Transcript+
It all comes down to computers communicating. The information superhighway can be a confusing mix of on ramps and off ramps. Bitcoin is worthless artificial gold. Is it still rat poison? Probably rat poison squared. We need to get into the world of OK, this is actually foundational technology. What the Internet of Money does is it creates a single network which can do a microtransaction to a giga transaction. The Internet is going to be one of the major forces for reducing the role of gun. The one thing that's missing that that will soon be developed is a reliable E cash. Hi everyone, welcome back to another episode of final settlement. No shortage of volatility and updates since last weeks discussion. Sure, everybody saw the crazy volatility in the crypto and digital asset markets Bitcoin relatively unscathed. So I hope you enjoy this episode. Quick word we have a very exciting announcement tomorrow coming out from honor and from a product perspective as well as last week we teased a new updated pricing structure that I think a lot of you will really appreciate. We deeply understand that we have some of if not the best custody solutions on the planet earth. But as far as some clients will go as far as that calling it the Rolls Royce of custody, but historically price have been an inhibitor. Some clients saying they're not necessarily ready to upgrade. And we don't want that to be a reason for people not to leverage on ramp. So if you want to reach out, those updates will become public in the coming weeks. But if you want a sneak peek, you could buck a consultation to reach out to me directly, Michael at honor@bitcoin.com and would love to share more. All right, on to the show. All righty gentlemen, welcome back to another episode of Final Settlement. Today is Monday, October 13th, 10 O 6:00 AM Eastern Standard Time. Gentlemen, how are we doing big week Lots, lots has happened over the past past few days. If you've been holding Bitcoin unlevered in cold storage, you might not know anything happened over the past few days. But if you were doing pretty much else anything else in the crypto space, you certainly were were wide awake on Friday afternoon. But we'll get into all of that. Maybe prior to that, the three of us were in Dallas last week for a few different events. There was text cap on Wednesday, which was, you know, really a traditional finance capital markets focused conference. So there was, you know, a lot of people from New York Stock Exchange, NASDAQ, who are really pioneering a lot of things in Texas, specifically getting wanting to get more companies directly listed in in the in the state on these various new exchanges as well as incorporating in the state. And so there was just a lot of momentum and excitement around Texas in general. And then the next two days, Thursday and Friday was the North American Blockchain Summit hosted by Texas Blockchain Council and Lee Bratcher, which was great as well. So Michael, did you have any thoughts on on the days leading up to to Friday, which we'll get to? Yeah, I very wild week, very wild route round trip, not not wild week for us, just wild week in general. Coming back to the show because I feel like there's so many different segments and things we'll touch on from, you know, what's going on the capital market side to the crazy stuff in crypto. But I think a few of the, the notable things for me that I took some, some things I wanted to share was related to, I guess first the, the sentiment that something's broken is something really interesting. This is less from the event, but more from meeting with family offices. I've done a lot of trips to Dallas and met with a lot of folks over the past five years being in the industry. And this is the first time I've really experienced, you know, the notion of the, the, you know, the debasement trade and really just effectively explaining the, the numer or the denominator just being broken. I think really people are primed for it. And, and I don't think it's anything actually to do with Bitcoin per say. I think Bitcoin took a small part of it. I think it's gold. And really what's happening with it has really got people spooked. So that that was a big one. And then I think the the politicians in Texas, I think would be great for you guys to hear from some, you know, folks aren't from Texas is I thought it was very interesting and refreshing to hear some of the senators speak in a light to call out the ills of the fiscal and monetary policy and how you want to ultimately insulate or help your state bypass them. I think at the end of the day, the thing they all miss is you just want your citizens to hold as much Bitcoin as possible. Because again, if you're in a world full of debasement, if your constituents don't have any money to spend, then you kind of don't end up in a good place. So I'll pause there. Curious if you guys have any thoughts. Yeah, no, it was. It's a good point around generally speaking, you know, people in government that were, you know, featured at both of these conferences really recognizing, you know, something that we've talked about for a long time on this show. Just in terms of the realities of the Fiat system, the realities of the debt situation, fiscal spending, and really like the implications of that for the average citizen. So that, you know, their constituents is that things are getting more expensive and they have no way to protect themselves effectively from the debasement. And so this debasement trade is now very much in the zeitgeist as you referenced. And, you know, it's not, I would say it's not something that's permeated everywhere, but it's, it's interesting to see that, you know, it has gotten more steam in a place like Texas where there's general recognition around property rights and freedoms. And, and so it is a natural extension to say, Hey, let's embrace these, you know, outside money assets as a way to protect, you know, not only our state, but our our citizenry as well. And so overall very positive, you know, optimistic outlook from a lot of the folks that were speaking at the conference just in, in the sense of being early to this still. And if you can make inroads in terms of setting up infrastructure and getting companies to move to Texas and incorporate in Texas. I think that's all very constructive for, you know, just being early to what is, you know, it's being called a trade, but it's it's really just, you know, properly positioning yourselves for what is a, you know, long term structural shift in how wealth is preserved, generally speaking. Yeah. And even in general, to everybody who was working or related to the Texas government really stressed the fact that in their constitution they can't run a deficit. They just are trying to be fiscally conservative themselves. And then in addition to that, you know, Texas isn't quite the capital markets that New York is or, you know, still trying to like compete with California as well. And so they're just really trying to be the challenger to both of those. And as such, they're, they want a lot of innovation to come into the city and, and, or state in general. And so with that, I think that's always a good place to be because you have to be watching everything that's coming down the pipeline and trying to be as well positioned as possible in order to have your citizens in the right kind of frame of reference for what's kind of coming. And that's I think why they're so open minded to ideas like Bitcoin and and