What Bitcoin Did - THE RISE OF BITCOIN w/ Parker Lewis

Episode Date: December 24, 2024

Parker Lewis is the author of Gradually, Then Suddenly and Head of Business Development at Zaprite. In this interview, we discuss the Strategic Bitcoin Reserve, the feasibility of executive action to acquire Bitcoin, and the implications for U.S. financial policy. We also get into Bitcoin's role as a monetary system, the potential for nation-state adoption, and whether fiat currencies can coexist with Bitcoin. MASSIVE THANKS TO OUR SPONSORS: IREN: https://www.iren.com/ RIVER: https://river.com/wbd CASA: https://casa.io/

Independent of Bitcoin, the dollar is demonstrating that it is breaking down as a currency system. We will go through two more Bitcoin halvings in the next seven and a half years. At the same time that the Federal Reserve will have to print more and more money, will Bitcoin adoption increase by 10 times? Very conservatively, will more likely increase by 100 times, almost certainly Bitcoin will become larger as a system than the dollar if adoption increases by 20 times or 40 times or 50 times, it doesn't even need to get to 100 times. So it's just difficult to see how Bitcoin has gotten to a status of storing in equilibrium, $2 trillion of purchasing power in its first 15 years. However, the course of the next decade, it won't become the largest currency system in the world.

But when it does, it becomes very obvious to the consensus of everyone else that Bitcoin is the de facto global standard of value. Hello there and welcome to the What Bitcoin did podcast. I'm your host, Danny Knowles. And why would you want to spend any time with your family at Christmas when instead you could listen to Parker Lewis and I talk about the death of the dollar and the rise of Bitcoin? So I'll keep this short. I hope you all have a great Christmas. And the one thing you can do that really helps, if you can go to your podcast app and subscribe to the show and head over to YouTube and subscribe, it makes a big difference. All right, have a great Christmas.

Enjoy the show. Okay, we've banned the dog collar, but we're back. Yeah, good to see you, Parker. Great to see you as well. Congratulations. Excited for the V2 of what Bitcoin did. Thank you very much. How's life down in Austin?

Everything's great here. Got a seven week old, so a little bit sleep deprived, but I'm excited for that first time dad. So, you know, managing that road and working on Zapprite and, you know, hanging out of the Bitcoin, Commons downtown as I can. Love it. Are you going to do the Bitcoin takeover again this year? Yeah. I would love to have you come and hang out in Austin. It's going to be the week of South by Southwest in March. So I think the days are March 12, 13th, 14th. It might be off by one day.

But yeah, we'll be doing that up big again. It'll be a great time. So look forward to hosting a bunch of bitcoins in Austin and March and everything in between. I'm writing those dates down. I will be there, that'll be fun. We can try and do another one in person then as well. Yeah, I'll be doing it. But there's a few things that I really wanted to talk to you about today. Obviously, we had the Strategic Bitcoin Reserve bill dropped by, or executive order dropped by Bitcoin Policy Institute. And it's kind of started a bit of a stir on Twitter. And it's something that I really wanted to get your opinion on, because you've obviously always pushed Bitcoin as money, not as this sort of gold, digital gold asset. And in terms of the Strategic Reserve, do you think this? is a positive for Bitcoin or the US or both?

I think that it will be a positive for Bitcoin. I think it will be a positive for the US. I understand the competing positions on the involvement of nation states and Bitcoin, but ultimately Bitcoin is more secure, the larger that it becomes. The larger interest there are, that are competing, the more secure Bitcoin is, the harder it is to change. The more the network will be able to resist any threats in my view. So I think it was positive that El Salvador made Bitcoin legal tender in 2021. I think that more, you know, it's not something to say that because it's the U.S. government, it's a positive, but it's just to say it's the fact that Bitcoin is rising

to the level that it would be a. store of value for a developed country is a significant development, the more countries that do that, because it would set off a wave, that everybody would start to pile in. It would actually accelerate the path to adoption of Bitcoin as a global reserve currency. And do you think it has any detrimental impact in Bitcoin being used as money rather than just a store of value asset? No, I ultimately don't think so. I think that, you know, somebody that might be. Somebody that might hold Bitcoin exclusively thinks of it as a store of value. Somebody else next door who holds Bitcoin might think of it as a medium of exchange.

Bitcoin is what it is. So whether somebody thinks of it as a medium of exchange or a currency or money or property, it just is. And that my view, it is money. It is going to be used to facilitate trade directly, indirect commerce, facilitating somebody at the grocery store buying food, at the gas station buying gas, everything being priced in Bitcoin. And there's nothing that anybody can do to stop anybody else from using it that way. And, you know, regardless of how it's defined in one place or another, is not going to dictate how it's ultimately used,

in my view. So you don't see a scenario where they kind of bring store of value Bitcoin in the front door and then ban self-custody or something like that in the back door. You know, ultimately, in my view of it, I never put anything past. what a government will try to do or how they might try to contort some law to overreach what might or might not be constitutional. I think that that happens quite frequently. But I don't ultimately believe that, you know, even if they tried that, one, that it would be successful, or two, that it would be in their interest to even attempt to do.

