Warren Davidson, Representative for Ohio’s 8th Congressional District: Modernizing U.S. Financial Laws to Keep Pace with Innovative Tech

Warren Davidson is one of the biggest Bitcoin proponents in congress. We recently had the chance to schedule this interview during the Blockland Conference in Cleveland Ohio. In this conversation, Congressman Davidson and Anthony discuss Bitcoin, financial privacy, taxation as theft, debasing currencies, and Libra's future prospects. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. CRYPTO. COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine. Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world. ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

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

• 0:00Anthony Pompliano?

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• 0:44Anthony Pompliano?

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• 1:25Anthony Pompliano?

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• 2:07Anthony Pompliano?

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• 2:51Anthony Pompliano?

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• 3:36Anthony Pompliano?

  If you see someone on the platform you like, you can set your account to mimic their trades. They buy Bitcoin with 5% of their portfolio? Your portfolio buys 5% Bitcoin. They sell 50% of their Ether position? Your portfolio does the same thing automatically. Copy trading is awesome, so go join the 10-plus million other traders on eToro and start trading all the most popular cryptocurrencies today. They're one of the largest companies in the space and you can get started by going to etoro.com. Again, that is etoro.com, where the entire team is ready to get you started in just a few clicks. And don't forget, go subscribe to the Off the Chain daily newsletter. You can go to offthechain.substack.com. I write a letter of news, analysis, and opinion every morning that goes out to more than 40,000 investors. See you there.

• 4:22Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 4:33Anthony Pompliano?

  Congressman Warren Davidson is one of the biggest Bitcoin proponents in Congress. We recently had the chance to schedule this interview during the BlockLand Conference in Cleveland, Ohio. In this episode, we talk about Bitcoin, financial privacy, taxation as theft, de-basing currencies, Libra's future prospects, and much, much more. I really enjoyed this conversation, and I hope you do as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow

• 5:18Anthony Pompliano?

  a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 5:25Speaker 01

  All right, guys. Bang, bang. I'm here in Cleveland, Ohio with Congressman Davidson. I'm super excited to have this conversation because I think you've been at the forefront of really pushing a lot of the conversation in the government. So thanks so much for taking the time to do this.

• 5:37Speaker 02

  Yeah, thanks for the interest.

• 5:38Speaker 01

  For sure. Let's just start real quick with kind of your background pre-government role, and then we can get right into kind of the crypto stuff.

• 5:45Speaker 02

  Yeah, so I mean, the first period of my life, I started out as an Army guy, enlisted in the Army, went to West Point, went back in the Army as an officer. But then I got out and got into manufacturing. And certainly over the past 20 years, manufacturing's involved a lot of international components for American companies. So that's really what I was doing. In 2015, Speaker Boehner resigned from Congress and as Speaker, I ended up running for Representative and winning that seat. And so I've been in Congress now since June of 2016.

• 6:16Speaker 01

  Very cool. Was you in Army?

• 6:18Speaker 02

  I was an infantryman.

• 6:19Speaker 01

  Oh, awesome. I was in the National Guard and deployed overseas as infantry as well.

• 6:24Speaker 02

  Very cool.

• 6:24Speaker 01

  Yeah, so and every soldier, I recently told somebody in Bulgaria, most of the people are mandatory military services like Israel, etc. And I say, when soldiers meet each other anywhere around the world, they know, hey, you've been through a lot of stuff that sucks.

• 6:36Speaker 02

  Plenty of camaraderie, yeah.

• 6:38Speaker 01

  For sure. All right, so you get into the government seat, obviously doing a whole bunch of stuff here in Ohio. At what point do you kind of intersect with Bitcoin, crypto, blockchain, etc. And what really was kind of that initial interest that drew you in?

• 6:50Speaker 02

  Yeah, so I got on financial services in January of 2017.

• 6:56Speaker 01

  Okay.

• 6:56Speaker 02

  Right, so in 2017, you start looking at, okay, well, what areas, what issue areas can I step into as a member of Congress? And in the financial services space, you know, a lot of, you know, Congress ends up, this person ends up being the champion for that, this person, and so you can cosponsor their bills, but they've already built some momentum on it. So you look for issue areas that aren't taken already. Well, certainly, this is one that isn't taken. And the other thing is, in 2017, the ICO market was going nuts. And, you know, normally, that would be an easy way to have hearings and go into depth. And so as I was pushing for this, we weren't really getting a lot of traction on the topic. There were a lot of things in banking regulation that needed address, post Dodd-Frank, things

• 7:40Speaker 02

  that were broken. And so Chairman Henslerling was focused on those issues. And we eventually got a bill through the Senate, through the House, through the Senate, and got a law change that made some significant progress, not as much as we were hoping for in the House, but good. What didn't get done, though, is, you know, a good regulatory framework for the blockchain space and really tokenized economy, whether it represents a security, a commodity, a currency, anything else, that has gone unaddressed. And so as I lost patience on that, that's when I said, well, I can convene a meeting at least. And that's what led to the meeting that produced the Token Taxonomy Act.

• 8:19Speaker 01

  Got it. So let's talk a little bit about how that meeting came together, who kind of came in there, where, how you solicited feedback, and then we can get into what exactly the Token Taxonomy Act is and kind of where that is currently. But what was the general outreach and like, who was in that initial meetings or conversations to actually end up creating this bill?

• 8:35Speaker 02

  Yeah, so the way Congress is structured, you know, you have, you know, In my case, an Ohio team, team that works in the district and then you have a team that works in the DC office. A core component of that, of course, is your legislative team and your communications team. And so, in the legislative team, we had a legislative director and a policy area expert for financial services. So the two of them, plus our comms director, plus my DC chief, started working on how to put an event together. We booked a room at the Library of Congress and then we looked at who should go. And you look at, well, okay, well, there's a digital chamber of commerce. There's now blockchain association. There are companies that are in this space.

• 9:20Speaker 02

  There are markets where you would want to regulate it. And prior to that, I had already taken trips to like Chicago, New York, Boston, talking to, you know, early-stage companies, developed enterprises like Fidelity or State Street that are dealing with custody issues, talked with regulators in DC, you know, members of the Securities and Exchange Commission board. And so, we started extending invites out to all the people that we had referenced. And we figured, you know, if we get, you know, a dozen, maybe 20 people together, that would be tremendous. And initially, you know, that started happening, but then people said, well, I'm actually want to send our CEO. Oh, really? The CEO of this company's coming?

• 10:04Speaker 02

  Well, we should at least send our general counsel. And so, it really just started to build momentum from there.

• 10:09Speaker 01

  And I think it'd be fair to say, you had a pretty good mix of government representation, kind of the lobbying groups or the association community, and then also private companies that all came there. And as you're saying, it wasn't just, you know, hey, we're sending our government affairs person, right? This was a pretty robust group of people who are well-educated and really had skin in the game, from what I can tell, in terms of like, they want to see this be successful.

• 10:33Speaker 02

  Yeah, absolutely. That was the goal, is to get the right players there. And so, we were successful in getting some of the fintech companies to send their CEO, CFO, general counsel, which led to, you know, say, you know, like NASDAQ saying, well, we're going to send our general counsel. Oh, really? They're coming? Oh, well, State Street's going to send, and Fidelity's going to send.

• 10:52Speaker 01

  It's like an arm dress.

