#1022 Adam Back On How To Get Through A Bitcoin Bear Market

Adam Back is the Co-Founder In this conversation we discuss the macro environment for Bitcoin, navigating bear markets, nation-state adoption of Bitcoin, the building of Bitcoin's infrastructure, and what Adam thinks of all the chaos and collapse around the non-Bitcoin industry. ======================= Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. No extension required. Store, manage, and grow your portfolio, get NFT & multi-chain support, and more. Download the Brave privacy browser at brave.com/Pomp, and click the wallet icon to get started. ======================= Today’s episode is sponsored by Abra. Based in California and backed by top VC firms, Abra is an all-in-one simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral and earn interest with up to 14% APY on stablecoins and 8.15% APY on Bitcoin. Join nearly 2 million users by downloading Abra from the Google Play or Apple App store. If you download the app today, you will get $15 in free crypto once you fund your account. You came, you invested — now conquer. =======================

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

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Adam Back is a co-founder and CEO of Blockstream. In this conversation, we talk about Bitcoin, past bear markets, the building of infrastructure for the decentralized digital currency, how he sees nation-state adoption, the various geopolitical issues, and what he thinks about the non-Bitcoin part of the industry and all of the collapse, chaos, and uncertainty that's playing out there now. I really enjoyed this conversation with Adam, and I hope you guys enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. Today's episode is brought to you by Brave.

• 0:44Anthony Pompliano?

  Brave Wallet is the first secure crypto wallet built natively in a Web3 crypto browser. What's Web3? Web3 is freedom from big tech and Wall Street. More control and better privacy. But there's a weak point in Web3, your crypto wallet. Most wallets are browser extensions, a Web2 technology. That means the same old risks, app spoofing, phishing scams, and theft. Brave Wallet is different. Brave Wallet is the first secure wallet built natively in a Web3 crypto browser. No extension required. With Brave Wallet, you can buy, store, send, and swap assets, manage NFTs, even connect other wallets and dApps, all from the security of the best privacy browser on the market. Whether you're new to crypto or a seasoned pro, it's time to ditch those risky extensions. It's time to switch to Brave

• 1:27Anthony Pompliano?

  Wallet. Download Brave at brave.com/pomp and click the wallet icon to get started. Again, go download Brave at brave.com/pomp and click the wallet icon to get started. Today's episode is sponsored by Abra. They're based in California and they're backed by top VC firms. Abra is an all-in-one, simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest loans using your crypto as collateral, and earn interest with up to 13% APY on stablecoins and 7.15% APY on Bitcoin. You can join nearly 2 million users by downloading Abra from the Google Play or Apple App Store. If you download the app today, you will get $15 in free crypto once you find

• 2:10Anthony Pompliano?

  Your account. You came, you invested, now conquer. Abra, conquer crypto. Go check it out today.

• 2:17Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 2:40Anthony Pompliano?

  Mr. Adam, back. How are you, my friend?

• 2:43Speaker 02

  Good kids. Good to see you.

• 2:45Anthony Pompliano?

  Good to see you as well. I got a lot of questions for you, so we're going to just go rapid fire and see what's going on. Let's start with Bitcoin itself. Bitcoin's price has fallen 70% or so. It's fallen, you know, 80, 85% in past bear markets. At the same time, at the price is falling off a cliff, it seems like many of the underlying fundamentals, hash rate, lightning node capacity, lightning network, everything continues to kind of move up into the right somewhere at all time highs or somewhere near all time highs. How do you balance price movement and then the underlying fundamentals decoupling over the last couple of months in the Bitcoin ecosystem?

• 3:25Speaker 02

  Yeah, I guess it's a mix of bleed through from the wider financial system. So some people will have leverage on their stock portfolios and get in margin calls. And so you get phenomena where sometimes people sell the more readily liquid part of their portfolio first. And so sometimes that's that's affected Bitcoin. And then the, you know, the more recent development was deleveraging in the DeFi part of the space, where it's turned out sort of more.

• 4:01Speaker 02

  You know, cross correlated lending and precipitated by the lunar collapse, of course, but other people exposed to that. And then three areas, capital having issues and companies that turned out had made unsecured loans to three areas.

• 4:21Anthony Pompliano?