It becomes certainly difficult, you know, at least in the United States, I'll speak for there if they were to adopt Bitcoin as a strategic reserve, but then say, oh, but you can't self-custody it, that the constitutional challenges would be easier. It's not to say that, you know, I think that executive order 6102 was challenged and, you know, upheld by certain courts. We're living in 2024. If we just saw yesterday, the Congress tried to. to pass a really crazy spending bill. And Elon Musk got on Twitter and there was a bunch of outrage publicly and they weren't able to get it passed. If we didn't live in the Twitter age or the ex age, that wouldn't have been possible. So I view it similarly that if, you know, whether the U.S. government had a strategic reserve

and tried to ban self-custody or they just tried to ban self-custody, that it wouldn't be successful because there'd be so many people up in arms and outraged. And Bitcoin can just transfer. You know, any, any jurisdiction that is not friendly to Bitcoin is going to see human capital, flee, monetary capital, flee, and ultimately physical capital that that monetary capital is used to build. So I just don't think that the incentives would, would allow for something like that to happen. But even if it did, Bitcoin still wins. So this incoming administration have been really vocally supportive of Bitcoin. We'll see how that actually plays out.

We'll see if we get this strategic Bitcoin reserve or not. But do you think they have a kind of fundamental understanding of what Bitcoin actually represents in terms of you obviously talk a lot about Bitcoin being a threat to the dollar? You think the dollar is going to die. Do you think they understand that? I don't think that Trump does. Just based on public comments, that he's made, I don't believe that he understands Bitcoin.

I don't think he understands it as, you know, in a really intuitive level. He has shifted his stance from four years ago. And I think that's a very positive. So I think he's on his way to understanding. He'll say two things that I view as potentially, or in my opinion are contradictory, where he'll talk about the importance of,

the dollar and the bricks currently countries using the dollar and if they don't use the dollar then they will be tariffed and then also saying that you know we should embrace bitcoin i think that there is something inherently in conflict there there's not something inherently in conflict between the interests of the u.s government and the american people and the you know u.s. states and bitcoin those are perfectly aligned but but there is a conflict between Bitcoin and the US dollar, which is issued by a private entity of the Federal Reserve. And so for all the people now on Twitter talking about this idea of a strategic reserve, perhaps strengthening the dollar, where would you kind of sit in that argument?

I would say that a Bitcoin strategic reserve would strengthen the United States. It would strengthen U.S. treasuries. it would strengthen the financial position of the U.S. government, that is different than strengthening the financial position of the U.S. dollar. I don't think that it would strengthen the U.S. dollar. I think it would strengthen the credit of the U.S. government, the overall structure of the U.S. government, and serve the interests of the American people.

But I view the U.S. dollar and the U.S. government as two separate entities. which they are. Okay. Can you expand on that? Because I don't know if I fully understand everything you're talking about there. So the US dollar is a currency controlled by the Federal Reserve, which is a quasi-public entity, but it is a privately chartered bank owned by a combination of private and public banks. So the Federal Reserve issues or creates, the Federal Reserve sets the amount of dollars that are in existence. These days, they create and destroy new dollars through quantitative easing or quantitative type. Literally clicking a button on a screen and crediting an account of a bank with more dollars or as liabilities that are owed to the Federal Reserve are

repaid, allowing those dollars to basically go into a black hole. So the Federal Reserve as an entity is in is supposed to be independent of the U.S. government. It is in control of the creation and issuance of currency. The U.S. government issues U.S. treasuries debt that it owes as future obligations. Now there's a reality that the U.S. government is so indebted in this iteration, it needs the Federal Reserve to continue to print more dollars in order to be able to repay its debts. But the Federal Reserve controls the U.S. dollar and the U.S. government issues U.S. treasuries. There is, and dollars are used to pay U.S. treasuries, but the interests of the U.S. government are and of the American people. The interests of the Federal Reserve are of the banks

that own the Federal Reserve. So they are distinct interests, and they're oftentimes conflated and viewed as one and the same, but they are almost undoubtedly distinct. And in my view, often in opposition to each other. Oftentimes, it's like the way I would think about it is the ability to create money out of thin air that was entrusted to the Federal Reserve is what allows the U.S. government and has allowed the U.S. government to get so indebted. It's what allows Congress to think that they should or that it's prudent to issue a $1.5 trillion

spending bill when they're already $36 trillion in debt, right? If the U.S. dollar was not there controlled by the Federal Reserve able to be created out of thin air, they wouldn't be able to do that. And ultimately, I view that as undermining the interests of the American people, the U.S. government, and ultimately the national security of the United States. So just thinking about that you have to understand. that the interests of the American people and the U.S. government are distinct from the Federal Reserve and the issuer of the currency, which is the Federal Reserve.