• 10:53Speaker 02

  Andreessen Horowitz is going to send, and... Horowitz is there? Oh, well, we got to get our venture firm there. Well, we got, you know, so then it turned into like, you know, we, we had to cap it at 50. And there were people calling my staff like 11 o'clock at night, the night before the conference, like, you have to get my CEO in there, you know, and they really wanted it. So we had to open it up after the conference. We, A, we livestreamed it, B, we had to open it up afterwards and for a call for papers. And so we had, you know, universities, I know Wharton came in and met and contributed and, you know, any number of other schools. I would say Wharton's the business school, the law school at Penn helped us a lot, as did several others.

• 11:32Speaker 01

  And what was the final product, if you will? So the Token Taxonomy Act as it stands today, maybe just give us kind of a quick overview of what exactly you're trying to get accomplished with it and then we can talk about where it is.

• 11:41Speaker 02

  Yeah, so if you think about this as a, as a tree, you know, at some point, the tree starts branching out, you got a divergence that fills out the tree. But the trunk is, we wanted to go as high up as we could till it starts branching out. Well, you want to do this, so you branch that way, this person wants to go that way. And, but the common denominator goes up a certain level. So we wanted to say, well, we at least have to address when things aren't securities. Because the SEC has been doing regulation by enforcement, it's been a patchwork, and they've literally said, come check with us, cut your own individual deal. I mean, I told Jay Clayton that has all the charm and efficiency of a third world system. And, you know, it is, I mean, it's like, you, you know, our system overall is great because

• 12:26Speaker 02

  you have regulatory certainty, bang, you do these things, you can efficiently launch a company, open bank accounts, you know, do whatever. But in this space, it's no, well, first come check with the SEC. What a horrible approach.

• 12:38Speaker 01

  It really is innovation by permission. And that's a really hard way to innovate when you've got to go check with mom and dad to see, can I do this or can I not?

• 12:45Speaker 02

  Yeah, and at that base level, that's one of the biggest reasons where entrepreneurs, and frankly, venture firms said, look, I'm not putting my capital at risk because I don't know what's going to happen. But I know if I put it in Switzerland or Singapore, they have a regulatory framework. So the odd thing is, you know, a lot of times you were seeing companies offshore because of the regulatory burdens of the US or the tax burdens of the US. Here, you're seeing people move offshore. To find regulations, not to, you know, not to avoid them, but to find some certainty. So that's the biggest one. You have to get clarity around what is driving the SEC. And a big part of that's a Howey test that goes back to a Supreme Court decision. And it makes everything look like a security to the SEC.

• 13:27Speaker 01

  Uh, and certainly everything in this space.

• 13:29Speaker 02

  And so, um, like literally only two no action letters issued with hundreds on deck. And so we say you, you, you can know that your, um, your token is not a security if it meets four criteria. One, it's already created, not promised.

• 13:45Speaker 01

  Okay.

• 13:45Speaker 02

  So take the money from you. I'm not promising someday I'll create this. It's like,

• 13:48Speaker 01

  Here it is.

• 13:49Speaker 02

  Already works. It does this. Um, two, it's on a distributed ledger, uh, where it's not controlled by a central authority or so it can't change the, you can't dilute it. You can't change the mix, whatever. It's already done.

• 14:03Speaker 01

  Yep.

• 14:03Speaker 02

  Um, three is that it's transferable between, uh, individuals without an intermediary.

• 14:09Speaker 01

  Okay.

• 14:10Speaker 02

  Or a third party, including the creator. And then fourth, it doesn't represent a financial interest in a company or entity. So you're not, it's not shares.

• 14:17Speaker 01

  It's not stocks.

• 14:18Speaker 02

  Yeah. Right. So if it does that, it doesn't say you're exempt from securities laws. It just says if it doesn't do that, well, you know, it's a security. It doesn't mean, well, now you don't get regulation. No, now you would fall either in a commodity or a good or service in the Federal Trade Commission.

• 14:33Speaker 01

  And so the, uh, the government usually gets a hard time about, uh, the policies they put in place. But the name's actually pretty good on this one, right? In terms of what you're trying to essentially do is draw a line and say, here's how we're going to define securities. Here's how we're not going to define the securities. And this framework will allow entrepreneurs to identify which bucket they fall into so they know the rules of the game that they're playing.

• 14:51Speaker 02

  Yeah. Taxonomy in terms of language and a big part of that dealt with, everybody wants to speak of this whole space as cryptocurrency. And the reality is most tokens frankly, don't purport to be currencies. They don't, they don't have aspirations of being a means of exchange even in some cases. Some of them represent, you know, title to a good or service, uh, title, deed for a property, uh, a license for software, you know, any number of things that could happen. I mean, we haven't tapped all the use cases for the internet. We certainly. Certainly haven't tapped all the use cases for blockchain.

• 15:24Speaker 01

  For sure. Okay, and so where is that bill today in terms of like in the process of going from an idea to actually being put in place? And then the other question that I think a lot of people have is like, what can they do to help? Right? So kind of where are we? And then what can people outside of the government actually do to help get this across?

• 15:40Speaker 02

  Okay, so there's two other key components I want to mention about the bill. One is it gives a de minimis tax exemption for currency. And it's

• 15:47Speaker 01

  Very important.

• 15:48Speaker 02

  It's very important, although it's not as big as we would like. It's in line with current law. So it's not a change to current law. So it's more winnable $600. So if you were changing from US dollars to pound sterling to euros on a trip, as long as you have $600 or less net gain, then you don't have capital gains on it. And so it does that. And then the third thing is it does is addresses

• 16:12Speaker 02

  custody. So a lot of times in custody, if you want to, you know, use somebody like Fidelity or State Street or, you know, whomever you use to store some of your investments, you need a third party to be credible for custody. Here it's challenging because you might have a private key that you could share with multiple people. And frankly, part of the whole point of distributed ledger is to get rid of third parties. So, so it addresses that. And then so how would we move this bill forward? The process in Congress is that you would have a hearing that would include a notice for the bill. So you would have witnesses that would come and at least part of the topic for the hearing would be to address these bills

• 16:54Speaker 02

  that are noticed. And then you would go to a markup, which is specific time devoted to moving this bill where members of the committee could offer amendments. Some of them would totally eliminate the whole point of the bill. Some of them are just small tweaks, like, oh, well, you didn't really address this. I wish you would have gone into whatever. Okay, so we'll debate that. We'll add it. Well, I think your language is a little too broad. Maybe we could tighten it here. That's how a product will come out amended and it'll be, okay, now it's the still be known as the Token Taxonomy Act, but as amended.

• 17:27Speaker 01

  Got it.

• 17:27Speaker 02

  And then, and then, so then the committee would vote on it and then it's available to be put on the floor. So there are a number of bills that make it that far that the Speaker and Majority Leader, in this case Nancy Pelosi and Steny Hoyer, don't schedule for a vote on the floor of the House.

• 17:44Speaker 01

  Okay, why would they do that?

• 17:46Speaker 02

  Well, they might say, well, it moves through the committee, but it's really not something that we It's frankly, it's just like a deck of cards. I mean, if you're a chair of committee like Maxine Waters, you want to give the speaker, you want to give your team plenty of cards to play.

• 18:00Speaker 01

  Yes.

• 18:00Speaker 02

  And unfortunately, a lot of times, the speaker and the majority leader, whomever they are, are like, well, okay, this is a better card to play now, so I'm going to play this card now.

• 18:10Speaker 01

  It's what people outside of the government think of as politics. Essentially, that's what that's.

