Bitcoin’s Next Big Move: How It Could Transform Your Financial Future | Muneeb Ali (Archived Episode)

By now you may be aware of bitcoin’s origin story that begins following the 2008 financial crisis. The essence of cryptocurrency continues to evolve with every new blockchain technology. It’s an innovative space being fueled with unprecedented energy. In the midst of so many innovations on blockchain, bitcoin continues to stand as a storehouse of value that no other cryptocoin has been able to compete with. Muneeb Ali is a Pakistani computer scientist with a PhD in computer science from Princeton, co-founder and CEO of Trust Machines. He is co-founded the Stacks project, a unique programming software created to be smart contract layer that sits on top of bitcoin minus the tension. Muneeb is CEO of Hiro, a developer tooling company. In this conversation Muneeb and Tom discuss the unique attributes that allow bitcoin to stand high above the rest and the likeliness of its usability in a practical marketplace. This is about a deeper understanding to what is incentivizing blockchain, why it’s drawing in so many people, and its implications to web 3.0 To learn more about Web3, Impact Theory has created a free resource for all that are interested. You are welcome to explore and learn with us as we continue to grow: https://web3u.impacttheory.com/ As you know, it’s my mission to help teach you how to build the MINDSET and SKILLS that will help you live an extraordinary life - and over the last few months I’ve been working hard behind the scenes to help create a brand-new tool that will help you do that. It’s called Kyzen - and I am proud to announce that I will be bringing it to the world later this year to challenge you to empower yourself and accomplish greater things in life. To learn more, join my Discord at impacttheory.com/discord! [Original air date: 5-24-22]. SHOW NOTES: 0:00 | Introduction to Muneeb Ali 1:24 | Web 3.0 Explained 6:06 | Decentralized Blockchain 12:58 | Bitcoin’s Incentive Structure 22:01 | Sound Money Revolution 36:05 | DeFi Money Market 47:11 | Crypto Marketplace 55:55 | Future of Crypto Regulation 58:44 | Bitcoin, Smart Contracts, & Stacks 1:13:20 | Bitcoin Usability & Predictions 1:26:44 | Onboarding Cities into Web 3.0 CHECK OUT OUR SPONSORS Range Rover: Explore the Range Rover Sport at https://landroverUSA.com https://landroverusa.com Miro: Bring your teams to Miro’s revolutionary Innovation Workspace and be faster from idea to outcome at https://miro.com. Found Banking: Stop getting lost in countless finance apps and try Found for free at https://found.com/impact. Netsuite: Download the CFO’s Guide to AI and Machine Learning for free at https://netsuite.com/theory Shopify: Sign up for your one-dollar-per-month trial period at https://shopify.com/impact Factor: Get 50% off your first box plus 20% off your next month while your subscription is active at https://factormeals.com/impacttheory50 with code impacttheory50. Follow Muneeb Ali: Website: https://muneeb.com/ Twitter: https://twitter.com/muneeb What's up, everybody? It's Tom Bilyeu here: If you want my help... STARTING a business: join me here at ZERO TO FOUNDER https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show SCALING a business: see if you qualify here. https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox: sign up here. https://tombilyeu.com/ If you're serious about leveling up your life, I urge you to check out my new podcast,Tom Bilyeu’s Mindset Playbook https://open.spotify.com/show/47VE90Cittmo6TGGFqg2xf —a goldmine of my most impactful episodes on mindset, business, and health. Trust me, your future self will thank you. Join me live on myTwitch stream https://impacttheory.co/4fitmnJ. I'm live daily from 6:30 to 8:30 am PT athttps://cms.megaphone.fm/organizations/0482bfe8-8502-11ed-af5d-3bdc320068d7/podcasts/0a41f61a-9ddf-11ed-9eb7-dbb3a40775f5/episodes/8ac68366-8a85-11ef-bb65-abca3ffdcf54/www.twitch.tv/tombilyeuwww.twitch.tv/tombilyeu https://impacttheory.co/4fitmnJ LISTEN TO IMPACT THEORY AD FREE + BONUS EPISODES on APPLE PODCASTS:apple.co/impacttheory http://apple.co/impacttheory FOLLOW TOM: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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

• 0:00Tom Bilyeu?

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• 0:45Tom Bilyeu?

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• 1:07Speaker 01

  So the way the Bitcoin protocol is designed is it gives people incentives. It's a little bit like the protocol is bribing people. It's basically like giving people money that hey, if you do this work for me, I will give you money. So Bitcoin is literally, the protocol is printing money in the form of Bitcoin. And it's saying that if you, it's basically giving payment to anyone who believes in the project and is willing to take that payment.

• 1:43Tom Bilyeu?

  Nibal Lee, welcome to the show.

• 1:45Speaker 01

  Thanks. Thanks for having me.

• 1:46Tom Bilyeu?

  Dude, I'm very excited about this. As I was telling you before we started rolling, when I first started researching you, I knew you were interesting, but I didn't know that you sat at this intersection of what might be one of the most important questions in crypto and Web three. And that is why Web three at a financial level is going to be so important.

• 2:07Tom Bilyeu?

  Revolutionary, I think. And that that was the thing that I really, I started taking crazy notes and I was like, oh my God, like this, the the idea around how this is going to be a revolution. You somehow sit at the nexus of that. And I've watched a lot of people in the industry get caught up sort of in a very similar wave. And you have remained a contrarian voice. And so I want to start at the beginning. If you don't mind, give people a very quick primer, because we're going to go super deep, but give people a quick primer on what Web three is, and then we're going to dive into why it matters.

• 2:42Speaker 01

  Yeah, so I think for people who don't know what Web three is, think of, think of this, like, we have kind of like the basic internet infrastructure. Think of that as the plumbing of the internet, right? Like you are kind of like exchanging data. But then initially, what you would call Web one, it was kind of like read only. Meaning that you can just go online. All you can do is you can just like read on a website. Or just like you're consuming information, right? Like you're kind of like a passive person. And then I would say in the early 2000s was the start of Web two, which a lot of people can relate to it, right? So it was interactive. It was read plus write. So when you're posting a tweet or a picture on Instagram,

• 3:27Speaker 01

  you're actually writing something like you're, and then people engage with it, right? So it became more interactive. So it became like read and write. And Web three, interestingly, adds like one more characteristic or dimension to that, which is own. You can now actually own things online. So you can still read and write, but you can now also own things, meaning that you can own Bitcoin. Like it's, it's like a strong sense of ownership, like you directly own that thing. No one can take it away from you. Similarly, you can own other types of digital objects, like, like NFTs, which I know that you're interested in.

• 4:04Tom Bilyeu?

  Interest may be the understatement of the year. Yeah, I'm completely obsessed. NFTs, though, for me is, so I really want people by the end of this interview to understand the difference between ownership. NFTs to me is ownership. It's not a financial instrument. That's like the drum I've been beating that I get a little bit of flack, because I think people are treating.

• 4:22Speaker 01

  NFTs like a financial vehicle. I think that's a mistake, but that's a whole nother argument. But there is another component to ownership, which is Bitcoin. And to me, Bitcoin and other things that really do act as money. Do you differentiate those two in your mind? Or like, no, ownership is ownership? No, I think I think they're different things. And it is very, um, maybe it's worth it like diving into that concept a little bit more. Because people like in their daily lives, they don't really think about ownership that much, right? Like, like you're, you're, let's say you're sitting in your house and you bought it. You're on, you, you would just think that you own the place. You never think about how exactly do you own it?

• 5:03Speaker 01

  Well, you own it because there are, uh, there's, there are property laws and they are enforced, right? And you trust that, let's say, uh, here in, in the United States, those laws are enforced pretty consistently. And everyone can kind of like trust the system that if there's a conflict about who actually owns, you know, this house. We can rely on our, our laws and we can actually resolve that conflict. In some other country, maybe, you know, I, I grew up in Pakistan and there would be, you know, in some villages. A lot of people would have conflicts about land, like who actually owns this land, right? And because, you know, some of either the laws are not clear or some people are corrupt.

• 5:48Speaker 01

  So you can't like, sometimes you can't even like rely on the local system for how do you resolve those conflicts, right? So whenever you're, you're thinking about what does ownership mean? Like if you go a level deeper, like how exactly do you own something like? Money in your bank account, let's say, you know, I have a Bank of America, you feel like it's my money. But, you know, we saw recently and when there were protests happening in Canada. When the Canadian government actually started seizing bank accounts for people who are like giving tips to somebody to go have a bagel. Or something like that, right? And suddenly you realize that, wait, that's not my money. Like it can be taken away from me because. And that's where the concept of ownership kind of like keeps getting deeper. And when.

• 6:32Speaker 01

  Bitcoin comes to the picture, it really like baffles people initially like because they they actually don't have any reference point. For what strong ownership actually even means, because we have never had strong ownership ever before. So the way you own Bitcoin is that you have, you know, your your private key. Which is people should think of that as a very, very, very long password. It's like a secret, like you're not supposed to tell anyone, you know, what the secret is. But as long as you have it, you have this really, really long password, which is a secret. You can actually mathematically prove that I own Bitcoin. Right. This was just simply not possible before, ever, right, in in society.

• 7:13Tom Bilyeu?

  And I think there's an important part there for people to understand. So. Decentralization, which from an entertainment NFT standpoint, I'm actually not that bothered by, whether it's centralized. I mean, I'm saying this because I'm super biased because we are a centralized project. But I don't worry about that. But when it comes to the money side of things, all of a sudden decentralization starts to seem very, very important. Can you explain to people how the blockchain of Bitcoin works? What is exactly being decentralized? And.

• 7:50Tom Bilyeu?

  I know you're not a big fan of the idea of a world computer, but as an analogy, I find it very helpful to understand what's going on at a technological level on a blockchain. A distributed blockchain.

• 8:01Speaker 01

  So I think I think let's build up on on on this example where, you know, I I have this private key and I can prove to you that I own Bitcoin.