  When you think about whether it's Luna, Terra, UST, or many of these other kind of high leverage or altcoin focused issues that are playing out in the market right now, how intertwined is Bitcoin in that? Is Bitcoin just at the kind of whim of what goes on in the rest of the market? Or can Bitcoin actually break away, be immune, somehow separate itself?

• 4:43Speaker 02

  Well, I mean, it is, you know, it's connected in the sense that it's, you know, it's, it's the investable asset class. And so there's a lot of Bitcoin that gets used for collateral in defi platforms via wrapped Bitcoin and other kind of wrapped mechanisms. But in terms of the exposure to Bitcoin and the drawdown, actually, if you look at the Bitfinex dominance index, it jumped 20% towards Bitcoin dominance during the price adjustment. So that's to say that, you know, Bitcoin is down, but the alts as a basket are

• 5:28Speaker 02

  down a lot more. And so have a very high percentage growth. To get back to they were, they were, if they in fact, they will, I think, you know, historically, most altcoins have, you know, reached a high point against Bitcoin and then individually never recoup that position again.

• 5:44Anthony Pompliano?

  When you start to look at leverage in the market, we recently talked to Caitlin Long, and she was talking about her efforts to build kind of a different type of financial institution out in Wyoming. How do you think about Bitcoin's ability to incentivize people not to pursue what many would consider the traditional banking model, which is rehypothecation and high leverage?

• 6:09Speaker 02

  Yeah, well, I think some, you know, a number of people and funds will have learnt some hard lessons in, you know, in pull down from thirty to twenty, particularly that seems to tip some things over or trigger some things. So, you know, I mean, it it transpires and of course it was disclosed and suspected that many of the lending platforms were rehypothecating. That is to say, you know, somebody would take a Bitcoin collateralized loan. So they would put up, you know, let's say one Bitcoin and borrow half a Bitcoin worth of dollars. Assuming that the Bitcoin was having a screw, but that's not actually what was happening.

• 6:44Speaker 02

  The Bitcoins put up as collateral were either in part or fully relent to hedge funds doing high risk things of them, such as, you know, presumably the strategies that Three Arrows Capital and others were doing. And so the the sort of rehypothecation by the lending platforms in some cases, obviously don't want to paint them all with the same brush because the risk management is quite different between these firms. And some of them do no rehypothecation, like Huddle Huddle is multi-sig, it's grow, you can look at the coins not moving on chain because you have one of the keys.

• 7:21Speaker 02

  But the unsecured re-lending is sort of exposing the borrower to to risk that they probably didn't understand or expect to be taking.

• 7:31Anthony Pompliano?

  When you think about something like Bitcoin, obviously there's the investment component of it, which many people will focus on because there is that price movement. But it seems like we've already forgotten the Bitcoin Mining Council last quarter came out and reported that Bitcoin mining was becoming much, much more efficient. And we've obviously seen a lot of the ESG claims and and what I would consider obstacles being put in in the way of Bitcoin continuing to get more and more computing power to secure it. How do you think about the technology of the mining machines, the energy consumption, ESG claims? And still Bitcoin continues to get stronger and stronger, you know, kind of in the face of all of this?

• 8:14Speaker 02

  Yeah, I mean, it's essentially remarkably resilient mechanism Bitcoin mining, because it creates its own financial incentives. So, you know, the the biggest recent example of that was the, you know, the banning of Bitcoin mining in China. You know, they've talked about such things for many years. Finally, they actually did something that caused the hash rate to drop in a meaningful way. And so, you know, there are all kinds of articles in the mainstream media, and even in some of the Bitcoin related media, wondering, you know, if it was going to affect Bitcoin price, if it was going to, you know, affect ability to transact. And in fact, you know, it made very little difference, difficulty adjusted. Everybody

• 8:58Speaker 02

  who wasn't switched off in mining actually made more money, contrary to people's expectations. And within not too many months, the hash rate had surpassed where it was before the crackdown, because a lot of the miners relocated internationally. Some, you know, they drove into Russia, some got shipped internationally. And transpired some of it, yeah, found its way back online in China. So some evidently some kind of gray market mining. So so effectively Bitcoin is sort of Bitcoin mining is kind of anti fragile, right? If if there's a, you know, some mining that is pushed offline in one location due to policy or other problems, the financial incentive becomes larger. And, you know, if a lot of hash rate was taken offline,

• 9:38Speaker 02

  the incentive would become enormous. And so the free market then has ever more inventive ways to put it back online, you know, via sort of small scale mining, you know, hard to detect mining. So effectively it gets more decentralized because the mining is hidden in little pockets in different places and more geographically distributed and sort of naturally moves towards geographies that are open to business, basically.

