69 - Asking the Questions: BTC & ETH | Preston Pysh

Bitcoiner Preston Pysh joins the Bankless Podcast to discuss Bitcoin and Ethereum and prove that there are high level conversations to be had between the two communities. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge 🎧 Get this Episode's Debrief: https://shows.banklesshq.com/p/exclusive-debrief-asking-the-questions ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🦊 METAMASK | DEFI PASSPORT https://bankless.cc/metamask 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap 🔀 KWENTA | EXCHANGE SYNTHETIC ASSETS https://bankless.cc/kwenta ------ Topics Covered: 0:00 Intro 5:50 Preston Pysh 8:17 Macro Value Investing 16:32 Moving to Bitcoin 21:22 The Last Free Market 26:13 Decentralized & P2P 29:32 Misconceptions 37:05 DeFi and Execution Risk 40:55 Ethereum Concerns 45:00 ETH’s Price Action 49:20 Protocol Consensus 53:54 Nodes 1:00:55 Work Vs. Stake 1:10:30 Clean Energy & Halvings 1:19:00 Issuance & EIP-1559 1:28:45 Currency and Blockspace 1:34:43 Risk-on vs Risk-off 1:38:24 Decentralized Finance 1:52:30 Preston Pitches ETH 1:56:06 David & Ryan Pitch BTC 2:00:40 On the Same Team 2:04:46 Closing & Disclaimers ------ Resources: Preston on Twitter: https://twitter.com/PrestonPysh?s=20 The Investor’s Podcast Network: https://www.theinvestorspodcast.com/ Bitcoin Fundamentals: https://www.theinvestorspodcast.com/bitcoin-fundamentals/ Bitcoin & Bonds with Greg Foss: https://www.theinvestorspodcast.com/bitcoin-fundamentals/bitcoin-and-bonds-greg-foss/ ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:08Ryan 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, and 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, this is the episode "Ethereans and Bitcoiners Have An Adult Conversation." That's the goal. What do you think? Did we achieve it?

• 0:32David Hoffman?

  Yeah, Preston Pysh is a Bitcoiner, and he's, he's, he often finds himself very much on the opposite side of the argument, very much in the Twitter sphere to, and it's kind of, it's very much emblematic of like the Bitcoin versus Ethereum fights that you see on Twitter. And I think this episode does a very good job as, as in, when you get in front of these people and you look at them face-to-face and you're in the same room with them, those Twitter fights do not represent reality at all. This was a fantastic conversation with Preston Pysh, who is a very informed investor in the, in the, both in the legacy world and also now highly focused in on Bitcoin. And he's also a content producer,

• 1:14David Hoffman?

  and he's, so that's always a fantastic time to get another content producer on the podcast. It makes podcasting very easy.

• 1:21Ryan Sean Adams?

  Yeah, I always find with these conversations, David, that's like, we agree on 90% of things, right? It's like, we started there with all of the things that we agree with. We talked about fiat and late-stage credit cycles. We talked about many money printing. We talked about the value of self-sovereign money and decentralization. And then we talked about some of the things we actually disagree on. So that other 10%, right? So some of these famous debates, proof of work versus proof of stake. What were Preston's thoughts on proof of work and our thoughts on proof of stake? We talked about monetary policy, because we can't not talk about monetary policy. We got into a really interesting discussion,

• 2:02Ryan Sean Adams?

  because Preston values scarcity to the nth degree. He thinks that is why numbers go up for Bitcoin. Well, guess what? There's some pretty extreme scarcity properties coming to Ethereum in the next 12 months. We had a good discussion on that. You know, I think listeners will have to, to, I guess, come to their own conclusion on this. There, there is a certain element, I feel, David, you and I have talked about this, that sometimes whether you're attracted to Bitcoin or Ethereum is, is more up to like personality, more up to disposition. And Preston is kind of like our, reminded me of the conversation most with Lynn Alden, where she was just like, yeah, what you're saying could be true, and I can understand what you're saying, but it's still too early to me.

• 2:47Ryan Sean Adams?

  I want to see all the execution risk boiled out of this thing before I'm willing to give it another look, but I will give it another look. So I almost, David, want to bring back Preston in 12 months or so, or 18 months. When Ethereum has shipped even more and some of these major changes go through and, and talk to him then and get his opinion from that perspective. But all in all, really interesting discussion. I hope this is the discussion that listeners wanted. Again, that conversation, open minded conversation between two groups that are more aligned than they seem, but often appear so tribal on social media.

• 3:29David Hoffman?

  And maybe over the long term, like as Ethereum calcifies and as, as Bitcoin just chugs along, hopefully we come together as a, as a community rather than splitting further apart. I, I, I think, you know, if, if Preston, you know, comes and, and the plan is for him to come and look at Ethereum in 12 months' time and see all that execution risk in the rearview mirror. And according to what he said, that he would be much more open to an Ethereum with minimized execution risk. And then, and I, that's more or less what Lynn Alden said. And so maybe the, the time for a decent amount of risk averse cohort of people to come to Ethereum is just not now. Now is the time for people who are willing to take on that execution risk.

• 4:13David Hoffman?

  And you might be, that might be you as a listener of this podcast, like maybe you, you're cool with execution risk. Preston is not, and he explains his rationale and he explains his reasoning. And that's kind of like the core fundamental difference between a lot of like the Bitcoin, Bitcoin only types of people.

• 4:30Ryan Sean Adams?

  Absolutely, guys. I think you are really going to enjoy this. Before we get to the podcast, we want to thank the sponsors that made this episode possible.

• 4:38David Hoffman?

  Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants program is now accepting applications for grants. We have been saying this for a while and we'll say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO,

• 5:20David Hoffman?

  apply for a grant to Uniswap. Just look at the size of the Uniswap treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a UNI grant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless. Aave is a borrowing and lending protocol on Ethereum and just recently released Aave version 2, which has a ton of cool new features that makes using Aave even more powerful. With

• 6:03David Hoffman?

  Aave, you can leverage the full power of DeFi money Legos, yield and composability all in one application. On Aave, there are a ton of assets that you can deposit in order to gain yield and all of those same assets can also be borrowed from the protocol if you have deposited collateral. Here you can see me getting a 200 USDC loan against my portfolio of a number of different DeFi tokens and ETH. I'll choose a variable interest rate because it's a lower rate than the stable interest rate option, but I could choose the stable interest rate option if I wanted to lock that interest rate in permanently. One of Aave's V2 features is the ability to swap collateral without having to withdraw your assets. Trade them on Uniswap and then deposit

• 6:44David Hoffman?

  them back into Aave. Aave does all of this for you, all in one seamless transaction, so you don't have to repay loans in order to change the collateral you have backing them. Check out the power of Aave at ave.com. That's A-A-V-E dot com.

• 6:58Ryan Sean Adams?

  All right, Bankless Nation, we are super excited about this next conversation with Preston Pysh. Preston is an investor with a strong understanding of macro, but maybe most relevant to today's conversation. He's a Bitcoiner that we feel like we can have a great conversation with, and that's what you're here for, is a fantastic conversation between Ethereum's and Bitcoiners. Preston co-founded the Investor Podcast Network, number one ranked on iTunes. We Study Billionaires is what it's called. He also hosts the Bitcoin Fundamentals Podcast, just an awesome podcast I enjoy quite a bit. He is one of the leading Bitcoin advocates

• 7:38Ryan Sean Adams?

  and has a very firm footing in the legacy finance world as well. Preston, welcome to Bankless. It's great to have you.

• 7:45Speaker 02

  Guys, great to be here. Looking forward to this. Looking forward to the learning.

• 7:51Ryan Sean Adams?

  Perfect. I'm so glad you said this because I think this is what listeners really want to hear, Preston, is an adult conversation between Ethereum's and Bitcoiners where they listen to each other. They're not just rattling off talking points on Twitter. They're trying to understand each other, where maybe they share values, where maybe the points of difference are, and I hope that we're able to have that today.

• 8:15Speaker 02

  Yeah, absolutely.

• 8:17Ryan Sean Adams?

  You know where I think would be great to start, actually, for Bankless listeners who haven't heard sort of your story a little bit, is kind of how you discovered Bitcoin? And when you discovered it, what about Bitcoin resonated with you?

• 8:34Speaker 02

  So, I mean, I was, a lot of people that listen to my show know my background as far as just being a Warren Buffett person, and they've heard the journey because we've been doing it for a very long time, doing the show for a long time. And, you know, it got really strange where, you know, I'm doing these discount cash flow models and really kind of just a stock investor purely, really nothing else. The bond market never really interested me as far as being able to outperform equities. And we were studying Ray Dalio in particular, and we were studying Ray Dalio's long-term debt cycle.

• 9:15Ryan Sean Adams?

  So good.

• 9:17Speaker 02

  And we were studying just how he invests, which is really kind of very unique and way different than the way that Warren Buffett invests. And so that was for me really kind of a fascinating piece to it because here you have a guy who's pretty much a stock, Buffett is pretty much a stock investor. If you get, if you plowed into like GEICO and things like that, he was doing a lot of fixed income stuff. It's very strategic times and you're in your typical like seven to eight year credit cycles. But outside of that, I mean, it was really straightforward, didn't really mess around with commodities, definitely didn't really mess around with currencies other than just hedging currency risk from an operational standpoint within his businesses. And so I start studying Ray Dalio and here's

• 10:00Speaker 02

  a guy who 15% of his portfolio around that, that amount is purely dedicated to currencies and commodities. You have pretty much the rest of his portfolio that's making up this mix between equities and bonds. And not only that, but he's levering a bond position and just like the whole, the whole portfolio construction was just so different than Buffett. And then he starts explaining and in some of his material, he starts talking about these long-term debt cycles. And I'm like, holy hell, what is this? This is so different.

• 10:34Ryan Sean Adams?

  Yeah, I gotta understand this.

• 10:36Speaker 02

  And, and his performance was exemplary.

• 10:39Ryan Sean Adams?

  Yeah.

• 10:40Speaker 02

  You know, he blew up and I think it was like the early eighties, but ever since that point, his performance was just like, you know, similar to Buffett's, close to 20% kind of numbers. I know in the 2008, 2009 crash, the market was down 60% and Ray and in one of his, you know, more premier funds, he was up positive like 9% for the year. And so I'm, I'm looking at this and I'm analyzing it. I'm saying, there's something here I need that I'm totally missing from a macro standpoint. And you come out of like the, the value investing, hardcore Buffett, uh, style of investing and, and the mindset is just ignore macro. It's not even worth your time. It's too complex. Can't understand it. So just ignore it and

• 11:24Speaker 02

  just focus on the micro and do your valuations and try to find the, the, the highest IRR for internal rate of return relative to, you know, whatever stocks you're kind of looking at. So. Long story short, I I'm studying Dalio and he has gold in his portfolio and I'm saying, you know, anybody in the Buffett community is like saying, gold is just

• 11:47Ryan Sean Adams?

  useless rock.

• 11:48Speaker 02

  It's a useless rock that doesn't kick off any cash flows and say, why in the hell would you own it?

• 11:53Ryan Sean Adams?

  Well, because Buffett's rationale is, is basically like, if you want an inflation hedge, Preston, go buy stocks, right? Because that's an adequate inflation hedge. So what are you doing messing around with gold?

• 12:04Speaker 02

  Yeah. And he even gets into, there's some really neat shareholders letters from like the early eighties where he, because you know, you go back into that time and you look at what inflation was doing back then, it was, you know, 16% on the 10-year treasury and things like that in 1981. And so he has some really interesting comments about inflation, particularly with equities and how you want to own a company that has a lot of intangible assets and not tangible assets because of the turnover and the cycle rate and you're buying things that are losing value when you're holding a lot of inventory and just a really kind of a fascinating discussion. So he, he addresses it and it gets to your point. You know, own that instead of a pet rock that's not doing anything productive.

• 12:49Speaker 02

  So Dalio changed the way I see that in a, in a dramatic way, like very dramatic. And this was like all through our show, right? So like, we're doing the show and like, people can hear how like, like our opinions

• 13:02Ryan Sean Adams?

  The thesis is changing.

• 13:05Speaker 02

  Is changing, our, our minds are warping and, and it was like learning in a very public kind of way. And so in, in short, I mean, the, the reason Ray has gold in the portfolio, like the, the basic thesis is really kind of for currency collapse or for like severe currency debasement, it protects against that. It's kind of the yin and the yang to the currencies. And that's why commodities and currencies kind of have this inverse relationship inside of his all-weather portfolio. And that's why they're equally weighted. I want to say it's about seven and a half percent for each one of them. Because his opinion is as, as one's doing, performing well, the other would be not performing well.

