Adam Back and Sean Bill reveal how Bitcoin’s evolution into “super collateral” is quietly positioning it as the backbone of a new global financial system.
In this landmark episode of TFTC, Adam Back and Sean Bill explore Bitcoin’s path to $1 million, focusing on its growing role as pristine collateral in a faltering financial system. Back highlights Blockstream’s infrastructure efforts, from mining operations to tokenized securities, designed to support this transformation, while Bill shares how he navigated institutional skepticism to bring Bitcoin exposure to a U.S. pension fund. Together, they unpack how institutions are entering the space through structured products and Bitcoin-backed credit, with Blockstream’s mining notes offering a glimpse of this new financial architecture. Amid rising debt, inflation, and fiat fragility, the duo presents Bitcoin not just as sound money, but as a strategic reserve asset gaining traction from El Salvador to Wall Street.
"It's not a stretch to say that Bitcoin could reach parity with gold. That would imply something closer to a million dollars a coin."
"Digital gold vastly understates Bitcoin’s potential, but it’s where the conversation had to start."
"We’re not just building software, we’re solving financial market gaps, one at a time."
"You can wipe out an entire pension fund’s unfunded liability with a 2% allocation to Bitcoin, if it performs as we expect."
"ETF buyers are the new hodlers. They’re not day traders; they’re five-year pocket investors."
"Bitcoin is becoming super collateral, its role in structured credit could help engineer the soft landing everyone hopes for."
"In a world of financial repression, Bitcoin is how the have-nots finally access property rights and savings."
"Emerging markets will be the early adopters of Bitcoin finance because they need it the most."
"You worked for your money. To systematically steal it through hidden inflation is perverse."
"Bitcoin could be the story that saves public pensions, and the people relying on them."
This episode presents a bold vision of Bitcoin as more than sound money, it’s the foundation of a new global financial system. Adam Back and Sean Bill argue that Bitcoin’s role as “super collateral” is reshaping credit, pensions, and sovereign reserves, while a robust infrastructure of financial tools quietly prepares it to absorb institutional capital. As fiat trust erodes, Bitcoin’s adoption will be driven not by hype, but by necessity, and when the shift becomes undeniable, $1 million per coin will mark the start of a new financial era.
00:00:00 - Intro
00:00:38 - New ATH
00:02:06 - Sean's Journey Getting Bitcoin Into Pensions
00:03:15 - Blockstream's Evolution Into Finance
00:08:30 - Building Bitcoin Financial Infrastructure
00:14:30 - The Challenge of Conservative Pension Boards
00:17:02 - Bitkey
00:18:10 - Bitcoin's Current Price and Market Cycle
00:24:05 - Bitcoin as Super Collateral
00:27:24 - Unchained
00:30:09 - Cypherpunk Ideals vs Financial Reality
00:34:55 - Pension Fund Crisis and Bitcoin Solution
00:42:29 - The Cypherpunk Banking Stack
00:49:54 - Digital Cash and Free Banking
00:57:06 - Liquid Network and Institutional Rails
01:07:49 - Sean At CBOT
01:22:16 - Bitcoin Futures and Market Structure
01:25:53 - 2025 Bitcoin Price Predictions
(00:00) I'm uh permeable, so I'm always astounded that it's not, you know, 10 or 100 times higher. If everybody saw it, the addressable mark, I mean, it would already be 100 200 trillion asset class, right? That's not a stretch to say that Bitcoin could reach parody with gold. That would imply something closer to a million dollars a coin.
(00:18) You see some established public market companies in different countries saying, "Oh, we're going to buy a billion of Bitcoin. We're going to raise and buy 500." Black Rockck ETF. They're even talking about recommended allocations to portfolio managers in the 2% range. Obviously, digital gold would vastly understate the potential of Bitcoin.
(00:38) Gentlemen, thank you for joining me. Of course. Thanks for having us on. Uh Adam, I was just saying I'm woefully embarrassed. This podcast is almost 8 years old and this is your first time on the show. Oh, okay. This is uh but it's an exciting time. Yeah. And you uh really dedicated to podcast. It's been a lot of years, a lot of episodes, right? It has been. Cool.
(00:59) I think we're approaching 700, which is crazy to think. Wow, that is impressive. The uh No, we're talking hit a new alltime high today. Yeah, Bitcoin doing Bitcoin things just as we were on stage uh at the talking hedge kind of asset manager conference uh trying to explain to them why they should put Bitcoin in their uh fund allocations.
(01:23) Yeah, we were discussing it before we hit record and I saw Tur's tweet looked like Tur was at the event, too. Yeah, he was. M so 50% held up they have Bitcoin in their personal account but only 2% or 4% of the funds very few that actually had allocated to Bitcoin. So a lot of them are believers at a personal level but they haven't been able to sell it within their institution you know so they own it themselves uh but they haven't quite gotten the boards to agree yet.
(01:53) So which was a similar situation I was in in 2019 when I first proposed it. You know, I had my experience with Bitcoin. I had a very good experience and was trying to convince uh the pensions in California that they should be looking at adding Bitcoin to the portfolio. Yeah. And it was great to hear some of your background last night, Sean.
(02:11) So, Sean, for those of you watching, uh is the CIO at Blockstream now. Yeah. I am really excited to have both of you here because I've got into Bitcoin in 2013 and nerded out uh on the tech side of Bitcoin distributed system mining full nodes the layered stack that's been built out and so I followed probably all the work that you guys have done at Blockstream since you've been around and it's been really cool to see everything you've done from the Blockstream satellite.
(02:42) I've broadcast some transactions through that before. It's a Jade um uh CLN or excuse me, Core Lightning now. Um the uh liquid and now over the last few years really sort of leaning into the financialization of finance as I like to um to reference it. And so Adam, like how's that transition from being hypert focused towards a more financial perspective on Bitcoin been? Well, actually in our 2014 uh kickoff meeting, you know, with the founders sitting around big whiteboard, we were trying to forward cast what we'd have to do to get
(03:28) a Bitcoin layer 2 for, you know, settlement of assets and Bitcoin working. And one of the risk you know so we thought we'll build the tech and other people issue the assets but like well they might be lazy they might not do it if that happens we'll have to do it ourselves. So there was a lot of situations like that actually where you know you would think there would be lots of people building applications but many people are really just more in business development and a technology is basically a website and a database and
(03:55) you know Bitcoin core wallet on a server or something like that right so we actually ended up building a lot of middleware and getting into asset management a couple earlier steps one was the mining note so we're doing hosting and mining in our own account and what we did when when it was public that we were hosting initially Fidelity was the uh launch customer.
(04:16) They kept coming back to us and saying, "No, we need we need some hosting." And you know, uh, they'd looked around and decided that we were the best. We were we were like, "No, no, we're prop mining. We don't do hosting." But they persuaded us to host them. And then we're like, "Okay, maybe we should expand and host for other people.
(04:31) " And then that became news. And so then a lot of Bitcoiners contacted us and says, you know, I've got like a dozen miners. Can you host them for me? And of course, if you're if you're hosting for thousands of customers, that's a whole you need need a support team. Somebody has got two miners and one of them's crashed or failed, they're very upset, right? It's half the revenue.
