Parker Lewis, Head of Business Development at Unchained Capital: Why People Should Care About Bitcoin

Parker Lewis is the Head of Business Development at Unchained Capital. In this conversation, Parker and Anthony Pompliano discuss Bitcoin, the value proposition, why people should care, and then we go through each of the latest writings of Parker, including "Gradually Then Suddenly," "Bitcoin Can't Be Copied," "Bitcoin is Not Too Volatile," "Bitcoin Does Not Waste Energy," "Bitcoin is Not Too Slow," "Bitcoin Fixes This," and "Bitcoin Not Blockchain." BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. CRYPTO. COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine. Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world.

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

• 0:01Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off. Parker Lewis is the Head of Business Development at Unchained Capital. In this conversation, we discuss Bitcoin, the value proposition, why people should care, and then we go through each of the latest writings of Parker, including the ones titled, "Gradually Then Suddenly," "Bitcoin Can't Be Copied," "Bitcoin Is Not Too Volatile," "Bitcoin Does Not Waste Energy," "Bitcoin Is Not Too Slow," "Bitcoin Fixes This," and "Bitcoin Not Blockchain." I really enjoyed this conversation, and I hope you do as well. Skrt skrt!

• 0:46Anthony Pompliano?

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• 1:31Anthony Pompliano?

  That's right. You purchase it, it shows up at your doorstep, you pull it out of the box, you plug it in, connect to your wifi, five minutes or less, you're mining Bitcoin. All you have to do is control it from the mobile app they provide, and then you receive over-the-air updates that add new coins and new features on a consistent basis. Kinda like how Tesla does over-the-air updates and updates the car software. Just your update in your coin mine. Consumer mining made easy. That's right. Go to CoinMine.com, tell them Pomp sent you, and thank me later. As many of you know, crypto investors store their digital assets on exchanges or in cold storage for long-term safekeeping. However, this strategy doesn't help them grow their investment holdings or build overall wealth.

• 2:14Anthony Pompliano?

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• 2:58Anthony Pompliano?

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• 3:32Speaker 01

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

• 3:57Speaker 02

  All right, guys. Bang, bang. I am here with Parker. We were actually just having a conversation, and I said, "Stop. We need to just go record this." So you guys could all hear this out. Thanks so much for doing this.

• 4:09Speaker 03

  Yeah, absolutely. Glad to be here in Wyoming. The whole blockchain task force, Wyoh Hackathon. Happy to be up here and learning how we can help Wyoming and advance the Bitcoin community up here.

• 4:21Speaker 02

  For sure. Let's start with just your background. You've kind of had this pretty interesting journey to Bitcoin, and then once you saw it, kind of some of the things you've done. So just start with what you were doing before Bitcoin.

• 4:32Speaker 03

  Yeah, so I was working for a hedge fund, global macro hedge fund at the time in Dallas, Hayman Capital. It's a fund run by Kyle Bass, who you know.

• 4:41Speaker 03

  Yeah, kind of when I first started working there was distressed credit, long short equity, but over time, a lot of the focus of the fund was global macro. And so that was at the time that I was also starting to learn about Bitcoin 2014, 2015, didn't really start to click for me until 2016. Once it did, went full down the rabbit hole, partly as a function of doing research for the hedge fund that I was at, but also just, you know, trying to re-educate myself on what money was. And so the more that I started to understand not only why Bitcoin exists, but also how it worked, I became more and more convinced that what I wanted to be doing with my time was not working for a hedge fund, but going

• 5:24Speaker 03

  to figure out how I could contribute to the Bitcoin ecosystem and create value.

• 5:30Speaker 02

  For sure. And so today, what are you doing? Because you were there, you did a bunch of work with Kyle, went really deep on Bitcoin, how it fits into that global macro environment, what it meant for institutional investors to try to get access to it, etc. But now you've gone kind of full-fledged and jumped in in the crypto world. So you talk a little about Unchained and what you're doing there.

• 5:51Speaker 03

  Yeah, so I lead our business development efforts at Unchained, so helping to guide the strategy, you know, kind of form a vision around what it is that we want to be. And really what that is, is kind of recognizing a world where we're at this very early point in the shift in really the global monetary order. And if, say, a 1% of people own Bitcoin and 99% don't, how can we contribute to that? And really where we focus our efforts is helping people better secure their Bitcoins. So we offer a Bitcoin multi-signature vault, which allows people to control their own keys and we aid in that process and help add incremental security to someone who is currently facilitating self-custody generally

• 6:36Speaker 03

  with a single key. We also offer lending, one of our You know, monikers or principles that we live by is friends don't let friends sell Bitcoin. We also lend against Bitcoin, which does have risks and trade offs. But, but you know, one of the primary reasons why people borrow against their Bitcoin is because they don't want to sell it. So it represents a tax efficient way to access some dollar liquidity while preserving an appreciating asset, a very scarce asset.

• 7:03Speaker 02

  For sure. I love the friends don't let friends sell Bitcoin. Internally, we joke all the time, and it's a joke, but we say, selling is for nonbelievers. Same sort of theme there.

• 7:14Speaker 03

  Yeah, and it's really one of the other things that I've started to work on as part of my function with Unchained is a new series that I've been writing on Bitcoin and kind of helping others in hopefully a more accessible way to understand partly my path, but then also in just a broader educational effort to help people understand what is a very complex medium of why you don't want to sell Bitcoin and why you should be accumulating it. Because I think for anybody who's around the periphery, they can see from the outside looking in, a very volatile asset. Why would I ever do this? It seems very esoteric and very complicated, which it is. But the more that you understand about how it actually works and why it exists, the

• 7:59Speaker 03

  more conviction that you have. And as a consequence, the greater your ability is to manage your own exposure to it, your own portfolio, and to remain in it and to tolerate the significant swings.

• 8:14Speaker 02

  For sure. So I definitely want to get into the writing because frankly, it's fantastic. It may be one of the better series that I've ever read. But before we get into that, let's just talk about Bitcoin in the global macro environment, right? So you had the pleasure of working closely with Kyle Bass on this, who we've had on the podcast, and I think has a lot of, you know, I would say powerful thoughts around global macro and then something like Bitcoin, how that fits in. Maybe give us your view on where does this fit in? And then how do you see that evolving, given some of the macro environment developments that are occurring today, whether it's the US repo market issues that we're seeing, China, Hong Kong, all that kind of stuff?

• 8:51Speaker 03

  Yeah, absolutely. And that, you know, one of the ways that I also came to Bitcoin was I was independently doing research for Hayman on Bitcoin specifically, but separate and apart from that, I was also doing work on the financial crisis. You know, obviously Kyle has history having shorted the subprime crisis. I wasn't at Hayman at the time.

• 9:13Speaker 02

  And just so people understand, Kyle is probably one of maybe six people who not only shorted the housing crisis, but made a very large bet from an aggregate dollar amount, obviously was correct, and kind of built a reputation around having this contrarian thought that ended up proving out. And so that's what Parker's referring to.