• 13:45Speaker 02

  And then he's trying to find where would I want to own, when would I want to have the heavy weighted currencies? And then which currencies would I want to be heavy weighted in, in comparison to that to balance it out? So, uh, long story short, I'm sorry to, to keep kind of going on about it, but in short, gold made a lot of sense for currency, the basement in the portfolio. And then, you know, I'm a millennial, barely a millennial. Some might argue I'm not, but I'm, I think I'm right there, maybe the last year of a millennial. And, uh, you know, gold made sense to me at that point. And naturally Bitcoin made sense as well. And so this is in the 2015 timeframe. We did a show about Bitcoin back probably first or second quarter of 2015.

• 14:31Speaker 02

  Uh, it's kind of funny to listen to because we're like, what the hell is this? Who is the person that like, how in the world can something that, um, you know, doesn't have a known founder possibly like set on a global stage and people take it seriously.

• 14:45Ryan Sean Adams?

  You guys were just figuring it out on the show.

• 14:47Speaker 02

  Yeah.

• 14:48Ryan Sean Adams?

  As you went on.

• 14:49Speaker 02

  We were figuring out on the show, but you know, it was interesting is even back then, uh, and at the end of the show, I tell people I took a position in Bitcoin. And the reason why I bought it back then is because for me, it had such a massive asymmetric upside because of how sick and broke the traditional markets are, specifically the fixed income market in traditional markets.

• 15:15Speaker 02

  You know, I, I was of the opinion back in 2008, 2009, that nothing was fixed from that. So as we went into the, because you know, I was, I was invested in the market during that period of time. And, uh, everything that they did from a central banking standpoint after 2008, 2009, for me did not make any sense whatsoever. I was like, well, this is a short-term fix, right? All the QE. And then they did more and then they did Operation Twist and now they're buying the longer end of the bond.

• 15:45Ryan Sean Adams?

  And now it's normal. It's not even.

• 15:48Speaker 02

  That's right. No one even questions it.

• 15:49Ryan Sean Adams?

  Yeah.

• 15:49Speaker 02

  And so I'm looking at this and saying, okay, so what's the end game here? Like, there's no way we can keep doing this without there being some type of repercussion. And so comes 2015, gold was starting to make sense. I see Bitcoin, I'm saying, I'm going to own a little bit of this because if this is, if this would play out, because I don't see the end state, um, this could become extremely valuable stuff. And the settlement can, can take, no, back then it was only, you know, every 10 minutes you could settle. So that was, that was a major challenge and kind of a setback at that point in time to own it. Because of the settlement time and there was a scaling concern back at that period of time when we covered it and a lot's changed since. But yeah, that's what got me in.

• 16:32Ryan Sean Adams?

  Okay, so I think I see sort of your path here, right? So coming from Buffett, right? And then you absorb that world and your long-term time horizon, all of the things like he preaches and says, and then Dalio is all about the credit cycles. And, you know, what if the 70 to 90 year sort of cycles? And within those cycles, somebody like Warren Buffett can be completely right and thrive. But when those cycles change, and Dalio argues that we're in the late stages of a fiat credit cycle, when those cycles change, the Buffets of the world can be really, really wrong. And you have to be ready for those stages. So you saw that, and I get that. What's interesting to me, Preston, and you've probably been studying Dalio for longer than I

• 17:16Ryan Sean Adams?

  have, though, is Dalio hasn't yet fully made the connection to Bitcoin. And maybe that is the millennial in you coming out, because he sees what's going on, right? With, like, he's like, you should hold gold as a result, you know, non-sovereign wealth stores are your friend, commodities, gold, these sorts of things. But he hasn't yet connected that to the digital. And I wonder at some level whether that's just a product of when he was born, like the generation, he didn't grow up with computers and the digital being a fundamental part of his life. So maybe it's just harder for him to make the connection. I know he was at the CoinDesk

• 17:55Ryan Sean Adams?

  conference, he's kind of coming around a little bit, so he's maybe getting close. And if anybody can change their mind on something, it's someone like Dalio, who's very rigorous, very analytical. But that seems to be the additional step that you took is just jumped into the digital. And I'm curious if you think that's kind of just a product of The time period in which you grew up?

• 18:19Speaker 02

  I, I think the thing that's really kind of held Ray back is he, it appears through some of his writings that he has been very concerned about government shutting it down and just if, if it really did start to run, that somebody was going to come in and be able to stop it. I think in, in your, like you said, he's down there at the conferences talking about he recently made an announcement on CNBC that he doesn't see the dollar continuing to be the global reserve asset, just like Stan Druckenmiller. The other thing that he said recently that I think is what I feel like I've been screaming about for a while, which is I, he, he made the comment to the tune of like, I'd rather have Bitcoin than have bonds.

• 19:02Ryan Sean Adams?

  Yeah.

• 19:02Speaker 02

  And people on CNBC were kind of scratching their head like, hmm, everyone keeps talking about Bitcoin versus gold, but no one's talking about Bitcoin versus bond. What, what he's getting at is if Bitcoin starts to become the new store of value globally, what does that do for debt in general? And I don't think too many people can have connected these dots as to what it means for the impairment of debt. Because your interest rates and boy, I'll tell you, and I've been, I've been saying this on a couple of different shows. What if these stablecoin interest rates that, that you can get in DeFi,

• 19:45Speaker 02

  that you can get on centralized exchanges? I know when you go peer to peer on like a USDC token, like it's like 20%, right? What if, what if, and this is the big what if that I'm trying to propose and put out there to people? What if that is the real risk free rate, right? What if, what if the cost of capital is double digits? We won't even say 20%, let's just say it's 10%. We could say it's 5%. Because when you look at asset prices, specifically like equities. In real estate or whatever, it all comes down to interest rates.

• 20:24Speaker 02

  And if they're priced, and I'll be generous and just say it's it's 2% or 3% today is where the equity market's priced. But let's just say that the real risk free rate is 10%. Like the amount that they have to come down, the equity prices have to come down. If those stablecoin interest rates are the real new risk free rate. I mean, you're watching equity markets sell off by like 80% from where they're at right now. In Bitcoin terms, in in in that new emerging global currency that is basically taking over from fiat currencies as we know it.

• 21:04Speaker 02

  And so that for me is the big, like, really mind blowing scenario at play globally. Uh, that I just don't think anybody's talking about. I don't think anybody looks at that as being like real risk free rates. But think about it, like, who's stepping in and saving anybody with these rates? Like, nobody is.

• 21:23Ryan Sean Adams?

  Yeah, and that's what's interesting about crypto, right? So another headline on CNBC is always talks about the the volatility of crypto. But but but sometimes I wonder if like the crypto is maybe the more free open market. Maybe crypto is the last free market on the planet. Everything else is just artificially suppressed or like pushed down. And certainly interest rates are so that has a an effect on every single other asset class. And maybe like our world is the real world. It's just like it back.

• 21:58Speaker 02

  That's totally what I think.

• 21:59Ryan Sean Adams?

  Meme like, like, we're in the real world. CNBC is in the fake synthetic world. And like, we're seeing all of the raw volatility and craziness that is a free and open market.

• 22:11Speaker 02

  I mean, just think, and that's totally how I feel. But just think how insane it is for people to think that the 10 year treasury is not manipulated.

• 22:21Ryan Sean Adams?

  Right.

• 22:21Speaker 02

  They're they're printing a bunch of money. They're going straight into the bond market. They're buying the bonds and they're shoving that cash into the system. And they're clawing those bonds off the market, which is either pegging the yields at whatever percent. Or lower. And so now they're talking about yield curve control. Like it looks like the 10 year treasury is kind of cooled off, but like if that thing got up near 2%, they were going to step in, they were going to do yield curve control, which means we'll print whatever amount of money that's needed to ensure the yield doesn't go higher than 2%. And we're just going to keep shoving it into the system and clawing those bonds out of the market. Right? That's manipulated. That's not, the cost of capital is not real at that point. It's just imaginary land.

• 23:06Ryan Sean Adams?

  So I'm glad we're kind of starting this with the things that we, we all agree on, right? Like the reasons we're in crypto. And I think we hit on two, just, just then, as we went through kind of your background and introduction, your story. One is, I think all of us agree that we are in this late-stage fiat cycle. Fiat monies are probably doomed. And by doomed, I mean, I don't think it's the end of fiat, but there's going to have to be a jubilee, a reset, a money printing event. And I think we also both agree back to your, back, back to your comment that like money printing does suck because a small group of bankers should not have the ability to

• 23:48Ryan Sean Adams?

  decide who gets freshly printed money and when they could print it. I mean, that is an unfair, we use the term often on bankless, credibly neutral. This is the antithesis of credible neutrality, right? A small group of individuals have controls over the buttons to print their money and they could, they can print it however they want. Over the last 10, 12, 15 years, it's gone primarily to the banking class and the wealthy, right? Now it's maybe it's shifting to, to labor, but that's probably not a good system to, to base our monetary system on. So those two things we agree, I want to get to a third that I think we agree on. And that is this concept of

• 24:30Ryan Sean Adams?

  self-sovereign money that individuals, rather than faceless governments and banks should have more power in our financial system. And for self-sovereign money to happen, we have to have decentralization. Decentralization is necessary for anti-fragility. Is that something that you deeply believe as well, Preston?

• 24:55Speaker 02

  Absolutely.

• 24:57Ryan Sean Adams?

  And then I'll also, I'll also follow up with some sort of belief that, you know, markets and monies should be out of the hands of top-down control and more of a bottom-up emergent phenomenon. I think, I think, Preston, you, you might also agree with that statement, too.

• 25:13Speaker 02

  Yeah, I think for anybody who believes in freedom and free markets and the power being at the lowest level within, within the individual, like what you would read in the Constitution of the United States.

• 25:25Speaker 02

  I don't know how anybody could see it any other way. Right? Because what it does is it, is it forces upon elected officials to make decisions reasonably. They're not just going to go to war with another nation state when there's extreme repercussions for the cost, the real cost that, that it takes to do something like that. And so when, when money is free, or I should say currency is free. That whole incentive structure and that decision-making that's being made at the highest levels gets totally warped. Almost like, you know, somebody who's on it, who's on a drug, how their brain and their, their rewards and

• 26:10Speaker 02

  penalties of their decision-making get warped.

• 26:13Ryan Sean Adams?

  How important to you, Preston, I'm curious, back on this self-sovereign topic, is the, the peer-to-peer nature of crypto or something like, like Bitcoin, right?

• 26:22Speaker 02

  So like Really high.

• 26:23Ryan Sean Adams?

  Okay, okay. So let's talk about that because I feel like there are two elements of decentralization in something in a system like Bitcoin. One is like hands-off decentralized issuance, right? You're like, no one has the ability to print. The algorithm controls the printing of new Bitcoin. But the second piece of decentralization is anybody can transfer Bitcoin peer-to-peer from one person to the other. And it strikes me that some in the Bitcoin community value one and not the other, some value both, some value one more highly than the other. Of course, we had the Bitcoin Cash fork, we all know like about that. But, but the reason I'm curious too is because like some who only

• 27:06Ryan Sean Adams?

  Value the the issuance side of things might say things like, oh, it would be really great if we had like a paper, like a a government fiat that was Bitcoin backed, right? Like a paper sort of fiat that that but like you've removed the ability to have the peer to peer sort of nature, almost like a Bitcoin standard, but we're not necessarily using the Bitcoin network itself. How do those two line up to you? Is is the peer to peer nature of Bitcoin as important as the hands off the issuance policy side?

• 27:45Speaker 02

  You know, for me, that was, this was just an argument that was much more of a debate back in like the 2017, 2016 timeframe. I mean, really, anything before the Bitcoin Cash Fork, it was a big debate within the community. But I would, I would say now, I don't really see within like, you know, hardcore Bitcoin or community. I don't see that really kind of being much of a concern because at the base layer, you got your sound money. You, your issuance hasn't been changed. The security hasn't been compromised by like, anybody can run a full node. It's super easy to do. But yet you're still being able to to step into layer two with the Lightning Network and and conduct transactions instantaneously

• 28:30Speaker 02

  at sizes that make sense for the amount of fees that that you're being charged. So like, if I want to send somebody 500 bucks on Lightning, it's, it's not too hard to use those rails to do it.

• 28:43Speaker 02

  So, uh, you know, I don't really see too much of an issue in the space with with respect to that, you know, piece right now.

• 28:52Ryan Sean Adams?

  So Preston, I think that's our base, right? So like, there's a lot here that we agree on, right? And and the last one being sort of self sovereign money, I might add digital because neither David or myself or anybody who listens to Bankless is really excited about non sovereign, uh, physical assets like gold, right? I mean, because we do skew for millennial, we think the world is going digital, like

• 29:18Speaker 02

  For sure.

