Transcript+
Before we get into the episode, a quick reminder that this podcast is for informational and entertainment purposes only and nothing should be construed as investment or legal advice. If you are enjoying On RAMP media content, please like subscribe and share as it goes a long way in helping others find the signal through the noise. Now for a word from on RAMP. On RAMP is a Bitcoin asset management platform built on multi institution custody leveraging our partnership with Bit Go and their 10 plus year track record in securing assets and Coincover, the premier digital asset risk mitigation company on ramps. Multi institution custody is a segregated institutional grade vault requiring two of three institutions at any point in time to sign once a client's unique permissions have been met at on RAMP we understand that your Bitcoin journey is a multi generational pursuit catalyzed by the ideals of perseverance, aspiration and legacy. That's why we're proud to introduce on RAMP Heritage, a suite of private client services dedicated to ensuring your Bitcoin legacy is preserved and passed on, embodying the true essence of wealth that goes beyond mere numbers. If you would like to learn more, please schedule a consultation. As we prepare for the Bitcoin having and the next wave of global adoption of this nascent and growing asset class, we are halving all annual maintenance fees for clients that secure their wealth before the next Bitcoin epoch. 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 extremers ever assembled in the history of. Doctors 1974. 1987. 92972000 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, I say when we sell. Jesse, Why buy Bitcoin? Why buy Bitcoin? Well I've I've highlighted that one because it's by Andy Edstrom who's part of the On Ramp team and Andy was ahead of his time. He wrote this in in 2018 for his clients and other wealth managers to try to make the case for why Bitcoin belongs in anyone's portfolio. And so you know, ahead of his time, he doesn't get the the props he deserves for that. And it's it's a good book. It's it actually helped soften the Bitcoin idea for my dad, so important in my family's journey towards accepting Bitcoin as part of our portfolios. Let's go bring it up. It's nice to see a bookshelf behind you. You've got You've got your podcast set up coming together. Yeah, I got to fill it out a bit. I literally 30 minutes ago I was like, I should probably put more than three books up there. So I unloaded two boxes and here we are. I need some help with that we get. We got some work to do in this room here. Well, at least you made your bed. It's. Yeah, this is the guest bed party. Come on. I'm not. I'm not working in my bedroom. I think last time I was on the show actually, that the the bed wasn't even in here, so we're making gradual improvements. It's important. Podcast. It took me years. We actually maybe we'll look at a clip from a podcast from two years ago, considering one of the topics we're going to talk about, and the studio looks completely different. Yeah, we need. I think we just got. We're we're young. We got things we focus on. We're busy. I I'm lucky I got this damn painting behind me Just because you you kept talking about my blank background. You. Need to, You need to. You need to get a curtain. The blank, I know the the wife is supposed to, she wants to come out and do all this stuff and we'll we'll get it done. It takes time. I just got a picture behind me for the first time. I've been here for two years. I've been sitting on the ground. I've finally got my poster, My picture up behind me. Takes time. Yeah, the art is coming next though. I I there's a couple pieces of Bitcoin art, you know, prints that I want to get but I can't justify like pulling the trigger on like a nice print now versus holding for another year and then buying it. So if you go to, if you go to Made X, you can send him a Bitcoin and he'll send you the jpg files. Yeah, it seems like a good way to go. Good for him. That was a pretty epic move, responding to David Bailey with that. I have a print of Delaware or Washington crossing the Delaware that I need to get up behind me and it's it's fitting because I I look at the Delaware River here in in the Bitcoin capital of the world of Philadelphia, so. Let's we got some work to do, Jackson, OK. Jackson On what? On what basis is Philadelphia the Bitcoin capital of the world? Isn't that current or future? It's current. I think it's all marketing what makes Austin or or Nashville the Bitcoin capital of the world. We had a we had 125 people show up to Bitcoin John on Monday to come you know meet other people in in the space. We had people coming in from DC, Baltimore, the middle of the state. Makita and Andrew Hans who organized the event did a great job. They brought Lynn Alden in, so I I won't get too far ahead of myself. I'm joking when I say it's the Bitcoin capital of the world, but it's nice to see that people are starting to show up and there's more of a presence here in this great city. It is a great city. Speaking of Andrew, I got dinner with Andrew last night. Road Warrior in the space started his week in Philly. It's in Austin. Last night we had a nice dinner that man can talk about Bitcoin for hours. Yeah, we got to get him on. I think whenever he's he's ready to to come on. I know that they're working on some stuff that was a little behind the scenes, but whenever he's ready to talk about it and just his travels, we were referencing how much he's on the road. I'm sure he could educate us on a lot of things that are happening across the world. A road warrior to aspire to. Let's start with gold. Let me go home with gold. It's pumping right now. I think I've been doing a lot of reading on this this week, trying to prepare for this episode. I think the big story really going back to 2020 is the divergent between treasuries and gold. And you have two assets that have historically been risk off assets that people have piled into treasuries being deemed risk free assets essentially risk free assets by by many allocators and the government itself. And it seems like that correlation, historic correlation, broke and is really breaking now. What is gold telling us? Is gold having its day? Yeah, well for for people who aren't aware, and I wasn't fully aware, it looks like Gold finally broke out of its $2000 per oz level that it, I guess, has been stuck at since 2011. It first bumped up against that and then had I guess a bit of a classic cup and handle since then bumping back up against $2000 per oz in 2020 and then getting stuck there for the last three years and change. And then now is in the last two months up to $2300 per oz. Which I guess in gold is a big move. Yeah, without being, you know, I think the the notion from macrofinance experts is that gold has been held underwater for so long that whenever it makes moves like this, it means a lot of things are happening across the world, macro in general. Finally, I don't even think it's a temporary event that's driving these flows. It looks like something structurally is different in the market where people are choosing gold over treasuries, which is not good for treasuries. I think Marty got it with how he led this off. And Logan, if you want to pull that chart back up, that tells the whole story right here. So for people who can't see on the screen, there's two lines. There's the price of gold for the last looks like six years or so where it's kind of trending up. And the last half of the chart is, is it really kind of accelerating. The other line is treasury prices which track gold for the first half of that six year time frame. But in the last three years treasuries has gone down into the right while gold has gone up into the right. And Marty, I think you're right. I think, I think this goes back to that that geopolitical shift, the the end of Bretton Woods 2 and the start of Bretton Woods Three. As Zoltan Pozar put it, right at the start of the the Russia, Ukraine war when the US seized Russia's foreign exchange reserves. And from, you know, Zoltan put it, it was the end of of inside money and the beginning of a of a shift towards outside money, meaning money that is outside of the financial system, outside of the control of international powers. And that means commodity money. And that means gold. Historically, first and foremost, it also means Bitcoin. And Zoltan noted that in at the end of his letter, saying that if this is true, Bitcoin will probably be the biggest beneficiary of all, even though he's not a Bitcoin bull himself. Or at least that's how he categorizes himself. So, you know, Fast forward a few years, that seems to be what's playing out of why hold Treasuries, if Treasuries can be seized? You know, like if if you're, if you're maybe not on the best terms with the US, maybe you're China, Are you really going to hold U.S. Treasuries as part of your reserves or do you, because of the example of Russia having their, their, you know, U.S. Treasuries seized confiscated? Maybe you don't want to hold that anymore. Maybe you want to shift to different store value assets and historically that's been gold. And of course that the narrative also plays in with what's going on with the sheer scale of the US national debt and the math that's hard and fast that we're going to have to print more dollars to deficit spend to service our debt, accelerating the debt, increasing inflation. And in that environment, U.S. Treasuries are not what you want to hold because you're if you're holding U.S. Treasuries, you're holding a a small nominal guaranteed yield in a currency that's being debased and you don't want that. So the I think the shift makes sense for you know when you view it from the macroeconomic perspective of it suddenly makes a lot less sense to hold U.S. Treasuries. And if you don't want