So do you think the Federal Reserve then would likely be against the idea of having a Bitcoin Reserve? Probably. And do they have any kind of power in that decision? I know they're independent, but do they have any sort of veto power in that? They don't have any veto power, but they have a lot of power, right? one, they own a lot of U.S. treasuries, and the U.S. government, in its current iteration, relies on the creation of dollars out of thin air to finance its deficits. So the Fed has a lot of power over Congress because Congress is dependent on the money printer

to operate the way that it does. So, Congress, while the Congress and Fed and U.S. government and Fed are objectively independent of each other in practice, they're in bed together. What Bitcoin did is brought to you

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especially their commitment to local communities and sustainable computing power. So whether you're interested in mining Bitcoin or harnessing AI compute, Iron is setting the standard. Visit iron.com to learn more, which is irons.com. So, Parker, you've talked a lot about the US dollar failing, and you think that's over a relatively short time period. Just remind me how long you think the U.S. dollar has left. I think that ultimately it is, in my view, probably less than a decade.

There's a few kind of compounding, you know, set of circumstances that caused me to have that view. Independent of Bitcoin, the dollar is demonstrating that it is breaking down as a currency system. What I look to independent of Bitcoin is the dollar inflation, getting worse, not better. In my view, it is a direct result of printing money and nothing else that the printing of U.S. dollars created out of thin air digitally by the Federal Reserve ultimately costs everything in dollar terms to become more and more expensive. A currency system that is working should really do the opposite, that if something is storing purchasing power and becoming more efficient at coordinating trade, that goods and services should get less expensive. Obviously, that's not possible if the entity that's controlling it, the Federal Reserve doubles the money supply, triples the money supply, quintuples the money supply over short periods of time. What's happening at a fundamental economic level as the Federal Reserve prints more money is that the dollar, as a coordinator of trade becomes less efficient and actually becomes harder to coordinate trade

with the U.S. dollar as the money supply is expanded rapidly. It becomes harder to coordinate trade as a function of both, expanding the dollar supply and contracting it. The change in money supply causes economic signals to become distorted, which ultimately causes trade to become less efficient. Given the credit system that the Fed creates, created by design, it is necessary in order to sustain that credit system for the Federal Reserve to create more and more money. As they do that, people look for alternatives to store value,

enter Bitcoin as a solution to that problem. And so if the dollar has problems independent of itself, and Bitcoin is a solution to it, that, again, the dollar would have failed independent of Bitcoin just as 50 fiat currencies have before, that if you entrust people with it, the ability to print money, they will print money, and it is the printing of money that causes the failure of that medium exchange or of that currency. Now, enter Bitcoin, the way I look at it is at a few different layers. Bitcoin exists, and it has a credibly enforced fixed supply, and no one has to trust that more or less Bitcoin will be created.

The system ensures that because there are competing interests and everybody enforces the rules against each other. But now we have this currency that does exist, that has. has a fixed supply that doesn't require trust. And we have this currency entirely based on trust that is constantly debased and constantly printed. And everybody has the option to store value in one or the other. And you can't save the same unit of value in both at the same time.

I can leverage Bitcoin and I can leverage the dollar. I can store a certain percentage of my purchasing power and the dollar and certain percentage in Bitcoin. but I have to make an economic decision, and each individual economic actor is incentivized to maximize their purchasing power over time. Currency with the fixed supply is going to do that better. So when I look at this equation, that is the Federal Reserve, given the nature of the credit system and the indebtedness of the U.S. government, but also the indebtedness of the system as a whole, is going to have to print more and more money in order to sustain its credit system. Bitcoin is entirely detached from its credit system and it will continue to operate independent of that and be there as a secondary option. Now, if we look at it and Bitcoin is worth, you know, in total purchasing power, approximately $2 trillion.

The current kind of statistics of the U.S. dollar in terms of base money is about $7 trillion. The broad money is somewhere between $23 trillion and $25 trillion. Bitcoin just had its last halving in April of this year. It will have its next halving in about three and a half years, the next having after that four years later. So we will go through two more Bitcoin halvings in the next seven and a half years. at the same time that the Federal Reserve will have to print more and more money, and Bitcoin is also global.

So when I think about it, it is, will Bitcoin adoption increase by 10 times? Very conservatively, will more likely increase by 100 times, I think over a course of seven and a half years of information and knowledge distributing and Bitcoin becoming a greater and greater utility as more and more. more infrastructure is built and more people learn about it, that almost certainly Bitcoin will become larger as a system than the dollar if adoption increases by 20 times or 40 times or 50 times, it doesn't even need to get to 100 times. So everyone is always making that economic decision.