• 29:18Ryan Sean Adams?

  Don't bet against that.

• 29:21Speaker 02

  I mean, I just don't know how anybody in this day and age could think that. We're going to go back to trading rocks and and paper currencies on top of that.

• 29:30Ryan Sean Adams?

  Doesn't make sense to me either.

• 29:31Speaker 02

  Yeah.

• 29:32Ryan Sean Adams?

  So let's talk, maybe we're going to get to some topics, maybe that are are kind of the crux of disagreements between the Bitcoin and Ethereum space. And we have a few. I'm going to just like throw them out here as a table of contents. We won't get on them now, but I think one of the things we probably want to talk about, Preston, is proof of work versus proof of stake. And the trade offs of those two things. Another thing that seems important is monetary policy. So fixed supply of Bitcoin versus the security trade offs that Ethereum might make. The third is Bitcoiners often don't think of ETH as a store of value, where Ethereum's do and increasingly do think of ETH as a store of value,

• 30:16Ryan Sean Adams?

  monetary asset, a money, as we might say, we should talk about that. Another thing I think Bitcoiners and Ethereum's can disagree about is the importance of decentralization. And when we say decentralization, what aspects of decentralization like most matter? And maybe that's less a disagreement and more sort of a a conversation or like a mutual back and forth learning. And then the last, the last piece I'd like your thoughts on is

• 30:46Ryan Sean Adams?

  I guess the, the, the holiness of Bitcoin, right? So there is this idea that, hey, Bitcoin was first and when Bitcoin was made, it was made well. And there's no need to tinker it with it, right? That that mean like, hey, I'm here to fix Bitcoin, like, nobody fixes Bitcoin. It was, it was made and you shouldn't tinker with it. And there's like an offshoot of that, which breeds, I think, possibly some maximalism. At least we want to have the discussion of maximalism, what that means to you. So that's kind of a table of contents grab bag for the episode. Is there anything else on your mind you think we should discuss?

• 31:23Speaker 02

  No, I love that, that list. That works great.

• 31:26Ryan Sean Adams?

  Well, before we get into the first one, which is like proof of work versus proof of mistake, I wonder if we could clear up some misconceptions for a minute. Do you think that there are any misconceptions that Ethereum's that people like looking into Bitcoin might have about Bitcoiners that you should clear up? Like, one thing is, every Bitcoiner I've met in real life has been like, awesome, like, really cool, really fun. I mean, David just, I didn't go to Miami, but David just came back. He's like, I had a blast. These people are great.

• 31:59David Hoffman?

  Yeah. They're lovely people. They're very, very nice in real life. On Twitter, you can kind of find some nasty ones, but I've never met a mean Bitcoiner in real life.

• 32:07Speaker 02

  I think it's more of a function of just, like, when you're talking to somebody face to face, you have this real, like, human interaction. I think when you're on Twitter, I mean, I'm just as guilty as the next person. But it's so easy to, like, fire a shot to somebody because it's not like it's, it's virtual. You don't even see a facial reaction, right? And I think it brings out the animal spirits in people. And that it's just so easy to fire these shots. I mean, there was one that I, that I did today that I wasn't, you know, if I, I'm sure if I was sitting next to the person, I would have been way nicer than just saying, oh, you're just, I'm sure you're an academic from Ivy League school or something like, I said something like that. And of course, it wasn't like

• 32:49Speaker 02

  the nicest thing, but I think it's more of a function of, of that dynamic than anything. I think most people are well intended. But as a human being, there's gaps and everybody's thinking, I don't care who you are, like, you're a product of your past and your interactions and the people that you've associated with in your preconceived notions. And that's kind of led you to the place where you sit today. So that's where I sit. That's where you guys sit. And there's going to be deltas in the way that we see things. And so, yeah. Anyway.

• 33:22Ryan Sean Adams?

  What other, are there any other misconceptions? Like, one thing, I think a lot of the Tharians here, some rhetoric from Bitcoin are saying ETH is a scam, like flat out scam. Do you think ETH is a scam?

• 33:35Speaker 02

  Um, I, let me, let me put it this way. I think that everybody who's working, especially the engineers that are working on this are well intended. I just think that, um, I think there's, personally, I think there's a lot of risk. Technical risk moving forward with, and not just Ethereum, but really kind of, uh, a lot of these other blockchains and store of value, uh, smart chains that are out there.

• 34:04Speaker 02

  And I'm saying that relative to how I view Bitcoin from a technical standpoint and the maturation of where it's at right now. And you got to remember, when I'm looking at all of this, I'm looking at it primarily with a, with a value investing kind of lens of, I'm gonna buy this thing that I think is going up in value. And what do I think the value, what do I think that the, the potential appreciation and value is relative to all my opportunity costs? And then what are the risks associated with all those forms of investment? Right? So I'm looking at it from that kind of lens. Um, so when I say, you know, I think your question was, do I think it's a scam?

• 34:51Speaker 02

  I don't think it's, I don't think it's a scam. I think what you guys are trying to do is create a virtual machine that's, that anybody can program, right? I, I get the, I get what you guys are trying to do. I'm concerned whether, not, how do I say this? Bit, bit in a nice way.

• 35:13Ryan Sean Adams?

  You don't have to be that nice. I mean, we could still be friends. Yeah.

• 35:18Speaker 02

  But I, but I think it's, I think it does a huge disservice to, to say, I think people are scamming. I think they're doing this. I think people are well intended. But I, but I'm concerned with the longevity of this being able to be pulled off at scale.

• 35:35Speaker 02

  Over a long duration of time. And so like, and that's another thing that I think is important for people to understand. My thinking is like, I'm looking 10 years out. I'm looking 15 years out. What's going to stand the test of time? And so like, whenever I look at ETH and I look at where it's at today as a proof of work. You know, blockchain and it trying to migrate to proof of stake. And, um, you know, then doing the sharding and everything else like it, it is a enormous technical feat. That I think is ahead of you and you guys understand, uh, the engineering of it way more than me because I just haven't invested the time because I see.

• 36:17Speaker 02

  All of this is being risk relative to this other thing that I think is going to perform. Very well, especially when you start talking about thousands of percents of return in such a short period of time. Me, it's just not worth my time to go and invest, uh, invest my time into trying to understand all the nuances. When I, when I think there's still so much risk to be resolved there. So I don't know if that kind of answers your question, but.

• 36:44David Hoffman?

  No, that's, that's really great. And you, you started when you were talking about when you found Bitcoin, you, you saw that was it mimics the properties of gold, but with the asymmetric returns, right? And so maybe, maybe trying to put myself into your shoes. You are saying, why would I go and risk all of this asymmetric returns that I think is coming with something that has this like technical upgrade path? So pressing my, my question to you is, um, mo- most things that aren't Bitcoin have some sort of like upgrade path. Like safer Litecoin, Dogecoin, all of these like early Bitcoin forks. Most things have a technical upgrade path. Uh, and so like, do you think that anything in the crypto space that has an upgrade path ahead of it is just kind of.

• 37:28David Hoffman?

  Disqualified from what interests you as an investment for you personally?

• 37:33Speaker 02

  No, but, uh.

• 37:36Speaker 02

  From an investing standpoint, I would rather see like all the fighters in the ring and watch them kind of devour themselves until it looks like a winner is starting to emerge. And I know that sounds terrible because I think, you know, I think a lot of people in the space really are trying to change the world, just the space in general. They're, they're trying to get away from the JP Morgans and they're trying to allow people to go peer to peer and I am all about it, like all about it.

• 38:07Ryan Sean Adams?

  You're all about bankless.

• 38:08Speaker 02

  I'm all about bankless. I'm all about people taking the power back from the cantillionaire system that we currently are experiencing because I think a lot of the social unrest we see in the world is a direct result of the monetary policy that the inflationary monetary policy that's been applied for 80 years. I think it like the polarization of politics is a direct result of this, these policies. And I don't think very many people are connecting the pieces together. So when I look at that, because you know, let's say we fast forward five to 10 years into the future and all of this is really starting to take root.

• 38:49Speaker 02

  You're going to have countries that are still trying to prevent people from going peer to peer in lending and borrowing and decentralized finance. And so, do I want decentralized finance to be successful? Hell yeah, I do. I think that, at the end of the day, and this is really interesting, when you look at risk-free rates today, they're completely managed by governments and for people in finance, they would find it laughable to think that a risk-free rate could actually be generated in a peer-to-peer market. But I'm of the opinion that in the, in the future, like five to 10 years from now, that

• 39:31Speaker 02

  your risk-free rate might actually be rates that are generated in, in the peer-to-peer market, specifically because you can actually see the escrow and you can actually see the addresses between the, the two parties taking place. And so when I think about centralized financing, like companies, you know, C5 today, I would argue that they're doing these, these baskets of balance sheet management between tokens and things. I see that as more risk than peer-to-peer lending.

• 40:03David Hoffman?

  Wow, I actually didn't expect you to say that, but we'll put that in the mutual things we agree about like DeFi. Hell yeah, is what I heard you say. Like, I mean, some Bitcoiners don't like DeFi, but you're not one of them.

• 40:17Speaker 02

  Um, I, I think that's probably a strong statement. Maybe, maybe I'm out to lunch here, but um, I think, I think that Bitcoiners want DeFi, but I think they want it on a protocol that is truly decentralized, that no government entity could come in and um, disrupt it, shut it down, whatever, right? That's what they want, and they want it to be in some type of technical solution that has a lot of maturation is what I would imagine. But maybe I'm speaking for Preston and, and not necessarily the Bitcoin community, but that's how I personally see it.

• 40:55David Hoffman?

  Preston, you, you said that you would really kind of just rather just wait for a winner to emerge, right? And wait for um, really things to mature before you really get into um, what might be an investment outside of Bitcoin. And that was really reminiscent, reminiscent to me about kind of Lynn Alden's approach towards Ethereum as well. She was like, well, it's a young technology, you know, hasn't really proved itself. But, but I would say that Ethereum has proved itself from everything below Ethereum onwards, right? Like Ethereum is, is six years old and a lot of Bitcoiners kind of say, gave very similar criticisms to Ethereum in its early days, when Ethereum was just one or, one or two years old, or even the same criticisms before he was even born, like technical risk,

• 41:40David Hoffman?

  it can never upgrade, the, the roadmap isn't achievable. And granted, the biggest things about Ethereum's roadmap are still ahead of it, you know, sharding, proof of sake, EIP 1559. But at the same time, Ethereum has attracted basically all of the, the crypto economic developers that, that really want to playground to do research and development and then implement, you know, measured upgrades that we think are, are good for the protocol. And we've, as the Ethereum network has actually gone through a, a large number of successful hard forks and successful protocols. Upgrades. And so we have this, you know, growing track record of successful protocol upgrades. Meanwhile, we have this immense amount of network effects on in DeFi with peer to peer lending,

• 42:25David Hoffman?

  borrowing and lending applications, you know, options, applications, all these other financial applications. And we are just not seeing that same sort of ecosystem show up on any other crypto network, nor are we seeing any developers show up on any other crypto network. And so my question to you is, when you are looking for some winner to emerge out of this like, you know, battle to the death, why, why hasn't Ethereum like ticked that box yet for you? Like, what else are you looking for?

• 42:52Speaker 02

  Really, the, the thing that I have concern with on Ethereum is just this migration from the proof of work over to proof of stake. And then also 64 blockchain, you know, sharding, that's then going to be, you know, I think you guys are calling it 1.5, you know, after the porting portion of it takes place. Then on beyond that, I would just say I have concerns about what happens from a centralization standpoint in five or 10 years from now, when you're under a proof of stake system, because, and I'm sure you guys have heard all these arguments, right? But I'm

• 43:33Speaker 02

  just going to kind of reiterate them, because, you know, I, I buy into this. When you have a proof of stake system, I think the exchanges are going to become pretty darn powerful for providing a service of staking the coins. And then what does that mean for validators? Now, my understanding is that under ETH2, you guys are going to then have this mechanism that the validators are getting randomly swapped between those 64 chains, which might provide a really unique solution to mitigate some of that concern as far as the centralization of the validators. But going back to my investing roots, so.

• 44:15Speaker 02

  Anytime I'm analyzing a company and they're saying our free cash flows might look like this in the future, or they might grow at this rate at a 10% compounder for the next five years, I immediately put that more into the speculative bin than the investing bin, because it's not something that's actually happening or present today. And so that's, although I agree with you that ETH has kind of proved itself as the biggest fighter in the space today, it's under all these technical circumstances that are all about the change, right? And so that that transition and that pivot for me is very concerning from an investor

• 45:00Speaker 02

  standpoint. Now, I'll tell you this, something that I find really interesting. So obviously, I'm looking at the price action and I can see the performance over the last three months, and ETH has done very well relative to Bitcoin. And so I obviously ask myself, what's driving that? Why is that price going up? And I would be, and this is more of a question to you guys, do you think that the staking that took place back in, you know, December, I think it was in the beginning of December, that people were able to start staking their ETH into the beacon chain? Do you think that that staking basically was almost like a happening

• 45:44Speaker 02

  event as far as scarcity of coins that were then sucked out of the market, which then made ETH more scarce to drive up the price?

