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40 - WTF Happened in 2020? | Meltem Demirors
Meltem Demirors is Chief Strategy Officer of Coinshares... former Vice President of the Digital Currency Group, advocated for crypto in front of Congress... and overall badass.
Meltem wants to answer the question 'WTF Happened in 2020', specifically as it relates to monetary policy from the Federal Reserve, economic forces that result from a top-heavy pension and social welfare system, as well as how COVID impacts financial decision-making.
This is our first video-podcast, because Meltem brought RECEIPTS. She has DATA and CHARTS and FIGURES to show!
We also turn to a discussion on Bitcoin vs Ethereum identity and in-group, out-group dynamics, and have a jovial discussion regarding tribalistic affairs.
Hope you enjoy!
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Transcript 18,448 words · 3 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Ryan Sean Adams? Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman and we're here to help you become more bankless. David, we're doing this video live, so I can see you've got a big smile on your face, man. What are you smiling about?
0:22 David Hoffman? Yeah, it's just funny to actually see you read out the intro. I've never seen you read.
0:26 Ryan Sean Adams? Whoa, whoa, whoa, read? That was a memory, dude.
0:29 David Hoffman? I've never seen you do it from memory, but yeah, you guys, we are doing our first video podcast. And that's because we brought on Meltem, how do you pronounce her last name?
0:39 Ryan Sean Adams? Demir.
0:39 David Hoffman? Demir, that's simple. We brought on Meltem Demir, who brought the receipts. She brought the transcripts, she brought the trans, oh god, she brought the tables. She has the data. And so we had to do this podcast in a video form so that we can see what's going on. And so if you are listening to this on the regular podcast, that's totally fine. You're not going to miss too much. However, do know that there is stuff to look at on the YouTube as well. If you want to follow along.
1:07 Ryan Sean Adams? This was just a fun conversation. I mean, like for Americans at least, it is a holiday week when we're releasing this. So it's a good one to listen to during the holidays because it's, it's kind of fun. And we start maybe, I don't know if we start serious, but anyway, we start with this whole macro case. And Meltem brought the data, as you said, brought the receipts, brought the slides to make
1:29 David Hoffman? And the energy.
1:31 Ryan Sean Adams? And the energy to make the case that everything is new again. And this is something we've talked about on Bankless. And we probably liked the first part of this conversation. It was probably like 100% alignment, right? But then the, the second part of this conversation is where things get a little fun. Things get a little spicy because there were some points where we disagreed on. And she was happy to like,
1:58 Ryan Sean Adams? Call us out on things or disagree with our perspectives and then we pushed back. And I feel like we got to a really interesting conversation that the community doesn't often hear from somebody who is not, Meltem is not a Bitcoin maximalist, but she's definitely a bit more team Bitcoiner.
2:16 David Hoffman? Right.
2:17 Ryan Sean Adams? You know, whereas, you know, bankless kind of bridges the gap here for sure. And we are, we like Bitcoin, we're Bitcoiners, but we're also very Ethereum friendly. There are some things we didn't agree on.
2:30 David Hoffman? Yeah, yeah, I think the way to characterize us is we are Bitcoiners when it's Bitcoin on Ethereum. If that's a fair take, which I think it is.
2:39 Ryan Sean Adams? You're a Bitcoin on Ethereum maximalist.
2:41 David Hoffman? Yeah, Bitcoin on Ethereum maximalist, that's a good way to put it. And we did get into that difference with Meltem where she thinks that, you know, the, the bankless nature of Bitcoin is actually possible in ways that we don't necessarily have optimism for here on the Bankless Pod. So there's, there's a perspective there. In addition to that, Meltem is just a bundle of energy and she really is having, just, just living her best life, helping people like us produce awesome, entertaining and really informative content. And while doing so with a smile on her face and in a very joking manner. And so in addition to seeing the receipts and watching the charts and looking at the data, she's also just a very expressive person. So maybe it's worth it to watch the YouTube for, for that purpose as well.
3:25 Ryan Sean Adams? Yeah, absolutely. It was a hilarious podcast. So you know, whether you agree or disagree with all of the perspectives, you're gonna have fun. You're gonna enjoy listening to this. So David, we should get right into it. Do you wanna talk about our sponsors?
3:38 David Hoffman? Yeah, I think I have a video of myself recorded talking about our sponsors.
3:41 Ryan Sean Adams? All right, let's get to the sponsors.
3:43 David Hoffman? All right. Hey guys, the next sponsor is Ledger and Ledger is running a 40% off Black Friday week sale. So if you haven't gotten your Ledger yet, you are in luck. For the week of the 23rd through the 30th, you can get 40% off of all Ledgers on the Ledger website. So if you are still using a hot wallet or you're just looking to get a backup, maybe for a multi-site. Or just for some more redundancy, now is the time to go get that ledger. There's a link in the show notes that can get you that 40% off Black Friday deal. If you want to live a bankless life, you need to get a hardware wallet. There is no alternative for storing your crypto in a self-sovereign fashion.
4:25 David Hoffman? That's why I have four ledgers that I use to manage my different crypto assets using the Ledger Live account as well. Ledger Live is like your home base for managing your Ethereum, DeFi, and crypto accounts. It does a really good job of aggregating all of your different Ethereum wallets if you are the type of person that uses more than one. But you can also add other cryptocurrencies like Bitcoin or Cosmos or whatever your preferred blockchain is. And then it will display an aggregate portfolio of all your accounts at the main page. One thing that Ledger is doing a really good job of is enabling all the money verbs that me and Ryan talked about with the Bankless Skill Cube enabled in the Ledger Live app. So right now in the Ledger Live app, you can buy, sell, lend, swap, and stake your crypto assets,
5:10 David Hoffman? which is doing a really good job of fulfilling all of the money verbs in the Bankless Skill Cube. Something that's new to Ledger Live is Ledger Swap, where you can swap assets one for another directly inside the Ledger Live application, ensuring trustlessness in your financial activity on Ethereum and on Bitcoin. If you want to learn more about what you can do with a ledger, go to the blog post "The Power of Ledger Live" on the Ledger website, where they share some of the more advanced things that you can do with your ledger that you might not have known about. There's a link in the show notes that will take you to the Ledger shop where you can get your preferred Ledger hardware wallets. I personally like the Ledger Nano X, but I also have both. They're both great options.
5:51 David Hoffman? When you own a ledger, you own your own assets in the way that they have been designed to be held by the user and the user alone. So go get your ledger today to make sure that you are as self-sovereign as possible. The Bankless State of the Nations are brought to you by Yarn. Yarn is DeFi's first self-building, community-run project, which I just get really, really excited about. Yarn is a system that seeks out yield in DeFi, and it does that in a number of different ways. A very aggressive way is with the vaults, where you can deposit your preferred asset of choice, and different DeFi experts will come in and generate a strategy for what to do with your deposited token.
6:32 David Hoffman? And so it'll go find ways to get yield in that deposited token in DeFi. For those who want to just earn yield on their stablecoins, the earn system is for you, where you can deposit your preferred stablecoin, and Yarn will go and figure out which money market on DeFi. And DeFi is producing the best interest rate, whether it's DYDX, it's Compound, or AVE. It looks around DeFi to see where the yield is coming from, and it directs stablecoins automatically, so you don't have to. Check them out at yarn.finance to get started, and also check out the stats page to see what other people are doing as well.
7:07 Ryan Sean Adams? Bankless Nation, we are super excited about this podcast. We want to welcome Meltem Demirz to the show. Meltem is the Chief Strategy Officer of CoinShare. She's the former VP of the Digital Currency Group. She's done angel investing. She's even testified on behalf of crypto to Congress, because Satoshi could not make it. Before she was bitten by the Bitcoin bug, she had a fantastic background in treasury management and corporate finance, so brings that side to the table as well. But this conversation is going to be a little less serious, maybe. We're going to introduce some data, but I think we want to find out, Meltem. WTF just happened this year, right? We're in late November, and a lot of things are happening. Meltem's got the data, she's got the receipts.
7:52 Ryan Sean Adams? We're going to go through that. How are you doing, Meltem? Welcome to the show.
7:55 Speaker 02 Thanks, guys. I'm excited to be here. It's an honor to be on Bankless. What the fuck just happened?
8:07 Speaker 02 Every conversation I've had since mid-April, I think people in March and April would say stuff like, "Oh, when we go back to normal."
8:18 David Hoffman? Right.
8:18 Speaker 02 And I was like, "I don't think you understand."
8:20 David Hoffman? In a few weeks, yeah.
8:20 Speaker 02 That that doesn't exist anymore. All concept of normal has sort of gone out the window. And look, I think the more important thing, we can talk about facts, and I want to get into it, and I did bring receipts because I love charts and data. And I want to always quantify and qualify what I'm saying. I think it makes us so much better at being advocates for crypto when we bring evidence and we bring facts and data to our conversation. It makes everyone smarter and just elevates the discussion. But I think one of the really important things that happened that we don't talk about enough is a decade, and actually maybe four decades, of mental models around how markets work and how economies function
9:02 Speaker 02 have been shattered to bits. And we are now trying to pick up the pieces, but all around the world, allocators of all size, of all type, governments, regulators, policymakers, central bankers, everyone who operates in the world of markets and money is trying to figure out how to grapple with this new reality. And it's dark. But every ending is also a beginning. And so as this era of markets comes to an end, I'm so excited about this new beginning that we have in the crypto space. And so I think what we can do is maybe talk about like where we came from, the past. I take a lot of inspiration from history,
9:46 Speaker 02 where we are now, like what happened, what's going on. And then we can get into all of the cool shit that people are working on, that people are building, that I think is going to completely change the way the world of money works. And it'll be fun. What do you guys think?
10:01 David Hoffman? It's gonna be a ton of fun. And my question is, Meltem, is like, when you ask a question like, "What the fuck just happened?" One of my questions is like, well, let's get some time parameters on that. Like, in what time period are we saying what just happened? And also, why are things dark? Like, why are things so dark? Explain where this darkness is coming from.
10:21 Speaker 02 Okay, why don't, why don't I walk through some of my receipts real quick? All right. Do it. All right.
10:27 Ryan Sean Adams? And guys, guys, if you are listening on the podcast stream, this is not the only way to, to see the visuals. So you can also hook into our YouTube channel and Meltem's gonna be showing us some data here too.
10:39 Speaker 02 So here's what I want to talk about. I think there are, there are four really important sort of macro trends. I think one of the challenges we have in, in crypto especially, but that a lot of people have is we view the world through these very narrow lenses. And typically the way we view the world is informed by our own experiences, our own expertise, our own background and where we spend our time. Right? If you spend all of your time talking to only DeFi Chads and degenerate gamblers on the internet, that's going to be your version of reality. But there are a lot of different realities out there and I think we can talk a little bit more about how reality and mythology and stories get constructed and how that informs what becomes reality.
11:21 Speaker 02 Because I think a lot of what becomes reality is what we want it to be like this idea of manifesting is not new. But there are four really primary forces that I think about and that I look at when I look at what's happening in the world. And they are as follows. Number one is technology. Number two is economic forces. Three is cultural and social forces and four is political forces. And when you take all of these trends and you put them together, you can start to mash sort of these different reality layers on top of one another. And start to at least get a sense of, you know, what's happening, what might happen next? And how these different forces that are acting on our world might sort of collide to make certain things happen, make certain
12:05 Speaker 02 potential future realities more probable or less probable, right? And really what this is like, right now, if we look at the future, anything is possible. But certain things probabilistically speaking are more likely to happen. And so really what I'm trying to understand as an investor is based on what we're seeing, based on the information, based on the, the trends out there. What will be likely to happen in the future and then placing chips on the table around those potential outcomes? And doing my best to try to make those outcomes happen, right?
12:35 Ryan Sean Adams? That change, Meltem, that change we were talking about earlier, right? Like the WTF just happened, everything's different last 40 years. All four of, like, there have been changes in all four of these factors that sort of shaped that entire paradigm shift, right?
