#401: Parker Lewis & Will Cole on Bitcoin As A Reserve Asset

Will Cole is the Chief Product Officer at Unchained Capital and Parker Lewis is the Head of Business Development at Unchained Capital. In this conversation, we discuss the recent trend of corporations holding Bitcoin as a reserve asset on their balance sheet, the macro and micro trends driving this transition, why corporations are the next group after individuals to do this, how businesses can hold their private keys, and what Unchained is building currently. ============================== Athletic Brewing is re-imagining beer for the modern adult. We love beer. But we also love being healthy, active and at our best. No matter your motivation, if you want to keep a clear head and drink healthier, we are here for you. Athletic makes non-alcoholic beer that you don't have to compromise to enjoy. The beers are fully flavored, clean ingredient, and a fraction of the calories of full strength beer - they fit in any occasion. Check out www.athleticbrewing.com for more details and free shipping nationwide. ============================== Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Will Cole is the Chief Product Officer at Unchained Capital and Parker Lewis is the Head of Business Development at Unchained Capital. In this conversation, we discuss the recent trend of corporations holding Bitcoin as a reserve asset on the balance sheet, the macro and micro trends driving this transition, why corporations are the next group of individuals to do this, how businesses can hold their private keys, and what Unchained is building currently. I really enjoyed this conversation with both Will and Parker, and I hope you do as well.

• 0:40Anthony Pompliano?

  Before we get into this episode though, I want to quickly talk about our sponsors. First up is Athletic Brewing. I love these guys. At Athletic Brewing, they're all about reimagining beer for the modern adult. Great tasting beer that happens to have no alcohol and be a mere fraction of the calories of even the lightest beers. That's right, if you're doing Sober October, you could still have beer, just with no alcohol. Go check out Athletic Brewing. In today's modern, mindful, performance-driven world, there's just no time for hangovers. So with Athletic Beers, you now have the full relaxing ritual of drinking a great beer to wind down the day, do it with dinner, day drink, but you can do it all without derailing the rest of your day or week. If you're looking for a great beer for Sunday through Thursday nights, that's right, Sunday through Thursday nights, drink Athletic Brewing,

• 1:24Anthony Pompliano?

  and then go and drink your Bud Light on Friday and Saturday night, Sunday through Thursday, Athletic Brewing. Athletic's got you covered. Their beers have won awards on multiple continents, including the World Beer Awards Best Non-Alcoholic Beer multiple times. They've even won awards for full strength beers. Go give them a try. You can go to athleticbrewing.com and if you use code POMP25, POMP25, you'll get 25% off your first order at athleticbrewing.com.

• 1:53Anthony Pompliano?

  Great news is now they accept Bitcoin and other cryptocurrencies. So anybody who supports Bitcoin, we want to support them. Head on over to athleticbrewing.com. Use code POMP25 for 25% off your first order at athleticbrewing.com. Lastly, don't forget that I read a daily letter to over 75,000 investors about business, technology, and finance. I break down complex topics into easy to understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get in this episode with Will and Parker. I hope you guys enjoy this.

• 2:32Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 2:58Anthony Pompliano?

  All right, guys. Bang, bang. Super excited. I've got a two for one today. I've got Will Cole and Parker Lewis from Unchained Capital. What's going on, guys? Thanks for doing this.

• 3:09Speaker 02

  Hey, Pomp. Good to be back on the show, Pomp. Thanks for having us on.

• 3:12Anthony Pompliano?

  Absolutely. Let's start with Parker, since you are a repeat guest. For those that didn't listen to the first episode, just give us kind of the two minutes on your background and how you got to Unchained.

• 3:22Speaker 02

  Yeah, started my career in the traditional financial world, worked at Deutsche Bank in and around the financial crisis, kind of traditional, both from investment banking to restructuring, ultimately worked for a hedge fund for a long time. That's really where I dug in and started to really see Bitcoin clearly. As soon as I did, I left the old world for the new world, ultimately ended up at Unchained. And in part of, a big part of my story of getting to Bitcoin is actually Will and I go back to the days when, growing up in Austin, I ended up joining Unchained just about two years ago. I lead our business development efforts, and then I convinced Will to come on. I let him introduce himself, but to come on and join us.

• 4:01Speaker 03

  Yeah, thanks Parker and thanks Pomp for having us on. Yeah, I got into Bitcoin relatively early on, not really through professional means, but through. I was living in New York City. After the 2008 Ron Paul presidential run, there was a certain crowd that got into Bitcoin pretty early on. My brother Napoleon actually sort of led the way on the Bitcoin charge there. But my background's in product and engineering. I worked at Stack Overflow for the past eight years and recently joined Unchained. Right after some of the Wyoming Blockchain Task Force work that I was doing, decided that I should

• 4:41Speaker 03

  put my, you know, mouth where my money is and go all in here. And the obvious choice was join Parker. We go way back, like he said, and Unchained's been a great place to work.

• 4:56Anthony Pompliano?

  Awesome, and maybe you guys can give us just a quick overview. What exactly does Unchained do?

• 5:05Speaker 02

  What you think about Unchained is really creating a financial services company for people that hold Bitcoin and thinking about what the financial services world will look like in a world that's built primarily around Bitcoin. And ultimately, for us, that means building on top of keys and helping, you know, from a custody perspective, both individuals and businesses hold their own Bitcoin and us helping them both from a technology standpoint. And then what we refer to as collaborative custody will hold one key in a client's quorum. But then thinking about that as the foundation, our custodial foundation, and then we build financial services on top of that custody layer. Today, it's lending against Bitcoin. We're quickly expanding an OTC offering. We want to expand that to more states.