• 9:32Speaker 03

  Yeah. And so at the time, this was 2016, 2017, the Fed had begun to, they'd basically tapered their incremental purchases. They had begun raising short-term interest rates, but they hadn't touched the balance sheet. And so the work that I was doing independent from the research I was doing on Bitcoin was really understanding the transmission mechanism of quantitative easing and trying to understand what then would happen when the Fed unwound its balance sheet, which it ultimately began in November of 2017. And so as I was going down those parallel paths, they ultimately converged with the principal conclusion that

• 10:16Speaker 03

  essentially where QE starts and ends is really the why of Bitcoin in terms of what it is here to disrupt and what problem it ultimately solves. And so the way that I look at the macro world is, and this is something that was part of my own education in kind of reading resources like the Bitcoin standards, but really reeducating myself or really educating myself for the first time on the question of what money is. And I think that's really the context that people need to think about Bitcoin is, you know, it is competing with the legacy monetary system. And principally, the dollar as a reserve currency, the euro,

• 11:01Speaker 03

  the yen, really fiat systems anywhere.

• 11:05Speaker 03

  And when I think about kind of the Fed and the global context, it is that the the global credit systems and the way that they're constructed require, not as a possibility, but as a necessity for those systems to continue to exist, QE is an inevitability. Without additional QE, those credit systems would collapse on themselves. And so I think we can talk a little bit about what's happening in the repo market. But if we expand out from the initial 75 billion of injections, it is, there's a lot more to come. And it's not in the order of magnitude of tens of billions. It's trillions of dollars and it's not just the Fed.

• 11:49Speaker 03

  It's the ECB and it's the Bank of Japan and it's really any central bank that has the ability to do it. And the root cause of that is that the financial system as it's constructed is massively levered. So if we just think about the dollar system alone, there's about 73 trillion of dollar-denominated debt excluding derivatives, just fixed liability, fixed maturity as tracked by the Fed. Today, in the banking system, there's only about 1.6 trillion actual reserves. So every dollar is essentially leveraged 40 times over. That is the consequence of 30 to 40 years of every time the credit system has tried to readjust

• 12:34Speaker 03

  or has tried as a system to delever, essentially been sustained as a function of smaller QVs along the way that ultimately lead to instability in the credit system, which we're starting to see where if banks want to access overnight credit in the repo markets, paying 10% interest, like that is a sign of liquidity strains. The only way to solve liquidity strains is to put more base money. And so that's what we're seeing with repo. I think what we'll see very soon from there is more large-scale asset purchases, so QE4, QE infinity. And then when you think about that in the context of Bitcoin.

• 13:16Speaker 03

  If the Fed system, or the ECB system, or the Bank of Japan system is dependent on a expanding credit system, it is, as a consequence, dependent on an increase in the base money supply. Bitcoin, as a fixed supply reserve asset, outcompetes that. And so, for people who have the ability to opt out of the legacy system, and as they educate themselves on Bitcoin, they will see the contrast, where each time, you know, every 10 years, or I think increasingly so, we either go into a form of a credit crisis, or an expansion of the base money supply, people will increasingly start to ask questions and say, "Hey, maybe this is why Bitcoin exists.

• 14:00Speaker 03

  Maybe this is a better alternative." And ultimately, what we're going to see on the free market is a competition between two monetary systems. The legacy system, that's dependent on future rounds of QE, or a free-market system that tolerates volatility, but at the root of it, is backed by a fixed supply.

• 14:19Speaker 02

  For sure. And so, you know, look, there's a ton here, and I think part of what makes it so exciting to, you know, folks like you and I, is that it's a very complex analysis, right? You have to understand what is money, you've got to understand some of the macro stuff, you've got to understand QE and central bank, kind of incentives and tools at their disposal. You've got to understand Bitcoin, its technology, its monetary supply, right? There's just a bunch packed into what is a pretty simple analysis, do I get exposure to Bitcoin or not, right? You keep bringing up this idea of like, what is money? Maybe talk a little bit about just like, how you describe that to people today.

• 14:55Speaker 03

  Yeah, and again, this is something that I think, you know, most people have never asked that question. And I certainly, I myself, up until four or five years ago, hadn't asked that question.

• 15:07Speaker 02

  Same.

• 15:08Speaker 03

  And I think that there are... Especially those that look at the dollar system, there's confusion as to, or there's explanations that it's just a collective hallucination, or money is just a belief system. But I think at a root level, it's a, it is a man-made invention, but it is a tool that enables specialization and division of labor. And I think in that context, and as I've educated myself, Nick Zaba shelling out Saifedine Ammous's Bitcoin standard, thinking about kind of really at a first principle level, why it is, you know, let's just, you know, restrict it to a conversation about the United

• 15:48Speaker 03

  States, why are 325 million people all walking around, you know, willing to accept this form of paper, or the digital representation of that paper, in exchange for real world goods and services? And I think that that discussion as to how the dollar emerged and why the dollar exists is a complicated discussion. But ultimately, I think what people have to recognize is that there is rhyme and reason to money, there are inherent properties that make something a better or worse form of money, and that also, our current economy, and how complex it is with the degrees of

• 16:27Speaker 03

  specialization, the degrees of division of labor, our economies don't work without money. And money is ultimately the good that facilitates the coordination of all other economic activity, and that when we think about the properties of money of something that makes something a better form of money versus a worse form of money, kind of, if we were reducing it to a few topics, it's relative scarcity, it's the ability to transact, so the divisibility of that unit, fungibility, there's a lot of discussion in Bitcoin whether Bitcoin is sufficiently fungible, and I think there's ways that Bitcoin will become increasingly fungible, but... Where we sit today, I view Bitcoin as equally as fungible as the dollar.

• 17:10Speaker 03

  And so when we think about relative scarcity, divisibility, portability, when you start to think about Bitcoin relative to other goods in the market, that is why it's emerging and for the principal reason that it is finitely scarce. And prior to Bitcoin, no form of money was finitely scarce. Now, the explanation as to how and why Bitcoin is scarce is really, really the tangible question that when I talk to people, that's what I tell them to try to understand. Because it isn't just some coincidence that it's finitely scarce. There's an interplay between the technical architecture of Bitcoin, the way that Bitcoin's consensus mechanism works,

• 17:54Speaker 03

  but also the economic incentives of the underlying currency that tie everything together.

• 18:00Speaker 02

  Yeah, and I think that the whole idea of this finite scarcity is, I use like real estate all the time, right? I say, look, if you look at the city of Manhattan, for example, it's an island. They're not going to make more land. And so what ends up happening is as more and more people want to move there or have ownership of that land, the price increases, right? And all of that is just simply supply and demand economics, which is a very simple idea. It's something that's taught in Economics 101 and things like that. But because it is so simple, a lot of folks who either don't buy into the Bitcoin story and thesis, or those who ignore it, I think it's just that they overlook the simple thing, right?

• 18:45Speaker 02

  And it's almost like it's so simple that they're like, no, there has to be something more. There has to be a more intellectually driven conversation. And some of it you're hinting at, you know, kind of once you get past that supply and demand. But ultimately, that's where the quote-unquote US dollar value comes from, right? It's just as demand increases, if you have a fixed supply asset, the price has to go up unless all of a sudden supply-demand economics ran out.

• 19:07Speaker 03

  Right, and I think that, you know, I think people fall out on two sides of this where, you know, the first question is, I don't believe that it's actually. scarce.

• 19:17Speaker 02

  Yep.