• 18:14Speaker 02

  People get frustrated by it. And then, you know, while Democrats right now are frustrated and they say, well, we've passed all these bills and the Senate won't even give us a vote. I'm like, don't get upset. They did the same to us. And we were in the same party, right? So you had Republicans in control of the House. And as I highlighted earlier with the reforms we wanted to do to Dodd-Frank, we were much more aggressive in terms of what we wanted to do than what could pass the Senate.

• 18:37Speaker 01

  For sure.

• 18:38Speaker 02

  So we had all kinds of bills that went over there and languished. And part of why I wanted to work on this area is it's not a partisan topic. So as you see the co-chinners on the bill, it's just whether you actually understand it or not, which unfortunately might be a bigger bear here than partisanship on this issue.

• 18:54Speaker 01

  Well, we'll get to that in a second, but in terms of as kind of the political process is playing out, right? And I think a lot of people look and say, hey, you and your peers are going to have to kind of be the experts there, right? Really kind of move this forward with your staffs. Is there anything that the people outside of government can actually be doing? Is this calling up the representatives? Is this going to town halls? What can they actually be doing in terms of making your job easier or just more effective?

• 19:19Speaker 02

  Well, I think one of the biggest things is reach out to your member of Congress and get on their calendar, right? So if you get a meeting scheduled with your member of Congress, it drives staff work where they come in prepared. I mean, the staff will do more of the prep work, but I'll get a briefing ahead of every meeting, or at least every day, here's the highlights and this is what the purpose of this meeting is. And they'll at least get something on their radar screen. And if you can't get the meeting, in the process of getting the meeting, invite staff and members to as many events in the space as you can so that they start to understand the issue. And then, you know, frankly, there are people that are not going to shift their minds. Right now, Brad Sherman in Los Angeles just became the chairman of the Subcommittee on Capital Markets.

• 20:02Speaker 02

  Well, for this bill to go forward, it has to get through that committee, that subcommittee or around it. So we either need him to change his mind or not be in the way. Or we need Maxine Waters to change to to say, look, I care enough about this bill. We're moving it. And she has that power, clearly, as chairwoman of the committee.

• 20:21Speaker 01

  How detrimental do you think to this entire movement is it, Brad Sherman, coming into that chair? Do you think it's actually a pretty big deal and people should be paying attention to it? Or do you think it's it'll grab headlines in the beginning, there'll be some fear mongering going on, but it's actually not as detrimental as maybe some think it is?

• 20:37Speaker 02

  Well, I think it's really consequential because the you know, he's not going to move this bill.

• 20:43Speaker 01

  For sure.

• 20:43Speaker 02

  Yeah, right. So so at least while he's the chair, which is all through 2020, Democrats, you know, even if Republicans win in a landslide in November of 2020 and take office in January of 2021, that's still a year burnt when you could take a nonpartisan bill and move it. Right now in 2020, and there's really no prospect of moving this yet this year.

• 21:10Speaker 01

  Yep.

• 21:11Speaker 02

  So in 2020, what can we do to move it? Well, we either have to get Brad Sherman to understand that, hey, not everything wants to be a currency. His view is anti Bitcoin, very openly hostile to Bitcoin as a project. But that's because he likes the monopoly that the US dollar gives as the reserve currency on power, sanctions, the spying protocol.

• 21:33Speaker 01

  And to be fair, he's very anti any currency, right?

• 21:35Speaker 02

  That's right.

• 21:36Speaker 01

  In terms of Libra, Bitcoin, etc.

• 21:37Speaker 02

  It's not it's not personalized. And he's he hates all of it.

• 21:41Speaker 01

  Yeah, for sure.

• 21:42Speaker 02

  And so if he understands, like, no, this is really more of a securities law, but that's why it would have to go through the Capital Market Subcommittee.

• 21:49Speaker 01

  Got it.

• 21:49Speaker 02

  Right? Or, you know, Chairwoman Waters cares so much that in spite of her chairman's objection, she drives it. That's not a high probability play. So him being the chairman is consequential. So either I mean, that's the only way is this is this is going to move. And then if Republicans have a majority, Patrick McHenry, who's our ranking member, is very on board with the overall framework. So the prospects for the bill get much better. But that's really personalities more than it is partisanship. So I talk about party changing as a path to changing it. But the reality is the bill itself is 100% bipartisan.

• 22:24Speaker 01

  Yeah, Patrick McHenry and yourself both, I think, a number of the things you guys have said either on the floor or publicly have taken Bitcoiners by surprise, but in a positive way, right? And the one with McHenry that just shocked me is, I think he said it on television, then he said it on the floor, where he said, "Look, you can't stop this thing," right? And it was just so bluntly laid out there, right? That I think that was the first time that a lot of people said, "Wait a minute, there might be some Bitcoiners in Congress here." But one of the things you keep talking about and pointing out is people changing their minds, right? Or getting educated on this stuff. And I think a lot of folks are of the mindset like, "Hey, I listened to the hearings, right? It's very obvious that 80-plus percent of these people don't understand what they're actually talking about, right? And it's an education problem.

• 23:08Speaker 01

  It's not, it's not a, "I did the work and I still don't believe in it," or "I don't understand how it works." It's just, "I haven't had the time yet to get educated." So what are you seeing your peers, and where are they getting their information from? How are they trying to get educated on it? And kind of what are like the backroom conversations? Are there people saying, "Hey, look, I actually don't understand this stuff, like, help me understand it?" Or is there just a general ignorance and just non-interest in even trying to put the work in to get educated?

• 23:32Speaker 02

  Well, it certainly varies by member from, "This is just not my issue," to, "Oh, so what is this really about?" And I will say that Libra was a big help in that. So when Facebook launches Libra, I mean, it's a huge surge in attention. Clearly globally, certainly in the United States, and even among members of Congress. So we had hearings, finally, that went into depth. Unfortunately, 50% or better used their time to really bang on Facebook and march up.

• 24:02Speaker 01

  Campaigning.

• 24:02Speaker 02

  Right, yeah, whatever, you know.

• 24:04Speaker 01

  I joked and I said, "Some people were there to talk about the issues and some people were there to campaign."

• 24:08Speaker 02

  Yeah, who would do that in politics, right? So that's why everyone's so frustrated with, I mean, a gazillion other reasons. But, you know, here we have this opportunity on the issue and, you know, it was not time well-used for some members, in my opinion. But hey, maybe it helped them in their districts, right? So they know their districts, I don't know it. And this is an issue that doesn't resonate broadly with the average American, because it's just not on their radar screen yet. But it is going to be huge for our economy. I mean, imagine if, imagine if Silicon Valley wasn't in America. Look at all the tech jobs that are in America, the protocols, the standards that are based on how America wanted to go about it, that are driving technology all over the

• 24:48Speaker 02

  entire planet, and a massive amount of those jobs, not just hardware and software, but the entire space is benefiting the United States of America's economy. And we weren't entitled to that. If you go back to the 90s, when they were getting the regulatory framework right broadly, I mean, overall, worked pretty well. They didn't try to understand, oh, so tell me about TCP/IP and, you know, how the seven-layer security protocols. They weren't trying to understand all that. But here with this, they're somehow trying to go, well, so tell me again, how do I do this? And, you know, it's like, no, you just need to understand it is a big thing, and this is the framework that if you just will listen broadly to the space, not just the companies

• 25:31Speaker 02

  that want to make money, but even the regulatory framework that isn't working right now, it's telling you it's not working.