(04:52) Whereas somebody's got, you know, 10,000 per client, it's just part of the, you know, maintenance cycle like a big data center. Discs fail 1% a year, you replace them when they die, they raid, it doesn't matter, right? So, it's kind of that phenomena. So we try to figure out well how can we help you know how can we help people do this without creating a you know that painoint and so we designed this mining note concept where it's kind of socialized so that collectively they look like one of the enterprise customers and then we put a 10% buffer in it so that we would eat
(05:22) the first 10% of equipment failure so they wouldn't get you know the drooping hash rate as miners like failed due to age uh for the for the onset And we also figured out how to try and make them a unified market. So, you know, we're selling more tranches into the market. This started in 2021, a three-year product.
(05:45) And um you know, there was some people on the launch branch and then some people 3 months later. So, what we do is look at how many Bitcoin it had mined in the first three months. We buy that and then match it with a 33month contract for the next one. And so the economically equivalent neither dilutive or anti-dilutive for the buyer and therefore they could trade in a unified market even though there were eight sales tranches over the first I don't know like 12 months or something like that and that that market you know it was using initially using uh liquid
(06:17) security tokens uh with uh stalker a European company that does the securitization I mean the legal part of it the setup right so they're licensed Luxembourg security fund managers and they were the share registration and the enrollment for it and initially people were OTC trading in a telegram but they get scammed you know people would like you know pretend to be somebody take the bitcoin not deliver the contract all the way around and until sides swap appeared which is so sides swap Swedish company that built a trustless trading platform
(06:52) on liquid and it's a great form of innovation because they just appeared out of nowhere we'd never heard of and they they set up a they have a functioning trustless market and we said that's cool. Can you add support for the security tokens? And they quickly did that. And after that, that was the go-to place. Nobody got scammed anymore.
(07:08) Uh cuz it's a kind of trustless trade. So you got atomic swap and it's actually it's a central order book, but it's non-custodial. So what you're doing is you're signing a limit order, uploading that to the server, and going offline. And if somebody they match your price, they can take it. And if somebody compromises the server, all they can do is pay the asking price.
(07:31) So it doesn't really don't really have that custody risk anymore. And subsequently added uh Jade hardware wallet support for the limit order approval. So you actually have your, you know, if you're trading Bitcoin for stable coin, all the assets on your hardware wallet, you set up a limit order, you want to buy Bitcoin, if it dips to here, go offline.
(07:48) If you get off a flight or come online again, you know, it might be swapped or it might not, but you can be offline when that happens without custodial risk, which is, you know, maybe getting on for the safest way in terms of custody risk factors to trade in the kind of Bitcoin related area. So that was our start and then later uh was talking with tur deistster about what became admin capital and so you know when he decided to bow out of that I was like well that that was that was a cool thing you had going and maybe blockstream could be a
(08:21) new home for it so we kind of took it on didn't really get to starting it but we were seeing some sort of market gaps which every bitcoiner is aware of shortage of dollars dollar interest rates super high funding rates very high for margin trading. So, and yet on the other hand, there are massive pools of fixed income taking what have been really low interest rates for a while.
(08:44) Um, so we figured that's that's so our our approach is just to try and fix any problems that come up. That's why we're like doing all the things, right? And so we recruited Sean Bill cuz who better to get out that institutional money than the guy that was, you know, a hedge fund manager but then for a while inside the pension fund trying to find trying to get it passed and trying to find asset managers that pass the due diligence.
(09:07) So he's been both sides of the fence and he knows a lot of these guys and you know he's quite well known for having the first uh you know being the CIO of the first pension fund to put Bitcoin on a balance sheet in 2021. So here we are which we're that's what we're we're in Texas for to go to a few different conferences uh you know meeting with and talking and socializing with that that crowd. Yeah.
(09:31) And Sean you were explaining it last night the uh the effort to get Bitcoin on the balance sheet of the pension and the story is pretty funny. there some collateral damage, but uh yeah, yeah. So, I mean, you know, for viewers that maybe aren't super familiar with pensions, you know, generally speaking, these are uh for the most part either corporations or public entities.
(09:53) And so, I was working with public entities. And so, that means it's taxpayer dollars, right? And so, the folks uh that are uh running that money are tend to be very conservative because it is taxpayer money. And uh so uh you know when I was looking at Bitcoin I thought gez you know this is a really interesting asset.
(10:16) The correlation at that time was extremely low. Uh this was before you know PayPal or Cash App or you know allowing people to get in and out easily and we got a little bit more of a kind of risk on riskoff correlation that happened there for a while. Um but before that it it was like you know pretty much zero to 0.15. Um so and then of course it had a lot of volatility.
(10:35) So I was like looking at it. I'm like I inserted into my mean mean variance optimizers to look at my portfolio. I'm like gosh everywhere you put it in it helps. It makes a better riskadjusted return. And um so when I was playing around with it um I thought okay you know what would be like a reasonable uh kind of first you know approach to this to try to socialize this idea uh with the pension boards.
(11:02) And you got to remember pension boards have half the board is usually labor unions and half is the uh uh sponsoring entity that's the taxpayer entity and um and so you have generally speaking a very much older crowd on the pension boards so they're not going to be familiar with Bitcoin at all right and um so I went in I was like I kind did some test messaging kind of tried different things out like you know okay you know this is digital money well lost them you know let's pull pull that back.
(11:32) Uh let's try, you know, digital gold. Oh, got a couple gold bugs on the board that are really interested in gold. And like they're actually listening and paying a little bit of attention. And so kind of started with that as kind of the idea like, okay, you know, obviously digital gold would vastly understate the potential of Bitcoin, but you know, to start and just kind of get the conversation going, it was something that they could latch on to and understand.
(11:58) So that's kind of where we started. We started with that conversation and we did that for like about a year and a half and we brought in a lot of other outside experts because it's always good for credibility if you have other outside people coming in. So we had a lot of folks like uh Dan Warhead and Mark Yusco and Anthony Pompiano and different folks that would come in once a quarter just to kind of you know give an update on what they're thinking on digital assets and Bitcoin.
(12:25) And then um uh eventually uh we were able to you know I I made my formal request you know to put uh 1 to 3% in got shut down. Uh I think I might have brought it back one more time got shut down again and I was like okay you know this is okay. Uh it took me six runs to get high yield added to the the portfolio right because that's how conservative they are.
(12:45) Uh but eventually I got high yield in. And I was like, uh, so then, uh, Skybridge, um, the fellows over there, Troy Giesi, Ray Noli, and Anthony Scaramucci, had asked me, uh, if I would be interested in seeding a Bitcoin fund. And, uh, I thought, oh, that's interesting. You know, I I knew it would not pass the board.
(13:07) Um, so I said, "Well, you know, we are your largest LP in the United States and you know, our limited partner agreement allows you to put up to 15% into discretionary ideas and Bitcoin could be your discretionary idea. And you know, if you chose to do that, I will write the memos to try to provide coverage for you to think that this is a sound decision.
(13:32) " And that's how we originally got in. We went in through Skybridge. The assets were custodian at Fidelity Digital Assets and um I think the initial allocation between the healthcare trust and the pension was about point uh 45 45 basis points half a percent and that was I think 17,000 on Bitcoin at that time. That was 2021 when when we actually got it in.
