Projects
![]()
No projects found
Investors
New
DAO Treasuries
DATs
Lend / Borrow APRs
Chains
Categories
Spaces
WILL BITCOIN DOMINATE THE NEXT CYCLE?#CryptoTownHall
Recorded: June 29, 2023 Duration: 1:23:51Space Recording
Short Summary
The discussion highlights the potential approval of a Bitcoin ETF as a major trend, the launch of EDX Markets as a new project backed by major financial institutions, and innovations in asset tokenization. There is also a focus on the growth of Bitcoin's dominance and developer interest, as well as trends in institutional capital movement and the potential impact of regulatory environments.
Full Transcription
Good morning, everyone, or afternoon evening, depending on where you are.
I'm so excited for today's panel.
This is like the friends and family, friends and family group that we've got up here.
I love to see all these faces up here and looking forward really to this conversation.
Obviously, we're still getting everybody up on stage.
So as we do that, we'll bear through it.
Ran and Mario, again, as it's been this week, will be in and out there.
Filming killer whales with Scaramucci and friends out in Los Angeles.
It's like a shark tank show for crypto.
So it's 720 in the morning for them, and I've heard that they've been putting in like 14 to 16 hour days recording this show.
Pretty much.
Pretty cool, though. It looks like I think the set is the Batcave from the last Batman where he keeps all his equipment and toys.
So it looks pretty awesome. I can't wait for them to give us the full download on that.
So just getting everyone, like I said, up on stage.
First, just order of business here, you guys may have noticed we had it up yesterday.
Crypto underscore Town Hall.
Crypto underscore Town Hall is going to be the account in the future that we're going to be hosting these crypto town halls from.
And so just encourage everybody to follow that account.
We'll probably get it up on stage here in a bit.
going to take quite a while, you know, a few weeks probably before we actually move over there,
but we want to get everyone following it so that they'll be able to be alerted when we have the Cryptotown Halls starting.
So just give that account of follow. I'll probably mention it again later.
So today is kind of one of those days where there's not a massive...
breaking news cycle, which are, to be quite frank, my favorite days. I really like having the deeper
conversations about what's happening in the space and what's important and not necessarily
being distracted by the next shiny thing that flies by and we forget about a day later, which
has obviously been the case. I mean, the market...
It's been up slightly a bit today.
Bitcoin's up about 1.3% all coins kind of seemingly sideways.
But I don't think that's the story.
I think what we want to get into today more is what the next cycles are likely to look like if this time is different.
Obviously, we're seeing a huge focus right now.
on Bitcoin and I think sort of a dismissiveness about a lot of the rest of the space.
There are people who certainly believe that will continue.
And then I think there's a lot of people who say this time is not different.
We'll just see the same normal cycle where there's a focus on Bitcoin.
And then it sort of flows elsewhere.
And we see all of these other things building.
And so I want to really dig into that with today's panel.
James Safer, I know we only have you here probably for like 15 minutes and you've become the king of the ETF conversation in crypto over here.
Do you think that the ETF, I mean, to your knowledge, assuming that we maybe get an approval, which you guys are putting at 50-50, I mean, do you think that that really puts a massive focus on the Bitcoin side of things for the crypto space moving forward?
Yeah, so one thing I've been saying is, one, I do think it puts more of a focus on Bitcoin, but also the one thing I have been saying is if the SEC and Gensler are going to give ground anywhere in the crypto, digital asset, whatever you call it, ecosystem, I think it's likely going to at least start, if not.
finish maybe even at Bitcoin because it's the one area where it's been discussed on this panel
extensively. It's the one area where against or doesn't claim it to be security and he will name it as
a commodity and say it's basically out of his wheelhouse. So I think things will heavily focus on Bitcoin going forward.
Obviously, I can spew my own personal opinions in the space, but I really do agree with the fact that it would be mostly Bitcoin.
And I don't think initially, if you asked me a couple years ago, I would have said that Bitcoin will come first.
And then it would probably be not long behind maybe a year or two that we'd see things like Ethereum and some other products, get ETFs.
But now I think it could be much longer than that.
Who knows, things have changed quick.
If you asked me a couple months ago,
I would have said the odds of getting a spot Bitcoin ETF in 2023 were 5% or less.
So things can change quickly.
But I have changed my opinion from the idea that Ethereum and other things will come shortly after on the trad-fi side of things.
For example, I would have assumed, and I wrote this,
in 2021 that I thought Ethereum futures were next just because we already have them on the CME.
But it looks like the SEC and Gensler put a line in the sand and basically are saying the only thing they're even remotely somewhat comfortable with.
And that's a very iffy statement is the Bitcoin side of things.
Yeah.
Yeah, I think that's pretty clear. What I find that interesting is that obviously we have this launch of EDX markets that has been the talk of the town, which is the exchange that's backed by Citadel, Fidelity, and Charles Schwab. They're offering four assets, right, which is Bitcoin, Ethereum, Bitcoin Cash, and Lightcoin. And the argument there, obviously, is that those are the four that have said.
somewhat been clarified as commodities. Clearly not in Gensler's eyes at this point, even though he
did once give the speech that people famously keep referring back to where he said those four are
definitely a commodity. So you don't think that with Schwab fidelity and Citadel offering trading
of Ethereum that it could get an ETF sooner than we think?
I mean, it's obviously possible.
I mean, the SEC, like, if we think, if we take one of my scenarios is that I would, like I said, they're changing their tune possibly on the spot Bitcoin market.
So it wouldn't be impossible for them to change their tune elsewhere.
Also, we...
Honestly, I think we're not going to have an answer until we see a lot more play out in the Coinbase and Binance lawsuits, particularly Coinbase.
So I think a lot of this is going to play out in the courts because it looks like from the current stance of the SEC and Gary Gensler, you know.
it's not going to be decided very clearly whether or not those are going to be allowed.
Obviously, the CFTC would consider those to be commodities.
There's, as you mentioned, Gary Gensler in the past has said those are commodities.
But for whatever reason, he has been very rigid in the stance that now he's not willing to say those things.
So...
I mean, first of all, we got to see if this spot pick when UTF happens.
Like there's still a decent chance that it doesn't actually happen in August.
Right.
Even at the end of February.
So then I think after that, we can come back and see, like, if they approve or deny what –
honestly i'd be most interested in seeing the language so these reports often end up being like
a hundred pages long and oftentimes it's like a few a footnote here or there or like some
specific language that i read through and i find and i'm like that's interesting um so like when
they approved the the bitcoin futures etf under the 19b4 process like the most interesting part of it
to me was they basically said and i've said this on these spaces before was the reason they
approved it is because the cm e bitcoin futures market is a market of regulated significant size
with respect to the CME futures market.
So basically with respect to itself,
which is just like ridiculous in my view as a reason,
but it was a way for them to get around and say,
we're approving this,
but we're not going to prove spot Bitcoin.
I mean,
it all comes back to Gary and the SEC and,
they kind of like, it very much looks like,
and I'm not a lawyer,
but it very much looks like they come up with a decision
and then try to figure out a way to use the law,
to back into that decision.
So it really comes down to like what's in Gary's brain
and what's in the SEC's brain and what they want to do.
And like I said, he's a political animal.
If he's looking at losses, potentially in ripple, obviously,
but also as we think in Grayscale,
He could be looking for a fig leaf to cover up and say, like, I wasn't wrong and basically
make those decisions illegitimate. So it's completely political, as I'm pretty sure multiple
people that are speakers here would say the same thing. So it's going to be very interesting
to watch. But if you talk to a lot of other people in my world, they don't think this is going
to happen just because of how avid and against this, Gary Gensland's and the SEC have been.
I just think there's a lot of other circumstantial evidence that that,
that points to the fact that they might loosen a little bit on Bitcoin and Bitcoin alone.
Yeah, I mean, there's two massive data points in both direction, right?
I mean, you have BlackRock that's 575 out of 576 on approvals,
but then you have a 0% hit rate on anyone trying to get a Bitcoin spot ETF.
So it's going to be interesting.
One of those has to give ground, obviously.
Dave, go ahead.
Yeah, I mean...
What you just said, it was very, very important, James.
I think that this gives him, at least in terms of the ARC ETF and the BlackRock ETF and other rumored ones,
it gives him the chance to take a win and seriously, you know, claim politically that he's taking a win.