• 25:37Speaker 01

  Yeah. Right? Well, people are leaving, and the thing that I always go back to, and it sounds like you and a couple others are now like really kind of hammering on, it's just, look what got America to be America. Right? And I think it's much easier when you've been a soldier, you've been exposed globally, etc. You realize like, everyone does not live the same life we live, they do not live in the same regulatory environments, they do not live in a world where entrepreneurship and innovation is encouraged.

• 26:02Speaker 02

  Right.

• 26:03Speaker 01

  That's what got us here.

• 26:04Speaker 02

  Yeah. And all these ideas really matter. I mean, they're really consequential.

• 26:08Speaker 01

  Yeah.

• 26:09Speaker 02

  Right? And you see places that, well, I mean, they're still the same sort of people. I mean, at the end of the day, everyone I've met, every culture I've met, everywhere I've met them, you know, they want similar things. They want to be safe, they want to know their family's safe, they want to be able to make a decent living without somebody blocking them from doing that. And they want the next generation to have a better future than they have. And, you know, those are pretty common things across everybody. And in general, governments are the entities that mess that up.

• 26:37Speaker 01

  For sure. Well, and I want to kind of go abroad, and then we'll bring it back to the United States. Talking about governments getting involved in this in a material way, right? So let's start with China first, and kind of their DCEP, or their digital yuan that they're, that they've supposedly already created and are going to launch here soon. Like, how do you view that in terms of a government stepping in, and the pros and cons of them getting involved there? And then what's the global impact that you see, and where should people be paying attention?

• 27:03Speaker 02

  Yeah, so if you look at why it's so consequential that the United States get involved, I mean, one, as Patrick McHenry highlighted, you're not going to stop it. I mean, frankly, it's like trying to ban the Internet, right? It really is almost the same logic of saying you're going to ban the Internet.

• 27:18Speaker 01

  Good luck.

• 27:20Speaker 02

  Yeah. I don't believe that's going to happen, and frankly, I do believe that blockchain is secure. And so people a lot of times will say, well, how do you value blockchain? It's essentially, I believe the Internet's going to endure, and I believe that this is going to be a secure place to store this value. How much do I believe that? I believe up to whatever the market value is fundamentally. That's not as easy to value as the net present value discounted cash flows, right? It was a debate about what's the right discount rate. So people debate about that. And right now, all that is at stake, is that going to be a market-oriented approach, or is it going to be a central government-run authoritarian style system using things that give the appearance of not being authoritarian and central control?

• 28:05Speaker 01

  Yeah.

• 28:06Speaker 02

  So, you know, while it might feel more free than what some countries are experiencing today, behind the scenes, because they have no respect for civil liberties and privacy, you know, they are totally permissioned in terms of who can get on, how they can get on, how they can get off, whether transactions are approved. And this goes back to the core protection on privacy. They are trying, as a framework for this, to have a social credit score. So it's not just creditworthiness, it's do you do the right things, or, you know, you say good things about the government, or, you know, are you...

• 28:43Speaker 01

  Yeah, it's basically like this dystopian future where if you go really far out and you say, hey, what they're going to do is they can have a electronic payment system, which is essentially just a digitized one that they control, that they've got complete oversight and insight into, so they know what you're doing, when you're doing it, with who. And then they link that up to this social credit score that says, hey, you jaywalked today, right? Now you can't go buy candy at the store, right?

• 29:07Speaker 02

  Yeah, or you blend it with every other piece of data, and it's like, look, you're clearly associating with these people. If you if you look in Hong Kong, I mean, they took their octopus cards and they quit using them, the digital version for sure, and started just buying stuff with cash.

• 29:22Speaker 01

  Yep.

• 29:23Speaker 02

  So does it maintain features of cash?

• 29:25Speaker 01

  Yeah.

• 29:26Speaker 02

  And if everything becomes so ubiquitous that it's permissioned and controlled by a central authority, some, I mean, some members of Congress like that. They believe that keeps us safer, right? That's how we keep it, keep everyone safe. And, but, you know, then, then you enable these dystopian futures. And so the idea, are we going to go with a system that truly is decentralized where just like a $20 bill, you and I can exchange it with no one's permission and frankly, no one really needs to know. Is there a protection of privacy? So I think privacy is foundational to this, and I think the United States moving in a way that respects what got us here. Civil liberties got us here. You, you look at companies that make things people want, well, I mean, people do want privacy. Look at how Apple's marketing has shifted.

• 30:09Speaker 02

  Look at the blowback against Facebook. Look at the concern over Libra. A lot of that went to the center of, of the concern of saying, wait a minute, you're not going to filter my financial transactions like you're filtering my information, right?

• 30:22Speaker 01

  Yeah.

• 30:23Speaker 02

  And China's future is definitely filtered. So the question is, could we do something similar in the United States of America? Could we enable a grand scale of innovation? We certainly have the companies, we have the talent, we have the education systems, and we have the capital to make all this happen. We do not have the regulatory framework.

• 30:43Speaker 01

  And, and so I think part of this is, we pretty much know how China's going to evolve this, right? And they'll put some, you know, lipstick on the pig and do all what they're going to do, but they're going to digitize the currency and they're going to go ahead and, and release this thing and they're going to have a lot more oversight into the financial transactions and frankly, just take the privacy from citizens even further. When you go to Europe, that now you see the French central bank saying, hey, maybe we're going to test this in Q1 with more corporate clients, you see the BIS or the ECB. Everyone now is kind of saying like, oh, wait a minute, this may be a thing. And so, you know, kind of two, three years ago, everyone had to have a blockchain strategy. Now it seems like every monetary related organization is saying, well, we need a central bank digital currency.

• 31:22Speaker 01

  Right. The US has frankly been somewhat lagging in their public comments around this. I know you've been a big proponent of like a digital dollar. But a digital dollar not meaning, hey, we just have electronic cash or something that's for surveillance. Maybe describe a little bit about what you mean around a digital dollar and why you think it's important.

• 31:41Speaker 02

  Well, so my version of what we would do with frankly fiscal policy and monetary policy are different than what we're doing. I mean, so frankly, you know, I mean, we didn't get $23 trillion in debt as a country because one party's good on the issue and the other isn't. But the fiscal policy is driving monetary policy to pay for all of it. So we're essentially printing money, quantitative easing, which is destroying the store of value. You're destroying the whole point of money. I put the money into this dollar. I get paid in this dollar. And I save for my future in this dollar, but actively central bankers are undermining the value of my dollar.

• 32:21Speaker 01

  And it's been the fall of every currency in the world is the debasement of it, right?

• 32:25Speaker 02

  That's right. And frankly, history proves that deficits do matter. Unfortunately, Congress broadly goes about its business day to day as if deficits don't matter, right?

• 32:36Speaker 01

  And because in the short term, we can just print more money to close the gap or solve the problem. But it's getting lost in the weeds a little bit from, you know, what actually matters.

• 32:44Speaker 02

  Right. And so as you highlight, look, digitizing the dollar doesn't inherently prevent that. What if you tokenize it in a way that was truly distributed? You could certainly diminish the the kinds of interventions that central bankers do. So I'm not morally opposed to central banks being involved in sovereign countries. But I don't like some of the interventions they've done.

• 33:10Speaker 01

  Any examples?

• 33:11Speaker 02

  Well, I mean, so for example, right now in the repo market.

• 33:16Speaker 01

  That's like a layup for you.

• 33:17Speaker 02

  I mean, if only there were something going on that was undermining trust in the financial system.

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• 35:16Speaker 01

  I mean, my favorite is, was it Jerome Powell said that it's not QE, right?