gold. Yeah, we don't have to spend too much time here or we can go into the the rest of the show. But I do think the one thing that I want to call out a little biased, but I'm sure you guys appreciate it, is it was very refreshing and fascinating to see a state, you know, that is I believe and they didn't let you forget eight largest in the world from AGDP perspective. And I believe France, they're, they're trailing France by a few months to get to 7. But it was a real idea, like breaking down from a pragmatic first principles stance on how to actually achieve being a, to Liam's point, a place for capital markets and businesses of all shapes and sizes to thrive. And, and really breaking down like the, there was a certain tax levy as a corporate income tax and just different things that they were doing to protect businesses. But the thing that I really took from it was they were like, hey, we don't sit back once we do a good job and pat each other on the back, we're like, hey, that was a good deal. They're like, we just want to keep pushing the ball forward, like we're just going to keep moving and keep grinding. And that ties into something that's interesting enough that we've done, whether it's both on the early rider side when it comes to being Bitcoin denominated and even on on ramp when it comes to pushing from the from the front with multi institution. Because I was listening to pomp briefly and Jordan Vista this past week and, and pomp was referencing something about how he went and, and we need to get him on a pot or go on his, his and talk about this because I know you'd appreciate it. He was referencing how he was talking to a, a like a, like a, a group or cohort of publications, media folks and referenced how that in the future they need to start denominating returns in Bitcoin dollars in gold. And they all looked at him like he was insane. And and then we're just and it just reminded me of like the debasement trade, some money renaissance we've been talking about, but then really early riders being denominating Bitcoin because at the end of the day, these concepts are pushing them puck forward. But it's how we will thrive and and survive as a society. But they're what looked at as taboo or crazy will eventually be looked at as a standard in the same way multi institution. And so I just thought it's interesting in a Texas based firm, you see what Texas is doing. There's just there's a level of like craziness in the world in that to like see through it or push forward, you just have to have a basis of I don't know what it is, but but Texas has it and I hope we get to embody it because there's no question like they're leading from the front when it comes to what's happening in the US outside of like Florida. I'm not sure of any other state that's had, you know, as much growth since like post COVID. Yeah. And the, and the other thing I would say too, you know, just a broad take away from the few days we were there speaking with, you know, various people in the industry and then also sort of prospects and, and clients. It's, you know, Texas in general. I would say, you know, it's very similar to how we've, we've historically talked about like the Middle East. Like there's a predisposition to understand hard assets, understand commodity driven markets and also understand, you know, there was a lot of panels and discussions on the Bitcoin mining side at, at the Nab's conference as well. And so there's this, there's AI would say a natural inclination of, you know, these folks to understand Bitcoin as a hard asset, as an outside money, understand the linkages between Bitcoin mining and the energy space, the oil and gas space. So there's a lot of, it's basically, you know, very primed area to understand a lot of this stuff. And that being said, I would say it's still generally early in that discussion, just given like, you know, if I want to take the more cynical view and on some of the events, like, you know, there's still a lot of conflation in the sense that, you know, there's a lot of panels and discussions around stable coins and the tokenization of real world assets. And really, you know, overall sort of still bucketing, you know, Bitcoin and crypto and digital assets kind of in, in the same innovation wave, if you will, And people, you know, talking about defy as, as you know, the real innovation here and, and Bitcoin's kind of boring. Like there, there was some of that sentiment at the conference, which, you know, it isn't unexpected. You have a lot of people from the industry who are, you know, have their own incentives in mind that are, are driving them to those, those outcomes or, or lines of thinking. So I, I think that is worth noting, just given, you know, what we will talk about today around just the broader crypto space. I do think that there's still a certain amount of conflation that's going on. Did you guys sense that as well or? Let's do it. We got let's, let's, let's talk about the fuckery and how it is. All right. So, yeah, as, as we alluded to Friday, got a little crazy. And so there's a lot of different ways we can take this. But I would say the long and short of it is traditional markets closed around, you know, 4:00 PM Eastern. And not soon after that, Trump threw out a tweet or a a Truth Social post, you know, signaling that he would, you know, implement a 100% tariff on China beginning November 1st. Now we've seen a lot of this, you know, the sort of trade war back and forth tariffs on tariffs off. So you would think that it, you know, something like this, we we'd already be a little bit primed to to not be as reactive to it. But given that traditional markets were closed, there's this natural inclination that, you know, crypto trades 24/7. So that is the only market to trade once those traditional markets closed. And so there was a knock on effect, basically a, a cascading liquidations. Now there is some other nuances to all of this in the sense that, you know, it, it wasn't totally random in the sense that, you know, there was arguably sort of an attack here in some sense on the broader crypto space, not specific to Bitcoin. Really. Like I said at the jump, you know, if you were just holding Bitcoin and cold storage, you know, none of this really impacted you or back over 114K, which, you know, we were around the same levels like 10 or 12 days ago. Whereas some altcoins and, and you know, it, it's always funny to me that people characterize like certain altcoins as blue chip, you know, if they're in the top 25 or top 100 even in terms of market cap. But a lot of these things in a matter of minutes on Friday afternoon dropped, you know, anywhere from 70 to 85% in market cap. Now they sort of bounce back. But this was a the broad take away to me is that it just shows the fragility of the broader digital asset crypto ecosystem that when something like this occurs where there's a broad deleveraging and sort of a cascading liquidation that occurs, you know, a lot of the market makers just step away and these things really have no floor. And so that's what we saw happen on multiple sort of venues across decentralized exchanges and centralized exchanges. I think the number being quoted that was observable on decentralized exchanges with something like 20 billion in liquidations. Now that number is probably understating the total amount of of liquidations because we don't have full transparency into some of the the centralized venues. But that was, you know, my sort of take away is