You're The Voice | by Efrat Fenigson - Ep. 97: Allen Farrington - Architecting the Monetary Endgame

Episode Date: September 23, 2025

My guest today is Allen Farrington, writer, investor, and co-founder of Axiom, a Bitcoin-focused venture capital firm backing companies that use Bitcoin as real infrastructure rather than speculation. Allen co-authored “Bitcoin is Venice” and “Only the Strong Survive” and draws on a background in math, philosophy, Austrian economics, and long-term equity investing to explain why Bitcoin is both a technological breakthrough and a venture opportunity hiding in plain sight. In this episode, he shares why he believes the most valuable startups will use Bitcoin as invisible plumbing for payments, energy, and financial services rather than marketing themselves as “Bitcoin companies.” We explore why current stablecoin systems break under real demand, how Lightning and Taproot Assets enable issuer competition and scalable payments, and why the long arc ends with e-cash and Bitcoin-native money. Allen frames Axiom’s edge as “temporal arbitrage”: investing early where technical understanding and adoption are low, anticipating that in a decade the market will recognize the value created by Bitcoin-based infrastructure.► If you got value, please like, comment, share, follow and support my work. Thank you!-- SPONSORS --→ Get your TREZOR wallet & accessories, with a 5% discount, using my code at checkout (get my discount code from the episode - yep, you’ll have to watch it): https://affil.trezor.io/SHUn → Shield your bitcoin with time-delayed transactions over multisig with BitVault: https://bit.ly/bitvault_efrat – AFFILIATES –→ Get 10% off on Augmented NAC, with the code YCXKQDK2 via this link: https://store.augmentednac.com/?via=efrat (Note, this is not medical advice and you should consult your MD)→ Watch “New Totalitarian Order” conference with Prof. Mattias Desmet & Efrat - code EFRAT for 10% off: https://efenigson.gumroad.com/l/desmet_efrat → Get a second citizenship and a plan B to relocate to another country with Expat Money, leave your details for a follow up: https://expatmoney.com/efrat → Join me in any of these upcoming events: https://www.efrat.blog/p/upcoming-events -- LINKS –Allen’s X: https://x.com/allenf32Axiom Website: https://www.axiombtc.capital/about Efrat's Twitter: https://twitter.com/efenigsonEfrat's Channels: https://linktr.ee/efenigsonWatch/listen on all platforms: https://linktr.ee/yourethevoiceSupport Efrat's work: ⁠https://www.buymeacoffee.com/efenigson   ⁠Support Efrat with Bitcoin: https://geyser.fund/project/efenigson-- CHAPTERS –00:00 - Coming Up01:12 - Introduction to Allen03:20 - Discovering Bitcoin & Career Trajectory 12:03 - Ad Break - Trezor & BitVault15:22 - Investment Philosophy & Lightning as Inspiration17:52 - Company and Investment Selection for Axiom VC30:12 - Stablecoins & Regulations37:32 - Why Most Stablecoin Systems Fail At Scale?44:50 - The Importance of Stablecoin Issuers51:16 - Stablecoins on Lightning & Taproot Assets: A New Approach1:01:23 - The Future of Digital Money: E-Cash1:05:47 - Steps to Migrate From Fiat To Bitcoin1:10:28 - Companies to Watch in the Bitcoin & Lightning Space1:16:43 - Allen Loves What He Does & Why He Does It

macroeconomics is just like Keynesian nonsense and it's all equations and they don't refer to anything it's all pseudoscience whatever but like you don't really go into enough detail on any of it i believe i introduced myself as a professional shit poster i'm just like i'm not an expert in this i don't claim to be i don't pretend to be i don't want anyone to think that i am they very self-consciously reject a lot of like financial market shenanigans that now i would blame on fiat like i would use fiat as an adjective as like an insult to describe this we're most interested in companies that are using Bitcoin as technology to do something, to create some good or service that either wouldn't be possible at all otherwise, or maybe if possible would be significantly more

expensive. Soliciting investments for securities is quite heavily regulated and I don't want to go to fiat jail. Stablecoins are, while in some key respects that are obvious to Bitcoiners, like kind of stupid and kind of bullshit, there are other respects in which they are vastly superior to FIAT. Hello and welcome to another episode of You're the Voice from Lugano, Switzerland at the Plan B Network proof of work space. I am with Alan Farrington. Hi, Alan.

Hi, Efra. How are you going? Very well. How are you? I'm very well. and thank you for joining me. Thank you for having me. Yeah, I appreciate it.

We met a year and a bit ago in Prague, I think. We did, yes. At Swietzki's get-together. And since then, I've been following you and I really like what you do. Thank you so much. I'm glad I made a good impression. You did.

Could have gone worse. You got a great sense of humor. You write really well. I actually like and enjoy reading your writing because you write in a very simple way. Like the way you write is very easy to read because it feels like you're talking. You might be the first person to ever say that.

I mean, it is long, so you need to be concentrated and read what you write. But once you start doing that, and obviously you have to stop and go research some terms if you're not familiar with them, but assuming that you are in this space and you know the kind of stuff you're talking about, you write in a simple way. Sometimes people use very high language and a little bit sophisticated.

I like the simple way in which you write. I am very thankful. I'm a bit confused. I think my detractors would be equally confused. Hopefully some of the audience isn't. Hopefully this resonates with people. People love what you have to say. I'm sure of it. Okay. So just for my audience that may not know you, I'll give a quick intro about you and then we'll jump to the questions. So Alan Farrington is a prominent writer and investor in the Bitcoin space. He co-authored Bitcoin is Venice and Only the Strong Survive. I haven't read either of them. I have to. And co-founded the venture capital firm Axiom, focused on Bitcoin-centric ventures. all right let's dive into it what personal journey led you to dedicate your career to bitcoin

oh career is an interesting one because usually i'll get asked in slightly more general terms you know like how did you find bitcoin in the first place and that story is actually kind of boring i think the career one is more interesting should i should i just tell both because it kind of bleeds into the let's do it go for it i mean not that it's boring i don't know i just feel like I've definitely heard other people's stories where they have some more obvious kind of eureka moment, if that makes sense. You know, like something happens that completely changes your perspective. And basically, I just don't have that at all. I have very, very slow burn, many different influences, and I kind of gradually tiptoe in, with the exception of then diving in

full time for work. So actually, that's kind of the end of the story anyway. And that's the more interesting part. I'll skip over the early part precisely, because I just don't think there's that much to really comment on um i first became aware of bitcoin and i see i don't even really remember the exact date i want to say something like 2013 um it's one of these ones it's funny i remember my own circumstances so like what i was a student at university and i remember you know where i was and like what year i was in and that kind of thing but i don't that's all i've got so i don't really remember it actually could have been two calendar years it was one academic year I think it was 2013. And at the time, I think the best way of describing it is I was very lucky in

my sort of combination of interests and endeavors that made me very predisposed to at least not dismissing it. I'm always hesitant when I describe this because I don't want to say like, oh, I got it right away. And I also always like to cite both the kind of the meme, but I think it originates with a really good blog post by jameson lopp which is nobody understands bitcoin and that's okay that's worth rereading from time to time like every year or so go back and reread that because it's worth staying humble in accordance with what with what jameson says and if he says it then obviously everyone else probably should say it as well um so yeah not at all that oh 2013 i just got bitcoin right away but i had a bunch of influences at the time that led me to at least take it

seriously because i think most people's stories are like they remember the first time they heard about it and they dismissed it and then they find it x many years later and it's gone up y times and then they take it seriously yeah so i at least took it seriously from the beginning so the influences led to that where i mentioned i was a student at the time i was studying math and philosophy so they are both you know in their own way lend themselves it's not like a perfect translation but it's a good starting point at least completely coincidentally i was pretty well read in Austrian economics so there's a lot to grasp onto there um even at the time there wasn't that much that what led you to Austrian economics uh so actually there that's like a