12:48 Speaker 02 Yeah, and it's not just the last, I think people really like to focus on the last three months or the last 10 years since the Great Financial Crisis, but actually this trend's been going on since about the end of World War II. And I think it's interesting to think about these longer secular trends and the shorter cycles that sort of happen within these larger multi-generational trends, right? But if you think about the length of a human lifetime, I'm a big fan of horizontal history, where you look at lifespans and the lifespans of influential schools of thoughts or influential thinkers, and where they overlap and intersect. We're so influenced by what we experienced during our own sort of horizontal histories, that it's very helpful to sort of think about this in the context of a human lifespan,
13:31 Speaker 02 which has gone from 60 to 80 years, and hopefully, the three of us will live forever.
13:35 Ryan Sean Adams? Yeah.
13:36 Speaker 02 Okay, so let's talk about it. Economically speaking, wealth in our world has become much more concentrated over the last few decades. And we see this trend, this data is from this time last year, I'm working on updating this for my big trends report this year. But one interesting fact, there are three men in the United States of America who have more wealth, between the three of them, than the bottom 50% of all Americans. And the crisis we've gone through over the last two months has only accelerated this trend, and in fact, we now need to add Elon Musk to this list, he's actually wealthier than Warren Buffett right now, he's about to become the second wealthiest man in the world, surpassing Bill Gates, I believe.
14:21 Speaker 02 But if we look at what's happened with equities as well, right? The rotation into, of wealth and the rotation of inflation into equities and home prices means that this wealth gap between those who are affluent and own capital, and those who have labor and work for capital, that wealth gap has only continued to grow. And while we're not seeing inflation as a result of money printing showing up in CPI, or the Consumer Price Index, where it is Going up is in these areas where people invest their wealth for growth, right? And if we look at growth areas, housing prices are rising at the fastest rate in 40 years. And it's not people buying primary homes, it's people buying second homes, people buying investment homes.
15:06 Speaker 02 The other trend that's really interesting is what's happened to equities. Equities ownership is highly concentrated in the hands of the top 20% of Americans who own 80% of the stock market. And I think this is another interesting trend, you know, we look at the pandemic, tech stocks are trading at 500x, 800x forward PE multiples. Where inflation is getting priced in is in growth expectations around tech. The other force I want to quickly talk about is
15:33 Ryan Sean Adams? Meltem, I have a, I have a quick question on that. So is your take that this wealth gap, this wealth disparity gap that's been increasing is largely the result of monetary policy interventions? Sort of like Cantillon, Cantillon effects, if you will?
15:48 Speaker 02 No, I, I think there are multiple forces at play here. One is a generational force. If we look at wealth disparity, a lot of it is tied to economic opportunity and the fact that real wages have been stagnant since the 1970s. The boomers, right, have captured the majority of wealth creation in this country. And if you look at where wealth is stored, again, most people store their wealth in A, their homes, which is the largest asset they own typically. And B, in their 401ks, their retirement accounts. If you look at all of the stimulus that's gone on in the United States, politicians realize the most important population to appease is the boomers. They have the most wealth, the most influence, and they run this country. They also turn out in large numbers to vote.
16:30 Speaker 02 And so it's been very important to number one, buoy stock markets and keep 401ks inflated. And two, to buoy home prices, right? At this point, the mortgage industry has largely been nationalized. So I think there are these really important trends and policy, again, all of these things fit together. Policy props up this wealth disparity and further exacerbates it. Shifts in the labor force are propping up this disparity and exacerbating it. And then forces in technology. The fact that the opportunity for new jobs, right? There are a lot of 1099 Musk workers or gig workers, particularly in younger millennial Gen Z populations.
17:11 Speaker 02 And most of the salaried, like, white-collar jobs are held by boomers. They're not going, they're not transitioning their roles to younger generations, right? The average CEO has gotten older over the last 20 years because all of the boomers have been playing a game of musical chairs rather than bringing in younger people to run these companies. And so what we're seeing is this incredible, incredible concentration of wealth. And even on top of that, what we're seeing is there's a massive, massive liability that the government has. If you look at the US deficit today, it's roughly, let's say, $22 trillion. But in fact, there's one important aspect that we don't account for when we report that number, which is unfunded retirement and entitlement benefits,
17:56 Speaker 02 which are unfunded and unreported liabilities on the Fed's balance sheet. There are about $122 trillion of unreported liabilities in the form of Social Security, Medicare and Medicaid. And on top of that, there's also a massive shortfall in private pensions, which are underfunded by a factor of 30 to 50%. So you take all of this together and you have just this massive, massive behemoth problem, which is we have this population of people who have accumulated most of the benefits of technology growth and of economic growth over the last 40 years. They now are consuming money at an insane pace and require an incredible amount of federal support.
18:40 Speaker 02 But we're operating in an environment where our economy has been decimated. And more importantly, we have no ability to generate enough revenue to make up that shortfall. So what we have is this massive snowball as a result of a shifting labor force, massive wealth concentration, and a massive, massive funding gap in these entitlements that we supposedly have in this country. So these forces coming together, in my view, create a perfect Breeding ground for a new asset class cryptocurrency.
19:14 Ryan Sean Adams? So so so Meltem, like, just just to go back there, right? So like, um, this can't last forever, right? Obviously, that's got to be obvious because of the demographics of the boomer generation, right? So like, how um, how old is the youngest boomer at this point? It's like mid now sixties.
19:31 Speaker 02 I think mid fifties, mid fifties to early sixties.
19:34 Ryan Sean Adams? Fifties. Okay. So like, there there's this feeling that as a result of all of this, I think among younger generations, like millennials, for instance, that um, we're getting screwed. Like, the millennials are getting totally screwed out of this bargain, right? Because the boomers kind of, God bless the boomers, my parents are boomers, love them. But they are kind of like, taking the ladder on their way out. There there's there's sort of like, optimizing everything for them and then where they're gone, like when they're gone, like, what happens? Do things totally fall apart?
20:11 Speaker 02 Well, well, Ryan, what you're articulating, um, if you read between the lines there, you're reading very political about it. I'm not going to be so nice about it. What we are setting up for is a generational war, right? And this is a cultural war, it's an economic war, it's a political war, it's a social war. What this is about is we have a generation of people who will do anything and everything to keep the status quo intact. They're trying to stop technological progress in order to keep the status quo intact. Because change is scary. People don't like change. But what this is going to result in is a massive amount of social unrest, and it's already happening in many countries around the world.
20:54 Speaker 02 We've watched this happen time and time again throughout history. There is now more wealth concentration in this country than there was in France before the revolution. So I think people forget. We are, humans are not stupid. Everyone sees what's happening and it's only a matter of time until someone, a leader, is effectively able to catalyze this discontent into some form of action and a shift in power. And if we look at what's happening, I actually think cryptocurrency is a huge part of that story. Because look at the three of us. Like, I'm in my 30s. How old are you guys?
21:32 David Hoffman? 27.
21:32 Ryan Sean Adams? Yeah, 30s. Yeah.
21:35 Speaker 02 Right. So
21:36 Ryan Sean Adams? Yep.
21:37 Speaker 02 And look at us, right? Like, we are building a new monetary system for our generation. The boomers are trying to cash in on crypto. But look, this is a movement by young people for young people who see the world and say, I did not, I do not subscribe to this. I believe in a different reality. And we are going to use technology, economics, a social movement, right? Bitcoin is first and foremost a social movement and political influence to make this happen.
22:07 David Hoffman? Right.
22:07 Ryan Sean Adams? So I feel like, Meltem, that the boomers, you know, I tweeted this out recently, but like, that's what it almost feels like to buy stocks these days. It's like, you're buying boomer bags, basically, because they have totally pumped the market, right?
22:20 Speaker 02 Wait, I need a shirt that says, I love boomer bags.
22:26 Ryan Sean Adams? I mean, that's like, that's what it feels like from a millennial perspective. And I think that message is going out. And like, it's like, when you choose where to store your assets, park your wealth, as someone in the younger generation, do you want boomer bags? Or do you want like, this whole new crypto thing? That's probably the asset class, like, the transformation.
22:44 Speaker 02 Well, let's flip that. I would love to sell boomers some of my crypto bags.
22:49 Ryan Sean Adams? True, they have way more money.
22:51 Speaker 02 Yeah. So if they want to, you know, bag hold some like XRP or whatever it is they're buying, like, have at it. Sorry, no, no dis to XRP, but like, I see people online, like, they're like, XRP is going to $100. I'm like, okay.
23:08 Speaker 02 Maybe.
23:09 David Hoffman? It's felt a little quieter lately.
23:10 Speaker 02 Let's use math. Well, at that, at that price, right? The, the market cap of that asset would be over a trillion dollars. Like, I think, again, people forget, like, math is hard.
23:20 David Hoffman? Mm hmm.
23:21 Speaker 02 Math is hard for people.
23:21 David Hoffman? Exponential math is hard. Yeah.
23:23 Speaker 02 It's very hard. Exactly. Um, and again, I just think when people say these things, they're not really thinking about what they're actually saying. That's why, again, um, you know, I want to use math and objective reality, or as close to it as we can. Yeah, because objective reality doesn't actually exist, but let's get as close to the truth as we can and actually try to use data and facts to inform our perspectives. Okay, so then I want to touch on another really interesting trend. So I think we've talked a little bit about economic force and what's happening. Let's talk a little bit about where growth is, right? You look at this world and you're like, wait a minute, it's scary. What do I do? How do I invest in progress? Okay, let's talk about the fangs and let's talk about what's happening with tech generally, right?
24:06 Speaker 02 So 10 years ago, I left college. No, more than 10 years ago. Oh my God, I'm old, but 10 years ago, the world I lived in, I worked in the energy industry. And at the time, you know, I was working with some of the largest companies in the world. 10 years ago, the largest companies in the world were energy producers and manufacturers, makers of physical things and banks that finance that physical activity. Today, the largest companies in the world, right? Microsoft, $2 trillion market cap. Microsoft has a market cap that is larger than the economies of most nation states.
24:39 David Hoffman? Right.
24:40 Speaker 02 Google.
24:40 David Hoffman? Yeah.
24:41 Speaker 02 Facebook, Amazon, right? I'm of the mindset that we are moving away from the relevance of the physical world and the physical state, right? Like, we belong to a digital nation state. I identify more as a crypto person than I do as, or as a Bitcoiner, I should really say. I identify more as that than I do as like an American or where I happen to be born.
25:03 David Hoffman? Right.
25:04 Speaker 02 And I think if you talk to people in our generation, the way we define ourselves is not by our physical jurisdiction. The way we define ourselves is by what we believe in and what communities we're a part of.
25:14 David Hoffman? Right.
25:14 Speaker 02 And we spend all of our time in this really amazing, really fun bubble that is its own alternate reality, which is crypto Twitter, right?
25:23 David Hoffman? It has its own personality, its own characteristics, its own internal memes, its own communication style.
25:29 Speaker 02 It's on beliefs, right? We have our, and we have our own language, our own lingo, right? Like Ape Together, Ape Strong, Rugpool, Blue Chip, DeFi Coins. Like, I love it. It's great. It's the best call I've ever been in. It's awesome. But at the same time, I think people looking at this from the outside in sometimes forget like how powerful that is. And the shift from the world of physical things to world of digital things, this is really about the battle we're facing now. It's a battle for control. And I want to quickly talk about the politics. Okay, cool. So here we are, right? Cyber space is the next frontier. And this is really what I was talking about with the evolution and the shift from the world of the physical to the world of the digital. And so as we think
26:14 Speaker 02 about this new frontier and like quick sidebar, I love reading sci fi. If you go to my website, meltonjamir's.com, I have my favorite sci fi books on a sci fi reading list there. But sci fi is actually humans creating mythology to try to predict the future based on history, right? And so sci fi is such an amazing genre to read because you get to time travel and experience all of these different potential versions of the future, which I think is actually really important as a technologist and an investor and someone who's trying to predict what's going to happen in the future and make bets based on that, right? Sci fi is predictive in a way because it's based on our understanding of the past. So
26:57 Speaker 02 big plug for sci fi books. If you ever want to read, like hit me up on Twitter. I'm all about it. All right. We talked a little bit about our digital overlords, the digital economies growing. What's crazy? So this chart about the percent of the S and P 500 by market cap. Last year, the five largest tech stocks made up 17% of the S and P 500. As of today, a year later, those five stocks make up 27% of the value of the US stock market. Twenty seven percent, over twenty percent of all stock market gains over the last twenty years can be attributed to a single company. Do you know what that company is?