• 19:17Speaker 03

  And and there's a lot of confusion around how and why that is, or or why it's not the case that, well, if I just create another cryptocurrency that that that that represents, you know, in aggregate, digital currency inflation. And so there's there's confusion around both of those points as to to whether or not, you know, Bitcoin independently can maintain a scarce supplier, or how to think about that scarcity relative to other digital assets. And then beyond that, you know, and this is something that I struggled with myself, it was this concept of, well, if if Bitcoin has a fixed supply and its and its value continues to rise, you know, if Bitcoin's 10,000 a coin or 100,000 a coin, it's too expensive for people to to get. And really, that that is a that is a mental block that

• 20:01Speaker 03

  people have to work through, where it's, you know, the way that I, you know, and one of my friends helped me think through this, it's actually that the more valuable, you know, what, you know, one Bitcoin is an arbitrary unit. You know, the way that I think about it is, the economic, I think about as an economic system and the purchasing power of the network as a whole. And so if that's approximately 200 billion today, the more valuable the Bitcoin is, the more valuable it becomes. The the the less of a unit of Bitcoin that you need to to transmit value over a communication channel, that that network is actually more valuable. And so, you know, the people struggle with the fact that, well, you know, how how is the rest of the world going to be able to to access enough, you know, a certain percentage of the network to make it significant enough? And and and

• 20:45Speaker 03

  that that really isn't the point. It's you just need a piece of the network. And and as more people adopt Bitcoin, and as it's met with a fixed supply, the the the the overall value of the network increases. It's not just that Bitcoin, you know, denominated in dollars increases, it's that the the the communication channel as a whole increases in value because there are now more nodes connected to it. If there are only 60 million people transacting in Bitcoin, that's very limited. But if a billion people Own Bitcoin and are transacting it every day, the value of that network increases. And the only way to get there is by incremental adoption, which ultimately increases the value of Bitcoin.

• 21:22Speaker 02

  It's the cellphone example, right? Just one cellphone in the world isn't very valuable. Even just two cellphones in the world isn't very valuable because you can only call one other person, right? It's when you have an entire network of thousands, tens of thousands, hundreds, and then ultimately millions of devices, now that network becomes much, much more valuable because each person who joins is actually driving value in that network to some point. And so I think that, you know, that example is not exclusive to money or to Bitcoin. It exists in other markets. We just don't think of them that way.

• 21:53Speaker 03

  Right, yeah. And really, when you kind of get into various different layers of Bitcoin and start to understand the network effects, it is, you know, the more people that come into Bitcoin that just want to purchase it as an asset and use it, you know, whether for speculative purposes or increasingly over time as they learn more as a true store of wealth and as a way to convert the value that they create into, you know, what we all believe in the future will be a stable form of money, that increasingly those people then begin to actually contribute value by building infrastructure. You know, I think it's probably an overuse and I overuse it, but Rome wasn't built in a day. You know, you don't have to be building infrastructure for Bitcoin or contributing

• 22:37Speaker 03

  as a, you know, either an investor or as somebody that is curating content or creating content. If you create value in the real world and then choose to store that in Bitcoin, you are increasing the value of the network as a whole.

• 22:52Speaker 02

  For sure. Holders are users, right?

• 22:54Speaker 03

  Yeah, and then that's, you know, what money is, is a store of value. And that if we think about it at a root level of converting time to value to Bitcoin or a form of money, and Safe talks about this in his book, where kind of thinking about kind of the time preference or what I consume today versus what I consume in the future, anything that we're choosing to save is

• 23:21Speaker 03

  Putting off what we could consume today for some future investment. And I think that there are serious, not necessarily consequences, there are massive ramifications as more people start to think about time preference, high time preference, low time preference, how they choose to spend today versus save, and then kind of how they think about the trade-offs. And I think this is a concept that Save talks about, and it's really interesting where he talks about macroeconomics and macroeconomics think about the trade-offs in transactions between different participants in an economy, whereas time preference is more of a trade-off between yourself and your future self.

• 24:03Speaker 03

  And so, kind of thinking about Bitcoin in that context, the more people that are choosing to store wealth in Bitcoin in a stable form of money, there are, I think, there will be ramifications far greater than just Bitcoin and the dollar and the Bitcoin monetary system and legacy monetary system. But if you have a world of a billion people that now are operating in an environment where there's a reintroduction of opportunity cost of money, there will be an increasing focus on productive activities. And so, I think it's far ranging in terms of the impact.

• 24:38Speaker 02

  For sure. So I want to jump into the series that you've been writing. First of all, where can people go find the series? And then we'll kind of go point by point of each of the ones that you've published recently.

• 24:48Speaker 03

  Yeah, so I publish generally every Friday. There've been a few things that have come up that have prevented the last couple of weeks, but I release a post every Friday, and I post it on Twitter, but then you can find it on our blog at unchain-capital/blog.

• 25:06Speaker 02

  Got it. All right, so the first one, it was kind of like a shot over the bow, because I didn't even know this was happening, and then all of a sudden you write this thing gradually, then suddenly. Describe, kind of at a high level, what exactly you were trying to communicate in that first piece?

• 25:22Speaker 03

  Yeah, so...

• 25:24Speaker 03

  And one to give some credit, kind of over the course of the last year, two years, I'd seen Marty Bent writing a daily newsletter.

• 25:34Speaker 02

  Shout out Marty.

• 25:34Speaker 03

  Yeah, and I know you write a daily, or daily or weekly newsletter. Safe wrote a book. You know, one of the things that I think, you know, yourself and Peter McCormick yesterday echoed, that education is such a critical piece. And so, and I've benefited immensely from the content that others have created. We, as an organization, kind of, while we're trying to serve a certain kind of segment of the market that values self custody today, we also want to help expand the knowledge base and bring more people into Bitcoin. And I think from my past, having worked at a global macro hedge fund, now kind of working

• 26:19Speaker 03

  every day within the Bitcoin spheres, kind of helping to create a bridge or an accessible medium that isn't necessarily, you know, as long as a book, but that can give, whether it's family offices, other institutional investors, a look through into my own thought process as to how I've arrived from not ever questioning what money is to being, you know, every day, full time, working on building infrastructure for Bitcoin. And so that was the primary goal. It was to really distill for myself, but then, you know, to create a depository or a repository of, not necessarily academic, but just educational resources to hopefully,

• 27:00Speaker 03

  if people are interested in the question of why are so many people interested in Bitcoin, that they can come and think about things that generally represent mental blocks. That's one of the things that I try to focus on is distilling complex subjects that hang up a lot of people and explain, at least, you know, in the context of my background and in the way that I think about it, how, you know, they may think about a certain problem that may prevent them from kind of advancing their. On their path of seeing Bitcoin as money.

• 27:33Speaker 02

  For sure. And so the idea of gradually then suddenly, as you look at this, is this kind of the starting point of where you think people can, you know, kind of enter into the mindset of this isn't just speculative asset, there's an actual kind of more macro, you know, kind of systematic perspective to look at this specific currency, and that's why you started there?