• 5:50Speaker 02

  But really just thinking about Bitcoin as money and the service to sit alongside money is naturally financial services. And it's just a matter of, I think the thing that differentiates Unchained in that equation is how we facilitate custody and then how we layer on top financial services.

• 6:07Anthony Pompliano?

  Got it. That makes a lot of sense. And so obviously, we wanted to do this because there has been this surge in interest in businesses holding Bitcoin after kind of a couple of businesses, probably MicroStrategy is the most famous, have decided to take a majority of their balance sheet that currently sat in dollars and convert that to Bitcoin and start using Bitcoin as a reserve asset. Maybe Will, you can touch a little bit on just how you guys have seen the interest from companies, the kind of your view of this new trend that's popping up of companies converting that balance sheet capital to Bitcoin with a reserve asset.

• 6:40Speaker 03

  Yeah, I mean, you know, most of this is really Parker's domain, right? Is they're looking at it from a macro sense where they're looking at all their dollars sitting on their balance sheet and wondering, you know, you had Sailor on here, he did a great job. And seeing that melting ice cube and wondering what the hell am I doing with with with all these dollars sitting here? We need to we looked into gold, looked into real estate, and finally landed on Bitcoin. I do think that we're going to see a lot more companies take that route. But, you know, obviously Sailor had a pretty sophisticated, you know, long view of this, right? And it's going to take some people to some time to catch up. And the way I see it is that they're going to be looking at Bitcoin for its unique

• 7:22Speaker 03

  properties, both as money, but also, you know, the way you can hold Bitcoin, the way you can actually own Bitcoin differently from the ways that you hold traditional assets and, you know, in treasury. And I think the challenging thing that businesses are going to find is sort of merging this idea of the way their current financial controls and corporate governance works with, you know, Bitcoin and what makes Bitcoin special? Like, how am I supposed to hold it? And how do I do it in a way that that takes advantage of Bitcoin's unique properties? I, you know, personally, I see some other things, you know, happening, you know, like some of the really strong qualities of Bitcoin around

• 8:05Speaker 03

  censorship resistance, that if you see a company being deplatformed for any reason, you know, it's not just, you know, being demonetized on YouTube or something like that, you could have other financial services that refuse to do businesses business with you. I mean, hell, you know, Bitcoin companies know that more than anyone in the fiat world, having trouble getting banking relationships, you know, over the past 10 years. And that And that as you know, more and more people see the values of Bitcoin as money and start digging into those really core things, the censorship resistance, the monetary policy, that it's going to hit them over the head pretty quickly.

• 8:42Speaker 03

  That they have to move some of their treasury into this, or they're going to see from the demand side of their employees or their customers that they have to start transacting in Bitcoin in order to perform their normal day to day operations. Parker, anything to add in terms of the macro?

• 8:59Speaker 02

  Yeah, I think one of the things that I would add, and we'll touch on it, but the, you know, I think there's two paths converging to one, which is Bitcoin is inherently, or at least coming around to it and seeing it as money, is an inherently individual process. I think the case of MicroStrategy is interesting, and I think it's particularly important and probably think a lot of people that are paying attention day in, day out to Bitcoin, recognize its importance. But it was, it was probably in the most public way, an example of multiple individuals having to at the same time, merge into a consensus.

• 9:39Speaker 02

  But that also recognizing that the, that the, the foundation of that is, is each individual in that boardroom or a CEO of a company coming to that conclusion. But the more and more individuals that we know every day are kind of something's unlocking and being able to see Bitcoin, recognizing that businesses are an extension of individuals. And so that there, there will be this natural progression that, you know, as, you know, and typically, everybody has, you know, kind of cash that they manage personally, and then cash they manage as part of their, as their business. And when you think about your current kind of banking suite, if you're just thinking about the field world, you generally want to deal with both of those things in the same place.

• 10:15Speaker 02

  And that kind of naturally, you know, the longer that you're in Bitcoin, or if you, if you kind of started to pay attention four years ago, then, you know, three years ago, two years ago, then you, you come around to this idea that you're not just speculating, you actually want to earn in Bitcoin. And then you start to think about your business as an extension of it. So I think that path is one where just as more and more individuals hold Bitcoin, then they're thinking as, as their business is an extension. of themselves that they need to be holding it um kind of kind of through through an entity and we've seen that through Unchained as part of what the inspiration for of our business accounts where then we'll talk about later but that you know not the micro strategies of the world the small businesses that just hold Bitcoin as individuals and have started using our application

• 10:57Speaker 02

  to actually facilitate custody of their own Bitcoin. The second piece of that that I think is key that someone like Michael Saylor keyed in on that more and more businesses are touching on is the three trillion dollars that the Fed printed and that I think that a lot of businesses knew that that that things didn't make sense but when you it's like the Band-Aid ripping off when you print three trillion dollars you people can no longer ignore that fact and I think you know as Will mentioned but you know kind of to Michael Saylor's world the melting ice cube um I think that the interesting thing was he specifically pointed kind of that idea out but that he also pointed out that if you if you start to come around to Bitcoin and you start to understand that there's no way that you only put one percent of your money in it and that it's it's not a hedge it's it's an actual strategy

• 11:43Speaker 02

  and so it's kind of the combination of that macro landscape of the Fed printing three trillion dollars versus just a function of knowledge distributing and those individuals recognizing that their businesses have the exact same problem that they have as an individual.