just like, this is something that we've known sort of as Bitcoiners is that a lot of this, you know, sort of vaporware to be to be honest about it has a lot of sort of spoof trading. Market makers are sort of keeping these things afloat. And when they step out, there's really no floor. And so when these cascading liquidations occur, you know, you could see this this occur where, you know, some of these things are dropping 80 to 90% in in a matter of minutes. So pretty wild stuff. But again, like the take away here should be like just just own Bitcoin and cold storage with no leverage. And and none of this really impacted you, but curious your guys thoughts on all of this. Yeah, I 100% would agree with everything that you just mentioned. I think that the proliferation of perps and hyper liquid and all these different exchanges that are D5 exchanges where there are no shortage of people who are in the broader crypto space, are now being interested in the crypto space in general. And are telling me about how they have a friend of a friend or something like that who can get them something like 24% annualized returns by taking market neutral bets. And, you know, not having any directional exposure to the crypto markets. But that it implies or expects that these markets are always as liquid as, as like the the Bitcoin markets. And there is somebody who is going to step in and there's a lot of there's a lot of actual liquidity in there. And as we saw especially over the weekend, that's just not necessarily the case, especially for a lot of these alt coins. The reality is the fact that we're just going to be in a in a high volatility environment going back to, you know, the actual announcement that caused this to happen, we are going to be uncertain about exactly what's going to happen with tariffs and where everything is going to fall. And so as such, I think the, the point really stands to, to what you mentioned Brian earlier is just like it's, it's very prudent to avoid leverage, especially if you are have any short term obligations that you need to make and just think about, you know, living your life and saving your craft. So you don't need to speculate in the markets especially on a very short term type basis. Yeah. So there's a lot here. I think there's a lot here from crypto. There's a lot here from Tradfi. There's a lot here in general. 1 is what Brian May be finished off with is maybe the key point to take away is if you're in spot Bitcoin without a single counterparty, whether it's yourself, right or you know, an institution, you're in a good, really good spot, even if it is yourself with an institution. That's a second quite that's a different situation because, you know, we don't even know where the rest of the bodies are going to be buried. And as far as like where holes exist, There was a lot of stuff that happened in 21 where people blew up and you didn't find out till six months later that they were insolvent, which is a thing for everyone to to be to realize. But the notion of like Friday, I didn't know what was happening. I was traveling and you know, if you run a like a book, a lending book, then you probably the volatility you're paying a little bit more close attention. But we don't run a, a lending book. And so the market's moving. And yeah, I didn't really understand what was happening until later and I still didn't fully understand because the move wasn't as drastic as you've seen like historically in 21 when you saw something happen like that, you were moving like 50% down in the Bitcoin markets or 30 to 50%. This was only like a roughly 10%. You know, when it, when it did the deleveraging to one O 5 or whatever that was like that's more market structure where things get wonky at the very end. But it popped right back to 112. So a few things on the crypto side. To Brian's point, all these assets are highly liquid, so there's only a few market makers that are actually trading against each other and eventually when they step out because the market, you know, goes no bid and there's like who's left holding the bag? All the liquidity drives up and that's where you see these things completely go down. So that's one what Liam said, those market neutral trades and or delta neutral trades and these perps proliferation of perps like these things have never existed and nobody actually knows the level of contagion and cross collateralization and the shit that exists like. Actually, nobody really knows. Like if you go listen, because I find this stuff fascinating. And so you go listen to some of the best, you know, crypto, Tranfi pods, and they're all have a different take on what the hell happened. And none of them can tell you anything. They're just like, well, there's auto deleveraging and then like the liquidations and then the insurance fund and the, you know, these delta new church trades, well, they're getting stopped out when they are getting liquidated on the downside. And then if they were long, they're also getting stopped out because the auto deleveraging just stopped out their position. So they just got like screwed on both sides. And yeah, I mean, I think that's like the core notion is so, so you take that right from crypto and it's all Ponzi. And I think a lot of people know and maybe you can make some money, maybe you can't because it doesn't matter if you had everything right If the exchanges in the fragile infrastructure you're trading on blow up when you're just left holding the bag, even though if you were short or long. But the real my real take away here is that this is basically the same system, but accelerated in the traditional finance world, like in the sense of the counterparty risk, the amount of leverage, it's just hyper scaled and hyper accelerated to just, you know, be at the whims of Trump tweeting that what we've been talking about. Other thing I I think it's the least amount of appreciated and Brian and I were partisan very serious or interesting conversations with very wealthy people that have no Bitcoin. And it's and we talked about Bitcoin being asymmetric and it in which I used to think of it as asymmetric is like what you get the exposure to bitcoins upside and then you reduce your exposure to the dollars downside. But what I'm really starting to believe is asymmetries, you reduce the counterparty risk to whatever other buckets of assets you hold because as we'll talk about later in the Tratify space, there is no shortage of like air pockets in a lot of different funds, banks everywhere that you look because there's too much debt and not enough dollars. And that's the thing I don't think people appreciate is like there aren't many safe places to park very serious capital, including like commercial residential in certain cities because we saw what happened in COVID. And so imagine you have a bunch of real estate exposure in a given market and something crazy happens. Well, there goes 60% of your net worth like so anyway, I know that was a lot, but that's like when I think about when I see these deleveraging, it's like this is just a proxy for the rest of the market. Yeah, that's a good point. And the the other sort of high level take away for me was, you know, I saw some of this sentiment on X was like, you know, sort of in the after the early aftermath on on Friday evening was like, you know, today is a day where a lot of Bitcoin Maximus were born. In the sense that if you are a crypto trader and you know, you thought you were doing well, making some money, taking