• 10:05Anthony Pompliano?

  So when we start evaluating the current market, does this bear market feel any different than prior bear markets that you lived through?

• 10:15Speaker 02

  Well, I mean, it seems a little bit like the $200 drawdown. So there was a period where Bitcoin price was, you know, $200 for a long time, then it ran up to $1,300 and Mt. Gox failed at that point. And eventually it got down below $200 again, which took everybody by surprise. They never expected sub 200 again. So, you know, it spooked a lot of people. But the price only stayed there for a few days and, you know, never went back. So the $20,000, you know, it's 100 times larger price. But the people lived through that, you know, prior, prior spike, it, it sort of looks similar, right? You know, people are surprised that it got there and so forth.

• 10:56Speaker 02

  And another interesting metric or a thumb is this 200 week moving average. And it's, it's just a simple moving average of the last four years approximately. And so it's a trailing indicator and I like to think about it as, you know, the sort of baseline value of Bitcoin and then the price above that is just volatility. So if you, you know, if you, if you try to develop a longer outlook, longer term outlook. And look at the 200 week moving average as your kind of approximately dependable price, everything above that is short term volatility. And that just creeps up and, you know, it's never, never gone down essentially.

• 11:35Speaker 02

  It's currently around $22,000. So, you know, at this point in time, Bitcoin prices below that, which has only happened a few times in the past. Um, so we'll see, we'll see where, you know, with, with the prices Bitcoin come the end of June and see if that's under this 22,000 approximately. A 200 week level, but you know, either way, I think it's, it remains a useful kind of mechanism to, to think about things and take, take this data to emotion out of, you know, short term movement.

• 12:12Anthony Pompliano?

  Bitcoin, obviously, for years was not very concerned with the macro environment. Frankly, there was more engineers, entrepreneurs, people interested in open source software, or many of the ideals that surround Bitcoin. But over the last two to three years, there's been much more financialization of the asset, including more of the Wall Street investment crowd holding it. And it seems like over the last eight months, it has very much been correlated to stocks and other types of assets. Those new investors appear to be treating Bitcoin like a risk asset or a growth stock. Do you think that that is a new normal moving forward and something that people have to pay attention to?

• 12:56Anthony Pompliano?

  Or do you think it's inevitable that because everyone will eventually adopt Bitcoin, yes, the Wall Street crowd will, but so will the average citizen, along with every organization and every nation state?

• 13:07Speaker 02

  Yeah, I would expect adoption across the board from funds and certainly in terms of, you know, you talked about the metrics of retail adoption, country-level adoption, country policies, and the news flow is continuing quite rapidly in a positive way with different financial institutions announcing new ETFs internationally or support for access to Bitcoin, more integrations and so forth. So all the metrics seem healthy in terms of adoption. And personally, I would expect the correlation with tech stocks to break at some point.

• 13:47Speaker 02

  And I think if you look at it from a bit longer timeframe, Bitcoin has moved on quite different trajectory than tech stocks, even from the start of the COVID era, where we're quite far up, where they're heading towards losing some of the gains now. Of course, it's interesting to overlay all of this with the amount of quantitative easing, the amount of new dollars, if you take that as likely to not be undone, i.e. all the printed money will just remain and work its way into the economy and therefore into asset prices. There's more asset price inflation to come, but essentially that's been propping up. You know monetizing and flowing into other asset classes like houses and the

• 14:31Speaker 02

  stock market. So if you take the stock market and you subtract the QE, there's not much actual growth. So that's, that's part of the formula at present.

• 14:40Anthony Pompliano?

  Talk to me about Tether. Obviously, Tether is kind of the largest and also really the first mainstream stablecoin. There's a ton of people who think that there's concerns there. There's tons of people who say, hey, this is basically a nothing burger. And, you know, you all missed actually the stablecoin that ended up blowing up while you were so distracted with yelling and screaming about Tether. How do you evaluate stablecoins in general as a market and their importance, but also Tether specifically with its relationship to Bitcoin?