• 28:00Speaker 03

  Yeah, yeah, really kind of providing that that that big overarching thousand-foot view, the question of why. And that's really where I started the piece. And the reason why I termed it gradually then suddenly, it's, it was a term penned by Hemingway and I think that the sun also rises, but it was also the idea of, you know, one, how people go bankrupt, kind of gradually then suddenly. That's very much how I think about the concept or context of the Fed's economic system, where it is a massively levered, you know, probably massively insolvent system. And it's, and it's happened very gradually, but then

• 28:41Speaker 03

  when it unwinds, it happens suddenly. I think that the first crack in that facade was the financial crisis. But then it's also kind of also applies to the context of how I came to Bitcoin. When I was thinking about it, kind of like I thought of myself as, you know, staring at a wall that had a mural on it, but only seeing a blank canvas. And then there were, there were a few kind of conversations or talking with my friends who had been involved in Bitcoin for a long time, where then suddenly something clicked for me. And I, like in certain cases, I specifically remember like the place in time where I was, you know, what the specific, specific mental block was, and then what it was that helped me kind of overcome that. And so, you know, a primary reason for writing this is thinking

• 29:25Speaker 03

  back to that, that kind of process that I went through, and then trying to distill those thoughts down. So people can start there and then they can move on to more longer-form subjects like the Bitcoin Standard or Mastering Bitcoin, which I believe is a great resource, as well as Inventing Bitcoin by Jan Pritzker. So really, it is for people who are, you know, have that question of what is this? Thing, it presents a digestible accessible medium, generally 3,000, 4,000 words where someone can sit down and then kind of start to peel back the layers of the onion.

• 30:00Speaker 02

  For sure. And so the second piece you wrote was Bitcoin can't be copied, which is a pretty common, yet relatively lazy, I think, detraction of just, oh, there's Bitcoin, then there's 2,000, 3,000 other tokens, right? So like, it's just the same thing over and over again. What differentiates Bitcoin? But maybe talk a little bit about some of the thoughts in that piece of Bitcoin can't be copied.

• 30:26Speaker 03

  Yeah, and I think it is a very, maybe shallow isn't the right term, but it's not a deep thought process, but it is one that's prevalent among a lot of people on the periphery of this idea that, well, you know, yeah, there's 21 million Bitcoin, but there's 21 million Bitcoin cash, or, you know, I don't know how many Ethereum there will ever be. But this idea that copying Bitcoin or creating a new digital currency does not replicate the monetary properties that are inherent in Bitcoin. And I think that, I think this is the way that I communicated in the piece. It's, you know, as kids, we're all taught that money doesn't grow on trees. And then suddenly Bitcoin, you know, has its immaculate

• 31:11Speaker 03

  conception, and, you know, the way that I think about it catches lightning in a bottle. When Bitcoin was released, it wasn't money, you know, in the days subsequent, it wasn't money, in the probably years subsequent, it wasn't money. But that over time, monetary properties emerged in the network. And it's a little bit confounding to me that, you know, we are where we are at today in Bitcoin, where it's this emerging monetary technology protocol that, you know, currently has a purchasing power of about $200 billion. And if we look back in history and kind of skip past the emergence of fiat systems, which leveraged gold, but really thinking in the context of

• 31:54Speaker 03

  Monies haven't emerged on a free market since gold and silver. And those emerged over the course of thousands of years. Here we are sitting with this new form of monetary technology. And everyone suddenly, despite being taught and despite being hyper intuitive that bitcoin or that money doesn't grow on trees, oh, let's all just go create our own form of money. And so, the point of that piece Bitcoin can't be copied was really trying to emphasize the things that make Bitcoin unique. And some base layer to think about why monetary systems converge to one. Why an economy converges around a single medium of exchange and ultimately uses that medium of exchange as a unit of account.

• 32:39Speaker 03

  That while it should seem intuitive that everybody around the world shouldn't be able to create their own money, they in fact can't. And it's really based in the monetary properties that have emerged around Bitcoin, the censorship resistance, the decentralization. And ultimately, those two kind of properties that are not inherent in other cryptocurrencies that really reinforce the scarcity that is Bitcoin's 21 million supply. Because without those properties of decentralization, without censorship resistance, 21 million is not a credible number. But so long as it is, and so long as the value of Bitcoin increases, the network becomes increasingly decentralized, increasingly censorship resistant, which further reinforces

• 33:24Speaker 03

  the credibility of a fixed supply, which will continue to cause, really cause, value to converge around the Bitcoin network because it's a better form of money.

• 33:33Speaker 02

  Yeah, and it's interesting because a lot of times I talk about, or my answer to the question of like, what is Bitcoin? Is Bitcoin is something different to different people, right? And so, these elements of non-seasability, non-censorship, the hard cap, you know, just a whole bunch of different aspects or criteria that have formed for this value that you're describing. Certain people find different aspects of that more valuable than the other aspects of Bitcoin, right? So if you're sitting somewhere and you're worried about people seizing your wealth, all of a sudden the seizeability or the lack thereof it becomes super, super important, right? If you're sitting there and you're worried about censorship, well now the fact that it can't be censored becomes really, really important.

• 34:16Speaker 02

  And it's not so much just that one group over another group finds certain elements more valuable than others, but also you as an individual may find different elements more or less valuable at different times as well, right? You could see a world where at one point in time, you actually really care about the fact that it's not seizeable. But then at another point in your life, you know, in a relatively short period or over a long period of time, now the censorship becomes important or the monetary policy becomes important. And so the fact that there is such a decentralized governance to this and the lack of kind of rapid change really allows people to find what's most valuable to them, in my opinion.

• 34:53Speaker 03

  Yeah, and I also think about that, and I believe I wrote about this in the initial piece that I did, is that everybody has to come to this relying on their own life experiences. If they, if they just looked at this simplistically based on what they had been taught in high school or college, or you have, you just looked at a incumbent economic view, they would never come to the view that Bitcoin is money in a vacuum. But that over time, as people look at this, they relate to it, you know, through their own eyes and through their own lens, and Bitcoin emerges as money to each individual for different reasons, reasons on different timelines. And then the aggregate consequence of that is that these properties emerge in terms of the overall network. But that, you know, Bitcoin, there wasn't a sudden point in time where Bitcoin became money.

• 35:37Speaker 03

  It becomes money to each individual as they educate themselves and as they, you know, kind of form a mental model as to how to think about it or what properties of that network are attracted to them. But then it's also in the context that it's always relative to something else. And so when I am choosing to store my value in Bitcoin, I'm choosing not to store it in another monetary network. But, but you can't do that in increasing ways without having formed your own perspective as to kind of how this helps you not only today but into the future. And that's, that will always inherently be, you know, dependent on have each individual's own circumstances, their own life experiences, and their kind of the way that they look at the world.

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• 38:15Speaker 02

  The next piece in the series is Bitcoin is not too volatile. Elaborate on that a little bit.

• 38:21Speaker 03

  Yeah, so this is one that I think probably at deeper levels and more reasonably causes people to struggle around, okay, so there's a group of whack jobs out there saying that Bitcoin is money, but every time I look on the screen, it changes, you know, 5% or it's down 20% over, you know, a month or, you know,

• 38:44Speaker 02

  Or up 20%.

• 38:45Speaker 03

  Or up 20%, like, how could that ever be money? That, that concept is foreign to what I know money to be. But realistically, and Vijay Boyapati had a great quote on this Stefan Laverre podcast, where he said that, and I'll butcher the quote, but it was along the lines of establishment, yeah, establishment economists deride the fact that Bitcoin is volatile as if something can go from not existing to a stable form of money overnight. And what we're, what we're realistically seeing right now is the monetization of a, of a good on the free market for the first time since gold. There's no way for that to happen without volatility.