(13:54) We started in 2019 but it took quite a while and then the opportunity came to try to kind of back door in. And it's uh you when you consider the state of a lot of these pensions like underfunded and totally understand the conservative nature of the boards and the investment committees but when you look out at the landscape of what's happening in markets particularly with debt and with bonds specifically like TLT underperforming massively uh recently.
(14:28) How do as a Bitcoiner as an investor trying to convince these pensions as well there's something like whenever I'm talking to some of these people it's like do you the lack of urgency around Bitcoin which has been around for 16 years best performing asset over that period like at what point does it become obvious and I think it's definitely um changed a lot I mean like you know so I did a presentation at the state association of California retirement systems in 2022 too and just talking about how we did it at Santa Clara. How did we get, you know, Bitcoin
(14:58) into the portfolio and that was, you know, you know, definitely a lot of skepticism at that time. Mhm. Um, you know, certainly not a lot of questions from the audience or anything. Um, when we were there last week, uh, they invited us back, they said, "Hey, there's a lot of interest in Bitcoin. We'd love to have you come back and talk a little bit about, you know, an update on that last thing that you did in 2022.
(15:23) " And so, uh, Adam and I went out there and Adam did a session and, um, you know, I think we had probably five or six hundred people in that session, which was, you know, pretty much everybody at Sackers that came out for that conference. That's trustees, that's the investment officers, the consultants, you know, we're they're all there.
(15:40) And um, it was one of the most highly attended sessions. And the second day because with the first day was kind of like just a highle talk about Bitcoin. And then the second day um we went into uh kind of how it fits into a portfolio and we got like I think 30 35 questions which I was told was like more than all the other sessions combined which was it was a lot of questions like I mean you know and you know and these are folks that you know they don't want to you know they're they're uh kind of u uh a little more conservative about asking questions in public right because
(16:13) they they they're supposed to be fiduciaries. they have to know what's going on. And so we're really excited to see them actually kind of break out and say, "Hey, you know, okay, we we want to know like what's the answer to this, that, that, and this, you know, and it went on.
(16:27) We had a lot of questions from uh folks and and they were like reasonable questions like they clearly spent some time learning to to be able to develop and articulate those questions. So, it was interesting to see, but still, you know, the overall flavor is it's still early. you know, they're they're grappling with things that, you know, we probably saw in 2013 or 2014 in terms of like what would be discussed on a financial news show back then.
(16:52) So, they're, you know, they they're still feeling their way around in an early stage. But I think ultimately that that just indicates it still is early. So, freaks, this rip of TFTC was brought to you by our good friends at BitKey. Bit Key makes Bitcoin easy to use and hard to lose. It is a hardware wallet that natively embeds into a 203 multiig.
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(17:35) Again, Bit Key makes it easy to use, hard to lose. It's the easiest zero to one step. Your first step to self-custody. If you have friends and family on the exchanges who haven't moved it off, tell them to pick up a Bit Key. Go to bit.world. Use the key TFTC20 at checkout for 20% off your order. That's bit.world, code TFTC20. Well, on that point, Adam, where we stand today? New alltime high under 9,000.
(18:02) Uh, has Bitcoin uh exceeded your expectations of where it would be today? Is it right in line? Is it underperforming where you thought today? Well, I mean, you know, I'm uh permable, so I'm always astounded that it's not, you know, 10 or 100 times higher because like, you know, like like you were just sort of indicating, you know, why don't they see it? It's obvious. We've been in it for so long.
(18:24) What would it take for them to, you know, see reality? But you know I think if if everybody saw it the addressable I mean it would already be a 100 or 200 trillion asset class right and so the fact that people are still struggling with it and at different stages of their Bitcoin journey is what makes it cheap today.
(18:45) So, I mean, I I I genuinely think like the 100,000ish mark is cheap because, you know, we had 69,000 the previous cycle and then that second alltime high 74 and a half. That's a long time ago and there's been a lot of money printing since then. So, 100 it's not not that high and there is a lot of um a lot of things that have changed.
(19:06) you know, the Black Rockck ETF, the spot ETF, which is a good reference for, you know, people from institutional world that Black Rockck is there and they're even talking about recommended allocations to portfolio managers in the 2% range. That's a lot of cover for those guys to uh you know, not get fired for copy copy suggestion, right? And then you've got uh PostHing uh Black Rockck ETF absorbed two times the min bitcoin per day.
(19:35) Micro Strategy absorbed two times. There are other strategy companies. There are individuals dollar cost averaging through you know River Swan Unchained all these companies and you know it's still only 100,000. I'm like who's selling you how is this possible? It doesn't quite add up to me. You know there's all this you know repeat buying and you know the price is still only 100,000.
(19:59) So I think you know ultimately of course going back last year or two there are a lot of bankruptcies from the excesses of you know DeFi and the things that got contagion via three arrows genesis and you know the firms unfortunately affected by that and NFTtx and all that stuff. So, you know, those bankruptcies sold a lot of Bitcoin into the market.
(20:20) So, that definitely contribute to the bare market, but that's I'm pretty sure that's all washed out now. And actually, you know, FTX is paying back different trenches of investors over time. So, I think there was another trench the last day or two. So, that mere contributed to the pop, which is, you know, that bankruptcy presumably sold this Bitcoin around $25,000.
(20:41) Now, people get their money back and they're like, "Well, I can buy it back at four times the price, but I guess I better do it. probably five times or more soon, right? So, they kind of they're back in market buying back cuz the bankruptcy the FTX bankruptcy is saying they did a good job and they you know they got 100% of the money back or maybe a little premium on top including interest but not a bitcoin basis they didn't because they sold it pushed the market down while they're doing it right.
(21:06) So, it's kind of bad job from Bitcoin perspective. Yeah, I saw earlier this week they sold uh the FTX stake in Anthropic which was at a preede valuation would be worth multiple billions. Oh yeah. Today um got one right on that one. Yeah, it is like do do you feel like this is a different a different cycle when you factor in Black Rockck nation states, individual states, the corporate treasury play? Yeah, I mean there there are some people who are drawing a diminishing return inference, but I think that they're reading too much into it. We don't have many samples in terms
(21:43) of number of hings for a trend and the prior one was influenced by a lot of external factors, COVID, supply chain, quantity easing, wave of bankruptcies, uh the contagion. And so, you know, technology sometimes goes through S-curves where things get steeper and the sheer, you know, volume of systematic buying by new entities that weren't there a few years ago and the regulatory improvement all these different regulations that have improved and the kind of institutional cover of some of the bigger entities that people
(22:18) would reference. You know, in IT world, you'd say nobody gets fired for buying IBM. in institutional world, you know, get fired for following Black Rockck's recommendation, right? So, it's a blue chip brand name there. So, I think that's that's a lot of things and the Bitcoin treasury company phenomena is picking up pace.
(22:39) You'll see one or two announced every week or two now. Um, so, you know, they're all in the game and you see some established public market companies in different different countries saying, "Oh, we're going to buy a billion of Bitcoin. we're going to raise and buy 500. So, you know, that that could snowball and there is only so much Bitcoin being mined.