As more people learn about Bitcoin, they'll opt into Bitcoin. The Fed will be printing more and more money. The dollar will be storing purchasing power worse and worse while Bitcoin will be doing the opposite. So it's just difficult to see how if Bitcoin has gotten to a status of storing in equilibrium, two trillion of purchasing power in its first 15 years. However, the course of the next decade, it won't become the largest currency system in the world. When it does, it becomes very obvious to the consensus of everyone else that Bitcoin is the de facto global standard of value. So if we just take a step back for a second, and let's just just

just play a scenario where we put Parker Lewis in charge of the Fed. Is there anything that can be done to save the dollar, or is this just a broken system that is now irreparable? Short answer, I think it's irreparable. Partly as a function of the fact that the underlying economic system is so imbalanced, and that the way that the Fed system works is functionally through the credit system. So in the United States, there's approximately 7 trillion of base money. There's approximately 23 to 25 trillion of broad money, which includes all forms of savings and checking deposits. And the credit system in total is approximately 101.5 trillion in the U.S. So like the amount of fixed maturity, fixed liability debt across the U.S.

U.S. system, including state, local, federal debt, corporate debt, household debt. That's 101.5 trillion. So there's far more debt than there are dollars. The actual coordination of the dollar is principally fueled through the credit system, that if the Fed didn't print more money, that credit system would collapse, and the U.S. dollar as a coordinator of trade would fail in that context or if they print the same. So it's a catch-22. And ultimately, the reason why is because it doesn't have inherent monetary properties. The only reason why the credit system has been able to grow to the size that it is is because over the last 40 years, the currency has been created out of thin air. The only reason that that's possible is because it's not tied to some

fundamental property of money or some, you know, constraint, and it didn't have a constraint ever since it was permanently severed or formally severed from gold, which was how the dollar arose initially. So because that system is flawed at a foundational level, and because it's caused this degree of economic imbalance that could only exist because of that foundational flaw, I don't, there's not a way to be on to put the genie back in the bottle. And when you talk about the $7 trillion of base money that's in circulation at the moment, do you think that is what Bitcoin replaces or does it replace everything? I think ultimately it replaces everything, but Bitcoin is base money.

So credit starts to form on top. Like there will be a credit system that creates Bitcoin denominated deposits. it just will never be allowed to get to the size and ultimately degree of leverage that exists in a system that can have money be printed. Because what happens is basically quantitative easing, the creation of new dollars, is designed to allow the credit system to not collapse. And then it's designed to induce the expansion of more credit. So there's two ways to deal with a debt problem in the current iteration of currency that can be created out of thin air. You can either reduce the amount of debt such that the amount of current money can satisfy it or you print more dollars. The path of least resistance is to print more dollars, but even if they tried not to, it would be an inherently trusted system.

And this is like the succinct point. There's a trust-based system, which is the dollar or any fiat currency, and there is one trustless money system in the world, and it is Bitcoin. And so even if the Federal Reserve said, we figured out the folly of our ways, we're not going to print any more money. It is now illegal. You're still having to trust somebody to do that. And you have the alternative, which is no more Bitcoin being created, but you don't have to trust another human. being that that's the case, that it's enforced by the economic incentives of the system itself. So that credit bubble is obviously ginormous. What does the unwinding of that look like,

do you think, for society in America throughout the world? My view is that it is impossible, it is impossible to go from a world of such imbalance that has been sustained through the creation of money out of thin air to one of economic stability that's based on a hard money that can't be printed without having some pain in between that it's akin to a drug addict that if you keep giving that drug addict more of the drug he might be more comfortable or he or she might be more comfortable in the next day the next week but ultimately if you keep fueling the drug with heroin, the heroin addict is going to die. If you remove the drug, that addict is going to have to go through withdrawal, and that's going to introduce in the more immediate terms of pain and the interest

of long-term health and long-term sustainability. So I don't think, if I, you know, if you think about the credit system in the United States, 101.5 trillion, and that's a number that the Federal Reserve publishes, they just published their latest financial accounts of the United States a few days ago, so that's a very up-to-date number. Those are the liabilities. For somebody or some entity in the system, it's an asset. If there's 36 trillion of just U.S. Treasuries, the Federal Reserve holds some of those, but other foreign governments hold it. A large holder of that is the American people, both through individuals or funds. The Social Security Fund owns over $2 trillion in U.S. Treasuries.