• 8:12Speaker 01

  Basically, what you can do is you're able to sign something like think think of it like, you know. Normal people would have a checkbook, right? And they can they can sign something, but their their signatures are easy to forge. Right? Like somebody else could also sign something that looks like your signature, right? So these signatures are basically. Unless like someone can come up with the exact same private key. You they're impossible to replicate, right? You would need like, you know, some insane amount of a supercomputer that consumes the more energy than is in is available in this like, you know.

• 8:46Tom Bilyeu?

  We can actually see the sun dimming.

• 8:48Speaker 01

  Yeah, exactly. Like it's it's it's crazy moon math type of a stuff, right? So. Uh, let's say, you know, you understand that concept that, okay, no one can force the signature, only the person with the private key can do it. Then, you know, the next thing to visualize is some sort of a global ledger. Right, just like bank accounts, like the bank kind of like controls the ledger. The bank says, you know, I have a hundred bucks, this other person has like two hundred bucks, something like that. We need like a global ledger that um, anyone can use. And anyone can basically verify that this information is correct. And you're not depending on any single party that basically controls the ledger.

• 9:30Tom Bilyeu?

  How is that possible?

• 9:32Speaker 01

  Right, so this is the thing that blockchains cracked, and more specifically Bitcoin was the first one. And that was the true innovation, I think, because this problem has never been solved before. Where you're always depending on some company, right? Like, let's say, uh, again, to make it relatable to normal people, like when you're logging into Facebook. Facebook, the company decides that, you know, your password is right or or not right, and you can have access to your account, or you you cannot. Right, in the Bitcoin world, in the blockchain world, like there is no company, right? It's fully decentralized and it's just kind of like, you know, code and and mathematics. And if you have the private key, you can spend your funds.

• 10:14Speaker 01

  If you don't have it, nothing can happen in the world and you, there's no way for you to access access those funds, right? So it's like a trustless system that just works without having any central point of control. And that's the key thing that, you know, a lot of people get get get confused about.

• 10:30Tom Bilyeu?

  The way my simple mind can grasp, you've got Timmy, Sally, Susie, Bob, uh, Muneeb, like a whole gaggle, thousands of people that all have something running on their own personal computer that keeps this ledger. And that ledger is designed to sync up basically with each other. And the distributed decentralized nature of this is that anybody can put this ledger on their computer and be a node and join the network. And now fifty one percent, I would assume, all have to agree that this transaction, this update to the ledger is legitimate. And if they do, boom, the ledger is automatically updated across all thousand, ten thousand, a hundred thousand, whatever, how many computers are on the network?

• 11:15Tom Bilyeu?

  And so the odds. Of even a state actor being able to identify where those computers are, simultaneously hack them and get them to report what they wanted to report is virtually zero. So they're they're not going to be able to do it. Once I understood, okay, wait, this is a world computer that is running on all these individual computers. So I can imagine the Google or Facebook like super network of servers somewhere in Iceland, you know, deep underground. And we've all seen those images, but it's a really different picture. And I can imagine somebody you break into one of those places or you have the keys because you're Google, Facebook, whatever. You can go do whatever you want, like no one will ever know, right?

• 11:58Tom Bilyeu?

  You can just manipulate the entries in a database and you're good. Whereas with something that's truly decentralized, because it's on random computers, the the benefit of that is while any one of them maybe could do something to their computer, the odds of you getting all of them to coordinate is again effectively zero. And so, once I understood that, that this is just normal people all over the place that have decided to join the network for reasons, to be honest, I don't completely understand. Are they miners? I'm not sure. But they have some incentive to have this ledger on their computer. And they all are in sync.

• 12:37Speaker 01

  Yeah, so I think, I think, I think, um, let's take a deeper dive, right? So there, there's a little bit more to it, which maybe we can jump into a little bit more. So basically now, forget, you know, we had the high level understanding. We had the description that you had, and now let's try to like dig a little bit deeper. So what's happening is, um, just like, you know, Facebook runs their computers in a data center, as you mentioned. This network, let's call it the Bitcoin network, um, needs people to operate it, right? It needs some people to kind of like run the network and actually have the physical computers, which are going to do the processing that is needed for doing transactions on this network.

• 13:19Speaker 01

  So the way the Bitcoin protocol is designed is it gives people incentives.

• 13:26Speaker 01

  It's a little bit like the protocol is bribing people. It's basically like giving people money that hey, if you do this work for me, I will give you money. So Bitcoin is literally, the protocol is printing money in the form of Bitcoin. Right? And it's saying that if you, it's basically giving payment to anyone who believes in the project and is willing to take that payment. Right? And then in terms of how the network works, there are basically like two types of actors. One is, you know, when you're describing that there are all these different types of users, most of the users who are running the Bitcoin like full nodes, they're mostly doing it either for themselves

• 14:07Speaker 01

  or they want to support the network and they want to kind of like have a node online. A normal node doesn't really participate in mining. Right? So the process of actually writing new information to the Bitcoin blockchain, miners are kind of like responsible for that. So miners are, think of that as like, you know, those people are more dedicated to the network. And what they're saying is that in addition to running a node on the network, I'm going to actively participate in this competition. So mining is kind of like a competition, that there's money at the table every block, which is roughly 10 minutes. And people are competing over who gets to pick up, pick up the money.

• 14:48Speaker 01

  So everyone's trying to do work and the protocol has like this basically algorithm that, that almost like randomly, like based on how much like compute power that these people are willing to spend on it, picks a winner every 10 minutes.

• 15:05Tom Bilyeu?

  And they're solving a cryptographic puzzle, right?

• 15:08Speaker 01

  Yeah, they're solving these puzzles.

• 15:09Tom Bilyeu?

  And they get harder, easier, depending on how many people are competing for it? So that it always comes out to be roughly 10 minutes a block, right?

• 15:15Speaker 01

  Yep.

• 15:15Tom Bilyeu?

  Okay.

• 15:16Speaker 01

  So then you should think of the miners as the operators of the network. So when a normal user comes and says, here's my transaction. They just don't, they don't have to like become a miner and write to the blockchain themselves. They just broadcast it and some miner picks it up and writes it on their behalf, right? So miners are kind of like, they are the operators and they write, uh, they write to the, to the blockchain. And then the other nodes are super important, right? So the normal users, the normal nodes that you were talking about, they are kind of like your independent verification of the notebook. Because the beauty of the Bitcoin notebook is that anyone can start up a new computer, install the software,

• 15:58Speaker 01

  start from zero and independently verify that this copy of the blockchain is the correct one. And that's a very, very important property to have, like, because think of, think of this way. You're not trusting anyone. You could be like in the middle of Japan or like in some village somewhere with a satellite connection, download the software. You're not trusting any other human, right? You, if somebody gives you like three different copies of the Bitcoin blockchain, you can run your software from, from the start and independently decide this is the right one. These two copies are not correct, right? So that's the beauty of like, um, the, the, the Bitcoin system where anyone can independently do this.

• 16:43Speaker 01

  So what you're doing is you're decentralizing trust. You're giving more power to the people who can run the software themselves. And we're like, you know what? I, I don't need to trust any other person on the planet because I can run my own software.

• 16:58Tom Bilyeu?

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• 17:40Tom Bilyeu?

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• 18:24Tom Bilyeu?

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• 19:09Tom Bilyeu?

  So the code of the Bitcoin network itself does all of that. And it's literally every time going all the way back to block one and retracing its steps to make sure that that block, or does it put like bookmarks and only run?

• 19:22Speaker 01

  It does. It does. So you could force it to recompute. But if you run a new node, it will kind of like download the blocks and independently verify them. But once you're running a node, then it just needs to stay in sync.

• 19:35Tom Bilyeu?

  And then as that node checks it, it will report back to the mothership, the main, uh, would you call it netbook?

• 19:43Speaker 01

  So there is no mothership.

• 19:44Tom Bilyeu?

  But it's reporting back to the other nodes that, hey, I agree this is right or no?

• 19:48Speaker 01

  So it's like, so now we are touching the concept of like decentralized consensus, right? So now everyone's, let's say there are thousands of people around the world. Everyone is running the nodes and the miners are the only ones who are writing, right? So when the miners write, sometimes these miners fight with each other as well, right? Let's say it had, there were two miners, one, one of them was like, I won the block and here's the right copy. The other one's like, no, you know what? I won the block and here's the cup or coffee on my chain. And what happens is now your node is, can actually see that there's, there are two different copies that are coming to me, which one is the right one? So the way Bitcoin works is always the longest chain wins

• 20:32Speaker 01

  because the longest chain represents the most amount of work being done, right? So other miners will basically, because they have money to lose, right? Like if you're working on a chain that will end up not being the longest one, you just lost money because the, you should have been on the correct fork and, and doing your work on the correct one. So there's a strong economic incentive for these conflicts to very quickly get resolved automatically. So your nodes can actually see all of that. And that's why sometimes people will tell you that if you do a Bitcoin transaction, wait for at least six, six confirmations. Because it's basically mathematics that after six confirmations, the probability that, you know, there, there, there might be a fork on the network basically goes down to almost zero.

• 21:16Speaker 01

  So if you, if you have waited for like six confirmations on the network, you're effectively, you know, now, now your transaction will be safe, basically.

• 21:25Tom Bilyeu?

  Okay, so now hopefully people, and I'll recap quickly, but people now understand what this is. So a technology was created, Bitcoin, by a mystery entity known as Satoshi. Um, and what they gave us was this distributed ledger that anybody can spin up, only so many people can write, but all these other people are going to be able to verify whether that's accurate or not. There are financial incentives all around to make sure that people aren't lying, uh, to make sure that there's plenty of people that, to use your words, have been bribed to, you know, confirm that this is all working. And so now we have a consensus that effectively can't be hacked. That's the right way to think about it. And so now we can take something that's digital and for anybody that's hearing this for the first time, hear this well.

• 22:10Tom Bilyeu?

