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What you're telling me is that music is about to stop and we're going to be left holding the biggest bag of odorous excrement ever assembled in the history of darkness, 1974198792972000 and whatever we're going to call this, it's all just the same thing over and over. We can't help ourselves. I say when we sell, hey. OK, I say when we sell. We just finished recording with DJ Boyapati, author of The Bullish Case for Bitcoin. I really enjoyed this one because his article in 2018 was one of the first pieces I came across that really started to help me understand Bitcoin, what it was, the history of money, and really the future of Bitcoin. He since published a book in 2021 diving into those ideas in more detail. And today on the last trade, we revisited something that I really wanted to was nation state adoption. He had mentioned that as kind of like one of the final points of the adoption curve for Bitcoin. So clearly there's a lot has changed since 2018 when he first published that article. We also talked about Bitcoin treasury companies and other hot topic there about B JS thoughts, which I thought were refreshing and balanced. And then we also talked about why he thinks Bitcoin adoption is still incredibly early from, you know, traditional finance and wealth advisors really not stepping in yet. Most people don't have any sort of material allocation. And then he also mentioned why Bitcoin is still incredibly attractive from a risk adjusted perspective, meaning a lot of the risks that people are concerned about 5 or 10 years ago no longer exist. But that said, one risk that does exist is custody and how you secure your Bitcoin. And So what we do here at On Ramp is we help investors like yourself, whether it's an individual or a business or institution to secure Bitcoin for the long term. We have inheritance built into that. We have insurance built in, we have Iras, loans, etcetera. There's a lot we can talk about. So if you want to learn more and how we can potentially help you, you can head to our website here. You can schedule a consultation and you speak with myself or someone else on the team. Hope you enjoy this episode with DJ as much as I enjoyed recording it. Welcome back to the last trade. We have a really exciting one. I'm I'm particularly excited for this one because we have Vijay Boyapati joining us and we have my Co host Brian Cabela's and Michael Tanguma. But Vijay, I know you have a busy summer. You have your hands full with the family. So thanks for carving out an hour here to sit down with us and chat everything that bullish that is happening in this space. It's great to be with you guys and I really like the format. I'm obviously a huge fan of the All In podcast, so it's a it's a cool format. Yeah, we're going to surpass them at some point. I can't put a prediction as to when that'll happen, but it could happen sometime. In the I think it's Bitcoin 500,000. I think that's when you surpass them. You know, I think it'll be around the same. Time, yeah, it'll be around the same time they start understanding Bitcoin. I think that'll be the convergence. It'll yeah. Yeah, if we could only have Vijay here every week with us, we would be ahead of them in no time. But yeah, we want to start just really quickly. I want to at least acknowledge some new all time highs. This is the on ramp terminal. But we hit a, what was it, 123 or so earlier this week. Felt like a nice milestone, but we all know I think there's much more ahead of this cycle. But then also you're just looking ahead. We're really just getting started. And one of the things that we wanted to start with today was VJ. You know, you hold a special place in my heart, my friend, because in 2018, your article the bullish case for Bitcoin was really the first thing that kind of got me set on the right track here. And so the three of us ought to be a good idea to just revisit that quickly because you had in kind of the closing section of that piece that you published, you had I guess the best way to categorize it as the the final Gardner hype cycle. So if you want to just explain quickly what those hype cycles are, and then you mentioned the last one would be nation state adoption. And so we're finally at that breaking point here where we had El Salvador a few years ago. But now you have the US government getting involved and you have a lot of nations that are exploring Bitcoin as a strategic asset. So we'd love to just hear you revisit that. And it's probably pretty wild, seven years later, to be seen everything play out as you had written. Yeah, so the Gartner Hype Cycle is part of the process of monitor the monetization of Bitcoin and the cool thing about seeing the monetization of Bitcoin. And so we're we're watching this real time, like all of us are watching this happen. The process of monetization of gold took thousands of years and no one really had, you know, a complete sense of what it looked like. You'd you'd live your life. And the gold, the value of gold didn't fluctuate that that much. But with Bitcoin, it's going from being worth nothing to being worth trillions of dollars and becoming global money in the span of decades. And really no one has seen this before. And, and so it, it was kind of an open question like what does that monetization look like? Is it just linear? Is it just like adoption grows slowly but steadily over time? And what we've learned is that it happens in these cycles, which I, I call fractal patterns of increasing magnitude, which is you look at each of these cycles and you superimpose them on each other and they look pretty similar, right? You look at the cycle from 2017 and you overlay it on the cycle of 2013. It looks pretty similar. It's this kind of parabolic shape. Then you have this crash and then you have a plateau. And this is the shape of a classic Gardner hype cycle. So we've had, let's see, three or four of these. I'd say four of these Gardner hype cycles have happened so far. And what I posited in my article and then my book was that the last of these hype cycles would be nation states scrambling to get as much Bitcoin as possible. And one thing that I wrote, which I, I still think is true, is that it would be nation states with strong executive power that would be the first to adopt Bitcoin because it takes kind of a strong leader to come in and say, hey, we're just doing this. We're just going to buy Bitcoin. My view was that it would be some, a nation like North Korea that they, that their leader would say, hey, we need to get some kind of store value that we can transmit across the globe that can't be sanctioned by the US. So we are going to get it by stealing, by hacking, whatever means possible. It it turned out that the the the leader who really stepped forward first was Naib Buchelli from El Salvador. And while El Salvador is a democratic country, he has overwhelming support there, like 90 plus percent support. So in practice, he has the power of a dictator. He has the power to do things that a very strong executive can do. And so he said, hey, we're just going to buy Bitcoin. And I don't care what anyone else thinks, we're going to go and do it because I think this is the right thing for our country. And I said I believed that Western democracies like the United States would actually be kind of later in line because it's really hard to build consensus in a democracy like the US, especially when you have so much polarization, right? When you have Democrats hating Republicans and you have these razor thin majorities in the House and the Senate, it's hard to get anything done. But it is interesting. I am a little surprised that the USI mean hasn't done anything really, but that the US said that it would establish A strategic Bitcoin reserve. And Trump seemed to be supportive of that. I think what that is, is a recognition that there's a very strong and crucial demographic in the US that are independent voters and that care a lot about Bitcoin. And, and for them, it might be their single issue, right? Like, I care a lot about Bitcoin. And if you were going to propose policy that is really antagonistic towards