27:36 David Hoffman? Is it Apple?
27:37 Speaker 02 It's Apple. And here's why I think this is interesting. They're in the world of investing, right? People are always like, oh, cryptocurrency is a bad investment. ICOs are bad investment because they're scammy. Guess what? A lot of public companies are scammy as shit and they are terrible investments and do not make money. And I think in the crypto world, and even in the investing world, we have this idea that like institutional investors are super professional and they don't FOMO into things. They 100% FOMO into things, number one. And number two, there is a lot of shady stuff that happens in the world of regulated finance. Just because you can afford a lawyer that is good and just because you can afford to file some paperwork with the SEC does not make your project, your
28:22 Speaker 02 company, your idea worthy of investing in. It tires me to no end when people confuse the status of being regulated with the quality of the investment. Those are two very different things. So I just quick gripe on that. But let's talk about what's happening on the political front because this is so important for what's happening in crypto and I think is going to inform us about the future. What is happening right now in the US is our government is spending an absolutely insane amount of money pivoting America's defense system from being physically driven, buying fighter jets, buying tanks, buying weapons, to being digitally and technologically driven. We are no longer going to fight wars with guns and
29:05 Speaker 02 steel. We are going to fight wars with information, with memes, and in the digital
29:11 David Hoffman? The narrative war.
29:13 Speaker 02 The narrative war, but also the cyber war. So right now, there's been a big battle going on to win some really important Department of Defense contracts. They are procuring technology services on an unprecedented scale. And in the next few years, the federal government expects to spend over $100 billion on cloud compute and services. And by the way, they're Also spending money on cryptocurrency companies and cryptocurrency services, right? They're trying to understand what's happening in blockchain networks. If you pay attention, DARPA, the DOE, the DOD, they've all done massive, massive RFQs. They've given out a couple of grants for different projects to try to better understand the use of Bitcoin as a private telecommunications network, the use of blockchain technology, national security instances.
29:57 Speaker 02 Like, there is a lot of money that is going to get spent here. And this is actually going to shape the political landscape. But digital space is now becoming our new political frontier. And this is also playing out with international politics and the politics of nation-states. And the reason I want to talk about nation-states is Bitcoin, at its core, is an attempt to separate money and state. This hasn't been attempted since Julius Caesar first stamped his face on a gold coin about three millennia ago. So it's very important, in my view, to understand what is going on with the evolution of the nation-state, because I'm not 100% certain that the construct of the nation-state survives the separation of state and money.
30:42 Ryan Sean Adams? You know what? That's a huge theme. We've actually, we brought it on Bellagi recently. We talked about that very thing, also a political philosopher to talk about that, too. I'd be interested in your thought on this, because when we were talking to Bruno, who is a political philosopher, just yesterday when we recorded, he pushed back on that a little bit, right? So his pushback, and he knows crypto. He studied kind of game theory of politics and like nation-states for a long time. He's got a great perspective on America, China, all of these things. And his pushback was like, yeah, but if crypto is successful, then governments are just going to ban it, essentially, right?
31:25 Ryan Sean Adams? Like, you can't separate money from the nation-state, no? Okay, so tell us why.
31:30 Speaker 02 Okay, here's why. Okay, hold on. Let's get into this. Okay. So, right now, there is a bill on the floor of Congress. It's sponsored by Mitch McConnell and Lindsey Graham, who are absolute ghouls.
31:40 Ryan Sean Adams? My favorites.
31:46 Speaker 02 Okay, not so much. I'm pretty sure their inspiration on how to govern is 1984.
31:53 Ryan Sean Adams? There's a lot of that going around.
31:54 Speaker 02 Yeah, I do not prescribe to that philosophy. But let's talk about this bill. It's called the Earn It Bill. If you go to EFF.org, that Electronic Freedom Frontier, has a bunch of great information about the bill and how you can contact your local representative and encourage them to vote no on Earn It.
32:10 Ryan Sean Adams? I already sent my letter, by the way, to senators, congressmen. You've got to do it. Melton's absolutely right. This bill kills encryption, basically, in the US.
32:19 Speaker 02 Exactly. Encryption is under attack. And not only is this bill on the floor of Congress right now, the Earn It Bill, basically what it seeks to do is similar to what the government tried to do with the Clipper Chip in the 1990s. So if we go back in history, right, in the 90s, when RSA or, you know, state-of-the-art encryption was first introduced, this is really what made payments on the internet possible, by the way. Before, we had RSA and secure encryption on the internet. It was very difficult to remit payments on the internet because communication was not so secure. And so, the government actually ruled for a brief period of time that encryption was considered a weapon or ammunition and could not be imported or exported. So people would actually print out T-shirts with RSA code on the front and wear them around.
33:03 Speaker 02 Like, they would make themselves a weapon. And then, when the government realized that you couldn't ban math or code, what they tried to do was they worked with telecommunications companies and mandated that all physical equipment have something in it called the Clipper Chip, which effectively gave the NSA and intelligence agencies a back door that they could use to spy on communications. Now, here's the problem with this approach to governance and this approach to trying to pass policy. Let's say, for example, that we look at a house, right? And bad things happen inside of houses sometimes, and people can lock their doors. Basically, the approach they're taking is nobody can have door locks anymore because once in a while, bad thing happens in a locked house, and therefore, we decree that nobody
33:48 Speaker 02 can lock their door. But guess what also happens in that situation? When nobody has locked doors, bad things that happen outside the house start happening inside the house, and anyone can come and go as they please, not just the government and whoever wants to get into houses to see what's happening. So this is why this policy is so absolutely stupid.
34:08 Speaker 02 Backdoors are typically used not only by intelligence agencies and quote unquote "the good guys" and we can talk a little bit about how messed up the whole idea of like applying a policy in this sort of way is. It can be used by anyone. And in fact, we already see so much software, so much hardware that we consume, particularly that from China, already has backdoors in it that's used by nefarious actors. We see this time and time again. And so I really just think that people making policy do not understand how technology works. They do not understand how the internet works. And so what we end up seeing is this really ridiculous approach where right now they're trying to A, ban encryption, which is math, and B, they're sponsoring, by the way, these competitions for mathematicians
34:53 Speaker 02 and cryptographers to try to break encryption. Which is so mind-bogglingly stupid that I can't, can't deal with it.
35:03 Ryan Sean Adams? And Meltem, you're saying it's mind-boggling, it's mind-boggling because it puts the US or any country that adopts this sort of anti encryption philosophy and approach, it puts them at risk. It decreases their defense capability worldwide. Not only does it destroy freedom of speech, but it's actually a negative from a security perspective for the country that adopts this. That's what you're saying?
35:31 David Hoffman? It's also futile.
35:33 Speaker 02 Well, the other piece that I think is so important, so let's talk for a minute about why people use encryption, right? The reason we use encryption is because there is a belief in many countries, many Western democracies in particular, that people are imbued with rights, right? The right to freedom of speech, the right to freedom of assembly, the right to freedom of religion. There is, there are these, these rules that have been put in place to preserve the ability for people to have these freedoms. Now, what starts to happen that's really interesting is today, our communication mostly happens over our phones, our computers, et cetera. And our communication is already surveilled and monitored. That ship has sailed, and that ship sailed in the early
36:17 Speaker 02 Two thousands after nine eleven with a bunch of the the actions that were taken then that allowed our own government to spy on us without needing a warrant. There's this whole philosophy of of something called lawful intercept where typically you would need a warrant to listen to someone's private communication. That went out the window. And obviously Edward Snowden, other whistleblowers have had had done this country a huge service and you know. People in our industry great service by sort of exposing what was going on there. The next layer of privacy is privacy in location, right? So I am a physical human being. And as I move around this world, both in physical space and in digital space, I typically have privacy and pseudonymity. Not full anonymity, but I have pseudonymity, right? I could be a Twitter egg. I could be an anonymous person.
37:03 Speaker 02 I could be a no name posting something on a website, right? And the ability for people to have pseudonymity allows people to uh to engage in activities that could potentially be risky, right? To expose things like the NSA wiretaps that were going on. So privacy and location, both in physical space and digital space is really important. And then lastly, the place where we have privacy today is privacy and transactions. So the best way for me to engage in a private transaction today is to give you a dollar. Right? Physical money and physical exchanges of value are a great way to retain privacy. But now we have new ways of maintaining certain degrees of privacy and transactions through cryptocurrencies, right?
37:46 Speaker 02 And what I think is so scary about all of this, imagine a world where we have a digital dollar.
37:53 Speaker 02 That's tied to your identity. You have no privacy of location in either your digital realm or in your physical realm. Everywhere you go, every service you use, you're required to identify yourself, right? It's like some Minority Report style shit. You're required to identify yourself and you have no privacy in your communication. Everything you communicate, everything you do is monitored and surveilled by a a Ministry of Information. Let's say, for example, that I'm having a private conversation with someone and I say something that could be deemed unpatriotic. All of a sudden, the government has the ability to freeze my assets, to prevent me from transacting, to prevent me from moving around in physical space and in digital space, and to prevent me from being able to communicate.
38:37 David Hoffman? So that what you're describing sounds like China, and I think that's what Bruno's point is. He's like, that's the future. And that's why, like, add on to everything you just said in that dystopia, governments bans crypto. If you're found citizen with crypto, you will be thrown into jail. That's what Bruno is effectively saying. So why is that bullshit?
38:58 Speaker 02 Here's why it's bullshit, because you're giving governments way too much credit.
39:03 Speaker 02 Look at the staggering incompetence of the US government. It is staggering how incompetent governments are. And what I described to you with corporations becoming wealthier than nation states, what I described to you with the separation of money and state, I don't think governments are future rulers. Corporations are.
39:25 David Hoffman? Well, do you think that's also true for China, right? Because the Chinese government doesn't appear, I mean, I don't know, but I would guess that the Chinese central government appears to be more effective than the American central government, because we have some like values that we tried to uphold that get in the way of a central government, you know, enacting rules and results. And the Chinese don't, the Chinese government and Chinese leadership doesn't really have those constraints. Is that, is that true for China?
39:52 Speaker 02 Well, I think that the difference there is, right, the style of government's very different. In China, there is one source of of power, one source of control, and everything flows from the top down. But recently, I wrote a long Medium post, if you're interested in it, you can find it on Medium, about the politics of the internet and the role of crypto in that future. And what I think's really interesting is what China has, the US doesn't have, and that Europe certainly doesn't have, is an unlimited amount of political will and an unlimited amount of capital that they are willing to spend for absolute dominance.
40:27 David Hoffman? Right. And that's not where we don't have that in America.
40:29 Speaker 02 We don't have that. We barely have that. We barely have the capability to do semiconductor R and D and chip fab here in the United States. And in fact, our government's now trying to invest in bringing those capabilities back on shore, because we have recognized that after two decades of exporting our technology and exporting The production of technology that's been built with IP originating here in America. We are at a major disadvantage. Europe doesn't have a leg to stand on. That's why they're having to use Huawei, right? To develop their 5G infrastructure. The US, I think in one smart move, hit Huawei with Rico charges. We've kind of stopped that 5G effort. But the US is in the progress of implementing an explicit American firewall. And, and that, by the way, like when you're on the internet, right?