• 35:20Speaker 02

  Yeah.

• 35:21Speaker 01

  And then you look at the charts and you're like, well, what is it then? Because it seems to be like we're adding a lot of assets here.

• 35:25Speaker 02

  Yeah, speaking of the taxonomy, what's this word you're using?

• 35:29Speaker 01

  True. And so as you see this, I guess, there's kind of the path we're on. Then there's a path of like, there's a digital dollar. Do you see a middle ground where, you know, there's countries, and it's a sensitive topic because Venezuela specifically has done a bunch of bad shit, right? And we've levied a lot of sanctions, et cetera, on them and a lot for good reason. But they've talked about putting actually Bitcoin and even Ether possibly in their reserves, right, and kind of backing some of the currencies, et cetera. Do you see like kind of that as a middle ground here in the US where we say, look, we can use some of these decentralized, non-manipatable currencies or assets as part of the reserves? Or do you think it's more of we've got to make a major shift and the kind of baby steps

• 36:13Speaker 01

  between here and that major shift just won't get it done?

• 36:15Speaker 02

  Yeah, so what's going to drive this in the future? So for me, I look at the time horizon we're on. One, we don't have five years to deal with faster payments, right? So the Fed and the

• 36:26Speaker 01

  Fed now?

• 36:27Speaker 02

  Yeah, Fed now and stuff, look, this is going to happen somewhere. It's just clearly if that's the mindset in America, it's just not going to happen here, right? And some people are okay with that. It's like, we don't have to be the first mover on everything. Maybe we could be a fast follower when everybody else crashes and burns and does the wrong way. Okay, I mean, I would rather us be the leader on it, but I can at least respect that from a well-informed person. But when you look at where we're going to go, the reality is in our financial system, we have a solvency issue in the United States. Cash flow quits working really fundamentally between 2027 and 2032. Virtually every macroeconomist will tell you that's the reality. So how do we deal with it, right? So what are we going to do?

• 37:12Speaker 02

  And the other thing is, if you look at whether it was Libra or You know, Christine Lagarde, when she was at IMF, now European Central Bank leader. Synthetic currencies are popular because it undermines the US dollar as the world's reserve currency. And most everyone else knows, look, well, we're clear it's not going to be the RMB, we're clear it's not going to be the Euro. Maybe if we all band together, it could be the synthetic currency.

• 37:39Speaker 01

  It's basically, we've been in a position of power for so long, and we've taken inch by inch, more and more of, okay, we have this currency, everyone's dependent on it, so like, why don't we use that as a weapon?

• 37:50Speaker 02

  Right. And we have. And it's been useful for a lot of things. And I've supported sanctions against, you know, like Iran and North Korea and Russia. And I mean, they're, these tools are valuable, they're useful, they certainly help modify behavior, and have been helpful in doing that. So, and then, once the behavior's modified, to me, you have to be able to move forward, which we did with, you know, with Russia in cases.

• 38:17Speaker 01

  So what happens in a world where, let's say that the US dollar does diminish in importance, and the US loses that, because I think Brad Shurm's a perfect example. Like, what he's worried about, at least what I can tell is, he's worried about the US losing the ability to weaponize the dollar.

• 38:32Speaker 02

  That's exactly right. The ability to use the dollar the way we're using it. And the reality is, you know, the Petro-dollar, really, when you look at Nixon, we moved off of the gold standard, the Bretton Woods framework for money, and we went to the Petro-dollar. And frankly, all the major oil contracts in the world are settled in US dollars, which is great. It's, de facto, creates a reserve currency for the US dollar. That's the big enabler of this, is what is it backed by? Ultimately, oil, Petro. And, and so, if you look at the framework, you go back to Gaddafi, I mean, a big part of why he posed such a threat wasn't terrorism, it was the idea that if he united Africa,

• 39:16Speaker 02

  and the idea that there was going to be an African currency, and all their oil, natural resources, you know, gold, diamonds, you know, rare earth minerals and everything else, were only settled in the African currency. That would have been a really big blow to the US dollar.

• 39:30Speaker 01

  Yeah.

• 39:30Speaker 02

  If you look at part of the concern that Brad Sherman and others rightly have about China, they want to change that system so that the dollar is not the reserve currency. And, look, when the dollar is not the reserve currency, we can't spend more money than we have. We can't attract as much money for our debt. We're already running into that, so we've bridged it with quantitative easing, the Fed printing more money to buy dollars, buy our treasuries when the demand really isn't there. But the demand, talk about the demand going away when the dollar isn't the reserve currency, that's really going to force the crisis.

• 40:04Speaker 01

  Yeah.

• 40:04Speaker 02

  So why is that framework there? Well, one, it's going to happen anyway, because even at the rate we're able to borrow right now, we run out of runway in the next decade-ish, right? But two, if actors, whether it's Christine Lagarde, in combination with China's central authority, come up with a synthetic currency in Saudi Arabia and Africa and everywhere else, goes with the One Belt, One Road initiative framework and starts settling in things that aren't US dollars, it's going to undermine the demand for dollars. And we're not going to be able to have the same kinds of deficits we've had. And that's going to change fundamental way of life for America.

• 40:40Speaker 01

  Yeah. Well, one of the things that I'm really interested in, and it went pretty uncovered in the media, but there was a couple of crypto outlets that covered it. I think it was 2017 or beginning of 2018, I think it was Argentina and Turkey settled a bilateral trade. It was very small, it was like less than $10,000 for some pesticides. They settled it in Bitcoin. And as I thought more about that specific transaction, it was, you can almost imagine the conversation, right? Like, hey, I don't trust you with your currency, and your currency sucks. By the way, you don't trust my currency, and my currency sucks. So like, why don't we use this other thing that we know no one's manipulating that's fully transparent? And so let's just settle on that currency. To me, it feels like the more that there's these currency wars and currency manipulations,

• 41:23Speaker 01

  etc., around the world, and you get these kind of private meetings and people trying to come up with what's the solution, more and more people just start saying like, hey, I don't trust any of this. Like, I just want to opt out.

• 41:33Speaker 02

  Oh, this is the beauty of it, and it's almost as if, I don't know, Satoshi Nakamoto envisioned this future, right?

• 41:40Speaker 01

  I feel like the politicians are helping a lot, man.

• 41:42Speaker 02

  So if you look at central bankers undermining the value of everyone's currency, I mean, good grief, most, I mean, look at the Europeans, look at countries around the world, they have negative, look at Japan, negative interest rates. I mean, we have negative real rates, right? So no one really believes that the treasury, that the 10-year treasuries should sell for less than 2% because they don't believe that rate of inflation is going to be less than 2%. So then you have a negative real return with a positive nominal return on US treasuries right now. But in other countries, the central bank has intervened and they have taken the, like, 30-year euro. I mean, the Germans are issuing a 30-year euro bond. I mean, this is, and the Japanese have negative, you get to pay to store your

• 42:27Speaker 02

  cash. So, you know, when you look at the intervention of this, I think that's where, in a way, Libra is attractive, a synthetic currency for all these countries. But what's the, I mean, what's already created? I mean, Bitcoin, it's a massive piece. So something about this framework as central bankers prove themselves less and less trustworthy and more and more predictable.

• 42:49Speaker 01

  Yeah. Well, and it's also the structural component of Libra in terms of a distributed currency or a decentralized currency that's adopted, that isn't manipulable, that's transparent, etc., all the things that Bitcoin has. But Bitcoin's one advantage is, one, it's got the network effect already, and two is you can't call Mark Zuckerberg in front of Congress, right?