• 15:09Speaker 02

  Yeah, I mean, there's, there's a clear difference in types to be drawn between so-called algo stablecoins, which are, you know, based on liquid assets such as Luna, or other, other stablecoins which are based on collateralization that have a liquidation price. And so those are, you know, it's kind of a transparent trading bot with a liquidation level. And so it's a trading disadvantage in the minor, in the, in the market. You know, you've got, on the one side, you've got intelligent traders, you know, maybe hedge funds with access to capital. On the other side, you've got, you know, a mechanistic, simple trading bot with, with all its figures laying out there. So it's just fundamentally a disadvantage. So I'm not really in favor of those kind of ever collateralized stablecoins because it can move very quickly. Sometimes

• 15:53Speaker 02

  they sell into automated market makers, you know, basically people see a problem coming and they move out of the way. You know, they sell Bitcoin, they buy it back after this event happens, or they pull money out of the, the market maker liquidity dries up. And it's all, all exacerbates the same problem. So I think the, the collateralized stablecoins like, you know, Tether, Circle, Gemini, so forth, are much safer.

• 16:16Speaker 02

  And I think the main concern with those is term mismatch, you know, so they're placing the capital in short term access, cash equivalents, and sometimes, you know, commercial paper and other kinds of investments. So that's their business model, right? They can make a return on the interest. So they have a lot of money, they can make a small return on interest and make a viable business out of that. And so I think Tether, as for example, said publicly that they shrunk the commercial paper exposure. So now they have, I think about eight billion of sixty five ish is in commercial paper. The rest is in, you know, more cash equivalent kind of instruments. You know, there's a real time transparency. It's actually slightly over capped, able to collateralize

• 17:01Speaker 02

  this because Tether has kept, you know, retained prior years earnings inside the company as extra cash cushion. And, you know, most of the stable coins, I mean, the top three stable coins have some forms of attestation, but not yet audits. So apparently Tether is working on an audit. So I think it's pretty widespread misunderstanding. So the people keep asking when's the audit? And the answer is, well, just as soon as, you know, a big, a big audit company will agree to take the work on, right? So it's, it's, it's difficult because it's a hard thing to audit. It has a lot of transactions. I think the other differentiator in the stablecoin market is the

• 17:38Speaker 02

  use, the types of uses. So while, you know, the top, the big two tether and then circle, I guess, like say circle is like fifty percent tether or something in that range. In terms of market cap, in terms of volume, tether is, you know, ten X or more. And that's because it's used very widely and has a history in helping smaller exchanges not need a bank account, basically for client funds, right? So people are moving tether around to exchanges, using it for collateralization for perpetual futures, using it for Bitcoin secured lens, and using it even for non crypto related uses, like a faster, more reliable international transfer or for real estate transactions and so forth. So it sees all that volume as well.

• 18:23Anthony Pompliano?

  When you start evaluating these stable coins, you evaluate things like DeFi, the whole lending space there, even altcoins to some degree. There's really, I think, three schools of thought. One is, these are a complete waste of time and resources, and we should disincentivize them or discourage them. Another is that actually it's R and D for what eventually will be brought over to Bitcoin and built on top of Bitcoin. And then a third one is, hey, I don't know what's going to happen, and so I don't have an opinion. And I think that it's always important, like, there are some people who just don't have the opinion. How do you look at a lot of this stuff, which, you know, one group of people who are the supporters and proponents,

• 19:08Anthony Pompliano?

  claim it's innovation, claim it's pushing it forward, an industry around kind of automation and decentralization in finance. And then the critics are saying, no, this is complete nonsense, and actually, it's all going to get built on top of Bitcoin, and maybe we'll use some of it as R and D. Like, do you think that altcoins and DeFi are just R and D for Bitcoin, or do you see it as something else?

• 19:29Speaker 02

  Yeah, I mean, I think, you know, the first thing you can do is take out, you know, I mean, there's something like 20,000 coins, right, at this point. So you can probably take out about 99.9% of them as not really having any R and D. They're kind of, you know, copies of other coins, copies of Bitcoin, copies of other altcoins. And so they are sort of more marketing casino chips, if you like. I mean, a lot of people who dabble in them, and I don't myself, view them as, you know, a lottery ticket, you know, a meme stock or something like that, right? And then you've got, you know, the 0.1% that is doing something interesting, you know, with privacy technology, with smart contracts, with consensus rules. And there, the question is really, and so that, you know,