• 39:27Speaker 03

  Right now, if, you know, again, I have no idea how many, you know, literally how many people use Bitcoin, but thinking about it in the order of magnitude of 60 million or 70 million people, everyone is trying to figure out exactly what this is, what the future of it will be, how resilient it will be. What we're witnessing in terms of volatility is price discovery as orders of magnitude, more people are educating themselves and beginning to adopt Bitcoin and beginning to, you know, at a base level, starting out with a very small percentage of their wealth, but then as they learn more, increasing. And while that adoption is increasing by orders of magnitude, it's met with a fixed So if we think about adoption waves, and again, we don't know specific numbers,

• 40:10Speaker 03

  but thinking of each adoption wave representing an order of magnitude. So from 2016 to today, maybe something like 5 million to 60 million, or 10 million to 100 million, whatever it may be, is that relative increase in demand met with a supply that over that same period only increased by 10%. That fixed supply is what creates the volatility, but it is also the fundamental source of demand. People are looking at this, they're starting to ask themselves for the first time in their lives, what is money? And whether Bitcoin is a superior successor to the legacy systems. There's no way to educate yourself on Bitcoin and as a market to, you know, all of a sudden

• 40:53Speaker 03

  at one time converge on a stable form of value. And so Bitcoin's volatility is a natural function of that, those adoption dynamics and the ultimate supply curve of Bitcoin. And that over time, if we think about the store of value, people in Bitcoin who have been around for a year, two years, or three years, they think about it in the context of longer time horizons and day to day. And then in addition to that, it's important to recognize that Bitcoin doesn't exist in a vacuum. And so if you're an institutional investor and thinking about, oh, you know, how can I have exposure to Bitcoin with all this volatility? The way that I think about it is in the context of diversification of an entire portfolio. So Bitcoin's volatility is muted when you think about, you know, a 1% position or a

• 41:36Speaker 03

  5% position, and what are the attributes of, or what is, what are the volatility of other assets that you hold? But that when you look at the dynamics and why Bitcoin has a fundamental demand, that being that it has a fixed supply, that over any long time horizon that you look at Bitcoin, whether it's three months, six months, one year, two years, it is storing value. Whereas the dollar may be stable day to day, but if you look at the long-term chart of the purchasing power of the dollar, it loses value by design. And so central bankers all over the world have You know, kind of chastise Bitcoin as being, you know, no one uses it as a method of payment, it's too volatile to be a currency, when in reality, we're just witnessing price

• 42:20Speaker 03

  discovery on the logical path of a monetization of a good on the free market, which is, you know, a fundamentally disruptive idea.

• 42:29Speaker 02

  Absolutely, and I think that's part of the power of it, right, which is, once people understand that, then, you know, as you said, I really like this idea of, because it was my journey, I think it's most people's journey, it's almost like you test it out a little bit, right, and you start to store a little bit of wealth, and then you gain confidence, you gain understanding, you gain conviction, really, and then it, very slowly, you start to put more and more of your wealth into this asset, and eventually, you know, people start getting to very high percentages of their wealth stored, once they're educated and they're convicted, which I think is, you know, a lot of people will just follow that path.

• 43:02Speaker 03

  Yeah, and I also think, by definition, when you buy Bitcoin for the first time, or make that leap, often likely for speculative reasons, you by definition know very little.

• 43:14Speaker 02

  Mm-hmm.

• 43:15Speaker 03

  And that that first, you know, foray into it, or kind of, I don't want to say leap of faith, but the first time that you choose to do that, that's what sucks you into the rabbit hole. Then you have skin in the game, then you're more interested in learning more as to why you just did what you did, and then the natural consequence of that is, if you're buying something, knowing very little about it, you're making a less informed decision, but then as you educate yourself, you start to understand the how, the why, and your conviction level increases, which translates into becoming, as Trace Mayer would say, a hodler of last resort, and continuing to accumulate, and continuing to shift the balance of whatever

• 43:58Speaker 03

  savings that you do have increasingly into Bitcoin, but you can only kind of get that education once you're already in the game.

• 44:05Speaker 02

  For sure. The next piece you wrote is Bitcoin Does Not Waste Energy, and this is probably one of my favorite topics to talk to people about, but elaborate on, you know, what you kind of covered in this piece.

• 44:16Speaker 03

  Yeah, so in this one, I really swung for the fences where, you know, there are a lot of reasons when you, when you get into the kind of the brass tacks of the energy that Bitcoin does consume, there's a lot of kind of micro level explanations that we can, that we can defend the, the energy use of Bitcoin. So, and there are a number of them. It's kind of this, it's this idea that realistically, the sources of energy consumption or production that Bitcoin's going to compete for are not going to replace or compete for the same energy supply that, say, powers your home. There's, there's the idea that a large portion

• 44:59Speaker 03

  of the Bitcoin network in terms of the energy that it consumes is, is renewable and that, that, you know, kind of Bitcoin only consumes the amount of energy that the free market will bear and that, you know, as a consequence of Bitcoin and because of the, the dynamics of the energy that it can consume, that, that it will actually lead to more stable energy grids and that, you know, it will actually advance the, the development of renewable source of energy. I kind of stayed away from, from that aspect, but I really went to the first principles. And it's this idea, and I use Venezuela as an example, but before I even go there, it's the idea of kind of asking that question of like what money is. And, and in order to understand or to, to form an appreciation for the amount

• 45:43Speaker 03

  of energy that Bitcoin does consume, you have to have an appreciation for the problem that it's solving. If you do not have an appreciation for the magnitude of the problem that it's solving, the amount of any energy that it consumes will never be deemed justifiable. But then, when you understand money and you understand that money is the backbone that allows our economies to function, it's the good that allows all other economic activity to be coordinated. You start to understand the weight of the problem and then when you look at it in the context of, okay, what happens to an economy when a form of money hyperinflates? Looking at Argentina, or Venezuela, or even Turkey, there's a number of any hyperinflationary

• 46:26Speaker 03

  scenarios that you can look at, the economic consequences are devastating. And that, and Saif has a quote about this, where if Bitcoin prevents one instance of hyperinflation, then all of the energy consumed will be a bargain basement price. And it's that idea that if we think about everything that we use in our daily lives is in some form or fashion, an energy output, there's an energy input to create an energy output. And that money is the economic good that allows for the coordination of all those energy inputs and outputs to get things that we take for granted every day in our lives. So not thinking about the most complicated things, but just thinking about the basic

• 47:11Speaker 03

  things. Food at the grocery store, basic healthcare, clean water, sanitation, those type of things. All of that is only possible with a stable form of money. And when you don't have a stable form of money, those basic necessities cannot be fulfilled. And so the approach that I took in Bitcoin Does Not Waste Energy, is this idea that if everything that we consume in our daily lives is a derivative of some energy consumption, and if we want that to be sustained, then we need a stable money supply. So it's this idea that every other form of energy consumption is a derivative of money. So therefore, the best and highest use of energy should first be to secure the money supply.