Bitcoin, hell no, I'm not going to vote for you. In fact, I'm going to go out of my way to try and make sure you can't get elected. And So what you've seen in this last election cycle is that there are all of these very powerful interests now that are having a big impact on the election and politicians are paying attention. And I'll give just one example of this. Sherrod Brown, who was a Democrat in Ohio, was the most powerful person on the Financial Services Committee. He was the chair of that committee and he was kicked off that committee. He was, he was voted out because the sort of Bitcoin slash crypto lobby went after him. And, and that was a very, very powerful signal. You better believe that people in the Democratic Party were paying attention to that, that this is now a very powerful lobby. And, and the, the, the last comment I'll make is this signals that Bitcoin has political capture now And for several years. I said the most important risk to Bitcoin is a nation state attack. And the only way to get around nation state attack is to get political capture. That is Bitcoin. There is enough adoption of Bitcoin that it becomes politically infeasible to attack it because the consequence of attacking it is you don't get into power. I think Trump coming to the Bitcoin conference, bending the knee and saying everything that Bitcoin, Bitcoin has wanted to hear from. I'm going to free Ross Ulbricht, I'm going to fire Gary Gensler. And he did these things, right? This is not empty promises. He did these things. That was the sign that we now have political capture. And I think the number one risk for Bitcoin is off the table. And so that is a very, very powerful thing. I think for this bull cycle and for future bull cycles we have instead of having this headwind against us, which is the political establishment being a headwind, it is now a tailwind for Bitcoin. So I think that's a very, very important sea change for the market. Yeah, One thing to call out from that prescience of, you know, referencing the adoption cycle in sovereigns, I think that was actually precisely right. They just weren't public because I was writing down like the Kingdom of Bhutan, you know, maybe didn't necessarily outright adopt or say they're gonna establish, but they've been leveraging their resources even before they became public. I think it like back ended into US finding out North Korea has been hacking everyone's wallets for a very long time. And I I was just saying that hacking Ethereum wallets then transferring it into Bitcoin because they recognize that Ethereum is an easier target to hack and that Bitcoin is the strongest, safest asset if you want to hold something liquid, easily transferable and not controllable by nation states. They wanted Bitcoin so the worst. This is another signal the the worst nation on earth recognizes that it's better to target Ethereum, but it's also better to save in Bitcoin. Exactly. And then Russia again with the sanctions and everything else going on. And then UAE, because it's understood that UAE has been stacking, whether it's via mining, via nuclear or just adopting, but behind closed doors. And these are all like effectively monarchies. And then Kazakhstan, I think this week it's it's interesting, it got to kind of swept under the rug, but they're potentially establishing a reserve a little out of a left field. Before we continue, I wanted to just ask, where do you, where does the, the first principle prescience or the first principles and some of the understanding of like this monetization phase come from? And the reason why I asked that is because like Jackson, you know, read the bullish case for Bitcoin very early. And then naturally, I've kind of looked at your, your Twitter for the, the signal and deep in the bear markets of like, you know, even now as we're coming back, it's, it's this is the adoption. This is where we're at. You know, there's a lot of questions have been around what's happening at 100K and is there paper Bitcoin. It's like, well, listen, people have been holding this for a long time. Feel like you've had a great handle on this phase more than a lot of people of what's happening in. And I know you've shared previously about your background father having to flee and carry gold and these stories, but you were also a Google engineer and lived the Silicon Valley life, which historically is like at polar office. It's a first principles thinking. I'm just curious, like, where does it come from? Because I think that'll help me personally. I understand how you develop this mindset, but also for the rest of the conversation where a lot of that comes from. Yeah, that's a good question, Michael. Actually, no one's ever asked me that. I think it comes from the fact I when I joined Google, I didn't really have any knowledge of politics or economics or anything like that. But then I came across some libertarians at Google and they introduced me to some thinkers, economic thinkers, who really changed my life, I would say. And yeah, people in the Austrian School of Economics, Ludwig von Mises, Friedrich Hayek, and they really provide a framework for thinking about economics and thinking about political economy. And I would say the book Human Action by Ludwig von Mises is just a life changing book. It's very, very difficult to read because it's, you know, someone who's a German speaker writing in English and writes these really long, verbose sentences which are incredibly dense. So it is, it's a difficult book to consume. There are other books that sort of introduce you to the same ideas in a more approachable way, but I'd say that's the background. Austrian economics, and in particular Ludwig von Mises, and that book Human Action really, really had a big impact on how I see the world. Love it. Yeah, one thing is well VJ that you mentioned that I thought was interesting that we talked on occasion on the show as well as you mentioned the political capital behind Bitcoin now and I would even expand that out to just broader incentives. And so now you really have everyone that has political power, financial power has the backing of Bitcoin, right? Because one of the things I like to follow that I can still cannot believe how little people are talking about it. But the fact that Blackrock's Bitcoin ETF is now in the top 20 largest ETFs in the world about 18 months after a launch, right? And it's, I think the now the largest revenue driver for ETF products at BlackRock. So not only is it the political shift that we're seeing now, but it's also all of the largest pools of capital in the private sector have a ton of incentive for Bitcoin to be successful. And so I just, I'm curious to hear your thoughts how you think about that as on the private side in addition to the public sector? Yeah, there are two facts about that which I find absolutely incredible, that it's one of the biggest profit drivers at BlackRock. The fee structure on that ETF is incredibly low, incredibly low. So that tells you how how quickly it's grown and the assets under management in that ETF are enormous and growing very, very quickly. So despite the fact that the fee structure is so low, I think it's like oh point 2%, it's incredible like for this kind of esoteric product that they're offering. And just for context, the gold ETF is, oh point, 4% and the gold ETF has been around a lot longer. So the fact that they're making so much money on it is, is a testament to how quickly it's grown. The the other thing is that I find amazing is that people like Larry Fink and Jamie Diamond, they, they're not true believers. It's not like they really understood Bitcoin and like we need to figure out a Bitcoin strategy and like be forward thinking. And, and I, I will give credit to Fidelity. They, they were forward thinking and they built out a Bitcoin team very early on. The reason they got into Bitcoin was it was entirely bottom up. Their clients were coming to them saying, can you please give us a way to get exposure to Bitcoin And they were hearing this over and over and over again. Their big clients saying, please, family offices and high net worth individuals are coming to them and saying, we want a way to