So those are assets for people. And those assets are going to turn out to ultimately be worthless, that the purchasing power of dollar-denominated credit is going to continue to trend to zero as the U.S. dollar does. And so if you think about the assets, the equation that there are certain people that are depending on the value of those assets in retirement or sooner, that as it becomes apparent to more people that those assets are not holding their value and that are going down very rapidly, that there's going to be some

economics instability. But that, in my view, is certainly not caused by Bitcoin. it's caused by the dysfunction and weakness of the currency system, the legacy currency system and the legacy credit system. So I kind of view it as look at something like Venezuela. Their currency failed not because Bitcoin existed, but because they kept printing money and it caused economic activity to deteriorate. And then trade could not be coordinated by the currency. So fiat currencies that can be easily printed in the case of,

reserve currencies can and are printed in massive quantities, those currencies fail on their own weight. So I kind of look at it to say, because Bitcoin exists, the pain that will have to be felt is far less. Because there's going to be a working viable currency system that literally everyone in the world can adopt when it becomes apparent to them and their currency is no longer working. Imagine the scenario where Bitcoin didn't exist. and the same exact symptoms do, that that system fails, but there's no engine, there's no currency system

to immediately start to reboot. So it's, you know, my personal view is that it's impossible to go from a world of imbalance and a world of excess to want to balance without some pain in between,

but we're all significantly better off because there is a currency system that is viable that can be adopted, not just in the U.S., but globally by any individual, by any country, by any state. I mean, Bitcoin certainly doesn't cause it. It just puts up a lens to the current system. So do you think when we get to the point where all these funds that are holding these

kind of like eventually worthless debt are going, when they come to offload it, that's when we see sort of hyperinflation in the dollar? Yes. I mean, I think that it's a symptom of hyperinflation of dollar. The hyperinflation of the dollar is caused by the creation of money out of thin air to provide that context, where we went from the financial crisis in 2008, there were approximately $900 billion in existence. In the post-financial crisis quantitative easing, the Federal Reserve created $3.6 trillion.

Now, in the subsequent periods, that was from 2009 to 2014 or 2008 to 2014, $3.6 trillion new dollars were created. So at that point in time, there were $4.5 trillion in existence. Over the next few years, the Federal Reserve tried to extract some of those dollars to bring that system back in check. It ultimately was not able to. And then they printed or digitally created $5 trillion. So there were approximately $9 trillion in existence. Then over the past few years, they've been taking those dollars out of the system to the point that there's only $7 trillion left.

So they've taken effectively $2 trillion out of the system. that is functionally re-leveraging a massively leveraged system because as they're taking dollars out of the system, the amount of debt doesn't magically go down. So there's just fewer dollars to go around. And so thinking about we went from $900 billion to $9 trillion, a 10x increase in the money supply that causes massive economic dissuarsion. That's actually what causes the economic system to fracture and fray, in my opinion. and it's with certainty going to have to be expanded again to support that $101 trillion. And so to be clear, the cause of hyperinflation is the creation of money. But as the effects of it start to distribute through the economic system,

imagine somebody who's holding, say, a U.S. treasury, and that that treasury is paying four and a half percent a year. But imagine real inflation of real goods and services that you need are 10 percent, that the holders of those assets, not the currency, but the debt instruments begin to realize, as they're realizing today, that, wait, if I hold this in just using those rough dynamics of, say, a 4.5% interest and a 10% inflation, you're actually losing 5%

by holding the asset. Then they start to look around and say, oh, wait, there's this fixed supply currency that's increasing in purchasing power. Why do I hold the debt instrument that in real terms is losing value when I could sell it to buy a finitely scarce asset? And so the cause and effect is the Fed printing money that creating dollar inflation.

And then the holder of financial instruments, in this case, credit instruments, bonds and U.S. Treasuries, realizing that it's not in their interest if they're just trying to store value to continue to hold those assets. They begin to sell the assets to buy Bitcoin. That actually then accelerates the process of printing money in order to sustain the credit system. And then you repeat that process. I've got Odell sat on my shoulder here saying mandibles, then Bitcoin Standard. It kind of seems like what you're talking about. But there's obviously other countries that are kind of waking up to this

with the sort of BRICS nations, they want to do their own currency. Whether that happens or not, we'll see. But do you think Bitcoin is going to be the sort of only escape valve from this unwind? Or do you think they'll try another currency first? I think that ultimately countries, whether it's the United States, Russia, China, the UK, Australia, there is an interest to own and maintain your own currency system. So I think that the instinct will be to not immediately turn to Bitcoin. That if you could control your own currency, that you would want to do that.