to hold U.S. Treasuries and maybe it's time to shift back to the tried and true store of value asset like gold and make that a bigger part of what you're holding. And that would explain the divergent of U.S. Treasury selling off and gold bidding up. Doesn't it all seem so antiquated? Like you know thinking about gold because you breakdown gold and you're like OK right now they got to store it somewhere. Now you got to have armed guards. Now you need armies and you start thinking about all this stuff and not to tie it back but like you know multi jurisdiction, all these ideas and notions. It's like the whole thing of the futures here. We're just not and it's not evenly distributed. It's literally like, we could also call this podcast this because it's just like these and we know the end state or like directionally it's just how long does it take to get there well. 100%. Look, I pulled that other charts. It's we do know the end state. Are we in the That's what I think gold in treasuries moving the way they are screaming at the markets right now. Something is broken. I don't think most people perceive the gravity of the structural break that is happening in financial markets right now. Like this chart is astonishing. It's literally hyperbolic. So what we're looking at if you're not watching on Spotify or YouTube is US interest payment scenarios on the debt they'll be recruit federally and it's a hockey stick chart and there's two scenarios we've we've really three scenarios what's already materialized in terms of the gross of the interest expense on the debt and then there's two lines projection assuming rates stay stable which it seems like they are. Jerome Powell came out earlier this week and said that they really don't want to lower rates until it they're certain that CPI is under 2%, which doesn't seem like it's going to happen anytime soon. And then even if there's another line here, yellow line, assuming 150 bips Fed cut this year and it really doesn't make a material difference in the growth of this chart. So we are in the debt spiral that many people have been talking about within Bitcoin for years now. We've been called crazy for saying that this is going to materialize and it's materializing right in front of our eyes. And you have pricing signals throughout the market essentially confirming that people are dumping treasuries, going into gold, going into Bitcoin. And yet, I don't think the broader public or even the broader mainstream financial industry has really internalized this fact right now like we are in the middle of the debt spiral. And it it, I don't know if it's head in the sand, cognitive dissonance, people don't want to acknowledge it, or just pure oversight of what's happening in front of your eyes. Yeah, it's all of the above and and math is hard. I think that's a big part of it that that tweet was from Lynn Alden and she and Luke Groman were the two people who were seen around the corner 18 months ago and were dead right about at the time. They were pointing out how it's really going to be head spinning for people when high interest rates, high fed interest rates are actually stimulative to the to to the to GDP and and the money supply which is completely counter to what you'd expect. And the point they were making is that because of how high the national debt is, once interest rates are increase and the debt rolls over those increased rates, now the interest expense on the debt necessitates more deficit spending and necessitates more debt issuance. And that debt issuance goes straight into the economy, straight into the money supply and actually stimulates the problem, makes it worse rather than you know helping to bring down inflation from from trying to reduce consumer spending. It. It kind of has the opposite effect of like the tail wagging the dog because yeah consumer spending is is decreased but government spending is increased because they have to pay the this interest expense and they're sure not going to cut other spending types. So it all amounts to more spending. They were dead right about that about 18 months ago. And that's like, that's a hard mathematics concept to conceptualize to, to hold in your brain and project forward and and see how that all teases out. And most people, you know or just don't think that way, I guess. Somebody needs to overlay the Bitcoin price with that chart because it just reminds me of the Weimar chart with gold in the, the, the, whatever the the currency was it the? Was it the? Yeah, the. The Weimar. Mark. Yeah, Yeah, Weimar, Mark. But it's very like similar. Go ahead, Jackson. Yeah. I was just going to say that we all feel at this point that we're we're in a debt spiral. We're we're at the early stages of it and what's coming is a sovereign debt crisis. And I have to think back to my grandfather who Silent generation young in the Great Depression fought in World War 2. And how do those macro events impact human psychology and investor behavior. And the reason why I bring this up is because my grandfather and his generation invested primarily in or saved primarily with government bonds, CDs, some precious metals as well, even though that was illegal at the time. And then the rule of thumb changes, right, Like how does how do you save if you can't save in dollars or money, you have a proxy for money and that has become like I just mentioned CDs, bonds etcetera for one generation. Then it became the baby boomers and Gen. X that primarily used equities, real estate as their form of savings. And I think now we're really just still in the early stages of Bitcoin. Well, this is different because it is a form of money, but it becoming the de facto premier savings technology and it's being adopted at a much higher rate for millennials and Gen. Z than it is for Gen. X, baby boomers, etcetera. So I think that's all to say that, you know, the Great Depression. Really. Was formative and how people chose to save their money. One, one thing I I meant to mention that I overlooked was that my dad about 20 or 30 years ago had recommended to my grandfather who again was you know, living through the Great Depression, you should invest some of your money into equities. You know, here's why this is a good way for you to kind of protect your purchasing power. And it was so risk averse because of the stock market crash during the Great Depression that I don't know if he ever invested in equities at all. So I I bring this up because I think we're really, you know at the start of a, a big macro event for a sovereign debt crisis in in the US but also in other nations. And this will be extremely formative in how people can proceed in saving their money and protecting their wealth. How do we think this impacts like housing? I don't know if you guys saw the the blog or there was a Reddit post that went viral about an Austin person that bought real estate. It's under underwater $200,000 and so it's like interest payments and or mortgage like 5200 just completely kind of screwed and like there's like two notions where we can we can lower interest rates, prices got it get inflated across the board and we continue. But it feels a little bit like maybe that's not the direction this goes. And if that is the case, there's a lot of people underwater in their real estate. Yeah, my, my view on this, I I once I fully unpack all my books, I'll I'd pull up When Money Dies, which is a bit of a deeper cut in in the Bitcoin space in terms of books. But it lays out all these vignettes about what happened. What did it look like? What were the dynamics going on in Weimar Germany as the Weimar mark hyperinflated? And some of the takeaways from that is that the people who did well were those who stored their value in hard assets. Gold did the best. So people who stored their, their value in a, you know, a few ounces of gold early on were then able to buy a bunch of assets once the hyperinflation had had devalued everything dramatically. And part of that process was on, you know, during the middle stages of hyperinflation, property investors did well and stock market speculators did well because the nominal value of those assets went up And so they thought they were doing great. You know, in the long run they didn't. But for a while there for the, you know, deep into hyperinflation, anybody holding assets thought they were getting rich. And I think that could be what happens with with real estate. I mean it's sort of already playing out. Canada is sort of a great example of what you know the path we could go on of real estate valuations just getting sillier and sillier in in the nominal U.S. dollar terms as the dollar is debased at a faster and faster rate and people are desperate to put their value into a a savings vehicle. And you know, we pretty deeply have adopted the psychology of like real estate is a safe place to store value. It's a good savings vehicle. And so I think that you know as the dollar debases at a faster clip that like desperation and that that resorting to real estate as a store value will probably be the the track that people follow rather than turning to gold or Bitcoin which is really going to be the, the asset that I think you know is the way for people to survive and and thrive through the debasement of the dollar. I think a lot of that breaks, it's breaking out simply because of the down payment for most people's out of people's reach. But what the last pod we did with there and Leopard was really like helpful myself being like I think following closer to Marty and I think Jesse you as well of like I think we end up in a lot smoother transition than everybody believes or like our peer group goes through. I think like the whole way this works out because of the incentive models and the way that we can think about the distribution and however you want to decide to hold the asset is a lot different