some leverage, taking some some bets on, you know, pretty far out on the risk curve, whether you knew it or not. And something like this occurs where, you know, you thought you were in a decent enough position in terms of the leverage and you just got completely obliterated. Like there was countless sort of stories and accounts of, you know, people who had built up, you know, 8 to, you know, 8 figure balances, trade in crypto and it's all gone in a matter of minutes. Like that is a wake up call for these people to say, hey, you know, maybe these Bitcoiners are right. Maybe, you know, just holding Bitcoin is, is the thing here. And the rest of this is, is super speculative because these people, frankly have been told a story that just isn't true, right? Like, you know, whether you know, any of these, any of these given narratives around all these different tokens and and why they should have value kind of goes up in smoke when you realize there's no actual bid for these things. And then you juxtapose that against Bitcoin, which to your point, Michael, like went down to maybe one O 5 on on certain venues and quickly came back up to like 112 and now we're back over 114. Like the that that shows you like there's actual, there's actual demand for this, there's actual bids here sort of globally as opposed to just, you know, propped up markets with market makers who when they step out these things just have 00 floor. So that was the other big take away to me like this should this should be an eye opening experience for a lot of folks. Now the the counter to that is like for the uninitiated, this is another event that, you know, unless there's really good articulation of what occurred, people are just going to continue to lump this in as crypto, like, oh, there was a flash crash in crypto and not be able to distinguish that, you know, Bitcoin was really, you know, unaffected by this in, in, in, you know, in a, in a large part. But that, that is my fear that like, this is just another thing that, you know, the uninitiated is going to say, Hey, you know, all this stuff is all this stuff is speculative. It's not even, I mean, it's not even that. That's like probably of of optimistic lens this goes back to safe's take about SPF should have never went to jail because when you put SPF in jail, well then the market just assumes that 2021's fault was SPF versus this whole thing of crypto and the the the moral Ponzi that it exists similar here. They're going to call out all these other things. They're going to forget that it was crypto and that it was vapor Ware and that it, there are liquid markets and they're highly fragile. I'm, I'm not saying this is what happened or didn't happen, but I'm fairly certain that what happened Friday, we will see 100 X the amount of deleveraging in the next 24 to 36 months. Like this was just a dry run. And, but the thing that I think really bothers me is like, it's really just simple. Like there's no such thing as a, a free lunch. Like money doesn't grow on trees. So it's the same trade, whether it's the debt trade or whether you're farming, you know, the, the, the risk free rate or you're hoping for your passive 10%, you know, returns, like, unless you understand where that yield or that return is coming from on a long enough time horizon, it's going to be looped into this whole like bubble here. And then you're going to be exposed. And that's why you park to money in the thing that's safe. And then you just go pack to like making more money. And it's really actually pretty straightforward. But the world has gotten that crazy that that's what the crypto casino is. It's a embodiment of the the gambling that exists massed up like Tratify, which Tratify also that is, you know, the casino. So you like blend them together. You had a little, you know, Polymark in 3 billion and next thing you know, you're ready to to to repeat this back. Yeah. One other thing that we touched on but didn't really stress too much is the fact that Bitcoin didn't dump nearly as much as these other assets just shows that there are a lot of limit orders who of people who just want to acquire Bitcoin at a cheaper rate. I honestly just don't even think that the rest of the crypto market even thinks that long term that they want to acquire their assets at a cheaper rate anytime that the market dumps because they're just so focused on making a quick buck today and yeah, there are there are definitely a bunch of traders in the Bitcoin market that are speculative too. But any time that this goes like any significant amount of risk off, there are a bunch of savers who are willing to step in and just acquire Bitcoin for the long term as well any any dip that happens, which isn't necessarily the case with the rest of the digital assets market. Hey guys, hope you're enjoying this week's episode. Quick word from on ramp. As you're familiar, we have multi institution custody, which protects clients from individuals all the way to institutions. We're onboarding some of the largest publicly traded companies holding Bitcoin as their treasury reserve asset. But we also have a bunch of features, you know, within that, whether it's traditional financial services like the ability to trade, set up inheritance, get Bitcoin back loans, but we also have on ramp guardian. This has come up a bunch as deep fakes come to life, become more prevalent, physical attacks become more and more realistic. There is no shortage of tools and services that you can add on top of your multi institution custody arrangement to make sure that you can rest assured that your assets will be safe and secured. These come by the way of, you know, legal time locks from 7 days all the way to 365 days to velocity controls as well as other three factor authentication methods that you can use outside of the traditional kind of logic that exists online. If you want to learn more and encourage you to sign up via our self onboarding or book a consultation and the team will happily walk you through it. All. Right, on to the rest of the show. Yeah, that's well said. The only other just small note I wanted to reference on this was there was some interesting takes and sort of takeaways around, you know, real, the concept of real world assets. And so there was, you know, a, a version of of tokenized gold packs gold that basically D pegged, you know, because of the price of gold didn't really move that much on Friday. It was still around 4K. But this version of tokenized gold, you know, basically spiked down to around 3200. And so people got liquidated if you had, you know, even a marginal amount of leverage on on those assets. And so it just gets back to this whole concept of real world assets is, is sort of flawed in my mind in the sense that if you are entangling it with sort of whether it's smart contract risk or just liquidity risk at, at whatever venue is sort of issuing that tokenized version of the asset. There's just a whole host of layers of risk that, you know, are not really well articulated or very clear. And so just something to to note there because I saw that and then I saw someone respond to that being like, oh, on our platform, it's actually better because that can't happen. We use external oracles for the price of the real world assets. So you know, nothing happened. And then in the in sort of the, the caveat to that, he was like, well, the way we do that is by having it not actually be able to be traded outside of traditional hour. So it's like, well, then