• 11:56Anthony Pompliano?

  Yeah, and so maybe talk a little bit uh either one of you could take this just in terms of this almost like micro type situation where okay I decide yes as an individual Bitcoin is for me now I realize my business has the exact same problem I've got to convert the reserve asset as Bitcoin what are the challenges that I have as a business that maybe I don't have as a as an individual like what what are the different things that I'm thinking about from a business perspective?

• 12:20Speaker 03

  I I'll take the first part of this is that you know from a business perspective you're not managing the Bitcoin on your own it's not it's not it's not your money it's the business's money so you you you know as a business you have certain financial controls corporate governance you know many people in many positions who are in charge of managing that treasury managing cash flows payroll you know all those types of things and the challenge is looking at Bitcoin and wondering like you are there the tools you know the same type of Accounting tools and tools that facilitate these financial controls available to me in the Bitcoin world. So even if you've taken that leap and you've decided like, okay, our company has a reason to,

• 13:01Speaker 03

  whether it's hold in treasury or use for, you know, payments or vendors or whatever it is. Do we have the sort of software layer and to facilitate all the different use cases that we have? And usually what that means is that you, even in the fiat world, you don't want to have single points of failure in your business to say someone can just run off with our money. Right? And in the fiat world, you do that solely on the sort of software financial controls with a, you know, third party, you know, bank and, you know, accounting software, things like that. But in the Bitcoin world, it's a little bit different. You, you have some of it built into the protocol already.

• 13:43Speaker 03

  So with Bitcoin's native multi-sig, for instance, it's built specifically so you can have multiple people help secure assets, Bitcoin, right? And that native multi-sig though can only take you so far because it doesn't know about people and your role in the company. It just knows that people that show up with certain information and that information combined allows people to spend from an address to somewhere else. So what you are looking for as a business is something that sort of takes that native multi-sig, right? Something that Bitcoin has and you can really trust and it's been vetted and verified by, you know, experts around the world and has never, you know, sort of failed.

• 14:24Speaker 03

  And you want to, you know, combine that with the financial controls that you're used to in the fiat world. I think that's one of the biggest hurdles that people have to get over. And one of the things that we're thinking about a lot as we build out our, you know, business accounts and corporate strategy at Hunching Capital.

• 14:42Anthony Pompliano?

  Yeah, and how much of this, maybe Parker, is like, you try to rebuild the existing world just for Bitcoin, right? And kind of take a carbon copy versus build something that is unique to Bitcoin, and it's more of let's educate the business owner, the individual on this new world, rather than we have to make it look identical, so that that's the way they'll be comfortable?

• 15:04Speaker 02

  Yeah, so I think that's a really good, I think that's what's happening right now is a, to a large degree, or to, you know, in many ways, a push and pull, right, between the old world and the new world. And I think that, you know, at least the way that we think about it is, starting from the first principle of security, of what will actually result Bitcoin is a new technology, like, what are the chances that, you know, the best way to secure Bitcoin, whether for an individual or for a company, is identical or very similar to the structure that securing a fiat currency that's controlled and cleared through a central bank, that very likely because it's a different form of money and

• 15:49Speaker 02

  it's a different technology and moving it occurs via different means, and that there's a different degree of finality to it, that, and that there's a different way that you can store it, that naturally that that would be different. But realistically, because we also live in a world of reality, is that companies have, you know, for regulatory purposes, for compliance purposes, for audit purposes, especially the larger that you go up in the chain, and the more constituents that there are that are part of a company, that that old world begins to say, hey, we've been doing this a certain way, and it's difficult for us to deviate from, we need, we need to create this box and make it look

• 16:32Speaker 02

  like the box that everyone's used to looking at, because there's, there's so many people that have their hand in, in, in this wheel. And I think that one of the things that, you know, where we break the mold and unchain is we say, hey, that 30 or 40 year old regulation that was form fit to a different financial system. Like, yes, we need to be able to replicate certain parts of that such that financial controls can exist the same way that they they do in the current world, such that compliance can exist the same way, such that it can be audited and and and likely to a to a greater degree in Bitcoin, because you have you, you know, you can actually prove that you have Bitcoin or that you have keys to it. You really can't prove if you're, you know, the squares of the world or the Googles of the world, that those dollars actually exist. You can only you're only relying on the trust of somebody else.

• 17:18Speaker 02

  And and so what we do is we try to look at the the equation and say, there there is a security element about Bitcoin. We need to be cognizant of all of those things that are important to various different businesses. That, you know, kind of, I I think about three primary buckets, financial controls, regulatory, compliance, audit, or really four. And that, but that building those type of structures and and and making something like that have legacy apparatus work on top of Bitcoin key. So it's like, it's really, it's not necessarily, you know, what we are building is a hybrid, but it is a push and pull between making a box look like something that the banks and and companies are comfortable with, but not casting away the properties that really deliver the ultimate degree of security in Bitcoin, which is private keys.