than historicals in the sense of it's going to be. I think it's going to play out a lot more seamless and then a lot. You know, we obviously have a lot of friends and peers building in the space to help with, you know, accepting Bitcoin, storing it different financial products that are just opening up to more and more consumers that once they get their taste from, you know, BlackRock ETF or whatever and realize what's happening versus going and putting that 100K in the house, they can you know store in a better form of money to to increase purchasing power. So then they can actually like transition in this way. And as people start to accept that because they recognize that, I think it's just like aligned and smooth this all out versus what's traditionally known in the circles we kind of follow or people that listen think this is going to be a lot bumpier. I'm starting to be a little more optimistic on how this all like turns out over the next decade. Even if it isn't something catastrophic or a violent transition, right, in the sense of just like chaos, I think there still is like a big sense of urgency to adopting Bitcoin because really fundamentally there's so much capital that's tied up in fixed income because people have been operating in a world where the US Treasury was sold to them as the safe haven asset, right. So I agree with you Michael, I I don't necessarily anticipate like Mad Max, right. I I think that I think it'll be pretty peaceful however we we transition into like the next monetary order. But that's all to say that a lot of people are going to be really financially crippled if they are over allocated to fixed income in particular, you know what was perceived to be the safe haven asset U.S. Treasuries. And that's concerning to me because I think there's a lot of retirees who thought that they were like you know, in a good position financially. Maybe they had enough to retire and then also pass them down to their to their children. But financial repression is an inevitability. So inflation will have to be higher than interest rates, which means that people are going to lose money. Maybe it doesn't happen like catastrophically all at once, but over the next 5 or 10 years, people who are over allocated the fixed income, I think are really going to be in for some financial hurt. And that's that's a a sad thing. It's, it's bad. It's bad. Look at that TLT chart. It's down 22% over the last five years. And Jackson, as you were just mentioning, I mean the complacency of the asset management space, particularly for retirement accounts has these target date funds that literally force your allocation from a 6040 stock bond portfolio to 8020 towards when you're approaching retirement, You have the most people ever in American history approaching that retirement age. More people are retiring every day in the United States than ever have before, and they're retiring with a portfolio that's essentially 20% underwater. Maybe their stocks are, let's say, 15% underwater if their stocks are making up for the under performance and these treasuries. And obviously there's probably a select few who took more agency over their portfolio allocations and maybe got into some alts and some hard money. But I think it's safe to say that an overwhelming majority of the people who depended on these complacent asset managers to just construct their portfolios for them are running into a buzz solve right as they retire and. That's why I think I was just saying, that's why I think it's important like to share this stuff with the people you care about, the people that you don't necessarily care about, like or don't want to listen, like they'll figure it out, whatever. But the people you generally care about, you almost have to do be relentless and share stuff like this. And because the reality is, like, I found out the other day that, you know, somebody close on my wife's side finally built a sizable Bitcoin position. And and I thought, like, oh, she's she got it. She wasn't that. She's like, she's a spike corner, basically. She's like, I had to do it just in case, you know, you were right. I couldn't have heard all this for years at the dinner table. And then you know like to your point and retired and now they don't have any wealth because it messed up. So you just get it out of like hedging which is fine like do it however you get there but I. Do that stack is a stack nonetheless OK? The stack nonetheless. And so yeah, I think it's just important to like just this whole thing that we were doing. Like it actually matters to share and have the conversations with your family and forward the the newsletters and all those things. Because to Jackson's point, like there's going to be a lot of repression with people that thought they had a lot of wealth. That is just getting depleted year. Over year. Well, that's, I mean, going back to Jesse's earlier comments on when money dies, that's the most insidious part about all of this is because the dynamics of the system are such that 2 routes, overt default or soft default. And they're gonna pick the latter and people are gonna think that they're getting rich. They're they're paper. They're gonna gas like you of their gas like. You kind of say begun in that sense. You know, like people are like, wow, the stock market's doing great, I mean. Inflation 2%. Yeah, I I remember in in finance class 15 years ago, my professor being like if you can find me a 7% return, you know, equity. I'm, I'm interested, like pitch them to me, like she was soliciting like ideas for investing, you know, because 7% was was like a dream 15 years ago, and now we've just been consistently returning 1011% for the last decade on average because, you know, we're debasing and so it's not real returns. Yeah. I think to go into the the complacency piece, Marty, in the managed wealth space, I think it, I think it does come back to just kind of generational differences because the average, I think the average age for as an advisor is maybe 55 or maybe somewhere even later in 50s. And I was running some of the numbers for an article I had written a couple months back at this point and just the I was trying to find the data but just the the number of or based on volume in terms of crypto buyers, right. So all all-encompassing Bitcoin and then other coins it was about like 94% of all volume of crypto purchases are Gen. Z and millennials. So I I do think that unfortunately just there, there's a complacency because people generally speaking are not willing to challenge their thought process or even ask the simple question of what is money and you know, what is this all for? Why am I doing this? What is financial planning right, Like There's a lack of first principles thinking and it's really just kind of a herd mentality when it comes to just looking back over the past 40 years from 1980 to 2020 and just assuming that whatever worked in the past will work going forward and feeling OK with that, right? Like Complacent as you mentioned just because most of your peers are doing that as well. I think this all kind of ties into the $80 trillion of wealth that's held by baby boomers and and as that continues to trickle down into younger hands that is just kind of like a natural flow into Bitcoin and probably unfortunately crypto as well. But I do think as advisors get younger and then also their clients we're we're going to see quite an increase in in allocations to Bitcoin and ultimately that becoming a form of money. Yeah, I have a have a spicy take here. I think that the Bitcoin is a generational reckoning. It's a it's a karmic rebalancing of the excesses that the baby boomer generation received. Whether or not they admit it they had an incredible set of tailwinds for their wealth building years and a lot of baby boomers, whenever I bring this up some of them push back and say well it didn't benefit me. Well it it could have. You didn't play the game the the way that other baby boomers did and they did very well. What it amounted to is the baby boomers have a a disproportionate amount of wealth in America and the world and it's they're really interesting chart from the New York Times that they should update. But it tracks the percent of total wealth held by different generations at that age at that point in time when they were a certain age. So like you know the baby boomers, I don't know whatever the average age is 60 or 65. Gen. X-45 Millennials, 35. Whatever it is. And what percentage of the wealth have they accumulated, you know, tracking by, by, you know, by age 303132. And the Baby Boomers have a, you know, high up into the right dominant share of wealth. The Gen. X is, you know, about half the trajectory, meaning they're gaining wealth relative to the total amount of wealth that exists at half the rate that the Baby Boomers were. And Millennials are about half of Gen. X. So which means to say that we're gaining wealth at 1/4 of the rate that the the baby boomers were when they, you know, as they moved through life. So we as millennials as a generation, we at this point in time have like 1/4 the wealth that the boomers did when they were our age. And and you know, we're on the trajectory for that disparity to to continue. So Bitcoin becomes this generational reckoning, rebalancing where millennials have an opportunity to catch up to the baby boomers. And you know the the flip side of that is sadly the baby boomers are not in a position to embrace the new. They're in a position to hold on to the old because the old did very well for them. So they're disinclined to try something new, to change it up when they've had such success building wealth with the 6040 portfolio. So they're going to hold on on net, they're going to hold on to what worked before, and they're going to see their wealth slip away in their retirement as the millennials gain wealth. And