isn't that sort of defeating the purpose of these things? If like you can only trade the tokenized version when you know, the actual markets are open? So I just thought it was all kind of funny to me. Like, you know, these concepts get, you know, when when you see something like this, these a lot of these concepts that the crypto people talk about get called into question when we actually realize that they're all pretty fragile. Where'd you guys want to go from here? We had a a ton of links. Maybe. I thought this was pretty interesting. Just prediction markets very in vogue, the calci rays, I forget who who brought this link, but calci hits $5 billion valuation days after rival Polymarket gets 2 billion backing out an 8 billion valuation. Yeah, I I added. This as part of the deals. Maybe we can speed run, we can talk about this one and then go through just a couple. There was a bunch of announcements with capital around capital corporation. I think this ties in. I mean, there's interesting things happening with Polly Market from the election to, I think there was somebody that placed a bid before this, like Noble Prize, noble the, the, the winner of that, as well as there was another one that just happened, Nobel Peace Prize. And there was another event. And I think there's an, I haven't fully rationalized this. There's an interesting case for like open markets for people to be able to like not price discovery, but information discovery. My, my instincts tell me that the other side of it is, is darker, which is you turn everything into a, a, a market, everything into a gambling market. And, and it plays nicely into what we just talked about here, which you just financialize everything under the sun, but it's, you know, the part of the investment was from ICE, which is NYS ES parent company investing there. So yeah, I, I know you guys probably have additional thoughts, but I just think the overarching notion of like, you know, these markets, they're oh, the other thing was polymarkets rumor to be announcing. I think today came out about a, a token now, which probably makes sense because if ICE is going to, you know, invest, I think it was three. I thought it was 2-3 billion, not 2. But either way, there's some probably warrants tied to tokens tied to that, and that that makes a lot more sense from that valuation. Yeah. I mean, to me, I, I've heard people talk around prediction market, like kind of what you're alluding to around, you know, information discovery. If there's a market for everything that's kind of broadly speaking, a net positive for information discovery. I guess where it, it gets conflated to me is like, you know, if you have markets on various things like a public company's quarterly earnings, whether you know, they are positive or negative, like if that's a bet, then like there is, there is still quote UN quote insider information. Because I've heard people make the argument that there's no insider information in predictor markets. And it's just like, this is how you, this is how you value a market by just allowing people to bet on it. But I, I do think that that breaks down when the, the market itself is on something that does actually have some insider information related to it. So I think it's going to be interesting to see how all this plays out, particularly from a regulatory perspective like you know, if there's certain rules and stipulations around public company earnings, but then you have these more open markets on just betting either side of of what an announcement could be or an earnings release could be. I I just think that causes some issues in terms of like, well, there is, there is still some insider information with some of these markets. And so I'm not sure exactly sure how that that's all going to play out. Yeah. I mean, it's a good point because that's like to the notion of like leaking false information or public information. So the first dimension is like what you reference is if you're an officer or an executive and you leak something to somebody internal or they have an anonymous account and then they can go and speculate on it. And the opposite is if you're leaking negative or like information, it's not true. And then they're speculating and you're making money on the other side. Like you don't necessarily bring the most clear market and it is TBD if that's even correct. Like it's just brings it almost negative incentives. Now the opposite is like, well, if there was somebody that knew about a assassination and then they bet that they wouldn't and they could like throw it. And there's always like weird like parallels you can go down, but I don't necessarily see at the end of the day, and I haven't fully formed this opinion, but like where everyone is so positive on prediction markets or net positive for the world, I don't, I think that's right. I just don't necessarily know. I haven't thought deeply about. All the I think it's a little bit nuanced. It's almost like the crypto casinos, like they start off by allowing people to buy and hold Bitcoin and that's obviously not benefit because people can have saved their money in a better store of wealth. And then they offer the next best cryptocurrency as well, just because they think, OK, maybe this one has potential and it's innovative, etcetera. And then you later on have, you know, 10,000 digital assets on your platform, including only pushing e-mail advertisements for Shiba Inu and Fartcoin. And that's essentially how I kind of see these going. Like there's the polymarkets and cow she's that have definite benefits for information sharing for, you know, presidential elections and very important events. But then at the end of the day, they're also going and trying to go out on the risk curve with everything supports gambling that is more of a negative sum game as well. That's just the incentive that they have because they need to make more capital and in order to return it to their investors. So it's not necessarily in my view, all all great are all bad, but I think they're just going to get pushed out further and further on the risk curve. Yeah. OK, rail off a few more deals or or headlines here. I'm going to go to the Square launches AI voice ordering and an integrated Bitcoin solution for merchants. I think this is part of a a, you know, announcements that's they've sort of been dripping out over the past few months in terms of basically turning on, you know, the ability for merchants using Square payment terminals to accept Bitcoin. It's something that, you know, they probably, you know, in hindsight, could have done a little earlier. People have been asking for this for a long time, but it seems like now they're actually falling through on it. So any thoughts on this one guys? Yeah. I mean, I think I thought it was interesting that they put the AI in the top part. This is a 10 bit article, so it's it's unrelated. And then the Bitcoin integration, I think probably, you know, squares playing a different game, a very long game. And so I think it makes sense where they've, you know, slowly trickled out the type of integrations. And really I think the biggest gap around payments has been what's commercially acceptable and and viable. And, and it's really a time thing versus anything else. It's not really tooling. And so I think, you know, the notion of the debasement trade, the understanding, I think there was some that came out this today, about 47% of Americans feel that, you know, groceries are more expensive this