separate story within the story um I'll try not to spend too long telling it but it is actually pretty funny so I studied uh I studied economics in high school which is quite unusual in the UK at least it's not that everywhere I think maybe okay yeah I mean I can only speak from my own experience that it is something that you can choose but a lot of schools wouldn't even offer it and then even in my school hardly anybody took it um but i took it and the way that economics is typically taught especially at that like very it's it's obviously pre-university so it's very introductory there's not a lot of insight it's just kind of a a wide view of a bunch of different you know areas but but the obvious split just at the very top level is like microeconomics and

macroeconomics and if you're not going that deep into it the way that they typically break up like the content effectively is that microeconomics is really just business it's like business administration and a bit of common sense and like logic so that's all fine and then macroeconomics is just like keynesian nonsense and it's all equations and we now know that i well i didn't know at the time and that's what makes the story funny but we now know that they're just like they don't refer to anything it's all pseudoscience whatever but like none of it you don't really go into enough detail on any of it for it to be that impactful i don't think for most people at least it's like very surface level but anyway i and but they also teach it in that order that's

the interesting part so we did you know we did a little microeconomic stuff and it's basically just common sense so that was fine and then we got to the macro part and i i could just tell that something was wrong right i i couldn't articulate what exactly yeah i this is obviously this is the origin story of then having become educated enough to say why in much more detail and even before studying math at university for example um but i could just tell that like the the way they were using the math just wasn't right i couldn't really put my finger on it but something was wrong and so i told my dad about it and i'd relayed basically that story and he chuckled and then went and got off the shelf i don't actually remember which book but

a book by Mises and I think he did that as kind of like a theatrical gesture because we then did talk about it it wasn't just like go away and read this and leave me alone yeah but I do I do remember it like it worked as a gesture right um it was it was impactful and so so that was that would have been a couple years before what I was describing when when I did then find bitcoin um but that was why that was the that was the origin so I say relatively well read I wouldn't have read absolutely ever I mean even now I haven't read the entire canon but I went through kind of the classics earlier on while still in high school and then never encountered economics again in an academic setting studying math and philosophy but had that background so that again

lent itself very nicely to then not understanding but at least appreciating bitcoin the final thing i should throw in too is that the only like real job basically i'd had at that point was as a software developer so i said real as opposed to like i did all kinds of stuff in uni for minimum wage like flip burgers and park cars and that kind of like the first job that was like i could conceivably have had a career in even though i didn't uh with software engineering and i actually probably i wasn't very good at it so i could i couldn't even have had a career you and i both but i did it when i was that old and they did pay me and i did you know give them some value i think so all of these influences combined were super super helpful to not dismiss it so that's kind

of maybe that part is interesting enough that's like the very beginning then a lot of time passes where not a huge amount happens other than just like gradually inching more and more towards where we are and how like learning more about it buying some that's also important i actually didn't buy right at the start because poor student no money negative money actually uh eventually bought some that's obviously very behaviorally important i'm sure everyone watching this understands that doesn't really need that explained to them yep um i then so when i left uni i worked for a company called bailey gifford uh which is based in edinburgh which is why i then ended up living there uh very nice place very very good company interesting detail here is so there was called an

investment manager and in super layman's terms my job there and like all my colleagues jobs there is we get money from mostly pension funds they want us to invest and we invest in companies right so it's equity investment as opposed to like bonds or real estate or commodities there's a whole bunch of different things you can invest in. We invest in companies. And we can go into this in a bit more detail if you like, I guess, but I do like crediting them because they're very, very unusual within the industry for reasons that, I won't go into like a whole commercial for them, but the reasons overlap surprisingly strongly with Bitcoin. So I think that was probably an important influence as well as in their outlook on how to invest i wouldn't say it's bitcoiny i don't think

it's like there's definitely no deliberate connection with something like bitcoin but i do think describing it as austrian is maybe viable they wouldn't describe it that way but i don't think they necessarily reject it either just in the sense that they're they're very long-termist in outlook they they very self-consciously reject a lot of like financial market shenanigans that now i would blame on fiat like i would use fiat as an as an adjective as like an insult to describe this they wouldn't do that but it's easy to sort of identify them as the same thing in their minds they're they're saying you know they want to avoid these short-term noises and find long-term signal in genuinely disruptive companies whether whether that's coming from new technology new business

models whatever they don't just want you know fluctuations of repricing as shares go up and down as they are inclined to do. They want real transformation and misunderstood value that realizes itself over 10 years plus. You're the Voice is brought to you by Trezor, the original Bitcoin hardware wallet company pioneering the development of self-custody for crypto assets since 2013, empowering individuals with an open source device, enabling beginners and experts to easily and securely hold their coins. I find my Trezor super easy to use and recommend it to my friends and family. Enjoy my 5% discount on Trezor products by clicking the link in the show notes and using the code AFLAT. Self-custody is powerful, but what if someone

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go and look at Bitcoin, but that was a very almost fertile environment, if you like, to be thinking about Bitcoin anyway. And so that then finally leads up to doing it professionally. the reason i ended up doing it professionally was pretty straightforward which is that around 2021 maybe late 2020 early 21 um having been there for seven years at that point or nearly seven years um i had never had the chance to act so they they one thing we couldn't buy bitcoin there that's probably an important thing to mention at the gate because they only invest in companies right so like right when i joined unfortunately as amusing as it would have been to have bought bitcoin in 2015 and it goes up a thousand times or whatever it did um i was instead in a position

where which i think is like much more interesting on the face of it but also clearly benefited my career i had to think instead about how bitcoin would be relevant to companies that we could invest in for a long time it just wasn't at all which is also helpful just in terms of like understanding the industry spending some time basically being trained which is you know good when you're going into an industry straight out of university. So that's all fine. But by 2021,

they're finally where companies that were not only big enough, but philosophically aligned enough. So again, I don't want to become a Bailey Gifford commercial, but they're very concentrated portfolios and a very specific philosophy as to what kind of things

they want to invest in. And so, for example, minors, like publicly listed minors don't really count. exchanges could in theory count but none that we ever saw did um and so it took a while for for ones that we did want to look at um and basically as soon as i had the opportunity to look at these companies professionally as an investment analyst i was just completely hooked and to be clear i really liked my previous job i mean i did all my like uh what would you call it brand building or

like shit posting basically i've been doing that for a long time um even though i i was just i was very careful for many years to never allude to what my job really was i just didn't want to get in trouble at work so i never talked about the price of bitcoin or investing in bitcoin or anything i basically never said anything that could even possibly be misconstrued as financial advice so like everything i was shit posting about it was very kind of academic um and obviously writing as well not all entirely tongue-in-cheek um but then when i had the opportunity to look at these so i knew all the companies right and in a lot of cases the people knew who i was as well um i never had the opportunity to look at them from that professional perspective i had basically

just been like a fan via twitter um and so that was really really interesting it kind of rewarding in its own right but i think the crucial thing and my co-founder anders felt the same basically we'd known each other for a while we worked at different companies but we were looking at the same things and seeing the same trends we felt that around that time what would then become the first venture fund we did at axiom which we started in 2022 we felt that that could be done basically um i think you probably could have done it a little earlier than that and there are other bitcoin vc firms who did start up earlier but i don't think it could have been done that much earlier i think our timing was pretty good in terms of recognizing like this is and and to be

fair it's i don't know how far down this rabbit hole specifically you want to go it's basically because of lightning as in by that point lightning had grown enough not only as a technology but probably more importantly from our perspective as an ecosystem around that technology such that it kind of was it so i mean it definitely is now but even then it was kind of becoming its own sub ecosystem within the overall bitcoin space yep that you could point to and you could justify by focusing venture investment on. And so that's what we did. That then leads to Axiom.

So it's basically getting to that point was the year or so across 2020, 2021, realizing, one, I like this way more. I'm way better at this, which is hardly surprising. But also the opportunities there to actually do it. Had a co-founder who felt the same way.