catch it. It's the ultimate rugging. And for that matter, you know, if you're a baby boomer, the the real the real play the the the way to beat the millennials at the game that they're going to win is to, you know, jump the gun and adopt Bitcoin before the millennials do. So you know you can as a baby boomer, you you're not it's not guaranteed that you're going to underperform. The question is whether or not you will embrace Bitcoin before the millennials on average do. And and you know that that is in your hands and the opportunities there there in front of you to beat the millennials again. But if you take no action, the millennials and the younger generations behind us will eat your wealth. As Bitcoin accumulates, it monetizes, and everything else underperforms. I think it ends up 50. It ends up 5050. Like less millennial, more millennials, then boomers end up early adopters, but boomers with more capital. So you end up with this similar allocation. And then the rest, the laggards all just have to adopt it because it's just the thing that has to be used. Because I think it's more of a lens thing of the world than anything like the meta version. Yeah, it kind of becomes a a litmus test for the boomers of like, can you can you preserve your wealth? All right, great. You made your wealth with a bunch of tailwinds. But are you savvy enough to realize that the winds have changed? Change tack and preserve your wealth by by shifting your strategy? And that's going to separate the the wheat from the chaff in the boomer generation, the real savvy investors, the smart wealth hold like retainers versus those who got lucky. And we'll we'll see what happens. Logan, can you show that stacking, stacking screenshot? Because I think that's like the the positive from from a Gen. Z or Millennial or anybody that's looking just to start today, the chart showing buying $10 a Bitcoin every day from April 1st 2019 to 2024 and 18 thousands turned into 70,000, a 285% increase. And this is like ultimately what we're talking about, whether somebody has zero Bitcoin today and starting this idea of preserving your wealth and being able to, like, save for the future is the the whole idea whether you have zero or you're sitting on, you know, 10 million plus as a boomer. Yeah, $10 a day. Five years you wake up and you can start to spend dollars Each $10 that you spent is now worth 2850. It's pretty crazy. Yeah, it's crazy because you think about like the freedom. If you're working day-to-day and you're living paycheck to paycheck, you make enough and now you're sitting close to $100,000 in 12 months, What is that? And now you can actually go do something like the level of productivity unlocked from, you know what we know this can do is just like you just have to start somewhere. Yeah, yeah. I've been reading a lot this week about the the history of eras and where we find ourselves. Michael, do you wind up reading the rest of that piece? I haven't. Do you want to summarize it or should we like read it? And is that book club homework for next week? And I think it's. Book club homework. It's a long 45 minute read, but I think really the most profound piece I've read since the sovereign individual. Again, putting our current the Sovereign individual was written in 96 and was very prescient and prophetic for what has played out over the last 30 years. But this is a piece that was written about like all right, here's where we are now. Not really harkening back to the sovereign individual specifically, but a very similar piece that tries to define errors throughout history. Sovereign individual broke it up into 500 year super cycles defined by technological innovations that really spurred on different errors, whether that's the the Protestant era with the printing press, the industrial revolution with the steam engine, the digital age with the microprocessor. This was similar but a bit different where it really defines errors Throughout history, very binary. We've had centralizing errors and decentralizing errors errors, and it's pretty clear that we're moving into a decentralizing era. And it was actually, I forget what the piece was called, I'll put up a link that Logan can flash up on the screen, but it was very illuminating and clarifying and actually a bit not cathartic, but give me peace about the current state of the world cause a lot of people get pissed off about politics, the state of the American government and red team versus blue team. But this piece, particularly the last third, did a really good job of just saying, hey, this is just the product of the end of a centralizing era that we're transitioning out of in into a decentralizing era. And the bureaucracy that has been built up in the central government is not something that you're gonna change. No. No politician's gonna change it. No amount of voting's gonna change it. The bureaucracy has been set up and it really runs the show, not the politicians that you vote in or out of that bureaucracy. The point being is that the level of centralization in that bureaucracy is getting to a point where it's about the collapse in it of itself, which as we've discussed throughout the show, the debt levels, the interest expense on the debt, the State of Treasury performance, I think those are the clear signals that's happening. And the big question is, is what's the transition into the the era of decentralization that we have before us look like. And it's a bit unnerving in the piece they say too. Probably not gonna be Mad Max but it's gonna look way different. And we're beginning to see examples of what it may look like on the other side materialize with states asserting their autonomy against the central government. Like here in Texas, Florida, the states that have legalized marijuana, despite the fact that marijuana's still schedule one drug and it'll get even more local. So like to your to your point about like how does this play out. And I I do have a point with this long rant, it's that these problems that we're talking about are going to persist and get worse. But where you're gonna find, I believe and with this piece did a very convincing job of convincing me of is that things are going to get very local. You're going to fall back to like the Fed and the Treasury are not going to solve this problem. And this is something anybody listening to this should begin to internalize and think through. Moving forward is like the problems are going to be solved locally, your pensions are going to get blown out, your house value is going to be decimated, Bitcoin's probably going to go up a lot and the other side of. This playing out of the end of the centralizing era that we find ourselves in will be very decentralized and local. Sorry for that long rant. So, so should we read it or not? I was about to say I'm excited about 'cause you, you kind of got me excited about maybe a format. Like once a month we find a piece and we do like a popcorn. We each switch. And then like these Leon Wancombe's coming on next week. And the idea was, I was going to say, we can share this piece and we all read it and then come back for like 15 minutes next week and discuss. Because I think what you interpreted is probably going to be different for Jesse and probably for myself on like what it's saying. It could be make for an interesting discussion. There's probably going to be directional things that we all agree on. But I think it could be fascinating the the chart I think about when I opened it and then I fell asleep because I opened it like at midnight. Was that right there? Yeah. I think scrolled down there was like where it showed what people perceive as. Yeah, there is like the top part is what people perceive is what will look like if we were to like separate and then you Scroll down and then it's like what it will, what it will most likely look like. Yeah, and this for any history buffs out there, it's a really good piece to put a lot of historical things in context. And basically the the long thesis that is put forth in this article is that decentralized errors happen when very powerful technology has reached the point of commoditization and is easily accessible to everybody. And This is why it Harkins back to the the sovereign individual. It's when any individual can have extremely high leverage against a powerful force like the government with accessible technology. And it's becoming clear that with Bitcoin, private public key cryptography, the Internet, the communications technology that exists today and then even upgrades and military tech, whether it be just pickup trucks or cheap drones, whatever it may be. I think we are at that point where very small individuals can be very have a lot of leverage with very few resources and capital. Yeah, I I guess that's in in tension with the sort of sci-fi trope of like technology is most useful to governments trying to you know get and maintain greater and greater control over a population. So we'll see how that plays out. I mean the the the idea of like neo feudalism is is is pretty interesting and we'll see if it's possible It it does kind of bring back that like philosophical like question of of like you know are we as people as animals you know really intended to be ruled by a worthy ruler who you know in a meritocratic way the way that in theory monarchy was you know at least originated of like a you know a ruler leading from the front sort of William Wallace type of leadership. And it's kind of impossible to imagine that returning in our world where there's so much fakeness from the political class. And I I think if if we get to that extent of like balkanization that that map showed of of the US and did like fiefdoms that would mean that would mean a pretty Mad Max sort of political landscape. I would think so. I hope it. Hope there's some happy medium. Yeah. We had this