• 43:08Speaker 02

  Well, that's exactly right. And you look at any of the other things that would come along, so far, virtually everything of scale, like Libra could be, just because Facebook's behind it, you know, but they still want to keep that control. They don't truly want to let go.

• 43:22Speaker 01

  Yeah.

• 43:23Speaker 02

  Right? And, well, then it's alterable. So it's not a truly decentralized system.

• 43:28Speaker 01

  What, um, how do you think Trump plays into this, right? So one of the, somebody recently said to me, they said, you know, nobody gives The credit or the understanding that we're actually super lucky, if you believe in this future of Bitcoin and decentralized currencies that aren't manipulated, et cetera, to have the President of the United States currently tweeting so much about currency devaluations, manipulations of economies, et cetera. And he's been public about not necessarily being a Bitcoin fan, but the fact that he's highlighting issues that Bitcoiners are also highlighting, that's driving a conversation. Do you buy into that at all, or do you think that he's more dangerous than he is helpful?

• 44:03Speaker 02

  Well, I mean, I think he's serving the same kind of role that advocates of destroying the value of money are. I mean, he's pushing for our Fed to copy other central banks and frankly, destroy the value of our savings, our money. So, taking negative rates isn't there. And frankly, it doesn't even do that much for the economy, except blame shift, so it's all the Fed's fault. And frankly, I don't think the downsides in the economy are driven by the cost of money right now. They're driven by uncertainty. A big factor for the United States is trade, and another big factor is political uncertainty. I mean, the difference in policies between what, you know, Donald Trump would continue

• 44:43Speaker 02

  to do with great effect, great results for America's economy, versus what frankly, the Democratic presidential debate stage, to me, looks like 15 or 20 different ways to destroy America's economy, with Elizabeth Warren and Bernie Sanders being the most aggressive.

• 44:59Speaker 01

  My favorite part is this whole wealth tax thing, and I've been very kind of public with a lot of people in the crypto community that, forget all the politics for a second. All I keep hearing when I hear wealth tax is we're going to take money from some of the best capital allocators in the world and give it to who is most notorious for being a really bad capital allocator.

• 45:18Speaker 02

  Right.

• 45:19Speaker 01

  And that just sits, like, I'm just uncomfortable with that idea.

• 45:21Speaker 02

  You've done so well with your money, why don't we take it and destroy all of it? Yeah, that's what I say, you're destroying the bank.

• 45:28Speaker 01

  But it also brings up like MMT, right? And kind of monetary theory and this idea, if you go and talk to like a Ray Dalio, et cetera, right? Like, he's... He fell off the cliff and although he doesn't talk about Bitcoin specifically, he basically makes the case that, okay, we've got quantitative easing, we can cut interest rates, we're gonna do all of this in the next recessionary period. It's not gonna have the effect we want, and so what do we do? Well, rather than create money and then go buy assets, why don't we just give it to politicians and basically just give it out to people? Right? And that seems to be an area that's maybe a little bit more like hyperinflationary type situation than not. Like, do you see that as a real possibility? Or is that more maybe kind of the capital markets looking and saying like, you know, trying to predict the future?

• 46:09Speaker 02

  Yeah, and you know, the scary thing is I see it's a possibility that we as a country would do it because frankly, other countries have done it. Modern monetary theory is essentially already been tested, like any number of socialist ideas. And, you know, I don't-

• 46:23Speaker 01

  Did it work?

• 46:23Speaker 02

  No. It worked to destroy, it worked to give power to the people that sold it, but it totally worked to destroy the economies. And so it's a dangerous idea. And frankly, the idea that it's gaining in popularity with people that frankly are smart enough to do the math and read the history is shocking to me.

• 46:43Speaker 01

  Well, and you used to word "dangerous," which I actually wrote today this idea of money is an idea that is too dangerous for school. And what I was talking about in there is if you think about everything you're taught in school, you're not taught nothing about money, even economics courses, etc. They don't teach you about where money came from, what is money, right? How is it actually, kind of the rules of the game of life and wealth, etc. And it goes back to the Henry Ford quote of like, if people actually understood the banking and monetary system, there'd be a revolution before the morning, right? Of just like the inflationary like tax on the wealth and all these components that I think the Bitcoin community, people get sucked in whether it's through price or some other ethos-driven thing, they then go do the work to figure out like what is money and why does it matter? Right?

• 47:28Speaker 01

  But there's a very, very high majority of Americans who have no clue how money works, right? And they don't understand that these ideas, they sound great because yeah, you may get some money upfront, but how detrimental they can be and how destructive they can be.

• 47:42Speaker 02

  Yeah, I mean, that's why I say if you want to defend freedom, you have to defend money. Right? And that's the concern I've got with central banks and their actions. They're actually destroying the whole premise of money. Monetary monetary modern monetary theory is openly hostile to the whole premise.

• 47:58Speaker 01

  What would you do if you kind of were completely in control, etc. What do you do to preserve the US dollar? And then what do you do in terms of Bitcoin specifically? Like, how does the United States interact with Bitcoin in the ideal world?

• 48:09Speaker 02

  Well, I think first and foremost, we have to get our privacy laws right. I mean, that even in our current banking framework, we've essentially deputized all the banks to spy on their customers, but it's for our safety. Right?

• 48:21Speaker 01

  And it's funny to me that soldiers talk about this the most, right? The people who you would think are like gung ho on safety and protecting the country, etc. They're actually usually the most staunch privacy folks because they've seen the other side of it.

• 48:34Speaker 02

  You see what happens with the people with this much power, you know, absolute power corrupts absolutely. This is a system of absolute power. It is a total system of control over the population. And yeah, you want to stop bad people. I mean, no one's more passionate. You know, you and I were willing to fight a war wars over keeping America safe, you know, and so are thankfully so many other people in our country voluntarily to go commit to serve and then go do whatever our country asks of us while we're in uniform. And so people buy into it. But to your point, a lot of people do get it because of that. So one, you have to get privacy protections right. Two, we need to, you know, frankly,

• 49:16Speaker 02

  deal with the fact that we have an economy that depends on the federal government spending more money than we have. I mean, if you think if you go cold turkey and cut off the trillion dollars above, I mean, we're going to collect about three trillion, 3.2 trillion in revenue, and we're going to spend like close to four and a half trillion dollars.

• 49:37Speaker 01

  If it was a business, those numbers don't work.

• 49:39Speaker 02

  You can't do it every year, right? Or even a household, right? Okay, so I make 30 grand, I'm going to spend 40 grand every year. Like, no, you can't do that every year. Right? And so you add the numbers up. It's essentially similar logic.

• 49:52Speaker 01

  Unless you can create more money.

• 49:55Speaker 02

  Well, right, or you can keep getting loans, right? You get a new credit card offer, a new credit card offer, and you can extend it. And, you know, but as Herb Stein famously said, if something can't continue, it will eventually stop. And hey, it's like, it's like, it's like jumping off a building. The fall isn't, isn't bad, probably. It's the sudden deceleration, right? Absolutely. Bang. And, and when the economy stops putting that trillion dollars worth of extra cash, or two trillion, which is where we're headed, you know, households will feel that. So, we need to be responsible about how we unwind the current system. And, you know, starting sooner is better than starting later, because the course corrections can be less aggressive with time, right? For sure.