(23:00) There's only so much Bitcoin on exchanges. So, you know, when uh you know, we new wave of demand meets uh sort of mathematical scarcity, there's only one possible outcome, right? Yeah. Yeah. And like to add to those factors, like I think you look at what's going on this week. Japanese bond yields blowing out. US bond yields blowing out here.
(23:23) 10 bips today on the 30-year. Yeah. Big move in bond land. It's a big move over 5%. Yeah. 10 years over four and a half I believe last I checked. And this is like a trend. I've been saying this on the show for like the last 6 months. Like when I think of sort of one of the bigger themes for this cycle, obviously nation state adoption, corporate treasury adoption is top of people's minds right now, but I think the recognition of the credit system and the incumbent financial world being relatively weak.
(23:57) And my hope and I am inclined to believe that more and more people are going to believe this is that they recognize Bitcoin as super collateral. this idea of Bitcoin being introduced into structured credit products to improve a credit return and in doing so actually manufacture the soft landing that Jenny Yellen and many others were talking about um not too long ago.
(24:21) It's like literally recapitalizing the the credit stack with Bitcoin as collateral. So it sounds like a lot of things Sean's been working on in in Prime Meridian and Blockstream. Yeah, I mean we're definitely um you know big believers that Bitcoin represents you know pristine collateral and so when we're going out um kind of you know actually you know part of the genesis of why do you create a fund right Blockstream is really uh you know a technology service provider to the Bitcoin ecosystem has built so much of this software that this community uses
(24:55) and we were trying to think well how do you get dollars into this ecosystem right And you know um cuz there's a you know there's been this massive creation of value with Bitcoin you over $2 trillion in market cap and folks have so much Bitcoin wealth that they've accumulated but it's not easy really to borrow against we have our folks here at Unchained that help with that um you know but it's still a very niche market and so when we started thinking about well how would you bring dollars into the market so that people don't have to
(25:24) sell the Bitcoin so they could just borrow against it or what have you and there's also not just individuals but there's corporate treasuries now, right? You know, there's a lot of Bitcoin treasuries that were funded when Bitcoin was 20,000 or 25,000 or 30,000, now it's 100,000.
(25:40) And these these runways have extended out from, you know, an 18-month runway to 5 years. So, it's they're in a great position to borrow against their Bitcoin, not have to sell it. And so, when we thought about that, we're like, okay, the natural long in Bitcoin is going to be the Emirates, right? the the oil countries, uh, Saudi Arabia, UAE countries, or, you know, the US, um, pensions, pensions, foundations, endowments, they're all naturally long dollars.
(26:09) And so, what would they how would how could we facilitate bringing them into this market? Well, we need to create a fund that is something that's in in a form that they're used to, that they understand, that is, you know, we go through and check the boxes that we have an institutional quality product for you that you can count on is not going to be two guys in a basement in Hong Kong, you know, fooling around.
(26:30) Uh, you know, so we um and we kind of approached it from that framework and otherwise, you know, our activities, you know, we could just do them out of blockstream treasury, you know, for Bitcoin oriented activities. Um but for dollars because you know Blockstream has probably one of the original Bitcoin treasuries going back to 2014 and you know the company keeps its balances.
(26:51) We you know eat our own dog food and are very much a Bitcoin first company. So only really raising dollars when we need it. Um so so you know that was the problem we were trying to solve for was what's the vehicle that makes it really easy for these folks to come in and provide dollar liquidity to the Bitcoin ecosystem which we think will get the flywheel turning faster help people stay long their Bitcoin help uh companies like Unchained when you know when bigger you know companies are coming and try to help them with finding capital and to
(27:22) just try to accelerate and catalyze that. The US now has a strategic Bitcoin reserve. That's not clickbait. It's a policy directive. Unchained and the Bitcoin Policy Institute just dropped a new report and are hosting a live event to unpack it. It's called the Strategic Bitcoin Reserve era begins.
(27:37) We've got Congressman Nick Beich, Matthew Pines, and Joe Bernett breaking down how the first 100 days of the new administration flipped the policy script on Bitcoin. Go to unchain.com/tc to register and read the full report. That's unchained.com/tc and see it begin to form like we're we're invested in battery finance and I think we're I know we're supporting them because I I think a product like that needs to exist to create a forward-looking duration curve because I think a lot of people may be spooked particularly at an institutional level
(28:11) about Bitcoin's historical volatility but if you look at a product where you're doing sort of dual dual collateralized commercial real estate in Bitcoin with a 10-year Yeah. duration and if that scales um whether it's commercial real estate dual collateralized or just like a fiveyear just pure Bitcoin collateralized lending product for dollars you can begin to create like a forward-looking duration curve where it's like okay I've pretty good amount of certainty that 95% of the Bitcoin locked in these wallets is not going to get margin called or
(28:43) whatever um or they're not going to get off sides on their loan and so you know that's off the markets has to suppress yeah volatility to a certain extent. Yeah. When I had the opportunity to meet Andrew from Battery um in London uh we were on a panel Alan Ferington put together a conference and uh Sam Cartwright who is a consultant who kind of got the first UK pension into Bitcoin and they kept it anonymous.
(29:10) They haven't given the name out because you know you know these things are very controversial. Like he's where we were 5 years ago in the US. They just got it into the UK. Um but I met uh Andrew and he was you know telling us a bit about the product at battery is super interesting. So this idea that you know you may have a commercial loan that also has Bitcoin as you know part of the collateral stack is basically like from a fixed income background we would say it's a collateral enhancement or a credit enhancement right you're
(29:37) attaching additional enhancement with Bitcoin and then that can really change the whole risk profile of the underwriting of the loan that you're that you're trying to provide. super interesting. I think it's just, you know, I think batter is at the forefront of this. I think, you know, at Blockstream, we're trying to help facilitate those things and um I think we're still very early days, but I think, you know, people are you're seeing glimpses of what can be done there. Yeah.
(30:02) And this makes some people uncomfortable. Do you think this conflicts with the cipher punk ideas, ideals that Bitcoin has grown up on? Well, I think um you know a some of the value proposition is basically the scope of permissionless internet money and you see that in the emerging markets in the countries with high inflation, a lot of retail payments, a lot of lightning payments.
(30:24) So I think that's kind of the value driver but you know ultimately people are going to want to restructure finance using Bitcoin because it offers a lot and you know other than these few I mean if you look at the Bitcoin market today it's actually you know most of the exchanges are custodial there spot markets there's perpetual futures le high leverage options dated futures split it right Bitcoin lending that's interesting But it's really only with it's only recently the interesting structured finance around Bitcoin that's come to market. And I think you know
(31:01) Milo and Battery are an example where they can make um a Bitcoin mortgage which is low risk or even you know non-liquidation basis with a shared risk profile because they're also interested in Bitcoin upside. they're willing to do a kind of shared upside formula um with a different you know you pick your poison rate in terms of your mix of um how much deposit how much collateral what interest rate but you know there's a shared interest from the structured lender so it's very interesting formula and I think there lots of other
(31:40) opportunities around that to reimagine the world with with Bitcoin and the financial system so I do like the um collaborative custody model. So it takes out the you know kind of repo rehypothecation risk of the centralized lenders which is you know kind of how we got into the current mess with the fiat world.