get exposure to Bitcoin. We're banking with you and we don't there's no product here. What do we do? And, you know, a lot of these folks, especially the older ones, they don't want to go out and buy Bitcoin directly and put it on a hardware wallet and then put it under their, you know, pillow. They don't know how to manage private keys. That stuff is scary as hell. So they wanted a trusted financial institution to give them access to bitcoin's price moves. And that's why Larry Fink launched the ETF. That's why Jamie Dimon is starting to think about offering products around Bitcoin. And it's it's a testament to this was there was a groundswell of demand for Bitcoin and this, the growth of this ETF, the fact that it's the fastest growing ETF in history is evidence of that, that underlying demand, that groundswell. And it it's not over by a, you know, a long shot like the gold ETF when it was launched caused a four or five year bull market in gold and, and gold, I think at 4 or 5X once the ETF was launched, you know, I think we could see a sustained bull market in Bitcoin. We may not see this cycle may be different to previous ones. It's entirely possible that we see a sustained bull market in Bitcoin that lasts 345 years based solely on the fact that there is so much underlying demand in the retail population to get Bitcoin. Yeah, Vijay, I was actually going to ask a question right along those lines of in your mind are are cycles different going forward? You know, obviously always cognizant of not saying that this time is different. But if you just, you know, take in context what we just spoke about in terms of institutional capital flows, even sovereign level flows, it does feel like, at least to me, like we've unlocked these higher rungs of pools of capital that now just fundamentally change the market dynamic. Like if there is some deleveraging event in the future, I just think there's going to be a massive bid from these larger pools of capital to step in with greater size. Where in the past, like you were reliant effectively on retail to, to, you know, step in in, in terms of, you know, that deleveraging event. And that could take time, right? Could take two years for retail to come back. So I just think the market structure is totally different now. What are your? Views on that just in terms of what cycles may look like going forward? Yeah, that's a great point. I will, I'm going to try and argue both sides of this and give you both perspectives. I think you're absolutely right, Brian. The market structure has completely changed and I think there are things now that dampen the movement of Bitcoin. One of the things is that we now have mutual funds which are allocating to Bitcoin and have a fixed percentage allocation, let's call it 3% or 4%. I think that'll grow and you're going to get more of these sort of retirement vehicles having a fixed allocation to Bitcoin. And the dampening effect there is they, let's say they allocate 5% and that turns out to be, I don't know, 500 million or it could be 5 billion depending on the size. Let's say Bitcoin has a Goodyear and it double S and now suddenly they've got a 10% allocation. They're going to sell that down. So they're going to try and get it back to their target allocation of 5%. So that's dampening. As Bitcoin goes up, they're going to dampen by selling it down. If it goes down, they're going to dampen in the other direction by let's say Bitcoin halves. Their allocation is now 2 1/2% and they're going to try and buy it back to 5%. So this is going to have a tendency to sort of stabilize the price of Bitcoin. The other part is the financialization of Bitcoin. That is, you now have options markets on Bitcoin, you now have futures markets on Bitcoin. Those things also tend to stabilize the price. They provide more liquidity and it means that you can you can make a sale in the Bitcoin market now without moving the price very much. And there's an example of a recent sale, very large sale of Bitcoin and it only moved the price a few percent, which I think is a remarkable testament to how liquid Bitcoin has become. So that's arguing one side. That's arguing the side, the point that you were making, Brian. The other side I will say is that human nature is still a thing. And and this madness of crowds phenomena, I think can still kick in. It's, it's not, it's not really possible to see something going up steadily in price and to not have people pile in like let's say Bitcoin goes up, you know, 20% a year. Every year people are going to say, why want some of that? And then more people will see, oh, well, it's actually going up more than 20%. It's going up 30% now. And that's what creates the parabolic move. I think that's still entirely possible that we do get a parabolic blow off top. And when that happens, I don't know, I could easily see this cycle being extended just because of the size of the capital that's involved. Now the last thing I'll say is this cycle already looks quite different from previous cycles where there was more of a kind of parabolic move where the price would kind of steadily, you could draw a parabola through it and there would be corrections, but it would go up, It would correct very quickly and just go up in kind of a parabola. This cycle looks more like a stair step where we go up like 30% and then we plateau and just grind for eight months and, and people like, is that the end of the market? And then we'll go up another sort of 30 to 50% and grind. And this has happened like 3 times in this cycle. This already to me feels quite different to, to prior cycles because of that. So I don't know. I guess that the, the bottom line is I don't know how this is going to play out. My intuition is this plays out over a longer period of time, but eventually the madness of crowds will kick in and that you will get retail FOMO and people will start piling in and you will get a blow off top. And I could see that happening in 20/26/2027. And and the thing we've learned from prior cycles is the top always seems higher than most people predict at the beginning of the cycle. Yeah, I think that's exactly right. Just based on the it's extended, it does look different, a little muted for a number of reasons with the, the capital markets, specifically options to, to kind of like dull or smooth out the volatility, but also from behind the scenes. And I'm sure you, you see a lot of this as well. You there's a lot of liquidity and plumbing being set up, whether it's banks, stable coins coming live, other, you know, institutions that allowing for setting up ETFs, the sovereign adoption pub codes that there's still a lot more liquidity to come in before this natural blow off top. But then we're still all humans and the people still running these shops are humans and they will naturally get overextended. My mental model and part of the founding of this business was looking at 2022 and realizing, Oh my God, we're going to redo this again because it's the old legacy mental model of just pure trad fire, right? Like either self custody or third party custody. And they treat Bitcoin like every other asset and they're not familiar with 24/7 lending and all the things associated with it that we've kind of like lived through. And so tread fights going to come in and do it because you don't just like wake up and be a pub Co and say, I want 5 billion and understand what you've learned in the past 15 years, like it's impossible. And so those humans are naturally going to get outside of their insurance. And then there's also the notion of not every capital, long term capital. We saw with forget what the firm was in 21 that realized like 100% gain and sold. And, and, you know, it's still rallied another like, you know, 2X from there is people are going to realize their gain and sell off and that's going to, you know, participate in that volatility in the future. Yeah. I think, you know, everyone who comes into Bitcoin learns these lessons over time. Like they, they initially see it as a trading opportunity. There's this famous tweet from 2011 where someone bought Bitcoin for three cents and they, they sold it at $0.08. And it just keeps getting brought