• 18:02Speaker 03

  I I I want to take that one step further too, Pom, which is, you know, it's Bitcoin's native multi-sig. The only reason you, I mean, it is actually really well-built for companies and the and the and the collaboration that companies need around their finances. And if you're not using Bitcoin's native multi-sig and you're using something else, you know, whatever it is, because it has to form fit to a hundred different digital currencies, or because it's the legacy system that you're using, you're not getting the full benefits of using Bitcoin.

• 18:33Anthony Pompliano?

  Yeah. What what's really interesting to me about this is there is people in the legacy system that are trying to almost adopt Bitcoin into their system. And I think you guys are highlighting like that may not be the best for Bitcoin and also that may not allow businesses and individuals to use Bitcoin the way that it was designed and kind of benefit from all of the properties it has. As you think about Bitcoin as this unique asset and building that hybrid model, so it's it's close enough to what they're used to. They're comfortable, but it also still kind of protects and empowers all the properties of Bitcoin. Where does the adoption come from at the business level? Is this the smallest companies in the private market, kind of, you know, small businesses owners that are looking at this problem?

• 19:14Anthony Pompliano?

  Is this more maybe kind of mid-market type companies that have larger balance sheets? And so it's more top of mind for them than maybe a small business that doesn't have that large balance sheet? Or are we talking about full-fledged, you know, Google or Facebook's going to go do this, you know, in the short term? Like, where do you guys see kind of adoption coming from? And what's the sequence across the the business environment?

• 19:35Speaker 02

  Yeah, I think that there it's interesting because, you know, one of the ways that that I think Bitcoin has existed to date is that it gives the it gives the smaller guy the first bite at the apple. And so I think that part of that is because when you think about the size of Bitcoin and the relevance of it, it's like, you know, currently Bitcoin has a total value of roughly $200 billion. And that's kind of less than the cash that Apple, Microsoft and Google hold combined, right? So it's so when you think about just like, well, you know, it's it's meaningful to a company like MicroStrategy that has a $1.3 billion market cap. But, you know, a company like Apple that has 90 billion of cash or Microsoft that's got, you know,

• 20:17Speaker 02

  above 100 billion of cash and short-term investments or the Googles of the world that, you know, when they're thinking about meaningfully allocating to it, it's almost that Bitcoin needs to be worth more to then more meat to take a take a more significant stake. If if Google wanted to go shift over $5 billion, Bitcoin would be really hard to do now. So I think we'll and then so that's part of the equation. But then the other part of the equation for why I think the the and really where our our platform tailored to, but it will continue to improve is small and medium-sized businesses. You just have less people and less decision makers. It's a lot easier for small and medium-sized companies to be nimble and to move quickly. You know, in the case of MicroStrategy, you had, you know, I don't want to say it's just one guy,

• 21:00Speaker 02

  but you had a CEO that formed a view and that then he, you know, had his board and other executives within the company, you know, have go go down that rabbit hole and become The larger the companies you have and the more that those are institutions, the more people that have to contribute and get on board and become comfortable. And so I think for the reasons of a decision-making standpoint, but then as a market opportunity standpoint and how and why Bitcoin is valuable and whether somebody can make a meaningful share of their balance sheet and allocate it over to Bitcoin, it just naturally, I think, starts with the small to medium-sized businesses and then works its way up to the Microsofts, Googles and the Facebooks.

• 21:44Speaker 02

  But I don't think more you're going to see those companies starting to fall over. You are going to see, as we've seen with Square, and I think PayPal is soon to be releasing a similar type app where people can buy Bitcoin, that those companies, even the large cap companies that are touching Bitcoin, they are going to start to hold Bitcoin on balance sheet, facilitate their business, whether they're meaningfully moving treasury assets over. I think it's probably something that will follow.

• 22:09Anthony Pompliano?

  Yeah, that makes a ton of sense. One of the problems that I hear from business owners or one of the obstacles they see is they say, hey, I want to have access to a liquid currency. Bitcoin solves that. That's great, but it's super volatile, right? And so how do I plan my business around one day I've got, you know, $100 million, the next day I may have $96 million kind of on my balance sheet? How do you guys talk through that obstacle and maybe some others that people may have that are unique to Bitcoin that don't reside with the US dollar? What's that talk track like and how do you really educate people on the pros and cons of Bitcoin?

• 22:50Speaker 03

  Yeah, there's a couple of things there. Like, first of all, is there's different reasons that the business might want to have Bitcoin, like the treasury asset that Michael Saylor is talking about. You have to really be bought in and understand the volatility and have a very long time horizon in mind in order to make that jump. However, if a business has customers that are, you know, there's lots of businesses that have to hold Bitcoin on behalf of their customers in the financial services world and just the on-ramp, off-ramp world. But there's also if you have any debt or obligations denominated in Bitcoin for any reason. If you're selling, if you're selling things, if you have payroll denominated in Bitcoin, then if you're using that as a unit of account for those debt obligation

• 23:34Speaker 03

  or for those vendor relationships or payroll, then the volatility doesn't hit you as hard, right? Because you are, your contracts are in Bitcoin, not in dollars. And as that starts to become more normal, and it's not normal right now, don't get me wrong, but there are businesses that have those types of obligations, then you're forced to, you know, have Bitcoin on your balance sheet to meet those obligations. That's one of those things that's just going to creep up on people. The Bitcoin volatility, as it's smoothing out, is, as we have more havenings, that, that that's exactly what will sort of cause that type of adoption.