His argument could easily be.
Listen, you know, we've been waiting, we've been pushing the industry to give us a surveillance sharing agreement.
This is the first time we're getting it.
This is exactly what we've been asking for.
Look how great we are.
We're playing.
difference. I mean, it's a rhetorical device. We all know that. You use the word fig leaf.
Good example. But the truth is, is that he's kind of besieged these days. And, you know,
we've heard from multiple Democrats, from Democratic lobbyists even, that they're sharpening the knives.
And so the ability to take a win is something that is kind of important, right? You know, and,
and he could be sharpening the knives against Gensler. Yeah.
There are a lot of people who were...
Yeah.
I mean, it wouldn't happen immediately.
It would happen in the changeover running up to a next administration if they win again, I don't think, unless something really horrible happens.
But the reality is, is it literally gives him an opportunity to say this, our policy, this is what we've been waiting for all along.
And don't underestimate that because, as you've said, if he truly is a political animal, and I don't know Gary well enough to understand what his motivations are.
But if that is true, you know, as a computer scientist would say, and if then else, if that is what he is, then in this case, the smart move.
And he's not done.
The smart move would be to say, hey, this is what we want it.
Yeah, go ahead.
Greg.
Hey, good morning, guys.
Great discussion.
This is Foss from Canada, where we do have a spot-based ETF for Bitcoin approved, as well
as some other digital assets.
But having experience in the square.
My odds are somewhat higher than James's odds, which is to say I'm higher than 50-50, that Black Rock gets approved.
And one of the things I can share with you is the pricing mechanism and the creation redemption process that BlackRock is proposing is exactly mirroring a spot ETF in Canada by the name of evolve.
My good friend and CIO and C.O.O. at Evolve, who is responsible for that pricing mechanism and lack of slippage or basis risk between the spot ETF and the actual...
pricing of Bitcoin and closing price of Bitcoin has a very detailed explanation that,
Scott, I'll share with you because I'm not smart enough to figure out how to share it with
the Nest. But it was a podcast that I was on. And it's a 10 minute clip of that podcast as to why
the functionality in the podcast.
plumbing of the Black Rock Spot ETF, in my opinion, is second to none in North America
with respect to the risk management and the manipulation or lack of ability to manipulate
spot prices in Bitcoin.
So I'll go on the record as saying I'm higher than James.
I appreciate that it's always a probabilities curve.
but certain people within the industry in Canada certainly,
and this is only Canada,
are giving it as high as a 90% chance.
Now this is Canada.
We live in your attic risk free.
I'm not going to tell you guys how to regulate your markets.
but a lot of people in the know give it quite a high likelihood of success just based on the plumbing
and the actual operations of running a spot-based Bitcoin ETF.
Over to you guys.
Thanks for having me.
Yeah, I mean, we've seen that that's the thing is there's so much precedent for this being
done in other parts of the world.
It's not like the United States would be the first.
We have these products or similar ones in South America, Canada, in Europe.
Eric, go ahead.
I saw you lifting your mic.
Yeah, in prior rejections, the SEC has strongly intimated that their concern was that the exchanges that generated the spot prices were not trustworthy and manipulated.
And so that was like the basis for their rejection in most cases.
And I think that, you know, this new EBX exchange would, you know, if they think that this exchange has more credibility than the other exchanges that they rejected in the past, I think that would be kind of what allows them to approve it in the new world here.
Yeah, I think that that makes a lot of a sense.
What I find, go ahead, Hong, I see you want to speak.
Yeah, so I just want to, I just came back from Switzerland from a conference where a lot of the institutional customers, banks, and regulators were there.
One thing I just want to know, I cannot, it's hard for me to opine on the possibility of VTF being approved in U.S. or not.
My personal vote is, you know, it's probably going to be hard unless there is some change in the, in the, in the,
people who are overlooking and approving the ETF.
However, one thing I would note is that, you know,
the crypto market is a part of the capital markets as well
when it comes to marketplace.
And what we have been seen is that a lot of the customers
on the institutional side are moving people,
moving their capital over out of the U.S.
And we have been also, as an exchange, talking to
various banks in different jurisdictions.
And one of the interesting line that I got from one of the banks in Europe this time during my trip
is that they basically say to me, quote, end quote,
we can provide a euro banking route.
We will be providing banking route in Asia currency or Middle East currency,
but we're not touching USD.
So I think that is a very interesting thing that is happening as well, regardless of what is going to happen with the ETF approval in US.
Because I think for institutions where they do make their own investment from a macro perspective, they will find a way to invest.
And when they look at the risk...
assessment of various cryptocurrency, I think Bitcoin is probably going to score pretty high on the list.
Yeah, Hong, I want to stay with you for a minute here. First of all, am I going to see you in
London next week by any chance? I don't know. I'm going to see you all too bad. I'm looking forward to
see you and everybody out there. Next time. Awesome. Awesome. But I
Obviously, listen, so you operate both OKCoyne and OKX as CEO and president, respectively.
You probably have more insight into the challenges here of operating in the United States,
but also maybe the advantages or challenges beyond.
So with all that's been happening in the last few weeks, even outside of the ETF,
How have you been able to navigate that and how do you approach it?
And what's the situation in the United States right now in your eyes trying to operate in exchange?
I mean, there's a lot of people saying the SEC doesn't even have the jurisdiction to regulate an exchange in the United States.
And Gensler's even said that in the past.
Yeah, so I think when it comes to exchange operation, there are two aspects.
One is the regulatory aspect, and then the other part is operational aspect.
On the regulatory side, our stance has always been that whatever regulatory landscape changes, however it changes.
We will take a very proactive and transparency perspective, and we have very proactive conversations
with various regulators in different jurisdictions.
We pursue licenses where we see fit.
The US is always a, despite all the challenges, seeing what is playing out there between
Coinbase and SEC, I still have very high hope for what is high.
possible in this land because I think there is a legal infrastructure and framework where we
can fight for what is right.
So we are committed here, but at the same time we are pursuing licenses in various other
jurisdictions where, for example, EU, we have been there for three years and will continue
to build our license mix there.
Asia, obviously you see Hong Kong and Singapore and others coming up.
And Middle East is inevitably a very...
high profile contender for the quote unquote crypto hub from a regulatory perspective.
So I think all regulators are thinking about it, but obviously there is different stands,
different level of sophistication from different regulators.
So I think that is interesting.
From our perspective, we have always been...
you know, taking the transparency stand instead of, you know, hiding things where we're trying to bypass.
I think it is what it is.
We will just have to make it work.
Operational side, I think there are considerable challenges for the overall industry.
I think the most notable challenge is obviously banking routes.
Actually, for the rest of the world, I think the banking industry is tackling it.
Different banks are trying to grab market share and developing that relationship with exchanges
that are credible, that have good marks, so to speak, with regulators.
On the US side, there are challenges, obviously, because the larger banks are probably more
risk or worse.
And then for those who...
probably wants to be more proactive in taking on crypto currency.
There are precedents that basically add a little bit more a hurdle in their decision-making process.
So I think things will play out a little bit, but in US probably takes a little more time.
So just a period of pain before we finally get some clarity, it sounds like, is sort of the consensus.
Yeah, I think that makes perfect sense. Jerry, I saw you hand up.
Yeah, thank you, Scott.
Thank you for the invite.
Long time listening or first time caller, as they say.
I'm busy building and trying to ignore the cycle, but I'd like to answer both questions based on what I've seen.
In terms of the ETF approval, given the political nature of this, I think it's just a question of when, not if.
and the likelihood it's likely going to happen after the election, I would say.
But you also made a point about the structure of the market in the next bull run.
I don't think structurally anything actually changes.
I think that if a Bitcoin ETF gets approved, more liquidity will flow into Bitcoin and it'll probably get more dominance.
But liquidity still flows between all the coins in the market. Bitcoin is always king.
And so I believe that once it gets approved, more institutional money comes in and it's better for the entire market.
I don't disagree.
So, yeah, I guess back to the original question, will Bitcoin dominate the next cycle?
It's the title here.
Do you think that this time will be different?
Like I said, we've sort of seen these narratives before.
Bitcoin dominates on the way early into a cycle and then it kind of ends up flowing and then it loses the narrative for a while.
But, you know, I think an ETF is...
A very, very compelling argument for Bitcoin to solidify its role here.