And here we are. Wonderful. Obviously a lot happened in the meantime, but that's Axiom. Sure. But thank you for giving me that background, which then just has me think, what kind of companies do you find that are the best for you to invest in today? Yeah, that's a super interesting question. So we, we like to think we have a pretty specific investment philosophy, which is in part inherited from Bailey Gifford from my end, and our former employers on his end. In the sense that, you know, our goal is not to just invest in every Bitcoin company that we find. right um that said i mean even for our first fund we're in the middle of our second fund now even for the first one it's it's not been anywhere near long enough to tell whether they're successful or

not so i'm i'm i'm hesitant to name individual i mean maybe i'll name some that you know people will know just to to use it as an example in that way i'm hesitant to be like oh this one's obviously amazing i'm obviously not gonna say this one's terrible but we probably don't even know in either case yet really um but the the gist of our investment philosophy is as follows this i think you definitely will will find interesting and i can i can then go to give some examples of this um we are most interested in companies that are using bitcoin as technology to do something to create some good or service that either wouldn't be possible at all otherwise or maybe if possible would be significantly more expensive right um there's a handful of reasons we're

interested in this so as opposed to for example like number one obviously we don't do crypto you don't need that explained but you'd be surprised how many people do need to explain i say bitcoin they say crypto i say no bitcoin um no tokens either that's kind of maybe kind of obvious with the crypto overlap but there's like there's tokens of bitcoin now so worth clarifying we're not doing that either um it's pure venture you know bitcoin is the theme in way that the theme could be anything it could be biotech or sas or whatever our theme is our theme is bitcoin uh but we're very much making making venture investments um and another thing that it is kind of easier to understand i think in the negative in terms of like what we we don't really

want to invest in is companies where the connection to bitcoin is only really uh like financial exposure like they have it on their balance sheet sure and to be completely clear we have nothing whatsoever against that i think goes like for the most part companies that do that well will do tremendously well it's more a philosophical point in that we don't really think we have any particular skill in identifying that like our skill is in understanding the technology and access within the community to identify basically misvalued opportunities because so few other people understand the technology um i've described it before this might be a weirdly unhelpfully conceptual I don't know but I quite like referring to it as basically just temporal arbitrage right

so like we're arbitraging the fact that currently nobody understands this and in 10 years which is the life of the fund everyone will understand it or at least way more people are understanding not really that much needs to change in the meantime other than the people who in 10 years will realize that we were right realizing that we were right and being willing to pay us much more than what we paid now which is deliberately like I realize that makes it seem kind of crass but in way it is because i don't want it to sound more romantic yeah you're living the we are early in your life you uh you'd be amazed how often i say we are early usually is cope usually is like when something's going horribly wrong it's like don't worry guys it's because we're so early

it's because we're so so early you have no idea how right we're gonna be just not now like in this in the super long run so uh yeah so that's that's what we that's what we we think are the actual value that we're adding to our LPs is it's a combination of understanding and access that most other people don't. I don't even mean most other Bitcoinists, just like most in the entire world, most people don't have this. And the other thing too, is we don't hold Bitcoin in the fund. So that's kind of falls out of a lot of things I've mentioned so far. Just, you know, we invest in companies, we don't invest in tokens. Bitcoin is a token for what it's worth, even if you hate that framing. But for a similar reason that LPs can just do that

themselves right they don't need to be paying us to do something they can just do for free effectively and that they should and we encourage them to as well so that's kind of like rounding out a bunch of things that we don't invest in and that then narrows in on like what's left over uh or the subset of what what's left over that we do find really exciting is kind of technology plays that's where we think we're uniquely positioned to try to determine basically this like you know the the arbitrage opportunity that the the idea that something will be incredibly valuable but people don't really appreciate this yet the other interesting point though is so something that we we're not completely against this but we do i'd say we we shy away from we

tend to be pretty nervous about one way of thinking about it would just be like direct to consumer companies it's that's not quite right but it does like a lot of the things that we get be nervous about are direct to consumer the the point is really more companies where there's like another almost negative screen just see the kind of thing that we're not that interested in companies where uh the appeal of the product or service kind of relies on hyper bitcoinization like it would be an amazing idea if we had already hyper bitcoinized right but we're trying to be a more like disciplined and basically honest with ourselves about where we are in bitcoin adoption that's why we like the you know using bitcoin to do something that you don't even necessarily

need to understand bitcoin to describe that's why we find that so attractive because that only relies on bitcoin working as technology which it kind of clearly does if anything the far bigger challenge is like general education and people coming around to it. Not even mentioning price. It's like this precedes price, right? It's getting people to understand why they even need to use this in the first place. And so what gets us really excited is

if there's a company that's building something that, you know, Bitcoin is technically fundamental to how it works. Yes. But the actual service, like maybe you could know Bitcoin's involved, but you don't necessarily need to. That's really exciting for,

I think for two reasons that are kind of the flip side of each other. So one is that it suggests a massive market because you're not confined to the, like, your five friends who also like Bitcoin, right? Or however many, I don't know what the exact number is, but I would guess it's probably fewer than a million people worldwide, like, have any real understanding and appreciation of Bitcoin. You can ignore that because you're not, like, a Bitcoin company. You're a whatever. You're a payments company or you do something in capital markets or energy or whatever it is, right? like that's your market and you're just using bitcoin as a tool so that's helpful from our

perspective in terms of getting comfortable with you know this company could be really big and this will be a really good investment i'm guessing there are not many companies there's many but there's a decent amount and there's this was like the gist of what we realized in 2021 that roughly then there were starting to be a lot more again because of lightning and we invest beyond like we don't it doesn't need to be just lightning yes come some examples of this but certainly then lightning was kind of a focus and i'd say probably most of the companies that we have invested in it have at least something to do with lightning right which only really means that they have something to do with payments right like it's it's not that it's not as powerful as it sounds necessarily

once you realize that like a payment is half of every trade and if you're bitcoin centric then you're probably gonna want lightning in the mix for for at least something and what you're doing so it's not really that different from just saying bitcoin frankly um but the flip side of that point though this is where i think it gets really interesting like you you could argue that's like quite cold and calculated as like oh we want you you could even you could kind of caricature as like we want companies where you don't need like you can pretend bitcoin's not even involved and like get away with it right which we don't say that but like i would i wouldn't disagree with that with that way of of of capturing it um the flip side though is that i actually think for so

that's like kind of a cold financial take but if you had more of an ideological take if you even for the sake of argument literally didn't care about making a return on your investment you just thought of this as charity which i don't think anybody does but for the sake of argument if you did i think you would still want to back those companies as opposed to the ones that are much better suited to you know already having hyper bitcoinized because i think that's a much much better way of educating people about bitcoin if you get them using some service and they're like oh my god this is amazing like i didn't know this was even possible or i thought this was 10 times 100 times as expensive whatever and they don't even know bitcoin's involved and they just

start using it and then five years later they they someone tells them this runs on bitcoin by the way they can't like they have no way out at that point they can't continue to kid themselves that bitcoin isn't useful because they know it's useful because they've used it yeah so i'm actually quite hopeful this is obviously tangential to like our purposes to make returns for i get it We do have to abide by the fiduciary responsibility implied in point one. But point two is exciting, too. The flip side of it is quite cool. And I think it's completely real.

I think a number of our, again, probably not every single one, but a number of what turned out to be our more successful investments will perfectly embody that point in another five years, ten years. Super interesting. How many companies are in your portfolio today? Oh, I should know the exact answer. More or less 25. So we had 21 in Fund 1, which wasn't like a gimmick.

Oh really? You landed on 21 very close to Fund 1? I feel like I always need to clarify that, that that wasn't on purpose. Like it just happened. Yeah, right, Alan. And we've started deploying from Fund 2. There's some that are, there's some over, this is why I don't know the exact number. There's some overlap with Fund 1, but there's some new companies as well. So I think it's 25, might be up to 26 now. Got it. And Fund 2 still have a way to go. So like... Yeah, we've only just started.