up every year. And, and I think that's going to, that's going to apply to a lot of these financial institutions too, that they don't, they don't understand what they have on their hands. I, I think. And, and that's, that's fair enough. You go back to the early days of Bitcoin, of the cypherpunks and, and the libertarians who are using it, A lot of them didn't understand what they had either. Like you look at the 2017 block size wars, there was this huge debate internally in the Bitcoin community, like what is Bitcoin? Is it digital gold? Or is it like a decentralized PayPal or Visa? Like is it a payment rail? And, and I think that debate was decisively answered. It's, it's much more akin to gold. It's much more akin to a reserve currency. But when, when you don't understand what Bitcoin is and what the opportunity is, you do see it as a, a short term trading opportunity. You're like, oh, this is great. I can make, you know, 50% in a year, or maybe I'm lucky and I get 100% in a year and I time it correctly. But then they're not zooming out and seeing like this is a generational opportunity. And this isn't me. This isn't my intuition coming from, you know, my understanding, the economics, this is my intuition having worked at Google. These things are very rare, these generational opportunities that change the world. And when you see them and when you understand them, what you want to do is just hold a core position, build a core position and just hold it forever. That that is how great wealth is always made. It's it's having a concentrated position in something that you have high conviction in. All of the, all of the wealthiest people on Earth became wealthy that way. It's not through diversification, it's not through day trading. It's having a concentrated position in something that's going to change the world, and that's what Bitcoin is. I love it. Yeah. No, Vijay, one thing too, we wanted to talk about ties into what you just said in the sense like I think the three of us, Brian, Michael, myself, we are, we're strongly advocating for people to buy and hold to your point, have a core position in Bitcoin and just kind of forget about it, right? Make sure the custody is up to snuff, however you want to do that and your family can access it. But you know, in this cycle, we've had a lot of people advocate for people selling their Bitcoin to buy a better form of Bitcoin, Bitcoin treasury companies. So I know it's something you wanted to talk about. Brian had it on his list as well. We wanted to talk about Bitcoin treasury companies. What your thoughts are in that space. I my personal before I hand it over to you, is that like if people want to invest in them, by all means, but you got to have the core position in Bitcoin. Like that's the most important thing here. But I also think it ties into what you said earlier about human psychology. And so I think that the Bitcoin treasury companies will likely play a part in a blow off top that inevitably happens whether it's this year or next. But want to hand it over to you and then certainly welcome the groups thoughts on this topic too. Because it's a it's a spicy one let's say. Yeah, I, I mean, there is kind of a religious fervor around these treasury companies and, and how, you know, they're great for accumulating Bitcoin. And there's this narrative that they're better than Bitcoin because they can, they can be a creative of Bitcoin per share. They can accumulate more Bitcoin per share through various, you know, financial engineering. I will observe that every cycle has had a bubble, something which kind of made it like people got really excited about it. Then it blew up and, and people lost their limbs from, from the bubble. And in 2017 it was Icos and in, in 2021 it was like NFTS and, and Defy. And also I will say GBTC. We can, we can talk about that later. And this cycle it's treasury companies. They are the big bubble and they will be, in my view, they will be the reason that this market blows up. And there will be a tail that will give you a big hint that the top of the cycle is in. Once the premium to NAV gets to one or drops below 1, you should be very, very careful about, you know, doing anything crazy in the market or putting in a huge purchase because that will be the signal for the top of the market. I am very skeptical of the idea that you can financial engineer your way to, you know, a huge holding of Bitcoin. I know it's happening with a couple of companies. And so they're a little bit of an anomaly like MicroStrategy and Metaplan. It's had some success, but you're going to get a flooding of companies doing this to the point where they're not able to be creative anymore and the premium to NAV gets down to 1 and they can't issue more shares. And I, I've always been supportive of the idea that companies have a real business and they save in Bitcoin. Mike, that's how MicroStrategy started, right? Remember, the first purchase of, of Bitcoin was MicroStrategy had $500 million that they had earned through their, their real business, their bricks and mortar business, which was a data analytics business. And they're like, what do we do with this $500 million? Let's buy Bitcoin. That's great. But this idea that you can kind of bootstrap your way up doesn't make much sense to me because there is nothing, there's no rational reason that they should have a premium to NAV. Let's say I create a treasury company that doesn't have an underlying business, that doesn't have any underlying cash flow and I have like 10 Bitcoin. Why should the value of the company trade higher than the 10 Bitcoin? There's no reason, There's no logical reason. It's just sort of irrational market sentiment. And eventually that market sentiment will be, I think, washed away and then you're going to get the hangover in the crash When, when that happens, I don't know. But I, I would be looking for the tail. If MicroStrategy trades at its asset value, then, you know, the bull market's about to end. I think that's really well said. And we've been I've personally been very loud about this, living through a lot of just building in this industry and seeing people lose their Bitcoin specifically like blocked by FTX. And part of our role when I think of outside of just custody and financial services and we like safeguarding. So all the things that you've learned, we've learned, we communicate that to clients and they can do whatever they want, but there's very little people just telling people to park and hold their Bitcoin. We'll take a nominal fee and then you go back to your life. And so just take pride in that. And I've done a lot of soul searching because I'm trying to figure out like, am I the lud out here? Am I crazy? And, and we've had to have these discussions you referenced. And I do think one big component you touched on it with the ET FS is and it, and this was something I was thinking about and that I was recently messing around with a single sig wallet. And it's like the proposition of all of us and what we did to get Bitcoin is actually kind of insane when you really think about it. Park material wealth, if not all of our wealth in this thing. And so many people globally have wanted exposure and there's so much capital out there that's underperforming. And so you see this, that's the, it's rational, irrational behavior of people just trying to get their proxy exposure through these vehicles. But to your point, this is just asymmetric misunderstanding of there's other ways to do it and there will increasingly be. And as people smarten up as everyone does because their wealth increases in whatever terms, well, there's Bitcoin per share of dollars. I'm like, well, what is this thing? And the rational move is to take it out and get the underlying with the least amount of counterparty risk. So, and that's just one angle. There's the first principles angle. What you're probably keen in on is you can't make more money off of money on a long enough time horizon. And so, yeah, it's, it's refreshing to hear you take have that take. But also I, I do see the concern of like, there's just so much capital out there and so much people, so many people that don't know. And we're