discussion a while ago in Austin. This is like early days when COVID was people were coming down and about what Jesse's referring to and it's like nobody. Everybody wants to theorize about a king, a king ruling them until they're under rule by a king. And it's like the democracy probably is the best that we have. We just messed up the money and so we have a good form of money and democracy. We're probably in a good good spot moving forward. But I do think to to Mark's point, it'll be good to like read through that and see like how this actually you know our feedback because what you referenced as cathartic, maybe you you're meant cathartic or like comforting in that like a lot of historical texts are helpful because they just anchor what's happening that it's happened before And so you can actually feel comfortable and like there's nothing new under the sun, it's just a different lens or like different way it's happening. Yeah, and it's it was a good, it's good context to zoom out, be like don't get triggered by the day-to-day monotony of the political system and the moves by this current administration, the next administration, previous administration. It's all you got to zoom out and understand that you're on a wave that you likely can't control to any large degree and don't get triggered. Focus on what you can control. Stacking Bitcoin, Holding your own keys, Building out tools that make it easier for people to do so. Thanks for tuning in. If you're interested in exploring any of these topics further, or want to learn more about how we can help you secure a new or existing Bitcoin allocation, get in touch with our team at on rampbitcoin.com. We look forward to supporting you on your Bitcoin journey. Well, on that note, we don't have to get too heady on the esoteric philosophical musings of a paper I read earlier this week, but something that the audience should be aware of. Very interesting development for Bitcoin, very sad development for the world. Massive earthquake in Taiwan earlier this week. 7.5 magnitude earthquake I believe caused a lot of damage throughout Taiwan. Why does that matter for us? Well, TSMC is one of the largest semiconductors manufacturers in the world and they produce chips for bit main for the ASICS in Taiwan. And so I think it is yet to be determined the extent of the damage that was done to the TSMC facilities in Taiwan from the earthquakes. But I think regardless if there was a lot of damage or no damage at all, it is something that we should highlight is that this is a centralizing force in Bitcoin as this chip production. But it also provides an example of how something like an earthquake, which isn't intuitive to individuals thinking about Bitcoin can be a Black Swan event for the Bitcoin ecosystem. So again, it's yet to be determined what the overall effect of the the earthquake was on TSM CS facilities. Still trying to figure that out, but potentially if the facilities are damaged to a point where they cannot operate, that could have significant effects on the supply chain of Bitcoin mining machines, predominantly bit main machines. And so you can have something like a weather event like an earthquake. Not weather a geological event, a seismic event like an earthquake affect Bitcoin hash rate. What? What does that mean if you referenced the, you shared the clip from two years ago, the guy from brains that was describing how just like yeah like I think that's interesting in that that just the movement subtle movements disrupt the manufacturing to the point where the chips are non usable. So I think that goes without question that there that it happened. I mean that it wasn't subtle movement, it was an earthquake. So there's already a bunch of chips that were in production that are not going to be able to be used. Yeah, any chips that were currently that were literally in the process of being laser sketched and layered as the earthquake are going on probably need to be thrown out. And it's yet to be determined if Bit Main and other producers had chips that were actually being manufactured on the floor as the earthquake is happening. But EON Capuch from Brains Co, founder of Brains and an extremely smart guy in the mining space. We've got a clip here that we'll play from two years ago in this studio. I was referencing it earlier. The studio looks a lot different than it did back then. Takes time. It's growing. Silicon is growing the different layers and you just can't speed it up the process. Yeah. So it's very similar. So you have an estimate where, where when the chip is going to be ready. But if there is for example a seismic activity, so like like a micro earthquakes in in Asia where some of the foundries are, this affects the process because we're at such small dimensions where we're like any seismic active is, is it an English word seismic? Seismic. Seismic. Yeah. Sorry. So when the earth moves, it influences the manufacturing process and sometimes it screws up the chip the the the wafers, so they have to redo it or they have to stop the manufacturing. So it's sort of like weather that has impact on on growing crops. Here it's not weather but like Geo geological processes have have effect on on on on manufacturing sometimes. I didn't say. Always. But that's that's what I heard like they they have to account for this. That's insane. I didn't know that. And then what was? What was the context for him bringing that up? Context was he thought there should be futures hedging products for the chips, the A6 specifically the wafers. Not necessarily the full final form factor of a Bitcoin miner, but literally the A6 coming off the foundry floor. Interesting. For manufacturers, the hedge. Yeah, the hedge. For manufacturer or yeah, for basic, For Bit Main and micro. BT companies like that to hedge their risk because you can imagine like bit Main has sold a lot of S 21 futures orders that are due to be delivered later this summer and fall. And if there's a scenario which those wafers for those particular ASICS that they've already sold, the futures orders that they've sold were being produced as that earthquake was happening, they have to scrap that that whole line and start over which delays the delivery of those machines. I would have to imagine and probably adds more capital on Bit main side unless maybe they have insurance to to account for something like this. But you could imagine there will be more capital pushed into this which could affect the price of of ASICS. And then if the foundry was critically hindered from operating as it has been up to this point, and you have something like a a large reconstruction that is necessary to get it back up and running in the 1st place, that could have profound lasting effects on the supply chain of ASICS, which could artificially hinder hash rate growth over the next 18 months, 36 months, whatever it may be. Isn't it that bullish Bitcoin though, right? Like just a beautiful. Hash price. I mean, if you have miners plugged in right now, you're so officially like this is awesome. Well, I mean like the long term viability of the network and decentralized like the idea is in a free market if that happens, you go and set up shop somewhere else so you're not sitting where earthquakes happen and so you have a more resilient manufacturing, it gets accelerated or pulled forward because of this. Yeah, it it's funny how with Bitcoin you have to contend with things like the Ring of Fire and and and adopt your operations accordingly. So like on both sides because you know I'm, I'm still bullish on volcano energy. I think we'll we'll see more and more geothermal mining over time because it's there, it's there for the taking and people just have to like you know invest that CapEx. But at the same time you probably don't want your chip manufacturers on the Ring of Fire. So it's a it's a funny geological element that you have to contend with as in in Bitcoin mining as an industry. I also, Marty, I also thought it was funny how we could see how your memory of seismic activity and weather got linked because of that conversation. They're different. And it's no obviously prayers out to everybody in Taiwan and the affected areas, Japan with the tsunami and all that terrible shit to see, but it is like, it was a little fun. I was like texting people that night after the earthquake. I was like, it's fucked up. Like my first thought is what's going on with TSMC? Are these chips going to be OK? A true businessman there. Yeah, but yeah, it's something to be aware of. If you're out there learning about Bitcoin, it does. Many think of it as this ephemeral digital thing that you can't touch. But there are aspects of the network that are very physical and highly dependent on like hyper industrialized processes to actually make it work in the real world. But it's also a great little microcosm example of bitcoins antifragility and the incentive model that that allows for antifragility. Because you know like if it's unprofitable or if it's a business risk to be running a foundry on the Ring of Fire, then over time you would expect competition to to go elsewhere to account for that. And then that makes that decentralizes chip creation it and it also gives that new foundry of competitive advantage over people who are having to deal with tossed out screw up chips because of of earthquakes. And and then and right there you've got a little a little example of how the profit incentive of Bitcoin mining causes adaptation, which overcomes problems, and that is antifragility and baked into how Bitcoin runs because everyone's trying to make money. And add more context to this. TSMC produces the ASIC wafers, the chips for bit main. The biggest competitor bit main is micro BT which leverages Samsung foundries in South Korea. So that'll be another interesting thing to see because this effects every, I mean most