(32:00) It's got a lot of leverage in it, a lot of rehypocation and ultimately instability potential. Right? So if we can if we can can restructure how the world works now different parts of the world are you know more or less structured right? So the emerging markets they don't have mortgages they don't have KYC uh like people working for cash week by week and say for them being able to get access to global finance is a big deal.
(32:26) about 50% of the world's working population is uh informal. So they don't have a bank account, they have a contract, they work for cash. So just to get access to the global financial market is huge. So I mean I think if you look at you know for people that were around when the internet uh was first starting like as a teenager or something you could see that you know originally there wasn't much going on no applications no social media but you know scroll forward a few years and there were you know oppressive regimes overthrown basically with
(32:59) instant messaging coordination and people were able to publish freely in competition with the official line and you know even western countries grappling with a concept that people compete with mainstream media and you know so the internet had a huge impact so I think we're still you know and if if just the internet the ability to communicate and publish does that what do you think like bare hard money is going to do for the world it's early days and it's going to change a lot of things I mean people like fix the money
(33:26) fix the world which is your sign up there and I I think that's the case and I think it just it takes time but part of that is you you know, reimagining and restructuring finance and lots of aspects of human organization around this new hard asset class. And I think, you know, a lot of what makes it work is that wholesome incentives matter and they seem to scale really well, better than you would expect so far, right? that it's influencing all kinds of people in businesses, in in fund management, in banking, in politics, in
(34:04) diplomats. So, you know, any of those people can invest in Bitcoin and it changes their mindset. So, I think hard money actually matters and even a few countries at this point, right? Bhutan, El Salvador, Abu Dhabi buying their sovereign reserves. So, I'm interested to see, you know, the full implications. Yeah.
(34:23) You call it wholesome incentives, otherwise known as weaponized greed by some other people. Well, Gordon Gecko, right? Greed is good, but greed for Bitcoin is good. Yeah. Yeah. Number essence. Yeah. And in terms of like because this this institutional adoption uh particularly like pensions because I think especially as it stands say in America, there's a ton of you look at Kalpers, Illinois State Pension, a bunch of others, woefully underfunded.
(34:48) You're looking at how much debt the government's Yeah. printing and you look at the amount of people. I think Kalpers alone serves two million pensioners. Yeah. And it's a big problem. People believe that they're going to get something at the point in time where they go to retire and anybody who's objective uh and just looking at the numbers of a lot of these funds, it's like it's not looking good.
(35:13) Yeah, it's a little tricky. I mean, so you know, I'm pretty familiar with California because I was a trustee for the city of San Jose's pension board and I was uh sat on the hedge fund selection committee for San Francisco employees retirement system and was a CIO of Santa Clara VTA's pension and so kind of got a chance to get up close and I you know got you know chance to talk to the folks that run Kalpers and Calsters and what have you and actually some of them are Bitcoiners.
(35:42) uh some of those folks are in those uh chat channels uh talking about Bitcoin. So they they are aware you know uh now when you go to the unfunded liability question um it's very interesting because in the California constitution you cannot break a contract on a pension. So, um, you know, California taxpayer is on the hook either way.
(36:06) If they fall short 200 billion or whatever the number is, um, you know, the California taxpayers taxes are going to go up to make up that shortfall. They won't break the contract with the employee. Um, so you know, that I think really heightens the awareness of the folks that are trying to run those pensions like, okay, you know, uh, we've got to try to figure out how to gradually dig our way out of these, you know, unfunded liabilities.
(36:34) And uh uh you know my proposition in 2019 was that you know if you got you have a relatively unusual and unique opportunity here for an asymmetric riskreward. Uh you know if we can put 1 to 3% into Bitcoin and it's at $7,000 and it goes to $100,000. You know we could uh at 2% we wipe out the unfunded liability.
(36:56) And we talked about that in our meetings and I said okay if we're wrong maybe we lose 50%. So that 2% goes down to 1%. And we make we can make that back in six weeks on the rest of our portfolio, right? So you know I think um you know I do still think that Bitcoin has a tremendous more way more upside. So I don't think it's too late.
(37:19) We put a chart up today in our conversations with the Texas pensions that showed Bitcoin, you know, as a percentage of the total market capitalization of financial assets. And it's 2 trillion versus 900 trillion. It's just this tiny little orange dot, right? And so, like, you know, you're not too late to get into this and actually starting with a position, just getting off zero, as uh Pomp likes to say, just get off zero, right? And just dip a toe in and uh get yourself involved.
(37:49) And um you know uh I think anyone that's you know in the pension space can definitely you know probably very very quickly understand the idea of comparing uh bitcoin to digital gold and if we just kind of start with that that that's a 10x from here if we just get parody with gold right so it could still make a big impact in their portfolios and so that survey we did that tour put on Twitter you know about half the audience owns Bitcoin personally but only about 3% of the audience is the institutions that they represent on Bitcoin and that's including fund of
(38:21) funds you know multistrap funds pension funds college endowment funds that are there uh it's is still very very early from institutional and then the one other point I'd make on that is that my perspective when I was um CIO was that this is a great way for kind of job blow every man and women uh to get exposure to Bitcoin because like I represented, you know, as a CIO, I had bus drivers, you know, train operators, uh folks that, you know, maybe were making 40 $50,000 a year.
(38:59) Um we had the firemen and the policemen, you know, and uh generally speaking, those guys, you know, they're pretty stressed out and when they get home, they're not like doing research on Bitcoin. Um so like the way for them to get access is actually through their pension to have participation. And so I thought it was a super cool way to kind of really get Bitcoin into the masses and to really so there's this controversy like oh you know institutions coming into Bitcoin that's we don't want that we want it to be for people. Well the the institutions
(39:30) really are just representing those folks. It's their retirement accounts and stuff and so you're just buttressing their retirement. You're chipping away at those unfunded liabilities. you're strengthening their pension plans and you're actually helping them achieve their goals and you're helping the investment teams achieve their goals and you're helping the trustees, you know, which are the ultimate ones that are most accountable for those pension plans.
(39:54) Um, you know, take action to help kind of reduce those unfunded liabilities. So, I think there's a really strong pathway for for Bitcoin and pensions. Yeah. I mean, how incredible would that story be? Bitcoin saves the pensions. I believe you were touching on this last night, but I think as Bitcoiners that are in it, I think we have to be have a heightened sense of awareness of the sort of public perception of Bitcoin if it does go up significantly and other people get left behind.
(40:20) The whether or not we believe that we just did the research, understood the system, and allocate our money accordingly based off of good information. Others didn't. And so therefore, we should benefit from that. Like that will not be widely recognized. So again, that's why I'm very passionate about this intersection of of Bitcoin and pensions, Bitcoin and credit, because again, I think it's a way to get people passive exposure that they may not even be aware of that that can help Yeah. help them.
(40:51) I mean, I'm always enthusiastic to see Bitcoiners trying to do something to help other people, right? And so surprising how many people that were involved early in Bitcoin decided to do something, right? You know, it's like Dustin Traml, who was one of the first people mining Bitcoin in 2009, got bored after his laptop was heating up for a few months or went off and did something else before it had a price.
(41:18) You came back years later and decided he had quite a lot of money. Started a VC fund to fund Bitcoin startups, your managing partner at 1031 doing similar kinds of things, right? putting Bitcoin capital to work, trying to build the ecosystem. So, you know, it's not just the asset, but you need, you know, technology, you need business development, you need business models to, you know, solve some of these uh financial problems.