• 24:14Speaker 02

  One, one other thing I would add there too, from a macro standpoint, it's kind of like merging, like always thinking about, or at least the way that I like to contextualize it is, always thinking about the convergence of the individual to the business. Because, and I think, Poppy, correct me if I'm wrong, but I believe you make this point, that in many ways volatility can be your friend, right? And that there's, there's a difference between store of value and volatility, and those two things are not mutually exclusive. And that just as individuals deal with the volatility, and Michael Saylor was also somebody that, that talked about this key point is, I, my business is generating cash. And, and I know in various different scenarios, all weather, I'm going to be generating cash. I'm figuring out how to preserve the value that I've already created today,

• 24:58Speaker 02

  but doing that in a world where I'm protected in all weathers. And that's the same, the same way that individuals think about it. And I think me personally, that what I convert over to Bitcoin, I'm doing in a way where I'm never planning to convert those back to dollars. I'm, I'm, I'm kind of managing my own personal balance sheet in a way where I'm always going to have the number of dollars that I need and increasingly shifting my, you know, kind of internal treasury over to Bitcoin. And that, you know, in many ways, you know, the other thing that I, from the macro standpoint that I would bring up is, you know, look at what happened in March, right? You know, and, and just, and if you, it's Interesting because if you look, if you look at the balance sheets of Apple and a company like Microsoft, you'll, you'll notice that they're holding a relatively smaller amount of cash than they are cash and marketable securities.

• 25:43Speaker 02

  And so what those marketable securities are typically so like, you know, kind of don't quote me, but it's around the order of magnitude of like, Apple's got, you know, say thirty billion of cash and sixty billion of short-term marketable securities. What those are typically treasuries or investment-grade credit, right? So investment-grade credit dropped twenty-five percent in, in March along with high yield. So, and then if you look at, if you look at Microsoft, it's similar, like they're actually holding a smaller amount of cash and they're dealing with the same problem that the Michael Saylor's of the world are dealing with. And they're, they're not just holding cash, they're moving it into investments, whether it be in T-bills or treasuries or, or other corporate debt.

• 26:22Speaker 02

  And so they, they may, I think they're probably underestimating the, the fact that volatility can also arise in those traditionally non-volatile assets in, in a bad way. And what they're looking at in Bitcoin is the volatility has generally been your friend in Bitcoin. There's fundamental reasons why that, that is. And if you're managing your balance sheet in a way where your business is generating cash, you're building up more and more allocations to not just cash, but then figuring out how to split that allocation between Bitcoin and, and, and dollars or, you know, euros or yen. But naturally, the, the way that you think about managing that treasury for your business is the same way that all individuals today in Bitcoin have to deal with it.

• 27:01Anthony Pompliano?

  Yeah, what, what's really interesting is kind of, you know that you're going to guarantee loss over the long-term when it comes to dollars, right? Like your purchasing power is going to significantly decrease. With Bitcoin, it has only increased over long periods of time. And I think that you guys like I, you know, believe that that's a trend that is only getting started. And so it really does come down to kind of just what is your belief in, in terms of these two assets? And then also what is that time horizon, right? I think Parker, in the first episode we did, just like really lowering your time horizon, right? And, and frankly, in the private markets, I think one of the advantages people have is they're not just looking at the next quarter, right? And kind of what's that earnings call?

• 27:41Anthony Pompliano?

  And kind of how do I manipulate, you know, my, my reporting so that the stock price kind of continues to stay inflated and go up. Private business owners have a significant advantage here, right? They can do that long-term planning. Talk a little bit about how you guys interface with the legacy system, right? So another thing that people will kind of talk about that I hear a lot is like, hey, it's really hard to buy a lot of Bitcoin, right? So you described kind of an OTC desk, some other things that you guys may be doing, which is how do you see if a business does have a large balance sheet or throws off a lot of cash, they're not likely wanting to buy, you know, $10,000 worth of Bitcoin, right? They're not going to go and kind of let a market order rip on Coinbase either. And so kind of how do you guys think about serving those types of needs in that financial service bucket of your customers?

• 28:27Speaker 03

  Yeah, the way we're looking at it right now is, yeah, we're, we're running kind of an OTC style size, you know, $50,000 minimum type buys both for individuals and businesses. And when you look at, you know, whether you're an individual or a business trying to, you know, manage your personal treasury or your corporate treasury, we are trying to connect all the pieces you might need in order to, you know, sort of fulfill that dream, right? So if you're a smaller business and you're trying to duplicate what Michael Saylor did, then we can help you both, you know, that on-ramp from turning your fiat into, into Bitcoin, but also solving that custodial problem from the very beginning. And of course, where we're coming from on the custodial side is that we want you to participate in your key management, right?

• 29:14Speaker 03

  And so, yeah, we can help you obtain the Bitcoin, but more importantly, we can help you keep it secure once you have it on your balance sheet and we can help map your current financial controls to something that works with Bitcoin on our system. So when, when we think about that, it's, you know, who has access to the physical keys and the physical world? That's up to you. We have no control over that. But once you want to manage that, we're your partner, we're your software coordinator, we're your wallet coordinator that can allow you to set different permissions for different people, whether it be, you know, types of things that we're working on right now, you know, imagine that you want someone to be able to Author a transaction, but not necessarily be able to sign a transaction, or be able to sign a transaction, but not actually be able to broadcast that transaction.