year than last year. Small businesses feel it. And so to be able to give the tools and then offer, which is I think one of the big parts of this is offering until 2027, no interchange fees. So if somebody is paying a a client or a user of the merchant services with in pain and Bitcoin, they don't have to pay any interchange, which is generally about 3% for a square. So I thought that was very interesting. And then obviously Square has the full kind of stack around letting them, you know, convert into, you know, BTC or take the dollars and convert to Bitcoin. So I thought that was an interesting aspect of, you know, starting to like get it more and more in the business understanding of like, look, this is something that you want to be prepared for looking at. And then they obviously have Cash App. So if anybody's ever going to land the payments use case for Bitcoin, it's really was always going to be Square because of the Cash App play and then also on the merchant services. But I think the reality is this is still far into the future because people just don't spend Bitcoin. There's not really a reason to spend Bitcoin. Yeah, that's what I appreciate. Yeah, that's what I was going to sort of reiterate. You referenced earlier, like there's a time, there's a time element to this. And and I think what you meant by that is like just, you know, the notion of people spending Bitcoin the, you know, the sort of individual incentive is to hold Bitcoin and spend dollars at current. And so in order to see material adoption and uptick in in these services, you kind of need people being willing to spend their Bitcoin. So where my mind goes with all this, it's something we've talked about in the past is like, you know, who will be the first merchants to recognize that, you know, maybe the way to go about this is you actually offer discounts in Bitcoin terms. Like if, if a customer wants to pay in Bitcoin, they're actually getting a a discount in dollar terms at that specific point in time, that would be one thing that I would expect certain merchants to to adopt here. So in addition to the the interchange fee thing that you referenced, there could be other ways to incentivize people paying in Bitcoin. Because I think what we're starting to see is the recognition from the merchant side that they want to, you know, save in Bitcoin, store some of their their revenue or their earnings in Bitcoin just as a defensive mechanism. But you still do need the other side of that equation. Now you could do an auto conversion if you want to accept dollars, you convert to Bitcoin as a merchant. That works as well. But I think where it really turns into, you know, what people talk about around circular economies and and Bitcoin actually being used as payment broadly. You do need people to actually want to spend their Bitcoin and so one way of doing that would be, you know, a dollar based discount, discount at the point of purchase maybe. Any thoughts on that? Yeah, I was just going to say Square is one of those few companies that actually deeply gets Bitcoin as well as has the distribution necessary in order to turn it on for a large number of companies. I was going to say, yeah, it's it's going to be a little bit of a slower burn in order to have consumers paid the merchants directly in Bitcoin. But just the auto conversion of some portion of revenue directly into Bitcoin is going to be a impetus or you know, for different payment processors in order to really focus on offering Bitcoin integration for up and down the stack. Just because a lot of their companies are going to now have Bitcoin and have a more of a material portion over time. And and so every company is going to recognize that, you know, even if they really want dollars or Bitcoin, they're going to want to accept both. But over time, they're just going to want to save most of their value in Bitcoin. It's just very early days, but we're going to see this force other payment processors in order to have at least a game plan around Bitcoin. Hey guys. I just wanted to give a quick update and something that we don't talk about enough is the on ramp onboarding process. You have at anytime the ability for an honor and private wealth individual to walk you through, help you configure, deposit, withdraw, move assets over. But in reality, we know a lot of people are sophisticated that listen don't necessarily need the hand holding. Our self onboarding experience is someone of the best in the industry. It takes what used to take Me 2 to 8 weeks and onboarding and collaborative custody, shipping devices, wallet configuration files and everything that's associated about two to 8 minutes and onboarding VR process. The wallet is set up, the keys are offline, sharded with qualified custodians and you have the ability to audit on chain. Those assets are secure with us. If you want to check it out, encourage you to go to on rampbitcoin.com and then go to sign up. All right, hope you enjoy the rest of the podcast. Yeah, maybe to rattle off a few, a few others, don't have to go through all of them, but they're interesting and we can go deeper on any of them. So Securitize was rumored to go public via SPAC with Cantor Equity. I think it's interesting from the RWA perspective of what Brian was talking about, like there's a huge opportunity on the capital markets to recognize the trend of digital assets. The other two, they were a little bit more interesting was Pay. Pay, which is one of the largest payment infrastructure providers in Japan took a 40% stake in finance. That's interesting because that's like, you know, Tratify going into crypto. And then the other angle or this is kind of similar is Galaxy announced and they didn't say who it was, which is kind of funny, but it's in their press release and it's a publicly traded firm. So I'd imagine you can get these, you can get who it is from the the filings that come out shortly after. But ultimately, if somebody took a $460 million strategic position from a leading asset management firm, and I thought that was really interesting because we're going to see more and more of this, specifically the pay, pay and then whoever this asset management firm is of different lenses of traditional finance looking to integrate with digital assets. We see this all day long when we talk with Ras and IT it kind of makes sense even from the on rent perspective. If we find the right partner that has the right distribution or the right opportunity that's synergistic with what we're doing, that can help with distribution and other things that come with, you know, R as at how hold anywhere between 10 to hundreds of billions of dollars in client assets. Clients don't ape into Bitcoin. They go in at a very, you know, nominal either .1 to 5% positions. Will that other 95% still needs to be managed. And so I thought that was really interesting on the Galaxy side, but I'll pause there. Any any of those that stand out? Yeah, I it was curious that they didn't name name the firm in the Galaxy release, but I'm sure we'll figure that out shortly. It it kind of relates to another one in the sense is, is what we've talked around just the blending of of Travian crypto. I think the other sort of news from last week was Morgan Stanley dropping restrictions which allow wealth clients to own crypto funds. This is a pivot, you know, I think Morgan Stanley was historically sort of skeptical or, or questioning crypto exposure for their clients. And now they're they're looking to open it