Anyone can feel free to jump in.
I mean, I can just share my own thoughts endlessly.
Foss, you've got to have thoughts on that.
100%.
Well, look, guys, I'm a...
30-year veteran of risk markets.
And if I didn't have an opinion, that wouldn't be appropriate.
So my opinion is that Bitcoin solves my biggest concern, which is the Fiat Ponzi.
I am not against other digital assets, but I...
encourage people to understand the difference between decentralized Bitcoin blockchain, excuse me,
decentralized blockchains versus centralized blockchains. At the end of the day, I'm very
concerned with the Fiat system and Bitcoin is the only digital asset that provides insurance
on the Fiat Ponzi. So I believe that Bitcoin dominance will continue.
It is your insurance policy.
I like to think of it as a credit default swap on a basket of fiat currencies.
And everybody needs that insurance.
Do other alt coins come along for the ride?
Bitcoin does not care.
And neither does Greg Foss.
It's an open market.
Please understand what you own.
But I own Bitcoin because of my concern over the Fiat Ponzi.
Full stop.
And that's all I can say.
Thanks.
Lex, I was hoping you were going to raise your hand.
I think it's great.
It's great to hear so much support for Bitcoin.
And I share that support, but I don't see any reason why, I don't see any good reason why this cycle wouldn't be different in the sense of,
you know, people generate capital gains out of Bitcoin, and then that flows into reinvestment into other stuff.
And then while there's some interesting technical kind of steps that have been taken on the Bitcoin side from
from ordinals to more programmability, you know, the things going on closer to the Ethereum ecosystem
around the software are really fascinating.
I mean, like legitimate breakthroughs in scalability and privacy, I'm seeing so much stuff around
the ZK space.
I'm seeing a lot of really interesting developments around...
creating chains that are custom built for applications, as well as figuring out ways to bring in developers to use software languages that aren't specific to any chain, but then can be repackaged and wrapped in a ZK execution environment and then anchored to chains.
So I think stuff like that is really important for...
continuing to move the space along from like an engagement perspective, from an application perspective, challenging the companies that focus on data, challenging some of the AI themes that are coming out.
that that is orthogonal to the Bitcoin thesis, right?
It's not about Fiat.
It is about technological advance.
And I mean, for me, that's the stuff that that's really exciting to watch because the promises that people have made about what the software can do are really coming to fruition.
I tend to agree. Dean, you have probably been around longer than any of us in this space for the one.
He doesn't know, Dean, he's about his OG a cryptographer in this space as you can get.
So I would really love your perspective here.
here. Thank you. Yeah, I'm definitely the technologist that wandered in off the street here.
So, so following up on what Jerry and Lex said, you know, from my perspective and for what I've
seen as a builder in the space and as someone who's thought about it and thought about what we
could do with smart contracts and what we could do with, you know, programmable money, um,
To me, Bitcoin is like gold, right?
You want this underlying asset that grows in value that people can lock up and provide a, you know, anchoring financial thing, you know, reserve to lean on.
But value is created by creating new mechanisms for humans to interact and do things.
And so the beginning of the cycle, you grow your asset base, so, you know, the foundation
so that you can build these new kinds of ways for people to cooperate,
these new financial instruments,
these improved efficiencies or different ways of,
I mean,
there's this great financial stuff of different ways of leveraging,
but there's also the places where it leaks into parts of the economy,
like the creator economy or as it moves into much more,
late stage economic things
like freight and chain of custody
for freight,
all of those are what at the enormous new value
and they're from a technologist's perspective
they are the driver for why we build this stuff
and the early relatively simple
but you know
but deeply important financial instruments
you know are the groundwork for that future
of of improving our ability to do
everything else in our life besides just the finances
Sorry, my mic wasn't working there.
I love that.
Eric, I saw you had your hand up to follow up.
Yeah, sure.
So I think at the first level, um,
thing to consider here is ambiguity versus clarity. And I think Bitcoin has gotten a lot of clarity
in the recent regulatory environment, not named in any of these, you know, actions from the SEC.
Bitcoin is kind of has a little bit of a clear sailing situation, whereas ambiguity has been
thrown at a lot of the other digital assets by Gensler saying their securities, things
getting delisted, etc. So,
The second order effective that is there's a lot of developer talent
that kind of drives the digital asset industry,
and they've been building things on other chains for various reasons,
and some of those chains are getting called into question now.
And we're seeing a lot of money get raised and a lot of developer talent,
you know,
looking to see if they can build some other things on the Bitcoin blockchain
because it's got a better chance of sticking around.
So, you know, I...
I think in the short term, it looks like Bitcoin is going to get a disproportionate amount of the incoming money and love here, especially if an VTF gets approved.
And I, you know, I would just take a little bit of exception with some of the prior comments.
I think people underestimate...
just how much money can flow into a good store of value.
I think the value proposition that Bitcoin is going after
is quite literally hundreds of trillions of dollars.
Even gold alone, right, like 10 trillion plus
would be 500,000 per Bitcoin.
And some of the other cool technological things
are kind of technological equity investments,
not that things like Google and Facebook and Apple
aren't awesome investment opportunities.
But I wouldn't,
underestimate just being a nice simple store of value that works in the digital age.
Eric, I love the point that you brought up about people sort of returning to Bitcoin to build now,
because that's been one of the huge narratives. Obviously, we've seen it with ordinals and BRC 20s and a lot of that, but
It seems that there are a lot of people now focusing on building things on Bitcoin that already exist elsewhere.
The question then becomes why to do that.
Well, Hong, I saw you had your hand up, but you can go ahead and then we can circle back to that question.
Sorry, I, it was hard for me to put my hands down.
I try to find where to put it down.
It's okay, I'd rather you go and then we can move on after.
Thank you, thank you.
Yeah, so I agree with a lot of the speakers who have said, which is basically, you know,
when you look at the crypto market cycles, it's essentially a narrative playing out,
a narrative, different narratives playing out over time and being validated over time.
And,
And the reason that crypto has been keen in the previous cycles is that Bitcoin has been keen in the previous cycles is that Bitcoin has a very clear value proposition.
In Turkey, for example, we have been building in Turkey in the last few months and we are going to launch an office in Turkey.
post the highly anticipated election within one week, the local currency depreciated 20%.
So in that type of economy, there is very hard a way for the people to find alternatives
other than, say, USD and Bitcoin, or in crypto market, maybe USDT or USDC.
So I think that has been very established over the last few cycles.
The other side is obviously developers and builders who are building the alternative, so to speak, altcoins.
And there has always been also a debate within Bitcoin community in terms of how to think of Bitcoin,
whether it's just a store of value and is that enough or do we want to actually build Bitcoin
a new world on top of Bitcoin in terms of second layer, in terms of BRC20.
So I think there is a very interesting debate there.
From my perspective, I actually have been saying this during 2020 when the Bitcoin was going through a bull cycle there.
When we see a lot of institutional money coming in,
particularly with the anticipated ETF being approved,
spot ETAF being approved for Bitcoin.
On the one hand, you know, I think there is a lot of anticipation of,
okay, the Bitcoin is going to move.
There's going to be a larger adoption from the institutional side.
However, my instinct is also question mark.
Before we actually have a solid,
entrepreneurial ground for Bitcoin on top of Bitcoin where we actually can leverage on the security, on the non-changeability of Bitcoin, on the smartness and the decentralized nature of Bitcoin network.
before we can utilize that to use for things beyond store of value.
And when we have institutional money flowing in,
and there is a very high risk of it being wall streetized,
you know, over-financialized,
where Bitcoin is becoming an annotation in the larger financial market.
where the original hope of actually seeing a more decentralized world is more remote from us.
So from my personal perspective, I do have that concern.
And there is a divided me inside where on the one hand I do want to see more regulatory clarity from SEC on the ETF.
But on the other side, I also think that it's not necessarily a bad thing when we have a prolonged cycle for approval of such a thing because it gives the developer more time to actually develop and build.
I agree with that 100%.
Yeah, I agree.
I think all of us are split, right?
Because we know that it's good probably for price and mainstream adoption to have things like a BlackRock ETF.
But I think the true like Bitcoins inside of all of us desires for our incumbents to be the winners of that and for people to move to self-custody and to use the assets for the original ethos.
Go ahead, Jerry.
Yeah, I mean...