  You take a digital object and you have now been able to give it the same sort of um, scarcity properties of a physical object so that. I mean, to be honest, it's better, if I'm quite frank, because I don't know how many of these mugs exist. Whereas with an NFT, just to put it back in my language, because that's where I deal. I know exactly how many of that item were created. And anybody that spins up, in the case of working on the Ethereum blockchain, which is where we do our NFTs. It's like anybody that puts up a marketplace that can read what's on the blockchain can tell you exactly how many of that are. They will all agree. So it's you can find out how many of something exists. So now you know exactly how rare it is. You know which one you have, what one somebody else has.

• 22:55Tom Bilyeu?

  So all of the, the sort of latent economic energy that was leaking out of the system in digital goods. Because you, you couldn't, A, you couldn't make it more complex. So what I always tell people is an NFT is not a picture. It's a picture with matrix code hidden inside of it. Once you understand the power of that matrix code, then you really understand NFTs. And so now it isn't just an image anymore. A and B, now I can track who owns that image. And if people care enough to be one of the owners and they can guarantee that now I have it. Now, whether humans should care about ownership or not is irrelevant. They do. And so this technology allowed us to track that into the digital world.

• 23:39Tom Bilyeu?

  Okay, so that's like the, the big innovation that, depending on where you draw the lines of what web three is. To me, it is web three is the ability to own a digital item in a provable way. And all of the consequences therein. And there are huge ramifications, once you understand what you can build on top of that. And that's where this conversation, I think, is about to get really interesting. Now, I think of it from an entertainment perspective, but today, what I really want to talk about is. I heard you in an interview, running through a hypothetical situation that stopped me in my tracks.

• 24:21Tom Bilyeu?

  About the way like interest works on your money. You were talking specifically about Bitcoin. And you said, imagine a day where there's a marketplace where people can lend money, review lenders. Yep. Review people that review borrowers. I was like, oh, my God, like this gets crazy. So. If you don't mind, walk us through that hypothetical situation. And for context, how does money work today? And how is this going to open up a level of creativity that I think will shock people?

• 24:54Speaker 01

  Awesome. Yeah, let me, let me dive into it and then I'll, I'll come back to some of the ownership and, and the NFT stuff as well. So interestingly, you know, so far we have discussed Bitcoin. Bitcoin is, you know, this new type of money that nobody controls. Right? So it's like, um, in some ways it's like open source technology that created money. That is not controlled by anyone and that, that, that type of thing has never existed in, in our society, in our history. Ever. Right?

• 25:23Tom Bilyeu?

  So why do you think that it created money? Cause that's a really interesting way to phrase it.

• 25:27Speaker 01

  Think of like humans, even when, you know, we used to live in, in tribes. Will always find ways to trade with each other. Right? And they will always find ways to ascribe certain meaning to certain objects. For those, for the trading to take place. Right? So that's why we had gold. That's why we had those seashells. That's why we had those like other types of, uh, physical objects. That will represent some value because humans like by nature, they would, they wanna, they wanna trade. They wanna, you know, I, I, I'm, I'm a farmer. I'm growing something and I will sell it to you and I want something else back.

• 26:08Speaker 01

  Right? This is how hu- human civilizations like come together independently in different kind of like geographic regions over and over again. And whenever people are agreeing on like some sort of, of a, um, of a medium of trade. Right? Like you're ascribing so- certain value to it. Right? And then that's, that's how money started, right? Like people were like, hey, instead of using gold, I will start using paper. And then, you know, paper and gold were linked and, and then, you know, we, we, we evolved over the years. So to think of money as basically kind of like, you know, both a store of value. And something with which we can, we can trade with, uh, with, with other people. And interestingly, um,

• 26:51Speaker 01

  Again, double clicking on these systems, you would find out that gold was a good proxy for something being scarce. Because we, we aren't certain that, you know, somebody can find a really big gold mine. And suddenly, you know, there's a lot more gold in the world now than there there there used to be, right? But Bitcoin, there's only 21 million, right? So it's crystal clear that what the supply is, how scarce this asset is, no one can change it, right? So it's not like the government can decide that, hey, we're gonna have 9% inflation, and suddenly your, your, your money is worth less sitting, sitting, sitting in your bank account, right?

• 27:30Tom Bilyeu?

  I think it's worth belaboring this point just for a second. So, stars explode, they emit gold, gold crashes into the earth, gets embedded in their crust as it crumbles and moves around and it gets buried and it's hard to extract. So, it also is very resilient, so it doesn't mold, it doesn't rot, you can melt it down and it remains pure. Like, there's a lot of properties that led a lot of different civilizations to ultimately coalesce around gold. But they tried all kinds of things, I think you said seashells earlier. So they try all this different stuff. They need a universal medium of exchange, because maybe I'm good at basket weaving, maybe you're really good at harvesting corn. I, I don't wanna have to know how many baskets equal how much corn, and so we all come up with this medium of exchange. We all, because of its properties, come to gold.

• 28:15Tom Bilyeu?

  The problem with gold is it's fucking heavy. And so, carrying that around and being afraid that somebody's gonna jack me for it, we start coming up with proxies. The proxy we come up with today is, well, entries in a database. But, people think of it as paper money. Pretty lame properties, though, when you really think about it. It becomes fiat, because we break the relationship between that money and the gold it was supposed to stand for. So now, to your point, governments can inflate the life out of it. I won't derail this conversation with that, but people should look into inflation. It's terrifying, it's eating all of your money! So, yeah, it's like a whole thing, which I didn't understand, and once I did, I became very paranoid.

• 28:56Tom Bilyeu?

  Okay, so now that we understand that civilization, because we specialize in things, our time is finite, so we can't get great at everything. We have this universal medium of exchange. And along comes Bitcoin, and it has properties that make it better than gold. That was like, these are all the pieces that probably seem self-evident to you. I've had to cobble those together to be like, why are people so excited about this? How did this open source thing create money? Why did people care?

• 29:24Speaker 01

  Right. So I think you got it exactly right, right? So you get Bitcoin. And then, honestly, like, I'm a computer scientist, right? Like, I, when I discovered Bitcoin, I was more interested in the network and how it's working, right? Like, the money thing, actually, even for me, came much later, when I started realizing, when I started seeing so many community members getting so excited about the fact that they finally have sound money, like money where supply cannot be changed, you're not trusting any government, any entity. It's not just about governments. I'm not anti-government, right? Like, it's just that you don't have to trust anyone. And that is a lot better than trusting any

• 30:03Speaker 01

  type of, you know, organized, you know, institution that can just decide to change things, right? Like, the Fed is basically, in the recent years, they just decided to print a lot more money. And some people are getting hit really hard because of that, right? If people who are listening to this podcast, if you're feeling that prices are going up, like, you know, gas is getting expensive, groceries are getting expensive, prices are not going up. Your money is becoming less valuable. So how you feel it on a day-to-day basis, it feels like things are getting more expensive, right? And the reason that the money is becoming

• 30:47Speaker 01

  less valuable, single biggest reason, regardless of what, you know, the narrative on the media might be, or they're trying to spin it, the single biggest reason is they're just printing a ton of money. So if they're printing a lot more, obviously, it's going to devalue, right?

• 31:04Tom Bilyeu?

  I don't think that's obvious for a lot of people. It wasn't for me. It took me a long time to wrap my head around, wait, what? Why?

• 31:11Speaker 01

  Here's a very interesting example. Imagine that, you know...

• 31:17Speaker 01

  The government decided that this year, they're going to automatically withdraw 10% money from every US nationals' bank account. Boom, one day, they come in, you had 100K in your account, now you have 90K, right? Single day, they took that money. I think there will be riots on the streets, right? People will be like, what the hell happened? Like, you can't just take money out of my account, 10%? Like, how do you do that?

• 31:46Tom Bilyeu?

  They did that in Cyprus. That shit is crazy.

• 31:48Speaker 01

  Right. That is literally the effect of inflation. Over the year, if there's 10% inflation, your 100K is now worth 90K. But because it happens slowly, it's like you're...

• 32:02Tom Bilyeu?

  And it's got way better PR.

• 32:03Speaker 01

  Right.

• 32:04Tom Bilyeu?

  You didn't take anything from me.

• 32:05Speaker 01

  You didn't take anything from me.

• 32:06Tom Bilyeu?

  You just made it less valuable.

• 32:07Speaker 01

  You just made it less valuable.

• 32:09Tom Bilyeu?

  That's so brutal. Okay, so, we don't want our money inflated away. So Bitcoin has this cap, 21 million, that's all it's ever gonna be. We can prove it by looking at this distributed ledger. We've already talked about why that's way better. So, people can buy into it, it's sound money, cool rad, I get, you know, why that matters. So, now that we have this sound money, why does this become a revolution? How does this open up this creativity in, you know, the future where you're painting this picture of these marketplaces? So, one, I think people have to get an understanding, so right now, if I have money in savings, I get bupkis for it. It may even at this point be negative, right?

• 32:53Tom Bilyeu?

  Because of inflation, so just holding it means I'm actually losing buying power over time. The number of dollars stays the same, but what it buys is less, so it's effectively going down.

• 33:04Tom Bilyeu?

  So, I don't think right now people are very excited to save, but Bitcoin may offer a solution.

• 33:12Speaker 01

  Yep. So I think this is the beauty of technology and especially like open source technologies, right? I think a classic example would be when the internet started, and you know, Web 2.0, when you could interact, right? And Wikipedia came online. So Wikipedia is like literally normal people, ordinary people around the world. They're like, hey, I know something about this topic and I'm gonna like try and write, write it in, in, in the Wikipedia. And then other people would try to collaborate and people, people are kind of like, they're collaborating around learning, right? So if somebody puts wrong information, they would argue about it, they would figure it out. And if you look, at that time, Wikipedia looked like a joke, right?

• 33:55Speaker 01

  Compared to actual encyclopedias. And fast forward 10 years, your, your, your classic encyclopedias are going out of business. And Wikipedia is now the best source of information on the planet, right? Because ordinary, ordinary humans, these citizens of the internet came together and they started figuring things out themselves, right? Like, oh, this is how you write an encyclopedia and we can collaborate and do it. Now, now, apply that analogy to Bitcoin. Once, you know, they got Bitcoin, they're like, oh, this is how money works. And I, I now understand it, that there's, there's only 21 million, no one can change it. Uh, now let's see how the banking system works, right?