people are focused on TSMC over the last couple days because of NVIDIA. They've got large purchase orders and for the GP us that want to push out for AI only BIC winners like what's going on bit main chips. So that's the other interesting factor beyond this. If TSMC is materially hindered and is yet to be determined, they can have very robust foundries that are prepared for these types of earthquakes and we'll be able to operate business as usual moving forward. Just have to scrap the the stuff that was being made at that particular point in time. But playing down the hypothetical that it's not the case, South Korea, Samsung, that's where Micro BT makes their chips. And I think that's that would be the next thought in people's minds like, oh, is this an opportunity for Micro BT to take market share? But then you have to think, does TSMC foundries going down create a crazy spike in demand for Samsung's foundries that extend well beyond Bitcoin mining? And that actually hurt Micro V TS production of of their ASICS as well because the AI companies are able to pay more for that foundry space. You're listening to the ramblings of somebody who's heavily involved in the mining industry and has to think about these things. I think did Jesse's pointless. It's like the market dynamics are amazing in the sense of if the price of chips or ASICS increase then it hits a certain equilibrium point where people go out and start to produce or get in capital investment. So it naturally just rises. Specifically also with the Bitcoin price or AI proliferating. Marty, I'm curious something kind of like I don't know how big it was, but Coinbase and Light, Spark and and Lightning and just knowing the what 80 million users or whatever Coinbase has, what's your take? Or have you thought about like what their the reason why they would be investing or partnering with them to open it up and like where it fits in their model because wasn't it like 2 weeks ago or three weeks ago Coinbase came out with they're like commerce or merchant payment where it was like a closed loop system where you could only pay if you were like I think had an account with Coinbase. But this seems like kind of contrary or like like the opposite of that because that would it makes I guess it may be a lot of things they do don't make sense so maybe they would only do it within a Coinbase lightning wallet. But do you have any thoughts there? First thought, Coinbase is completely spread thin and does not know how to actually build Bitcoin products. And so the fact that they're outsourcing this delight Spark is laughable. Not surprising though, Light Spark, another A16Z portfolio company and that's what A16Z likes to do, is to get their portfolio companies to work together. Yeah, I mean, it's good to see they should implement Lightning. They should have done it years ago. Many exchanges crack in Bitstamp, Bitfenix, River Cash app, keep going down the line, have implemented Lightning well before Coinbase, which is supposed to be the largest, most reputable, most professional exchange in the world, has done so. I mean good. It's a good deal for light spark, big splash for them. But any thoughts on like implementation like why they would like what they would the use case would be? I think is like like what? What would be the purpose I? Mean. Withdrawals. Is it withdrawals like similar to the Bitcoin native companies you're referencing or is it for you know, like and then you don't have? If you don't have an answer, it's OK. I just. I personally don't know. Withdrawals and enabling payments. So you mentioned the Commerce thing. I think they shut down the ability for individuals to pay Coinbase Commerce invoices with Bitcoin that wasn't already held in a Coinbase account, 'cause they're worried about on chain fees and they didn't want people sending small UTXOS that would be expensive to consolidate down the line. But I think that was a lot of hand waving by Coinbase, a abdication of their ability to actually implement Bitcoin upgrades like SegWit and Taproot, which would make that a lot cheaper and catch them up to speed with everybody else. Yeah, I think, I mean, and I think the market, they've been sort of bullied into this over the years. Brian Armstrong tweeted, I think a year and a half ago. And OK, OK, you've been asking enough, we'll we'll implement Lightning, the fact that it took them this long. To come out with a big announcement, the announcement being we're partnering with somebody who's going to do it for us is hilarious. The fact that they can't do it themselves, they're more focused on Ethereum, they're L2 base, whatever they're calling it and getting people to trade degenerate shit coins because that's where they get mess of their revenue. Coinbase will be a funny case study when we look back at all of this because like what you just described the the that's like a micro example. I think the macro one is that they hold no Bitcoin or very little Bitcoin over the course of ten years or whatever. It's like how far they missed the. Marvin since 2012. How far they missed the mark on this whole thing. Colossals grew up. I mean, if if they had played their cards right, they would be the single largest holder of Bitcoin. Instead, they are the single largest custodian of others Bitcoin. But they don't own any, or or at least very little. It's it's really a shame. I mean, they're early user base. Individuals probably have more Bitcoin just from Coinbase's referral program than Coinbase has at the company on their balance sheet. Because at the very beginning, like Coinbase referral programs like if you get somebody to sign up via your link, you're getting 25,000,000 Saps. You're getting a quarter of a Bitcoin. Oh, wow. Back in the early days, so you sign up 100 people, you get 25 Bitcoin. Which if you think about like from a counterparty eventually people wake up and they're like, wait, why do I hold sailors? Like why do I hold 5 billion with firm that doesn't even hold any of this. Like, that doesn't even seem like consistent Jackson what was the quote from the the RAA yesterday that he gave about the the pain point? He's like, how can I custody at Coinbase if they can't even insure the total balance of the Bitcoin that they hold? I mean there's a, there's a palpable concern as well, just the fact that it's one entity who custodies 90% of the Bitcoin ETF assets. And yeah Michael, to your point the sophisticated financial planner in the in the Philadelphia area just has been trying to figure out, he's kind of got the thesis wrapped together or has formulated the thesis and understood it around the Bitcoin investment, but still trying to figure out how do you allocate to this thing, right. Because he he has high net worth, ultra high net worth clients and he doesn't feel comfortable from a fiduciary standpoint for them to hold devices and backup seed phrases to do self custody. But then also he looks at the counterparties that are out there such as Coinbase and really can't get comfortable with trusting those individual institutions to manage the Bitcoin or custody the Bitcoin for his clients as well. So to me it's still kind of shocking that Coinbase is the custodian for 8 or 9 ETFs, 90% of the assets, but then on the other side of their business. To your point, Marty is just, you know, trading revenue from shit coins like Pepe and and dog with hat. It just like I don't know how institutional investors kind of balance those two things. But you don't hold any. You don't hold any Pepe. I've got a big bag. Well, this I I went to, I mentioned I went to dinner with Andrew Hunt's last night and we were at dinner with somebody else who's experience allocating money, large swaths of money for institutions. And that was a big conversation and it became very clear deep in the discussion about like why haven't the institutions got it? And so many of them got burned by Celsius. FTX Block Fi was the one in Canada. Quadriga. Quadriga FTX, they're all throwing the baby out with the bathwater, and that was like a big point of a conversation last night. It is going to be shame on Coinbase because obviously they've not collapsed like the companies I just mentioned. But they're incentivizing the same sort of misallocation of capital at the retail level and confusing a bunch of institutional capital and not providing what I would deem to be necessary services for people that want to hold Bitcoin, which is the most important asset not only in the space, but it's the only only important asset in the space in my opinion. But what's gonna happen is people already burnt the career risk card by at the institutional level. Many people did. Who allocated to these crypto funds and aped and FDX and Celsius in all these companies last cycle? And that's gonna be the really sad thing to watch play out for the institutions that did burn that the the managers within the institutions who burnt the career risk card last cycle is. I think as we discussed at the beginning of this episode, it's becoming abundantly clear that the time is very nigh to to get into Bitcoin. There are a number of institutions out there who got burnt last cycle. I think Bitcoin is crypto and are not going to participate this cycle. And they're gonna eat the career risk on both ends where they burn it by going into all this crypto grift and they're gonna burn it on the back end by missing out on Bitcoin's price appreciation over the next few years. And it's just really sad to see. Yeah. I will say though, there. Go ahead, go ahead, go ahead. I was just gonna say that there's a lot of sophisticated people paying attention. Was it up in New York couple weeks ago for the Bitcoin investor day event and 700 people or so that showed up for this one day event that was hosted by Pomp And you know the big names are there to speak from Fidelity Digital