Pitch Alan, but don't pitch him the wrong thing based on the explanation. Soliciting investments for securities is quite heavily regulated and I don't want to go to fiat jail. So I'll be careful. Cool. Tired of feeling like your freedom

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recorded and available to watch. The conference explores the psychology behind global mass processes, offering a behind-the-scenes look at science, economics, and human potential. It addresses challenging global agendas, mass formation, transhumanism, consciousness, societal change, and the path to transformation. Click the link in the show notes to access three and a half hours of exclusive presentations in-depth content and my fireside chat with professor desmond use my code afrat for 10 off i hope you find great value in it all right so let me take you to another area um let's talk a little bit about stable coins i've i've recently read your article um from april this year about stable coins which is super good

And I may put a link there in the show notes to that article. We're seeing growing momentum in the U.S. around legislating stablecoins right now. I mean, it's happened now. We've got the Genius Act passed recently. I know you're not on Twitter, but I guess you know that, right? I mean, I... You are aware of that. I am on Twitter.

I'm just... This is reflecting what we were talking about before recording, that in the past few days, I've been on Twitter less and therefore I didn't know some ridiculous British thing that they're going to sell all their Bitcoin or whatever. But I am still on Twitter. I still, I believe I introduced myself as a professional shit poster or something to that effect. You are a professional shit poster.

I can tell. So we're, so the legislation has passed in the US and some people celebrate it as regulatory clarity, while others warn that this is a backdoor to CBDCs. And I see posts like as clear as, and some of them from Bitcoiners, some of them from just freedom lovers that don't know Bitcoin, but they post stablecoins equal CBDCs. What's your take on where this leads and how should we think about stablecoins or CBDCs concern? There's a few different points I'd make.

So... And we'll dive deeper into the article. Sure, yeah, yeah, yeah. Yeah, I'll leave the article even for now. We can go deeper depending on where you're most interested. So first of all, I don't at all consider myself, like I genuinely, you know, we're joking about like not knowing

about the Rachel Reeves thing. I really don't know that much about the Genius Act. I'm aware it happened, but it's kind of- Well, I think the gist of it is that they have to hold like a full reserve of US dollars. Basically, from what I gather, it's like the US is more stablecoin friendly, more kind of crypto friendly.

in general exactly um but i'm not gonna clearly by that answer i'm not gonna claim to know that much more about it because it's really not a worthwhile investment for me of like the time to learn about this i'm honest just yeah yeah i'm not sure whose time it is worth but like it's minimally applicable to what we do day to day so just describing it as like probably positive from a regulatory almost certainly positive from a regulatory perspective it's kind of enough I mean the other thing too is that the only reason it would affect what we're doing is specifically how it affects individual companies we've invested in and I'd much rather they tell me like I'm not gonna pretend I'm not gonna do my you know my whole think boy

thing I'm like write an essay for them we're like is this what's gonna happen and then they say no I just wait for them to tell me and for for most of them it I don't think there are some that do have some exposure to this and we'll get into that because it's like the overlap with lightning that's that brings out about in the first place um so that's one point i'm just like i'm not an expert in this uh i don't claim to be i don't pretend to be i don't want anyone to think that i am um a couple other things that you you mentioned in the question um i think my like my overall attitude to it and this is this is very much the the the attitude with which i wrote the piece that you want to talk about more is to try to not be kind of

normative about it in a way like i i i see what has happened and then in particular leading to what i think will happen with taproot assets as i don't want to say predetermined i'm not like a technological determinist but that it's possible to view it without seeing it as ethically good or bad no not that not that you deny that not that you think it's neither but that you can just see it as like well this was gonna happen this is something like this was probably gonna happen and that's i think that's for me at least is you know i don't begrudge anybody else making the case that it's really bad or even really good for i haven't i haven't heard any bitcoin or say that but i'm sure somebody has that attitude um i just don't find it that interesting because i feel like

I've kind of spent all my energy on like what is uh you know on that kind of normative angle over the years on really just on like fiat in general and how horrible it is um and I don't see for me I don't see that much value like railing against this too hard and maybe one of the points I might be kind of copping out a little bit on the basis that I do actually see a positive angle for bitcoin but it's it's sort of subtle and behind the scenes and I get why people would be uncomfortable with it so that i'm sure this is exactly what we're what we're going to get into uh in terms of that development with lightning with taproot assets and yeah that's what i want to break down with you like how this leads us to a positive trajectory for bitcoin in the long run

well one other thing i did want to mention just before because i think this sets the stage nicely too for then exploring where i think is going to go again purely for technological reasons or any kind of economic reasons not so much because like oh it's a good thing or or even oh it's a bad thing and like the evil people are in charge and they're gonna make it happen but the the final thing is one of the one of the things that actually motivated me to write the piece that really doesn't have anything to do with bitcoin at all um or i guess it does in the sense that my initial bias which i think a lot of bitcoiners share is like stable coins are crypto crypto is bad and therefore i can just ignore this and it'll eventually go away because everything in

goes away because it's all bullshit so i had that for a long time but and it didn't go away and a lot of where i landed in terms of the thinking about what will happen next was basically came from trying to be a bit more serious about why it hasn't gone away rather than just being like as bullshit is going to go away sure um and so the final thing i want to mention before we then go in more detail into the pieces i would encourage people to appreciate to the extent you want to think about this at all i mean you can just avoid it and only think about bitcoin but if you do want to look at this space um i encourage you to appreciate that stable coins are uh while in some key respects that are obvious to bitcoiners like kind of stupid and kind of

bullshit there are other respects in which they are vastly superior to fiat and i think that's a gist of why they haven't gone away and why they're actually pretty popular product market they have they have a certain product mark i don't want to overplay it because again i'm skeptical of it but they do have a product market fit in ways that have nothing to do with bitcoin this is why i'm saying like you can just ignore bitcoin completely they are uh while deficient in some what i think are key ways that will be ironed out in the long run they're superior to fiat in some ways as well and that can annoy you annoy me for a long time but i'm kind of over it now so here we are yeah yeah well you know you can resist reality or you can just accept that that's the way it is

Well, I think I'd push back a little just in the sense that I think the instinct is still valuable. You should still be like, hmm, crypto. I don't know about this. I'm with you. Which actually sets up where we're going nicely. Exactly. So if we're arguing, you're arguing in your article that today's stablecoin systems are fine until they're used too much. Yeah, basically.

Right. Can you explain in plain terms why these systems breaks under real demand? Yeah. So it's basically rooted in, this is where the hunch about like, hmm, crypto, we're not so sure. This is where it comes in. That to reduce it to basically just a slogan, right? Blockchains are for money. I guess slightly more specifically something like blockchains are for a native monetary unit, right? Because you could kind of weasel out of that with like, oh, stable coins are money, but like, no, they're not. They're real world assets. If you want to get all like trad fi with the lingo, they're not, they're, they're not the native

token, but you still have Ether, Tron, Solana, whatever. So from that starting point, you, no matter what you do, if there's significant usage, you're going to bump up against the same constraints that make basically every other crypto use case kind of dumb, which you could flippantly describe as like, well, it's not money and it's not Bitcoin. Which again, I encourage people to keep that in the back of their mind, but I will attempt to flesh it out a little bit more than that. Basically, you'll always have the problem of pushing for more decentralization, creating gas fees that explode the use case or react probably in terms of like how this comes about reacting to that pushing for more centralization that destroys the rationale

for using a blockchain so i'll go through it in that order because that is typically the order it happens in so you start off you issue a bunch of tokens and you're like these are dollars right it's fine when no one's using it basically when there's not that much demand it works pretty well and it certainly works better than fiat which is how it gets traction but the more people use it this is and this is true of bitcoin by the way too but i'll leave for now the rationale like every bitcoiner said kind of knows how to explain why it's not a bad thing it's actually a good thing in bitcoin because it's it's basically just contributing to the security and you scale in other ways um but in crypto the more people use it fees go up eventually or actually pretty quickly