in a mimetic world where there's a ticker for everything. And so it's like we're infusing Bitcoin into instead of crypto 2 point O we're going to get it's the the altcoin cycle, but it's in public duty traded stocks, which is where everyone 6040 is in by definition. So it's a click of a button to get your Bitcoin Treasury Co. And so it probably lasts a lot longer than we're expecting or hoping. Yeah, you're right, it could last a lot longer. I will say it's kind of the last stage of a risk on market where people really chasing that kind of performance because I think there are at the last stage of a bull market, there's just so much froth and so much speculation and people are trying to catch up in a way. Like they look back and they feel this sense of like lost, lost opportunity because they, they have friends or people they know who've made like, I don't know, 2X or 3X in Bitcoin and they haven't, they've come in really late and they're like, how do I catch up? And it's really just pure greed. You know, the market's driven by greed and fear. And at the end of a bull market, it's just pure greed. And that's when people are trying to look for leverage. I will say this reminds me a lot of before I was a Bitcoiner, I was a gold bug. And I, I used to talk about gold when I was an employee at, at Google and try and explain why gold was important to people. And they would always look at me funny, like, what is this useless rock? Why would you want to own this useless rock? And then I'd explain it and they would start understanding inflation and start understanding money and they'd be like, Oh yeah, actually gold makes sense. I should have some in My Portfolio. And the next thing that would happen was why don't I own a gold miner? Because they have more leverage. And if gold is going to do well, and now I start to believe the story that gold will do well, it's better to own gold miners. And I would always have to sit them down and say no, that that's a bad idea because there are all these other risks to gold miners that gold does not have this geopolitical risk. There's management risk, there's forex risk, there are all these other risks that you're not considering. What you're trying to get is leverage on gold. If you want more performance, if you're getting greedy and the gold is not giving you enough performance, just leverage on gold. And I make the same point about Bitcoin. If you feel like you need to catch up, don't go find a super speculative treasury company that you think is going to 10X. Just do leverage on Bitcoin. I mean, I think that's a bad idea too. You're going to get blown up that way too, but at least it's a pureplay and you're not taking on these risks that you don't understand. You were just taking on the risk of leveraging on Bitcoin. So yeah, it really is. I think it's greed. That's what what it comes down to. It's people are chasing performance that they feel like they've missed out on. And you won't. You know, as much as you speak to people, Michael, you're not going to be able to stop it, unfortunately, because there's just this herd mentality and people go crazy at the end of the cycle. And you just kind of have to stand back as someone who's seen it over and over again and say, crap, this is going to happen and people are going to get burned and people I care about are probably going to get burned, but there's nothing I can do about it. You're going to feel like Cassandra, that that's what it's going to feel like. It's the beauty of having a vehicle to express it in the which is our firm. And then the low time preference. Because I appreciate you sharing this because the guy like I have, we're all day long explaining what you're explaining. And I know they buy in, but they're a little younger and they haven't gone through like build it in this business. And I witnessed this first hand. I used to. I was that Unchained built that business and would compete against block Fi all day long. And our loans were more expensive and everyone would always like, you know, balk. They knew it was better. It's like, look, nominally it's more expensive. I remember the exact numbers because interest rates were lower was 7.9% to lend against your Bitcoin at block fine, 9.9 at unchanged, but it was risk adjusted much cheaper and then people lost their shirts. But then at the other end of that, that's when you build a, you know, generational business because all that capital flees not only to the people explaining it, but also the more transparent fault tolerant solutions. So that's the angle here is like we just keep talking about it and people will remember who was doing it the right way and then who was putting people in these like speculative products. Yeah, you're absolutely right. 2022 was a great example of this. Like all of the companies which had no risk management, which were being incredibly reckless with their lending, they all blew up Voyage of Block Fi, you know, Genesis all, they all blew up because they didn't have good lending practices and their management specifically prevented good lending practices because they were greedy. And, and, you know, to have good risk management and risk controls in place would mean that they wouldn't make as much money. And and, and unchanged is an example of a company that was, you know, very responsible and, and still exists, but probably left money on the table because of that. But in this space, that's the only way you survive. Like the ones that win in this space are the cockroaches, the ones that say, I just want to survive because every cycle there's something that will blow up a lot of businesses. And at the end of the day, it's the cockroaches which survive and become the most successful companies. And, and some examples of that like River and and Coinbase who, who've been fairly, you know, risk averse and haven't taken, you know, huge leverage or, and, and have had good risk control. So I think that's a good lesson to any business in this space is is to be a cockroach and survive. I hope you're enjoying this episode with DJ. I did tell you at the start of the show, it was a good one, so I hope it's delivering on that. Just a quick break. If you could leave a like a comment, subscribe rate, 5 stars, that really helps. We spend a lot of time making this a good use of your time from booking guests. I reach out to Vijay a number of times. He's busy and but I was really persistent wanting to have him on the show. I've always looked up to him. And so reaching out to guests, preparing for the episode, recording, editing, it all takes a lot of time. And so if you could just leave a like comment, I really appreciate it. Michael, Brian, the team, we really appreciate that. So thank you for being here tuning in. And if you could do that for us, that really helps. And then one other thing, if you haven't subscribed to our research, head to on ramp bitcoinresearch.com, check it out and then if it looks good to you, subscribe. I think Brian does a great job distilling his thoughts on the investment landscape on Bitcoin. Then we also share your product updates, launches, etcetera, partnership. So if you just want to stay up to date on what we're doing, that's a great place to hear from us. Enjoy the rest of the episode and thanks for being here. Bye. Well, one, one thought on that as a transition point is just curious your thoughts 'cause I don't like, let's say COIN base Black Rock, which is proxy. So ETF flows, pub codes, like where do you start to see a concern, if any, with the amount of assets getting pulled into these pulled vehicles? Because it's just been, I think it came out that as great as the ETFs have done, I think pub co's have accumulated half of those ETF assets and we're still early in this cycle. So just curious like if you, if you think about that at all of either the neutering, neutering or hollowing out of like the underlying into these vehicles and how that gets expressed from like what, what Bitcoin we think it will be as global money. Well, well, it'll be interesting when the cycle turns. Eventually it'll turn and sentiment will turn. That's that's inevitable. Some of the CEOs of these companies have said if we