bitcoin and moving forward. But from what, 2017, when did we start getting stable coins? 2016, 2017, they started popping up in that time frame.

Starting point is 00:36:49 They started popping up. And the only reason that they started popping up is because of these other less decentralized, less secure blockchain, quote unquote blockchains. And in a way, it's, I mean, I look at it like this. The state is very pro-stable coin at this point because they see it as the buyer for all their sovereign debt issuance. The world needs, they need Bitcoin, but they don't realize that yet. And going to your comment earlier about know that customer and know thy user, First and foremost, the world thinks that they need stable coins. And all of this blockchain stuff, right, was a core enabler for like bridging this gap to people eventually understanding what real sound hard money is that will actually hold value without some government entity being able

Starting point is 00:37:40 to step in and stop it. So I guess I get everything you're saying, Parker, but at the same time, I'm looking at how things have unfolded and I'm just looking back and I'm saying, wow, this was somewhat serendipitous the way that so much of this has like fallen in the place, because there's no other use case for any of this, call it Ethereum, Salana, that we've seen so far is just the tokenization of sovereign debt. That's pretty much the only utility that we've actually seen pop out of it to date. So I know, I would disagree, you know, like, I mean, I accept the premise that the existence of all the noise is allowed the Trojan's worst to advance without maybe a more clear distinction.

Starting point is 00:38:19 of where it's actually headed and that, allowing it to advance in that way, might credibly have prevented somebody from trying to stamp it out sooner. On the other side, I'd say that in 2017 or 2018, I think that Indian Central Bank banned Bitcoin, it was later reversed and overturned and being unconstitutional. And then Bitcoin mining was banned in 2021 and China or 2020. I didn't remember which one. Yeah, I think it was 2020. Well, it was banned multiple times, but yeah, the big mining ban was, I think, 2020.

Starting point is 00:38:52 But what I would say is it is a sort of liable fact, uncontrovertible fact, at least of my own experience, that if I start somebody fresh that has not gotten their mind worked around a narrative of stable coins or blockchain tech or it's going to be crypto, that's the real inundation, then I can help that person understand Bitcoin about 10 times faster than if I have to unwire their brain. from this false reality or false hope that the innovation is blockchain tech and that crypto and the thousand cryptos are going to be solving a problem. So that's just kind of individual to individual use case that has proven to me in the eight years I've been explaining Bitcoin to people to be the case. Then the other thing I would say is when it comes to stable coins and like the tokenization of Fiat, I personally don't, and we can debate this back, I don't buy this idea that it creates demand for treasuries. That dollars, the Fed creates reserves,

Starting point is 00:39:51 those reserves move between banks, and then other constituents that sit on top of banks create demand for dollars, and then dollar reserves change between banks. But if there's 36 trillion U.S. treasuries, 36 trillion U.S. treasuries need to be demanded. So it's not creating demand, it's shifting demand.

Starting point is 00:40:13 Say shifting demand. demand potentially say, if J.P. Morgan is holding fewer reserves because the reserves are flowing to the bank, you know, whether Cantor Fitzgerald has access to the Fed window, but if they're banking tether, so it's just transferring where that source of demand's coming from. And that ultimately, the Fed is the backstop to the demand because it's still going to have to create more dollars. And stable coins can't solve an actual problem because they devalue as dollars are printed. and I'm somebody that also happens to believe that we have a lot less time than most people believe we have to have Bitcoin working as a system that needs to work independent from Fiat. That if you think about where Bitcoin's come.

Starting point is 00:40:56 Yeah, what do you mean by that? Dig into that idea more. I mean that I don't think that the Fiat system has another 10 years. And so it's like we can build out all these Fiat stable coins. And I don't even think it's necessarily bad that there's stable coins on Heather. even though to try to conceptualize what that actually means is kind of difficult. But if you think about... You mean on the Lightning Network?

Starting point is 00:41:17 Is that what you... Yeah. Okay. If you think about what stable coins are, they're really like a different method of payment for dollars, right? And so if the problem is the printing of money, they don't solve that. And that if the end game of Fiat currencies being printed at infinitum is hyperinflation, that that ultimately means that the Fiat system stops working in being able to effectuate trade.