it becomes unusable because the the percentage of the fee as you know of the overall payment is just like totally untenable if you're half if you have to pay like even as small as ten dollars which in the scheme of like bitcoin transactions isn't that big a deal um it completely ruins this because you know if you're if you're if your obvious comparator is something like maybe credit card fees on the one hand for one type of transaction, the all-in costs of using Swift for, you know, completely other type. If it's $10, nevermind, you know, times it goes up to $50, $100, whatever. The implied transaction fee is just not tenable. And basically this, you know, this has happened in the past, not really because of stable coins, but because of

just broader crypto usage usually at the the peak of some scam bubble or other um but the point we're at now which is quite interesting and hence like the genius act and people getting all excited about it and like mainstream fintech thinking oh i need to do something with stable coins i don't think it's an unreasonable prediction that the next the next crypto bubble i don't know if you call it a bubble exactly but like the next fee spike basically will be because this massive interest in stable coins without people having thought this through properly that the more people use it the more the fees are going to go up and that makes it unusable you kind of can't win so the natural reaction to that is okay well we won't have it be like main chain ethereum or

main chain solana i'll leave tron i'll come back to tron in a second and tron's interesting because it's the most value typically it depends exactly how you define it and over what periods and so on but typically the most value settles on tron um but the reaction is okay well we'll move it to like they call it layer twos but i have to do this i'm doing inverted commas if people are just listening and can't see this um because it's there's there's effectively no such thing as a real layer two in crypto it's all like multi-sigs it's private execution environments that uh and it's not even a real multi-sig because they don't have that concept it's like multi-party compute it's a mess basically it's just like i'm trying to keep it in more like layman's terms it's

technically a mess it's it's definitionally centralized by the people who are operating the so-called layer two now the reason they do this is basically just to get away from fees right so fees come down and uh potentially there's other benefits around like you don't really get programmability benefits because the whole thing with ethereum is it's you know you can write any smart contract you want but you know maybe speed whatever um but at that point you you have to ask yourself well if you're completely reliant on whoever's like the operator of the layer two like why are you even using blockchain in the first place like what's the point of this right if this i think is speed if you want efficiency if you want yeah yeah this is what

i think is far more likely yeah exactly you should just use a database this is what i think is far more likely to happen in terms of how this all progresses that they'll first do well more likely to happen but like more likely to be the culmination of it they'll issue them all as like layer one tokens they'll have the fee thing they'll move to some ridiculous so-called but not really layer two and then the actual stakeholders in the sense of like they have a lot of money on the line will realize they should just use database like they don't need to be paying all these intermediaries because they are like the intermediaries are basically just running a database for them and periodically faking settlement on the underlying blockchain.

And so then the reason for Tron being funny is that the reason Tron has the most value, again, just roughly speaking for over most periods and most ways of defining it, Tron has the most value settled in terms of stablecoins, is that it is the blockchain that is pretending the least not to be a database. right so it's just like given up with this like oh we're a smart contracting platform you know decentralized application bullshit from 2017 they're like no we're basically just for clearing stable coins you use this if you want to but again you should be asking yourself why like why aren't you just using a database for this and so that this is you remember right back

the start of the explanation i'm like you should be suspicious about you know even okay yeah there's product market fit it's better than fiat because fiat's also just like kind of a shit database this database at least works better but it could work even better still and there's not really any reason to be paying any of these people ah it's uh it's pretty cool i like it um okay so most people think of stable coins as digital dollars what's actually going on behind the scenes when someone uses a stable coin and why does it matter who the issuer is yeah i think i mean what's going on behind the scenes is not all that interesting it's pretty straightforward it's just that they're so the the issuer i mean we as well just say tether because the vast majority of it is

tether for now at least we can come back to that though because i think that's an interesting avenue for when we get to talk about lightning uh-huh um it's it's basically like fiduciary I don't mean for this to be too jargony, but it's like fiduciary media from Tether. So it's like, you can make it a bit funnier actually and say something like, it's a promise to pay the bearer on demand this amount of dollars. But in the sense of like, you had to send Tether those dollars to get the token and then they'll do the same. So it's kind of like a fully reserved bank in a way.

So this is another reason that you could argue it's better than fiat. Yep. No, or commercial fiat banking. Yes. No commercial fiat bank is fully reserved. Except for maybe Caitlin Long, if she manages to pull it off. Yeah, I mean, that'd be amazing. But I don't think they're going to let her do it because it unravels their whole scam.

You know that she has applied for a stable coin together with another bank. Is this a more recent thing? Because I've been following one of them for years. I think it's in the last year or two. I admire her persistence. Yeah, yeah. To get her together with another state, small community bank that has a master account with the Fed, which she doesn't. So they joined forces in order to apply for a stablecoin now. This is a relatively recent development. Right, right. And I think she may get that because she's in collaboration now with another bank. Just saying.

We'll see. I mean, is that relevant to the recent political developments that I have proclaimed ignorance on? Probably. I've just interviewed her a few weeks ago and so I put that interview out there and she was talking about that too yeah so yeah I mean that's yeah what what Kaylin has been trying to do for a while is basically what Tether is has done um when you yeah full reserve commercial yeah it's basically just full reserve bank um with the the weird added quality that they um they kind of Here's one interestingly, probably relatively neutral way of putting it rather than me calling it like shit coining or something like that. They outsource the ledger to public infrastructure. So they don't have to keep track of it themselves.

They just say, here's a token. And it's like kind of a bearer instrument. It's a bit weird. And this is like back into the overlap with like, why are you even doing this on a blockchain in the first place? it's a bearer instrument in the sense that the right to reclaim the dollar from tether is with the the holder of the token but it's not a bearer instrument in the sense that it doesn't have any value otherwise it's really credit from tether so it's kind of it sort of depends what you mean by that i mean it's it's like cash in some sense it's like dollar cash yep so it's it's

as it's as much a bearer instrument as as cash is but it has a lot of the same flaws especially of fiat cash um it's actually way worse for privacy now i think i don't mean to do that yeah yeah yeah yeah comparing it to cash necessarily um but comparing it to bitcoin is really interesting because the the weird thing i mean you're asking about what happens when people transfer it um it's it's only a bearer asset so long as tether actually pays you right like and even there that's weird because they're paying you back dollars which is also like not really a bearer instrument because it's like all fiat bullshit anyway so it's very tentative like where the value is or if it even exists i think the healthier way to see this is like don't even focus so much on

the dollars don't think too hard about where there is or isn't value because a lot of that collapses into just fiat being bullshit anyway just think of it as payment rails right it's payment rails that even in spite of the issues i just described outside of them being an issue which is amusingly when not that many people are using it it's way better payment rails than most fiat not all fiat because there's all kinds of funky ways that that can work but it's clearly better in a lot of ways for a lot of use cases and that's why it's fine product market fit but there's kind of a there's a weak link in the sense that it's all there's an element of decentralization theater because ultimately you don't need a blockchain to do this right

tether could just run a database right they could not outsource the ledger to public infrastructure right they could just keep their own ledger because they sort of have to do that anyway like they i don't know the inner workings of tether but i'm sure that they even though they're outsourcing it to like these tokens exist on all these blockchains they probably keep their own ledger anyway so that they can make sure that they're redeeming properly and also maybe i'm using embarrassing cash to uh redeeming in compliance with whatever government edicts they are given like don't redeem this guy's tether because he's a baddie kind of thing and so that's where the obvious contrast to bitcoin is that and it's why you can't weasel out by saying

oh this is money on a blockchain because it's not the native token it doesn't have any endogenous value right the value is exogenous it's entirely relative to things outside this system and ultimately to the trust of the participants who are saying they will uphold that value but could just change their mind at any point and none of this applies to bitcoin so that's why it's a bit suspicious that's why it's hopefully that ties together a few things that like if you just think of it as payment rails you kind of lose a lot of this because you don't need like nobody cares really when you're talking about normal even outside of the bitcoin context just like within fiat it's sort of taken for granted like okay you're using fiat for this the only real question