• 34:36Speaker 01

  So usually on a day-to-day basis, I think people weren't even thinking about these things, right? They're like, yes, the only way money works is like, you know, I get a paycheck and I put it in my bank account. Here are the rates, you know, they publish new rates once in a while and this is how the system works. But now you have the tooling, the open source tooling, to start playing around with these things. That, okay, I have my Bitcoin, do I wanna self-custody it? Do I wanna give it to somebody else? If I put it to some productive use, how much are people willing to pay me for that, right? And it turns out a market emerges, like, you know, entrepreneurs come in, they're like, if you wanna lend me your Bitcoin, I'll actually give you a 6% yield. And they're like, what, 6%? You're willing to do that?

• 35:21Speaker 01

  Uh, because for my bank, I actually don't get very high yields at all, right? So it's, it's a little bit like now these normal, average citizens are kind of like tinkering with things themselves and are figuring out how the financial system sort of works. And then they realize that what, what has been happening so far is in the banking industry, and no offense to, you know, my friends who work in this industry, it's literally you're kind of scamming people, like you take their money.

• 35:54Speaker 01

  They put all the money in the in the bank. The bank goes off and makes a lot of money on that. And they give nothing back to the actual owners who deposited the money. They basically get pennies, like barely even pennies, right? There's always a joke at tax time when you look at your, you know, savings account statement. And where's the money going? The banks are keeping it. They're keeping all the profits, right? That's that's how the system is working. And suddenly you decentralize it and people go like, wait a minute. If, let's say for this example, that six to seven percent was the actual yield. When you're lending out money to somebody and they can put it to productive use.

• 36:37Speaker 01

  Uh, why shouldn't I get all of them? Maybe I should pay some fees to some parties in the middle. And then these systems are very efficient, right? So banks are also inefficient on on on top of kind of like this model of where we're not going to give anything back to the users. Uh, they're also inefficient. So they lose a lot of money because there are so many parties involved and they have inefficient systems. And these young entrepreneurs with open source technologies are building much more efficient markets. Right? So that leads us to things like smart contracts where people can now program a lending protocol. So instead of like a bank and, you know, a bank working with another bank and they're they're kind of like coordinating to figure out how to do lending.

• 37:19Speaker 01

  It's it's just a computer program because now money is programmable, right? Bitcoin is programmable or other other forms of digital currencies, they're programmable. So you can actually literally deposit money in a smart contract. It's like a computer program that now owns the money. And these developers and engineers who are far more talented, I think, than than, you know, the the the type of talent that the banking industry is able to attract. And now they're innovating like at a massive rapid speed. And that is leading to almost like a new type of a financial system, which is which is based around these cryptocurrencies and Bitcoin and so on.

• 37:57Tom Bilyeu?

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• 39:30Tom Bilyeu?

  Okay, so are you going to wrap all that inside of the label of DeFi?

• 39:35Speaker 01

  Sort of. I think, I think I think of that as even broader than DeFi, but DeFi is certainly part of it.

• 39:43Tom Bilyeu?

  Well, give me the edges of DeFi and then help me understand. Cause DeFi is something I don't consider myself super knowledgeable about. I've always been really gun shy. It just seems too good to be true. Like hearing 10% APY is like, what? Like that's, that's insane. So, and then you have people, it's 15,000% APY on my, uh huh. So. What is DeFi? Where are the edges of DeFi? And how is what you just described going beyond that?

• 40:13Speaker 01

  Yep. So I think the way I think about the system is that the current way that Wall Street works is pretty much like a black box to most, most people. We have, we have no idea how these markets work. Funny enough, even people who work at Wall Street, sometimes they have no idea how these things work. And so imagine that it's these old systems that are kind of like held together by relationships. If, you know, let's say, um, you know, the markets go down. Someone is trying to bail out, you know, um, a company. Like they're literally making phone calls, right? Like they, they don't know like what's the actual risk probability of, of something happening or how much money?

• 40:56Speaker 01

  Like this is what happened in 2008. Like if you've seen any of the, of the documentaries, like these banks couldn't even figure out how much money they would need to even stay, you know, above water. Like they themselves didn't know, right? And now you compare that to this world of open source, transparent systems, where it's like engineers and developers who are coming in or writing computer software, which is transparent, meaning that anyone can analyze what the software is doing. Anyone can analyze like what the risk in the system is, right? This is sometimes how I describe DeFi to Wall Street people. I would, I would talk to them and I'll, I'll say, you know, what if I can improve

• 41:42Speaker 01

  your visibility into the risk in the markets? And which Wall Street person doesn't want that? They're like, yes, yes, absolutely. Like I would want to know. I would like to have better visibility into the risk in the markets because then I can, I can make smarter decisions if I know what the risk in the market is. DeFi has a hundred percent visibility into what risk exists in the market and how it's going to work.

• 42:10Speaker 01

  Because because everything's transparent, right?

• 42:13Tom Bilyeu?

  But the individual like contracts are transparent, but how do you contextualize them to industry-wide risk?

• 42:22Speaker 01

  So you can you can model that out, right? So imagine that Wall Street is black box, no one has any access to data. They don't know how these systems are interlinked. They don't know that if trigger A happens, what else is going to get triggered? Over here, because all the data is public, all the contracts are are are transparent. You could actually model it out, right? Like, it will take work, but it's entirely possible. And and these systems have actually, like recently, like a year ago, when there was a crash in the markets. It was amazing how systematic the DeFi system was and how it held up. Like, if you're if you're getting liquidated, the code will liquidate you, right?

• 43:05Tom Bilyeu?

  Can you explain liquidation? I think I know what it is, but you hear that term a lot. And, yeah, I wouldn't want to be on national television trying to explain to people what liquidation is.

• 43:16Speaker 01

  Yeah, I think I think a simple type of liquidation could be that, let's say, you are providing liquidity to a decentralized exchange. Let's say, you know, it's a trading pair between Bitcoin and a stablecoin, right? You have Bitcoin, it's just sitting there in your wallet. And you're like, you know what? I'm gonna provide liquidity to the exchange.

• 43:44Speaker 01

  And that means that I'm helping with trading, like my Bitcoin is actually not being used. And whenever some of the trades happen, I will get some percent of it. So I'm trying to put my money to be like active use and I'm making money.

• 43:57Tom Bilyeu?

  And the way that works is I put in, let's say, a hundred Bitcoin and maybe they sell ten of them, but they owe me the ten plus some fee. And how do I know I'm going to get my ten back?

• 44:08Speaker 01

  Yeah, exactly. So the way you provide liquidity is that you you don't want to sell your Bitcoin. Like, you want to eventually get your Bitcoin back, plus some of the fees that were being offered, right? So what you're doing is you're kind of like.

• 44:24Speaker 01

  Putting your money in at some sort of a price bear with some risk boundaries. That let's say, because Bitcoin is volatile, let's say Bitcoin kind of like goes down a lot. Then at some point, you know, I I made the wrong bet and I'll I'll take some loss there. So it's it's basically like, like, imagine when someone says that someone is getting liquidated. It's like they had their loss parameters defined, but you reached the parameters and now someone's coming in and actually liquidating you. So there.

• 44:58Tom Bilyeu?

  Do they get your Bitcoin?

• 45:00Speaker 01

  Like depends on how how it was structured. So you will basically take some sort of a loss in in this particular example. That, okay, I came in, let's let's try to have a simple example. Let's say Bitcoin was forty thousand and I'm like, I'm willing to provide liquidity at Bitcoin forty thousand. If it keeps trading plus minus five thousand. That's within the range of this particular liquidity pool and nothing's going to happen to me. Right? They can tolerate that. But if Bitcoin suddenly drops to like twenty five thousand. Now, I'm gonna, I'm gonna take a loss, like I'm gonna take some loss.

• 45:35Tom Bilyeu?

  And they're just what, gonna cash you out?

• 45:38Speaker 01

  So it depends, like usually the protocols, sometimes they would have liquidation mechanisms. So they would, um, it's it's pretty fascinating, like they would actually give incentives for somebody to come in and liquidate a vault, like come in and buy.

• 45:54Tom Bilyeu?

  Need a, when somebody is liquidated, what happens? I have a hundred in, I've loaned out ten. And then the the price drops beyond my um, my risk tolerance that I have set. What happens to my ten, what happens to all, so I've got ninety still sitting on the books. I've got ten that are loaned out essentially. Do I lose the ten?

• 46:16Speaker 01

  Yeah, it's like a, it's like a, uh, it's like a forced price that you have to take at that point.

• 46:22Tom Bilyeu?

  Okay, so would I take it at the price it dropped to, or I take it at the threshold I set?

• 46:28Speaker 01

  Yeah, it depends on how it was configured, but the worst case scenario would be that you would take the lower amount. You'd be forced to sell at the lower price.

• 46:38Tom Bilyeu?

  All 100, or just the 10 that are loaned out?

• 46:42Speaker 01

  So in this example, you weren't loaning anything out. Whatever you're putting into the pool would be at risk.

• 46:48Tom Bilyeu?

  Okay, so if I say, if I say my threshold, I have it in at 40,000, meaning 1 BTC equals $40,000 US. So I have that in there. I've got a 5,000 USD threshold drop, so it could go down to 35,000. But it drops down to 25,000. Now I'm getting my BTC back at their, what? That's what I don't understand. Do they get to keep some of the BTC?

• 47:19Speaker 01

  Let me, let me, let me try a different example. Let's say, so this is a different example. In this example, you were giving out BTC as collateral.

• 47:31Tom Bilyeu?

  Yep.

• 47:32Speaker 01

  And you're taking a USD loan against it, right?

• 47:36Tom Bilyeu?

  Okay.

• 47:36Speaker 01

  So now, slightly modified example, 40,000, let's say the collateral ratio had to be double or something, right? Because Bitcoin is volatile. So you had like 80,000 worth of collateral, and let's say you took like 50,000 loan against it. And then markets start crashing. Bitcoin is going down, right? At some point, the protocol has this rule, that if your collateral kind of like falls below a certain amount, you could lose, you could lose your collateral.