Starting point is 00:41:39 and I think most people look at this and say, ah, you know, 50 years down the road, we're going to transition from fiat to Bitcoin. I don't know, you know, if you just logically look at the equation and accept that knowledge distributes as a function of time, humans can't work for money that's created out of thin air. And that as money is created out of thin air, that's actually what causes the economic system to fracture and degrade and to break down the ability to coordinate trade. assume Bitcoin, not soon, Bitcoin has two more havings in the next seven years. Knowledge continues to distribute Bitcoin as a system, if you look at it relative traditional assets, it's something like the fifth or sixth largest asset in the world. If you look at it relative to other currency systems, it's somewhere between five and ten. And then assume that Bitcoin increases in demand by 10x,

Starting point is 00:42:31 it starts to become close to the largest currency system in the world. and then assume the Bitcoin demand increases by 20 times over the next seven to 10 years, it's the largest currency system in the world. And they're going to be, and central banks are going to have to print a massive amount of money between now and then. So what's more rational that humans don't figure this out in the next 10 years and are going to actually need the rails to effectuate the real utility that we get out of money, which is trade, or that stable coins in advancing a different way to pay dollars is more

Starting point is 00:43:05 important than figuring out how to get business owners to understand Bitcoin. And I don't just mean Bitcoin owners to understand Bitcoin for the purposes of accepting Bitcoin payments. I'm talking about people that have the knowledge and capital to actually deliver productive resources to the economy, get sound money so that they can continue to deliver those goods and services that we all generally take for granted, like cheap power, clean water, reliable access to health care. So I'm somebody that would say, hey, in 10 years, we're going to be on a Bitcoin standard and everybody should be operating under the mindset that the fuse is very short in the Fiat system. And there's a lot of evidence out there for that,

Starting point is 00:43:45 but part of this is what's happening in the economic system today, the volatility of the treasuries. But another part of the evidence is three years ago when Silicon Valley Bank, a $200 billion bank failed virtually overnight. You know, the Fiat system is far more fragile than anybody wants to admit for themselves and that people need to be operating with that mindset, because in most cases, a new technology that comes along is a luxury. Like, if you think about the advancement of a car when we were on horses, or the advancement of electricity when we were on kerosene. This innovation happens to be the most foundational basic necessity of the economic system

Starting point is 00:44:20 because money is what coordinates trade. So I just look at it and say, hey, there's a five-wall and fire, and we have a short fuse, and we need to be making haste to make Bitcoin work in a way that is independent of those agile systems because we're going to need it a lot faster. But I also don't worry about it because like when everyone hits the exit, there's going to be a rapid monetization Bitcoin and humans are survivalists and they're going to build the tools and access the tools that they need and get things here. So I just, I view all of those other things that happen on top of Bitcoin, like the tokenization or the demand for treasury, which again, I think it's just shifting demand as

Starting point is 00:44:56 being so much smaller of a problem to solve. And I just don't think that people see it that way. I love this point because you're not saying that it's not important. You're just saying that like all those things that we talked about as far as like the tokenization of dollars and all that. You're just saying that it's going to be short-lived. All these things are a dying breed. And it's super important for people to understand that and not get caught up in all of that noise as there's this thing that could save them a whole lot of pain and a lot of grief if they can just figure it out is basically the premise of what you're saying. Yeah. Correct.

Starting point is 00:45:29 Yeah. And I totally agree with you 100%. I'm curious your thoughts on central bank digital currencies versus tokenized dollars or euros or whatever, call it tether or circle or whatnot. Is this just a central bank digital currency anyway in disguise? Or is there some core differences? Is this something that people should be concerned with if it is, in fact, just a central bank digital currency wrapper? What are some of your thoughts there?

Starting point is 00:45:56 My view in type of credit, Will Cole for some of his thinking on this, that's helped. me see this more clearly. One way to think about it is, hey, I just don't really find this interesting because it's a different way to move dollars and they're not really stable. They're just devaluing goods and services as fast as traditional. Yeah, the same. You know, the rails aren't. But the other side of it is that the logical, I don't look at something like tether or

Starting point is 00:46:21 what's the other one, circle? Circle, yeah. USDC as being CBDCs. But if you play it out, that's the logical. end game. And it's not the logical endgame because Tether wants it to be the logical endgame. And I don't believe that that's what Tether's building out to. It might be more realistically what USDC is building out to. I think that between USDC and Tether, USC's definitely taken the approach more of trying to regulatory capture. By the way, I agree to dictate this. But it's interesting because this idea

Starting point is 00:46:57 of money converging to one, which I talk about a lot to help people understand. and Bitcoin in to allow the sea of noise of 49,99 other cryptos, it's like, you only need one form of money, and consensus and money is necessary to affect trade, and the most important property of money is that it can't be printed, that that is what explains Bitcoin. That it's also not a coincidence that Tether is $150 billion. U.S. DC is something like $60 billion. I don't know what the next largest is, but Gemini tried to create their own stable coin, and their stable coin is something like 50 million or 60 million, that it has this long tail

Starting point is 00:47:36 for the same reason that money does converge to one. And it's logical just foundationally to the way that money works, that one of these stable coins, and it might be that there's one stable coin for the yen and one stable coin for the euro and one stable coin for the dollar, but that those currency systems gravitate towards one because what they're ultimately doing is coordinating activity between peers. And so that's already been displayed as happening. That's the explanation for why. And as it becomes more evident that there's a winner, say it be Tether, the leader, the Fed and the Treasury have every incentive to control the dollar system, right? And so to give Tether access to being able to