There's a point I think we need to stress is that these blockchains are not just digital
assets, they're also digital network.
So right behind clarity around ETFs, there may also be clarity around stable coins.
Now if that happens, and Scott, you mentioned this many times before, probably the only other
use case in our industry that's actually gotten a product market fit are stable coins.
If that clarity comes through, that benefits the smart contract platforms like Ethereum, Tron, and others.
So I think that you have to, the digital asset side, I think Bitcoin is king.
I think a lot of us came into the space because of Bitcoin.
But I think the blockchain and the asset associated the blockchain that will accrue the most value, ultimately, will be the one that garners the largest adoption.
Right.
and we don't know which one that is yet.
There may be yet another killer use case that comes up
that does get the billion users,
and then whichever blockchain hosts that use case
will accrue that value.
So it's not just one thing, it's many things.
And I love the analogy of that blockchains are countries or cities.
It's not just one angle you have to look at these things from.
It just so happens that right now,
there isn't much real world adoption of the blockchain space.
Well, when that happens, I think there'll be a shakeup.
Right. I think some people would argue that simply holding Bitcoin is that adoption, but I hear you and agree with you.
Go ahead, James. I know you probably got to go soon. So jump in.
Yeah, I actually took care of some of that stuff already.
But I was going to say part of the other problem here is you can't deny the,
I know everyone wants the crypto innovators to win,
but you can't deny also that a lot of the crypto innovators have been fraudsters, scammers.
There's been an attraction of a lot of...
very not so great people to the industry.
Part of it is because they get rich quick scheme
and the fact that things have become so profitable.
So there's a lot of bad looks and incompetence in the space,
and that's why I think it's leading to openings
for TradFi and other companies to come in
and really take some meaningful market share in the space.
Obviously, this is only the very beginning,
but you can't deny the...
the bad things and bad actors in the space and there's been a lot of them over the last few years.
I agree.
Go ahead.
Hey, guys, Scott, thanks for having me.
I got to jump at a quick statement.
I'm not a technologist, but I play one on TV, right?
So you have the trilemma between decentralization, security, and scalability.
And you can have two but never three on a blockchain.
Think about that and remember that's why Bitcoin, that's why decentralization, that's
why not your keys, not your coins.
But...
What does the Black Rock ETF bring to the world?
Very simply, from someone who's managed money their whole life, it brings a QSIP.
And when internal systems are set up in an institutional portfolio that revolves around a QSIP identifier of any asset in your book,
It simplifies your life immeasurably.
So I don't like to think of Bitcoin as digital gold,
although you can't think of it that way.
I think of Bitcoin as digital energy.
And that's where it blows the minds of people
who have an ESG narrative that was largely 50.
formed by BlackRock that Bitcoin is bad for the environment. No, Bitcoin is actually very good for the
environment and a Black Rock approval of a Bitcoin ETF knocks the ESG narrative against Bitcoin
down a few pegs. So this is very positive. I am very happy to be involved in Bitcoin ETFs in
Canada. I think they increase on-ramps.
I agree though that ultimately not your keys, not your coins, that's not a true Bitcoiner.
But for the Ontario Teachers Pension Plan and all of the plans in Canada that can benefit from exposure to Bitcoin for the benefits of their stakeholders,
Gosh, I'm so happy that a Black Rock QSIP will exist for a Bitcoin spot ETF and not a futures-based
ETF where they bleed theta or time value.
Thanks for having me, Scott.
I got to run.
You guys are brilliant.
Eric, shout out to you and give our buddy, Mr. Sailor, a good hug for me.
Okay?
Thanks, everyone.
Love you from Canada.
Yeah.
Forget that, Eric. Just have micro strategy sent each of us on the panel, one Bitcoin.
We've heard of right now.
Yeah, that'll happen.
Okay, okay, maybe not. I guess not. Go ahead, Dean.
I just wanted to, I really like that, you know, it's energy rather than gold.
I wanted to clarify that kind of the key thing, when Bitcoin first came out, I was not excited about it.
Because, you know, we worked on cybercash.
We worked on various other, you know, money schemes or worked with them.
And here's this thing that it's not fast, it's not anonymous, you know, and it's not, you know, it's not integrated anything.
It just didn't have any of the flavors we wanted from money.
right but it has this wonderful ability to be this energy source you know and or you know
this foundation you can do all these other things on that was the way in which it's like gold not
not not didn't want to compare the value the key thing about digital stuff is we can keep making
more of it whereas gold is you know you have to dig it up so um so i like the energy analogy
and i'm going to chew on that song
But, so listen, I want to talk to you about what I was bringing up before.
Obviously, we're seeing a lot of things built on Bitcoin.
You've been building here for ages, you know, since literally the very beginning.
But you are building things that are not on Bitcoin now.
Absolutely.
After seeing what was possible with each blockchain, you're effectively building your own, correct?
It leverages proof of stake from Cosmos, but it is our own blockchain, yeah.
Right. So why have you chosen to do that? And do you think that you'll then bridge back to Bitcoin or that you'll go back to build on Bitcoin? What I'm interested in here is that we're seeing so many things that were built elsewhere now going back to being built on Bitcoin. And I'm trying to get to why. And if that's going to be successful, if there's a reason for that.
So it will be interesting to see how that works.
I think it will be successful, partly because Bitcoin will be the first mover in the next wave, if you will, because it, for good infrastructure reasons, it typically has been.
But it doesn't have speed of transactions.
It doesn't have fast finality.
It doesn't have privacy.
It doesn't have many things.
it deeply suffers from that trilemma.
From a technologist's point of view, zero knowledge technology, for example, is one of the things that cuts through the so-called trilemma.
So I think there's plenty of ability to do things elsewhere that cannot be done on Bitcoin.
As we find some key use cases, especially as they find product market fit,
it will be worth it to find a way to anchor them back to Bitcoin, right?
NFTs for images don't move around very fast, right?
I'm not trying to do chain of custody with an NFT,
where the NFT is a bill of lading that needs to be private,
and it's being handed off from one driver to another as a package moves,
but it would raise world GDP by 5%.
That's a big number, but it's a long way to get there.
You're never going to get that on Bitcoin.
So I think there's a lot of value in a lot of the continuing innovation so we can get to the much richer digital economy that I think when people look back from there, you know, we're really still at the very, very early stages of what all this technology can do.
I mean, Lex, do you think that these things need to be built on Bitcoin?
Yeah, I see you're actually, we're putting your hand up as I said that.
Yeah.
Yeah, I got a hop too, so I'll try to keep it brief.
But I think, you know, I would love to see a world where Bitcoin is used for the purchasing of the many digital assets and many digital objects, which are built on...
smart contracts platforms that focus on, you know, performance,
scalability, security, the ability to have lots and lots of different role-ups.
I mean, it's sort of, you can't cram that stuff in, right?
It's not, it's not, that's not the point of the things.
And that's okay.
I think a good outcome is to say like,
the utility and value of Bitcoin is, yes, absorb the fiat demand.
But it's also, you know, apply it for the demand that's being generated in crypto and in digital goods.
So I think these things are additive.
I think Ethereum and the technologies around it, you know, and I guess the thing I would say is that Ethereum to me is likely to eat all of the technological advancements of CODIC.
cosmos and the rest, the way that they've been able to incorporate proof of stake, and
you know, the way that roll-ups are kind of mirroring the many chains and kind of that you
could set up in other ecosystems.
So I do think you'll have a winner-take-all for the smart contract stuff, and then you'll
have a winner-take-all for the asset that's being used to buy this, and it would be fantastic
more bitcoins were participating in the web three economy using their assets and kind of creating more
utility from that so bitcoin could be the base currency of web three it it's already important to web three
i i don't remember the number off the top of my head but you know i think it's five to twenty billion
wrapped bitcoin on on eath at the height of the last cycle you know so there was there was a meaningful amount of
it but
You know, ETH being used as a staking asset as generating real interest rates.
You know, I think it'll benefit the Bitcoin ecosystem to think about how it can be applied as one of the payment processing options inside of Web3.
Lex, I'm going to let you leave in one second, but I have to ask you that.
Have you seen anything compelling for actually bridging Bitcoin between these other chains then?
Look, I don't think there's a difference between an ETF and wrap Bitcoin.