• 45:54David Hoffman?

  I don't think so, because the people that are staking, kind of there's this game with staking is like, kind of no one wants to be first, right? Like, no one wants to be first through the door. So there were some people, I think Vitalik was probably put some of his ETH through, I think the EF made of like deposit a little bit of ETH just to kind of signal confidence. And then some very early OGs put their ETH first as well, like the people that have been following the space and been waiting for staking. And this is Been verified decently well on chain is that a decent supply of the ETH that went into the deposit contract was very, very dormant ETH.

• 46:33David Hoffman?

  Like some of the ETH that went into the deposit contract hadn't moved since the actual ICO inception date, right? It was had been dormant for six years. And and at the time of speaking, we actually have 4.5% of all ETH in the deposit contract. Whereas there's 11% of ETH inside of crypto exchanges. And and with ETH inside of the deposit contract, that's like the beta for staking. That's not even like, you know, full production of staking where everyone can go in and out and as they see see fit, right? This is, are you committed to Ethereum because you don't know when we're actually going to merge? And so like, you're going to put your ETH in here and then you'll get it back whenever we merge, right?

• 47:17David Hoffman?

  At some point when we merge, the the barrier to staking gets really, really low, like consumer level hardware. Even in with innovations such as staking pools, decentralized staking pools like Rocketpool with Lido Finance. The goal of of staking is to allow everyone to stake inside of their own homes. And it's very much an anti-centralization vector. Whereas the staking on exchanges is always a concern. And the way that the Ethereum community has answered for that concern is by making it trivially easy to stake at home with. And with even like only portions of the stake, right? You need to informally in the code, you need to stake 32 ETH. But if you don't have 32 ETH, you can participate in a staking pool, which is its own DeFi app, right?

• 48:03David Hoffman?

  And so the ethos of Ethereum is to really offer optionality in staking. Right now, the OGs went first and and that ETH was never on the secondary market to begin with. I think really where where that price rise came from was some level of the market putting confidence in that staking will actually happen. Whereas, you know, if you ask people in 2017, 2018, 2019, some people started to believe that, oh, yeah, proof of stake will never actually get here. For the deposit contract plus the depositing of what is now five and a half million ETH into the deposit contract, I think was a signal of confidence. Along with, we had parallel signals

• 48:44David Hoffman?

  of confidence of EIP 1559 getting approved and with a date for inclusion, which is sometime at the end of July. I think the the big ETH run up in price was some sort of skepticism narrative violation. That's that's my take as to why the ETH price ran like it how it did.

• 49:01Speaker 02

  Say that again skepticism.

• 49:04David Hoffman?

  Uh, narrative violation. There, there was a very much an anti ETH like proof of sake will never ship, EIP will 1559 will never ship. And now that's that skepticism has kind of that that narrative of the skepticism has kind of been violated.

• 49:18Speaker 02

  Okay. Yeah. So, um,

• 49:22Speaker 02

  is it, I want to talk about the 1559 thing with you guys. So, uh, you know, my understanding is that the 1559 is going to happen in in July. That's been approved. Did you say that it's been approved?

• 49:34David Hoffman?

  Yeah, by like rough consensus. So everyone kind of gave the thumbs up and no one really gave the thumbs down. So that's how we have consensus in Ethereum.

• 49:41Speaker 02

  And and how was, and I I truly don't know. So when you guys say that you have consensus, I know with Bitcoin, so like we're going through the tap route, uh, you know, upgrade in the miners are the first ones. And then they all basically signaled with the blocks that they're mining that they support it. And now it's going to keep going through. So for you guys, how are you guys, uh, like, how was the 1559 approved? Because I have no idea.

• 50:05David Hoffman?

  Yeah, there's this EIP process and it's very, very rough and it's it's purposefully informal in the sense that like, there's no vote, there's no vote counting. Uh, because as a system, we know that if we make a formalized governance process, that's an attack vector, right? Like if you lay out the rules, then you tell the attacker what the rules are. And you don't want to inform what an attacker or would be attacker, you don't want to tell them what the rules are. You want it to be rough. Uh, and so, you know, EIPs get proposed, it goes through an all devs, uh, call, basically a Zoom call with all the the core devs who work on these different client teams. And loosely, all the client teams are the people that are

• 50:44David Hoffman?

  Ultimately responsible of putting that improvement protocol into code and then actually updating the clients and the clients all organize and coordinate with each other. And then there's some sort of like kind of community consensus process, right? There was this one EIP forever ago called Prague Pow. And the miners really, really wanted it, but basically no one in the community wanted it. Yet the miners had their their sort of influence in the EIP process. The EIP was proposed. Then the community learned that the EIP was being discussed and like pushed back very, very heavily. And when I say the community, I'm talking about people on Reddit, people on Twitter, people just making their voices heard. People made a website, a vote no on Prague Pow.

• 51:29David Hoffman?

  And you know, it's all about, it's much, very much like a merit meritocracy as to who can be in these all core dev calls. You really have to show face for a long time and really prove credibility and clout and allow just like how kind of like Bitcoiners really kind of rise to the rise to the top of Bitcoin, the Bitcoin community based on their merits and contributions. Same thing with the Ethereum core devs and the leadership, people like, you know, step up as a leader and they are rise up through the merit to their contributions. And there's this rough consensus. There's this famous Ethereum like video in an all core devs call where they, people asked, it came time to figure out if we were going to include this EIP or not include this EIP and

• 52:14David Hoffman?

  there was a, you know, please signal if you have anything that you, if you, if you don't want this thing included, right? And people were really confused as to whether they had consensus or not, but people like, oh, I guess we have consensus. Let's move forward. And that's, and it was this very chaotic or like what I like to call chaotic organization way of moving forward. And that's how we make sure that the community never gets pissed off when something gets included. And that it really just has to happen by some sort of pseudo super majority.

• 52:46Speaker 02

  But at the end of the day, your your full node operators are voting with the software. So whoever's running

• 52:51Ryan Sean Adams?

  Yes, correct.

• 52:52Speaker 02

  Yeah, whatever.

• 52:53Ryan Sean Adams?

  This is it's the same process. It's a similar product, different community, but similar processes Bitcoin, right? It's like other chains, other smart contract platforms. They have like token vote governance, right? Which, in my opinion, kind of embeds plutocracy in the system. You have the most stake, you have the most tax tokens, you have the most capital. You get to say what the next upgrade is. But Ethereum's upgrade path works the same way as Bitcoins in that like ultimately there's court dev teams. They develop the software, they push the software. In Ethereum's case, there's multiple, you know, clients you can run Bitcoins case. There, there's one client you can run.

• 53:34Ryan Sean Adams?

  So users, those that run the nodes actually get to choose what software you want to run. And when the fork comes out, they could choose whether to update or not. So ultimately, it's the it's the no, those who are running the nodes that like decide, right? That's that's the check and balance on on power here.

• 53:54Speaker 02

  So my question for you guys is when you, when you migrate over to ETH two, and you're going to have four different types of full note, or you're going to have four different types of nodes. Which node at that point, would it be the super full node would be the only one that like? Let's say there's a discrepancy between the community and you have a 50 50 split.

• 54:14Speaker 02

  Which which full node is the one that is able to basically say this is? This is truly the software we're running. Is that the super full node or?

• 54:23Ryan Sean Adams?

  Okay, so

• 54:24Speaker 02

  Help me understand how that would work.

• 54:26Ryan Sean Adams?

  Yeah, so first off, there's, there's the when you say a different kinds of nodes, there's different client teams and there's different client softwares. And so there's literally four different clients that will produce for different nodes that all can actually agree on the same state. But what I think you're talking about pressing is you're talking about, yeah, there's an archive node. There's like a full node, there's a prunes node and.

• 54:51David Hoffman?

  The everyone who's running a node is running a full node. There, there are like light clients and stateless Ethereum that's being worked on. But when we talk about nodes, we're talking about full nodes. Now, there's the difference between a full node and an archive node. And a full node is something that is roughly about 150 gigabytes. An archive node is that big one that like really scares Bitcoiners.

• 55:13Ryan Sean Adams?

  It's multiple terabytes.

• 55:14David Hoffman?

  It's like multiple terabytes, right? And the difference between a full node and an archive node is an archive node is full node plus computation. If you, if you have a full node, you can produce an archive node with sufficient computation. But the full node has the full state of Ethereum, the full verification of every single transaction that that's ever happened. And that's the, the bare minimum thing that needs to be a part of the network to achieve consensus. And that's the thing that's like very, very manageable as a piece of hardware and software.

• 55:46Ryan Sean Adams?

  Yeah, so it's like 250 gigs or something like that. You can

• 55:50David Hoffman?

  I was talking to Vitalik last night, it was 150 gigabytes.

• 55:54Ryan Sean Adams?

  That's for, that's for the state and then you have to the history as well. So, um, yeah, and but like an archive node is multiple terabytes, but a full node you can actually sync in like half a day. You know, 12 hours, 15 hours from a home internet connection. An archive node, that's the thing that you really can't run at home, that an individual can't run. But those who run archive nodes are doing that for like faster queries, a sort of thing to like power, uh, adapt for faster query response times. It doesn't have anything to do with actually validating, uh, the network.

• 56:33Speaker 02

  My question's more oriented to the ETH two than kind of what you guys have right now. So like the full, uh, super full node is that's downloading the, the full data and the beacon chain and every shard block and every reference. Is that going to be needed for the consensus of the code? Or can you get away with like a top level node or a single shard node? Like, I, I guess when I'm, when I'm looking at that and you're going to have these nodes that are like a single Shard node, that's a one piece of the puzzle and I'm aware of like fraud proofs and things like that as far as them validating these blocks as they come through, but from a forking standpoint

• 57:13Speaker 02

  is really kind of the essence of my question. So if the community, let's say ETH2 goes through whatever year we're in, and there's a discrepancy between the community as to a certain path and there's a 50 50 split in the direction, which one of those nodes are going to be the ones that are able to say, well, you have an opinion, but this is, this is truly what's being run here. Which one of those would be the, would it be your super full node is what I would assume?

• 57:49David Hoffman?

  Well, you said a sharding node. So when you are validating on proof of stake, you are validating one, one shard and the computation that is required to do that is just for one shard. All 64 shards go into one single node. So an Ethereum 2 node is still a complete node of all the shards. So it's not like the shards are like accidentally like splintering off into different directions in the case of a fork. So there's still only like if you have, if you're running in an ETH2 client, you're running the full Ethereum blockchain. And that, again, it's really just no different from, from Bitcoin. It's a full, a full node that carries the current header of the state of Ethereum and, and the, and you can still produce an archive node

• 58:31David Hoffman?

  from that. But it's, it's always the full nodes that at the genesis of Ethereum, I'm not sure what the state will be if the state is completely wiped clean because we're back onto a new, we're back onto a new blockchain and the ETH1 is now just a shard on there. But it's, it's truly no different. It's just, it's just the full nodes from the client teams.

• 58:50Ryan Sean Adams?

  And the design goal here, Preston, is have the ability to run that full node from a consumer laptop. That is like a necessary design requirement to keep this decentralized.

• 59:02Speaker 02

  I just, I guess, and it's, it's definitely a technical roadblock for me because I just, it's, it's not my forte for sure.

• 59:09David Hoffman?

  It's also not our forte, so.

• 59:12Speaker 02

  I just, I hear that and I'm just like, I don't know how that could, I just don't know how that could be possible to run that on a laptop, especially as you're expanding into like these 24 different shards and a beacon chain and everything else. I just don't know how that technically could happen, but I'm sure if I tweeted it, I would probably get a thousand people in my, in my comments section to tell me this and that and everything else.

• 59:36David Hoffman?