up. And so I think this, this merging of these two worlds, I think is, you know, still in the early days, but more stuff like this is going to continue to come out, whether it's, you know, on the Galaxy side, Tri 5 firms actually taking stakes in the crypto native incumbents or just, you know, something more like this where it's just opening access to whether it's the ETFs or, or other products for their clients. This is just again, you know, early stages of this, this transition or this evolution of these worlds colliding. And I thought this was this was a notable, notable one just given Morgan Stanley who they are and how they've historically talked about the asset class. This is a pretty, pretty big departure. Yeah, well, they also just made that relatively large investment into 0 hash too. Now, I think this week is the first week that they're actually talking about like recommending some sort of Bitcoin allocation to their clients. And so that's something that we've kind of been talking about for a long time that most, most legacy firms are not going to recommend any Bitcoin exposure to their clients unless they actually like have some sort of incentive to do so, right? If they can't make money on it, Like they're just not going to push their clients what's perceived to be further out on the risk curve, especially if they even if they know it's better for them, they're just, they'd happily be wrong if they can't make these off of it. And so I think that's also why you're seeing more of these asset managers like whether it's Galaxy Pay, Pay and Binance Japan, etcetera, all kind of making mistakes into these companies. They are they're trying to one learn about it as well as to get their clients best in class exposure to whatever they're they're investing in. Yeah. And I think where this ties into the business opportunity kind of what we're building, what we're investing in, and then just in general where the market goes is it's it's super valuable to talk about in the sense that Morgan Stanley manages roughly 6 trillion in assets and historically had just been for private clients or over. I think it is 1,000,000 1/2 in net worth. And now it's available to all of them. But it's that this is just the first order. The next order is like, there's multiple reasons and it doesn't really matter why, whether it's because they want to make money or it's because they're afraid that their clients will leave. Because similar with Vanguard, if they don't OfferUp digital assets, well then their clients are just going to go down the street and take their capital with them. But then the angle is, well, where do they go next? Is the big like like line of do they go down the perp and and all the stuff we just talked about and expose themselves. I feel like Franklin Templeton's very close already involved there. When you look at just how much crypto Franklin has done versus somebody like Morgan Stanley, and I've spoken with those folks, they're very conservative and they generally look at Bitcoin as a completely separate asset than everything else. Then you start to go, well, now I have to, if you go down the Bitcoin route and your clients are holding material positions, well, they're not really equipped again to build the right products and services for those individuals. And that's really where acquisitions AQUI hires end up coming into play because it's very hard to build that from within a business. Square is able to do it and they're able to get the right people because Jack is a leader that, you know, is understood, that understands Bitcoin and people will work for him. But if you're just a tratified person and you're, you know, have no view of the space or even if you show a view of the space, but it's not widely felt that you deeply understand or have the right kind of like thought on where it's going, the the best talent will not go work for you. And that's really where a lot of these companies are going to get hit over the course of the next 12 to 24 months. And then especially as the deleveraging happens as they're going to realize, oh, it was always Bitcoin and then they're going to really be on acquisitions freeze to find the right talent and businesses that will integrate best in class products and services. Yeah. And and the other thought I had related specifically to the Morgan Stanley stuff is, well it's generally positive. I think we I think we can sort of ascertain that it's very much that, you know, this decision and this quasi pivot is being very much driven by underlying client demand. And the reason I think that is because they're still being very conservative in in how they talk about it. So what I'm pulling up on screen here is actually from the report itself, which talked about this and talked about the recommendation. Well, for one, they're saying cryptocurrency, right? So this is not Bitcoin specific. They're talking about crypto broadly here. And if you look at the sort of recommended allocations here, the, the 4% that people are excited about is in the quote, UN quote opportunistic growth bucket, which, you know, I, I think that that falls sort of more in the, the narrative domain of broader crypto, right, like venture tech, sort of exposure opportunistic growth. Whereas you look at the other end of the spectrum, the quote UN quote, wealth conservation bucket is 0% to, to cryptocurrency. When you know, in reality, if, if this were more specific to Bitcoin, like Bitcoin to me falls in the wealth conservation bucket. Most, most appropriately, right? This is not a trade, it's not opportunistic growth, it's not venture tech, it's fundamentally protecting yourself against the basement with which is another way of saying wealth conservation. So I did find that notable that like, while people are getting excited about this and, and saying this is huge, we do have to sort of peel back the the layers here in the sense that I think this is just being driven by client demand. And they knew they had to put out something that said like, you know, we're going to quote UN quote, recommend crypto to our clients. But when you dig into what's actually put here, it's it's maybe a little less positive specific to Bitcoin or, or, or really just, you know, showing their hand in terms of not really understanding what's going on here. Yeah, I think we don't. We don't have to pull it up unless you want to. But I think this ties into the the central banks and banks in Russia offer also just putting Lacser controls around crypto activity, which I think is interesting because we've seen the opposite with India. And I think it came out last week, India was like going after 500 of the top like high net worth people around crypto and tax evasion. Like there's a antagonistic view that certain sovereigns are taking versus you're naturally starting to see, you know, others like Russia let their banks soft start to offer some of these services, which they historically have. I think they were the last ones maybe six months to a year ago took a similar stance with Morgan Stanley that they like we're starting to lean towards it, but it was only for a very selective number of clients with a certain, you know, net worth standards. Yeah. Yeah, I think Russia is one that makes sense, though it's still less than 1% of bank assets can be digital assets related. But obviously back in I think it was 2022 or 2023 when their treasuries were seized and then just commodity rich nations in general are going to be the first to lean into