I mean, an ETF wraps Bitcoin in legal documents and integrates them into the traditional
wealth management system, right, portfolio management, all the stuff we talked about.
Similarly, wrapping Bitcoin and having that be a token on Ethereum does the same thing.
It just turns it into a standard that can be used in that ecosystem.
So I think it's...
I think there are solutions, but there's probably cultural, cultural barriers in the same way that, like,
If I want to hold Bitcoin directly and I don't really care for the ETF and I don't care what the Ethereum people think.
But if I want the value of Bitcoin to go up, you need it to have more demand.
And if you want more demand, that's going to come from the places where people are.
And the places where people are in the fiat economy, in the Web 3 economy.
And so I think that's how I would think about it.
Really interesting. I think of the short term, it's very clear that a black rock ETF would be more demand than probably in the Web 3 economy. But I could see down the road if we really see major development in that side that it could become a serious player in there. Dean, go ahead.
To me, you know, about your sort of a question about, is it the ultimate payment mechanism?
And I think because of the characteristics of it, it really isn't.
But it seems like the ultimate collateral.
And that's how I see a lot of these platforms thinking about bringing RAPBTC into Cosmos,
bringing RAPBTC into these different ecosystems, is as that.
collateral so that you can, you know, have it underpin other financial activity, have the people who are holding on to that collateral, you know, turn it into stable that they can use to engage in more complex financial arrangements. And, and, you know, that's a lot of energy.
Right, Eric.
Yeah, I would add, I think we just need, like, to kind of frame the orders of magnitude here of opportunity.
You know, just think about the size of a massively successful technology company, a Google and Apple, you know, kind of thing.
We're talking about a trillion to two trillion dollars.
And then think about that very simple value proposition of an entire country,
currency going to shit like a turkey uh Venezuela Argentina Brazil all these countries
right where you know trillions and trillions you know tens of trillions if not hundreds of
trillions of dollars are going to be looking for a home any of those sovereign debt fiat
derivatives that have interest rates that aren't keeping pace with like the real inflation rate
those are locking in a loss so there is
an unbelievably massive value proposition to just hold Bitcoin as a store value. Even gold is not
like really holding its own particularly well. So I think you got to first look at it in that
context of value proposition and just realize that Bitcoin ETF or not, the demand
for Bitcoin globally is extraordinary.
There's 180 currencies in the world.
I mean, ask yourself, you know, 30 years from now,
how many of those currencies are still going to exist?
I think it's like probably half of them.
And where's that money going to go?
Right. I mean, boring doesn't mean small, right?
Exactly.
I think everybody who just wants to innovate and continue to iterate,
but at the base use case, there was a reason that Bitcoin was created,
and that hasn't changed.
Yeah, gold's pretty boring, but it's bigger than big tech.
Yeah.
Yeah, absolutely. Tom Dunleavy, I saw you. We brought you up. You were requesting. I always love to have you up here. So I'm sure you request it because you have something to say.
Yeah, sorry, it's been a wide ranging discussion so far.
One point I think we haven't really made yet is Bitcoin because of its economic weight is the biggest settlement layer.
So they'll always be a natural interest to try to build things on it. But...
You know, Ethereum has really had the weight of developers.
I would push back on the comments from a few others that say there's more building on Bitcoin than other ecosystems,
because from what I'm seeing, it's more people are still building on Solana, people are still building on Cosmos,
people are still building on Ethereum because of the programmability and the sort of the money moving through those networks today.
Bitcoin is really, really powerful as a store of value.
And I always want to push back on...
people who say we need to be a lot more than that because it is a huge use case.
It is a huge TAM.
If it can just be this one pristine thing,
I think it really just helps solidify that in the minds of everyday investors, right?
If they know that one, two, three percent of my portfolio can be invested in digital gold and that digital gold is Bitcoin.
And I don't have to worry about it being,
oh, maybe a tech asset or maybe potentially some kind of technology company or whatever.
Right.
I think it sort of muddies the message when we try to do other things with Bitcoin.
So really just trying to solidify that the next cycle, I think, is really important just for Bitcoin and accruing more value.
Go ahead, Bruce.
Yeah, I mean, this is an interesting thing.
I've thought about this for a long time, kind of the...
you know, what chain to build on.
You know, I'm not that technical.
And, you know, when I got in this space, you know,
early on and wanted to build other things,
I just kind of looked at it as a layman and said,
to me, it seems like the strongest chain is a good place to build.
You know, it's just one less thing to worry about.
You know, this space...
You know, especially those who survived a long time in it, know that this space is just completely crazy, and it's always chaotic and there's always problems. And it's very, very challenging to be an entrepreneur in this space because there's always some kind of crazy chaos coming along. So, you know, my thought is like,
It's, you know, what I want to avoid as an entrepreneur is I want to avoid calls at 2 a.m. that ruin my life.
You know, I want to avoid like, you know, I'm friends with Phil Potter and he was C.O. of FitFenex.
And I remember, you know, he was on chats just like this on Discord right when they got hacked.
And, you know, the misery in his voice, I'm like, I don't ever want to deal with that.
So, you know, the idea of, you know, having customer, you know, I don't hold customer assets because I don't want to get hacked.
And I don't want to be on a chain where I get a call at 2 in the morning or I wake up and say, oh, boy, the chain broke and, you know, this kind of thing.
So it's less likely with Bitcoin.
You know, certainly Ethereum has shown that they...
you know, they have a lot of stability and they've built, you know, something very big.
But, you know, I think one of the best criticisms of Ethereum that I've heard came from Adam Back,
where he said that, you know, they've embraced the internet motto of move fast and break things,
which worked well with the internet because it just encouraged people to put on the gas and, you know,
okay, things break, but you keep moving. And you can fix them, you know, with a website, you know,
okay, your JavaScript breaks, okay, okay, you fix it.
But in the financial world, you don't want things to break.
And there's been some things like polka dot and other things, you know, that more stuff has probably broken around Ethereum.
But in defense of Ethereum, I'd say that they've been more, you know, open to encouraging building, which is a really good thing.
One of the weaknesses, I would prefer to build on Bitcoin.
You know, I'm passionate.
Most people know I'm really passionate about it.
digital securities, which is the, you know, that's the $100 trillion opportunity.
BlackRock is talking about that just like they're talking about Bitcoin.
For a billion reasons I could get into, it's time to modernize that.
And the old security system is based on like 70-year-old technology.
It's going to move to a digital world where you can move securities across borders
and move them quicker and everything else.
So this is going to be tokenized.
It's a real thing with a real use case.
And it solves for a real problem.
And it's going to be built on some chain.
You know, I think Bitcoiners should be more welcoming.
Because it's interesting, you know, a lot of Bitcoiners are like, hey, anything can be built on Bitcoin.
And then they'll also say, oh, everything is junk.
You know, for Bitcoin to be the chain that succeeds, it has to, ironically, go against what's a lot of the Bitcoin ethos of, you know, junk coins and other things.
And it has to embrace everything.
And if Bitcoin succeeds at being a truly, it has to be permissionless.
So if Bitcoin succeeds at being this layer, it will have scams and it will have junk and it will have NFT booms that are, you know, being, you know, well.
way too high priced and this kind of thing.
Otherwise, you should encourage it to be built on Ethereum,
because securities is a multi-trillion dollar market,
and even something as small as online collectibles,
I think is a $22 billion market.
So even just collectibles and art is a big thing.
So I want to see this stuff built on Bitcoin, but I'm open to other chains.
I like Lex's theory that maybe you have Bitcoin as the money and these other chains.
But one way or another, Bitcoiners should recognize this stuff is going to get built.
It's going to get built somewhere.
Maybe Bitcoin's the best chain for it.
Maybe not.
I don't know.
But you're talking, so I just want to be clear for people listening, because I know we have an audience that's not so deep down this rabbit hole.
We're talking about tokenizing real world assets.
Right.
And you hinted to the fact that BlackRock has talked about it.
That's one of the more underreported stories is that in BlackRock's, Larry Fink, specifically, investor letter in March, he talked extensively about the future of, you know, the financial system being tokenized and effectively on blockchains.
Like think about, you know, you tokenize your stocks, so rather than having to wait 48 hours for them to clear and do it through a broker, you can transact directly with a tokenized version of these securities.
Bruce, I'm assuming that's the direction you're going here.
Yeah, yeah, it's a really, really big deal.