• 47:54Speaker 03

  Because if we don't secure the money supply, everything else is moot. And so I used an example where you look at Venezuela, and not just the fact that they have gone into hyperinflation, but recognizing that Venezuela is one of the most oil-rich or energy-rich countries in the world. And if you look at their energy production year over year, over the last five years, it's plummeted. Literally, they can't get their trading currency, or oil, out of the ground because they don't have a reliable form of money. And so when we think into the future... It is not that Bitcoin is going to, you know, the energy that's consumed by the Bitcoin network could otherwise go to power homes and if we didn't have Bitcoin's energy consumption,

• 48:37Speaker 03

  we could, you know, have, you know, warm homes for 6 million more poor people. It's that if we don't have that form of money, everything else deteriorates. And so kind of the first order function should be, let's secure the Bitcoin network and then everything else, you know, will follow from there.

• 48:56Speaker 02

  For sure. And, you know, one of the things that I think a lot about, and mainly one of my partners and I, Jason Williams, we, one of the first things we did in Bitcoin and crypto was we built a mining facility at a renewable energy plant, right? So we had made an investment and they take car tires, they turn it into oil, steel and power, sell the oil and the steel. That power essentially was kind of OpEx free, right? Because the business was profitable by taking the tires and selling the oil and steel. Power source, build the mine right there rather than sell the power to the grid. Very economic advantage for us, but also we sought out a renewable energy source because low cost power. I think

• 49:39Speaker 02

  a lot about the fact that there's almost this game of like cat and mouse or like hide and seek around the world of people who want to mine or secure the network, they are looking for lowest cost power. Lowest cost power is usually attributable to renewable energies. And so they are actively spending money, time, energy, intellectual capital to go seek out those renewable energy sources and then to help monetize them. And so if that continues to play out, can we actually drive innovation and drive the kind of build out of renewable energy sources simply because of Bitcoin securing the money supply?

• 50:14Speaker 03

  Yeah. And I do think that there is merit to that in the sense that, and I'll use an example of one of our good friends in Texas, Gideon Powell, who's out building infrastructure in West Texas for greenfield mining, Bitcoin mining. And, you know, one of the things out in West Texas, there's obviously a lot of natural gas, but there's also an incredible amount of wind power and solar power. And so I do think that, you know, one, Bitcoin mining will increasingly go out to the periphery where the cheapest sources of power actually exist, and then it also incentivizes the lowest marginal cost of power.

• 50:53Speaker 03

  And Bitcoin energy consumption is unique in the sense that it's demanded 24/7, which is a dream for either an energy grid or an energy producer. When you think about, you know, kind of any network that requires a significant amount of infrastructure, you know, whether it's a telecom network or an energy grid, there's generally peak demand and trough demand, and there's generally, you know, only a few points during the year where peak demand is reached, or a few points in the day. And that the nature of Bitcoin's energy demand being that it's 24/7 specifically, or I think, you know, tangibly will lead to, you know, the, I guess, innovation around technology in renewable energy, because one of the biggest challenges, and again, I'm not an energy

• 51:37Speaker 03

  expert, but it's just common sense, that, you know, the storage of that, you know, of that renewable energy is costly, and it's one of the biggest challenges. But if you reliably know that you're consuming power 24/7, the storage of that power becomes less important because you're literally consuming it as fast as you can produce it.

• 51:58Speaker 02

  For sure. That makes complete sense to me. The next one in the series is Bitcoin Fixes This. What does that mean, and what would you cover there?

• 52:05Speaker 03

  Yeah, so there I went back to what we talked about a little bit earlier, of really what brought me to Bitcoin, and really had the idea, you know, one, Bitcoin Fixes This is, you know, something that the Twitter sphere, you know...

• 52:20Speaker 02

  It's a great meme.

• 52:21Speaker 03

  It's a great meme, and it's this, at a high level, it's the idea that a stable form of money, or a sound form of money, or a form of money that's divorced from the state, that's not subject to the political whims of a few people sitting around a table, or not necessarily even political whims, that's not fair to say to defend, but, you know, kind of a limited knowledge base, or a limited scope of ability of, you know, a very few number of people managing the money of an economy that supports 300 million people, that... As we shift to a world of of of sound money, of of a stable form of money, that there will be a natural balancing effect that will will solve a lot of the the problems

• 53:01Speaker 03

  that people can feel around them, but maybe not maybe haven't identified is is fundamentally driven by an unstable form of money or an easy form of money. So that's that's the high level context of Bitcoin fixes this. But then specifically what I talk about in this piece is really, you know, again, I think about the reason why Bitcoin exists is because ultimately you have some very smart individual forward thinking people solve a problem that many people did not and created a a technology that that created a solution for that problem. The practical reason why Bitcoin exists is because the forms of money that we're using today are not reliable and and are subject to not just debasement, but but systematic

• 53:44Speaker 03

  debasement and and really debasement that the legacy system is inherent on in order to function. And so what what Bitcoin fixes this is about, and specifically in the Gradually Then Suddenly piece, is the idea that Bitcoin fixes QE. Each time, and we, you know, we're we're just starting to see, I don't know if we can officially say that, you know, what the Fed is doing in the repo markets is officially QE4, but QE4 will be announced in short order, in in in my view. It's inevitable at this piece. ECB has already signaled additional QE. I don't think the bank of Japan ever stops.

• 54:19Speaker 02

  And I think they've even gone as far, you know, the ECB, etc., as saying that it's kind of like the new normal, right? Like, it's not just going to be another, you know, limited point in time where there's QE introduced. It is basically this is now necessary to continue kind of a charade, right?

• 54:38Speaker 03

  Yeah, and and really, if if people are interested in understanding that. The reason why that is, is because of the size of the fiat credit systems. The size of the credit system and the degree of leverage that exists cannot be sustained unless the base money supply is increased. The whole system is based on that dynamic of the relative scarcity of the base money to the overall size of the credit system. But then when you recognize that all QE is designed to do, or what it's designed to enable, is to allow an unsustainable system to be sustained. QE and the way that the central bankers view kind of in managing their economies is, I need to expand the credit system because if I'm not expanding the credit system, then I have a deflationary environment.

• 55:21Speaker 03

  The only thing that was worse than inflation to a central banker is deflation. And in this context, if they just let the system go, it would collapse on itself. And so that is the reason why QE is not just a tool that will be periodically used. It's actually a necessary function to the way that the existing system is constructed. And so when we think about Bitcoin and those of us that recognize this problem and why this form of medium that is Bitcoin is superior to this legacy system that is, you know, Fed puts more QE in so that the credit system can increase. We get to a situation where we have too much debt and then we need to put more base money

• 56:03Speaker 03

  in, which is QE, that ultimately now Bitcoin represents monetary competition. If people believe that that is, that the path to economic stability or prosperity is central banks managing the money supply and managing the economy from central command, they have their legacy monetary system. But for those of us that are starting to see clearly and to see that this is a never-ending cycle, that we increasingly opt out. And so by Bitcoin having a fixed supply that, again, I, you know, we all think about Bitcoin having a fixed supply, but really at a root level, Bitcoin's supply is dictated by consensus. So while we think about it as a fixed supply, it's really only fixed so long as the market

• 56:47Speaker 03

  participants that are involved want it to be fixed. And then it so happens that a group of rational economic actors that have independently opted into a fixed supply currency system would not In an overwhelmingly, you know, large way, form of consensus to debase that currency. We basically now have monetary policy by consensus rather than by fiat. And, and, you know, kind of over the course of the 20th century, whether it was, you know, the conversation or the debate between Hayek and Keynes, ultimately, we ended up in a world where we have Keynesian and monetarist debasement of the money supply as the mechanism to achieve economic stability. That was always an intellectual debate. The Keynesians won.