Assets, BlackRock, Skybridge. And to me it was pretty clear that serious people, sophisticated investors on the institutional side, managed wealth, ultra high net worth individuals are really starting to pay attention. One thing in particular that stuck out to me was Anthony Scaramucci's presentation. It was one of the few that I actually caught during the day. But the one thing that he pointed out that that is maybe obvious to the three of us, but still not obvious to Wall Street or Main Street when it comes to owning Bitcoin is just pretend like you're dead with Bitcoin. Like, avoid the avoid the yield, avoid the active management and elaborate strategies that exist out there to trade Bitcoin and other crypto currencies and just buy Bitcoin and act like you're dead. It's it's really that simple, right? It the people who've performed the best with the asset are are those who have done absolutely nothing with it. And it's so counterintuitive to the Wall Street culture where it's all about generating alpha. How do you outperform A benchmark? What's your edge in a in a particular market, you know geography region, how do you maximize sharp ratio and it's just it's it's it's not intuitive that you could own a better form of money that on a even on a risk adjusted basis to use a Wall Street metric with a sharp ratio it outperforms all these active strategies. So I think that's all to say that it was impressive for you know first year of of an event there was about 700 people or so in a room. I think they oversold the event and it was largely traditional finance folks who were there and they're really starting to pay attention. I think of you know the digital gold rush and and thinking back to the 1800s in in California and it's interesting that you guys may know this but gold I think was first discovered there in January of 1848. But there was so much skepticism around the discovery of gold that it really wasn't until December of that same year in I believe 1848 that President Polk shared in his State of the Union address a report from from I think Colonel Mason about the gold discoveries in California. And it was at that point that there was widespread belief of the discovery of this precious metal in California and people from all over the US and internationally travelled there for what became the gold rush. So I think the ETFs are kind of like the President Pulk moment of Bitcoin and and it's it's starting to be really clear and and that event in New York 2 weeks ago was just one indication of that. Completely agree. But I want to make it clear to the listeners out there, scary moochie like you have to watch out for this archetype of people talking about Bitcoin because they can talk the game. They can say just pretend like you're dead, look at the sharp ratio, look at this. But then they're going to try and sneak all the shit behind it because they don't really care about Bitcoin. The revolutionary aspect of it, the fact that we have this non sovereign money in the digital age, I don't think he's in it for the revolution. I think he's in it for the the the gains that he can see and like Scaramucci play the clip. Logan like this is, he's going to say all like there's this is an archetype and I don't want to pick on Anthony Scaramucci specifically, but he deserves it And there's many people like him who can talk the the Bitcoin thesis and and and explain it very well, but then they're going to try and shovel shit to you on the back end. Almost feel like you've got one foot in the coffin and the other one in a on a banana peel. How are you going to compete? With the big boys. This season on the all new killer whales, these crypto entrepreneurs from far and wide pitch to me in 60 seconds or less, come to pitch their projects to some of the industry's biggest names and hopes they'll pitch the next big crypto project. You got to relax, man. Roam the shoulders. Loosen up. There it is. We there. Walk me through. Exactly how it works. If the whales take the bait, they'll give the project a swim vote. Even a child can create these worlds. So it's a swim for me, but. If their. Project fails to whet their appetite, They'll sink it to the bottom. I just think the project is really. Bottom You just love being the villain, don't you? Kind of creep me out, so for me it's a sink. Watch to see who will swim to victory. It's not a crypto business. I'm your only hope right now. And who will be deep sixed to the seabed floor? I see lots of potential in you. Frank, I'm going to disagree with Grayson. If we fail, the world is fucked. I think it's time to sink or. Swim. This is killer whales. It's. Two yeses, 2 Nos. And the vote is down to Wendy, who didn't understand this. Pre-order now at Hello. It's a game to these people. Can you keep us on the screen, 'cause I think this is actually will be an awesome way to like rap or just a conversation, 'cause there's a lot of things that I haven't said that are all like coming together based on what you just described, and I think there'll be a lot of feedback and interesting things. The first one is Jesse referenced earlier about boomers and individuals. And I think it's less about age and I think it's more about a mindset. I think there's something like very just wired and individuals that see what we're talking about and allocating. And I think that goes all the way down to reputation in the short term versus long term. And so Marty is right in the sense of it's just anybody being careful for what people say and then what they do. Because like, I don't know, Scary Ritchie and a lot of folks that are now coming up the curve maybe are grokking it's Bitcoin and that's how they store their value and that's what they position in the ETF 'cause that's the most kind of Ford public thing right now. But the reality is the incentives in the system we exist in, you cannot raise capital on that story. It you cannot raise. That's this is partially why you see people support the longtail crypto assets. The beauty of that is that they're actually kneecapping themselves and they don't even know it. Because every cycle, every year, if you go and put people in the bad products, the chicken, the truth always comes out. The cycle always, you know, kind of flattens and people are left holding a bag of crap and people don't forget and their reputations are aligned. And when we go to rooms with these individuals and other individuals like that, they'll they'll tell us behind the scenes. I mean, that was really smart doing Bitcoin only. And this isn't gonna have to be about ideological reasons or doesn't even have to be about anything related to the efficacy or value of other cryptocurrencies. Anybody you ask or talk to is 9080 to 90 to 100% waited in BTC, whether it's the custody, the trading revenue or just their exposure. But they're forced to show all this stuff because they can't go and raise money. And that's the beauty of Bitcoin. When you store your value in it, when you save in it, when you have people aligned with it, you can build companies like on ramp and you can actually produce the value from a long term sustainable business. And so everybody can go do whatever they want, everybody will play the game that they want. But the long term game, we know directionally we've seen this for the past five years being in this space is this game because it's the one that's going to outlast everybody. So anyway, it was just like a, a type bow of like all these different things that are happening. And we look at it, we're like, oh, I guess the last point is going into a room with a sophisticated investor. If you give them a, a buffet of cryptocurrencies, you're basically telling them like you know nothing except for put 1 to 2% because that's all they're ever going to do versus if you can type be very singular and expose the asset from a multidisciplinary aspect, how we do with research, content, education. And in the conversations we have now, somebody can start off the bat 35 whatever percent and they can actually look at this as a different form of savings versus a casino chip and that's where the custody comes in. So that's the the point to tie it is that like everybody thinks, oh, so you offer more things, you get more market share, more trading revenue. The reality is they're going for one to 3% of somebody's allocation reality. We all on this call and the most people that join are sitting on 30. Fifty 90% because we understand the trade-offs and that is the last trade and that's the ultimate game and none of these people can play that because they literally have to sell a buffet of 10,000 cryptocurrency. So they hurt themselves even though they believe that they're doing the right thing, and that's just the Fiat mine. They can hurt investors who fall for their scales. Oh yeah, don't buy their buddies. That's where we say, I mean that's the point of like shilling this. And we've been in these rooms with the the firms that are out there. We've been in the rooms with the large ETFs that are shilling 40 billion, 150 billion consulting firms. And they'll call us in to say like let's talk about Bitcoin versus crypto and explain it and we leave. And they're like, oh, wait, what have we been doing looking at this cryptocurrency thing? Like if you ever get it and they won't, we can have them join, we'll have anybody join a pod and discuss. They probably wouldn't, wouldn't want to but it's always open for anybody to to discuss because it's pretty binary in in the results of Bitcoin versus any other asset whether it's a bucket or a singular asset other than maybe like Pepe or or whatever local racial slur coin that's out the the past 30s, yes. No, and it's I think it's imperative that we in Jackson. It was in no, no way trying to stomp on the. I mean, what Scaramucci said was right, but I think these people in crypto have done the the Bitcoin industry