And, you know, I've said this before, but nobody should underestimate the size and importance of BlackRock.
You know, somebody commented, they said, well, how can BlackRock catch Grayscale?
They already have a billion.
And that just shows like anybody in the financial world would laugh at that.
Like it is inconceivable how huge they are and how little a billion dollars.
A billion dollars is less than one...
1,500th of their money.
BlackRock made a billion dollars while you were making that comment about Black Rock.
Exactly. Exactly.
Literally.
But let me talk on this securities thing because it's really, really important.
It's the biggest story in the world and in this space, in my opinion, other than money.
So my thought is Bitcoin is really, really good.
for solving this problem of trusted parties and kind of a variation of what's called the Byzantine General's dilemma, which is sort of how do you, you can look it up, for those who don't know, I know you know, Scott, but, you know, how you get, how you can deliver information in an untrusted environment. Okay. So it's really, really good for knowing what's true.
and not having to rely on anybody.
So you can say, here's my money and I know it's real.
There are a lot of things that that technology isn't useful for,
you know, like whatever, any goofy idea that people throw blockchain on,
you know, dog training on the blockchain or ice cream on the blockchain or whatever.
Securities, it does work and it does make sense because there is a ledger problem.
Forget about securities being centralized.
They are centralized.
But the ledger is also centralized with a third party.
So currently today, when you buy Apple stock or something like that, Apple doesn't have a cap table like a startup does that says you own it.
It's done for public companies like Apple and Facebook and Google and Microsoft, all of them, 100% of all public companies in the United States, all clear through this big, goofy, complex, clunky, stupid system that has been built. It was originally built in 1934 and 35 and has been iterated on.
By the 50s, it kind of went through a big, you know, capacity issue.
By the 60s, it had a really, really bad capacity issue.
They were trying to, they used to have these shares in paper.
Okay, so they had bicycle messengers that would drive all around Wall Street and deliver.
At the end of the day, they'd say, okay, you know, Bear Stearns sold 10,000 shares of IBM,
and Merrill Lynch bought 9,000 shares.
We're going to settle up with the 1,000 shares difference.
put it on a bicycle messenger and he's going to drive across town.
So that system became so clunky that 90% of the firms, New York Stock Exchange firms, in the 60s failed.
The whole market was going to collapse.
They didn't know how to save the stock market.
It was completely dismal.
It was a big, big, bare market.
They ended up having to close the exchanges on Wednesdays just to try and reconcile.
They started closing early.
They'd close the markets at two just to try and catch up with all these goofy piles of certificates that were around.
Right.
So to solve this, they came up with this thing called street name.
They said, hey, let's make a new organization.
We pile all these certificates in this one place.
And we'll trust it out.
Long story short, that issue failed later.
And then, you know, by the 90s, we have what's called the current street name system.
So when you buy stocks in the United States, you actually have a claim on a claim on a claim.
And all the money is ultimately held by DTCC.
And then it's held in this street name ownership of this group called CD and Co.
CEDE, you can look it up.
CED and Co is the actual beneficial owner,
and this has been held up in court,
of all securities.
If you think you own Apple stock,
you don't own Apple stock.
You own a claim.
Suppose you have it at Schwab.
You have a claim on Schwab.
Schwab has a claim on DTCC.
And,
and then DTCC has a claim on CD income.
It's actually more goofy and complex than that.
But the bottom line is it's this big gunk, gunky, goofy ledger, and nobody even knows what they have.
That's why you're able to short more AMC and GME than exist.
And that's why Dole Foods, when they got acquired, they had a million more shareholders than they thought because people own shares that they didn't even, you know, the company didn't know what they had.
It's a big mess and it is solved by a distributed ledger.
Distributed ledger specifically solves for this trusted party.
When I send you a light coin or an ape or an Ethereum ERC 20 token or a Bitcoin,
you know for sure that you got it without verifying it from anybody else.
You know, when somebody sends money from Coinbase to Cracken,
if you send IBM shares from Merrill Lynch to Morgan Stanley,
that has to be verified by this big, goofy, clunky system and it takes days.
When I send you like coin, you don't need a big goofy clunky system.
You can look on the blockchain, and whether you like the asset or not, you all agree.
I mean, even the biggest hater knows that an ERC20 token is real.
And it could be the worst token, but we all agree that it exists.
And that solves this problem of trusted third parties.
And it's a really, really, really big deal.
If we can solve that for securities, we can make stocks work better.
And stocks are the backbone of the entire global economy.
They're just as important, if not more important than cash.
So money is a big deal.
Bitcoin is a great application, but securities are right up there.
I mean, it is the mother of everything.
Every business from your local hot dog stand to Microsoft, they're all securities.
And if we can make them work better, we'll improve capital formation.
We'll improve the way startups work.
We'll...
tear down borders so that you can start buying stocks in other countries.
You can, there's no reason I shouldn't be able to send anybody on this call a share of Microsoft on their phone.
Why not? We have the technology. I can send you an ERC. It's inevitable. It will happen. It has to happen.
Gen Z is going to demand it. The current systems are based on this goofy old paper system going back decades.
It's going to be a big deal and it's going to be really, really good for the world.
Just like when the first stock it was invented in 1694 or whatever,
Dutch East India Company, that changed the world. This will change the world. It's a really,
really big deal what Black Rock is doing. Bruce, what a masterclass. That was awesome.
It's almost like we should have you up here every day. We're really weird.
Tom, I end one of your tweets above in The Nest, which says the market for on-chain asset
tokenization is $5 trillion. Where do you get that number? And obviously that makes Bruce's case
even more compelling.
Yeah, Professor Bruce, that was fantastic. I feel like I have I got a certificate after that. So that was awesome. Thank you. Yeah, I just want to provide a little more context here. So when we say real world assets, I think it's sort of a nebulous term. So that's government bonds on chain, corporate bonds on chain. Equity is as Bruce was just saying, fractionalize real estate.
And the benefits of that are clear.
There's more liquidity, accessibility, faster settlement, lower costs, all the things we understand sort of blockchains give us.
But trying to size that opportunity is really, really hard for most people.
So what I shared here is a report from Bernstein, you know, a really big outfit who did the numbers here.
Looking at the overall opportunity, we're talking $700 trillion, which is, you know,
it's hard to even say, right?
And taking, you know, just a percentage of that, one percent, a half a percent, right?
You get to an enormous market size that you can put on chain for these assets.
And, you know, the benefits, again, are just very, very obvious.
So if we even assume a small amount of adoption, you're going to see this asset class grow exponentially.
Yeah, we'd melt them on and she was talking about much bigger numbers even than $5 trillion.
So it's pretty massive.
Dave and Jerry, both of you.
Dave, go ahead, then Jerry.
Sorry, Jerry saw you had your hand up.
But Dave, go ahead, then Jerry.
Okay.
Yeah, I sum up Bruce's, you know, excellent soliloquy as the world needs a digital financial system and we are stuck in an analog one.
And the narrative that we should all be pushing when you talk regulation or anything else should be to foment that.
But there's a couple of things that are really important here to, you know, in terms of differences and the arguments I made to like my friend Larry Tab to why everything Bruce said is true.
First, the ability to trade true multi-currency.
You know, in the U.S. we take for granted everything's in the dollar.
But that's not really true.
The fact is U.S. investors want to invest in global companies, people outside the U.S.
want to invest in U.S. companies.
The market structure that's grown up around crypto and digital assets is full multi-currency
and investment.
It is a major innovation.
Another, which we talk about and obviously understand is the need for self-custody.
But whether it's self-custody or delegated third-party custody, true ownership, which is really the cornerstone of both Bitcoin and, in fact, Ethereum and pretty much everything in the crypto world.
is exceedingly important, and it's much more important outside the U.S.
Everything Bruce said about the U.S. is true.
And look, I wrote a trade entry subsystem from Morgan Stanley back in the 80s.
So, yeah, I get all that.
But if you go outside the US, remember something.
The US is, I like to say in Danny DeVito's words, the best damn buggy whip manufacturer
left.
We have the best analog financial system.
It is by far the most efficient, by far the lowest cost.
Outside the world where they're nowhere near as low of the cost, they're going to embrace
the market structure that we're talking about first.
And so what that means for us, well, it means a lot of things actually.
It makes the size of the market huge.
We get that.