41:14 Speaker 02 We don't actually think about where internet comes from, just like we don't think about where power comes from. But like internet isn't this magic ethereal substance. It's not in the air. It's not in the air, no. It, it comes from physical things, right? There's physical infrastructure that supports the backbone of, of the internet and supports it. You know, getting to your router and then being available in your house. But also there's routing logic. There are protocols that dictate how traffic gets routed on the internet. And as traffic is being routed through this network topology, that makes up the modern worldwide web. Right? Which is in fact, many different webs that are highly localized, that have been stitched together through shared protocols and through this routing logic.
41:57 Speaker 02 There are a lot of different interaction points where people can sniff that traffic, can interrupt that traffic, can do things like man in the middle attacks and replace information in that traffic with other information. And so I think the area that crypto needs to go next, and what I'm really excited about, is we need to come a bit out of this esoteric, highly intellectualized digital realm. And start thinking about the physical infrastructure that supports the backbone of the cryptocurrency industry. This is why I think Bitcoin mining is really interesting. We do a lot of research on this. We spend a lot of time on it. But also the physical infrastructure supporting Ethereum, the physical infrastructure supporting these new protocols.
42:38 Speaker 02 Like all of this is really, really important because if we don't own this physical infrastructure and find ways to secure it. Then attacks on Bitcoin become possible. But so long as we can find ways to secure this physical infrastructure and minimize the ability of all world governments to collectively take down these networks by taking all of the nodes offline. Right? There is not going to be a feasible way for governments to shut this down.
43:04 Ryan Sean Adams? Okay, so we've kind of answered like that, that I guess objection. And you've you've laid out this this backdrop, Meltem, of like the WTF just happened. We've got this technology change. We've got this economic change with wealth disparity. We've got baby boomers getting older, their stocks have inflated. We've got these political changes and then we've got this cultural change, which is kind of like the millennials, you know, almost almost rising up and shifting the asset class somewhere else.
43:33 Ryan Sean Adams? Bitcoin just hit all time highs as far as market cap. Ether's price is doing well, too.
43:39 Speaker 02 Wait, did we break 19K?
43:40 Ryan Sean Adams? Not price, but we we did with market cap, by market cap.
43:44 Speaker 02 Okay, wait, hold on. Let's make a bold unsubstantiated prediction because I want to manifest some shit here, too. Let's do that. Let's tap 20K by before Thanksgiving. This is like my goal, tap 20K before Thanksgiving.
43:56 David Hoffman? Oh, I think that's in that's in the cards.
43:59 Ryan Sean Adams? You heard it here.
43:59 David Hoffman? For sure. Yeah.
44:00 Speaker 02 You heard it here.
44:01 David Hoffman? You are looking for the front page of DeFi. Look no further than zerion.io. Zerion is your home base for managing your DeFi portfolios. Zerion offers a central place for you to engage with all of the DeFi protocols and assets that you engage with on a daily basis, but all in one central spot. Here you can see I've loaded up a wallet and Zerion is giving me the portfolio performance of all the assets in this wallet over time, as well as a breakdown of all the assets that I own, as well as all of my transaction history that I've ever done in an easy to view fashion. Zerion also lets you invest right into DeFi's best yielding financial opportunities right from their homepage.
44:42 David Hoffman? Zerion also makes it super easy to access interest in DeFi using applications like Compound and Aave in the background. And you can also exchange your assets using the Zerion app, using an exchange aggregator in the background to make sure that you always get the best rates. You can even use the Zerion mobile wallet to add your MetaMask or Argent or another Ethereum address right into your mobile wallet, so you can see your portfolio and engage in DeFi on the go. Here I just loaded up my Argent wallet and now I'm going to load up my MetaMask as well. And Zerion will do. The same thing. It will add all of my assets and wallets together all in one space and give me a portfolio summary of what's going on.
45:21 David Hoffman? Adding wallets is trivially easy. If you already have a MetaMask, you can get it right into the Xerion app and it can sync with your desktop app as well. And the best part is you can also buy Ether right into the app itself. Use the Invest tab to look at all the things that you have invested in as well as other opportunities. And coming soon to the Xerion app is the ability to buy and sell your assets straight from your mobile device as well. So download the app. It works on iOS and Android. Go to xerion.io, plug in your wallets and get a historical report of your portfolio over time, as well as a comprehensive breakdown of all the assets that you own and how much yield they're generating for you.
46:01 David Hoffman? We're also brought to you by Monolith. Monolith is your cool new DeFi account, your DeFi savings account, your DeFi checking account. Except the cool thing about the Monolith DeFi account is that it gets software updates, right? You actually get to increase the usefulness of this over time. So here are some of the features. Monolith is a smart contract wallet with a lot of the features that you would expect if you've come to know DeFi and what it is. You can, you can add money to it. You can put that money to work in Compound and accessing yield. But you can, and you can also swap through Uniswap. What was cool with Monolith is that they will send you a very sexy Monolith Visa card that connects to your Monolith smart contract wallet on Ethereum.
46:42 David Hoffman? So it's a really awesome tool to live a bankless life with a savings account that gets software updates. So this is something that you're never going to find out in the real world, but you can still do real world things with, you know, real money and like buy your groceries. So that's just fantastic. Coming soon to Monolith, actually already here to Monolith is now you can buy, die and get it sent to your wallet directly, right? So it's also being an on-ramp. So you don't have to go through your centralized exchange like Coinbase or Gemini or wherever. You can just go straight from your bank account, right into your Monolith checking account, smart contract wallet. So check them out at monolith.xyz.
47:21 Speaker 02 You heard it here first. Let's make that.
47:22 David Hoffman? Do you know, do you know what this means?
47:24 Ryan Sean Adams? What this means, David, we're gonna have to ship this podcast on Monday.
47:27 David Hoffman? Yeah, before Thanksgiving.
47:30 Ryan Sean Adams? Because if we don't, then if you ship it after, we could just go in and edit. We've got to verify this on the blockchain, obviously, or else, you know, who knows?
47:38 Speaker 02 We are, we are the propaganda. We are the Polit Bureau for Bitcoin and Ethereum for this industry. Like, let's get better at creating narratives and creating mythology. I think sometimes we get way too internally focused. Like, I don't need to, to proselytize and like preach to people who are already in my version of reality because we're all already here. I need to get everyone outside of this industry to believe that what we're doing is reality, because in that process, it becomes reality.
48:08 Ryan Sean Adams? I think that's something that, by the way, because you know, David and I dabble a lot in the Ethereum community, right? That's something that the Ethereum community, that's something that the Ethereum community needs to learn from Bitcoiners. Because I think Bitcoiners are just absolute at this, at meme propagation and at the social layer of the stack. And money itself and finance itself is so much, as we talked about, like a social, social movement here.
48:35 David Hoffman? Right.
48:35 Ryan Sean Adams? Right? Like, we all need to raise the flag and get better at this. If this is the future we want, meaning it into existence is part of getting to that future.
48:45 Speaker 02 But I, I don't want to actually, I want to be careful here. There has to be substance backing it up.
48:51 Ryan Sean Adams? Yes.
48:51 Speaker 02 Right? Which, which I think is there.
48:53 David Hoffman? Memes are based on reality.
48:54 Speaker 02 Exactly, right? And I think what's interesting, you know, there are a lot of different types of, of ways you can make different realities sort of appear and come into fruition. And I, I do think the Ethereum community needs to get better at creating a larger vision that's, that's more inclusive. But I also think like this weird feuding between Bitcoin and Ethereum, like, it has to stop. Why do people care so much about what other people are doing? Like, I love that, I love the Bitcoin community and in my heart, like, in my heart, I am a Bitcoiner. I wouldn't say I'm a Bitcoin maximalist, right? I call my, I used to call my Myself as shitcoin minimalist. Now I don't know if I can say that any longer.
49:38 Speaker 02 Um, because I do think that that there are real things happening on other protocols and we're kind of reaching this point where like some of these things we've been talking about are starting to become more real. Um, but at the end of the day, like we need to stop fighting each other. This is exactly what's happening with politics in this country, right? Like the Democrats and Republicans are so busy fighting each other that we forgot to fight all of the corporations who are trying to control our minds. And I sound like a crazy person. That's a little bit of an exaggeration, but they're so busy pitting us against each other. That we forget the bigger battle that we're fighting. Same thing in the crypto industry. Like Ryan, David, I don't agree with you probably on 50% of the stuff you say.
50:19 Speaker 02 Instead of arguing over the 50% of stuff we disagree on, like there are a lot of things we do agree on.
50:28 Speaker 02 And we both agree on a future where cryptocurrencies have a way more prominent role to play in our society and our culture and technology and in infrastructure. And while we may disagree on the details of that, if we agree on the same direction, then we should focus on finding ways to move the world in that direction because it's too early to be fighting about details.
50:51 David Hoffman? Right. Well, and I don't mean to point fingers or to place blame. And because that's antithetical to the exact type of like culture that we want.
51:00 Speaker 02 This is a good opener.
51:01 David Hoffman? Yeah.
51:04 Ryan Sean Adams? You're making an excuse for something you're about to say.
51:07 David Hoffman? The, the, the most extreme of, so like I view Bitcoin as a, the Bitcoin culture as a bunch of concentric circles, right? And like the innermost are like the extremists, right? The most extreme Bitcoiners, like the, the Dan Helds, the Pierre Richard's, the people that think anything that isn't Bitcoin is a scam, right? They kind of force the conversation into being an adversarial conversation because if you believe in anything other than Bitcoin, you are by definition like a shitcoiner or a scammer or.
51:34 Speaker 02 Wait, hold on. Why do you care what these people say or think?
51:37 David Hoffman? Because they, well, because they dominate the Bitcoin conversation.
51:40 Speaker 02 No, they don't.
51:42 David Hoffman? I think they do.
51:42 Speaker 02 What version of reality are you living in?
51:45 David Hoffman? The, well, Pierre Richard, who is fantastically smart and has some of the best ideas, who is also an extreme hardliner about Bitcoin, is one of the most listened to individuals in the Bitcoin community.
51:57 Speaker 02 I'm in the Bitcoin community and I don't feel that way at all.
52:01 David Hoffman? Yes, and I, that's, and I agree with your distinction between Bitcoiner and Bitcoin maximalists, right? And so like if you move out from the concentric circle of extremity, I find people like you and Nick Carter and people that use data and math and are a little bit more moderate in their extremity about Bitcoin. And the more you move...
52:22 Speaker 02 Wait, am I still an extremist, though? I can't, I can't figure out where I'm, am I getting categorized in like which...
52:28 Ryan Sean Adams? You should, okay, Meltem, you should categorize yourself.
52:31 David Hoffman? Yeah.
52:31 Ryan Sean Adams? So you're not a maximalist.
52:32 Speaker 02 So if Pierre and Dan are like in the ninth circle of Bitcoin maximalism, what circle, like to use a Dante allegory, who's intelligent, we read books, what circle am I in, would you say?
52:47 David Hoffman? Well, I think maybe that answer, the question, the answer to that question comes from like, what do you think the second largest market cap cryptocurrency can be in relation to Bitcoin? Like, do you think Bitcoin is going to be 80% of the world, of the market cap of all crypto assets combined? Or is it going to be something more moderate? Or like, where does Bitcoin, does Bitcoin suck up all the value, a little bit of the value? How much air does Bitcoin suck up? I think answers that question.
53:12 Speaker 02 But, but also, like, this, this conversation is kind of a silly conversation to have if we don't attach timescale to it.
53:19 David Hoffman? Sure.
53:20 Speaker 02 Right? So one of the interesting questions that came up on Twitter and a few people had sort of mentioned this when I asked people, like, what do you want us to talk about? One thing that people wanted us to talk about is like, why do you guys get so triggered when people talk about Bitcoin and public treasury?
53:36 Ryan Sean Adams? They don't, though.
53:36 David Hoffman? Yeah, that came from, I can't remember his name.