  It is worth noting that like we, so historically, this, this is history that frequently Bitcoiners talk about Ethereum with this, with this consensus and node operations. At the beginning of Ethereum, it was very much a concern, like the, the speed of, of hard disks over solid state drives really bottlenecked how fast you could sync up with a chain. And that was a very big cause for concern because if you can't sync up with the, with the leading chain with the, with the latest block, then well then at some point you'll never actually get there and you were only going to be, you know, trusting a very few centralized, centralized node operators. Now that kind of solid state drives are kind of the status quo, then now that the hardware of the world is upgraded, that's also been mitigated. But

• 1:00:20David Hoffman?

  also at the same time, a brand new Ethereum one client came out just a couple of weeks ago called Aragon. And now you, and that's actually the fastest Ethereum one client for, in for sync speed ever. And I think that that's what Ryan was talking about when it's in half a day. And that also made hard disks now viable to sync the ETH one chain. So not only like moving forward is consumer hardware just getting better and more capable of supporting Ethereum, but Ethereum client teams are actually innovating to make Ethereum more capable for consumer hardware. So it's actually improving in both directions simultaneously.

• 1:00:55Ryan Sean Adams?

  So Preston, let's maybe move back to your question of proof of work and proof of stake. But like I do want to establish that I think there's actually a shared agreement here that both Bitcoiners believe that individuals should be able to run a full Bitcoin node on consumer hardware. So do Ethereum's. Like, we do, like legit.

• 1:01:21Ryan Sean Adams?

  That's the entire point. If we can't run ETH2 validators, not the archival nodes, but validators on consumer hardware, the thing doesn't work. Other chains, smart contract platforms, run thing in data, run, you know, hardware and high-performance data centers, that can't be the case with ETH2. We want to keep this thing decentralized. So you could tweet it out on Twitter, get a bunch of responses. You can listen to Ethereum researchers like Justin Drake talk about the cryptography magic. You can be like us and understand maybe like 50% of all of those things. But that is the design goal and that is the value system. But let's get back to proof of work versus proof of stake because you said you had some

• 1:02:05Ryan Sean Adams?

  other problems with with proof of stake. So one, I think, is the critique that the rich get richer. Can you talk about that a little bit? What do you mean by that?

• 1:02:17Speaker 02

  In short, when I think about what worked historically before we even went into a digital space, the reason gold works so well is because, you know, it's really kind of hard to find an ounce of it in the earth's crust because of the distribution of it and whatnot, the amount that there is. So when you look at why gold served the purpose, it's very obvious from a scarcity standpoint, why. And then you look at the work that had to be performed with a shovel or whatever in order to pull it out of the ground. It makes sense real fast as to how it basically achieved its value.

• 1:02:56Speaker 02

  When I look at

• 1:03:00Speaker 02

  You know, and if we were just going to take it to extremes, because I think that's the best way to to understand something. Let's just say that a protocol had a pre mine, 100% pre mine. And there was no work performed on the units that were created inside of it. And let's just say that it had a cap and that no more were going to be created. And they were somehow able to decentralize the whole thing and then just issue out, equally distribute those, those units out to everybody with no work being performed. You're in a, you're in a situation there where it's going to be hard to

• 1:03:36Speaker 02

  say what the value of those units are if there's not some type of utility to that network for everybody to use. And then the utility is going to just naturally,

• 1:03:47Speaker 02

  you know, provide whatever value that might be. When I think about proof of work and how it requires energy expense in order to generate the, the units before they're issued. What, what's occurring in that situation is a recapital investment in the hardware in order to,

• 1:04:15Speaker 02

  let me put it this way. If you, if you bought a mining rig four years ago and I bought one right now, I have a, I have a bigger advantage or I can capture more coins. That's rare that new entrant has an advantage over the old entrant. Right? So like you, you came into it four years ago. It's harder for you to capture and mine the coins than it is for me. And I think that what that does, and when you look at proof of stake, it's a little bit different. If you had first access to the coins, you now have an advantage over somebody who's now just coming in. That's trying to capture them and, and employ them into the network. So I think that that's.

• 1:04:54Ryan Sean Adams?

  It's basically like, so if you, so one mental model we use for staking tokens is that they are like tokenized ASICs, right? So like, what are ASICs? These are, this is hardware, but it's capital essentially, right? It costs a certain amount of money. Tokens in Ethereum, Ether as a token, is like a tokenized ASIC. But I think what you're saying is basically like ASICs in the hardware world, they depreciate and they get old. And so, yeah, after four years, it's going to be completely obsolete. After one or two years, it's going to be half as good as the newest model, essentially. And so, these, these tokens, essentially, the ASICs kind of expire and bleed out of the system.

• 1:05:39Ryan Sean Adams?

  Whereas in Ethereum, the tokens are permanent, right? They don't depreciate, is what you're saying. And you're saying that that maybe leads to some churn.

• 1:05:50Speaker 02

  Well, you're, the person who's mining, when you're, when you're mining, you have to be a great operator to continue to fetch the newest issuance of supply and to remain competitive in the process of securing the network.

• 1:06:06Ryan Sean Adams?

  Right.

• 1:06:06Speaker 02

  Only the best operators, the people who can, I mean, I'm not a miner, but I can see how competitive it can get, especially if you're, if you're subscribing to the cycles, you know, the, the four-year cycles and that there's these bear markets and things like that, and how they got to manage their derivative exposure for their energy costs and all this kind of stuff. It is extremely difficult to do that effectively and to stay in business. Like, you have to be a good operator to do it. And so what it does is there's an incentive to continue to increase the security of the network by, by buying new hardware and not using old hardware because of Moore's Law.

• 1:06:46Speaker 02

  And you're also pushing the coins into the hands of the fittest operators that are then redistributing them back into society.

• 1:06:56Ryan Sean Adams?

  But aren't, aren't these fittest operators? Aren't these the ones that are the best operators? That do have the best connections to hardware and supply chains? And like, so I, David actually got into this space. I know his story because, you know, we do podcasts together. He got into this space because he was mining ether from his living room. He used to, we used to podcast. He's okay, bathroom. He had the mining equipment behind him when we like, we do this podcast, right?

• 1:07:25Speaker 02

  Still over there, yeah.

• 1:07:26Ryan Sean Adams?

  Um, and that was in Ether's early days when you could do that from home. You could no longer do that because of economies of scale, because you had to be an operator with data center with like.

• 1:07:39Speaker 02

  Well, I think that actually talks to the renewable energy piece more than anything else. Like I, I tell people.

• 1:07:44Ryan Sean Adams?

  Can we talk about the rich get richer piece, right? Because haven't we just undemocratized? Haven't we just given this like power to those who have these economies of scale? And we've moved it. David can stake from his apartment, but like he can't run mining equipment from his apartment. So like, is that less decentralized and less democratic, if you will?

• 1:08:10Speaker 02

  No, I would, I would probably, and no offense to you, David. I would just say that if, if David was really hell bent on being a great miner, he, and if that was really his, his core business, what he would have done is he would have gone and found cheap renewable energy in order to continue to do his operation. But instead he unplugged his, his rigs and somebody else took on that responsibility or they bought new hardware. And then think about the distribution of those coins. It's not going to him as a first mover advantage. It's going to somebody new that's, that's actually finding the cheapest and most.

• 1:08:46Speaker 02

  You know, clean energy that that they could possibly find. I tell people all the time, if you want to get into the ESG stuff, just go ahead and plug a mining rig into the wall and see how long you last.

• 1:08:56David Hoffman?

  Well, well, Preston, here, I what happened was I got washed out. I got washed out by people that had economies of scale like I was making the the Ethereum blockchain super secure in the comfort of my own home, enjoying a free heating bill. And and then I got washed out by other people that had the capital to invest in the economies of scale. And what I always get hung up with with the the and when the individual gets washed out for the for the large capitalized entities with the economies of scale, it's a centralization vector. And so like, not only does like the footprint of Bitcoin become very, very instantiated in the physical world, but like those supply chains become a part of the security of the Bitcoin network.

• 1:09:40David Hoffman?

  And that physical instantiation, I think, is is a risk vector. And this this argument that like BTC gets this churn from from Bitcoin miners being a hyper competitive. Ultimately, it's actually to just turns into cell pressure and the what I can't get it, what I what I just have a fundamental disagreement with is like proof of work is supposed to be a security mechanism, not a distribution or excuse me, blockchains are supposed to be secured, not distribution. They are. They are supposed to be maximum security. And it's a I think it's more of a moral argument rather than an investment argument as to that Bitcoin mining needs churn, right? It's actually not an argument that Bitcoin is a good financial investment.

• 1:10:25David Hoffman?

  It's I think it's more of a moral argument as this is what I think good money looks like.

• 1:10:31Speaker 02

  So as far as the centralization piece goes, so miners can participate in whatever pool that they want. If you don't like how the pool is, you know, managing whatever, you can leave, you can take your your mining rig. So I don't see the whole centralization piece. The the part about

• 1:10:50Speaker 02

  The hardware being centralized or that there only being a few producers, I think that's a valid concern and something that is a huge opportunity for anybody that wants to try to start moving production and things like that outside of some type of countries that supply a lot of the hardware. I think that that is something that's worthy of a discussion, but

• 1:11:11Speaker 02

  as far as the actual, like you're, you were saying that it went to economies of scale type operations. I would tell you that it went to locations that was getting really super cheap. I mean, you guys saw the whole volcano thing today where, I mean, that's, that's where this is all going to migrate to is the whole ESG thing for me is, is really a huge misnomer because I think that what we're finding and the reason why people that were doing it out of their house initially, which was extremely inefficient, it's moving to the places where it is becoming efficient and, and great operators that are able to manage the process.

• 1:11:53David Hoffman?

  I'm, I'm actually compelled by that argument. There's Bitcoiners really pound that, you know, Bitcoin is green drum and I tend to kind of agree with that side to the, to a lot of consternation from a lot of the Ethereum people that I hang out with. But the, the also, also if we, if we, I, I do a podcast with Christian Corolla is on, from Bitcoin Magazine, Bitcoin Media and he goes so far as to say is like, not only is Bitcoin going to be green, but he's Bitcoin is actually going to put power back into the grid out of the demand for Bitcoin mining, right? But then if, if that's true, then there actually is no more churn anymore, except, except for the hardware costs. But if you have zero electricity costs or even negative electricity costs,

• 1:12:38David Hoffman?

  the whole rich gets richer argument comes back to the people that was able to instantiate their perpetual mining farm with never having to sell all that much Bitcoin because they have free energy or even negative costing energy.

• 1:12:52Speaker 02

  I think where a lot of Bitcoiners go down the path of like store value is exactly what we have right now. They're looking at it more from, hey, if you've got a bunch of money, let's just say you've got $100 million worth of ETH. And it doesn't really require you to have to do anything from this point forward to still have an enormous vote in the future of, you know, transactions. And so then the concern about exchanges, and I know you guys talked about how in ETH2, you guys are going to make it very easy for anybody to basically

• 1:13:28Speaker 02

  run a fractional piece of a validator, which I think is, is a good thing. But at the same time, you're not able to control these exchanges and the ease that they're going to supply for people that are maybe just buying ETH on the exchange and they just immediately go ahead and stake it because they're lazy and don't really care about too much on the decentralization front. It's, I, I believe that it's still going to potentially provide a pretty good centralization concern. And there's no way to know, right? Like maybe, maybe I'm dead wrong because, you know, we might be years out from that becoming a reality. But I think

• 1:14:08Speaker 02

  that when you look at proof of stake, I'm sorry, when you look at proof of work, it's like, I mean, really, the full nodes are really kind of calling the shots on the Bitcoin network. I have no concerns on the centralization of Bitcoin, right? And I think proof of work has done an amazing job at, at being able to provide. One other thing that I would tell you that I think a lot of people, even in the Bitcoin space, might not agree with me on. I think proof of work actually is driving a lot of the price action of this entire space. Because, so I'm sure you're familiar with the, the labor theory of value.

• 1:14:50Speaker 02

  That Adam Smith, you know, is is famous for, which is you go out there, you perform some type of labor and then the cost of the units that are being harvested are a direct result of that. Most economists will spit on the labor theory of value and tell you that it's worthless. I think in this really unique situation of Bitcoin, that it's actually valid. And the reason I think it's valid is because it's commoditized and the hashing keeps going up. So when you look at the hash rate and it keeps accelerating and going up, part of that's Moore's Law, but I think the other part of it is just the sheer demand for the units and the work that's actually being performed. And so if that's valid and that there's this, I would, I would look at

• 1:15:34Speaker 02

  it like if, if we were selling wheat on, on a corner of a street and the line was just getting longer and longer and longer for the wheat, we could make the conclusion that whatever work is being performed back there and expended in order to bring it up to the table to sell it, that there's this one to one kind of comparison for the amount of work that's being performed based on the, the constant demand flow to consume it. And I, and I see Bitcoin in a very similar ways. And I think at the root of that is proof of work. So as the, as these halvings occur each four years, I think one of the reasons, and I don't know if Ethereum people laugh at this or not, but I take the stock to flow valuation very seriously. And the reason why I do is because I

• 1:16:19Speaker 02

  think it's actually a representation of the electrical expense for the number of units that are now flowing and, and being dropped into the market. And that's why we see these waves that happen almost literally down to the day for the bottoms, the, the bare bottoms and the peaks are almost exactly four years apart. And I think that what's driving that is, is, is at the engine of all that is this proof of work mechanism that's actually putting a price tag of the electrical expense for the number of units and the scarcity as it keeps ratcheting up every four years.