Bitcoin, just like we've seen with Texas. It's just going to be those types of countries that understand there's a limited amount. If you have the resources and have a lot of energy, it's just a trade that can allow you to get more Bitcoin if you're mining there and just use excess power, which will obviously enable more power generation for your great and consumers too. So it's just, it's, yeah, it's very different to see versus, you know, some of those other countries like India, which, you know, honestly, I, I think that they're just going to be a little bit slower because I don't know if they have quite as much natural resources in that country compared to country like Russia. Yeah, as it as it relates to the sovereign sort of discussion, there was another noteworthy announcement from last week. Luxembourg is the first Eurozone nation to invest in Bitcoin sort of at the sovereign level. So their sovereign wealth fund invested 1% of its holdings. It's a Bitcoin ETFETFS thinking the first level state level fund in the Eurozone to do so. And then somewhat similarly, the, I think this is just worth noting, you referenced this earlier, but a Bitcoiner, the leader of the Venezuelan opposition, Maria Carino Machado, she won the Nobel Peace Prize and is a Bitcoiner and you know, has has proposed using Bitcoin as a national reserve asset for Venezuela. So I think this is very positive to see just in terms of again, those sort of the sovereign level game theory playing out in real time of, you know, adopting outside money, adopting reserve assets that can be manipulated by either the US or anyone else, sort of managing Fiat currencies. I think this is a very positive development. Yeah. Should we wrap with the capital market stuff related to just the I forgot first brands? Yeah, because. Anyway, we want to pull that up. Yeah. So I haven't done a deep dive on this, Michael, I know you have. So I'm going to, I'm just going to I'm going to hand this one to you. But what is First Brands and and what's going on here? Well, I haven't necessarily done a a deep dive because it's like the similar the perp stuff. It's just, it's pretty wild. If you, if you actually, and this will give context if you open up the other link, I think that was in there from Zero Hedge, it'll show their org chart, which if you see, if you ever seen an org chart like this, you should generally run. I think we've seen a few recently in the digital asset space and most notably FTX. But effectively first brain started as like a smaller automotive business and it ended up picking up a roll up strategy where they own some of the large. Like the notable thing that I think is when one of their like either some document was that if you have a car over 10 years old, you basically have a part that came from first brands companies because it was anything that was post manufacturer where you can buy it like half the cost, right? So that all sounds pretty good. It's like you have, you know, wholesale distribution of auto parts. What end up happening is they were taking off balance sheet loans. So the market didn't understand the amount of leverage that they had. And I think that they're notable assets are one to 10 billion and they have estimated 10 to $50 billion in off balance sheet loans for that one to 10. So like anywhere between a 4:50 to 10X leverage ratio. And there's a bunch of money missing and they don't know where where it went. And there's all this other stuff happening. And the bigger problem and I think this is tying into they're starting some rumors of concern. I don't know how really are. So don't take this to take away a grain of salt. Is Jeffrey's being exposed? But the core, when you look at this, it's obviously not apples to apples, but it mirrors very similarly when you look at like we just we talked about the beginning of the show with the amount of leverage in the system of crypto. And as it starts to get more and more complex, it gets more and more obfuscated where you don't know where the risk lies. And then when the deleveraging happens, you could be somewhere over as like in a Jeffrey's, you know, bond portfolio or whatever it is and have exposure there that's going to effectively net out to be potentially A0. And so this is picking up steam. I don't necessarily think this is like some kind of crazy systemic thing that's going to like, you know, be like, I think Evergreen was one of the ones that comes to mind from a couple years ago. But I think we will start to see more and more of this. And part of what this article or what's referencing is just like tricolor was picked up the past few months is as we start to see or the past few weeks, as we started to see more and more of acute signs of recession and, you know, delinquencies, you start to see on the edges these types of businesses that are prone to the consumers lack of liquidity start to show up because there's a lot of holes everywhere. Like we talked about the air pockets. It's like when do they start to show up is the point. So yeah. Yeah, this, this reminds me of the sort of what we, you know, you're exactly right. We're starting to see little signs here and there of really where, where all the risk lies. And the other example that comes to mind was a month or so ago that, you know, Karna offloading a bunch of their buy now pay later loans to an insurance company. And it's just shifting around the risk, shifting around the liabilities and, and really obfuscating where the credit risk lies. I think we're going to start to see more of this, unfortunately, where we, we start to figure out similar to the crypto side, it's like figuring out where the bodies are buried over the next several months. I think it's going to be pretty interesting to watch play out. Yeah, With the only caveat is in the crypto space series, no bailouts versus if anything is systemically important, you're going to get bailed out in nominal terms, but not in real terms. Anything else, Mike? No, a few a few things just to call out if you made it this far. We had teased last week about updated pricing on the on ramp side and we had a lot of interest and we're basically going to be moving to a flat pricing structure. If you want to book a consultation, you can reach out and we'll walk you through the pricing. It's really advantageous for clients that have wanted to work with us, but a little hesitant on our BIPS based pricing. And then we have exciting news tomorrow related to the business side of Bitcoin adoption. So I'd encourage you guys to to take a look at that and reach out if you want to learn more because we have notable things being announced in the next couple weeks and would love to chat with anybody listening. Awesome. Well, sounds good. I think we can wrap their boys tight hour. Thanks for joining. See you guys next week. Thanks. Thanks for listening to this week's episode of the show. If you found the information valuable, please share the episode with a friend or leave a rating on your favorite podcast app. All the links we discussed in today's show will be in the show notes inside your podcast app. Before we finish, a quick reminder that On Ramp Media is for informational and entertainment purposes only, and nothing should be construed as investment or legal advice. Regardless of where you are on your Bitcoin journey, we'd love to hear from you. Visit onrampbitcoin.com/contact to schedule a consultation with one of our private Client Advisors.
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