(41:44) So, you mentioned battery. So, 1031 is helping with that uh for mortgage use cases for Bitcoin and structured finance. So, there's lots of opportunities like that. So, it's really good to see people think looking at the bigger picture of how the world evolves with Bitcoin as part of it to to help everybody basically. Yeah. Yeah.
(42:01) And sometimes I feel like I have to pinch myself cuz it's it seems like it's all come together and we're definitely in our bubble and we're living it every day. But whether it's on the capital market side or the tech side, it's we were talking about hash pools before we hit record like the emergence of all these second layer solutions whether it's lightning liquid arc now these chamoms like you can squint and you can see the cipher punk banking stack of the future being built out right in front of us and it's almost like we just need to
(42:32) get through this transitionary period of recapitalizing the world with better collateral and then just sort of transition to a better banking stack built on these Bitcoin primitives. Yeah. I mean just the removal of well reduction in the influence of money printing allowing more people and more part society to opt out of the hidden tax of inflation.
(42:56) And historically in developed world we haven't really felt it that much cuz it's you know they call it 2 or 3% it's probably 3 four or 5%. you don't feel it, but I think since co it's hard to avoid feeling it because there's a 25% money supply inflation and it just feeds into everything and you can't avoid seeing it and probably the asset price inflation for you know real estate and things like that is even worse and it's going to stay elevated probably for a decade with financial repression.
(43:23) It's not easy to see how you know the major governments that have this really high debt burden can get their way out of it. I mean, they basically have to inflate the way out of it, plus or minus because they can't afford to refinance it. Scott Passent explicitly admitted that earlier this week. Yeah.
(43:40) And if you think about that, you know, you peel back that onion. So, who benefits from financial repression, right? And inflating your way out of assets. And well, be guys like us sitting around the room that own a home that have a 401k that are benefiting from, you know, the um where does the money go when they print it? it goes into the financial markets into the real estate markets and stuff like that.
(44:01) So this uh gap between the halves and have nots gets wider and wider as a result of these central bank policies of zero and you know zerp and QE for that went on for so long. And uh you know again Bitcoin is this kind of really unique opportunity for you know the people in El Salvador or the people in Honduras or whatever that uh don't have access to owning real estate or financial assets but they can still buy Bitcoin and they can offset that that M2 money growth.
(44:32) um or at least protect themselves against that growth. So I think uh you know it's it's just a very powerful tool uh for folks in terms of like kind of the global democratization of access to to finance. Um and you know just actually the the basics of being able to actually save money on your phone, right? And be actually able to have an account, have a Bitcoin account and actually be able to put your savings into that rather than say the Mexican peso or whatever else they're using down there.
(45:02) uh which you know a dollar's depreciated 25%. I don't know what's going on with the emerging markets. I haven't actually spent a lot of time on that. It might be worse. I don't know. Have to ask Tether. Yeah. Yeah. Actually happening down there. Yeah. And so, you know, so that brings up a great point. So, you know, I mean, kind of a tangent, but you know, stable coins and Tether and this this whole thing about stable coins.
(45:23) I mean, it's I think it's uh if you can combine Bitcoin as your savings tool with Tether for your daily, you know, expenditures or what have you, perfect, right? I mean, spend the fiat, get rid of the fiat, you know, and when you have extra fiat, convert it into Bitcoin and let that grow and and then you you know, you have a real good formula for these folks that are in emerging markets.
(45:45) And it's also easier for them to ship money back home, right? If you look at like uh you know you know folks that are shipping money from the US back down to Honduras it can be between six to 13% fees for those uh those those transfers right um so you know if you can do it with a lightning or or bitcoin or tether or whatever and cut that fee down that's real money on 200 bucks you know you could be sending you know 20 bucks of that might be going to Western Union. Yeah.
(46:15) And and even a layer before that you mentioned Alan Farington earlier, but I know we've talked about this, but like Jesus Dodto wrote about like what is the problem the number one problem with emerging markets is that like it is the money and sometimes the political environment most importantly like the inability to have and preserve property rights which Bitcoin sort of gives you out of the box with private public key cryptography.
(46:39) You know, I think that is often lost and underappreciated by Bitcoiners, particularly with a lens on the emerging world, which is we just unleash a technology that gives them inhalable property rights that they can then build a better economies and systems around. Yeah. Core fundamental building block that uh maybe previously wasn't accessible that now is and or since you know 2009.
(47:08) Um and uh yeah, you can't underestimate the impact of that, right? Like uh you know, for a uh somebody that owns a bodega and you know, maybe uh was holding their their excess savings in the local currency and watching that, you know, depreciate uh they can now just convert that into Bitcoin and then maybe it actually appreciate for them. Yeah.
(47:28) You know, yeah. An interesting question you you hear from time to time is um you know once Bitcoin is fully adopted and presumably the adoption curve slows down everybody that wants an allocation has an allocation and you know then the question people ask is well should you reallocate and I'm like no like this this is a perfect savings vehicle right if you earn like a fraction of a basis point of the supply of Bitcoin you have command of that fraction of that addressable market of like savings assuming that Bitcoin is at that point
(48:04) demonetized a lot of monetary premiums in real estate and other assets. And so you have uh dependable money where you can park savings and preserve it spending power where today you have to work and you have to be a really successful hedge fund manager to outpace the inflation fact, right? And most people are not going to do that and there's a lot of luck in there for them.
(48:26) So it's risky for them, right? So they're sort of chasing high-risisk things to try and get return. That's why you get a lot of um excessive gambling kinds of things going on when the interest rates really low and the inflation's high. So I think that means that ultimately you've got a new environment where you have a hurdle rate which is you just just put your savings in there and you don't have to worry about it.
(48:51) Whereas today you have you know it's very risky out there right to uh to even hold on to your money. So you know when I was managing my personal savings and investments in the um early '9s um you know I was very very uh aware that you know in the UK at the time that's when I was living in the UK they have two indexes the consumer price index which they were claim was like 2 or 3% and the retail price index was like five or six but you know everybody knew that that was manipulated and a real number was much worse And so, you know, if you want to outperform in
(49:27) there, you you got this sickening feeling that your savings are actually going backwards and you're trying to fight to like hold on to your savings, right? So, Bitcoin actually provides um solution to that in the in the long term, right? I mean, in the short term, you get you get the adoption curve. So, that that increases the pie, but even once it's fully adopted, I think the prospect of a hard money and and of course, gold has some of that, right? So famously, you know, things that you could buy a thousand years ago for gold
(49:55) are like approximately in the same region, which is amazing kind of data point, right? Roman times, you get a good tunic today and get a good suit. Yeah, that kind of thing, right? Wow, how did that work? But I maybe it's sort of there's some kind of fundamental, right? There's a certain amount of usage and scarcity.
(50:12) So yeah, so the prospect of that being able to depend on that is super valuable. I think it should should really be considered a human right to preserve the value of your savings, right? I mean, you you worked for it and then somebody's sort of stealing it from you by systematic hidden taxes. It's quite penicious. It really is.