• 48:08Tom Bilyeu?

  You, you took 50,000 from us in a loan. We're getting 50,000 back. Your collateral just went down in value. So now I'm clawing, it may take all of your collateral to equal the 50,000. In fact, I'm sure that's where they liquidate.

• 48:22Speaker 01

  Yeah, so that's a different type of liquidation, but maybe it's like simpler.

• 48:26Tom Bilyeu?

  That's way easier for me to understand. But, so now I feel like I get that part. But the first example, why did we abandon that? Now, admittedly, I still don't understand it. But is there, what's the key thing that I'm missing on that one?

• 48:42Speaker 01

  Over there, I think it was basically you weren't drawing a loan out, but you were still putting money in a vault and a liquidity pool at certain parameters. That I am fine with the prices going up and down in this range. But if the range, kind of like, if the volatility is more than the range, then some of your BTC will get converted to USD at the prices that you wouldn't have liked them to be converted.

• 49:16Tom Bilyeu?

  Because it forced me to sell at a price where, hey, if I could have held on to it and the price went back up, then I would be in much better shape.

• 49:25Speaker 01

  Yeah.

• 49:25Tom Bilyeu?

  Okay, I don't understand what would prompt somebody to do that. I guess other than they're hoping that it pays out at a premium and that the price doesn't go down. But every time I hear liquidation, I'm just like, why do people take out debt? Like, this is crazy. So, but that's admittedly me just not understanding. Like, I do not understand DeFi even now. While I can wrap my head around the part that you're explaining about, I used collateral, I took out a loan, they're going to get that paid back one way or the other. And as my collateral drops to that value, they're going to snatch it just to make sure. That part I totally get. But the, so when I originally heard you describe that marketplace that will ultimately be born and efficiencies will be found. You've got these coders and people being incredibly creative with how you do this.

• 50:08Tom Bilyeu?

  What my mind can understand is like microloans, right? So I remember I learned about microloans maybe five or six years ago for the first time. I was like, whoa, that's dope. Like, you loan a hundred dollars to somebody, you know, in a third world country and they can use that. Like, for them, that's a lot of money. They can start a business, whatever, they can get back up off their feet. They could pay you back whatever is a reasonable amount. I just thought, man, that's a cool way to do something amazing and make money off it. Word, I love that. And so when I heard you describe, like, this will be sort of like the Uber of lenders and borrowers, where both lenders and borrowers will get a rating. And so you can decide to do something with somebody. And somebody who's paid back, you know, a hundred or a thousand Bitcoins, like, oh my God, like, that would be insane.

• 50:51Tom Bilyeu?

  Like that person's obviously doing something right. You could be more comfortable engaging with them. And then I just thought, oh my God, like, what are all the creative things that people could do along those lines? But getting into the more extreme APY, we go back to the fundamental problem of, and I'll speak for myself. I don't understand, like, I think I understand how Wall Street works. I don't understand puts, calls, stuff like that, no matter how many times I try to wrap my head around it. It just seems like gambling. And if we can all agree that it's gambling, then cool, I understand Wall Street. The moment somebody tries to tell me that it's not gambling to say, hey, I'm going to guarantee I'll buy that stock should it fall to this price. But if it doesn't fall to that price, you're going to pay me a premium.

• 51:34Tom Bilyeu?

  You're going to pay me a premium for having guaranteed you that I would buy it if it did fall to that price. Which, that is how it works, right? Like, I don't remember if that's a put or a call, but like, that's what you're doing. You're, you're guaranteeing to buy or sell something at a certain price.

• 51:51Speaker 01

  Right. So I think, I think the, the difference I want to point out is, Wall Street still remains a closed system.

• 52:00Tom Bilyeu?

  Black box.

• 52:00Speaker 01

  Black box. You don't know what's going on in there.

• 52:03Tom Bilyeu?

  You're all for all of that stuff. You just want it all to be completely transparent.

• 52:07Speaker 01

  Those are, those are, the way I view the world is, those are different types of financial instruments. Just like you can't stop, you know, a developer from writing a certain type of code. You can't stop like financial engineers to coming up with new types of financial products. They are going to do it, right? And if anything.

• 52:25Tom Bilyeu?

  You can't stop them.

• 52:26Speaker 01

  I mean, I mean, with, with regulation, sure, but it like it, that's, that's another thing with, with the, uh, the crypto and Bitcoin world. Because it's global, you don't know which countries regulations are, are applying, right? Like, sure, maybe you can geofence a product in the US. That doesn't stop people from who are non-US from using that product, right? So it's a little bit like these people are going to build these financial instruments. It's already happening. This market is like very transparent and a lot of really intelligent people are coming in and experimenting together in a very open way uh to build new types of financial markets. And I think that's that's that that is something I can support like that is that to me is way better than Wall Street, right?

• 53:11Speaker 01

  Because uh it is it's a little bit like it's a the Wall Street to me feels like an insider's game. Uh if they do something wrong, sometimes they get pilled out like in in in DeFi. Who's gonna bail you out, right? Like it's it's a little bit like when markets crash in DeFi. It it's a very orderly crash at times. You know that when when this uh Walt is going to get liquidated, this will happen. And then, you know, if this happens, then that code path is gonna get triggered and and and this thing is gonna happen.

• 53:40Tom Bilyeu?

  It's an orderly crash, just that everybody knows what everybody should end up with. It was all entirely predictable.

• 53:45Speaker 01

  It was all programmed and you could have run a simulation through it and you could have you could have and the simulation would give you the same result, right? And that's that's a lot that's a lot more transparent system. And over time, that system is going to become much more resilient because there's so much open experimentation happening in.

• 54:03Tom Bilyeu?

  When you say resilient, resilient against what?

• 54:05Speaker 01

  Like resilient resilient against like, you know, mistakes that could have been avoided. Like uh if, you know, I let's take a simple example that people learn through different modeling and experimentation and just like messing around that, oh, you should always have like one hundred and fifty percent collateral and not less than that. Because, you know, people learn because that system just had a lot more information available to average, normal people around the world, like anyone can can participate in in this system. Anyone can basically start learning, like you don't have to be in the US. You don't have to work on Wall Street. You don't you all you needed an internet connection and the intellectual curiosity

• 54:47Speaker 01

  to come in and start learning about these things and contributing back to these protocols, right? And and some of. The APY stuff like usually I know it turns off a lot of people and there are good reasons for why, you know, alarm bells go off and you hear like an insanely high APY. Typically in DeFi at least is people who are trying to give incentives to users to come and use their product. By giving them insane amount of tokens that they have created for that protocol. Right. And obviously like you can see problems like if you know, they just have too much too high of an APY. You're flooding the market and then maybe the value of that token will start going down.

• 55:29Tom Bilyeu?

  Okay, so the black box idea is really important to all of this. Let people see what's going on. Do you at all worry about? So remember this is for me, this is within the context of man come and learn about this stuff. I think this is going to change everything, but in terms of thinking through potential things for people to be thoughtful about.

• 55:52Tom Bilyeu?

  In any system like this where it gets open to everybody, somebody's going to be better than other people. And it feels like we could really quickly get to a winner take all scenario. Do you worry about that? Like one of the things that I'm hoping web three helps combat is the just huge disparity between the haves and have nots. And my hope is that ownership becoming so widely diversified that owning an NFT versus it being a financial instrument, but owning it like it's a collectible with utility, whatever. But that because you own it and it has utility that ultimately at some point down the road,

• 56:34Tom Bilyeu?

  you can get some of that value back, more of that value back, whatever, but you own it. So it's not controlled by the company. That's really interesting to me. But getting into like DeFi wars where like AI ratchet is up and people get like insanely good at this. Is there a fear of that or because it's so transparent? That it's like, oh, I see what you're doing. Word, I'm gonna do the same.

• 56:59Speaker 01

  Yeah, I think it's a very competitive market. So in terms of like winner take all type of scenarios that we have seen emerge in web two. I think those systems tend to kind of like, you know, move towards monopolies or oligopolies. Whereas if a marketplace is like very open and it's very easy for new entrants to come in and actually compete. I think you you have a lot more competition and a lot more choices for the users and which is which is something that we are seeing. Like in in certain cases, like I think a classic example would be if Twitter was open, right? Any developer could come and use the data, build a Twitter like front end client application.

• 57:43Speaker 01

  You'll see like hundreds of them, right? And then they're competing on quality. They're not, it's not like Twitter is saying you can only use this single application. Right? It's it's it's kind of like that in in DeFi and other marketplaces. Anyone can start a new stablecoin. Anyone can start kind of like a new lending protocol. And then it's really about like your execution, how good kind of like your your particular implementation of that thing was. And people can even, you know, copy paste some of the code and they can try to like tweak it. And so it's a very competitive, open system. And usually I'm a big believer in like open marketplaces. Let people compete. And I think consumers typically win when when you have those type of dynamics.

• 58:27Tom Bilyeu?

  Okay, so transparent, we're attracting massive talent. People are coming in and experimenting. We can all see what everybody else is doing. We can fork it, we can tweak it, try it ourselves. And there will hopefully be some sort of natural balance that comes out of that. Where do you think the future is in terms of regulation? Like, how do we get to that moment safely? I know you guys have been, and we're going to get into what you're doing in your whole thesis around Bitcoin, which I find utterly fascinating. But what's the right way, like if I were to grant you regulatory powers? What's the right way to approach this?

• 59:05Speaker 01

  I think it's abundantly clear now to me, especially in the last couple of years, that the rate at which this industry is just evolving, regulators just can't even keep up.

• 59:17Tom Bilyeu?

  They're gonna try.