Starting point is 00:48:25 even buy treasuries or how those assets are held in that they're not free. I think there was something just that came out yesterday or yesterday of the day before that 15 million in tether was seized. You know, tether centralized. So if you imagine tether growing as this, quote, separate tokenized dollar, if it was to go bigger and bigger, the powers that be would not want the powers to sit in this private entity that's not controlled by the people that are controlling the current dollar system. Yeah. So that as one winner becomes more. evident or just becomes larger, it's natural that the end state or the end game is its co-option. It's being, whether fully nationalized, effectively nationalized, everyone would say,

Starting point is 00:49:08 we don't want to see a CBDC, we don't want a CBDC. Well, that doesn't change the fact that the Fed and the Treasury and the federal government in the United States don't want a dollar that's not controlled by them. They have the power to control it. It even gets more interesting than that. When you think about, well, what are they doing with the retainer? earnings from all the coupons and what does that treasury look like. And it's Bitcoin for a majority of it, right? And you talk about this idea of nationalization and how they have to be in sync

Starting point is 00:49:37 with the government to continue to play this tokenized sovereign debt game that they've been playing. But if at the end of all this, they're sitting on a ton of Bitcoin, it only further compounds all these forces that you're talking about, which is a nationalization effort to basically scoop up all that Bitcoin, especially if it's a privately owned company and doesn't have millions of shareholders on the public markets. Don't you think that's a bit of a, I don't know, it's kind of interesting. Yeah, I think that it accelerates it down that trend. But then also it's like those treasuries are custody somewhere, right? I think it's the DTC. So I don't know that. Well, Cantor was one of the biggest custodians I know for Tether, but I don't know on Circle side.

Starting point is 00:50:17 Well, yeah, but I'm saying like my understanding and someone, this might not be correct, But there's an underlying entity that actually custodies the treasuries that even like a canter would use. I believe it's the DTC. Oh, yeah. Yeah. Depository trust corporation. Yes. You know, custody is like 50 trillion in assets.

Starting point is 00:50:36 What my point is, hey, if Russia can be cut off of Swift and the treasuries that they hold could be cut off. It's like certainly if you don't play ball with us tether, you know, the treasuries that you own or your ability to access the reserves that cancer holds for you. there are Fed reserves sitting somewhere in the system underlying tether. Absolutely. So it becomes a centralized endgame that likely is nationalized. I do also agree that, hey, strange bedfellows and, hey, you're buying a bunch of treasuries, but also our interests are in the U.S. financial system. And if more of it is going over to you, we, the Fed, we, Treasury, we, the federal government

Starting point is 00:51:18 still wants control over that. So the larger, I guess, the greater the incentive to regulate it. I wonder with all this legislation that's about to go through that's then going to allow the major Wall Street banks to start playing in this space and issuing their own stable coins, if you're going to get this bifurcation in the global market where it's basically Circle and Wall Street, J.P. Morgan, Goldman Sachs coin, right? You have that particular market sector and then you basically have Tether, which is the Alisbury. outside Euro dollar equivalent that, I mean, for all intensive purposes, I think we both agree is under intense US scrutiny because of all the treasuries that they hold and the US government's ability to step into the custody market to basically take all the treasuries away from them if they're not playing nice.

Starting point is 00:52:08 But it does seem like there's a bit of a bifurcation that might play out here in the coming year or two in this particular space. And then I guess what does that mean moving forward? Right. But even there, I mean, I could see a world where there's one onshore stable coin and one offshore, like, effectively like two different dollar currency systems. That would probably be the one unique one versus, say, something like the yen or the euro. But it's more difficult to see a world where there's JP Morgan coin, Goldman Sachs coin, Wells Fargo coin, Fidelity coin, for the reason that money still converges to one. And so if these currencies are going to be, or these stable coins, tokens are going to be demanded,

Starting point is 00:52:49 there's some forcing function as to why they're being used. You know, an example on our side, we, a Bitcoin miners that use Tether and request payment solutions for Tether because people have Tether and they want to pay for things like miners in Tether. And then the Bitcoin miner can then either use those Tether to buy the A6 that they're selling them or to convert them back to dollars to get them in their actual bank account, but the utility of the system is what will drive demand for it, not the existence of shift year. Yeah.