• 57:31Speaker 03

  Now, we have free market competition. We've got two systems that is every single day being evaluated by market participants all over the world, and the signal of value going up in Bitcoin is more people looking at this question and coming out on the side that, hey, if I was contributing value today, I would rather be opting into a system that had a fixed supply rather than one that I know is going to be debased. So kind of in that general context, it is, you know, Bitcoin fixes this at a root level or at a fundamental level. It is presenting a monetary option that is an opt-out path for the legacy system.

• 58:08Speaker 02

  Yeah, it's fantastic, and I think that's why people have gravitated towards that idea, which you just articulated. The last in the series is Bitcoin Not Blockchain, which is a play on words, I think, of a lot of people saying, you know, blockchain not Bitcoin. Describe a little bit about what you covered in this last one.

• 58:25Speaker 03

  Yeah, so, and then also, just to say, for all the listeners, it won't be the last one.

• 58:30Speaker 02

  The last one is published.

• 58:31Speaker 03

  Yeah, the last one that I've published. And so, again, this one is getting to, you know, coming back to the center of if Bitcoin fixes this is, you know, really the economic rationale for why Bitcoin exists and kind of addressing this problem statement between kind of what was something that we were all forced to opt into versus now having an option to opt out, that Bitcoin Not Blockchain is then going back and focusing on the technicals of Bitcoin. And it's helping, you know, it's expanding upon the idea of why Bitcoin can't be copied, but then it's also trying to distill for people why a lot of, a lot of people, I think, look at the, and I try not to reference the Bitcoin community, but for the people that

• 59:15Speaker 03

  have come to this view that Bitcoin is the only blockchain that works, it's the only blockchain that matters, there's this idea that somehow we have this closed-minded view. And that, oh, you know, what's the fun of this whole thing if we only have one currency to rule them all? And really, it's not an ideological belief, like it's not something that we just want. It's something that we have reason to based on first principles. And so what I walk through in Bitcoin, not blockchain, is trying to give people kind of some tools at a really base level as to how Bitcoin works and then build up from those kind of base building blocks to then walk through the rationale as to, okay, now

• 59:59Speaker 03

  if you have this baseline as to how Bitcoin actually works at a technical level and how the currency interplays with the blockchain and what the blockchain actually is, then I can walk you back up to the first principles as to why we think that this then obsoles every other form of currency. And so kind of walking into a little bit of that, if I was to distill it down into ideas, it is that first recognize that Bitcoin was designed to solve a very specific problem. It was designed to solve a problem that exists in modern money and that the blockchain was a tool that the founder of Bitcoin used specifically to remove a central third party

• 1:00:44Speaker 03

  from that equation. How can we validate and verify either the scarcity of the asset or that that asset has not previously to be spent without a central party? The only way to do that is for all parties to have a copy of all the transactions that have ever happened.

• 1:01:00Speaker 02

  For sure. The thing that I think is so interesting about this is you're taking a single asset, right, which is Bitcoin, and you're coming at it from so many different angles. And some of it is you're disproving or arguing against the detractions. You're also kind of enhancing or highlighting some of the positive arguments. And so I'm very interested in how many of these you can write, right? And I think that there's a lot more to go, right? So I'm super pumped about it. Remind us where folks can go and read them?

• 1:01:33Speaker 03

  Yeah, so.

• 1:01:36Speaker 03

  All of the blog is, or all of the series is available at unchain-capital.com/blog. And you can, you can, there's a, there's a tag for gradually than suddenly. So they're all listed there on the Unchained Capital website. And then I also, each week, you can sign up for the newsletter on the website, and then I also distribute them on Twitter each time I release them. So we'll be out with another one next week, which will be Bitcoin is not backed by nothing, which is one of the things that, you know, I get a lot of the times that I write, I think to the institutional audience that, that, you know, one, it's a broad resource that anyone in Bitcoin that has friends that are interested can, can point to. Then we're also thinking about educating future clients of Unchained.

• 1:02:18Speaker 03

  So it's creating a repository that as each person is going, you know, down the rabbit hole, these are all questions that most people come to in the past and have to overcome to kind of come to this point of view that Bitcoin likely will be, and I think the probability is increasing with every day, that Bitcoin is a, will be a global reserve asset.

• 1:02:36Speaker 02

  For sure. Where, where do we go from here, right? Like, what does the future of Bitcoin look like? And how does that unfold or evolve, in your opinion, given what you know today?

• 1:02:47Speaker 03

  So, one, I think that it's increasingly not practical for people to ignore Bitcoin. So I think that we're getting to the, the point in time, and I know that through Morgan Creek, you guys have started to get institutional investors involved in not only having exposure to Bitcoin, but then also infrastructure that's being built around Bitcoin. I think it, you know, two, an economic system that has a purchasing power of 200 billion, and each time that it doesn't die, and then people see that it continues to rise in value, they can ignore, you know, fewer and fewer people can ignore that reality.

• 1:03:29Speaker 03

  And then as Fortune 500 companies get involved like Square and the CME, that provides a lot of cover for us where it's not this medium that's just for criminals. It's not this digital nothingness. It's actually, there is rationale and there is reason as to why there's fundamental demand. I think that where we go from here, I think that one, we recognize that still very few people hold Bitcoin, the people that do. For an even fewer number of those people, does it represent a significant portion of their wealth? That educational resources are continuing to increase and that people are in an exponential way educating themselves on Bitcoin.

• 1:04:11Speaker 03

  I think that we're going to see a really interesting dynamic between Bitcoin adoption and in the cycles of QE. I think that ultimately, the state and central banks are going to be, there is going to be a fight in terms of control. And I think that, you know, I don't, you know, there's no crystal ball in terms of how that fight plays out, but I think that, you know, kind of heavier regulation, kind of trying to, you know, whether it's the Fed, you know, combining with the ECB or the BOJ to in some way try to deregulate it out of existence, I think it's going to be very difficult to do. I think the positive side is that they only probably get there until Bitcoin, or not

• 1:04:55Speaker 03

  until Bitcoin represents a trillion dollars of wealth or two trillion dollars of wealth. And I think the path that, you know, where we go from today to there is increasing education, but then also building infrastructure. Like a lot of people look at Bitcoin and, you know, say like, oh, this could never be a form of money, but what they don't recognize, or I don't want to say they don't recognize, but it's not looking at the long game and it's thinking a very short sighted context of, you know, Bitcoin went from zero to where it is today in 10 years. If we think about the internet, we have to build infrastructure to increase usability, increase security, give people confidence that when they're storing this, they're storing it securely.

• 1:05:36Speaker 03

  So I think the next phase is going to be, I think we're still trying to solve custody solutions that work, and so that's what we're focused on at Unchained. I think we're going to see a lot of competition in that space and a lot of different models tried. But as we perfect those models, that gives people increased comfort that whatever assets they store in Bitcoin are secure. As people gain conviction in that, then that further increases adoption.

• 1:06:03Speaker 02

  For sure. I think it's a very clearly articulated path and one that's very likely. Before I finish up, I always do rapid-fire questions. What do you think is the most important company in Bitcoin other than Unchained?

• 1:06:20Speaker 03

  Square or Trezor?

• 1:06:21Speaker 02

  Oh, Square!