• 50:38Speaker 02

  If you're walking towards a mountain, you can divert a little bit and miss it. But if you're right on it, I mean, you're stuck. Yeah. So, we have to do that. And then I think that, that, then, the, there are a number of ways to do that. But most of it involves controlling spending, not necessarily revenue. I mean, you saw the, the tax system we've got, and you talked about the wealth tax. The idea that the government is owed this money has shifted. I mean, look at the whole systems of taxation and how hostile they are to privacy. I mean, wealth tax, very hostile. We know everything about you, how much money you have. Estate tax, right behind it. You paid taxes your whole life, but we're going to tax you more. Income tax, we know everything about how you make money and everywhere you make it, including capital gains in our system.

• 51:22Speaker 02

  What you bought and sold, and that'll all net out, so we'll pay tax on your income. Payroll tax, somebody paid you money. Or, wait, I was gonna, I wanted to pay someone, you better tell us and report to the government. Property tax, you never actually own your property, you're really renting it from the government. If you make improvements upon it, then, you know, then we'll pay, you pay even more. And you go down to sales tax, did you buy or sell something? I mean, you get down to the early systems of taxation in the country. You know, while I don't like tariffs, tariffs are taxes, it's probably less invasive of privacy than most of the other systems. And that's really, early on, a lot of what our government did.

• 52:02Speaker 02

  So, I think you have to really get to a system that has a stable, predictable amount of revenue, that isn't antithetical to the whole civil liberty framework, the system of control. That we've got and we need to spend within our means. And we have the talent and innovation to do these things in America. If you look around the world, look at part of what Hong Kong did. It wasn't they had all these great natural resources. Look at, we have so much more to work with. They created a smart regulatory framework. China's actively destroying that. But if we do that, America's economy will continue to flourish. That's what we did in the first place to make America flourish.

• 52:39Speaker 01

  It, it, it really is. It's just like building a business. It's just like, you know, running a campaign, et cetera. It's just get the best people working in the right direction. Right. I mean, at the end of the day, that's really what you're doing is using regulations to incentivize people to come to our country, to build things that are innovative and to change the future, right? Or improve the future.

• 52:56Speaker 02

  Yeah, and I think that the dialogue we've got in the country, why language matters so much. You know, people say, well, that's all we're doing. We, we just believe that everyone should have this and the government should pay for it. No, I mean, you're using the law to do something that inherently it can't, which is part of why I like Bastiat so much. You're taking essentially a system where if you took the money yourself or with a group of friends, that would be theft, right? But if you pass a law, it's not theft, this is legal plunder, right? So you're, you're in to say, well, but if you don't do this, you don't care about people. No, I mean, you, you, charity is when you do things, not when you take someone else's resources to do them. And in particularly in a system where you don't even use your resources to do it.

• 53:39Speaker 01

  My, my favorite thing around the wealth tax is I'm still waiting for one of the people pushing that idea to sign the, the 99% giving pledge, right? Where they're gonna give away 99% of their wealth? Cause I haven't seen that yet. They, they seem to be pretty good about taking everybody else's wealth, but they're not necessarily giving all of theirs.

• 53:54Speaker 02

  Yeah, no, I, I think Amy Flay's in her book Forgotten Man has a nice introduction. And that before, just a little foreword, it says, you know, you know, the forgotten man is C, you know? It's A and B getting together to decide what C is gonna do.

• 54:10Speaker 01

  For sure. And so a couple more questions for you before I let you go. The first is around mining. So we're seeing in other countries a pretty big effort in terms of putting national resources towards just becoming a large contributor to the computational power of the Bitcoin network or some of these other networks. Is that something that you see the US eventually getting into? Is something that you'd like to see them doing? Where do you see that, that industry playing into all this?

• 54:36Speaker 02

  Well, personally, I think we should, I don't know that the US government should necessarily do it, but I do think we should create a system where mining is attractive in the US because again, you know, we benefit a lot from the architecture of the internet being not just founded intellectually in America, but present physically in America. And I think when you look at that computing power, we would benefit a lot from that. And frankly, doing that effectively also has ancillary benefits for us. If you look at the energy consumption in the space, which is one of the things that you say, oh, well, I will say Bitcoin isn't perfect. It takes more energy consumption to process transactions than we would all love. Look at where that might go with, you know, computing power.

• 55:20Speaker 02

  And it's already moved in terms of specialized devices that do this faster, more energy efficiently. And if we can create a good, efficient energy framework to do that, America could end up being the best destination for that as well.

• 55:33Speaker 01

  And I'd take a step further, right? All of the work we've done show that there's a ton of investment going into renewable energy production and development because of mining, right? So whether it's flare gas in Texas, whether it's the consumption of excess hydropower in kind of the Northwest, we've got businesses that are taking tires and breaking them down into energy and then using them to mine. Like, again, when there's an economic incentive, people will get innovative, right? And I think that-

• 55:58Speaker 02

  That's absolutely right. And for me, one that I think is a mistake to overlook, although it does require, you know, government, governments to be more involved to make nuclear work correctly. You know, nuclear is also carbon, you know, negative. It does not have a negative carbon footprint where a lot of our other energy frameworks do. And particularly depending on how that's available to industry, that can be a huge competitive advantage for our economy.

• 56:27Speaker 01

  For sure. I know you know this question's coming, but if the government would let you, would you take part of your salary in Bitcoin?

• 56:33Speaker 02

  I would appreciate being able to participate more in Bitcoin right now. I'm in a role where it would probably be perceived as unethical for me to be very public about what I want to be doing in Bitcoin or any number of other investments.

• 56:47Speaker 01

  Yeah.

• 56:47Speaker 02

  But yeah, I'd be happy to take the standard thing you always used to be if I could give you a quarter million dollars, but you can't get it for 10 years, do you want it in US dollars or gold?

• 56:57Speaker 01

  Uh huh.

• 56:58Speaker 02

  And almost everyone says, I'll take the gold.

• 57:00Speaker 01

  Yeah.

• 57:01Speaker 02

  And now, you know, do you want it in US dollars, gold, or Bitcoin? And I think most people would be foolish to not take at least a significant portion in Bitcoin.

• 57:09Speaker 01

  Yeah.

• 57:09Speaker 02

  You can have a healthy debate between Bitcoin and gold, but I think no one rational is going to take it in US dollars.

• 57:15Speaker 01

  For sure. And then I ask every guest, aliens, believer, non-believer?

• 57:20Speaker 02

  Look, I believe God created man in his own image, and I don't believe that he needed to only do that here on planet Earth.

• 57:26Speaker 01

  All right. If you get into any of the government files and you find out anything, let us know. What one question do you have for me to finish up?

• 57:35Speaker 02

  I mean, how did you get into this? You've become this iconic voice in the space. We now know you're a National Guard Army guy.

• 57:43Speaker 01

  Yeah.

• 57:44Speaker 02

  So how did you get into this?

• 57:45Speaker 01

  All through mining. So I had a young kid who I'd met when he was in high school. He basically came to me and he literally like held me hostage. He was like, you gotta pay attention to this stuff. And I probably was very similar to most people, just like, it's just like a video game, you know, what is this thing? And how he convinced me, he was like, look, my family's been in the data center business for a long time, so I understood kind of the idea of, you know, renting space, bug power and got computing hardware and you rent that out for cash flow.

• 58:14Speaker 02

  Okay.