here is like how much are you paying you know what's the what's the fee and what's the time for this to settle over a given rails right that's basically what you achieve with stable coins. It's just slightly better rails in some cases, but this weird decentralization theater that suggests you should just use a database instead. Got it. Okay. You described Lightning and Taproot assets as a fundamentally different approach to payments. What makes this model so powerful and how could it eventually change the way money moves globally? Okay. So this is kind of tiptoeing towards basically just using bitcoin that's what i won't be able to keep that in mind as i'm giving this

explanation i make that relatively clear i think in in the piece but i don't at all mean it as like a kind of apologetics for stable coins again it's i'm not even i'm not saying it's a good thing or a bad thing i'm saying i think this is direction it probably will go in as it happens i think that's good for bitcoin but we're a bit away from kind of understanding why um the major difference with how taproot assets works and i don't mean it's probably not a great idea to go into like super technical explanation fireworks i wouldn't be the best person to give that anyway um but just works in the sense of like what is going on even to some extent what is the user experience is that they're so they are you know they're they're tokens issued on bitcoin like they have the

same kind of peculiarity in terms of being like real world assets they have no exogenous values completely you're relying on the issuer you're trusting the issuer they're giving you like digital cash kind of yep um so you accept that as a starting point but you tap into using i won't even say bitcoin it's like using a blockchain in an actually sensible way which is to route value so this is now more specifically attacking the the payment rails piece and what i mean by this is as follows and actually i'll step back just for a second and address something i kind of skimmed over before in terms of how tether works yep that hopefully i mean i very much believe this hopefully once i give the context people will say oh that is actually

interestingly different when you do it's that great assets so yet another reason that it's sort of weird decentralization theater using blockchain for tether um and a consequence of like it may as well just be a database is that both the sender and receiver have to trust the same issuer yeah right because you're just receiving the same promise to pay and it's not at all obvious how you could ever hope to fix that i know okay maybe you think that like that's not even a problem but this actually goes back to you mentioned right at the start you know the concerns about cbdc's that i think is the major that this is why this is like the slippery slope to how it even becomes a cbdc yeah because the fact that the sender and receiver have to trust the same

issuer. This is basically like saying in fiat world, you know, even though the rails are conceivably better, like we've covered that at length now, in fiat world, everyone would have to use the same bank, right? Which is just, it's like, that just doesn't happen. That's kind of weird. Like nobody even thinks that way. You think you, you can pay someone no matter what bank they use. It's just a question of like, again, it's fees and time, right? It's like, this is the essence of payment rails. Payment rails are basically between different banks. That's ultimately why we care about them because if we use the same bank they just relabel their ledger and it's nothing so that's actually a really helpful framing to thinking about the weirdness

of tether it's like if you're just given you have to use the same bank and all it really means to to send uh you know to have a payment between two people who are using the same bank is to relabel a ledger why is any of this public why isn't it just their private database why are they doing the what i'm describing as outsourcing it to public infrastructure with the privacy headaches more important well sorry i shouldn't say more importantly more relevant to our discussion to the costs because fees are going to spike if too many people use it you don't have that problem if you're using the database the fact of their the fact of the decentralization part kind of being a lark the need for payment rails kind of being a lark because everybody's trusting the

issuer this is basically what's addressed by the taproot asset design so they're tapping into what you know a blockchain is actually for which is settling real value and they're pushing it a bit further by actually making it operate over lightning which is especially cool because that's you know basically instant or is pretty much literally instant um and a very very small fee and what this unlocks it still is you know you go to all the caveats it's still bearer instrument it's still fiat even you're still trusting the issuer but the sender and receiver can now trust different issuers that is really really cool i guess from the start again i'm saying from totally get why bitcoiners would just be like

don't care using bitcoin don't want to use a bank don't use any of this that's fine if your starting point though is recognizing stable coins have clear product market fit i think you should care about this quite a lot because one you can get actual competition in the issuer space rather than currently it's basically i don't know the exact stats as of right now but i want to say it's something like 80 of the issuance is tether 19 is uh usdc which is basically just a regulatory we carve out because tether is not allowed to operate in the u.s if it wasn't you know government threats tether would be 99 and then one percent is everybody else combined and this is basically the reason because again i don't want to repeat all the same reasoning but like you have to trust

the same issuers everybody has to use the same issue in in that technical paradigm the tabloid assets paradigm basically solves every one of these problems other than that you're still using fiat but even that is something we can do because this is why i'm excited about the direction it's going in i see the whole thing as effectively a trojan horse for bitcoin because you yank the payment rails onto lightning you give people a means of issuing stable coins that are just as good as crypto based stable coins on everything that they are actually good at on everything they're better than fiat at but are also way better on all the things that the crypto ones fail at which is that they're they actually the cost issue is kind of like nicely the inverse

in that time-read assets are going to be the most financially difficult when, like right now, basically, when they're first starting, the more and more people use them, the cheaper they're going to get. So there's a bootstrapping problem, which I don't pretend to know how to solve or how Lightning Labs and Tether and so on are going to solve it. But if they do and they get sufficient volume, every additional user becomes cheaper for the network as a whole,

whereas in crypto, every additional user becomes more expensive. It becomes cheaper because of the volume? Basically, yeah. Because the demand grows. The fact of it riding over Lightning means you don't have this gas issue. And I mean, sorry, the full explanation is probably not worth going into. People will recognize what I'm talking about if they've looked into this, but it's to do with how the payments are routed. You're more likely to find a route successfully through the Bitcoin denominated part, which is Lightning in the middle of the payment.

you're more likely to find that successfully the more issuers there are because it's basically the more endpoints on the on the bank i realize that isn't actually an explanation it's probably not worth going into a more detailed explanation um but it will get more useful the more people use it uh so it's better on cost um but the the issuer thing i think is really really interesting because it means that you can actually there can be competition there like there can be so it really opens the door for other stablecoins to step in and... Well, other issuers. I think that's the really interesting point, that it means that we don't all have to use Tether. Like, to the extent that, you know, you're worried about that

centralization vector, this is a technical paradigm within which there can be unlimited issues. I mean, there's probably a natural cap in terms of, like, how many dollars even exist and so on, but it's not at all obvious what it is. Or it could be thousands, tens of thousands, hundreds of thousands of different issuers. We don't really have any idea how this is even going to evolve. But I think it's fairly obvious that it's better than there just being one, basically. It's much healthier from basically every perspective. I mean, it probably doesn't even need explaining.

But even some of the subtler issues around like privacy, for example. you so for example you could have a you could have a version of tether that basically nobody even knows who runs it which would clearly be better than than what we have now and it runs purely on reputation say that's not possible there's no way that could ever have happened in crypto because of that kind of market dynamic so that i think is the first reason to be excited about this potentially moving to lightning okay um which i'd also i'd go a bit further no i wouldn't say potentially, I think it will happen. It's just a question of, in the previous answer I gave before we were talking about taproot assets, how much of that headache in crypto needs to be

internalized by everybody realizing that actually taproot assets is the superior way to do this. Yeah, I mean, this is forward thinking. I don't think everyone will see what you're talking about now as the clear pathway to the evolvement of this space some bitcoiners will some crypto people will most crypto people won't because they have a vested interest in denying this or or not recognizing it exists in the first place and they're the ones who unfortunately have the attention of broader fintech who are now edging in and i forget exactly how i put it in the piece but i made some joke about like they're gonna spend five years and however many billion dollars working this out.