• 1:06:23Speaker 03

  Yeah, so either, so AnonRamp and those that are building hardware to help people secure their own Bitcoin and that allows Bitcoin to be decentralized and allows for the properties of decentralization and censorship resistance to increase over time.

• 1:06:42Speaker 02

  So somebody was literally tweeting at me this morning saying, "Has anyone ever answered?" It was Square. And I said, "I can't remember if someone has or not, but there would be a very strong argument."

• 1:06:49Speaker 03

  I didn't see that, so...

• 1:06:50Speaker 02

  Yeah, that's even better. What's the one regulation you would change or improve if you could?

• 1:06:59Speaker 03

  Either the qualified custodianship or AML KYC.

• 1:07:05Speaker 02

  Yeah.

• 1:07:06Speaker 03

  I think that those are both areas that, one, we are in this world where we are trying to, as a, not necessarily as a collective, but via competition, solving different models as to how to secure Bitcoin, requiring a lot of regulatory overhead to just put a regulator's view as to what in Bitcoin qualifies as someone that can actually secure Bitcoin, is trying to fit a square peg in a round hole. And then on the other side, I think that, and this is something that we struggle with as a company, as Bitcoiners, I think everyone

• 1:07:50Speaker 03

  is increasingly conscious of privacy and how important that is. But then as a financial institution, we are required to...

• 1:07:59Speaker 03

  Comply with certain laws that I think inevitably and really undebatably create risk for a lot of law abiding citizens. And so, you know, it's the unintended consequences of those AML KYC policies that create risk for people while maybe well intentioned or, you know, there's probably a range of people who think well intentioned or not well intentioned, but there are unintended consequences and so, you know, but those are the rules and so we are, as a financial institution, we comply with them. But I think that we are now looking at a new medium and so both on the qualified custodianship and AML KYC, I think we have to recognize what it is, what the subject matter is that

• 1:08:42Speaker 03

  we're dealing with and what is the right way, whether there is a right way to regulate.

• 1:08:48Speaker 02

  For sure. What's the most controversial thought you have in Bitcoin? So when you say it, the most people will be like, "Oh, I disagree with that."

• 1:08:55Speaker 03

  Okay, so, a lot of people believe that everybody gets to define Bitcoin by running a full node. I don't. I think that what a node allows you to do is assay whether something is Bitcoin or not. And so, you know, it may be splitting hairs, but, you know, I think about it in the context of, you know, you can change Bitcoin and you can fork Bitcoin. If you do not win a consensus, then it's not Bitcoin. And so, so that's, that's like, that's the first principle that I use to say, you know, a node doesn't allow you to define Bitcoin for yourself, it just allows you to assess whether you're in consensus of the network.

• 1:09:40Speaker 02

  What's the most important book you've ever read?

• 1:09:43Speaker 03

  Maybe The Bitcoin Center.

• 1:09:51Speaker 02

  Safe Dean won't mind that.

• 1:09:53Speaker 03

  Yeah, I mean, it's definitely up there. A world in debt is up there. And then the road to serfdom. The road to serfdom may be, I think, kind of on a societal level, the most important.

• 1:10:06Speaker 02

  Yeah, I haven't read that. I need to pick that one up.

• 1:10:08Speaker 03

  Yeah, I definitely recommend it for for anyone that's, you know, whether you're interested in Bitcoin or not, you know, Hayek is an economist, but he's a philosopher as much as as an economist. And it really, the road to serfdom provides a really first principle view as to why socialism fails and why it is so, not only in contrast, but is in opposition to individual freedoms. So I do recommend that to everybody.

• 1:10:36Speaker 02

  Got it. I wrap up each podcast letting the guest ask me one question. But first, we talk aliens. Believer, non-believer, did you go to Area 51?

• 1:10:48Speaker 03

  Did not go to Area 51.

• 1:10:51Speaker 03

  Don't think about it a lot.

• 1:10:52Speaker 02

  Okay.

• 1:10:53Speaker 03

  I think just on probabilities, probably.

• 1:10:56Speaker 02

  Yeah.

• 1:10:57Speaker 03

  But.

• 1:10:58Speaker 02

  I find that's the most common answer, right? It's just, look, you know, who knows? But on a mathematical basis, you know, there's a lot of, a lot of space out there. And it is highly likely, more than anything. What one question do you have for me to finish up?

• 1:11:14Speaker 03

  What is the first state or nation to to buy Bitcoin?

• 1:11:21Speaker 03

  Or adopt it?

• 1:11:23Speaker 02

  Okay, so two different questions. Adopt first, buy. I'm going to go out on a limb and say that we're recording this in, what is it? September 2018 or 2019. I'm guessing a state's already bought some. I don't know who, but, you know, I would have some kind of likely candidates. But my guess is that somebody somewhere has bought some, even if it's a little bit, and are holding it. I don't know if it's in like a central bank reserve, right? Because I think that that might be a little aggressive. But definitely states have some Bitcoin, right? Could do Caesars and stuff like that. But actually actively purchasing it, I think probably has happened.

• 1:12:06Speaker 02

  In terms of adopting it, I think it's going to be the reverse of what everyone is thinking. So it's not going to be the developer. It's going to be some developing country, maybe one that suffers from hyperinflation, maybe not. But it's also likely going to be attached to size. So the smaller a country is, probably the less bureaucratic it is, which also means that there's less risk because the least amount of people are kind of going to be subjected to the experiment, if you will. And so, you know, you see these countries like the Maltese, the Marshall Islands, you know, all those things. I don't know if it's that small as much as it might be a country with, you know, kind of low single-digit millions of people.

• 1:12:50Speaker 02

  And the thing I'm waiting for is like, the first country that gets a Bitcoiner as the leader, I think a lot of stuff will change very quickly. Right? So it's almost like you have to have somebody at the very top which believes or understands, and therefore the top-down approach will accelerate their embracing of it or their adoption of it.

• 1:13:11Speaker 03

  Yeah, that makes sense. I mean, I think that we're sitting here in Wyoming, so, you know, the state here is doing a lot of things to create regulatory certainty for crypto and Bitcoin-related companies. So I think that, you know, it likely is some entity that has, or some state or nation that has, you know, the kind of forward-thinking, kind of is investing the resources to attract the type of people and that as a consequence of education and familiarity that they see the benefit in terms of securing a portion of whatever is in their treasury reserve. So it'll be interesting to see.

• 1:13:51Speaker 02

  For sure. Where can people find you, Twitter, elsewhere online?

• 1:13:56Speaker 03

  I'm generally only active on Twitter, so Parker A. Lewis, at Parker A. Lewis on Twitter. And then follow the Gradually and Suddenly series, reach out to me, love to engage, so.

• 1:14:06Speaker 02

  Awesome, and let people know, or let Parker know if you're gonna be in Austin, Texas as well, so.

• 1:14:12Speaker 03

  Yeah, we do host the Austin Bitcoin Developers Meetup, Justin Moon organizes it. But we hosted our Unchained Capital, hard to say headquarters, but our office down in Austin. So if you're in Austin, we've got an increasing number of Bitcoiners there, so look us up, we're around.

• 1:14:30Speaker 02

  Awesome, man, thanks so much for doing this.

• 1:14:32Speaker 03

  All right, I appreciate it.

• 1:14:33Anthony Pompliano?

  Hey, everyone, Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening, and see you next time on Off the Chain.