• 29:59Speaker 03

  Those types of controls are not something that's native to Bitcoin's protocol. So we can provide the interface that allows you to set up those types of controls for your business. And then, you know, take advantage of Bitcoin's native multi-sig, you know, with a two or three quorum, maybe, you know, other quorums in the future to split up those private keys. But always what we would, you know, suggest to companies is to take advantage of the fact that you can, in this world, participate directly in the ownership of the currency, and you should be holding private keys, just like we preach that to individuals.

• 30:34Anthony Pompliano?

  Yeah, Parker, anything to add there?

• 30:39Speaker 02

  The only thing I'd really add there is kind of like one of these core ideas, I think that

• 30:45Speaker 02

  a lot of us as individuals experience this, not to a person, I think we're also, you know, both individually, myself and Will, and also as a company at Unchained, we recognize that there's going to be a range of solutions and that there's no one size fits all. But that

• 31:02Speaker 02

  in the current legacy world, we effectively live where, both as individuals and as companies, by default, we must take the counterparty risk of another institution. So, you know, if we want to send dollars kind of over the internet or digitally or clear them to the Fed, ultimately, we're relying on a bank to do that, or an extension of a bank to do that. And that in Bitcoin, we don't, even though we recognize and expect that there are going to be full custody options, and there'll probably be like a more kind of tailored managed service that looks identical to the legacy banking system, that there needs to be solutions that

• 31:44Speaker 02

  that do not require other institutions or businesses to have to take the counterparty risk of other businesses by default. And that one of the things when we're interfacing with businesses is helping, you know, kind of from a white glove standpoint, but really, you know, sometimes from just a consulting Standpoint, even though we don't separately charge for it, it's helping them because we deal with all these problems ourselves of how we manage private keys internally. Now, there are certain things that we can't disclose for security reasons, but what we provide those businesses with resources to help them get over that hurdle of, okay, if I want to store these keys, how do I do it? What are the best practices? And then, and then we have our software application that, that allows them to do that in a world that feels more akin to something that they're using kind of in a traditional banking suite today.

• 32:29Speaker 02

  But then I think to your point too, it is helping be that bridge from the fiat world in terms of currency conversion increasingly. But then, once they come over into our world, giving them the tools that if they were managing their treasury in Bitcoin, and it have all those same tools that they need. And then as the applications for Bitcoin evolve, we'll be layering on additional services. So today it's helping people just hold on to that Bitcoin as a group of people, which is a, a problem if they're dealing with Bitcoin keys that was not solved. And today I wouldn't say it is solved, but we're taking great strides through the release that we just had last week and we'll continue to improve it. But then naturally, those businesses are going to be buying and selling things in Bitcoin. So whether it's be helping, you know, Bitcoin companies that are holding their own keys, run BTC pay servers,

• 33:14Speaker 02

  or, um, you know, helping them facilitate payment of payroll that we, we're just thinking of that world that individuals run businesses, businesses have individuals. For those that need to store their own private keys or want to or don't want that counterparty risk by default that they can, and we can kind of just, as Bitcoin evolves, we'll be layering in those services and we recognize that it's not just going to be happening overnight. There's going to be a logical progression from individuals to businesses to payments to payroll, that, that those things will all be have natural and we'll need to replicate that. But then when we're interfacing, in many ways, we think of ourselves as, as the, as the partner for these businesses in Bitcoin, and, and we'll be helping them solve all of their personal business needs.

• 33:54Anthony Pompliano?

  How close are we to people paying their employees in Bitcoin? Like, is that something that seems, you know, short term or is that something that we got still work to do?

• 34:02Speaker 03

  Hey, Expensify had, at least, used to have an option to get paid back in Bitcoin for whatever expenses you're reporting. So, you know, enough people are doing it already, right? But, no, I mean, I think it's just going to be a demand side. Enough individuals negotiating that into their contracts will probably start at smaller businesses. We've seen it with plenty of them. I think Blockstream sort of famously did that from day one, that you could negotiate part or all of your salary in Bitcoin.

• 34:35Speaker 03

  That, yeah, we'll see that keep on popping up. And I especially think it will pop up, you know, the adoption curve in the financial services world, right? You know, the OCC news, Wyoming's SPDI stuff, is that you're seeing businesses that are banks and financial service providers that are getting the demand from their customers, that they want to hold Bitcoin, transact in Bitcoin for a myriad of reasons. And that those companies themselves, who are already, you know, in the financial world, are going to sort of lead that demand. And the individuals that are a part of those companies will lead that demand.

• 35:11Anthony Pompliano?

  Got it. And so as you guys think about what's going on in Wyoming, talk a little bit about that, Will. I know you've got a whole bunch of information there, but share what you can in terms of just like what's going on and kind of how popular that'll be and what the advantage is.