(50:33) And like and you've been in you've been in the game uh for quite a while uh cryptography, open distributed systems, and last night you were mentioning uh DigiCash and and why that failed. Uh do you think we can really get the cippher punk banking stack? Like it what's been fascinating to me over the last two years it's really uh watched the emergence of the interoperability of Bitcoin lightning ecash mints arc liquid begin to form and and again you can squint and I I've been fascinated with ecashmans particularly fed mint and
(51:13) cashew um it's been really cool to see how quickly cashew as a protocol has developed over the couple of years like comparing what you observed in the 90s and how um Digicash failed versus what we're seeing today. Well, it's it's a kind of uh free banking type of concept and how Finny was I mean he he uh was very early in making some grand pronouncements or like speculation about Bitcoin December 30th 2010 I believe. Yeah.
(51:46) So I think already in like 2009 he talked about the addressable market like a day after the network launch he's like oh maybe the addressable market is 200 trillion. It's like wow like ahead of the curve right and I mean today we're still that's a lofty goal but it's much more plausible now right and it's one more 100x when we get there. Yeah.
(52:03) Yeah. Yeah. I mean 10x for gold another 10x for the addressable market. Yeah. Just give it a few years. We'll get there. And um I mean price is set at the margin and there's a lot of kind of things in flight that haven't had their effect yet, right? So I think it's like super interesting moment here. But um yeah, I think one of the other things how Finny was talking about was a prospect, I think this was on Bitcoin talk, of the kind of free banking era where you'd have competing Troy and mints that would be um you know, denominated in Bitcoin, but
(52:37) you know, with some different trade-offs. Um and effectively Fedint and Cashew are like look like they're that thing, right? And the other kind of organic thing that's transpired is that lightning seems to emerged as the glue between the different layers because it's something that you can connect to everything.
(52:56) So you can kind of pull some money out of cashier or fed him in put into a lightning wallet, convert that into liquid, convert it into bitcoin. So you've got this kind of atomic swap between lightning and everything. So it's become a kind of uh internet of money connection for the different layer 2s which is called c evolve.
(53:14) Yeah, talking about like wholesome incentives, the cashier protocol implemented multiath payments for lightning and I thought that was really cool. They're calling the multi-nut payments. But that's one of the problems that exists with cashew specifically being a single mint operator as opposed to fed mint with the federation is that how you know that the mint operator is is not acting maliciously, right? Fact is, you can never know, but can you create incentives to Mhm.
(53:42) make sure that they're uh acting in the favor of the people using them in I mean the Fed argument is that now you need a collusion for that. So you only have to trust the uh the set now. So it's got sort of similar model to liquid actually and and the Fedin like the original protocol was something that worked on a in a blockstream research group and then the tech guy that went over to uh the startup was like a former blockstream guy.
(54:10) So it's like pretty cool to see people you know building wallets and applications and using things and actually with liquid it's a slightly different trade-off which is you have you know generally a set of exchanges and people anyway operating businesses part of federation just a kind of you know public list of people that are uh members of liquid federation or operating nodes whereas fedment hit on this community concept which was you know we didn't see coming was like pretty popular concept and it feels more kind of hands-on like you you two can
(54:44) participate and start one, right? It's kind of more community vibe. That's pretty cool. Yeah. Do you think we're going to get a free banking system on Bitcoin? I mean, it's um I think we got the makings of it and it is, you know, even where there are custodians. I think the fact that Bitcoin is assayable and people expect to be able to withdraw and deposit and have it audited or be able to verify where show me the coins, you know, show me show me the uh proof of reserves. It's promising.
(55:24) So it would be a bad outcome if you know rehypothecation creeps in. But so far I don't think there's a lot of I mean and you get some kind of implicit rehypothecation from derivatives. Mhm. You know you people who think they own a Bitcoin who actually own a a perpetual future or something but actually I think economically even there there isn't really much um sort of side contract paper Bitcoin because there's almost nobody that wants to be short Bitcoin for any period of time. Mhm.
(55:56) So for everybody with a you know for 99% or whatever the percentage is of people that have a perpetual future or dated future there's some basis trader who's bought a physical who's who's collecting a dollar yield who's bought a physical bitcoin so that he can dare to short it to like you know provide the leverage for the other guy to go long right so it's sort of effect the you know the sort of hard money and the volatility is driving almost no fractional behavior even like at the edges, right? Yeah, that's fascinating. And and going back to like
(56:31) multi- institutional, multi-IG and institutions like when I look at Bitcoin from a protocol and layered perspective like the rails which institutions are using to facilitate their business like they need to be upgraded, right? Like so it's probably not the pitch to make to institutions right now, but I think over time like going to institutions be like, "Hey, this is when you're actually custodying assets on behalf of customers, you should do it this way.
(57:00) It's cryptographically verifiable and much more efficient." Yeah. So like moving on. Yeah. I mean that's we're we're hoping that you know Liquid can u use the Bitcoin technology base to deliver that. And so there are a few interesting there's a bit over 3 billion of assets on liquid including the mining notes we were talking about but also about 1.
(57:27) 8 billion of promisory notes in Mexico which are small business loans financed by a couple of big US banks and um those are it's basically solving um a problem which is previously those notes were handled with paper in an errorrone way. in Mexico. And so it's kind of um you know a docu sign workflow thing where you get a uh a resellable certificate representing the the note and they're customized, right? So they're not funible interchangeable, but the people that place the loans can resell them.
(58:04) Um, so it's solving a problem and it's generally bringing, you know, bringing on about 100 million a month of new loan flow into Mexico. So it seems to have hit a sweet spot for, you know, demand from the Mexican small business and individual uh, loan and for the US banks that are financing it as a as a kind of nice riskreward trade-off.
(58:28) um and you know some securities like um Micro Strategy shares and some other shares. So it's it's very interesting to see it play out because it feels very Bitcoin like and you know of course it's a security so the share registration agent in the case I mean not for the promisary notes because that's the institutions holding those but for the shares there is a share registration agent which is stalker the Luxembourg company and there is a custodian Britannia securities that has the underlying shares but you know once you
(59:02) enroll Oh, you can transfer, you can pay somebody with, you know, a hundredth of a micro strategy share, which is about $4 or something, right? So, you can split a lunch bill. It's like, oh, yeah, have a a few fractions, right? And uh you can you can do there's your ticket to the sailor train. Yeah.
(59:18) Yeah. Little ticket. You can do a cash OTC, you know, is here's 10 bucks. Give me a couple of those. And uh then uh you can do this kind of trustless limit order thing. And actually the price so it's mostly using sides swap but there are other platforms that can do similar things and that has uh so it's a bitcoin pair right so people are trading micro strategy is a kind of relative value trade where they will buy it with bitcoin and sell it back to bitcoin when it swings higher so it's convenient pricing to actually trade it in bitcoin but they also have
(59:52) the facility to do stable coin pairs in the same same model and I guess the unique selling point for it. It's a 24 by7 market, so it doesn't you it doesn't close at an inconvenient time. Particularly with, you know, depending on where you are in the world, some of these things are really awkward to to trade.