• 20:14Speaker 02

  they are providing utility because people are using them to do things. Now, fortunately, a lot of things they use them for is to make altcoins. I feel the casino, but there's a market for, you know, there is a market to use casinos, and that's what the altcoin space is, but also for, you know, DeFi and smart contracts. And that has turned out to be higher leverage probably and higher risk than people appreciate. And also, the technical risk is quite high, you know, some of the larger... Smart contract chains tend to lose about a billion dollars a year to hacks and problems like that. So it's a bit of a risk on environment and it's probably quite difficult to evaluate

• 20:55Speaker 02

  which is a safe DeFi platform or market maker and so on, right? Because you never know. And the fact that it's been around and it hasn't been hacked or rug pulled, as they say, yeah, it doesn't necessarily mean that that is not in the future, right? So I think there is a utility, but there's still a kind of fallacy about the market valuation of, I mean, they're relatively centralized typically, so you can think of them like, you know, stocks in the company and so, or utility tokens to use a network. And so John Pfeffer, who's an ex KKR investor, has a nice investor report on value, like

• 21:36Speaker 02

  evaluation theory for altcoins. And his view is that it doesn't make sense to consider them an investment asset. And this, you know, because technology gets cheaper and faster, it wouldn't make sense to keep them as inventory. You would just buy them as you use them. My example being, you know, if you were excited about the internet in the 1990s during dial-up and you had bought prepaid vouchers in bulk as an investment for one megabit of bandwidth. Now, of course, the price of bandwidth has dropped 10,000 times. So it had been a terrible investment. And so I think that's really the case. And so eventually the kind of fundamental value and that economy has to work itself out.

• 22:15Anthony Pompliano?

  As you look at many of the Bitcoin businesses that are being built, obviously Blockstream has a number of different products and services. Can you give us an update in terms of how you think about building your company and why choose so many different products and services around the Bitcoin ecosystem?

• 22:31Speaker 02

  Yes, I mean, we just view Bitcoin as the best asset class. And actually, they're home to a lot of the kind of dependable, security-first innovation in the space. And so we want to build on a dependable, robust base.

• 22:48Speaker 02

  So you know, there are increasingly sophisticated smart contracts you can build on Bitcoin, layer twos. Well, usually with a security-first mindset, and so they tend to favor simplicity, formal provability about security over kind of ease of programming for a JavaScript program or something, which then tends to to create risks. And I think, you know, effectively, as Bitcoin gets monetized and adopted globally, there will need to be more layer twos, more applications, more financial services that are ground up, designed around Bitcoin.

• 23:27Speaker 02

  Because, you know, it's a shift in the monetary standard in the world effectively. And so, you know, some of the things that work for fiat may not work in a Bitcoin world, and different models are required. So we're just trying to get ahead of the curve and do the thinking and do those things to market early and, you know, lead a trail, basically.

• 23:50Anthony Pompliano?

  Can you explain Liquid to everyone and give an update in terms of where you are with that?

• 23:55Speaker 02

  Yeah, so Liquid is a kind of Bitcoin layer two. So if you think about it, Lightning for retail payments and micro payments. And Liquid is a different type of layer two, which is a sidechain. The only kind of native asset on it is Bitcoin, which is, you know, pegable. You can move it between a Bitcoin chain. And Liquid is somewhat analogous to being able to open and close channels to Bitcoin or Lightning. And then Liquid gives a different set of features. So it's not for micro payments, but it's for trading and assets and shares and stocks and, you know, different kinds of assets and being able to transact on them trustlessly, you know, with atomic trades, ultimate market makers, report of wallets and

• 24:36Speaker 02

  we, you know, there's an ecosystem of about sixty different exchanges, market makers and participants in the Liquid network at kind of company level, and of course, many users and lots of different assets, you know, so Bitcoin, stablecoins, exchange tokens, and we have a security in the network itself, which is a securitized version of kind of mining contracts that we sell to public companies like Fidelity and Galaxy, but in a kind of securitized format. So that's, again, a tonically tradable.

• 25:12Speaker 02

  And tradable on exchanges as well.

• 25:15Anthony Pompliano?

  When you think of Taro, Lightning Network, are these things competitive with Liquid? Are they all going to kind of coexist and are all necessary for the success of Bitcoin? You know, kind of in the steady state two decades from now? How do you view Liquid as a sidechain, a layer two like Lightning? And then a proposed, I guess, layer three, if you will, in Taro?