trade below NAV, we're going to sell the underlying and buy our shares. Now Michael sale is an excep exception to this. He said I'm never going to sell my Bitcoin. That's going to be very, very difficult, right? Like imagine you're a fiduciary for shareholders and suddenly you're trading at 50% of NAV and your shareholders are threatening to sue you. So my point is, it's not clear that the Bitcoin is going to stay with these companies. There's going to be an enormous amount of pressure if they trade below NAV to get rid of their bitcoins. And the bitcoins could flow out of these treasury companies just as easily because you're going to have some medium sized treasury company that no ones heard of. They're trading at 50% to NAV. The shareholders are suing the CEO and the CEO is like, oh shit, I'm going to have to sell my Bitcoin and buy shares. And those bitcoins are just going to flow right out of them and go to some stronger hands. So I wouldn't, don't worry too much. I, I do think at some point sentiment will shift and bitcoins will flow out of these treasury companies. But again, I don't know when when exactly that's going to be. Yeah. And so Vijay, you made a good point that I certainly agree with on the market perception and say the human and investor psychology around these is a lot of people feel like they not necessarily late. Like I think a lot of people in the Bitcoin space still recognize that it's early, but they look back a couple of years ago and the price is 10,000 if you look back a little bit further as 1000, right? And so it's still, I think there's a perception where many investors think that they've missed a lot of the upside, right? And so naturally, they go into riskier areas of the market to try to eventually, hopefully get more spot Bitcoin in their possession. But as you mentioned, that's very challenging feat to accomplish. So maybe you could just help paint a picture about where we are. Do you think we're finally at the exponential point of the S curve? Are we approaching it? We'd just love to hear your thoughts about kind of what lies ahead, you know, thinking, let's say, past this year, past next year, just in the next like 5 to 10 years. Because I think some people need to hear this still, right? Because otherwise they're going to end up in vehicles that they probably shouldn't own just because they're being greedy and they think that they are not going to be able to have enough Bitcoin. We're we're still definitely in the early adopter stage. I'd say global adoption is still single digit percentage call it 5% maybe of of the global population owns Bitcoin. So I think we we still are incredibly early. Sorry, can you repeat the last part of the the questioning and Jax and I missed the yes. Sure. So the last part would be, you know, so you said we're at the early adopter stage still. What do you think needs to happen for let's say this like exponential part of the S curve? Like when? When do you approximate that may happen? Or what should we look for to know that is happening outside of just the price exploding higher? The one thing I think is really important is that it's not the number of people who adopt Bitcoin that is really important, it's the total amount of capital. This is something I tweeted about recently. And most of the capital is concentrated in places like the US. So, you know, one point I made on Twitter is that the top .1% of capital in the US, like, you know, the billionaires in the US, they have more capital than the entire population of Africa. Oh yeah, this is the tweet. Thanks. So it is possible that this happens very quickly, right? What you need is for folks who are wealthy to suddenly get it and suddenly say, oh, I, you know, I'm so short Bitcoin, I don't have any Bitcoin and it is exploding. I need some exposure to Bitcoin that I think could happen within one cycle or maybe two cycles where you have these incredibly wealthy people who are thinking about their portfolios and say I need to get like Bill Gates. I my guess is he has near 0% allocation. Folks like that if they suddenly turn and realize that this is not going away, they need exposure. That could happen very quickly. The signs of that, you know, I think price will tell us, I think when Bitcoin, when Bitcoin goes from 100,000 to like a million, I think we'll know just by the fact that the to to to get to that price level, you have to have such an enormous amount of capital coming in. Like to to get Bitcoin to a 4 trillion market cap, you you need hundreds of billions of dollars of capital come to come in and for hundreds of billions of dollars of capital coming, you need to have these very high net worth individuals jumping into Bitcoin. So I think price is really the big signal. In that context, Vijay, I'm curious how, you know, how big of a factor is sort of the broader macro picture and the unsustainability of Fiat debt and deficits. Because to me, that's like that would be part of the turning point for that super high net worth individual who recognizes like the unsustainability of the debt. And it feels like for a while we've been sort of reaching that event horizon of people recognizing, you know, Elon getting loud on Twitter about it after his failed attempts at doge. Like it seems like it's more in the zeitgeist that the Fiat system is is unsustainable and we're just going to have to debase our way out of this. You know, how, how much weight do you put on that component of it as opposed to like someone just purely learning about Bitcoin, understanding Bitcoin versus understanding the rest of the world and the the sort of water that they've been swimming in? Yeah, that's a great question. I think Bitcoin has now become a macro asset. And what I mean by that is that macro factors affect the price of Bitcoin. And I think we saw that in the last cycle. My strong, my personal view is that the last cycle ended because of the Fed. And I think Bitcoin behaved in a way that gold would behave. Gold did behave in the 70s. It was the Fed that killed the gold rally. During the 70s, gold went exponential. And then in 1980, it went into a bear market because Paul Volcker came along and said I'm going to get inflation under control. And he raised interest rates to 20%. the Fed did something similar in 2022 where they at first they were like inflation transitory. We think it's going to go away. And then they got religion and thought, oh, this is starting to get out of control. We need to stop this. And so they raised interest rates very quickly and it had a big impact on Bitcoin, at least in my opinion. So I think Bitcoin is acting like a macro asset. When Bitcoin was much smaller, I don't think that would have mattered because it was just really an adoption story. And it's, it's kind of like, you know, like a penny stock or a startup or something like that. They're much more affected by adoption and user growth than they are by macro factors like Google, for instance, when I joined Google in 2022, it was like the depths ofthe.com bust, right? Companies were laying off people, there was a huge recession, but Google was growing like crazy because it there was an adoption story there. I think Bitcoin has now gotten to a size where it is affected by macro factors and the adoption story itself can't completely overcome them. So, yeah, I'm not sure if that answered your question, Brian. No, it definitely does. Go ahead, Mike. I. Was just saying, I think there's two components on both questions that Jackson brought up on. Like one of the aspects of adoption is that as the price rises, awareness happens. And then as awareness happens, more users by notion of holding and want to accept it. And I think that's will be a cat, not a catalyst, but it'll be a Canary where you start to see more people want to accept it for goods and services. And that'll be part of that like real kind of breakaway. But the other one that just rings out is I don't think people, not that they don't care, but the average person doesn't actually really care about macro or even the debt because the debt is like ephemeral at this point. You just hear about it and it just always gets, it continues to get raised. And