53:38 Speaker 02 Hold on, wait, if you, if you can dish it, you gotta take it. So like, let's, let's take it a little here. I love criticism. I think it's a great way to highlight flaws in your own thinking. And by the way, like, people criticize me all the time. Being a woman on the internet is hilarious because everything you do is subject to like 10 additional layers of scrutiny. And I've gotten a lot of criticism over the years. It's actually been really informative because it has helped me realize that there are places where like I haven't examined my own thinking and I've had to ask myself some hard questions and like I think being open to changing your mind is one of the greatest skills you can have. And unfortunately, I think a lot of people in the crypto space, instead of being open to changing their minds, just double down.
54:21 David Hoffman? Yes, very much.
54:22 Speaker 02 You have to be open to changing your mind. So here's my view on all of this, right? Bitcoin right now is the dominant asset because number one, Bitcoin is really unique. Like, I do believe that in a pantheon of all cryptocurrencies, Bitcoin occupies an extremely unique place. There are so many things about Bitcoin that are just impossible to replicate. And this is a lot of what I talked about in the testimony I gave last year when I had the opportunity, you know, to be one of the representatives of our industry and hopefully try to make us look, you know, intelligent and practical. I don't know if I achieved it. I tried. But I think, you know, Bitcoin really is unique. And in terms of knowledge, right?
55:04 Speaker 02 And in terms of understanding, Bitcoin by far has the largest mind share of writing, of data, right? Like, the ability to analyze the Bitcoin network, the ability to understand the economics of Bitcoin mining, the depth of the Bitcoin market, the depth of the options market, the derivatives market, the depth of just intellectual gravity that is going into Bitcoin is very, very deep. And Bitcoin is the topic, like, I come from the commodities world. When I first started learning about Bitcoin, I got it right away, right? Because Bitcoin, in so many ways, everything about it resembles a commodity, right? It's a digital commodity, in my view. I think other things like Ethereum, the surface area is so vast. And I think even
55:49 Speaker 02 within the Ethereum community, like, there is really no consistent narrative that's really easy to latch on to. It's gonna take people much more time to understand where in their mental model, something like Ethereum or another asset fits. Bitcoin is right now much easier for people to place. And this goes back to mental models, right? When I think about the world, like, I have all these different little categories, and in each category, there's sort of a dominant category leader that comes to mind, that occupies a lot of my mind share. It's like, I think about electric cars. What comes to mind when I say the word electric cars to you?
56:21 David Hoffman? Tesla.
56:22 Ryan Sean Adams? It's always Tesla.
56:23 Speaker 02 Tesla. When I say space to you, what do you think about?
56:25 David Hoffman? SpaceX.
56:27 Speaker 02 Tesla, yeah, Elon.
56:28 David Hoffman? Elon.
56:30 Ryan Sean Adams? Rockets.
56:31 Speaker 02 Rocket. I love that he made the rocket look like the rocket emoji.
56:37 Ryan Sean Adams? I know.
56:38 Speaker 02 Like, the man has style, and I am so into it. Style is underrated, by the way. We need way more style.
56:45 Ryan Sean Adams? He does a great job memeing his own success into existence. Speaking of memeing, and I know David wants to answer your question, but I want to ask you a question to like, figure out what what circle you're in, Milton. So would you say, for instance, this is my acid test. Well, David has his acid test, but so my acid test is, would you say that ETH is a shitcoin? Because I think ninth circle people
57:08 David Hoffman? Yeah.
57:08 Ryan Sean Adams? definitely say that, right? But like, what's your answer to that?
57:12 Speaker 02 No, I mean, I don't think ETH is a shitcoin. I have Ether in my portfolio. And I'm perfectly happy to talk about that.
57:23 David Hoffman? Do you have shitcoins in your portfolio?
57:24 Speaker 02 Yeah, they're all on my website.
57:27 David Hoffman? Okay, so what's your definition of shitcoin then? Because to me, a definition of a shitcoin is something you don't have in your portfolio.
57:32 Speaker 02 Look, I think the word shitcoin gets thrown around really loosely, and maybe, you know, I myself have really enjoyed using this term. I believe that about a year and a half ago, you know, I brought a toilet onto a stage and threw gold coins out of it.
57:46 Ryan Sean Adams? Remember that.
57:47 Speaker 02 I have no apologies. I'm, again, you know, what we started the pre-podcast with is like, I have three rules in life, right? Number one, I want to make money. Number two, I want to have fun. And number three, I want to learn something but also have more fun. And all of those three things are kind of related. So, look, yes, there were a lot of pointless garbage coins that have no reason for existing. But I think that money, right, makes it possible, and like, resources, generally speaking, beyond just financial capital, but like, social capital and intellectual capital can take things that start out as not meaningful, not interesting,
58:27 Speaker 02 and give them depth and gravity, and they evolve, right? Again, things change over time. Nothing is static and nothing exists in a vacuum. And what I think's been really Really interesting to watch about Ethereum. Ethereum has really found a really interesting use case with everything happening in DeFi. I just spent the last three days hosting the CoinShares Crypto Credit Summit. It was awesome. And a lot of the conversation was about what's being built, the financial applications and financial products being built on top of Ethereum. So I think, again, you know, as the, as things mature, as people find these different narratives and draw out these different narratives and build on these different narratives, as financial capital flows into these ecosystems and allows people to build more,
59:12 Speaker 02 there's sort of this relationship, right? Or like you start with an idea and it can be crazy idea. And then a little bit of capital flows in and that capital allows them to produce things. And then more capital pours in, which allows you to produce even more things. And there's sort of this recursive wheel where more capital facilitates more building, which facilitates more capital flowing in. And I think that's what's going on with a lot of these newer projects that I maybe a year or two ago would have called shitcoins, right? Because at that point, like they were ideas and they were trading at ridiculous valuations. The other thing that I think is important to keep in mind is I think we have an obsession with price in this industry. Right? And we always talk about price, like price, price, price. Like we need to stop.
59:54 Speaker 02 It's hard to not think about price, right? And my rule number one is like, I want to make money. Like I'm not doing this out of charity. I love working in this industry. I can't imagine working anywhere else. But like, let's be real, all of us are also here because we think we can make a livelihood here and like be successful here. But I think what's, what's been interesting to see is like this obsession with price leads to this environment where people are trying to justify the price for something. And here's a really interesting thing. If we look at the stock market today, like look at the stock of Zoom or even the stock of Tesla, right? Tesla produces less cars than any other car manufacturer in the world. Yet their valuation based on their stock price is higher than every single other automaker in the world combined.
1:00:40 Speaker 02 Now, if I looked at Tesla's stock price as a rational human being, using a price-driven sort of fundamental value-driven investor model, like Benjamin Graham-style value investor, I would say Tesla's stock is way too expensive. It's way too overvalued.
1:00:58 Speaker 02 But we don't live in that world anymore, right? This is the mental model shift that's happened. So this is where I think this obsession with trying to rationalize something, whether something is cheap or too expensive or underhyped or overhyped is so stupid. Because there is no way to put a price on on this, right? And we don't live in that world anymore because value investing has gone out the window. It went out the window like 12 months ago.
1:01:24 Ryan Sean Adams? Totally agree. So my second follow up question to that. So if ETH is not a shitcoin, do you think that it is possible? Maybe not likely, but do you think the possibility exists that Ether as an asset could accrue some sort of a monetary premium at Bitcoin as Bitcoin so clearly has?
1:01:41 Speaker 02 Yeah, uh, look, I see a lot of discussion about this, like, is Ether money? Um, there are a few people who are like, every time I mention Ethereum, they're like Ether is money.
1:01:51 Ryan Sean Adams? Is that you, David? I don't think it's me.
1:01:55 Speaker 02 So, um, I will be very candid. Right now, I don't, I don't view Ether in that way. And like I said, I hold in my portfolio. I use Ether to engage in in different activities, like in the world of DeFi, right? And it's been a really useful form of collateral because it's highly useful in this DeFi universe, right? I think time will tell whether or not Ether becomes a store of value. But I don't treat my Ether in the same way that I treat my Bitcoin. Like, I don't really sell my Bitcoin. I don't really trade most of my Bitcoin. I just hold it because to me Bitcoin is savings technology. Now, five years ago, I did spend Bitcoin, right? I had like the first Bitcoin credit card, the Shift Card, and I bought stuff with it.
1:02:39 Speaker 02 I was like, I tried out, I, I did an estimate recently of like how much money I spent trying out all of the different apps and like shit getting built on Bitcoin over the last five years.
1:02:48 Ryan Sean Adams? Real sad, real sad looking at those numbers.
1:02:52 Speaker 02 Yes and no. I mean, I ended up investing in some of those companies, which have gone on to do very well. So hopefully that will make up for it, but like, it's kind of scary. I don't view Ether in the same way. I don't have the same like feeling of hurt when I spend Ether. That doesn't mean that won't change, but right now in my mind, not yet. And I don't know if it will be, and that's okay. I think that's totally okay.
1:03:18 Ryan Sean Adams? Mel, tomorrow, are you?
1:03:19 Speaker 02 What do you think, though? Wait, hold on, what circle am I in, Ryan?
1:03:22 Ryan Sean Adams? I so so you were definitely not in ninth circle, right? That is pure maximalism. That is pure. Everything else besides Bitcoin is a shitcoin. I think that Vitalik is a scammer. Like Bankless Podcast sucks. And by the way, we love Bitcoin on Bankless. Just like let that be known and we say it all the time. By the way, but so you're not there. You're clearly not there. You are seem open to the possibility that something other than Bitcoin could accrue a monetary premium. You find it unlikely. It hasn't yet for you. You wouldn't say ETH is money. So you're look, you're a Bitcoiner. You're like, you're not a maximalist. You're somewhere in the outer perimeter of circles, I would say.
1:04:08 Ryan Sean Adams? So yeah, it's awesome.
1:04:09 David Hoffman? In my opinion.
1:04:10 Ryan Sean Adams? Yeah, me too.
1:04:11 Speaker 02 But look, here's the thing, right? Again, let's go back to where we started this whole podcast. Like my view of the world is informed by the reality I consume. And this is why I actually want to talk about a topic that I think is really important. It's really important to have a circle of people around you that influence you that are different from you in every sense of that word, right? Like different life experience, live in a different part of the world, speak a different language, have had different life experiences, have a different view. I love listening to people who, when I listen to them, I'm like, oh, fuck that. Like, no. Because when you have such a visceral reaction to something, really what you're reacting to is what that person is making you feel.
1:04:55 Speaker 02 And typically, when someone makes you feel something so extreme and so visceral, it's because you recognize some truth in what they're saying and that truth is incompatible with your view of reality. And so in order like, and again, like part of this is also understanding that in order for you to grow as a person, you have to have the flexibility to change and evolve as the world around you changes and evolves. And I think I unfortunately, when I started working in crypto professionally, I worked in a place where there was a view that Ethereum was not worth spending time on. I did not share that view, but I spent three years in that sort of mentality, which had, I think, um, when I left that environment, I was like, wait a minute.
1:05:40 Speaker 02 Like, I don't know why I believed these things. I don't agree with these things. It was part of the, the reason I left that environment. It's like, I don't share these worldviews. I don't share this philosophy. And in my view, like, my job is, I'm an investor, right? And as an investor, if I don't have the ability to change my mind as the world changes and as new information emerges, then I'm not doing my job. Because I'm going to miss things by being intellectually inflexible. So I'm not arguing one way or the other. What I'm arguing for is like openness, pragmatism, and like, take time to consume different versions of reality. Take time to understand someone else's view of reality. Because if you don't, you're gonna miss a lot of things.
1:06:24 David Hoffman? Milton, have, has anyone, have you, has anyone pitched to you the bankless thesis?
1:06:31 Speaker 02 I actually pitched that same thesis, uh, but I don't call it that.
1:06:35 David Hoffman? Okay. Wait, so what's the bankless thesis to you?
1:06:38 Speaker 02 Okay, so here's my thesis. A lot of people spend a lot of time on like, oh, I want to make Bitcoin institutional. Like, I want institutions to adopt Bitcoin. And I say, no, Bitcoin is going to change institutions. And Bitcoin will have to evolve their models to function in a world of cryptocurrencies, right? Of Bitcoin. And so my view is like, instead of having these monolithic institutions where, you know, they own your assets and you have the privilege of interacting with your assets when they allow you to, you will engage service providers to provide services to the assets that you own, that you hold, when you choose, how you choose, in the way you choose. So the way I sort of verbalize that is, trade where you, trade what you want with who you want, where you want.