• 59:18Speaker 01

  They're gonna try, but it's like, I think there was some infographic that over the last three months or something like that, ninety nine zero, new decentralized exchanges popped up. Right? So even if you ten X or hundred X the bandwidth of the existing regulators, you still wouldn't be able to like go after those projects. Right? So at some point, you need to come up with a different strategy. And the best proposal that I've seen is by Hester Pierce, which is around these effectively safe harbors. That anyone who starts a crypto project by default has a three-year safe harbor. Right? So by the end of the three years,

• 1:00:00Speaker 01

  they have to effectively demonstrate that this protocol is decentralized enough. It's not a company where the company kind of like controls it. It's a decentralized thing that they don't control. And just like Bitcoin is truly decentralized, right? Like you can't go to a company and be like, hey, modify Bitcoin. No one can do it. Right? So then at least you get out of the securities regulations. Because securities regulations apply to things that are securities, which are typically things that, you know, it's like company stock is clearly a security. Right? Because that company controls the value of what the what the stock price would be because of their actions. Right? So I think things like that where there can be something like a safe harbor,

• 1:00:43Speaker 01

  which was what was, which is exactly the thing that was done for the early internet. There was like by default a safe harbor. If you wanted to start an internet business, it's not like you first had to get some sort of a license before you, you know, started your web app. Anyone could just do it. And then regulations came in much, much later at really late-stage companies who by then, by that time, had the resources to actually be able to afford like a lot of lawyers and compliance officers and this and that. But not like when you are two people sitting in a garage and you're just tinkering with things.

• 1:01:19Tom Bilyeu?

  Okay, so now, looking with all of that context, looking at Bitcoin, you have a really interesting take. So, what I found interesting about it is, and I think we have to get into maximalists and that whole thing. So they seem to be having an immune response to the very idea of what Ethereum did. So Bitcoin was like, we're sound money, you can't change it. Yay, that's the very thing that makes it magical. Don't write smart contracts on the top of it. Ethereum was like, oh, word? We're gonna do then everything that you're refusing to do. And a whole world sprung up around it. And I've heard you say, and I think this is really interesting,

• 1:02:01Tom Bilyeu?

  that Bitcoin is knocking it out of the park from a money perspective, but they're eschewing, like completely ignoring and leaving on the table, all of the other things.

• 1:02:13Tom Bilyeu?

  Walk us through your approach to that, how Stacks is a potential answer, and why you really want people in the Bitcoin community to start developing on top of it?

• 1:02:24Speaker 01

  Yep. So I think, first of all, like Stacks, for people who don't know, think of that as a programming layer for Bitcoin. Bitcoin doesn't have smart contracts, right? Bitcoin is very simple. Like, it's very simple at the base layer. It's very durable. So what Bitcoin is trying to do is that it's just money, and it is going to be money like 30 years from now, or 50 years from now. So people can, after a while, they can, Bitcoin will establish itself as like, hey, this thing doesn't change. It doesn't go away. It's rock solid. You know, it does one thing and it does that thing really, really well. Like, that's what Bitcoin is doing, and I think it's winning at that game, right?

• 1:03:04Speaker 01

  And, but then people wanna experiment, right? Their smart contracts are, it's a little bit like, the confusion, I feel, comes from the fact that both this idea of sound money and the idea of smart contracts started from blockchains. NFTs also start from blockchains, right? But people don't confuse NFTs with sound money. Like, they feel different enough, right? Um. Just because like they're both coming from uh the same technology doesn't mean they're the same thing, right? Uh. Smart contracts have very different requirements and from a money layer, right? So this is something, uh, let me, let me roll back a little bit, right?

• 1:03:46Speaker 01

  So when I look at the landscape of different projects and you know how web three is different from web two and decide and I need to decide like where should I spend my time and energy, right? So it's a, it's a very big decision because you could be wrong, right? Like imagine that you were early in the internet and you thought that AOL is going to be the internet, right? And you spent a ton of time and energy and money and resources trying to build a business on AOL and then AOL disappeared, right? Versus something else took off, right? Uh. So I think that's a very, very important, like, you know, critical question. And so I've thought a lot about it and my reasoning is

• 1:04:26Speaker 01

  that the thing that is different about these blockchains from the previous systems, the number one thing that's different is decentralization, right? If something is not truly decentralized, right? You're losing the, the best property uh that these, these systems bring. And Bitcoin by far is the most decentralized blockchain out there, right? And, and, and same, same thing with, um, you know, ownership, like when you, when you were talking about NFTs. What is ownership? Ownership is linking this back to the, the uh conversation we were having earlier. Like most people don't think about, you know, how do I own my house?

• 1:05:10Speaker 01

  Because the laws, at least in Western countries, seem to work. But if you were in a much more kind of like hostile type of environment, you would be worried about, do I really own my house or not, right? So for NFTs, you really don't want to be in a situation where you had a lot of valuable NFTs. Five years passed and the system on which those NFTs were defined basically just disappeared or became in, became unstable.

• 1:05:37Tom Bilyeu?

  This, this is so random and I really do run the risk of derailing you, but something just clicked in my head. So I've heard you talk about being from Pakistan before, you mentioned it earlier as well, that. There something psychological breaks down when you're not sure if you own that thing. And as you were talking just now, I was like, oh, that's really interesting because if I wasn't sure if I owned my house, I wouldn't want to put money into it. Right. I also wouldn't want to put physical energy into it, so I wouldn't spend the time doing it up. If I don't spend the time doing it up, then it doesn't increase in value. If I don't own something that's increasing in value, I can't pass it on to the next generation. Even I don't have to lean on it. And so you've taken this, what here in the West, we think of as this incredibly smart place to invest your time, energy, emotion,

• 1:06:19Tom Bilyeu?

  into a house, into like, it's the thing I'm gonna leave to my kids, whatever. And so even if all you do is hold it and improve it because you love it and you want to see it, you know, it's like a reflection of this is mine, whatever, that all of that energy, you know, so if Bitcoin is, is literal energy stored in a computer system manifested as money, a house is the energy of how well you upkeep it. If you're afraid that, ah, I'm not really sure that I own this, or if you outright don't own it, you wouldn't put that kind of investment into it. Now, if I take that same concept to the digital world or to money,

• 1:07:00Tom Bilyeu?

  if money is deflating, it creates, and this isn't me guessing, this is true, when money is being inflated away into madness, people don't save, they spend. And so you have artificially altered human behavior by what you do on the back end to money. Now, people don't even understand it, but the incentives arise to be like, yo, I'm better off having this in frozen food because, you know, inflation is happening so rapidly, this is how I'm talking in a hyper inflationary environment. But I'm better off having this in frozen food because at least that might last for a year, 18 months, where my money could be worth half in that amount of time. So you've created this bizarre incentive for people to, in that case, load up on food.

• 1:07:43Tom Bilyeu?

  So as we think through why this is so revolutionary and why there's something, and here's the great news for anybody in my audience, I'm just dumb enough to really have to grapple with this shit. And so it like clumbles around in the back of my mind is like, there's something here, there's something big, I can feel it. And then I'll get a piece of information like what you just said, which will make a piece click into place, which is what this is allowing to happen at a financial level is you're giving me the incentive to learn this, to put energy into it. Going back to this idea of really smart people coming in and playing with these financial instruments by not having it be a black box, by opening up to people that are already sort of mathematically minded because of that's what draws them to

• 1:08:25Tom Bilyeu?

  the code, you're getting the best and the brightest to experiment in something where the the user of that is now incentivized to learn about it, to put that time and energy because they can own it. Wow, that's really interesting. And I think is going to echo really hard because I have never paid attention to financial stuff because it just doesn't seem worth my time and energy. Maybe because it's black box, maybe because it's just too weird for me. But I find myself drawn to Bitcoin for all the reasons that you were just laying out. So sorry, I know I derailed this, but that feels meaningful in terms of how there's this invisible expenditure of energy that's people are saying, but it had never clicked for me until now.

• 1:09:10Speaker 01

  No, I think I think you're you're spot on, right? So that's that's the thing. And then if you so if Bitcoin is building kind of like this trust in the minds of people that this thing is durable, this thing is going to be around for decades, for centuries, I think that is valuable, right? Because this at the end of the day, it's going to be humans who are going to decide what Currency or cryptocurrency becomes the reserve currency of the planet. Right. And Bitcoin seems to have that network effects that more and more people day after day, like now even countries or even, you know, public companies are comfortable putting Bitcoin on their balance sheet.

• 1:09:52Speaker 01

  And I do think it's important that it's durable, it's simple, it's not going to change. And now you compare that to something like Ethereum or other blockchains, which are effectively their smart contract platforms. They're not, Ethereum is trying to be money now, like in the last two years. It didn't start off as trying to be money and those things have an inherent conflict. And I'm not the only person saying that, right? Like Vitalik, who started Ethereum, like there, there's a recent blog post he had, like maybe it came out like four, five weeks ago, where he was looking back at the past five years of Ethereum, what type of design decisions they made, what went well, what didn't. And then the conclusion was that Ethereum needs to decide,

• 1:10:35Speaker 01

  does it want to be more simple like Bitcoin? Or does it want to be more complex and experimental? Which is, which is how smart contracts need to be, right? Because so many people need to come and innovate and change things. And Ethereum is both things in the same box, in the same layer.

• 1:10:53Speaker 01

  The only thing people need to understand about Stacks is that it's simply a two-layer solution on top of Bitcoin. So there's no tension between a money layer and a smart contract layer, right? Bitcoin is the money layer, Stacks is the smart contract layer.

• 1:11:10Tom Bilyeu?

  What creates the tension in Ethereum?

• 1:11:13Speaker 01

  Because at the same layer, what you're saying is to be better money, Ethereum needs to simplify, have less features, less complexity, right? Don't upgrade the protocol, like be stable like Bitcoin.

• 1:11:29Tom Bilyeu?

  Because otherwise there's too many question marks. Am I going to own this? Is it going to be the same as it is today? I stop investing in that house.

• 1:11:36Speaker 01

  Yeah, let's say I'm, I'm keeping my money as a savings account in Bitcoin. And I know Bitcoin is not going to change. I'm keeping my money as a savings account in Ethereum. And there's like, I don't know if they're going to change the consensus algorithm. What's going to happen to my money when when they do that, right? Like, it's it's it just adds unpredictability. And that's not a good property for a money layer. A money layer network, you know, I think we can agree it needs to be simple, durable. It's going to just do the thing that it's designed to do.