Yeah. That's back to my temporal arbitrage. We figured it out now. So eventually we'll sell them our companies. We're so early. Yeah, we're so early. All right. You end your argument in the article

by introducing e-cash. Yes. For someone who's never heard of it, what is e-cash and why might it be the most private scalable form of digital money we've ever seen? um i similarly don't think it's worth trying to give a technical explanation because you'll get into all kinds of like cryptography gibberish yeah um i think it's probably fine to just say

that it's the most private form of digital money just say trust me bro like yeah trust me well but no but don't trust me like trust the math right like look at the math convince yourself this works yeah go check out on ecash it's one thing i will say i'll give like slightly more technical detail it's um when you make a e-cash transfer uh it is still a uh it's a credit instrument ultimately it has it doesn't need to be a stable coin i mean it can be it can be anything it kind of i struggle to think of it making much sense as the denomination being something other than money but like you could you could do it um it's credit from the from the issuer from the the they call it a mint but it's basically a bank yeah it's a it's a fully ideally

fully reserved bank um when you make a transfer the bank has to sign off on it like you need their participation but they don't know anything about the transfer the only thing that they know is that you're allowed to make it and so they're basically co-signing like this is valid and it's it's kind obviously in their interest to not sign when it's not valid and to sign when it is valid so it's you've got to be careful because it's still a it's still credit right it's still like fiduciary media and the assumption would be that you know if the denomination of the e-cash is in bitcoin which we'll get to eventually because then we're talking about stable coins now that the mint holds bitcoin right like you you get the e-cash in the first place by sending them real bitcoin and then

they give you you know fiduciary media of bitcoin in the stable coin scheme it's arguably you know even more straightforward at least in terms of what we're used to like you send them dollars or it's the same processes with stablecoin issuance except you're now what you're getting the kind of uh what you call it like the the digital manifestation is not a token on a blockchain anymore it's it's literally just data it's it's data that you if you want to say custody i don't know if that's exactly the right way of putting it but it lives on your you know the device from which you intend to spend it um and you spend it with a cooperation at the minute um that's probably about as much as you need to know but the key point that i introduced there

is it isn't a token on a blockchain so so that's that's the key part in terms of where i think it's going overall that you know i mentioned when introducing taproot assets that that paradigm is far far more sensible in terms of uh hijacking the payment rails as like now we're using blockchains for a more sensible reason which is that we are actually settling value like between different counterparties this is like an instant settlement this is just what lightning is right we're just used to denominating into bitcoin we're not used to talking about it in a stablecoin context real instant settlement of value and it just so happens that the people at the edges are deciding to denominate it in dollars or whatever um so you're you're using a blockchain there for

something that it is actually for but you still have the token that's kind of floating around for reasons you might be dubious about and so my hunch as to where this all goes and this is now probably quite a long time in the future but once we yank everybody onto lightning as the rails you're then in a position to make the final leap and like literally just cut the blockchain component i mean other than the lightning part but cut the uh the layer one non-native money token just cut it out altogether because there's like a minor technical detail but basically as long as your e-cash scheme has some concept of hash locking you can interoperate it with lightning which actually uh cashew does which is probably your audience knows what that is so it'll work it could

work today uh there are actually there are people doing this today it's just my prediction is that for the broader market it's gonna have to go through these phases so phase one is everyone gets decided by stable coins they try to do them on crypto and it breaks then they discover tab root assets we yank all the rails onto lightning but we still have the stupid tokens and they step three is we finally realized that actually even that's an unnecessary cost it may as well be ecash because it works the same way and then we land there uh and then i guess the final step is like this is all on bitcoin now it should just be bitcoin so then you swap out the dollar ecash for bitcoin ecash and then we've hyper bitcoinized yay happy ending yeah and they

lives happily ever after and that's probably what's your bet it's gonna take a decade or what so i don't know but timing is way longer than that i mean yeah i really is this complete finger in the air but yeah so phase one i'm just making up these phases yes yes yes yes phase phase one is uh fintech discovers stable coins i don't know like well it's happening it's happening now yeah when does it end five years probably like one crypto cycle will that'll be when they learn but then how long before they change anything five to ten years um phase two we yank them onto tabloid assets that'll probably start to happen soon but it'll be like in earnest it requires crypto failing so starts in five to ten years ends i have no idea yeah and then phase

three where we yanked them onto e-cash i have no idea and then phase four where we yank them onto bitcoin i have no idea let's hope we're live by the time that i have yeah hopefully i'm still around right that'd be good all right um it'd be exciting to actually witness all i know i know we can listen to this podcast again exactly that's what i was about to say if it does all come true we can always put this podcast but it's okay it's okay though we'll do so first here it's okay because as bitcoiners we have an exceptionally low time preference see what i mean by the way about this being cope right like we're so early so if in 20 years this still hasn't happened yet it's fine right got another 30 years right low time preference right right right it's true we're

so early i would never say this in our old age right i would we're so early i would never imagine that i'd sit here doing a podcast on something that is so i mean you can see it so clearly obviously i have to like i can you know lag behind you and try to understand what you mean but but you can see it so clearly for something that is so revolutionary and and could really change the way people handle money in the long term and we're talking about it as if as it has already happened because technologically it can already happen tomorrow morning like this stuff is there it's just that that's what i'm saying i already saw i saw a nostril the other day literally the final stage of this people are playing around with this now yeah so yeah

it's unbelievable i forget what it is obviously talking about the same thing i forget exactly what context i brought it in up in earlier um oh no i tell you what it was it was about it wasn't the same thing it wasn't stable coins it was talking about axiom investments in our philosophy yes yes yes that um if you can get the bitcoin component to just be off skated away then not that you have to but like if you can it's actually kind of exciting because this is exactly what i've just described with the sable coins and some of our portfolio companies that are there's not that many that are directly connected to it but some are i think hopefully going to be kind of key infrastructure and all this more more just because they're key

infrastructure in lightning but everybody in lightning benefits if this if this happens um for a while they'll be able to get away with like not really talking about bitcoin that much they're just like fintechs and they're just making payment rails better which is very sneaky it's i can see why bitcoiners wouldn't like that that's the hijacking part yeah exactly we're hijacking the rails so that in like in the like stablecoin centric context we're hijacking the payment rails we're putting them on lightning in the more general context i described before this is like a great way of onboarding people like you imagine if this actually happens and then i know i give you a ridiculous time frame of like between five years and never

but five years after that you you get people to realize like oh shit this is all worked because of bitcoin like that's a great way to orange bill absolutely it's an amazing way to orange bill Absolutely. And so, you know, in that context, which are some of the companies that you think we should be paying attention to in the next few years? Some could be from your funds, I mean, in your portfolio. I'll probably just mention some that actually relate directly to this. So the one that immediately comes to mind is Voltage. People probably know who that is. I mean, again, it's not... Well, don't assume. My audience, they may not. Well, it exemplifies a lot of what I described of what we like in that it's very, it's not at all, you know, direct to consumer. It's very kind of R&D centric. It's kind of cutting edge infrastructure development.

So, yeah, I guess on that basis, maybe people haven't heard of it. But I think it will be, you know, I kind of flippantly referred to like, oh, we'll see what Lightning Labs does. We'll see what Tether does. I think Voltage is probably the third most important company in getting tampered assets to work. And actually, for what it's worth, when we invested in Voltage, there was no such thing as, like, we invested in them as a, you know, foundational lightning infrastructure company. And it just so happens because of the way Taproot Assets works, it's likely to be pretty instrumental in enabling people to use it. So that's a good one. Another one that I'm stretching it a little bit here.