1:07:23 Speaker 02 Clear in margin where you want, settle where you want.
1:07:27 David Hoffman? Okay, so a world without intermediaries, right? A world that's in the hands of the individual.
1:07:32 Speaker 02 Yes.
1:07:32 David Hoffman? Right.
1:07:33 Speaker 02 Is that the same thesis?
1:07:35 David Hoffman? Yeah, that's, it's different from how I would, how I would pitch it. But yeah, that's the gist of it. The, what me and Ryan really focus on is like Bitcoin is fantastic. Digital scarcity is a wonderful new invention. However, the Bitcoin blockchain, the actual technology layer is relatively constrained. And what we are worried about is that those constraints push people out to the margins of Bitcoin rather than being able to be inside Bitcoin, right? And so like engaging-
1:08:04 Speaker 02 I want to be inside of a Bitcoin. How do I get in?
1:08:08 David Hoffman? Let us know what that feels like. Let us know what it's like down there.
1:08:11 Speaker 02 When you said that, I was like, I want that.
1:08:15 David Hoffman? So like, so like if people, if Bitcoin becomes the world's currency, it's not, I don't see how people can engage at the L1 layer. Like they, I will have to send you my Bitcoins via Coinbase, via PayPal. And that's not bankless. That is using an intermediary to settle transactions off-chain.
1:08:34 Speaker 02 I don't agree with you.
1:08:35 David Hoffman? Okay.
1:08:36 Speaker 02 I don't agree with you at all.
1:08:37 David Hoffman? Okay.
1:08:38 Speaker 02 Look, we've just spent this whole time talking about like evolution, right? An evolution of ideas. Look, where Bitcoin is at now is a function of where our culture is at, where our world is at, and like what our behavior is.
1:08:51 David Hoffman? Right.
1:08:52 Speaker 02 It typically takes one to two decades for humans to change their behavior, right? This thing came out 12 years ago.
1:09:00 David Hoffman? Your iPhone, you're pulling out your iPhone.
1:09:02 Ryan Sean Adams? You should, you should upgrade, Milton.
1:09:05 Speaker 02 No, I hate, I hate phones.
1:09:07 Ryan Sean Adams? It's not 12 years old, is it?
1:09:09 Speaker 02 Wait, hold on, look, I still have one of these.
1:09:12 David Hoffman? The ones with one camera on them?
1:09:14 Ryan Sean Adams? Oh my God. Was that before you were born, David?
1:09:18 David Hoffman? Oh my goodness.
1:09:22 Speaker 02 But look, when, when the iPhone started, right? I didn't really know what to use it for because the App Store didn't really exist. The app ecosystem didn't exist, like iPhones weren't a thing. But now I have a supercomputer in my pocket and I do all sorts of stuff with it.
1:09:37 David Hoffman? Right.
1:09:37 Speaker 02 I think where Bitcoin is at right now is partially a function of like our mental model and how much change we can absorb. Right? And we can't absorb all of the change all at once. Like we're just now getting to the point where people are even willing to contemplate that something other than the dollar could exist. Like we're just at that point. We're just like getting started, right? So I think this, this narrative that Bitcoin can't scale, Bitcoin can't do this is a little bit short sighted. It's the same thing as someone saying like, oh, Ethereum can never be money.
1:10:06 David Hoffman? Right.
1:10:06 Speaker 02 No, if I'm willing to entertain that, I think you should be willing to entertain the possibility that Bitcoin can.
1:10:11 David Hoffman? I, I do think Bitcoin can scale. I do think that Bitcoin can achieve its maximum banklessness potential. And I think I see the, the easiest path for Bitcoin to do that, the, the way that the water flows downhill is by doing it on Ethereum. Because Ethereum offers all of this intermediary free financial infrastructure that Bitcoin wants. And so I think Bitcoin on Ethereum is the easiest path for Bitcoin to scale. Right? Like Ethereum is pushing the envelope on scaling technologies. Ethereum is pushing technologies on disintermediated financial infrastructure. If all the cool financial innovations is based off of cryptography is happening on Ethereum. And there's no reason why we could just take the Bitcoins and put it on Ethereum.
1:10:54 Speaker 02 Hold on. No, that statement is categorically false.
1:10:57 David Hoffman? Oh, boy.
1:11:00 David Hoffman? Let's get into it.
1:11:01 Speaker 02 Okay. Saying all cool cryptographic innovations happening on top of Ethereum is false.
1:11:05 David Hoffman? Yeah, that, that was, that was a, uh, what's the word?
1:11:09 Speaker 02 Unsubstantiated and bold claim, which I like.
1:11:11 David Hoffman? Yeah.
1:11:12 Speaker 02 Which I like.
1:11:13 David Hoffman? Hyper ball.
1:11:13 Speaker 02 I like that. I like that, but I'm going to get in there. I'm going to bring some fucking receipts.
1:11:18 David Hoffman? All right.
1:11:19 Speaker 02 Categorically incorrect, right? And that's fine. We can agree to disagree. That's the thing. I'm not here. To convince you that my view of the world is correct. And you're not here to convince me that your view of the world is correct.
1:11:31 Ryan Sean Adams? Oh, I am. I'm kidding.
1:11:34 Speaker 02 Good luck with that. But I think what we are here to do is find where our visions for the future are similar. And like, we have the exact same view for the future, right? We just disagree on where it's going to happen, what it might look like and who and where and how and why and what. Which is all important, but like.
1:11:48 Ryan Sean Adams? I totally, I totally agree with that, right? So the same vision, you know, pro, pro cryptography, pro self sovereignty, right? Like this is core stuff and 100% aligned. The, the disagreement or the question is like, how do we get there? But I want to ask another acid test question, Meltem. So is Uniswap cool? Or is it really stupid and does it suck? What do you think about Uniswap?
1:12:13 Speaker 02 Wait, is that a real question?
1:12:14 Ryan Sean Adams? That's a real, that's a real question.
1:12:17 David Hoffman? Yeah, yeah.
1:12:18 Speaker 02 Uniswap is so fucking cool.
1:12:20 Ryan Sean Adams? Why is it cool? All right, tell us why it's cool.
1:12:23 Speaker 02 Okay.
1:12:23 Ryan Sean Adams? Because we think so too. We agree.
1:12:26 Speaker 02 Okay, so Uniswap actually proves out something really, really interesting. That blows people's minds when I explain it to them, like traditional finance, people who are accustomed to like trading on a venue, right? What's so cool about Uniswap is anyone can list anything and trade anything with anyone.
1:12:45 Ryan Sean Adams? Right.
1:12:46 Speaker 02 That is cool. That is so cool. I don't understand people who are like, that's not cool. Like the token and all the other stuff.
1:12:53 Ryan Sean Adams? You're talking damn hell about this then.
1:12:55 Speaker 02 We don't need to get into like, okay, you know what? Kraken should spend their time building a better trading engine. That's all I'll say.
1:13:03 Ryan Sean Adams? That's spicy.
1:13:04 David Hoffman? Spicy.
1:13:04 Ryan Sean Adams? Whoa.
1:13:05 Speaker 02 But like.
1:13:05 Ryan Sean Adams? Get some spicy takes. Spicy emoji.
1:13:08 Speaker 02 But look, it's, but why are we spending time like ripping other people apart? I know why, because it's really easy to do. And I'm guilty of this myself from time to time. Like sometimes I really rip stuff apart and afterwards I kind of feel bad, but then I'm like, hmm, okay. We, we all do it, right? Because it's easier to tear things down than it is to build things up.
1:13:30 Ryan Sean Adams? All right, if it's confession time, I may have said some bad things about lightning. All right, not lightning, excuse me, well, also lightning, but that came to mind, but Litecoin.
1:13:38 David Hoffman? Yeah.
1:13:39 Ryan Sean Adams? Confession time. I've said some bad things about.
1:13:41 Speaker 02 I mean.
1:13:41 David Hoffman? I don't think anyone's coming to you after you go on that one, though.
1:13:44 Ryan Sean Adams? Okay. Okay. So, so Milton.
1:13:46 Speaker 02 Why does Litecoin exist? I'm sorry.
1:13:48 Ryan Sean Adams? Why is it pumping in this bull market still?
1:13:50 Speaker 02 Okay.
1:13:50 Ryan Sean Adams? I think.
1:13:51 David Hoffman? Cause retail's coming. Retail is here.
1:13:54 Ryan Sean Adams? David's excited about that. And I just, it makes me so sad, to be honest, to see Litecoin pumping in this. But anyways.
1:14:01 Speaker 02 Here's my thing, like, can Litecoin and like, Bcash or whatever other dumb assets have like somehow survived the last five years? Can they just like, drop out of the top 10 or top 20 just because random OGs, lots of money still own these things? Can they just like go, it's so stupid. I'm like, we need a.
1:14:20 Ryan Sean Adams? I want that for hat. I, I, I want that.
1:14:22 David Hoffman? That's, that's the role of DeFi tokens. DeFi tokens need to.
1:14:25 Ryan Sean Adams? Alright, so. Let's talk about DeFi.
1:14:27 David Hoffman? Only blue coins.
1:14:29 Ryan Sean Adams? Okay, so let's talk about DeFi. So.
1:14:32 Speaker 02 And the pink one, the one pink one, uni. We'll let that.
1:14:35 Ryan Sean Adams? Uniswap, Uniswap is super cool, right?
1:14:39 Ryan Sean Adams? How about DeFi writ large? Cool scam?
1:14:44 Speaker 02 Super cool. I've like written a lot about DeFi. I've talked about a lot. We do some cool stuff with, with DeFi. Um, I've been investing in DeFi projects, like, super cool. Huge fan of Zapper. I'm an investor in that, like, love what Zapper has done. Crazy cool. Um, huge fan of Uniswap, obviously. Huge fan of like Hedjic and YeeFy. I, uh, don't own either Hedjic or YeeFy, but I think what they're doing is super cool. Like, what I like about the DeFi space, there, there are pros and cons, right? Like, first of all, DeFi's super immature, right? It's, it's all experiments and like, oh, some of them are not good.
1:15:27 Speaker 02 And there are rug pulls and I think there are people who are like poorly intentioned. There's a great meme. There's two great memes. Um, I'll post them on Twitter. But there's one where it's like someone whispering in someone's ear saying DeFi and then a picture of like arms, uh, hair on someone's arms standing up. It's one of my favorite memes. Like, DeFi's so hot. When you say the word DeFi, people are like, oh, I love DeFi.
1:15:50 Ryan Sean Adams? I've seen that happen to David in real life, actually. I think it might be his, uh.
1:15:54 David Hoffman? This was a mutual.
1:15:56 Ryan Sean Adams? It might be his.
1:15:56 David Hoffman? You promised to never say that.
1:15:58 Speaker 02 Like if I whisper DeFi, your nipples get hard, dude.
1:16:03 Ryan Sean Adams? You could try it.
1:16:05 David Hoffman? Wait a second, I need to turn off my camera.
1:16:08 Speaker 02 The second meme that I love is like this giant like vat of water has a hole in it. And there is a guy who just slaps a piece of tape on it and it says, so we are DeFi. So like all these random like coins that don't do anything are now trying to become DeFi and they're like, we're DeFi.
1:16:26 Ryan Sean Adams? Tron is DeFi, baby. We're big believers. Tron's bringing a DeFi.
1:16:29 Speaker 02 Wait, what about CD5?
1:16:32 Ryan Sean Adams? That's, oh, that's my favorite. Yeah. Yeah. Centralized DeFi. That's.
1:16:36 David Hoffman? We're relevant.
1:16:37 Ryan Sean Adams? Finance.