• 1:12:07Tom Bilyeu?

  So you with Stacks can build a ton of complexity on top of Bitcoin.

• 1:12:10Speaker 01

  On top of Bitcoin.

• 1:12:11Tom Bilyeu?

  But it doesn't alter any of the fundamental properties that make it attractive as sound money.

• 1:12:15Speaker 01

  Exactly. So if you are interested in Bitcoin only as a money layer, you can just ignore Stacks. Like, it doesn't exist for you. You don't care. You're only using Bitcoin. If you care about smart contracts, then in addition to running the Bitcoin software, you run the Stack software as well. And Stacks does very interesting things with Bitcoin because the one of the reasons why it's great to have smart contracts around around crypto assets is that people can start programming things more easily, right? So you can actually Ethereum, like around twenty two to twenty five percent of Ethereum is productive, meaning it's deployed into DeFi, into other types of assets. People can earn yields on it. It's not that easy to do that with Bitcoin. This is what Stacks is changing. Bitcoin is a trillion dollars of capital.

• 1:13:00Speaker 01

  Like, imagine it's like one of the biggest opportunities where I think the only thing missing on the Bitcoin side is better developer tooling, better programming layers like Stacks. But that's solved, this is engineering, right? Like, we have solved that problem. But if you are an engineer or entrepreneur or developer, someone says, like, here is a trillion dollars of of capital, go and build things on top of it. And by the way, not a lot of people are doing that today, like this year, because relatively more people are trying to build on the newer, you know, blockchains like Solana, Avalanche, Ethereum, right? Because because most people are, for some reason, it's Bitcoin is in the blind spot. That might not be the case next year or the year after, right?

• 1:13:45Speaker 01

  But at least right now.

• 1:13:46Tom Bilyeu?

  How did it end up in the blind spot? I've heard you talk about this. I think it's important.

• 1:13:49Speaker 01

  I think the reason is that because for so many years Bitcoin has been fighting this this thing, and you you said you made a comment about Maxi's before, a lot of the community members, they Tend to guard Bitcoin. They they basically say, don't make any changes to Bitcoin. So a developer comes in, says that, you know what? I want to build this interesting thing. It's going to require this particular change on Bitcoin. The answer is almost always no, right? They go to Ethereum or they go to a newer blockchain and they they say, hey, I want to build this thing is going to require like this change. People are very friendly. They're very welcoming there because they're not building a money layer. I think the fundamental aspect is like very, very different.

• 1:14:33Speaker 01

  So that's why a lot of developers have been getting attracted to these ecosystems. And then comes along stacks. It only launched like last year and our community is just as friendly. A lot of developers, somebody comes in and says, I want to build something that's going to require like this particular upgrade. Stacks can upgrade independent of Bitcoin. Right? So no zero changes required at the at the Bitcoin layer. And all of the changes, new features for smart contracts for developers, anything they need. Let's say someone comes in and says like, I want to create an N F D standard. Sure, go ahead, do it at the stacks layer and and and you you kind of leave the money layer alone. So I think that's the base idea.

• 1:15:15Speaker 01

  It's it's it's literally that simple that it instead of having both those things, money and smart contracts in the same layer, just have it as two layers, which is a very tried and tested thing in the internet architecture, which is my background. I think that's why some of the design kind of like inspiration comes from, that in the internet, the lower layers of the internet are very, very simple. Like TCP IP just does one thing, right? Then people built a layer of complexity on top of it, right? People built the the World Wide Web. They started building other layers of complexity on top. So Bitcoin becomes, you know, completely.

• 1:15:55Speaker 01

  Uh ubiquitous around the world, like it literally becomes the money there. Our bet is there would be a lot of value created on top of Bitcoin. As and and that's where layers like like stacks come in.

• 1:16:08Tom Bilyeu?

  And do you see, so the narrative of Bitcoin as digital gold is so clean and easy to understand. But because inherent in that analogy is that I don't pay for things in gold. And I actually feel weird about like I've completely gotten my head around spending ETH. Even though you could buy something one day, that's, you know, a pizza. And then the next day, that's like, you just paid $7,000 for that pizza.

• 1:16:38Speaker 01

  Yeah.

• 1:16:38Tom Bilyeu?

  Uh, which there's the famous Bitcoin story, like 180 million dollars or whatever for a pizza. Um. Do you see people eventually adopting Bitcoin as money? Even though it's like, oh, God, like I'm holding it, it's going up in value. Like, do you see that only happening when it sort of stops being a high volatility asset?

• 1:17:01Speaker 01

  No, that's, that's a great question, right? So this is something that, you know, maybe four years ago, if you would have asked me the question. Uh, I would have said, hey, maybe it could be a payments mechanism as well. It's crystal clear to me and a lot of other Bitcoiners now as well. That Bitcoin is um a store of value, right? You're not going to buy coffee with Bitcoin. Um, and and there are things like Lightning, again, it's a layer, it's a payments layer. It's a fast payments layer. Uh, where you can actually spend small amounts of Bitcoin with very small fees, very, very efficiently. And maybe, maybe you don't even want to do that, right? The where, where I think this is heading is right now, we're at the stage of Bitcoin as digital gold. Basically, it's a savings account, right?

• 1:17:45Speaker 01

  You're putting money in there, you know that everything, you know, um, there's inflation happening. Other assets are actually going down in value and I'm just storing wealth in Bitcoin. That's the use case today.

• 1:17:58Speaker 01

  The next step is going to be when Bitcoin becomes truly productive. And hopefully Stacks enables that. Meaning that most people, if they have a Bitcoin wallet, there are two things you can do with it. One, transfer, like you move Bitcoin from one place to another. Two, nothing, you just hold it, right? Those are literally the only operations supported in a Bitcoin wallet. Through the work that we are doing Stacks, now in a Bitcoin wallet, you would be able to swap. Let's say you want to go from BTC to a stablecoin. You want to purchase a Bitcoin NFT, like you could just do it from a Bitcoin wallet. So we are making Bitcoin productive by adding a programming layer on top of it.

• 1:18:43Speaker 01

  So that's, I think, step two of the evolution of Bitcoin, where it will go from, hey, I can hold Bitcoin, but I could also get a 5% yield on my Bitcoin in a decentralized way if I want to. So it becomes productive capital. And then the final step is going to be, which, you know, most people are not viewing Bitcoin as that right now, is that it becomes a settlement layer for Web3, right? Where the idea is that, let's say you're building a decentralized application on a smaller blockchain. Right now, it's harder to build that application on Bitcoin. But let's say it becomes easier in the next year or two. Would you, let's take Twitter as an example. Let's, let's compare if Twitter was built on Solana versus Twitter was built on Bitcoin, right?

• 1:19:28Speaker 01

  Meaning that it settles information on Bitcoin. So if someone needs to take away your user, Twitter username, they need to attack the Bitcoin network versus they need to attack, I don't want to pick on Solana, I'm friends with those people, but you want to attack the Solana network. I think even today, in this year, people can feel like, yeah, attacking Bitcoin is going to be a lot harder. Versus attacking this this other chain where you know who the company behind it is. You know how this blockchain kind of like goes offline, comes back online, right? So it's like it's like intuitive, people already understand that. So once that happens, when these decentralized applications are settling information in the Bitcoin blockchain, the number one property is decentralization. You don't want your NFTs to disappear.

• 1:20:12Speaker 01

  Like if you want your NFTs to live for decades, do you want the ownership to be defined in Bitcoin? Or do you want it to be defined in a new blockchain that started last year and might disappear five years from now? Right? So I think that's the core difference and that's going to be the third stage where people realize that Web three is actually more valuable if it settles on Bitcoin and everyone just agrees that hey Bitcoin Bitcoin is the best settlement layer. And Bitcoin is designed to be a settlement layer. Like the transactions on the main Bitcoin chain in the future, they're going to be very, very expensive. But people would have the right incentives to do to make those those transactions.

• 1:20:47Tom Bilyeu?

  So when you look forward, is this a multi-chain world? Is this a Bitcoin eats everything world? How do you see it?

• 1:20:57Speaker 01

  I think that in the short term, short term, meaning the next five years, we're likely going to see more chains, right? So we are we're basically right now experimenting and we are we're growing and we are checking what's possible, right? So in the next five years, I'm fairly confident that we will see more and more chains. We will see bridges between these chains. We will see tons of experimentation. And I don't know when consolidation will start, but I do think at some point we'll start seeing consolidation. My best guess right now is it's not going to be like there's just one chain, right?

• 1:21:32Tom Bilyeu?

  When you say consolidation, do you mean that they're gonna collapse and go away because they didn't function? Or they buy each other up? What do you mean?

• 1:21:39Speaker 01

  I I I think like it could be that the blockchains die very hard, right? So one of the first blockchains I experimented with, it was called Namecoin, right? This is 2013 or so. Namecoin Satoshi was involved with Namecoin. This is how old it is. It started in 2011. That project like kind of like people start working on it. People start using it, kind of like chug it along for years and years and years. I think now it maybe still has a million or two million market cap, right? So blockchains die very, very, very, over a very long time. They survive for a long time, right? So I don't think, but but. Less people would start, people would move over.

• 1:22:22Speaker 01

  Let's say if a lot of, a lot of traffic is moving over to a blockchain. Like over a couple of years, it will become kind of like apparent that this thing is growing and this other thing is not growing. Right. That's what I mean by consolidation, that it will become clear. Right now, it's an open market, right? People have their thesis that, hey, is it going to be Avalanche? Is it going to be Solana? Is it going, and everyone's excited and everyone's kind of like working towards it. I think five years from now, like some winners would have emerged in, in, in, in the ecosystem. And it might not be that there's one clear winner. It might be that some chains specialize, like maybe some chain becomes really good at gaming or some chain becomes really good at NFTs. I, I, I don't, honestly, I don't know.

• 1:23:05Speaker 01

  But my best guess is in any of those permutations, I just cannot come up with a permutation where Bitcoin is not playing a very large role. And I think that's my thesis. Like I might not, not know the rest of this stuff, but my confidence level that Bitcoin is going to be around and it will be playing a very important role is actually very, very high.