• 1:16:52Ryan Sean Adams?

  So you're a big believer, Preston, that like the four year halving cycles are super important and that, that these scarcity shocks every four years are, they have a material impact

• 1:17:03Speaker 02

  Yes.

• 1:17:03Ryan Sean Adams?

  on, on Bitcoin cycles.

• 1:17:05Speaker 02

  Yeah. And I think, to be honest with you, I think proof of work is, is an enormous part of that.

• 1:17:11Ryan Sean Adams?

  Can I just share the story?

• 1:17:13Speaker 02

  And I have no proof.

• 1:17:15Ryan Sean Adams?

  Well, I mean, the stock to flow model, right? I mean, I guess it's held up over time. It's kind of that that chart going up, right?

• 1:17:23Speaker 02

  And where I think it's hard for Ethereum because it's proof of work. It's been proof of work since inception. But where I think it's harder for that to be seen in the price of Ethereum is that the monetary policy has changed. You know, I've seen the chart of kind of like how it's with Bitcoin. It's so systematic, like you know exactly what in the world is going to happen, when it's going to happen. And like, I mean, it's just, it's clockwork.

• 1:17:47David Hoffman?

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• 1:20:21Ryan Sean Adams?

  Okay, Preston, so since you are a supply shock bull with respect to Bitcoin, I want to run this by you. And like, keep in mind, this may sound crazy to you at first, because it does sound a little crazy the first time you're hearing it. But I want to blend what we were just talking about with proof of stake and the next conversation, which is monetary policy, issuance policy, because these things go hand in hand. So right now, the Ethereum issuance is about 4.5% annually. I think it's like 1.5% annually for Bitcoin, something to that effect. Maybe it's 1.3%, something or something to that effect, something close to that.

• 1:21:01Ryan Sean Adams?

  So Bitcoin definitely has the supply scarcity advantages at this point in time. But that may not be the case for long, because there are two supply shock catalysts. That are coming very quickly to Ethereum. And as you said, Ethereum doesn't have this four-year cadence schedule in issuance. Its issuance policy is minimum necessary issuance. And when we get to proof of stake, we need a lot less issuance to secure the network. But let me run them both by you. So the first is something you've probably heard about, which is EIP 1559 press net. You've heard about this, I assume.

• 1:21:39Speaker 02

  Yeah.

• 1:21:40Ryan Sean Adams?

  Okay, so summertime, what happens sometime June, August, an update is going to go through, and this is in the regular Ethereum mainnet ETH1, as we call it. All of the transaction fees, a large portion of the transaction fees, like hundreds, like tens of millions a day at this point in time, are going to start being burnt instead of going directly to miners, right? So this is, this is kind of

• 1:22:11Ryan Sean Adams?

  like a, a variable supply shock, right? But it's definitely a supply shock. So if, if part of your bull case for Bitcoin is, well, it goes up because miners don't have as much Bitcoin to sell. This is absolutely the case with Ethereum. Because like a whole chunk of the supply, rather than going back to miners, is actually just getting burnt permanently. And this is variable because it depends on block space demand on Ethereum. But block space demand on Ethereum lately has been very high. This could go up, this could go down over time, but it's definitely a catalyst. So you've got that in effect.

• 1:22:53Ryan Sean Adams?

  That will bring down issuance a little bit, like say a percent or so annually. This will vary. The next supply shock happens when proof of work gets turned off. So when Ethereum talks about ETH2, there's no actual monolithic ETH2 that is like suddenly here. At some level, staking has already been active since December 2020. And ETH2 is going to be implemented in phases, all kind of an Ethereum upgrade path. There is really no To there's kind of like staking is put in place and proof of work gets turned off and then later sharding gets put in place and that is what we call ETH to right it's all kind of Ethereum.

• 1:23:36Ryan Sean Adams?

  And so what happens probably within the next nine to 12 months, let's call it Q1 2022 is all of the the 4.5% issuance on proof of work may

• 1:23:54Ryan Sean Adams?

  gets replaced by proof of stake issuance. But the nice thing about proof of stake and there's a great podcast we did with Ethereum researcher Justin Drake, who goes into this is it can be much more efficient from a capital efficiency perspective versus proof of work. So it takes a lot less capital at stake to secure the Ethereum network in the staking economy than it does in a proof of work network. So the the rough order of magnitude is like it's a it's a 10x improvement. So issuance and proof of stake gets to go down to about 1% annually per year and that fluctuates

• 1:24:37Ryan Sean Adams?

  based on how many people stake. The more people stake, the more issuance on the Ethereum network, the fewer the the less issuance. And that's all market driven and and completely open and variable. So what that in effect does, we have EIP 1559 this summer starts burning Ether, right? And then we have proof of work turning it off. And we get to this thing that sounds silly as a meme. It's called ultrasound money, which is just basically a play on words like it's sound money, but it might even be negative issuance, right? If EIP is totally max EIP 1559 is totally maxed out, we're burning more ETH than we're actually minting on an annual basis.

• 1:25:21Ryan Sean Adams?

  We might get into the negative territory some years and actually have a negative issuance rate. So from a stock to flow ratio, right? Again, you can't model all of these.

• 1:25:34Ryan Sean Adams?

  Variables, but you can start to put some financial models in place. In fact, like we've done some of that on Bankless. What would it look like in an optimistic scenario for block space demand? What would it look like if 30 million ETH was staked versus 5 million ETH staked? You can get some parameters in terms of what this might look like in the future. But it's absolutely going to mean if this is successful, there's execution risk. You talked about that in the intro, but like if the execution risk is mitigated, put aside if this actually happens, we're going to see a massive supply shock in ETH and an ossified, much more solidified monetary policy. Does that sound crazy to you? Like, what's your reaction to that?

• 1:26:18Speaker 02

  So, so first off, I think that this could be bullish for the price. Doesn't mean I'm gonna buy it because of my concerns like I outlined earlier as far as the technical risk. But as far as just the sheer shock of the lack of issuance going out, I think it could be bullish for the price. Now, where I think I have a concern for the use of the protocol. So, one thing that we've learned, you know, once we, once we started having a free-floating currency, the thing that we learned is that it created a major incentive between nation-states

• 1:26:57Speaker 02

  to debase their currency in order to attract other currencies into that local jurisdiction. So like if the dollar would debase itself and become the dollar would be get weaker, what it did is it attracted the euro, the yen into the United States. And it was beneficial for, for businesses because we were attracting all that capital into the country and then vice versa. So then when the US would debase their currency, now all of a sudden the Europeans had to debase there so that they could suck the dollars and the euros back over into their, into their jurisdiction because they had a weaker currency. So what my concern would be is ETH is trying to

• 1:27:41Speaker 02

  Have this this protocol that incentivizes people to come and use and you know, burn gas on their on their protocol in order to run all these programs and and decentralized finance and whatnot, right? Like you got all this activity and all this utility that you're trying to use on on the protocol. But my concern is is if you start getting into this super sound money and you start appreciating the value of the ETH, what might happen is you might actually incentivize the use of using other chains, basically cashing out the appreciation and the value of the ETH to go over and spend it on

• 1:28:23Speaker 02

  another chain's utility, which is then going to create this situation where you almost have like a currency war kind of situation between protocols.

• 1:28:35Speaker 02

  So my concern for for a protocol that's trying to do decentralized contracts is that if the value of it keeps going up, let's let's just look at, you know, we'll go back to the fiat currency because I think it actually provides a really interesting parallel here. If the value of the dollar starts getting really strong, those products and services inside the United States, people aren't aren't doing them anymore. They're not they're not coming here to buy them anymore because they're too expensive. Would you have the same thing happen with the ETH protocol if the value of the underlying inherent token that's associated with it is appreciating in value? Would you have to debase it to try to incentivize use?

• 1:29:18Ryan Sean Adams?

  I do think some people get tripped up on this and David and I have even had some debates on this where it's like there there are two different markets in Ethereum as there are in Bitcoin, right? So let me just flip to the Bitcoin world, right? In Bitcoin, there is Bitcoin, the asset that is an asset to money. It's a currency, right? But then there's this other commodity inside of Bitcoin called Bitcoin block space, right? And like there's a set amount of block space in every

• 1:29:51Ryan Sean Adams?

  Block, right? And the only way you can buy that commodity, which is Bitcoin block space and get your Bitcoin transaction in is by purchasing block space with what currency? With Bitcoin, right? So there are these two different markets. In Ethereum, there are these two different markets as well. There is ETH, the asset, and that price can go up and down for a variety of reasons. Maybe it's because people are listening to this podcast and they get super bullish on ETH, right? So price goes up, but they're not necessarily, block space does not necessarily go up along with the asset price. Block space demand goes

• 1:30:31Ryan Sean Adams?

  up when people want to use the Ethereum chain more. So that's a separate market for block space and ETH as an asset. Now, you still buy block space with ETH. That is kind of the currency. It's like, it's like petrodollars, right? It's like, you know, oil is priced in, in, in dollars largely. And but, but oil is the commodity here and dollars are the currency. It's kind of the same thing in Ethereum. So these are separate markets. So if the ETH price, if ETH price goes up by like a factor of 10, that doesn't necessarily mean anything for block space. Now, many times these things are correlated because if ETH price is going

• 1:31:15Ryan Sean Adams?

  up, then people are like, well, I'm using Uniswap. And so we're using more block space and we're using more transaction fees and I'll pay much more to get my transaction through to buy more ETH and all of the other DeFi tokens are pumping too. So I'm doing more of that. So there's correlation, but these markets are actually different. So I'm not sure that you get that foreign currency debasement problem. What you could get though, Preston, and this is kind of a bear case for Ethereum is like the presence of all sorts of other layer ones and smart contract platforms, or even layer twos and sidechains, or even Binance chain, for example. People might say, well, now we have all of this super cheap block space. So

• 1:32:01Ryan Sean Adams?

  Why would we spend so much for on Ethereum block space, right? And if that becomes true, then what you'll see is ETH gas price fall, ETH block space demand go down, ETH revenue flowing to EIP 1559 and getting burnt, all of that going down, and some of that activity migrating to other chains. What we tend to believe is like the most economically dense transactions will ultimately come to the most decentralized and secure base chain. Something like Bitcoin, right? Like, there was a time in Bitcoin's history where Eric Voorhees was doing Satoshi Dice, and we're using Bitcoin block space for crazy things,

• 1:32:45Ryan Sean Adams?

  like things that we wouldn't use it for today because it's just too expensive today, right? But the most economically dense transactions stayed. At some point in time, you know, it might not make sense to even move $10 or $20 on the Bitcoin network. It might be just thousands of dollars transactions. It might be just a bunch of crypto banks doing settlement on Bitcoin. Something similar could happen to the Ethereum chain in that only the most economically dense transactions will occur on Ethereum. Less important transactions, lower value transactions, might occur on Layer 2s, or even sidechains, or even other Layer 1s, or Binance Smart Chain. So that's one way I might answer that.

• 1:33:30Speaker 02

  So this is what I'll give you guys. I find it really interesting, and I find that it's going to be demonstrative to all the other competitors in the space that are trying to do smart contracts, for sure. As to whatever it means, it's really kind of hard to know at this point. Do I think it's going to be bullish for the underlying price if the scarcity gets tighter? Absolutely.

• 1:33:59Speaker 02

  But it's not something that... And I think this is important, like, just me personally, like, I just see so much technical risk on the migration over to ETH 2, so I just kind of keep my hands off. Do I think it could outperform? Sure, right? Like, all those things, I just... I'm more than happy to say those things. It doesn't, you know... I find it funny when...

• 1:34:28Speaker 02

  Folks are like, it's not gonna do it. And it's like, well, it it might do it.

• 1:34:32David Hoffman?

  You gotta wait to see.

• 1:34:33Speaker 02

  And it's not a big deal, right? And and if it underperforms, so what? You know, relative to Bitcoin, vice versa, right?

• 1:34:43Speaker 02

  In general, I think we've all learned that scarcity of units, digital units,

• 1:34:50Speaker 02

  is bullish for the price. So what you guys described, it's it's going to be really interesting. Now, I think the the bigger concern of of the community is the timeline of this migration. You know, I heard Vitalik say not too long ago that he thought it was going to happen this year. And then I just recently heard that it's now the end of 2021. And and like, I just

• 1:35:16Speaker 02

  I know I've said this a whole bunch, but at the end of the day, I think the thing that I think a lot of Bitcoiners, and I don't mean to speak for for the Bitcoin community, but think the thing that frustrates a lot of them is they look at things and they say there's a lot of technical risk. And when they're seeing conversations, they don't necessarily see that. And I don't think that anybody has to do this. But I think it would I think it would benefit the the ETH community if they were more upfront as to the risks associated with how difficult this is as to what you're trying to pull off. As a Bitcoiner, that's how I see it, right? So.