1:16:38 Speaker 02 Look, all of these things, like this again is kind of an issue of semantics, right? The way I view DeFi is like, I think DeFi has opened people's eyes to the possibilities of what can be built using blockchain networks and assets on blockchain networks. Definitely. The practical realities are that DeFi and its current substantiation has some challenges, right? And some of those are being worked on. Some of those challenges are, you know, going to be very difficult to resolve. And that's, that's fine, right? And, and we'll see what happens and what direction it evolves in. So my view is like, again, as an investor, if I'm not looking at DeFi, I'm not doing my job.
1:17:22 Speaker 02 If I'm not like, you like, I love yield farming. Yield farming is super cool. We actually had to rewrite some of our internal policies to allow people at CoinShares to yield farm. That was fun.
1:17:33 Ryan Sean Adams? That's, that's got to go with like, you know, number one, rule number one is make money, right? Yield farming is a great opportunity to make, to make money.
1:17:39 Speaker 02 But just like I was spending Bitcoin back in the day, right? And like trying out all these different Bitcoin apps, like if I'm not using these products and services, if I'm not like engaging with them at that level, if I'm not yield farming, if I'm not trying to like do Jana LP and like figure this stuff out, I'm missing things. I am, I am going to have fundamental gaps in my understanding. And you can't be dismissive of everything that doesn't conform with your own very narrow view of the world.
1:18:05 Ryan Sean Adams? So here's another layer.
1:18:06 Speaker 02 I tried out Twitch a few months ago, like the Bitcoin Cash or like the BSV thing. It's like their social messaging app and everyone on Twitter was like, did they pay you to tweet that? Like you bitch.
1:18:17 David Hoffman? Right.
1:18:17 Speaker 02 I can't believe you did that.
1:18:19 David Hoffman? That's the Bitcoin maximalism that we don't, that we don't enjoy here.
1:18:22 Speaker 02 You should see my DMs. People were like, you are dirty shitcoin bitch.
1:18:26 David Hoffman? I'm sure they were pleasant.
1:18:28 Speaker 02 How do you?
1:18:28 Ryan Sean Adams? That's terrible.
1:18:30 David Hoffman? So, so, so Meltem.
1:18:31 Speaker 02 How do you get to a point where you are so limited in your thinking? That someone even engaging with something that like turns you off.
1:18:40 David Hoffman? Right.
1:18:40 Speaker 02 It inspires that type of reaction. Like it's wild to me that people are that crazy. I'm like, you need to relax.
1:18:48 David Hoffman? Yes, because according to the inner circle of Bitcoinerism, like Bitcoin is a jealous god, right? Like you, you play in a different ecosystem and then you're committing blasphemy, right?
1:18:57 Speaker 02 No, no, but here's the thing. We're now finally getting to the point where people recognize like Bitcoin is not a personality.
1:19:03 David Hoffman? Hmm. It's just a technology. It's just a, it's just a blockchain.
1:19:06 Speaker 02 You have to be a person, like just tweeting, like I'd hate these people who just like tweet random shit about Bitcoin. Like Michael Saylor's tweets drive me nuts. I'm just like, it's so chattish. I'm like, this is so stupid. And I love when Michael Saylor's done for Bitcoin, but I'm just like, please stop. Like Bitcoin's not a personality. Please be a person first and foremost. Like Bitcoin can be a huge part of your identity, but you can't be a Bitcoin. Your final form is not becoming a Bitcoin.
1:19:36 Ryan Sean Adams? Wait, David told us we could get into a Bitcoin in this podcast.
1:19:40 Speaker 02 Right. I want to get inside of a Bitcoin. I did, I did joke that my final form, like when I evolved to my final like spiritual form, I will actually become a Bitcoin.
1:19:51 David Hoffman? Become a bit, yeah.
1:19:52 Ryan Sean Adams? Wow.
1:19:53 David Hoffman? Are you an Ethereum?
1:19:55 Speaker 02 An Ethereum?
1:19:56 David Hoffman? Yeah.
1:19:56 Speaker 02 Um, I don't know. Look, I don't, I don't feel the need to identify myself as anything. I'm Meltem, right?
1:20:04 David Hoffman? But you are a Bitcoiner.
1:20:06 Speaker 02 I'm a Bitcoiner. I'm a.
1:20:08 David Hoffman? Meltem comma Bitcoiner.
1:20:10 Speaker 02 Yeah.
1:20:10 David Hoffman? Okay.
1:20:11 Speaker 02 A part-time troll. I do think, but I actually not troll, shit poster. I prefer that term. Um, I'm really good at memes. I have been dropping some dank memes lately. They slapped. I'm into that.
1:20:26 Ryan Sean Adams? Love it. Love the dank memes. That's how we propagate. All right. So
1:20:29 Speaker 02 Yeah, we do. That's how we spawn.
1:20:32 Ryan Sean Adams? Our friend, our friend Pomp, uh, come on the show, Pomp. Why isn't Pomp on the show? Anyway, he would say that
1:20:40 Ryan Sean Adams? all this cool, all this stuff on Ethereum is going to be basically pushed, ported to Bitcoin. And Bitcoin will basically, you know, build its own Uniswap, build its own DeFi ecosystem. What's your take on that perspective?
1:20:58 Speaker 02 Yeah, look, um, that could happen. Um, I don't see that happening right now or in the near future, though, just because there's some like, just really fundamental challenges that that make that difficult. Um, but look again, like I have a lot of respect for Pomp. I actually think he's super consistent and he does a great job getting people amped up with like very simple messages and he's just consistent. Like Bitcoin fixes this, the virus is spreading. Like he's very good for pithy one-liners and people love it. Right? So like kudos to him. Much respect.
1:21:36 Speaker 02 Everyone is entitled to their perspective. Everyone's entitled to their views. I don't have to agree with everyone, but like me disagreeing with you, Ryan and David, doesn't mean that I don't respect your perspectives as a person, right? You disagreeing with me as Meltem doesn't mean that you disrespect me as a person, right? And again, I think people and people on the internet generally have a hard time finding this line, right? I can disagree with someone. I can disagree with someone's politics. I can disagree with someone's views on on crypto. I can disagree with their views on what the future will look like. But it doesn't mean that I deny that person the right to believe what they believe, right? Like
1:22:16 Speaker 02 we are not judge, jury or executioner. The whole point of cryptocurrencies is permissionless financial innovation. And so to me, what's so ridiculous is how statist people will be. They're like, oh my God, you rug pulled like called the SEC. I'm like, why are you here?
1:22:38 Speaker 02 Why are you here trying to be judge, jury and executioner? You can't say out one side of your mouth, "We want to be permissionless financial innovation." And then in the very same breath, like, "Call for financial regulation." Those are two ideologically incompatible views. And I don't think people recognize their own hypocrisy. I recognize my own hypocrisy. I have a lot of incompatible worldviews, but I recognize them and I work on them and I try to understand how I arrive at a place where like my worldview can be more consistent and make sense. But I think a lot of people just never take a step back and ask themselves, like, "Does what I am saying actually make sense?"
1:23:19 Ryan Sean Adams? I think we solved it. I think we solved crypto tribalism here and now. We just solved it, guys.
1:23:24 Speaker 02 It's really fun. Like, spectacles are fun. I believe in bread and circuses, right? So, this is what's going on in this country right now. We have a fucking circus. It's called the Trump presidency, right? And we have bread. They're just gonna give money to people. Like, bread and circuses are a great way to keep the population from knowing what's actually going on. And over time, the spectacles will just get bigger. So, people are here for the spectacle, like, "Come for the Bitcoin, stay for the drama."
1:23:51 David Hoffman? That's exactly what Michael Saylor did, absolutely. So, Meltem, like Bitcoin is pushing up on 19,000. Like, the all-time highs are in sight. Meanwhile, over the last three years, the industry has built out the infrastructure that is going to make it really, really easy for institutions to access Bitcoin, right? Like, back in 2017, that didn't exist. It was hard for an institution to-
1:24:14 Speaker 02 Wait, hold on. Before we go down, why do we care about institutions? I really want to stop talking about, like, white boomer dudes buying Bitcoin.
1:24:22 Ryan Sean Adams? Because they have a lot, because they have a lot of money, though. That's why we care a little bit.
1:24:26 Speaker 02 And I would love for them to buy my Bitcoin. Well, I'm not selling them my Bitcoin. They can buy my other Bitcoin.
1:24:32 Speaker 02 I don't understand the obsession with institutions. Because what people are saying is, "It would be really cool if, like, Ray Dalio bought Bitcoin and then took Bitcoin and put it in a vault at BNY Mellon and got a little paper receipt for it." That's what we do in banking today. Like, that's not cool. That's stupid.
1:24:54 Ryan Sean Adams? Oh, yeah. I mean, we're totally, totally, I would, he should buy it and put it on his ledger is what he should do. I mean, he shouldn't, like, he shouldn't put it in the banking system. That's probably a little dangerous for Ray. Not financial advice.
1:25:08 Ryan Sean Adams? But
1:25:08 Speaker 02 Nothing on this podcast is financial advice, by the way. Nobody should take
1:25:11 Ryan Sean Adams? It's not even advice. It's not even advice at all.
1:25:16 Speaker 02 It's banter. It is somewhat informed banter, but also David making a lot of unsubstantiated.
1:25:24 Ryan Sean Adams? I think where David was going with this question is less institutions, but like more like where are we headed next? Right? So we just, we're hitting these all time highs already. It's not the end of 2020. The decade's getting crazy. You outlined all the macro stuff for us. What's next in 2021 and beyond?
1:25:42 Speaker 02 Okay, um, so there's two ways to interpret that question. What there's what I would like to be next, like my version of reality that I'm trying to manifest over here in my little corner of the world. And then there's probabilistically speaking, what is more likely to happen, right? Okay. Which one do you want to do first?
1:26:02 David Hoffman? Start with your, your version of the future.
1:26:05 Speaker 02 Okay, so my version of the future is A, like, I think cryptocurrency at this moment in time and really Bitcoin, and I apologize for like really focusing on Bitcoin. But right now Bitcoin is just at a very interesting point and the Bitcoin narrative was made for the, the world we're living in right now, right in this minute, right? I think we're at a point where people all around the world are looking at our financial system, are looking at economies, are looking at assets. And what I go back to is like my experience working in corporate treasury, right? At ExxonMobil, which when I worked there was the largest company in the world. No longer is like not even close, right?
1:26:48 Speaker 02 As a corporate treasurer, um, my job was to optimize, um, the, the cost of capital, A, right? Keep the cost of capital low. So make sure that we could access debt at zero cost, basically. And two was to maximize the opportunity cost of capital, meaning that, you know, if I have a hundred dollars sitting here, I can earn a return with that hundred dollars. So how do I optimize and get the best risk return adjusted, um, sort of profile for those assets, right? I don't want to put them in something super high risk where I might lose all my money or I might 10x it. But I also don't just want to leave it there when I could be earning return with it. And so, uh, in 2013 was I could make a pretty good clip, two to three percent, trading short-term treasuries.
1:27:35 Speaker 02 Basically, very low risk return. That doesn't exist anymore. Rates are zero. In some places, rates are negative. Fully one quarter of the world's sovereign debt is negative yielding. And that number will only increase. We are in a zero interest rate environment. The way we allocate capital has to change. And investment committees don't respond quickly, right? Like, if you've ever been in an investment committee meeting or in a risk review meeting with a large bank or a large investor, it takes them 18, 24, 36 months to make changes. Because it takes a long time.
1:28:19 Speaker 02 So people are like, in March, people are like, oh, my God, Bitcoin's gonna boom because inflation. I'm like, things don't happen on that time scale. Like, in November or in April of next year, they'll have their annual risk review meeting. They'll have their annual allocation strategy meeting, and they'll talk about maybe allocating, right? But it doesn't happen like the very next day. I think what is happening, what's very real, is people look at the world around them. Inflation target is 2.5%, meaning every year, my dollars buy me 2.5% less. My risk-free rate of return is zero and will be zero forever, for the foreseeable future. So what can I do with my money
1:29:05 Speaker 02 that will allow me to at least keep pace with inflation and potentially earn a return? Because there's no way that the government's gonna fund my retirement. I know that for a fact.