And so I think it's perfectly plausible that Brick's countries tried to create their own currency before realizing that they have no other choice but to turn to Bitcoin. Because my ultimate view is that while the dollar has inherent problems, it's the strongest by far of a weak thought. The dollar is stronger as a currency than the Japanese yen, in my view, the British pound, the Russian ruble, the Chinese yuan. So even accepting all the problems that the dollar has if the Chinese government were to create its currency and then try to demand that people take their currency for oil, but then they're printing the money too because they have to sustain their credit system and the same. Russia is basically like communist countries or anything in between a free state and a communist country, the communist country get more control out of the currency than that.

even the Federal Reserve does in the United States in terms of the control over the people. So it's logical to not want to give up that control. And that even if, in my view, there's a fundamental economic truth that economic systems converge on a single form of money due to the nature of the problem that money solves being trade, that people can make the wrong decision, can store value in a form of money that they think will be viable in reality, it won't be. And so I do think, you know, there's a chance that they look at the game theory and say, well, we might as well just adopt Bitcoin and skip the painful step of trying to create our own currency that won't ultimately work because we will

now be the counterparty. And if trust in fiat currencies is broken, we're not going to replace, you know, trust in the Russian government with trust in the U.S. government and trust in the Chinese government or trust in the euro or the Japanese government. It's just, you know, it might be a more rapid realization that everyone needs a currency that is devoid of counterparty risk, but it's also very plausible that they certainly, you know, what is true is they don't want to give up control. They get the most control out of their own currency. So plausible that they tried to create an interim currency, but that that will ultimately prove unsuccessful. This episode is brought to you by River.

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Yes. That's pretty wild. Because everything that I'm describing about the U.S. currency applies to all the others, and the U.S. currency is the strongest. So if the world is figuring out that Bitcoin is a better currency than the dollar, and if the dollar is the strongest, then the same would apply to the end, the euro, and every other currency. And so do you think Bitcoin is ready for that? I don't know, you know, readiness is a, it's certainly a relative benchmark that Bitcoin evolves very quickly and rapidly and that as more people use Bitcoin, the value of Bitcoin increases and the ability to create infrastructure to support it increases as a direct derivative of that, that as more people adopt Bitcoin, more people are relying on.

on it and then those people need tools to make Bitcoin more and more valuable. So the short answer is yes. What that actually means of like could Bitcoin satisfy and replicate all of the trade that exists today? No, absolutely not. But does it have the foundation to be able to absorb all. of that adoption and then innovate to build the tools to in the future, whether that's five years from now or 10 years from now, to be able to recreate all of those supply chains and

all of those trade lines, absolutely. So in terms of kind of like the usability of Bitcoin right now, we know we're not going to get everyone in the world using like base chain Bitcoin. I actually don't really know where you stand on the ossification side of things. I would have always assumed you're quite a conservative bitcoiner. Do you think we need upgrades to Bitcoin to get us ready to, you know, have 8 billion people using the network? I think there's definitely advancements to Bitcoin that are needed to be able to support direct commerce and custody by in between all 8 billion people in the world. That it is unlikely that Bitcoin has permanently ossified.

I think that it is going to require material broad-based benefits in order to change Bitcoin, but that as 10x the mind share, 100x the mind share of people staring at Bitcoin and figuring out how to innovate, there will be a lot of innovation without needing to change Bitcoin's consensus code. But if 100x the mine share is staring at the question of Bitcoin scarcity, it's more likely that innovative solutions are put forward that in a broad-based way benefit an overwhelming majority of Bitcoin holders, that it's likely to continue to change. And that those changes will likely be changes that that do help support scalability, not just the transactions, but more and more. I don't even want to say non-custodial support of Bitcoin, but allowing for more peer-to-peer direct interactions in the economic system than are capable of that Bitcoin is capable of support today.

What are some of the upgrades that you would like to see? Would you like to see Covenants? My personal view of Covenants, I can see a use case of it. I don't, I see as a marginal benefit to custody and that it's difficult to, I think at this point it's going to, be difficult to get marginal changes through. So the use case of covenant, so the use case of covenants as an example, like CTV.

I can make the argument that, whether it's CTV or Op Vault, that one of those would provide an incremental benefit to custody. And one could say maybe it's low risk enough and it stands to benefit enough people, that something like that could get done. I don't see that necessarily being a 10x improvement over what already exists. That multi-sig itself and that people can take better custody of keys and secure them better.

And there's going to be a lot of innovation to happen without changing Bitcoin. So I don't know if something like that gets through. But I think that one reality is that something like the Lightning Network is very difficult. to operate non-custodically. I don't know if that ever changes, not because the Lightning Network won't materially improve, I expect that it will,

and that it is capable of facilitating a lot of commerce. It's just easier to do in a custodial way. That I think that the changes that are more likely to come through to Bitcoin are ones that have finite surface areas to evaluate and that directly facilitate both non-custodial custody as well as the ability to transfer small amounts of Bitcoin directly between individual parties,

whether that's individual to individual or a business selling a service to an individual, that there will be a natural gravitational force to innovate to not force there to be a financial institution or a counterparty in the trade line. So are you talking about any upgrades specifically there, or are you kind of in the weight and C stage and nothing that's currently proposed is moving the needle for you?