the concern is the, you can start to see this with like real world assets and tokenizing like everyone's going to get rich in the next couple years in nominal terms. But in real terms, it's, it's that like waking up. And I don't know what happens where people realize the only way you can actually persist or outcome like stay ahead of, of real inflation is by holding this asset. And I think that's just a function of once you get that enough penetration that the market just realizes that's your cornerstone. Like we talk with banks all the time in the way I think about user adoption is, remember we used to have checking account or savings accounts and you would park your money from your checking and savings and put enough of your, you know, in your auto convert from direct deposit go out, and then you would move into saving to get some nominal yield. Like that's what it ends up looking at for from Americans or people globally. You're just naturally putting those assets and it'll have the local Fiat with BTC and that'll just become user behavior over time. And then that's when it just becomes it just, it's like, well, that's what I use. That's my cornerstone. I don't know how far we are, but that's how I kind of see it playing into the zeitgeist versus like people realizing the debts not going to be paid back. He's a proxy for the debt not being paid back is inflation, But they're, they're kind of different because you not being able to afford a stake because you're, you know, trading Solana is a little bit different than adopting Bitcoin because the government has too much debt and doge didn't work out. I do like, I really do like that mental model. Then, Mike, that Bitcoin will kind of become this like de facto savings account. And when you want to spend you, you might transfer some and sell to stable coins. And then you, you'd use the stable coins to spend. I do think that's going to be, you know, very transformative to the financial industry because you don't really need banks. I mean, banks, banks are this intermediary that that grew during the 19th century because it was inconvenient to store, store your own gold and to to pay with gold. So you put your money in a bank and they would give you these paper certificates. And then you could use these paper certificates to buy things that was more convenient. And then the bank made a yield by lending out the gold. That model I don't think needs to exist at all today. Like, and you know, one reason, I don't know if you guys paid attention to this one reason with the stable coin bill, the Genius Act, there's a provision which says that stable coin providers can't pay interest. Did you guys know that? Why is that there? That the reason that's there is because banks realize that if you could pay interest on stablecoins, it would kill the banks. It would instantly kill the banks. Like why do you need a bank to keep your money to to be able to transfer to businesses? You just don't need that and banks don't. Most banks don't pay any interest. So if I was able to keep my money in something that I could control and I get paid interest on it, then I would do that. I'd take all my money out of the bank and put it into a stable coin. And it is very interesting that there I always wondered like, why is it that stable coins aren't paying interest? Because naturally competition would drive them to do this, right? Like Tether is the big stable coin, but then you have these other competing products. How could they out compete Tether? They could say, well, Tether doesn't pay interest, we pay interest. What are they doing with the the money that they're holding these stablecoin companies, they're just parking it in treasuries and they're collecting interest. And This is why Tether is so profitable. They have like $150 billion of just dollars and that's all parked in U.S. Treasuries. So they're earning like 4/4 and 1/2 percent on, on U.S. Treasuries on $150 billion. So they're making $6 billion in pure profit every year. And you know, someone else's is margin is your opportunity as a business. You see they're making that $6 billion and you say, well, I'll pay like 3% interest. I'll give most of the interest from the treasuries back to the user and I'll win market share from Tether. And eventually what you have is competition will drive people to give up most of their profit and pay most of the interest out. The only reason that's not happening is regulatory is that banks need to be protected. And the the Genius Act is really giving banks some runway to say, hey, you guys better start offering these products, too. If you don't offer these products, eventually they're going to pay interest and you guys are all going to get blown away. There won't be deposits in banks anymore. There'll just be people holding stable coins to spend at the grocery store or or the hairdresser or wherever people spend their money. Yeah. And I think you just walk through kind of the logical progression of how Bitcoin gets used as money. We talked about this like 2 years ago with Joel Rebel, who's up in Wyoming, thinking through the game theory around competition, if they're going to issue a stable coin, because it kind of just goes back to free banking, right? Like you're naturally going to have reputation, but also what is the competent competitive factors and issuing eventually interest. But then you saw Safe did a good talk about this two years later. It's the rational thing where you'll naturally have to back your stable coin with BTC. And then if you start to pass that through and then eventually just becomes inefficient to use the stable coin and transfer to BTC. And then you're naturally just using the thing that's backing it. And then you naturally use it as money. Since we have DJ on it, we're it's the bullish case. I don't ever give my price or my number, but I will share that after really looking deep into like what's happened in the US with stable coins, it really opened up how the possibility of $1,000,000 BTC could happen in this whatever next cycle. Simply because you're taking this small kind of exercise of what Tether meant for the Bitcoin market and bringing liquidity and you're digitizing basically the rest of the capital markets and just increasing that flow or that opportunity from that dollar or whatever that stable currency is into BTC. And you do that globally in the market that we're in. And now you can start to see the amount of capital flow and across the world into numbers that we haven't historically. So that's been my like case for how I think we can get up much higher than we expected because it just becomes normalized that there's a there's we're in a digital world and you're going to have digital currencies. And if you have a, you know, a dollar next to your eBay Amazon account and you can literally transfer within it or go back to your bank account and transfer to Bitcoin without having to send it to some shady exchange. That just opens up the amount of capital flow that can come in. Yeah. And that that infrastructure for making that happen is being built out now, like the ability for banks to custody Bitcoin and and for these financial institutions to hold Bitcoin. That's happening now. And there are other things that are happening that sort of in process like registered investment advisors being able to actually recommend Bitcoin and and for for financial institutions to sell it as a product. That's all happening. So this is going to play, this is a story that's going to play out over several years. There are so many like unseen, but very, very powerful catalysts that will sort of push this market forward. I will say one comment is that Bitcoins price has always been strongly correlated to the size and stability of the liquidity channels into Bitcoin. So in the earliest days like that, there weren't reliable liquidity channel so the price was effectively nothing. And then Mount Gox came along and it was the only real way to get Fiat into Bitcoin. But it's incredibly unreliable. It was run by this guy who was malfeasant and then went to jail and his business blew up. And then eventually there was Coin base and then you have these sort of bigger