• 35:25Speaker 03

  Yeah, I mean, that's how we met, right? Was in Wyoming last year. And that was when the, you know, sort of the final bits of the SPDI legislation was coming together. So, yeah, I was particularly involved last year. But, you know, just in the last few weeks, we got the big news, which is Kraken got the first, excuse me, banking charter for a special purpose depository institution in the state of Wyoming. And I think this is a bigger deal than, you know, even though people made a big deal of it on Twitter, you know, there are dozens of applications that are still, you know, waiting to go through. We're going to see them trickle out here. And this is a really big first step. And I think that, you know, where

• 36:10Speaker 03

  A lot of the problems have been just getting, you know, in a free market to compete with currencies. You know, we want Bitcoin to compete on a free market level. We need jurisdictional certainty that the financial services and bank type companies to exist in order to allow Bitcoin to compete on an even footing. And Wyoming is essentially, you know, selling sovereignty here. It's a big deal what they're doing here, not just creating the new corporate formation of a special purpose depository institution, which is in essence, a bank charter. You are eligible for membership in the Federal Reserve Group of Banks if you're an SPDI.

• 36:51Speaker 03

  But it's also, you know, those connections to the fiat world that will allow these Bitcoin businesses to grow and not have to go through all the hurdles that, you know, every single exchange, every single financial services company, every single payment processor's had to jump through. Being a bank in the United States is a really big deal. It also really helps on the custody side where, you know, there's kind of this gray area of digital asset and Bitcoin custody. You know, there's a lot that's been going on in South Dakota, but we know that these are, you know, rules that are set by the SEC on what's considered to be a qualified custodian. And then the state banking commissioners are the ones that actually enforce that. And that could, you know, that's, that's, that's kind of a gray area right now.

• 37:34Speaker 03

  And Wyoming has provided absolute certainty through these, through their legislative groups. And not only did they do the, the corporate formation of the SPDI, they also set up a Chancery Court, which means that they're going to have precedent and legal, you know, sort of backing the same way Delaware did with LLC. Little known fact, Wyoming actually invented LLCs and then got kind of outflanked by Delaware because they set up the courts and they got all of the sort of precedent and sort of certainty that businesses needed in order to incorporate there. Wyoming really has that going for them with the SPDI. It's really the killer app of, of corporate formation and then why you would want to do business there.

• 38:19Anthony Pompliano?

  It's really cool what they're doing. Like, I think that's been my big takeaway is like, not only is it just impactful and kind of really serves as this foundation for a lot of people, I think that it's just absolutely something that is so ambitious and courageous, and it takes special people to go do it. So it's pretty cool to kind of watch that all come together.

• 38:39Speaker 03

  Yeah.

• 38:40Speaker 02

  Yeah, and I think one thing that I would add to that, too, because it's, you know, knowing that, knowing the work that, you know, kind of people like Caitlin Long and Tyler Lynnholm, and there's others on the Wyoming Blockchain Task Force, join, Will was on it last year, but that, you know, it was three, four years in the making, right? And they, they did, they put in all the legwork and it really laid the foundation for one of the largest crypto exchanges to become a bank and to do that in Wyoming. And so it's just a testament to a lot of those, the work that those people put in. But now you're seeing like, just probably equally as big around the same time as the OCC news basically saying, hey, you know, if you're a nationally chartered bank, it's okay to custody Bitcoin and giving that green light. And since then, we've already had an inbound

• 39:25Speaker 02

  from, from a Texas-based bank that's interested in providing Bitcoin custody. So I think, you know, like, the, the trend around kind of this aggregate of, you know, kind of all the things that are happening from crypto exchanges becoming banks, banks looking to, you know, custody Bitcoin, public companies starting to hold Bitcoin, all of this kind of positive momentum feeds off itself. And I think that, you know, you know, I don't think that it's probably getting the attention in the mainstream that it is, but that's just natural with Bitcoin. But that in six months, probably every, not every bank, but, you know, most banks will figure out that they need to have a Bitcoin strategy. And increasingly, large companies will be thinking the same thing.

• 40:02Speaker 03

  You asked earlier, Pomp, about like, what's going to drive this adoption? What do businesses actually need? I think about it like a sort of three-layer stack, right? You need the regulatory and sort of the jurisdiction that's going to give you certainty that your business can operate as a going concern and the rug's not going to be pulled out for you. Wyoming is providing that, right? They're leading the way. And the state, other states are going to copy them. Like, they're going to copy you almost exactly, just like they did with LLCs. Then you need to actually be attracted to an alternative to US dollars, yen, you know, euros, right? And Bitcoins providing that. And lastly, you need all the connections, right? You need the connections of your corporate strategy and corporate governance to that core

• 40:44Speaker 03

  protocol. So you can operate, you know, seemingly smoothly, like you would have in a fiat world. And that's what unchanged trying to provide. And that stack there of jurisdictional certainty of the core Bitcoin protocol and and software solutions like on chain put together. That's what drives businesses to say, we have what we need to make the leap.

• 41:06Anthony Pompliano?

  Yeah, I love that. I want to spend the last couple of minutes with both of you just outlining how you think that this kind of plays out over the next 10 years, right? It's going to be hard to kind of make a prediction, if you will, in terms of percentages of businesses or anything like that. But just how do we see 10 years from now, the world in terms of the businesses that have started to use Bitcoin as a reserve currency, maybe what that macro economy could serve in terms of a tailwind potentially, but just kind of how you guys as a business, you know, at least today, are thinking about evolving to kind of continue to serve customers with those financial services as they adopt Bitcoin more and more over the next decade?