• 1:23:27Tom Bilyeu?

  And I'm assuming that that is your call to arms for people to come and work on Bitcoin. That it's the one that like, probably right now, I would say has the best PR. It's the one that people know the most about. And if we saw the same kind of development activity at that layer, that abstracted layer, like you're doing with stacks, that people would naturally gravitate towards that for its stability. They already understand it. They're already there. The only thing that I'm still struggling with a little bit is I would have to get my head around buying a coffee with Bitcoin. Even if I'm not buying coffee, I'm buying NFTs or whatever.

• 1:24:09Speaker 01

  Yeah.

• 1:24:09Tom Bilyeu?

  Because one of the things that drives me crazy about NFTs on Ethereum is on layer one, to justify, I mean, gas right now, because we're in a bit of a lull, has gotten way more reasonable and people have gotten way better at writing the smart contracts. But there for a while, it was like you were going to spend a hundred and fifty dollars, two hundred dollars on gas or more. And so you're not going to sell a twenty dollar item. It wouldn't make sense. So everything became expensive and high end.

• 1:24:38Tom Bilyeu?

  And I was just like, wow, I don't think this goes anywhere until you can bring the prices down and you can make this just de rigueur, to be honest. Like, I get how special everything feels right now. It's on the blockchain. That makes it exotic and amazing. And my thing is, yes, but I would love to live in a world where you, not everything has to be an expensive purchase, right? And so as somebody who I can afford some of the finer things in life, and yet, when my wife asks me what I want for my birthday, the answer is a $6 manga, right? So it's like, I just love it. And so going on to layer two becomes very interesting, but I've already crossed the chasm of ethos to be spent.

• 1:25:24Tom Bilyeu?

  And I worry that if people don't cross that bridge with Bitcoin, I'm so paranoid about spending Bitcoin on something. And then Bitcoin, you know, quintuples in price over the next 10 years. And I'm like, I'm an idiot. I should have just been saving it.

• 1:25:41Speaker 01

  I think, I think there is a very interesting design space of stable coins that are actually backed by Bitcoin. And we will, we'll, we'll come back to almost like Bitcoin is gold. And just like we had fiat that was actually gold backed. We will get stable coins that are backed by Bitcoin. In some ways, it's already happening. Like, if you look at Terra. Terra is an algorithms-based stablecoin. It doesn't have collateral. They started buying Bitcoin reserves because they realized that Bitcoin is the best form of money. Right? And so Terra Protocol has bought like three, $4 billion of Bitcoin just in the last six months or so. And through the work that we are doing with, with Stacks, because we bring smart contracts to Bitcoin.

• 1:26:25Speaker 01

  Some new entrepreneur could actually start a stablecoin that is literally backed by Bitcoin directly using Stacks, right? What Terra is doing is manual, like they're going off on the market. They have a multi-asset. They're kind of like buying Bitcoin and putting it in their reserve. So this is, this is what I mean by like permissionless innovation. And interestingly, let me, let me come back to this idea of, you know, one chain versus other chains and so on. So if you look at, you know, some of the criticism for the approach of like stacks as a programming layer with Bitcoin. People would criticize, oh, there aren't as many developers on it as compared to Ethereum. Or there isn't as much liquidity on it as compared to Ethereum, right?

• 1:27:11Speaker 01

  Look at, like, we're talking about a game plan for decades to come. And these things are so short-lived, like imagine Solana like 12 months ago. Solana has less, had less liquidity, like Solana had less developers. It's, it's a, just this point in time that, oh, USDC is not launched on stacks yet. They might delay it by like three months, six months, nine months, like these are months, right? Like you're, you're talking about what is a thing that is going to survive over decades? And yes, there will be more liquidity. Yes, more developers are already coming, right? Uh, it's a little bit like, there's also an interesting dynamic here.

• 1:27:54Speaker 01

  Where as crypto industry becomes bigger and we start reaching the mainstream. When you're talking about mainstream gamers. Would they want to earn Ethereum or Avalanche or something else that they've never heard about? Or would they want to just get, get paid in Bitcoin, right? We already have evidence, like there are gaming companies that are coming, coming to the stacks ecosystem. They're like, people want to just get paid in Bitcoin. They've heard about Bitcoin. Maybe their grandmother understands what, what, or have heard about like what Bitcoin is. They have never heard about any of these other stuff that the crypto native people are, understand, right? So as the industry becomes more mainstream, I think it's actually more of an argument.

• 1:28:36Speaker 01

  For Bitcoin winning and the network effects of Bitcoin actually getting stronger, because it's the first to reach the mass market. It's the first thing that people still learn about when they hear about crypto currencies. Right? So you can solve the developer tooling challenge. You can solve the liquidity stuff like those are developer tooling is just engineering, right? Liquidity is just a bunch of companies bringing their assets to a chain. Those there's no rocket science behind that. But the with the dynamics around how Bitcoin started, how it became what it is, like, I don't think you can reproduce that. I don't think you can compete against it. So that's the unique thing. And I think your focus should be on like, what's unique?

• 1:29:18Speaker 01

  And then you ride the wave with with the kind of like, you know, once in a lifetime event that's happening, which is actually Bitcoin, and and and try to kind of like fill in the rest of the gaps. That's that's kind of like the thesis that that we have.

• 1:29:31Tom Bilyeu?

  All right, so playing that out in the real world. You mentioned earlier countries putting this on their in their treasury. City coins, city tokens, whatever they're called. That's a really interesting phenomenon. Speaking of Bitcoin being the one that people lean on, was Stacks involved in in what's going on with city coins?

• 1:29:52Speaker 01

  Yes, city coins were launched using Stacks. So they're very, very interesting idea. This guy Patrick, who's actually going to pick me up after this podcast. So maybe maybe I'll I'll introduce you. And he, Balaji, a bunch of other people like they've been brainstorming about this idea of how do you onboard cities to Web three? Right? Like, at some point, cities did figure out like the traditional internet, right? They have web services where you can log into DMV and like, you know, do something online. And it's like, what is the role of a city in a Web three world? Right? Like, that's kind of like the intellectually curious type of a thinking line. And from there, I think this idea is is something like,

• 1:30:37Speaker 01

  what if cities are incentivized to build up crypto treasuries? Right? There could be donations that, you know, some people just want to support. Let's say Miami. Some people want to support the city and they're just willing to give flat out donations. Or there is some sort of a city specific.

• 1:30:57Speaker 01

  Token, whereas part of the mining process, like part of, part of the, uh, the rewards are automatically going to the city treasury. Right. And once the city has a treasury, um, it can utilize it in a way that is, let's say specifically for Miami, because you know, Mayor Shorres has been like very uh, supportive and, and forward thinking about, about these concepts. Let's say Mayor Shorres wants to attract more entrepreneurs or more talent or companies to Miami. Now they have a crypto treasury that maybe they can, you know, put it in a, um, put the treasury to work by, uh, borrowing stable coins against it and giving out loans to entrepreneurs who wanna move to this, to the city.

• 1:31:42Speaker 01

  I'm just like, you know, throwing ideas out there. But once, once they become like comfortable with, with crypto, they onboard the city to crypto. Uh, a lot of like interesting possibilities start from there. And, and the wildest idea is that if every city ends up having its own token, so Miami has, you know, Miami coin.

• 1:32:02Speaker 01

  People who just wanna be involved with the governance process of the treasury could decide to participate. You might not even be living in Miami, but let's say you grew up there and you wanna have a voice in how that treasury is being used by, by the local government. You can have your share of, of, of the tokens and you can participate in the governance process, which might actually be a very interesting way to actually incentivize people or just make it easy for people to actually interact more with their local city government.

• 1:32:32Tom Bilyeu?

  It's a very interesting way to vote on who you think is doing things well.

• 1:32:37Speaker 01

  Yeah. And, and then the market dynamics could also be interesting. Let's say, you know, there is a San Francisco, um, equivalent coin. And San Francisco local government makes some horrible local decisions and the price starts tanking because people are shorting it, right?

• 1:32:53Tom Bilyeu?

  This is all fictitious.

• 1:32:54Speaker 01

  This is all fictitious, right? But it could happen. And I think it's very interesting where, again, the same concept, like, you know, going back to how Wall Street is a black box and DeFi is more transparent. Uh, if a city is holding money as a crypto treasury, it's very transparent. It's very transparent how they're involving the citizens or not citizens or the holders of the tokens in the governance process. Like, are they actually listening to people? Like, how is voting being done? So suddenly you flip everything open and and local city governments, which is again, kind of like a black box. Nobody really knows what they do, how they function. It becomes both interesting to your your younger generation who are now sitting in front of a laptop.

• 1:33:39Speaker 01

  They already have a crypto wallet and they're just intrigued that, you know what? Mayor Suarez is actually listening to me and I wanna I wanna give him my my feedback and and I'm gonna attach a proposal and let's see, maybe the proposal will get accepted. So I think those are like very interesting, obviously very early stage ideas, but this general space, I think, has has a lot of potential.

• 1:34:02Tom Bilyeu?

  Dude, I agree so aggressively. Where can people follow along with you and learn more about what you're doing, how you think about this space? It's, I think, very useful.

• 1:34:12Speaker 01

  Yes, so I am on Twitter, fairly active there. It's my first name, which is at Muneeb, M U N E E B.

• 1:34:23Tom Bilyeu?

  That's the place? Amazing, man. Dude, thank you so much for coming on. This stuff is so fascinating. I learned so much researching you and talking to you. It really feels like this tectonic shift is happening right now and I am desperate to get people involved. So, boys and girls, please look into this. There is something changing so rapidly right now and if you don't learn about it now, it will pass you by. As Muneeb said, this is a once in a lifetime opportunity, but it's happening right this very minute and it all starts with getting educated. So I hope that this primer has served you all well. And speaking of things that will serve you well,

• 1:35:06Tom Bilyeu?

  if you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care.

• 1:35:11Speaker 01

  Peace.

• 1:35:12Tom Bilyeu?

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