• 58:14Speaker 01

  So, got it? Well, if you buy a different type of computer and you don't go get customers, you instead rent that computing power out to this algorithm that'll pay you in a predictable, transparent way, it's more profitable, eh, let's go try that, right? And so kind of slowly did that. And it goes to this whole idea of the education of folks gets accelerated once you get some skin in the game, right? And so literally I made an investment to buy some mining equipment, started, and then it was just, I just like fell really hard down the rabbit hole. I always tell people like, I can sit here all day long and tell you everything that you want to know about Bitcoin and answer all your questions, but the best thing you can do is go buy a hundred dollars. Like literally go buy a hundred bucks and sit there and I promise you, if I come back in six months, you'll know a hell of a lot more.

• 58:55Speaker 02

  He'll pay more attention. So how long ago did you start in the mining?

• 58:58Speaker 01

  Yeah. So we started really looking at it in 16 and we built the, the big ones in 2017, kind of early on. And, uh, and it was one of these things where, you know, you start to build it and then we also had layered on top of that, a lot of GPUs that we were using or mining Ethereum or Ether. And the price went from $10 to $30 to $50 to a hundred dollars, all in a couple of months. And so, I'm actually one of these people who believes like the volatility of price is doing a lot of good work in terms of bringing people in because they come for the price.

• 59:30Speaker 02

  Right.

• 59:30Speaker 01

  Uh, and somebody said to me, um, you know, I came for the money, but I stayed for the money.

• 59:34Speaker 02

  Yeah.

• 59:35Speaker 01

  Right. Of this idea of like the price volatility actually is a huge attraction, but when, when you start to really understand like what is money? How does it work? And why are some of this stuff maybe might be better? You kind of stick around because you're like, hey, this is bigger than just, you know, making, uh, making profit.

• 59:47Speaker 02

  Definitely big. And now, um, the other big thing is, you know, one of the common questions I get that I feel better if you answer.

• 59:53Speaker 01

  Okay.

• 59:53Speaker 02

  Is, uh, so what's the best digital wallet? People talk about, you know,

• 59:56Speaker 01

  Oh, man.

• 59:58Speaker 02

  How do you buy and store your Bitcoin?

• 59:59Speaker 01

  You're, you're going to get me crucified online for answering this one. Uh, no. So, so, uh, I've been pretty public about the fact that, uh, I, I'm with you in terms of the privacy aspect. If people own Bitcoin, I actually think that they should not be public about it. Since I am, I've basically given up control of everything. So, if there's any sort of, uh, security things, et cetera, like newsflash, I can't do anything. So,

• 1:00:18Speaker 02

  Yeah.

• 1:00:18Speaker 01

  So I'm probably not a good target. Uh, but, but that was a very intentional decision of, hey, I'm going to be public about this and kind of be a proponent of it. And so therefore I need to take those security measures. For the everyday person, um, I actually have kind of two different pieces of advice. So there's some people who are, are more technical in nature. They, they really appreciate understanding the hardware walls, the software walls and kind of getting deeper into, not your keys, not your coin, et cetera. Um, and so for those people, uh, there's a whole bunch of them online. I'm not going to name names, but, but the more popular they are, usually that means that they've kind of been battle tested by, by the community. And there's a reason why they are. Popular, but with that said, I still think that there is a entire community of people who are going to come into this that just like you don't hold a bunch of dollars underneath your mattress.

• 1:01:01Speaker 01

  Right. You put it in a bank and so you do trust some sort of third party. It's not necessarily you're going to have to trust a fully custodial type wallet or exchange, but there's going to have to be a significant increase in the usability of the user interfaces, et cetera. Because those technical solutions, although they work today, it's just not feasible for, you know, my mother to come in and use that stuff. And so for her, actually, the best thing would be for her to go buy something on an exchange and leave it there. Right. That's actually where she's probably the most safe, but I don't think that's a really good long-term solution. So we've got some work there to build some solutions.

• 1:01:34Speaker 02

  Right. Same. And if you think about like a corporate treasury, if you look at a company with a significant amount of cash on their balance sheet. To me, anything that's a store of value, you might want that as part of your portfolio. A lot of people feel like, well, gee, Bitcoin moves too much for it, for that to be used as a treasury tool. Some people, I think, believe that's great. And I would say if I were looking at treasury management, I would look at some component being stored in other stores of value besides some digital store of value.

• 1:02:00Speaker 01

  Yeah, I joke all the time and I say, first of all, non-correlated assets actually reduce the overall risk of the portfolio. So if you kind of study any kind of modern portfolio theory, you get that. But the second piece is volatility has somehow become a bad word. And I have to remind people volatility works on the upside and downside. So you can't get returns if you don't have volatility, because if something isn't volatile, it just stays flat. And so I think that it's really just being intelligent about portfolio construction, risk management and kind of sizing of a portfolio. But I tend to think that more and more people are going to see the light a little bit and it's going to become less of a taboo and just people are more familiar.

• 1:02:35Speaker 02

  Okay, one last question for me. So with all the volatility out there, with all the market participation out there, you would think that provide a little bit more stability. What explains the volatility?

• 1:02:47Speaker 01

  Yeah, so if this kind of also goes into like, is the halving price then, right? It is a popular question as well. And so the way I describe it is like, we all look at it as like, everyone knows about Bitcoin. Right. But it's actually like, I think it's like six or seven percent of Americans even know what Bitcoin is or have heard of. About it, if you look at from a participation standpoint, even the most kind of bullish predictions or projections of like how many people are actually using Bitcoin internationally, it's like 1% of the world's population. And so, you know, go to the having priced in, I always talk about, okay, even if everyone in the Bitcoin community knows it's coming, it's priced in, what about the other 99% of the world's population that's going to come in at some point in the future? Obviously, they have no clue, right? So from their standpoint, it's not priced in.

• 1:03:29Speaker 01

  Same thing goes, I think, when you start looking at the volatility, which is there's not a lot of electronic trading that goes on. And then also, there hasn't previously until over the last like 12 months or so been the ability to short. So the long only market, right? And so anytime that you get volatility and you've got a lot of more retail, human emotion driven investors, again, they came for the money, right? The people who stick around stayed for the money, but there's a big delta between the people who came for the money and get shaken out and not. And so you get these hyper volatile markets, but you know, as everyone knows, the lows continue to be higher. And I think what that really is, is the most interesting stat to me is the amount of Bitcoins that haven't moved, right?

• 1:04:10Speaker 01

  And that number continues to trend upwards and it's just, you know, those holders of last resort that are just saying, look, I don't care what the price does, right? It's kind of the one BTC equals one BTC, which so far has played out pretty well. So we'll see if that continues, but I think the volatility will slowly dissipate over some period of time. Well, those long-term holders have certainly been rewarded. They, there's a question that a friend of mine who was very, very early in Bitcoin, I asked him, I said, at what price would you not buy anymore, not believe, like would you capitulate? And he goes, I'll be buying at five cents. And I said, look, man, that's a statement from somebody who isn't here because of money, is here because of some kind of ideological or ethos-driven view of the world.

• 1:04:55Speaker 01

  And while I think we've all been trained in a different version of the world, I think we're starting to see a lot of things you've highlighted that's not working how we thought it was going to work, right? And so there's probably going to be that plan B, whether that comes from the government, whether that comes from something like Bitcoin, or there's some other avenue to pursue. I think that, you know, it's likely every day that that's becoming more and more probable. Okay, I can keep asking you questions all day. All right, man. Listen, thank you so much for doing this. I really appreciate it. And then thanks for the people here in Cleveland for having the conference. So we'll have to do this again. Yeah, I'd love to. Thanks. Absolutely.

• 1:05:29Anthony Pompliano?

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