financial institutions coming in and now you have the ETFs. The size and, and reliability of the liquidity channels into Bitcoin are now enormous. And and you know, one thing that may not be fully appreciated is we now have a liquidity channel, not just from retail, the retail equity market, but from the bond market as well through Sailor offering convertible debt and allowing the bond market to get exposure to Bitcoin. So you have all these pools of capital now which are able to get exposure to Bitcoin. And as those become more developed over time, I think you're going to see much greater flow of money into Bitcoin and but that's going to take a few years to play out. Yeah, it's a, it's a fantastic point. And I, I won't hold you to a price prediction, Vijay, but I, I was curious, I did want to ask like if you, so you wrote the, the bullish case in 2018. If you were to, you know, write it again today fresh like, what would be the sort of most important net new addition to the bullish case in your mind knowing everything you know today? Well, I am actually working on the second edition, so this question is actually very relevant to me. I think the thing that's very different is the risk profile of Bitcoin is just completely different now like we talked about at the beginning of the show, I think that the biggest risk to Bitcoin is now off the table. And so that in terms of risk adjusted returns, I think Bitcoin is, is the best asymmetric bet on Earth. And I said that at the time, but I think, you know, 1000 X Bitcoin now is probably not possible. But it's, it's also important to realize that the risk profile of Bitcoin has dropped, you know, massively like 90% of the risk is out of Bitcoin. And I think Bitcoin still easily, easily has a 10X in it over the next, you know, few years, 100 XI think that that's over, you know, you know, a decade or maybe a couple of decades, but 100 X return over a couple of decades with the risk profile that Bitcoin has, I still think makes it the best asymmetric bet on earth. I will say there is one risk that should be considered by investors, despite the fact that the risk profile has dropped dramatically. I do think people need to think about quantum computing because it really is sort of an existential Black Swan type risk to Bitcoin, and it's worth keeping in your mind that that's still out there. There are solutions and I'm going to write about this in my book, but the real question is, can the Bitcoin community? Get consensus around the solution. Getting consensus in Bitcoin is very, very difficult thing to do because it's a very fractious community. It's hard to get people to agree on anything. You know, that is the story of the block size wars. It was really, really hard. People, All the most powerful companies tried to get consensus around increasing the block size. Thankfully they didn't and they didn't change Bitcoin The one time I think you do need to change Bitcoin and really need to get consensus is under the gravest extreme when the protocol itself could explode if you don't. And quantum computing provides that one risk. I think the the predictions of when quantum computing could be a risk to Bitcoin or exaggerated. I don't think it's like a three to five year risk. I do think it's a multi decade risk though. Do you wanna game that out? Do you wanna game that out a little bit? Because I know you had it on the list and it does come up with folks. I know we have a limited time, but I guess the question would be if that happens, there's a lot more economic capital. So there's a lot more weight behind. I guess it goes in both directions, more people, so more governance issues, but then also more economic weight to rational to come to rational decision. If it comes down to two, it would naturally be a fork and then wherever the hash rate would follow and that would be the adoption. Is that like a very simplistic version or how do you see that playing out? Hash rate will follow where owners of Bitcoin go. That was the big lesson from 2017. Like the miners in 2017 threatened to starve the chain that the legacy chain say we're not going to mine that chain. We're going to mine this chain which has twice the block size. They wanted to change the block size and they threatened to only mine the chain which had greater block size. But what happened was owners said, I'm not going to buy that chain. I don't want to say I don't want that chain. And actually futures markets got created where you could trade the legacy chain against the the new chain, which had twice the block size. And the market overwhelmingly chose the legacy chain, the chain that didn't change. And that was a sign that, hey, you guys can mine that on the chain if you want, but it's not going to have any value and you're going to throw away all your resources mining a chain that people don't want to own. So it comes down to owners of Bitcoin. What will owners do? And owners need to find consensus on a solution. And it's difficult because the, if quantum computing becomes a thing, there will be Bitcoin addresses that become vulnerable, any Bitcoin address where the public key is being exposed. So the old address is Satoshi's coins, the public key is exposed, all of those coins can move. And that's really scary, right? Like if quantum computer can steal those bitcoins and move them and sell them, then suddenly you're unlocking millions of coins of supply that could get sold onto the market. So part of the consensus is do we burn those coins? Do we say that coins that have the public key exposed are dead? Do we come to a common agreement about that or do we give them a sort of a timeline time horizon? You got to move those coins and make them quantum resistant within two years, otherwise they're dead. That's going to be tough, tough debate and argument about what the solution is. And I will say that if quantum computing, it looks like it's going to be feasible on like a five year time horizon, that will be priced into the market today. So the price will start getting affected today. So this is something we need to think about years in advance and that's the one thing that I try to urge people, anyone who's thinking about building Bitcoin and working as a core developer, this should be by far the number one focus that you think about. What are we going to do about quantum computing? How do we solve this? How do we get consensus around this? Try and figure this out and start thinking about it right now. Once we get rid of, you know, this, quantum computing is a risk. I don't think there's anything that's going to stop Bitcoin, and I think we're on a clear shot to Bitcoin becoming the global reserve currency. Well, Vijay, I want to be respectful of your time. I know we have many other questions for you, but we could just tuck those away for a future episode. I know you mentioned before we hit record, you said you would only come back on the show if people liked the video and subscribed. But anyways, Vijay, I really appreciate your time. You're a legend into space. I owe a lot to you. For people who are not familiar with your work or want to hear of maybe early Access or however you're going to release the second edition of the Bullish case, how should they follow along? So Twitter is the best place to find me. Or I should say X. You know, I've been using X or Twitter for a long time, so I've got this old bad habit of calling it Twitter. But I am real under score VJ. So REAL under score Vijay at X and that's the best place to sort of follow along. And you know, when I launched the book, I'll announce it on Twitter and I may launch it like I did the first one, which was a Kickstarter, right? I launched it directly and and that went pretty well and and had a lot of success. So I think that's probably how it's going to come out. Yeah. Vijay is a great follow on X or Twitter and his fault who he follows. The one who he follows was one as a good nice Easter egg. You should look into what he's doing and the business he's building. Thank you so much, Vijay, really. Appreciate it. Thanks guys. 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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