Starting point is 00:53:22 So if they're being used to actually facilitate value transfer between two parties, that there's a network effect that drives there to naturally be dominance in one. But what I would expect to see as people try to create all different versions, there's going to be one supremacy because of the way that money is used that it won't be demand for it if there aren't people on the other side saying pay me in this. Very interesting point. All right. Final thoughts. What's on your mind happening right now that you think is important, maybe missed by many market participants, maybe even a little bit of expectation into the end of the year if you have it. Give us your thoughts, Parker. I'm very focused on one built and out Zappa,

Starting point is 00:54:07 of course. I'm getting more businesses onboarded to Bitcoin payments and delivering the tools really in a focused way where the market is demanding Bitcoin payments, kind of closest to the center of the economic system, the Bitcoin-centric people. But beyond that, there's a highly leveraged financial system that is highly unstable. And I don't know the pace, but as of the last time I checked, the Fed was still withdrawing research from the system. And that was, what the Trump administration is doing rightly or wrongly, and I don't have a strong opinion on that. I understand arguments on either side of the tariff equation. What it certainly does is increase uncertainty.

Starting point is 00:54:50 And when you introduce increase uncertainty in a highly leveraged system, that it is likely to result in a dollar liquidity crisis. And so I think that that is something that everyone needs to be cognizant of because when And currently the state of play is there's about $102 trillion in dollar denominated debt, which is just fixed liability, fixed maturity, not derivatives, not unfunded pension liabilities, and there's only $7 trillion in reserves. So if there's a run on those reserves, everything gets sold relative to them because the system is functioning of solvent and then the Fend will have to come in to print more dollars

Starting point is 00:55:27 and you see the jockeying that's happening where Trump is asking how to reduce interest rates and functioning the only way to practically reduce interest rates, their interest rates that matters is by increasing the supply of dollars. But before that happens, there's very likely to be, or at least I'd be on the lookout and be cognizant of a dollar liquidity crisis. And so looking at things like the bond market, but not just the treasury market, the corporate bond market, because those underlying markets are highly illiquid. That when liquidity disappears, it disappears is fast. And so that from a broader macro, as it relates to Bitcoin is something that I'm watching out for because Bitcoin's a liquid good and liquid goods get sold first. But Bitcoin

Starting point is 00:56:12 could run from here before that happens. And there's been a lot of selling pressure. So, you know, I think we could see a divergence, but it's to be aware of the broader setup. And then the other side of it is, I think that as it relates to the debate of like institutions, I think institutions are good for Bitcoin. I do think, though, that fiat arbitrage is as close to zero sum as trade gets. It's not zero sum because it provides a pricing function and a capital allocation function to the market, but that not every trade is created equal and that people spending their time building infrastructure that's important to Bitcoin creates more value than arming fiat and that Bitcoin needs more infrastructure to be able to function as a standalone system that exists today and that people

Starting point is 00:56:57 people need to be focused there. And that number goes up by, I wrote a piece that's on my blog that people can check out called Bitcoin's exchange theory of value, that the value of any currency is derived through its ability to coordinate trade. And if you were thinking about the spectrum of creating value, that actual commerce is more productive than the yacht arbitrage and to not get. We all want number to go up. The best thing for Bitcoin is number go up, but the path that actually gets there is dependent

Starting point is 00:57:27 on valuable infrastructure to promote Bitcoin as an economic system and that there's, in my view, there's better uses of time than Darbing. Yeah. I love this point. I love that point. Parker, give people a handoff to where they can learn more about you or anything else that you want to promote. Check out the book at the safehouse.com slash gradually. So it's the safehouse, S-A-I-F, thesafehouse.com slash gradually. If you're interested in Bitcoin payments, and what I tell people is, if you don't understand Bitcoin, if you don't understand why it stores value over time, if you don't understand the importance of its fixed supply and that that's the basis of sound money for the world, get a book, whether it's my book or the Bitcoin Standard or listen to more of Preston's

Starting point is 00:58:08 podcast, that's the most important part. But if you already understand that, what I would tell people is make the investment in accepting Bitcoin as payment or at least evaluating it, because if you do, it's the most efficient way to actually acquire Bitcoin, then you can check us out at Zaprite, zapright.com, ZAPR-I-T-E dot com. And people can follow me on Twitter, Parker A. Lewis. And then if you go to Unchains YouTube channel, you can find the presentation that we were talking about earlier, Bitcoin, not crypto, which helps distill why Bitcoin's the real signal, why you don't need to worry about all the other cryptos. They're all losing value relative to Bitcoin for very foundational reasons. And that blockchain tech is kind of a false

Starting point is 00:58:49 hope. And that presentation, Bitcoin. Not Crypto, is a great way to distill it down for people. As a proud user of Zappright for our business, I can just say it works amazing and it's super easy. And yeah, kudos to you and what you're building. And thank you for making time and just your education and the material that you put out there is of the highest quality. I truly mean that, Parker.

Starting point is 00:59:13 So it's a pleasure for me to call you a friend and comrade in this space. And thanks for making time and coming on the show. Yeah, I appreciate it. Same sentiment for me to you, Preston, really value everything that you do and you supporting me having me on, but then also using the platform and being one of those companies that is. Dude, it's awesome. Possibility for people to pay you in Bitcoin. It's awesome. It really is. Yeah, thank you. All right.

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