• 25:37Speaker 02

  Yeah, so I mean, Blockstream is active in Lightning. So we have Core Lightning, which used to be called Sea Lightning. And it was actually the first Lightning implementation to go live. And the Lightning protocol actually works, you know, potentially on top of different chains. So we've had it working for a number of years on top of Liquid as well. And so it's possible to make a Lightning channel on Liquid Bitcoin, Bitcoin existing on the Liquid network. And, you know, one path for high scale uses of blockchains is Lightning on top of them. So, you know, we're, we're expanding the capabilities of Lightning on top of Liquid

• 26:21Speaker 02

  to include, you know, Lightning channels that involve stablecoins. Like, say, Tether is a, is a probably the highest volume example. And there are, you know, different ways to do that. It's like three or four different variants. The Taro proposal is like relatively new. It's a color coin based. And there was another one, which was a similar design called RGB. And there's something else based on Omni, Omni Bolt, which is kind of Lightning on top of Omni, on top of Bitcoin. And so those, I mean, I think that's, you know, that's fine. Like, we'll see which approaches work in the market. You know, ultimately, we just want to see, you know, effective and reliable ability to do layer two things on top of Bitcoin. So whichever one wins, I think that's fine.

• 27:04Speaker 02

  I think, you know, my view is that doing it on top of Liquid is, is a little more efficient because you're not, you know, directly creating load on the Bitcoin network for non-Bitcoin transactions.

• 27:17Anthony Pompliano?

  As you see it, what's the biggest risk to Bitcoin over the next five years?

• 27:22Speaker 02

  Um, it's an interesting question. I mean, I think, you know, the risk perception has receded a lot. You know, Blockstream started in 2014, so we've been around for quite a long time in kind of crypto company terms. And, you know, at that time, we were quite, you know, wary about geopolitical risk, about, you know, whether major countries would outright ban Bitcoin. At that time, essentially, no financial institutions wanted to hear about Bitcoin. And of course, that's all changed around, you know, so now many big financial institutions are queuing up to offer Bitcoin-related products, offering Bitcoin financial instruments, Bitcoin deposits, purchasing derivatives and so forth.

• 28:06Speaker 02

  And, you know, there's become a lot more clarity in terms of regulations. So it seems that the risk of a country-level ban has greatly receded. So I don't, you know, the, the risk perception is largely fallen off, I think. So, you know, apart from the usual market cycle, I think it's, it's on an interesting track at this point.

• 28:30Anthony Pompliano?

  When you also begin to consider nation-state adoption, like in El Salvador, like in the African Republic, is this just the early days and we should expect one or two people to kind of broach the, uh, the topic now? And then it'll take years to get others? Or is this now in the, okay, we should expect this to pick up quickly and maybe, you know, one, two, three different countries per year at a steady pace for the coming decade?

• 28:57Speaker 02

  Yeah, it's, it's hard to say, but I mean, I think what is fair to observe is that things have progressed far faster over the long term than people expected, you know, so.

• 29:11Speaker 02

  If you'd have asked anybody in 2014, if you'd see a nation state adopt Bitcoin, they would have been incredulous, or if they'd see the price pass $10,000, that seemed completely farfetched, right? And so, and banks adopting it, offering financial services related to Bitcoin, you could see that playing out positively for El Salvador already, in a sense that apparently the revenue at country level from tourism had jumped like 20 or 30% in the first year. So you can see that as that works for one country, other countries with an interest

• 29:53Speaker 02

  to attract global workforce may try to replicate it.

• 29:58Anthony Pompliano?

  As we look forward, what do you suggest to the average person? So there's a lot of people watching this or listening to it, and they want to know, what can they do to help propel Bitcoin forward? Obviously, they've likely gone and bought some Bitcoin. Is it run a node? Is it go work at a Bitcoin company? Like, how do you think that the average person can help Bitcoin?

• 30:22Speaker 02

  Yeah, I mean, I think there are many, many ways to help. You know, education, word of mouth, a lot of Bitcoin is via word of mouth. And, you know, within the companies, there are many different types of roles, you know, documentation, business development, technical support, accounting, finance. You know, so there are things to do for people from all skill sets effectively. And Bitcoin growth and investment in startups comes in waves, and over the long term, it's only been getting bigger.

• 30:54Anthony Pompliano?

  And then, in terms of talent, have you seen a change in talent since when you first started in the industry until today? You know, you've been doing this now for, what, probably almost 10 years? What's the change in talent quality or experience?