• 41:47Speaker 02

  You know, from my perspective, you know, I think we probably have a forward looking view or, you know, a view that, that, you know, that believes that business adoption is going to start happening a lot quicker, right? When we, we literally were sitting around the table, making the decision around these investments in early 2020, late 2019, recognizing that there was going to be this wave. And that realistically, as it is with everything in Bitcoin, the infrastructure has to be built in place in order for the wave to really happen. And that that's happening in parallel to just more and more individuals finding out about Bitcoin and spending the time to learn about it and how they can utilize it to empower them in their own lives and in their business.

• 42:32Speaker 02

  So I think that that realistically have, we have a view that is slanty to this happening far quicker. I personally have a view that we're hyper Bitcoinized in the in the next 10 years. I think that, you know, that's, you know, kind of probably crazy to a lot of people, but it it speaks, I think mostly to how quickly both infrastructure is the pace of infrastructure being built and not just at Unchained, but at the, you know, kind of all the incredible things that are being built on top of Bitcoin by any number of people and just how quickly knowledge distributes. And that that is naturally kind of increasing by by multiples, if not exponents. So, you know, in in my view of the world, practically every business is holding Bitcoin

• 43:17Speaker 02

  in the next 10 years because they're going to be using it more on a day to day basis to to facilitate, you know, the the commerce that we're used to facilitating with the other.

• 43:31Speaker 03

  Yeah, I'd second.

• 43:34Speaker 03

  Yeah, I'd second that. You know, I think that you you mix in that with, you know, the power of having 50 states and the 50 states trying to out compete each other to attract businesses, to attract talent to work there. You know, Wyoming might have a head start, but it's, you know, in 10 years, everyone's going to be doing what Wyoming's doing. Like, they are going to be copied. And when you have those two things put together, the Bitcoin or those three things, Bitcoin at the core protocol layer increasingly getting more secure, more hash rate, more feature filled, that you have more infrastructure being built on the sort of enterprise and business account layer.

• 44:16Speaker 03

  And you have these 50 states out competing each other constantly that in the next 10 years, I think it would be very rare for companies not to have exposure to Bitcoin, both on their balance sheet and in terms of their obligations to to their, you know, their.

• 44:37Speaker 03

  Vendors and people that work there.

• 44:40Anthony Pompliano?

  Absolutely. To wrap up, I just want to ask you both, there's going to be a lot of business owners that are listening to this and kind of just maybe in 60 seconds or less, what's each of yours pitch to those business owners as to why they should take a look at using Bitcoin as the reserve asset for the balance sheet?

• 45:00Speaker 02

  I think it's the best way to preserve wealth. I think that's the solution that or conclusion that that a micro strategy came to. Snap is another business. We have many businesses that are private that we wouldn't disclose the names of that are already doing that as well. That the short answer is yes, Bitcoin is volatile, but the fundamentals of Bitcoin dictate that that volatility be in your favor because everything is built on the fundamental demand for Bitcoin and the reason why it's the best way to preserve wealth. It is the only form of money that can verifiably provide you with a finitely scarce supply. And that as more and more people figure that out, you're looking at that equation, which is

• 45:42Speaker 02

  a finitely scarce supply with, you know, a currency that can't be manipulated by anything that's entirely decentralized versus the melting ice cube. And knowing that volatility does not equate to a store of value and looking at the purchasing power of the dollar and knowing that it declines, you know, 2%, 3% every year and knowing that the Fed has printed $3 trillion, but they're also going to have to print trillions more in order to sustain the credit system. And if you're a business that has cash on its balance sheet and that is generating quite a bit of cash to add on to that, that if you're not considering Bitcoin to be stored on your balance sheet and to be a treasury asset, you really should be thinking about it at the very least. And there's a lot of resources out there to go down the rabbit hole.

• 46:24Anthony Pompliano?

  Think that's great, Will.

• 46:26Speaker 03

  I would just say as central banks around the world gleefully compete with each other to see who can base their currency the most, that Bitcoin is going to emerge as the only option. And if you're a business owner and want any help going down that rabbit hole, you reach out to me.

• 46:44Anthony Pompliano?

  I love it. You guys are doing a fantastic job and obviously building products that people need. Where can people find each of you on the internet and where can they find out more about Unchained Capital?

• 46:54Speaker 02

  I'm at Parker A. Lewis on Twitter, so at Parker A. Lewis. You can find us through Unchained, our website's unchained-capital.com. And like Will said, if you're a business or actually an individual, we want to be there to help you with all your personal business needs. And if you're thinking about Bitcoin, we have resources. There's a lot out there. I write a series. It's on our blog called Gradually Then Suddenly. You can learn about Bitcoin there. But if you have specific needs related to Bitcoin financial services, how to custody Bitcoin, please reach out. I'm easy to find on the internet, on Twitter, or reach out through our website.

• 47:29Speaker 03

  Yep, and I'm at Will Cole on Twitter. And yeah.

• 47:33Anthony Pompliano?

  Awesome, guys. Listen, thank you guys so much for doing this. This is fantastic. I highly suggest anyone who is thinking about converting their balance sheets to using Bitcoin as a reserve asset, please reach out to Parker and Will. They're doing fantastic work. They've got a great product that can help you. And generally, they are some of the most knowledgeable people in the space. So they can definitely kind of get you up the learning curve, help you understand the risks, and how you can mitigate those with their products and a little bit of education. So thanks so much, guys. I'll do it again in the future.

• 48:02Speaker 03

  Thanks, Pop.

• 48:03Speaker 02

  Hey, really appreciate you having us on, Pop.