I mean, that's where I'm at, that nothing's particularly moving the needle or that there's another view that Bitcoin is sacrosanct and that if there's not broad-based support for something that it's unlikely to change Bitcoin and that in order to change Bitcoin, it needs to provide a very clear benefit, but also that benefit can't be marginal, that it needs to be material unlocking. something that otherwise wouldn't be possible. This episode is brought to you by CASA. For those of you out there who want to protect your Bitcoin, I want to tell you about CASA, the leading Bitcoin self-custody solution. So if you're serious about protecting your Bitcoin, then you need a rock, a solid security plan, and CASA gives you just that. With their multi-signiture security and key management services, CASA makes it easier than ever

to take control of your Bitcoin without the risk of a single point of failure. They offer multiple levels of protection, all designs. with simplicity and ease of use in mind, even if you're not a tech expert. Don't leave your Bitcoin security to chance. Go to CASA.com and check out their services today to protect your stack and sleep easy. That is CASA.io, which is C-A-S-A.io. So we should talk a little bit about ZapRite, because you're building tools that make using Bitcoin as money easier. But explain what it is and what you're doing.

Yeah, and maybe if I step back, is that consistent with everything we've talked about, I view Bitcoin as evolving from an nascent and volatile store of value to a fully functioned currency system that is facilitating virtually all the world's trade in direct commerce. And that what that means is that everything will be priced in Bitcoin, that people will go to the grocery store, prices will be denominated in some unit of Bitcoin. and people will be using Bitcoin wallace to buy groceries at the grocery store, gas at the gas station, going to the doctor, getting their health care, paying for power, that Bitcoin will be facilitating all that trade directly.

Those tools to facilitate Bitcoin as an exchange medium or a medium of exchange and to be able to facilitate direct commerce, the tools actually need to be able to build. Lightning Network is a key piece of infrastructure that, is being leveraged today, but people also transact real economic value between two parties, not just sending Bitcoin to themselves or to their wallet on the base layer by sending on-chain transactions. So the recognition, though, is that on-chain is a protocol, lightning is a protocol. There will likely be other protocols.

I don't know whether, you know, Arc is the next one that works, but there will, in my view, be others. People are starting to work on things like Fetamint. Each of those I view as protocols, but then in order to be able to support direct commerce, you need tools that you need commerce tools to sit on top of them. And that the way that a e-commerce transaction is facilitated is one type of transaction. The way that real estate is transacted is another type of transaction. The way the oil is transacted is another type of transaction. The way a point of sale transaction is facilitated is another type of transaction. The transaction between two peers is a different type of transaction.

All of this infrastructure needs to be built. That in order for people to adopt Bitcoin as a medium of exchange and selling their goods and services directly for Bitcoin, it requires building the tools that work, given the nature of a particular type of transaction, a particular type of trade. And so if I use that as a foundation to talk about ZapRite, we're focused currently on a certain type of transactions. Like people talk about Bitcoin payments and oftentimes people view Bitcoin payments to be synonymous with lightning payments. And that's not how we think about it. We think about what is the type of transaction and what's the business use case for that type of transaction?

Can we deliver a solution today that allows more people to adopt Bitcoin to be paid in Bitcoin? So today's ZapRite, what it is, it is a Bitcoin payments company. We're focused on a certain set of universe of transactions. We're not trying to facilitate real estate transactions. We're not trying to facilitate commodity transactions. We're typically trying to facilitate today a combination of business. businesses that bill for their services via invoices, businesses that sell their goods and services online, and to a lesser extent, but starting to get to the point of helping businesses that facilitate transactions in a physical store at a point of sale. The first two are really where our main focus is, and we do a number of things to help support that.

we basically make it easy for people to connect Bitcoin wallets, both on-chain and lightning, to Zapprite and then provide commerce tools on top of that, such as an invoicing template, like someone like yourself might use, and we can talk about that in detail, or connecting those wallets to an API to build their own website to be able to accept Bitcoin in a way that's very custom to the nature of the service, like a paywall, or something that's usage-based or just an e-commerce store like WooCommerce, we're not yet on Shopify. So it's a combination of both on-chain and lightning, building the commerce tools, but then importantly, we're bringing the Fiat into our system.

So it's a Bitcoin-native solution that allows people to accept both Bitcoin and Fiat side-by-side to then help tip the scale so that people can drive more and more payments directly in Bitcoin. Well, I definitely need to set something like this up. I need to start invoicing. And I assume this could just basically replace zero for me. Is that right? Yes. What we can't do is we are not an accounting system.