• 31:14Speaker 02

  Yeah, I mean, it seems that Bitcoin attracts, you know, a great number of very technically gifted people on the technology level. But, you know, once people get the bug and, you know, fall down the Bitcoin rabbit hole, it seems to pull in uh people that are they're more likely to ask questions or develop their own opinion and you know, want to want to make a difference in the world and sort of, you know, step out of other areas of business and want to see the see the world benefit from Bitcoin adoption. So it seems some pretty, you know, clever and interesting and resourceful people join in a Bitcoin effort in a kind of organic and decentralized way. Bitcoin has no marketing department,

• 32:00Speaker 02

  unlike, you know, some of the altcoins, which are more like startups. So it's it's pretty impressive to see as a kind of very decentralized economic group action, if you like.

• 32:10Anthony Pompliano?

  And then my last question is, uh, the United States. Obviously, we've got a ton of different challenges uh that are going on. What do you think the United States should do if it wants to remain uh not only relevant, but a leader on the global stage from a macroeconomic standpoint, uh financial market standpoint, when it comes to the relationship with Bitcoin? You know, there are specific things that you say this is what is likely to lead uh the United States on that path?

• 32:36Speaker 02

  Yeah, I mean, there are a few impediments. I mean, some of them are probably harder to to rectify. I mean, one being the fragmented nature of regulation, because there's slightly different regulations in each state, for example. So some types of businesses have to get licensed per state.

• 32:51Speaker 02

  The uh kind of feet dragging on the Bitcoin ETF is another one, like, you know, many major countries with highly respected financial regulations have had Bitcoin physical ETFs for quite a while. US is lagging on that. So we'll see. I guess it's sixth of June decision time for the GBTC one. We'll see if that one, what happens with that one. And I think another one, which may be less widely known is the accounting basis for Bitcoin and the company balance sheet. So it's it's a bit deficient in the sense that it it causes the company to write down a realized loss if the price falls, but not to be able to mark to market when the price rises again. So it it kind of makes it unattractive in the standardized accounting method.

• 33:34Speaker 02

  Quentin's rules and a number of people, including MicroStrategy and others have been you know, trying to work with the accounting standards bodies in the US to get a better formulation for that. That's more representative of the value of the company holding Bitcoin.

• 33:48Anthony Pompliano?

  Where can we send people to find you on the internet or find out more about Blockstream?

• 33:51Speaker 02

  Yeah, for Blockstream, it's at Blockstream on Twitter or Blockstream.com. Myself, it's at Adam3US on Twitter.

• 34:00Anthony Pompliano?

  Awesome. Adam, if you had one message for folks over the next, you know, I don't know, six months of a potential bear market here and a continuation, what have you learned in the past bear markets that you think would be helpful for them?

• 34:13Speaker 02

  Um, yeah, I mean, I think people get sort of stuck in the moment and, you know, if you zoom out is the usual advice, right? You know, look at past bear markets and the, you know, there's a period and the price tends to recover in the long term. So I think, you know, for most people, as the origination of the hodl meme goes, that, you know, short term trading is highly dangerous and is actually quite risky. And actually, just for a statistical reason, that most, you know, if you take out the 12 most successful days in Bitcoin's price movement, out of the equation, it loses money, which is to say, if you were trading, your biggest risk is to be out of market

• 34:54Speaker 02

  during one of those 12 days. And so the lowest risk thing to do generally is to hold or, you know, and dollar cost average. Figure out how to cold store, you know, on coins that you're not exposed to platform risk and pay attention to, you know.

• 35:13Speaker 02

  Interest product risk too, as we've seen with some of the products now where which have limited withdrawals due to exposure to other high-risk parts of the sector.

• 35:22Anthony Pompliano?

  Yeah, I think that is words that come from years of experience. I appreciate you taking the time to talk today. I know that folks always enjoy hearing from you and we definitely will have to bring you back as you guys continue to make progress at Block Stream and you guys are working on a ton of very important things. So please keep it up and thank you from the audience, from myself and from many other people across the industry as you guys continue to push Bitcoin forward.

• 35:47Speaker 02

  Yeah, thanks for having me on.

• 35:49Anthony Pompliano?

  All right. See you later, Adam.

• 35:50Speaker 02

  Bye.

• 35:51Anthony Pompliano?

  Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more and I'll meet you guys for the next episode.