But it also means from a US competitive point of view, it really matters.
And I think that that's kind of important here when you're looking at all of these things,
because it is a large market size.
One last thought on the Bitcoin, Ethereum divide, or the Bitcoin, everything else divide.
They can absolutely coexist. I mean, I forgot who it was that said it before, and I gave a few hundred percent signs. The fact is, the use case for a true digital gold. Remember, in 1971, gold effectively represented north of 90 percent of the market cap of all value, right? You know, it basically was the measuring stick against all currencies. Today, it's way less than 10 percent.
So when you talk about digital gold and we say, yeah, Bitcoin has 20 times upside.
If it gets a digital gold status, well, that's true.
But gold itself is probably one-tenth of what it used to be because it's been getting
gradually demonetized by the system.
So it's worth understanding both of those things.
Go ahead, Jerry.
Yeah, thank you.
This amazing discussion.
I just want to bring up the point that the other killer use case for Bitcoin,
apart from being digital gold in the hedge against the fiat system,
is its security characteristics.
I mean, it's proof of work.
It's been around forever.
It's the most decentralized chain.
One thing we forget about technology is that this can all be made modular.
When I was at consensus a few months back,
I stopped by University of Austin,
and there were a lot of talks about how can you...
extract the security characters of Bitcoin and bring it to other blockchains in a modular way.
So I think ultimately going back to this divide between Bitcoin and everything else, you can have your cake and eat it too.
I do think that free markets ultimately do tend towards duopolys.
So I do believe that Bitcoin and Ethereum will probably be the major players into the future.
But you could modularize the security of Bitcoin using proof of work, right?
You can use Ethereum or some other smart contract platform to do the other things that those are good for.
And you can end up in a world where, yes, you know, Bitcoin is maybe the sun and Ethereum
is Jupiter, but there are the planets that do orbit and moons that orbit around it and
there's place for all of those.
There was one of the...
Yeah, go ahead.
Sorry, go ahead.
There was one last point because, you know, I still feel there's a division in our industry
between Bitcoin and non-bitcoin and innovators and so forth.
And there was a comment about, you know, there's so many frauds in our space and so forth,
which I do agree that is the case.
But as things get better regulated, both externally and hopefully, hopefully we'll get some
some of self-regulatory bodies within our industry, something similar to FINRA in the in the Tradfi space, that hopefully will start going away because that was when I started in this space, I came from the traditional tech space.
And I was very reticent to join this space.
Why did I join it?
Because my biggest client was Fidelity and they talked me about Bitcoin.
And I was very gun-shy about all the fraud that was going on in the space.
But I do believe it's back back to the pink sheet days of Wall Street.
You know, let's get good regulations in.
But most importantly, that's all band together as an industry and do some proper self-regulation as well.
James, I saw you giving him the 100.
You're the one obviously earlier who mentioned the frauds, which we all have to mention every time we have this.
But, I mean, do you agree a self-regulatory body or that we could get a regulator specifically for crypto?
Yeah, I think there should be a push for the industry itself to come up with some sort of self-regulatory body.
But I think the real need is like there's probably going to need to be an act from Congress going back to the ETF stuff, like in order for this all to be completely cleared out.
My point was more so that you kind of hear a lot of like hyperbole on both sides.
Either it's all fraud and manipulation and a Ponzi scheme and nothing is real.
or like there are no issues and really it's far more nuanced than that obviously if like if you think it's all fraud then you're kind of a little bit crazy and you're not looking at what's going on but if you think there the fraud is minuscule and not a big deal that you're also crazy and like i tend to see a little bit of both of that but i think that's more just a side effect of social media and echo chambers and whatnot
tribalism. Yeah, I mean, I think you could have buried your head in the sand on that before 2020.
Hard to look at what happened in this space last year and say, oh, it's pristine. Go ahead, Tom.
Yeah, thanks. I love, I love Jerry's point. I think we all recognize there's fraud here.
And there's going to be a need for an act of Congress to regulate the big things.
But I think there needs to be self-regulation for some of the smaller, more tangible items that we can attack as community together.
Right. Like, is there any reason we should be having token frauds left and right, changing investing schedules, kind of all of the things or distributions to insiders, you know,
all the things that just give us a terrible look as an industry,
which I think most reasonable actors agree
or just certainly not something we should be doing.
Something like that or something similar
could regulate very narrow slices,
and we could have meaningful participation.
But we're definitely going to need, you know,
the bigger players to get stable coins
and all the other things that, you know,
we really need to get through.
But in the meantime,
I think we need to just figure out a way to stop dunking on ourselves.
Yeah, I think a lot of that will be slowly marginalized and reduced with each cycle.
I mean, I 100% agree with you, but I think, you know, to some degree, the bad players keep getting washed out and people hopefully won't fall for the same tricks on the same scale.
you know, in the future. And that's sort of the quote unquote self-regulation that we desire, right?
Is it there just becomes no demand for that stuff. But I think anywhere that there's money,
there's going to be people who come in and try to take advantage. Bruce and Dave, go ahead.
Yeah, I think, you know, when it comes to regulation, one really, really important thing to remember is that
politicians don't work.
A lot of us have this idea.
It's like, oh, here's a problem.
We've got to fix the problem.
Therefore, we should have regulation.
And the thing is, it just doesn't work.
And we have a lot of evidence of that.
So you're kind of picking your poison.
And it's an illusion to think like, oh, we have all these horrible problems.
If we only gave the politicians more power, you know, that's not great.
But at least it solves the problem.
No, it's not great and it doesn't solve the problems.
Because again and again and again, it actually makes a different kind of fraud more common.
So if you have no regulation, the market will entirely regulate it.
And the market works because the market is made up of people.
So it's the ultimate in democracy and people voting with their dollars.
And it works way better, the madness of crowds and everything else.
things will happen quicker and that's what we saw with the ICO wave you know that market was crushed
not by regulators they didn't come in with actions until years later that market was crushed by
the market the market realized a lot of these were stupid investments and they they rewarded it
accordingly with with proper price discovery
So when you go into regulations, what happens is you have all the drawbacks of all these pinheaded nanny state bureaucrats sitting in fancy offices that they paid for with money that they stole from us, making life miserable for millions of businesses and people and burdening everybody.
But it's not like, oh, yeah, it's a real pain.
And we have to spend three hours a day and millions of dollars on compliance.
But at least they stop all the fraud.
No, they don't stop all the fraud.
They don't stop any of the fraud.
They didn't protect anyone.
I mean, it's very clear.
You just look at 2022 in crypto.
Nobody, I don't feel protected.
And the more they regulate, the worse it is.
It's just a different kind of fraud.
You want to show me one of the most fraudulent countries in the world?
I'll show you one of the most regulated countries in the world.
You go to the places with the most fraud.
It's a big bureaucracy and it's all corrupt.
You know, places like Nigeria and stuff that are known for fraud have tons of regulations.
Everybody's a regulator there, you know.
And in the United States, as we've grown on this march towards socialism and huge nanny state government for the first time in my career, I've been registered under nine SEC chairs.
And this is the first time that I felt like one of them is, you know, so anti-business as this.
And it's not just anti-business, but it's cronyism.
When you have this huge...
giant communist-style state, whether it's Soviet Russia or the current America, you end up with corruption.
You end up with people like Sam who steal money and bribe politicians so that he can get access.
And he had unprecedented access to the SEC chair.
And you have people like Bernie Madoff, who became the head of the largest regulator.
He was the most powerful regulator in America, and he was also simultaneously the biggest scammer in America.
That moment should have been a wake-up call to people that politicians are not the answer.
It's stunning to have Bitcoiners and other people saying like, oh, we just need just a little bit of regulation.
It's like, why do you have so much faith in politicians in 23?
These people are not smart.
They don't have our best interests at heart.
They are co-opted by big powers and they're unbelievably stupid.
Look at what they're doing with ESG and every other...
crazy thing that they do. They are not a solution. So the market, we got to let the markets work
and the pendulum has swung so far the other way. When I started my career 30 years ago,
did you know you could open a stock account over the phone and buy stock without your ID
and you didn't even have to pay for a week? When I started, I'm not that old. When I started my
career, you could call up on, you could call me up on the phone.
Never having talked to me in my life and say, hey, Bruce, I want to buy IBM.
My name's Scott Melker.
I live on one main street, Boston.