dirty. Like we have to go and literally rewire people's brains and be like no, Bitcoin is not this. It is completely different. I know you got washed out with the tide last cycle because you allocated to all these crypto projects and these companies that were highly leveraged on this crypto thesis. That is not materializing. But Bitcoin is different and does the Bitcoin industry a disservice to a degree. And I I do think it is imperative to like stand up and say like draw a line, a demarcation. Like there's Bitcoin and then there's crypto and you you have to separate the two if you are a competent institutional investor. Yeah, but we're that's right. I I think it, I think it all comes back to like, I think we forget how few people understand Bitcoin and what Bitcoin is. And the vast majority of people who are in crypto or excited about crypto or think it's the future are still in the Fiat mindset. They're playing the Fiat game. They're they're trying to find the next venture capital pump and dump to make dollars. They're trying to ride the next wave to make dollars to to buy low, sell high. It's, it's venture capital on a faster timeline. It's penny stocks on a faster timeline. And so it's no surprise that you do have a lot of these characters who you know belong in those worlds stepping into crypto and seeing it as like a new frontier for their business model of of how do you buy low, sell high. And the unfortunately, they're the noisiest people and the people that the culture, mainstream culture believes because mainstream culture is Fiat. And so we sound like the crazy radicals when we're saying no just buy this this digital scarcity and and act like you're dead and just hold it and you'll your purchasing power will appreciate over time like that. That sounds crazy versus ride the next wave, buy low sell high because that is part of you know how the world works today and and people understand that And so you know I for me it's all about when we hear Scaramucci talk about things he's right about some things but he's coming from a world that is antithetical to Bitcoin and he's trying to bring those games to he's trying to play both games. He's trying to make as much money as he can. And that includes stuff that is counter to how Bitcoin should be engaged with which is you know just just focus on that hold it keep it safe forget about the crypto noise out there. But you know if you're a Wall Street person who's made a fortune by buying low and selling high, crypto's kind of irresistible. And and unfortunately that's everyone has to go through that learning process of of of thinking that crypto is part of the future and eventually getting burned or going deep enough down the rabbit hole to realize that it's not a part of the future. And then focusing on Bitcoin because that that is, you know where this is all headed. So it's, you know, it's a it's a learning process. And I I guess the the positive spin on it is if you understand that it's all about Bitcoin, you're way ahead of everyone who's talking about crypto and and that's that's a blessing, that's an edge. That's your opportunity for you know, securing your Bitcoin wealth way before the rest of the world has arrived to California in 1949 and is trying to you know, scramble to stake a claim. You're in California in 1948, congratulations or in 1848 and 1849. Sorry guys. Marty the the counter. Like, not counter, but to the point of not picking on anybody but the dinner last night and that person or the art type that went into Celsius and these other firms, it's like honestly, don't blame Celsius. They did their own, you know, misdeeds or whatever. It's that was always going to be the art type of a person that was going to go out on the risk curve and they didn't do their diligence and like, 'cause we work with the other side of that where the person's like actually from a first principles thinking about the whole digital asset space and they're building up from understanding gold and then thinking about what's the counterparty risk associated now that they're at Bitcoin. And so I just think that there's a natural lens of who got washed out is a very small micro example of the rest of people that have been sitting prudently like as a fiduciary looking at the whole ecosystem waiting to jump in and make their move. And then obviously there's a lot larger position there that will come in this next cycle and hopefully they learn from the previous. But I I do hear you that, like people have been people kind of burn. Yeah. People have been burned. But I think like there's also those people got burned were because those were like Fiat thinking people that like, like and they weren't like naturally, you know, oh, it's like they weren't They didn't think through because all you had to do was like do a little research. You know, like maybe this thing doesn't make any sense. You got to take it back to basics. The the trap that so many of these people fall into is being too smart by 1/2. As Greg Foss likes to say, it's overthinking it being this trying to be the smartest people in the room. And the I think the perfect example of this is the cash and carry trades that that pop up all over crypto. There's all these opportunities to short something and collect the premiums for, you know, futures funding rates. If people are offsides disproportionately long if you short it, you get to collect the the the funding rates and then hedge that out by going long. So you know from a position standpoint you are neutral but you get get to collect the yield from funding rates. That's just one example of cash and carry trade. You know there's lots of opportunities like that with amount to some sort of hedging scenario where you you get to collect some nominal yield in the middle. And The thing is, is that Wall Street has developed in a way that they think that's the play that's the smart move is to just have the risk neutral allocation of capital where you get to collect the risk free yield. And so that's that's what people get excited about and that's how you get burned in block Fi or Celsius because you don't you don't understand the hidden risks there. The actual counterparty risks of what if the counterparty that I have half of this this trade with goes under and then suddenly I'm shit out of luck for for half of my deployed capital. That's how you get burned in that and and the assumption, you know the the the mistake that so many people made is assuming that these counterparties are as robust and safe and tried and true as people are used to in Wall Street. You know with the behemoths that have been operating for 100 years and it's just not the case in in this market. So you know that's that's the the trap that Fiat thinking gets you in is how do I get the risk free yield by finding some inefficient frontier in crypto markets and exploiting it. And and you know that's that's where most people are going to start, especially the the Wall Street types that they start by trying to find some clever way to get their money without any risk. Not realizing that they're actually taking on a a great deal of risk and actually missing the much bigger opportunity cost of just parking your value in Bitcoin and riding the 30 to 50% taker every year. You know and and outperforming everything in the market in the process. Counterparty risk matters much more just because you can't print more Bitcoin. So what's the We have that chart right that in our presentation materials where it's $120 billion of Bitcoin and crypto loss from either just losing it yourself or having exposure to the wrong counterparty, whether they stole it outright, it was hacked or it was just poor management which led to insolvency and you losing your crypto. I think that figure now is closer to 300 billion because that was originally produced in the depths of the bear market. So it is, you know, people really have to think about counterparty risk, which in the Wall Street you know with with 2008 as an exception, people are not used to thinking about that in traditional finance. Like no one really cares to think about where are my equities or fixed incomes in count 2. 1008 just removed counter. Like they they're working on the assumption that counterparty risk doesn't exist because you always have that lender of last resort that'll step in like you will get bailed out. The crazy part about that is that was 16 years ago, 2022, and everybody blowing up was literally 16 months ago. And nobody talks about nothing has changed in the market structure. Like, not one thing. Yeah. We saw everybody blow up. Everybody showed their hand and nothing changed other than like maybe some patsies went to pretend gel or whatever. Like that's the crazy part. And what does that look like? You know, next year and when all What is a 2X lever? GTF just came out this past week. Yeah, be aware. Just be aware this is a big be aware segment of the show stuff exists out there. Yeah, be aware it's out there. Gentlemen, this is a pleasure. I have to run. Yep. Sure, we all do. Are we, Are we? Is it homework for next week or not? Because it's a 45 minute thing. That's some real homework, and I got to send it to Leon Wongkum, who's going to join us. I think. I mean, I think you should all read it. I don't. We don't have to discuss it. You can read it and determine if we should discuss it next week. I'm happy too. But very illuminating piece. OK, I'm. Going to check it out. Good history lesson, at the very least. Jackson thanks for bringing the Gold Rush history in, too. It's it's it's an important lens that you know it's very helpful for thinking about our current place with Bitcoin and and the historical precedent like it's the fucking gold rush and act like it. That's a great place to end. Just act like it, right? All right. Thanks guys. See you guys and gentlemen.
Transcript source: fountain