1:29:16 Speaker 02 So what do I do with my money?
1:29:20 Speaker 02 And I think people are looking at Bitcoin because there aren't a lot of places left to put the absolute shitload of money that is out in the world that needs to earn return.
1:29:33 Speaker 02 People are buying Pokemon cards, right? A few weeks ago, Logic, their rapper, like, bought the most expensive Pokemon card ever. People are buying classic cars, people are buying houses, people are buying wine, people are buying like these esoteric assets, people are buying NFTs, right? People are trying to find places to stash cash that will help them at least keep pace with inflation, but also potentially earn a return. That opportunity is going away in a lot of places. And so again, I think this is where Bitcoin is such a beautiful, beautiful story. Because Bitcoin has the capacity to absorb significant amounts of capital. The markets are really liquid and robust. The infrastructure available to institutions is very robust. So I'm very excited in the
1:30:17 David Hoffman? That's what I was saying, you said the institution word.
1:30:21 Speaker 02 Look, but this is the, this is the practical reality, right? This is the practical reality, like what you said, Ray Dalio is not going to sit there with a ledger and like type in his eight-digit passcode. Do you really think that's gonna happen? Like, he probably doesn't, he probably doesn't even write his own emails, right? Like, he has people who do that for him. The man is extremely wealthy. Like, he's not gonna sit there with a little ledger and like unbank himself. Why would he do that?
1:30:47 Ryan Sean Adams? Because he would definitely lose his private keys at least once.
1:30:51 Speaker 02 Wait, didn't Peter Schiff lose his private keys?
1:30:54 David Hoffman? I think that was a media stunt to get engagement out of Bitcoiners. I think he's been doing that for years.
1:31:01 Speaker 02 He's actually my, my favorite no-coiner. I kind of like Peter Schiff being in the space. Like, now that Nuriel Rubini believes in Bitcoin, we don't have anyone to like hate it on.
1:31:13 Ryan Sean Adams? Wait, wait, what? Nuriel believes in Bitcoin?
1:31:17 Speaker 02 Yeah, Nuriel Rubini is now a Bitcoiner. Did you?
1:31:19 Ryan Sean Adams? No, he is not.
1:31:20 David Hoffman? Yeah, I miss, I miss that memo.
1:31:22 Ryan Sean Adams? How did I miss that? When did that happen? We're talking about the same guy, like, American economist, you know, testifies in Congress, like, how?
1:31:30 Speaker 02 I feel like, you know, you're praising, I'm kidding. No, Nuriel Rubini, like, has a lot of degrees and qualifications. He has a lot of pieces of paper. Yes.
1:31:44 Ryan Sean Adams? What made him change? He bought some Bitcoin.
1:31:48 David Hoffman? Yeah.
1:31:48 Speaker 02 He's friends with a lot of Bitcoiners.
1:31:50 David Hoffman? Right.
1:31:51 Speaker 02 Yeah, but but look, people are gonna change their minds. I don't know where I was going. I'm starting to ramble. I'm gonna stop talking.
1:31:58 David Hoffman? Yeah.
1:31:58 Ryan Sean Adams? Just overheaded, you know?
1:32:00 Speaker 02 Yeah, but but look, at the same time, what is gonna happen is I think there's a massive crackdown coming. Look, at the end of the day, like, what governments want is control, and governments are losing control in many ways. And we're in an interesting part of the cycle where like the mob has started to, or like governments no longer rule, mobs of people rule. Right? And so governments are losing power. We're seeing the era of the nation-state. I think the experiment of democratic nation-states certainly like sort of reaching a natural denouement or ending point, and something new is going to emerge. The question is, what will it be?
1:32:38 Speaker 02 I have a lot of hope and a lot of optimism around that being, you know, more technocratic society where cryptocurrencies, particularly Bitcoin, play a greater role. But again, there's a lot of uncertainty in like how that might evolve. But look, there are a lot of glimmers of hope. And as I've said before, right, every ending is a beginning. And I think there are going to be a lot of endings over the next decade. And when things end, we need to be in a place where we can build new things that are more inclusive, that are more open, that are more egalitarian. And when I say egalitarian, I mean equality of access, right? Equality of opportunity.
1:33:21 Speaker 02 I can't make people who make poor choices make better choices. I can only give them equality of access. And then if it's like leading the horse to water, right? I'm like, hey, Bitcoin at $200, like, you should get some Bitcoin. They're like, no, it's too expensive. And then I do it again at 2000. They're like, too expensive. And now they're like, oh, my God, why didn't you tell me to Bitcoin, to buy Bitcoin? I'm like, I can't help you because you refuse to help yourself. All I can do is show you the door and give you the information and encourage you to walk through it, but I can't make you do it. And so I think that's kind of where our industry needs to go is like, let's build things that make it possible for this world we want to exist. That's more egalitarian, that provides equality of access. And let's take governments and companies and regulators and people to a place where they can walk through that door.
1:34:05 Speaker 02 But if they choose not to, right, like, we can't force people to.
1:34:08 David Hoffman? Right.
1:34:11 Speaker 02 Unless we can find a way to like enslave people in like some crypto citadel and then they have to, I don't know.
1:34:19 David Hoffman? I'm sure somebody would be interested in that. I mean, this entire industry is based off of empowering, self empowerment and self responsibility. Right. And so you can, you can, you can lead a horse to water, but you can't make them buy Bitcoin. You know?
1:34:35 Speaker 02 I was gonna say, if you have a big enough stick, maybe.
1:34:39 David Hoffman? Meltem, we want to thank you for coming on the Bankless Podcast and also for being a part of our first video podcast. Everything else is usually not done on, on video. So again, if you guys watched or listened to the podcast, you missed out on some of Meltem's graphics and infographics that she shared in the, in the beginning. So don't miss that. But before we go, Meltem, do you, you have a price prediction after all of this reflexivity in Bitcoin and institutions come and buy all their Bitcoin and Ray Dalio gets his ledger? Where is, where is Bitcoin's price gonna be?
1:35:12 Ryan Sean Adams? Wait, David, David, David, hold on. You're asking the easy question. We want to know where Bitcoin is, but we also want to know where, where Ether price is.
1:35:18 David Hoffman? Yeah, that was gonna go, that was gonna come next. Yeah.
1:35:21 Speaker 02 Okay, so I, I'm a big fan of Howard Marks, the investor at Oaktree. And he has a great saying, which is you either name a price or no date, or you name a date and no price, and that way you're never wrong. So I'm gonna go with, I'm gonna take that advice. My price target for Bitcoin is $150,000. I'm not gonna attach a date to it. My price target for Ether is $2,500. I'm not gonna attach a date to it.
1:35:49 David Hoffman? Okay, but is that in one cycle or is that cheating on the whole date thing?
1:35:54 Speaker 02 I have no comments.
1:35:55 David Hoffman? Okay, fair enough.
1:35:59 Speaker 02 While we still have the fifth, I won't plead it because I'm pretty sure in the future we won't have it anymore.
1:36:06 David Hoffman? Okay, Meltem, if there was, what should the listener, so you've kind of given a few call to actions, like write to your senator to, to make sure that we preserve encryption.
1:36:17 Speaker 02 Also, elect better representatives. Stop electing boomers.
1:36:20 David Hoffman? What's, what's the lowest hanging fruit that a listener can do to help this world forward?
1:36:25 Speaker 02 Uh, just get, get, get involved in like whatever capacity feels comfortable to you. I think the biggest thing is like have an open mind and be open to the idea that your experience of reality is about to change in a radical way. That has never led me wrong.
1:36:43 Ryan Sean Adams? Super cool, great advice, Meltem. This has been a really fun conversation, uh, like really fun.
1:36:48 Speaker 02 Hold on, wait, did you expect that? Or were you like, fuck?
1:36:52 David Hoffman? Uh, well, when we were coordinating to get you on the podcast, uh, the, the email that you sent in response, I, I messaged Ryan, it's like, oh yeah, she's, she's coming in hot.
1:37:03 Ryan Sean Adams? Yeah. So, and you did, it's, it's been a lot of fun and I think people don't usually get this kind of conversation between different, um, communities in crypto, talking about what they, hopefully we now at the end of this conversation, maybe we've moved from a, we agree on 50% to 51%. That was like the, the true goal of this conversation.
1:37:22 David Hoffman? That's enough for consensus.
1:37:23 Ryan Sean Adams? That's enough.
1:37:25 Speaker 02 It depends on what protocol you're talking about. In some instances, you need 66% or maybe even 80.
1:37:30 Ryan Sean Adams? You've studied up, you have studied up, you have prepared. Uh, that's something like staking, talk to me.
1:37:36 Speaker 02 I, I have interests outside of just the narrow realm of, of Bitcoin, although the realm of Bitcoin is actually quite expansive and like really infinitely interesting.
1:37:45 Ryan Sean Adams? There's a lot there and I think we agree on the overall bankless thesis, let's say, let's get the banks and intermediaries out. So that is good. So maybe Meltem's bankless, maybe that's right.
1:37:55 Speaker 02 I'm working on it. It's very hard to become bankless in America, though. Uh, it's not very easy. Uh, the last thing I want to say to everyone listening, um, if you disagree with anything I've said and you want to argue with me, feel free to DM me on Twitter. I am at Melz underscore Dem, open invitation, I have open DMs. And, uh, if you want to, you know, alter my perception of reality, please come and be my guest. I love it.
1:38:19 David Hoffman? How much time do you spend engaging with people in your DMs who want to argue with you? That's something I try to avoid.
1:38:26 Speaker 02 I, I find it fun. And you know what? The thing is like with most people, you can find something to agree on. I always like to start by finding things to agree on and then I think it makes disagreements like less scary.
1:38:36 Ryan Sean Adams? Well, very good, guys. And Meltem, would you be able to share those slides that you put at the beginning? Is there a link that we can put in the show notes somewhere?
1:38:42 Speaker 02 Yeah, there are a few links. I do like a lot of different presentations, so I'll share with you a few different links where people can check stuff out. Yeah.
1:38:50 Ryan Sean Adams? All right, guys, here's the thing. Action items, of course, you can DM Meltem at your discretion, particularly if you disagree with her. David might be doing that after the podcast. I don't even know. We will also include a link to some of the coin share slides that she shared in the show notes. Go check those out. We also, of course, always appreciate five star reviews on iTunes. So make sure you do that. Get us top of the charts. Last thing, risks and disclaimers. None of this was financial advice. I hope we expressed that sufficiently. Maybe it wasn't even advice.
1:39:21 Speaker 02 Yeah, no, it was neither a solicitation by or sell securities. I just want to make that very clear. Not a solicitation, not tax advice. Please talk to a lawyer. Do your own research. If you have any questions, I am bound by the coin shares disclosures and disclaimers, which are linked in my Twitter bio. Guys, never work for a regulated company. It's the worst.
1:39:41 Ryan Sean Adams? You took the words right out of my mouth. Of course, with crypto, you could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey.
1:39:52 Speaker 02 It is for everyone. Be inclusive. You're all welcome in my wagon. Maybe.
1:39:59 Ryan Sean Adams? There you go.
1:40:00 Speaker 02 Maybe Ryan will let you in. You can come hang out in my wagon.
1:40:04 Ryan Sean Adams? No, but the door is open. Thanks a lot. Take care.
1:40:07 Speaker 02 Does the wagon have a door?
1:40:10 Ryan Sean Adams? We're mixing metaphors here. We can't. You can slip in the back. I think this podcast's over, guys. I think we're done here.
1:40:19 Speaker 02 You can lift the little flap and like.
1:40:21 David Hoffman? Is that a door?
1:40:23 Speaker 02 Is a flap a door?
1:40:24 Ryan Sean Adams? It's a flap.
1:40:25 David Hoffman? Do we need to have a podcast on this?
1:40:28 Speaker 02 But I need to delve into the history of doors.
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