We are a payment system. So that's one thing that can oftentimes be confused. If you're using zero specifically or exclusively to issue invoices, we can 100% eliminate that. Also, if you're just using QuickBooks to issue invoices, we could totally replace that. ZapRite is not a small business, you know, general ledger accounting tool. we evolved to that at some point. Ultimately, we're going to be needing to be facilitating more and more commerce at greater scale to then justify potentially creating that tool

ourselves. We do make it very easy to put all the data and all the transactions, to translate it in a way to account for receiving Bitcoin as payment very easily. We just don't have that process, you know, the accounting piece of the software in ZapRite natively. Very cool. I will definitely be using ZapRite. But I can't let you go without asking the gradually then suddenly question. So we're now at 100K. Every cycle that someone comes around and says that we're at the best risk we're all Bitcoin's ever been at. But I feel like that's changing. And do you think we are starting to move out of the gradually phase and into the suddenly phase? I think that we're still very early in Bitcoin and

we're still in that gradual phase of each individual that's adopting Bitcoin has to consciously evaluate that decision, understand why Bitcoin stores value, understand the fact that it has this fixed supply, the fact that it's fixed supply is credibly enforced without the need for trust, understanding to some degree how that's able to happen, how Bitcoin is able to function without central coordination, and then consciously decide to begin to store a small percentage of their wealth in Bitcoin. So long as that is true, I think we, by definition, have to remain in that gradual

phase. Now, if my view is that the entire world adopts Bitcoin sometime between now and the next decade, that there will be some tipping point that sets that off and that when we don't have to ask the question, that will be when we know that Bitcoin's in the suddenly phase. That it's rapidly monetizing and that it's the one currency that's working. People are no longer in a position to have to consciously evaluate, do I store my wealth in Bitcoin or not? They opt into it out of necessity because it's the currency that's storing purchasing power. It's the currency that's able to facilitate trade. And that the way I think about it is first person that got on an airplane, had to really evaluate that decision consciously.

These days, everyone flies on airplanes and they don't think about it. You know, or, and certainly there was, you know, less risk involved for the first person using a telephone, but maybe, you know, more akin to someone, you know, deciding to wire electricity to do this house. So there will become a time where Bitcoin is just ubiquitous and everyone's opting into Bitcoin because it just works. I don't think that we're there yet. And I think that if it's true that no fewer of one and a hundred people really understands Bitcoin, that's probably going to require something like five out of 100 or one out of 10 before that tipping point is reached and Bitcoin rapidly monetizes. Well, if we've got 10 years of fiat currencies left, it better be quick.

Appreciate you, Parker. I always love talking to you. Is there anywhere else you want to send anyone? Is it just that prime? So what I would tell people is, even though I'm spending the vast majority of all my time working on Bitcoin payments, that until somebody understands why Bitcoin will store value, I think that their interest and their time is best spent and focus best spent on trying to understand Bitcoin from a fundamental level. So if they're not yet there, they can go pick up a copy of my book at the safehouse.com, safety and I mean. Muce's website, the safehouse.com. So it's the and then S-A-I-F.com.

You can get my book there gradually than suddenly. You can also find it for free online at the Nakamoto Institute. I believe it's Nakamoto's institute.org. So the book version of Gradually then suddenly is there. You can read the whole thing or buy the hardcover. So I point people there. For the people that already understand Bitcoin, I would highly encourage them if they're in the position to do so

to really evaluate in general the idea of accepting Bitcoin as payment. If not you, then who. It doesn't mean that you have to work with Zap right. But if you're somebody that already understands why Bitcoin will store value and with the owner-operator of a small business or you're a key person in a larger business, I really encourage you to seriously evaluate. Can I, are the tools there that exist to? today sufficient to support my business and accepting Bitcoin.

And if so, seriously consider that endeavor. If you're one of those people, please do consider us at ZapRite. You can reach out to us on the website, ZapRite.com. I'll help support all the inbound myself. So I can help get you set up or at least discuss with you the pros and cons and help you evaluate whether ZappRite would be a good tool for you. So look us up at zapright.com. If you're still trying to understand Bitcoin, check out my book.

I've also got a blog, Gradually Then Suddenly. Dot X, Y, Z. I write from time to time. I'm writing less often. But when I do, it's generally, you know, because I think that there's something important to say. So you can find me on the blog, gradually than suddenly.

dot XYZ. I'm on Twitter or X at Parker A. Lewis. If you want the physical book, the safe house, the digital version for free, Nakamoto Institute. And if you're in the game for Bitcoin payments, look us up at zapright.com. What's your end pub, Parker?

You'll have to ask a rock star, Dan. Appreciate you. Thank you very much for the time. That's amazing. And I will be there for the takeover week in March. I'll look forward to it. I'll try and do one in person then. Yeah, I look forward to hosting Austin

and very excited for the V2 of what Bitcoin did and where it goes from here. Thank you, Parker. I'll speak to you soon.