We can come back and focus a bit more on Stablecoin specifically if you want, or like any part of that, that whole thesis. um but arc labs is something i'm really really excited about this is going to sound like i'm massively changing the subject but like for the audience arc is a much more novel uh basically we'll hear to protocol it's like similar to lightning but different in interesting ways uh it's only a little over two years old as an idea there's only really two companies as far as i'm aware of directly working on it arc labs is one of them we've invested in them um so i mean it's interesting for a whole host of reasons that are more like i don't know less commercial more like technical r&d scaling is cool blah blah blah the reason i

thought of it now though is that something they actually demonstrated pretty recently is i'm going to skip over like masses of technical details here but they can uh basically they figured out a way to manipulate taproot assets also in their layer too so you can think of arc that's like super high level and not at all informative but it's like it's a way of moving bitcoin off chain similar to lightning it can interact with lightning in kind of interesting ways and basically if somebody has issued a taproot asset uh the obvious assumption being that you want they want it to be able to be sent back and forth over lightning you can also send back and forth over ARK. So that could potentially be super relevant to this too. To the extent

that stablecoins take off as tampering assets, I would expect ARK, the protocol, ARK Labs, the company to be pretty heavily involved in basically commercializing that, like making it more user friendly for businesses. Cool. So ARK Labs, Voltage, any other ones that we should have on our radar? I can give super interesting examples of basically ones that have very little to do with or like nothing to do with what we've talked about so far. I'm just thinking that like, you know, I mentioned at the start that this is kind of quite niche within Bitcoin. Like it's, I mean, it doesn't really exist at all within Bitcoin right now. So the ones that are most obviously

going to impact it are the ones that are basically what I described voltages, like core lightning infrastructure i do think though that if it starts to take off probably every lightning company benefits to to some or other extent because we basically just need a lot more liquidity on lightning in order to actually facilitate this that's kind of tied in with the point again i'm not gonna explain this in too much detail but i mentioned before uh the bootstrapping phase is going to be the most difficult for for tablet assets at all and it's going to get cheaper and after yeah hitting some kind of critical threshold um is basically the same the same point as that uh that the the reason part of the reason for that again without really explaining it is uh

there's significantly more there's like orders of magnitude more value in currently issued stable coins on crypto than there is in lightning full stop never mind you know how people might want to use it for stable coins rather than for bitcoin so that will need to go up significantly in order for the kind of leakage to start to happen um but once it does probably any not even infrastructure like i think voltage is pretty solidly an infrastructure company but just lightning payments company and we have a whole bunch of them so we have there's a rattle off a few like ibex and you're familiar with them uh get bit in india uh coin corner has a lot of this they're primarily in exchange but they've been pioneering a lot of um a lot of lightning work going back

years and years now uh who else neutron in vietnam southeast asia muskets a super interesting one too they're maybe a bit more removed from what we're talking about but they're basically they're tackling merchant acceptance of bitcoin and it's just it if you get that then it is probably pretty obvious how it sort of falls out of this that if tabooed assets works even i mean there's some overlap there with arc potentially as well it's it's very much in musket's interest to enable their merchants to accept these stable coins as well as as well as normal fiat as well as bitcoin as well as lightning etc so yeah i mean there's knock-on effects for probably anybody that's building on lightning it's more or less direct in the sense that voltage is going to directly

facilitate it musk is just going to benefit from it but it probably touches everything it's uh it's exciting wow this space is amazing dude wow and that's the only stuff that i can like just off the top of your head go out my way to make the case will have something to do with stable coins there's loads it just won't at all yeah it sounds like you love what you do i do you enjoy it yeah you get up in the morning and you're like i mean i kind of skipped over that i i alluded to it very briefly but just at the very beginning describing my background that i really liked my previous job right yeah in no way it sounds like in no way at all did i like rage quit because i'm like sick of trad fire or anything uh which i get like a lot of people do that and obviously i don't if

you hate your job obviously you should like you should probably quit anyway but you should certainly quit to work in bitcoin but just to emphasize that that's not what happened to me it was entirely a pull and not a push it was you know before i was describing it more in terms of like this is commercially viable yep that was an important realization because it doesn't really make sense to do it if it's not but it's just so much more rewarding and so much more interesting there's probably obvious why but like in hindsight i maybe didn't even appreciate that enough of the time i think at the time it was more kind of cynically driven as to like oh we could like this could be a cool business i don't know there's anything wrong with that but i

definitely didn't appreciate then as much as i do now how much more interesting more fun it is for sure so in that kind of space and with you doing the amazing work you do and thank god people like you exist where do you draw inspiration aspiration hope from oh just like completely in general no yeah because this is I mean you're obviously passionate about what you do and it gives you a lot of motivation and drive a lot of fuel in your life and i'm just curious about what drives you in general because you know this is one of my favorite questions in the end of my podcast normally to ask people what gives them that spark that motivation that aspiration to keep going honestly i'm kind of wary of just giving a cringy answer of like fix the money fix the world like

but like is i don't it's not that it's just like not original it's not cringe but it's Who cares that it's not a regional? Well, I want to give a more interesting answer. You know what? This is, everybody who works in Bitcoin has some element of that, for sure. It just wouldn't make sense not to, because it's too stressful. It's too stressful to do it purely for how much money you might make, say. At least in terms of anybody I've ever met.

I don't think anyone's ever told me, like, I don't give a shit about fixing the money. I just want to make a lot of money. No one's ever said that to me. So kind of have to acknowledge that. Well, I have to acknowledge that it is true and it definitely applies to me, but also that it's hopelessly unoriginal. So I'm now trying to think of a better answer or at least a more interesting answer, not a better one. um, something that did come to mind, actually, this was like, this is maybe a little bit cringy as well, but I think I'm, I think I'm uniquely positioned to give this answer. Whereas I'm not at all for the previous one that I, the main reason I like what I do so much, this is going back to you, what you commented on just a moment ago is, and especially relative to my previous

job where in my previous job, which again, I did really like basically what I did all day was think about how companies work. And I was very privileged to also have access to a lot of the people at these companies, like unusually so for how big and, you know, big in terms of like value, but also, you know, revenue, say sales employees, like every, every measure of it. We're basically talking about the biggest companies in the world. So a lot of people would find that really, really appealing and I really enjoyed it. But the major difference now is the companies I speak to are many many orders of magnitude smaller but they're doing something that i find intrinsically much more interesting yeah so just to i mean it'd probably apply to any company i mentioned so

far but like the fact that i can talk to the founders of arc labs or voltage or musket i can just do that and in fact i have to do that it's not just i can't do that it's like it's actually i have a fiduciary responsibility to do that that's awesome and that and it inspires me as well like that's that's the part that is by far the most rewarding part is like having an excuse to be that close to what's happening also giving a mind that i'm nowhere near technical enough to do it myself so this is why i'm like when you're saying thank god you're doing this i'm just like i can't help but laugh at that because anybody could do it like seriously no i'm gonna believe Do you really think that?

No, not many people can do what you do. There's a far lower bar to contributing the way I'm contributing relative to the people I just mentioned that I get to interact with. Fair enough. I'll take that. Okay. But don't be so modest. It's just true. It's not modest.

Okay, I can argue with you on that, but I won't do that. i i truly humbly appreciate your um your level of complexity of thinking you go very deep and thank you and you can keep a trail of thought man you do it well you do well i'm not sure that's true it is true okay you followed it so that's good i did i lose myself sometimes and and and you're great and i i really appreciate your think boy hat keep doing that online sorry i lost my voice as well you can edit this out right people don't know but before this you gave what a two hour three hour i went way over because right so you did almost a three hour class for the students of plan b network so you have an excuse for losing your voice this and that and then we went to lunch

and then we went to lunch all that for ordering a cappuccino right so people need to know that We're in Switzerland, but technically I think we're in Italy because everyone around us is Italian and they speak Italian and the restaurants we go to are Italian and the waiters are Italian. And Alan just asks randomly before his main dish comes in for a cappuccino with milk. And all the Italians around the table go, I can specify with milk.

With milk, of course. I'm kind of tired. It's not even an espresso. I just talked for three hours. I want to perk up a bit. And they go, are you kidding us? What are you doing? What is this cappuccino?

We need high cultural standards. And I think because of you, next year, they're going to add to the curriculum some guidelines on how you should behave in Lugano. They should. Right? I would have gone to that class. Because that was a big no-no. But they like you, so you're lucky. This is the note we're concluding on.

With my sincere apologies to everybody from Plan B. For insulting you with my request for cappuccino. All Italians, I guess, while we're at it. The whole world. It was the CEO of ArcLabs, by the way, who started the pilot. Outrageously. Given he is an Italian. They all went around the table.

Shame, shame, shame, shame. So anyway, yeah, I lost my voice. Sorry about that. I forgive you. We forgive you. Thank you so much for the valuable information. and for sharing yourself so generously here. Thank you.

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