• 1:35:49David Hoffman?

  Yeah, and Those conversations do exist. And and we've had, you know, Danny Ryan, Justin Drake, Vitalik on the podcast, very explicitly like go after those things. And at the end of the day, there is just some sort of disposition, differential disposition between Bitcoiners and and Ethereum's and and Bitcoin as an asset is fundamentally trying to be a risk off asset, which is kind of like crazy for if you if you go tell like somebody like like Warren Buffett that Bitcoin is risk off, he's going to be like, what? But no, in the cryptos, in the crypto space, like Bitcoin is risk off. And so it makes sense that like

• 1:36:29David Hoffman?

  people who resonate with Bitcoin see the upgrade path of Ethereum, rather than than getting bullish like me or me and Ryan, they get like, oh, they see risk there rather than an opportunity.

• 1:36:42Speaker 02

  And I think that that's perfectly described. Like, so what you guys see is is like this upside and this really exciting like movement that's about to take place. I'm looking at that and like wanting to run the other way. It's it's not like any type of personality, like conflict between the two of us. I just, you know, I we just see it differently, right? We're just viewing it through a different optical lens.

• 1:37:06Ryan Sean Adams?

  I mean, I I understand what you're saying, because like even when you first jumped into Bitcoin, you know, 2015 or so, like it was kind, the project was kind of done. It's pretty ossified. Yeah, there's some things enlightening.

• 1:37:17Speaker 02

  That's that's very true. Like, so I know whenever I first got into it, like Mike Hearn came out with a, or this was like, I don't know, a few months, maybe a quarter or two after I got into it for the first time. And he was basically wrote his resignation of Bitcoin and saying,

• 1:37:33Ryan Sean Adams?

  I remember that.

• 1:37:35Speaker 02

  Not going to scale. Like, you got these transactions that take 10 minutes. How is that ever going to be used? And, um, you know, spooked a ton of people. And sure enough, a technical solution emerged. And so I think for for people like yourself, you might be looking at where maybe the technology solution is is is there and maybe going to arise. And you're going to do all these gee whiz things to kind of tie it together. And I'm I'm looking at it and saying, that's too many things. There's too much going on and like, hey, maybe maybe it'll get there. And if it does, you know, I'll be more than happy to come and take a second look at it. So it's just,

• 1:38:16Speaker 02

  it's a, you know, it's a little bit of a cultural difference between the the two different communities and just risk appetite, I guess.

• 1:38:24Ryan Sean Adams?

  Let me throw something else out out at you, which is on kind of a different subject. We talked about proof of work versus proof of stake. We talked about issuance. Um, I want to talk about the importance of DeFi, because you gave us a big hell. Yeah. When we talked about like DeFi and we are hell. Yeah, on DeFi too, because this is the entire point of crypto in our mind, like.

• 1:38:49Ryan Sean Adams?

  Bankless.

• 1:38:50Speaker 02

  So.

• 1:38:51Ryan Sean Adams?

  Podcast name is like for a reason, right? Yeah, go ahead.

• 1:38:54Speaker 02

  So for me, first and foremost, sound money is the thing that why I'm in the space.

• 1:39:01Ryan Sean Adams?

  Okay.

• 1:39:01Speaker 02

  Much more.

• 1:39:02Ryan Sean Adams?

  No central bank, that's sound money, basically.

• 1:39:05Speaker 02

  Yeah, is, uh, exactly. So when I look at the issues that we have happening in the world right now, for me, it comes down to like one thing. It's the fact that central banks can step in and just debase the currency and manipulate the market.

• 1:39:21Ryan Sean Adams?

  Okay.

• 1:39:21Speaker 02

  We don't, we don't have free and open markets today, in my opinion. Like, it's just completely manipulated. And I think that sound money and like a unit of account that can be used by everybody in the world that can't be manipulated is the solution and the, the big, the really big thing right here.

• 1:39:41Speaker 02

  I think the decentralized finance is, is a great thing that's going to enhance, uh, banking to everybody in the world, which is insanely important. But if I was going to kind of put them in order, I would tell you the sound money piece and kind of fixing the, the central banker's ability to just debase everything far outweighs the priority for me on what's going to solve all the issues we're seeing in the world right now.

• 1:40:11Ryan Sean Adams?

  I get it and I understand that prioritization. So let me make this argument to you. First of all, I would say, what if you could have both? I'm sure you'd be like, yes, but, but also like we want both. But also, what if I were to say this? I think you need DeFi or you won't get the sound money that you're actually seeking. And here's what I mean. Like, if we look at the history of gold, the way they, the banks put a stranglehold on gold was through centralization, through custoding of the gold. You actually had to bring your gold to a bank vault and deposit it.

• 1:40:51Ryan Sean Adams?

  Over time, those, those banks kind of collected into the central banking system that we have today that is now controlled by the nation. It was that centralization of custody that actually got us to the place that we are today. And I see very much that unless we have a decentralized banking system, not banks, but banking, right, then we could get to that same place with with something like Bitcoin. So here's what I mean. I feel like a Ethereum with Uniswap, for example, the ability to trade without a centralized intermediary. You don't have to give up your private keys at all, right?

• 1:41:32Ryan Sean Adams?

  You don't have to put it in Coinbase or Gemini or Binance or any crypto custodian. You could just trade with any other asset, right? That is a trading as a banking service, and that is decentralized. The ability to borrow or lend these other money verbs in DeFi without a bank, right? So rather than go to BlockFi, where you have to give up your private keys, which is great, nice Bitcoin crypto bank service, nice service. You could go to Aveir Compound and it's just code. There's no central intermediary.

• 1:42:04Speaker 02

  What do you guys think of Huddle Huddle? Because that's really popular in the Bitcoin space and it doesn't have any inherent token. But yet, everything can be settled between the peer-to-peer on the blockchain of Bitcoin.

• 1:42:15Ryan Sean Adams?

  So here-

• 1:42:16David Hoffman?

  With payments, right?

• 1:42:19Speaker 02

  What do you mean by with payments?

• 1:42:21David Hoffman?

  Huddle Huddle, I mean, could you explain to me and also the listeners what Huddle Huddle is?

• 1:42:28Speaker 02

  So this is a website that's a DeFi that's peer-to-peer. You go to the website. Now, my concern with it initially was, hey, like, you know, anybody can go in there and shut down the server of this website. But, you know, I had it explained to me by the person who created it that you can still complete the contract with the other peer on the blockchain, even if the website was down, after the contract was initiated, obviously.

• 1:43:01David Hoffman?

  It's a multi-sig exchange function.

• 1:43:03Speaker 02

  Yeah, you have you have your own private key, you know, one of three keys. And Huddle Huddle holds one of those keys in the event that the counterparty, you know. So when I look at that and I'm saying, hey, this is being done today on a platform like that that doesn't have any inherent token associated with it. Why, why won't we have more of this in the future? Why do we have to have this whole virtual machine with all these inherent tokens and like Uniswap? You guys can maybe talk this in more detail, but my understanding is that Uniswap used to not even have an inherent token. Then all of a sudden they issued one, which makes me feel like the founders that kind of stood it up.

• 1:43:44Speaker 02

  Wanted to basically get their fair share, get their fair share of what they created. But for Bitcoiners, they see a lot of that and they say, hey, we have this thing over here that doesn't require any of that. And that's probably where the future is going to end up going.

• 1:43:59Ryan Sean Adams?

  So I have a couple of thoughts really quick on that. So first of all, any real DeFi on Bitcoin is awesome, is great in my mind, right? So like, this is all part of going bankless. So something like Huddle Huddle, if it's that criteria and I knew you could do some like basic smart contracts on Bitcoin with multi-six and that sort of thing. That's all great. Like, I hope Lightning is super successful too, right? That is a bankless peer-to-peer transfer service. What like what I would say though, is without the EVM, without the general compute. I had a friend in high school, do you remember those TI 83 calculators?

• 1:44:40Speaker 02

  Oh, yeah.

• 1:44:41Ryan Sean Adams?

  Okay, so like, he used to love to program apps and like these crazy apps on the TI 83 calculator. And I would look at him and be like, why are you spending time? Like, there's no keyboard attachment. He would literally use the, you know, number controllers to like actually convert it to alpha, like alphanumeric text and like program this thing. I'm like, why don't you just use a computer over here with a real screen and some JavaScript? And like, build your program that way. And that's a little bit how I feel like with Bitcoin is because it doesn't have the expressivity baked into the base layer.

• 1:45:20Ryan Sean Adams?

  You could do some stuff, you can create some apps, but you have the power of a graphing calculator. When you could have like a much more powerful system. So it's not that these things won't exist in some form. It's just that they'll be less powerful. And so like, the question is, why hamstring yourself? Or like, you know, maybe it's okay for DeFi, for Bitcoin to not be optimized as a DeFi system in the way Ethereum is.

• 1:45:52Speaker 02

  Yeah, I think it goes back to my prioritization that I was talking about. So like priority one, like you have to have sound money. Priority two, if we can do DeFi, let's do it. And so why do we need to have that on the same base layer? Do we, do we need to have it? My argument is that we don't.

• 1:46:10Ryan Sean Adams?

  Why can't ETH be sound money to you? Because it is non-sovereign. It is digitally scarce, right? It has a similar governance mechanism as Bitcoin. I'm not saying ETH has to be the only non-sovereign story value, but why can't it be one as Bitcoin is?

• 1:46:29Speaker 02

  So A, anything's possible. B, I would tell you that I just see the code base is just being so complex and difficult to, to audit. I think is probably the best way to put it. Like when I think of Bitcoin, it's so insanely easy to audit what it is and what it isn't.

• 1:46:57Speaker 02

  That anybody can kind of look at it and, and quickly come to the conclusion like, hey, that's, that is not going to have any types of issues. When you start talking about something that's doing all of these things with 64 shards and like, you don't necessarily have to run a full node, but then there are some that like have the, the whole archive and some that, you know, you're, you're doing fraud proofs and, you know, erasure coding and all this kind of stuff. Like it's really insanely hard to wrap your head around all that. For me personally, I don't have my head wrapped all around it. And so, um, you know, we look at the El Salvador announcement.

• 1:47:38Speaker 02

  I really think that the reason that you have a sovereign nation that's now has claimed Bitcoin is there, there.

• 1:47:47Speaker 02

  Legal tender in their country is because it's so easy for them to understand it. It's so easy for anybody within their country to run a full node.

• 1:47:57Speaker 02

  And I think, you know, that's today. 10 years from now, maybe it's different. I don't know, but I think that that's, that's one of the reasons why it's just so simple to understand.

• 1:48:08David Hoffman?

  Preston, I want to go back to this huddle, huddle thing really quickly because I, there's some very fundamental differences that, uh, from what I'm, what I'm seeing, uh, with the explanation on the website versus what we're seeing in, in DeFi and specifically on Uniswap. Uh, it's, it looks like it's a custodial, uh, arbitration service for two buyers and sellers of Bitcoin, right? So you create a smart, you create a multi-sig. And so that's one transaction on Bitcoin and the seller deposits Bitcoin into this escrow multi-sig, right? And you're basically using this arbitration service to make sure that the buyer pays the seller the right price. Uh, and then there's a payment for these Bitcoins in the fiat world using actual like, uh, you know, Venmo, PayPal's.

• 1:48:51David Hoffman?

  Uh, they say on the website buyer pays the seller according to the agreed upon method. And people are asking for PayPal, Chase Banks, Grille, um, Nateller, some sort of fiat payment site like in, in the legacy world. And then when that payment goes through, if it goes through as according to the terms of the agreement, then the agreement has been made as a handshake deal on the internet off-chain, not on-chain. If that agreement goes through and huddle, huddle, uh, attest and, and test this as the arbitrator says that yes, this went through. Or the buyer can just do it, then those funds are released. This is very, very different from just Uniswap where it is one transaction in and out. And it was trustless from the beginning and trustless from the end.

• 1:49:34David Hoffman?

  And you didn't need this like middleman arbitration service, uh, to, to facilitate this trade. Have, have you ever made a trade on Uniswap?