And I'd say, okay, Scott, how much you want, 100 shares?
Okay, you're in.
You owe me 3,800 bucks.
You got a week to pack.
Period.
No social.
No date of birth.
no AML KYC, none of this Nanny State bureaucracy that just been piled on.
That's how markets are supposed to work.
That's how they worked in the United States for a century.
It's pin-edded bureaucrat status authoritarian nanny state Cairns being directed by the Elizabeth
Warrens of the world who are destroying this country and they're suffocating us
under this pile of regulation that does no good.
It doesn't help us.
It doesn't save us.
It doesn't stop fraud.
We have more fraud and we have scumbags like Sam
will get unprecedented access
and they're able to get meetings with Gensler
when nobody else can get meetings with them.
them. And then they go around and commit fraud. And then you have this other scam special purpose
broker dealer that's being pinned up. It's like we're falling into the world of a third world
country governed by corruption and special deals and special favors and cronyism. That's what
regulation leads to. Anytime somebody says there ought to be a law or if we just had clarity,
if we just had more regulation, maybe just a few things. No, we don't need any of it.
entirely burn it all down and let the market,
let the people, let us decide what we want to do.
We don't need Danny State Cairns telling us what to buy.
This is America.
This is an entirely new idea.
And everybody who's younger than me doesn't remember
that it was just yesterday,
that we didn't have any of this stuff.
The idea that we need AML and KYC and a bunch of Nanny State bureaucrats telling us what to do
is a brand new and stupid and failed idea that does not work.
It's never worked and it never will work.
And we've got to swing the pendulum back the other way, take our country back, tear down the scammers,
clean up our industry and get bad actors like Gensler out of the industry, and then move forward
and do what we did for 100 years and have a great securities market where we have capital
formation and reward entrepreneurship.
It's the only way.
Bruce ran for United States Senate, by the way, for anybody who's listening.
And you could have voted for him.
Go ahead, Dave.
So, I mean, while I agree philosophically with Bruce, we have an expression when you sit down at the poker table that you need to play the cards you're dealt and not the cards that you wish you were dealt.
And more importantly, you know, what's going to be on the flop, what's going to be on the turn on the river.
The reality is we live in a world.
where there is a government and they are going to regulate.
And I definitely disagree with Bruce that they have done no good on balance
and everything he says about the current SEC and the ESG rule 100% agree.
So, well, let's focus on what they can do.
And he specifically mentioned Prometheum.
And for those who want to see an enjoyable rant,
I put one up on YouTube yesterday on our CoinRout's channel about Prometheum
where I basically took it down.
But there's a really important point in there that I want to make now.
which is we've talked about the frauds and we've talked about what's gone on.
And the simple fact is if you try to use today's securities laws for if any project,
let's just say you waived a magic wand and you allowed people,
you allowed every single project to register as securities.
Would that help anything?
And the answer to that is not only no, as Bruce says, but it actually would make it substantially
worse. Why? Because there is no notion in our rule set for any of the things that actually
matter when it comes to open source technologies and what we're trying to do. And the point is you have
nothing about tokenomics. There's nothing about supply. There's nothing about lack of
There's nothing about, you know, whether or not, you know, what sort of legal rights will pertain to the token, whether there's a burn schedule, how governance works. There's literally nothing.
So you cannot do a damn thing with tokens in current securities laws without changing those rules, period.
And anyone who says otherwise, when Aaron Kaplan says, he just made me cringe.
I mean, it felt like I was watching Central Castings version of some 80s villain in a Wall Street-based movie from that time.
I mean, it was unbelievable.
Yeah.
But the point that matters here is, you know, we're not talking about Bitcoin anymore.
We're talking about the rest of the cryptobverse is there's a very important part that people ignore, which is a way to bootstrap a network with capital formation with unaccredited investors to use U.S. terms.
And by the way, Bruce and I am sure would could both riff off of how insanely horrible that set of rules is.
The fact is, if you're trying to incentivize developers, you're trying to incentivize users, you're trying to incentivize people who are going to adopt any particular new crypto technology, this brilliant idea of being able to have a native token, which will also support mining and the other technologies, the other things you need to secure the network, has literally no applicability in U.S. securities laws as well.
And people have recognized that.
And so that's the important point.
What I would say about regulation and why we need regulatory clarity is there are some regulations that are good and have done a good job.
Almost all of those have to do with disclosure.
and, you know, not to pick on a, not to pick on Scott because, you know, but, you know, we know how you feel about this.
If companies had clear rules that they had to disclose exactly where their money came from,
there's not a human being or very few that would have left a penny in Voyager, that no way wouldn't have left a penny in BlockFi.
And some people would have left in Celsius. And I distinguish that because,
you know, no one would want to have an unsecured loan to some random fund outside the United States and et cetera.
But, you know, some people might want it to invest in a hedge fund.
But disclosures matter. And disclosure rules do two things. First, they give people information, although current SEC rules are massively outdated. But secondly, it sets a precedent in law. Once you've disclosed and said something, now if it turns out to be a falsehood, you are potentially personally liable for fraud. And those rules need to be in play.
And so I don't go as far as Bruce does in saying get rid of all the, get rid of all regulation,
but it's absolutely important to understand that it needs to be limited.
And disclosure is the most important thing.
Yeah, you know, I agree, obviously.
For anyone who doesn't understand, I'm a creditor, Voyager.
I've been pretty outspoken about it.
But to Dave's point, if we had gotten a call or an email or a letter that said,
hey, what we're doing with $700 million of your money is giving an unsecured loan to a couple gamblers,
you know,
named three arrows capital, and I had known that I would have had the option to withdraw my money and put it somewhere else.
So I think your point to being transparent and to disclose is well received, obviously.
James, go ahead.
Yeah, I was basically going to say a lot of what Dave said.
I might agree with some ethos of the things that Bruce was saying.
But, I mean, it really comes down to practicality and pragmatism versus idealistic views.
And the stuff you talked about, he mentioned at the very end, it's just there are some beneficial things that could come out with rules and regulations that would prevent it.
at least some people from facing what they lost.
And a lot of the people who got scammed and things,
and I see those are rug pulls,
I think would now be happy to have ways to prevent them from happening
the first place.
Obviously, the market did push a lot of them out,
but they're still happening now.
So, I mean, like I said,
there's idealism and there's pragmatism,
and I think there needs to be a pragmatist,
a pragmatic way to look at this.
Jerry, go ahead.
Yeah, I think both could be true, right?
I think I'm probably 80% agreeing with Bruce.
I think the current system as it is right now is broken.
There's too many regulators.
Most of it's bad.
There's a lot of crony capitalism and corruption that's plain insight for all to see.
But going all the way the other way, I think is a utopian dream.
I don't think it exists.
I think, you know, there are cases in the United States back in the early days where you had private firefighters.
And, you know, if the house that's outside of their limit was on fire, they wouldn't put it out because there wasn't regulations to control that.
So I think there is a minimum set of regulations that encourage...
a better free market because a free market going to extreme does end up in a monopoly.
So, but I 100% agree that that's not the right message in the current situation that we're in.
We're obviously over-rotated way on the other side.
And especially in the United States, which is supposed to be, you know, more pro-free market,
and going to Europe and seeing that their more pro-free market is a very unusual thing to see.
Yeah, the pendulum will inevitably swing back the other way, though.
I really believe that.
It's just a matter of time.
So, guys, I think that we've done a great job covering this topic.
And I actually really enjoyed today not having this endless cycle of breaking news to interrupt people with and to...
analyze and talk to death. It was fun to have a deeply sort of intellectual conversation on what
all of this actually means and what it can mean moving into the future and how the how the market
and the structure should actually look. So it was it was nice to have I guess what we'll call
a slow news day to be able to do that. Guys once again please follow it was up on stage but
crypto underscore town hall crypto underscore town hall eventually we will be moving to that
account for doing these spaces because it's much easier than the three of us,
which we've tried to rotate and hosts on Mario's.
It's just a lot.
And obviously we want to separate and be able to run that straight from a controlled account
that is all three of us.
So please check that out.
We will, of course, be back again tomorrow morning, 10, 15 a.m.
Eastern Standard Time.
I'm sure you'll see a lot of these same guests up here.
We love having you guys.
All of you are welcome any day for sure.
Thank you, everyone.
See you tomorrow.