• 1:49:43Speaker 02

  I have never, so I think this is important. I've never used DeFi and the reason why I've never used DeFi is it actually comes down to most of the money that I'm managing is through a corporate account. And so I can get myself into all sorts of issues where they would shut down my cash account of my business if I'm doing these activities, these financial, because they would see this financial activities whenever I'm not a financial business. And so, and I think this is, this is a major hurdle for the space in general, because when you think about large amounts of capital, it's nested inside of businesses with their

• 1:50:25Speaker 02

  retained earnings and marketable securities that they could then be allocating into some of this space. None of them will get anywhere near this at the concern of potentially losing their cash account of whatever banking service they, they still have to use today to start doing some of these activities. On an individual level, I could be, but I'm not, you know, I just buy Bitcoin and hodl it.

• 1:50:53David Hoffman?

  If I send you some, some Ether, is that, is that compliant? So you can play around on DeFi, make your first Uniswap trade? Will, will that get you under the radar? Or will that, will that, is that also not cool?

• 1:51:05Speaker 02

  Um, I mean, I could accept it on a personal level.

• 1:51:09David Hoffman?

  Yeah.

• 1:51:09Speaker 02

  But, uh, yeah.

• 1:51:14David Hoffman?

  You should, you should ask them. This is a good opportunity.

• 1:51:18David Hoffman?

  I'm sure there's a price of how much Ether will take.

• 1:51:23Speaker 02

  Yeah. You know, the, the space is really interesting to me. I, but again, I just, I'm not real comfortable with the maturity of it at this point. And maybe, and you know what? Maybe I'm missing a massive opportunity by waiting and as things continue to mature.

• 1:51:41Speaker 02

  And I'm fine with that. I, and maybe some of it's just my personal financial situation, right? Like I don't have to go out and do these, these fantastic things to really kind of improve my lifestyle or anything like that. So. I'm, I'm, as an engineer, honestly, I find the space absolutely fascinating. I lack the encryption understanding and I lack the software engineering background to really kind of fully understand everything that's happening. But I, but I, I will say this, I understand how difficult it is, especially in an open source kind of way, to be able to manage all this where you don't have some sort of systematic risk that could potentially

• 1:52:22Speaker 02

  insert itself into a protocol that does all of these things. And that's my concern.

• 1:52:30Ryan Sean Adams?

  So Preston, this has been a really cool conversation. I think just a couple more things as we close, but I, I think listeners really like having people from different perspectives on a podcast actually make their, like the case of the other. So I'm wondering if we could do like a steel man kind of argument here of like, what's the most compelling thing to you about ETH or like steel man, the Keith, the case for ETH for us? And David and I will do the same for, for Bitcoin. Do you want to have us go for Bitcoin first or do you want to?

• 1:53:09Speaker 02

  No, no, no, I, yeah, I love being able to shoot holes and kind of look, look at things from the exact opposite lens. So the thing that I would tell you that I, that I find really interesting about your space is Uniswap, particularly. Um, I find it really interesting that you're able to do this decentralized finance, that you're able to, um, put liquidity basically in the Bitcoin space would, you know, they're going to cringe hearing this and I, and I'm not saying that I promote this in any way, shape or form, but I find it interesting how there's been a solution that's kind of arrived to provide liquidity into something that typically would not have liquidity.

• 1:53:51Speaker 02

  Um, and you see that through Uniswap where you got these really obscure, just total, you guys would agree with me, shitcoins.

• 1:53:58Ryan Sean Adams?

  Yes.

• 1:53:59Speaker 02

  There are some. You got these really obscure shitcoins that are, that are able to, to have liquidity applied to them, um, in a completely decentralized way. I think it's, I think in most cases it's a total Ponzi.

• 1:54:19Speaker 02

  Nearly most cases, like all cases of these coins that have no utility whatsoever, right? It's just, it's just a total scam. But the fact that, that this has been experimented with from like an R and D standpoint in that, uh, what's the equation you guys use? It's like A times K.

• 1:54:38Ryan Sean Adams?

  X times Y equals K.

• 1:54:40Speaker 02

  X, yes. This equation, which is so simple and just so like generic, is able to provide this amazing kind of, uh,

• 1:54:55Speaker 02

  way to value these, these coins that have no liquidity. I find that as, especially as a market kind of person, just mind blowing. Um, so what, what does that mean in the future for, so I'm, I immediately go into like equities and like what that might mean for like real stocks, especially if, if we start tokenizing stocks in the future, which I think is where this is all going to go. And, um, once they get tokenized, they have immediate settlement. You're going to start getting into over collateralized lending markets as being like, uh, you know, pretty much how all lending is done, which I think is really exciting, which I mean, which I also think is going to blow out yield, which is going to reprice everything and it's going to be a massive redistribution of wealth. And so I think at that, at the

• 1:55:40Speaker 02

  heart of all that is going to be some way, shape or form, it's going to be decentralized exchanges, whether it's Uniswap, I have no idea. Um, whether it's going to be ETH providing that, or you know, EOS, Tron, Binance Smart Contract, I mean Cardano, Polkadot, I have no idea. I just find the space fascinating.

• 1:56:06Ryan Sean Adams?

  Good answer. There you go. David, you want to, you want to steel man Bitcoin first? I'm almost equally curious as to what you'd say.

• 1:56:14David Hoffman?

  Oh no, I'm so happy to have the floor right now. All right. So. It's 1970 Nixon killed the the gold window and all of a sudden the dollar becomes unbacked and all of a sudden everything kind of slowly slowly starts to go wrong. And you know, it's pernicious. It's like the frog boiling the water. But 40 years later, we have meme stocks, we have Dogecoin, we have kind of what my POV crypto podcast co-host calls a clown world. Whereas nothing is real anymore. And we have these, you have the nifty 50s that, you know, so they can only go up. We have the the housing market bubble.

• 1:56:59David Hoffman?

  And I think financial markets just lost their grips on reality. And not only did financial markets lose their grips on reality, but if you if your money loses grips on reality, you lose grip on reality. Right? And Bitcoin was the first thing since the gold standard, since the dollar was on the gold standard to reestablish what is fundamentally real. And not only is it fundamentally real, but it's now it's digital and on the internet. And it's one of the greatest globalizing, unifying technologies that the world has ever seen. Since gold, since gold, you know, one of the reasons why gold was so adopted

• 1:57:42David Hoffman?

  and valued as a as a money was that it was equally distributed all over the world. You can find it in every single continent. And Bitcoin and its online nature. And not only its online nature, but also its long term orientation. And why Bitcoin needed to be a hands off technology from as soon as possible? It's because in a world with, you know, fake money and in a world with like, you know, assets that we we kind of play around with PE ratios, but it's really narratives at the end of the day. Bitcoin was like the first real thing to have to force people in a long term time horizon. And it was a great like sobering event or like a waking up.

• 1:58:27David Hoffman?

  Event for for the people that figure that out and for the people that became Bitcoiners early on and everything about Bitcoin is centered around that the proof of work the hard cap the focusing on on making the network extremely optimized just chugging out blocks every 10 10 minutes like like a clock clockmaker's perfect design and now we have this great model for what the future of the world can be with the values instantiated by Bitcoin maybe that was a bit of a monologue that was kind of something that something tangential that maybe

• 1:59:02Ryan Sean Adams?

  Sounds like that's been brewing for a while.

• 1:59:04David Hoffman?

  Yeah, but no, no Bitcoin's great Bitcoin's fantastic.

• 1:59:07Ryan Sean Adams?

  I guess my my steel man is that we don't need all of this DeFi stuff, right? So like the steel man for Bitcoin is that all you need is that sound money at the base layer Bitcoin can provide that it will secure itself into the future and then basically these crypto banks will kind of do the rest. So the block five is the coin bases and the binances they'll be custodial at first, but maybe they'll start to incorporate some proof of reserve type of schematic. So you get some additional transparency and maybe that will be enough. Maybe you'll be able to easily spin up a Bitcoin bank and that will be kind of the the banking layer. And then,

• 1:59:52Ryan Sean Adams?

  as you were saying, David, like Bitcoin just becomes kind of a wrecking ball and it's meme and it's brand just of digital scarcity just eats into bonds each into all of the asset classes. And you get sort of a a some state of Bitcoin ization, right? With this crypto banking layer on top and the whole DeFi thing becomes a niche and NFTs and it doesn't fully work out. That would maybe be the the bull case for Bitcoin in in my mind. And I think it's a good base case for crypto. Definitely. I like I think on bankless guys, if if it wasn't clear for you, we've always been bullish Bitcoin. We've just been more bullish ETH and more bullish DeFi, but we've still been bullish Bitcoin the whole time.

• 2:00:37Ryan Sean Adams?

  Preston, that was a good steal, man. Let's maybe end on this. How can Bitcoiners and Ethereum, how can these two communities help each other moving forward? I was just struck by this before we came to record this podcast. I just watched a US politician talking about how possibly it would be a good thing to make it illegal to go from Bitcoin to Fiat like anywhere and maybe a bunch of nations could band together and make this happen. And I have to wonder if this is a response to El Salvador or what this is a response to. I feel like we've always talked

• 2:01:17Ryan Sean Adams?

  about the the final boss coming to crypto. That's something that all proponents of self sovereign money like want to fight and and want to keep at bay. Maybe that's something that we can collaborate on as a crypto industry, as Bitcoiners and Ethereum and other crypto communities. What would you say to that? And what are some other areas?

• 2:01:42Speaker 02

  You know, at the end of the day, I just, I look at all of this that's happening as almost like an immune response, like a global immune response to toxic sludge being poured into the into the global economy. You know, if you went to us into a pond and you just poured like this toxic sludge, you're gonna get the the Simpsons like three eyed fish that kind of comes out, right? But when you look at how biology just naturally heals itself, you'd see like everything on the side of the pond just kind of, you know, starts turning like different colors, but it's the it's working itself out. It's solving whatever that sludge was that was put

• 2:02:21Speaker 02

  in there that was not natural. And so I see the reaction of Bitcoin being that. I see the reaction of all these other protocols, call it Ethereum and all the other ones that I named earlier, is also being the experimentation of of just a natural evolution trying to solve the issue at hand, which is all these issues that have come out of unsound money and market manipulation. When I look at how I interact with the other

• 2:03:03Speaker 02

  People in various spaces, whether it's Ethereum or whatever.

• 2:03:09Speaker 02

  I'm I'm just as guilty as the next person, especially like we talked about on social media of just kind of blasting out and being quite brash in the way I see things. But when you're in person and you're talking to somebody face to face, you get a much more human kind of reaction between between people. I know people in the Bitcoin space will look at Ethereum or anything else and just say, it's a scam. It's a scam. I'm I'm looking at it and saying, I think that there's well intended people that are really trying to solve something here that see something from maybe a different vantage point or a different lens than than how I've grown up and how the things that have led me to the belief structure that I have right now, which hasn't changed at all through the

• 2:03:53Speaker 02

  conversation or, you know, after the conversation.

• 2:03:57Speaker 02

  But I think being respectful of other people and assuming that they're well intended is probably the most valuable thing that anybody can do, not just in this space, but in general in society with each other.

• 2:04:12Speaker 02

  And so, you know, I think that's probably the thing I want to take away from most through this conversation is just be a little bit more respectful of other people and to, you know, ask the questions. You know, at the end of the day, the first thing I said when I came on here is I want to learn your vantage point and I really wanted to kind of, you know, ask certain questions and you guys as well to try to kind of understand why you guys sit where you sit. And that's where real value is created is through understanding other people's point of view. So I think that those are some important things that we can all think about.

• 2:04:47Ryan Sean Adams?

  That's awesome, Preston. Well, let's end on that note, certainly some tumultuous time ahead for the world and we'll do better if we we stay unified on the values that that we all stand for. Preston, thanks so much for joining us on Bankless. It's been great to have this conversation.

• 2:05:05Speaker 02

  Yeah, thanks for having me, guys.

• 2:05:07Ryan Sean Adams?

  Guys, action items, of course, I will include a link in the actions to Preston's podcast, Bitcoin Fundamentals. One of my favorite recent episodes that he did was an episode with Greg Foss on Bitcoin and bonds. Take a listen to that. And secondly, we need some more five-star reviews on iTunes to get us to the top of the charts. Also, David will appreciate me saying this. If you are listening on YouTube, please like and subscribe, right, David? Did I get that right?

• 2:05:36David Hoffman?

  Absolutely. We want to be right behind Preston's podcast on the top of the Business and Investment Podcast. And so if you could get us there by giving us those five-star reviews, we would super-duper appreciate it.

• 2:05:48Ryan Sean Adams?

  All right, guys, none of this was financial advice. As usual, Bitcoin is risky, ETH is risky, crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but thanks for joining us on the Bankless Journey.

• 2:06:03David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where

• 2:06:46David Hoffman?

  we summarize the week in crypto and other fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless Nation.