(1:00:11) Like from Europe, the Meta Planet one, like the market opens at 2 a.m., what are you going to do? Right? So um you know with the 24x7 trading it it makes the market and actually even though it's a fairly new market there's uh a micro strategy ADR like a foreign listing in a Frankfurt exchange 8 a.m. to 8:00 p.m. Central European and the sides swap market in CMSR which is like this security note it uh almost matched the Frankfurt weekday volume on a weekend when uh when the Bitcoiners got busy and they saw an opportunity.
(1:00:49) So very interesting to see that market evolve and move I mean because Bitcoin is 24 by7 global right so to kind of drag the you know the shares that Bitcoiners care about um into the you know fairer ecashville trade settlement world I think it's like a it's a good example like the Mexican uh small business loans you know uh there's that saying in Silicon Valley that to get somebody to use your product it's got to be 10 times better right to get somebody to switch in Mexico is just a great example, right? Because in the US, we
(1:01:21) have some basic rails that work and function. So, you know, 10xing that is is not easy. Uh Mexico, uh, you know, we still have a very large unbanked population. You still have, you know, relatively disorganized capital markets. You still have this paper process of, you know, trying to get transactions settled.
(1:01:42) And uh so for those folks you know it's a great use case where you can increase the efficiency the settlement time security of the transaction the monitoring the oversight the reporting all these things come together when you go on to liquid for these emerging market countries. So I think we'll probably see uh a lot of folks in these emerging markets be the first movers and adopters uh over say the western you know developed markets because they just that the solutions there do improve their outcomes 10x. Yeah.
(1:02:15) And I think this is a testament to two things. Number one like timing is important. Like I feel like Liquid Liquid's gotten ragged on a lot in the past, but I feel like right now like the timing like Liquid makes a lot more sense to people. And then on top of that, it's just like the the sort of macroeconomic factors and the technology are like right at the point where it's like, okay, this makes sense to to adopt.
(1:02:43) Well, I mean, I think, you know, having talked to a lot of Bitcoiners, many of them are not interested in capital markets and shares and trading and investment, right? They're like everything else is a shitcoin apart from Bitcoin, right? Fiat shares, IPOs, stocks, bonds, it's all a shitcoin. They just want to hold the Bitcoin, right? So, you know, they're not they're not the audience actually for that kind of thing, right? And uh and so I mean, there is a segment of the Bitcoin world which is speculative.
(1:03:09) I mean it it enh it it makes volatility worse actually the excessive leverage at times but ultimately they are delivering liquidity at least so if you need to you know close a position or do something you can do that efficiently um and I think the other kind of unforeseen use case that liquid emerged into is this nodeless lightning model which uh the aqua wallet so I stumbled across so The genesis of that one was uh Boltz exchange had a cool submarine swap like a trustless swap to add and remove balance from a lightning channel
(1:03:48) with a UTXO on chain and then the first wave of JPEGs NFTts caused a sustained high period of fees and they basically had to pause service because it is disruptive to their business and uh during those couple of weeks they were trying to find a solution so they rapidly hacked up Liquid Bitcoin atomic swap into onchain lightning.
(1:04:12) Liquid wasn't impacted by this. And so, you know, for the people that were using that service to rebalance lightning channels for businesses or power users like, oh, actually liquid is better. You know, it's it's faster, it's cheaper, it's a little bit more privacy. So, after the JPEG wave wore off and the fees came way down, it was sticky.
(1:04:32) They kept using liquid for the rebalancing. And um because it's only part of the solution, right? You still got to establish the channel in the first place which be difficult with those fees. But then what what happened after that is Samson Mo with the Aqua wallet uh he with this is gen 3 now right he had the idea to implement a lightning wallet that actually isn't a lightning wallet.
(1:04:57) It's a liquid wallet and every time you know if you want to send lightning you call the bolts exchange API uh it gives you a liquid address and you paste in the address of the person that wants to receive and on the other way around you you know you give out a a lightning address which actually a bolts exchange server and then you receive a liquid bitcoin so balance is kept in liquid bitcoin and um and it turns out it has some interesting trade-offs which is as a natural side effect you can receive lightning payments when you're
(1:05:27) offline because the bolts exchange server is online you get a kind of slight advantage that wallet Satoshi has bit because it's custodial that they can manage channels effectively right so but the liquidity in bolts exchanges the bolts exchange guys own bitcoin liquidity and yet so you get the advantage of that centrally managed liquidity without trust it atomic swap so you're sort of trading the lightning hot wallet risk for the liquid federation risk, but it's giving you something back.
(1:05:59) And for a wallet integration is actually turns out to be an even simpler way to integrate. You just call in APIs, you know, you got a little bit key management. It turned out to be an even simpler lightning kind of integration. And so a few few other companies followed that uh Bull Bitcoin, Peach Bitcoin wallet and uh now Breeze has a second so they provide SDKs for many different wallets and they added you know they've got their existing model uh with green light um but they added what they call nodeless lightning.
(1:06:29) So they coined that phrase but it's that it's that model which has uh now proven popular. I think one of the things that it simplifies is the need for LSPs. So you don't need inbound liquidity to start because you can just use bolts exchanges. So you can kind of immediately you got immediate, you know, instant gratification, fast start, no kind of who who pays for the LSP liquidity without having go there has some downsides.
(1:06:54) So, I mean, you got that different trade-off and the minimum fee is a bit higher because you're you're basically paying for a liquid fee and so, you know, the uh Nosta tipping somebody once that that's not going to work so well because, you know, the fee is going to exceed the tip, right? But, you know, you can use a different type of wallet for that use case.
(1:07:15) But, for the general, you know, 50 cents plus, it works works great. Yeah. getting the timing. Like I feel like we just need to touch and smash these things together. Well, I mean I love that kind of innovation because I I'm not a believer in like planned innovation like people are going to solve problems that arise and react to interesting building blocks around them and it and it sort of kind of evolved biologically.
(1:07:40) So it was one of those. So it's really interesting to see that evolve. Yeah. Shifting gears here but because I have to bring it up because I'm fascinated by Seabbot. started your career on Seabbot, Sean? Yep. Yeah. Um yeah, so I I started investing when I was about 12 years old. Um started buying stocks and then by the time I was in college, I was trading commodities.
(1:08:01) I had stumbled into the commodity world my senior year of high school and uh uh that's a kind of another side note because uh I was really into junk bonds in high school and so I had sent proposals for takeovers on Harley-Davidson to George Roberts at KKR Colbert Travis Roberts and some other folks and was really focused on uh high yield markets and then that uh all just went away with what happened with Michael Milin and Rudy Giuliani and um so then I was visiting my folks uh in Indiana cuz I was a senior I was a senior high school and they had gotten
(1:08:34) transferred and so I was finishing my senior year in California and um my mom's like you got to get a haircut you know like and so I went to the barber shop and these farmers were talking about specking soybeans and they're like oh you know I had whatever my $5,000 maintenance margin and I just made like you know $17,000 like I was like whoa like this this is interesting like I was like excuse me fellas where where do they trade soybeans? And uh so they they uh told me about the Chicago border of trade and so I'd seen
(1:09:04) like a little bit on TV with the futures markets but really you know uh not really thought much about it but then I was like okay this is interesting if they have so I went went down to the Chicago board trade my mom uh and saw the gallery there of the floor and I was like I was sold. I was like oh my gosh this is like raw pure capitalism and I was like this is it.
(1:09:29) like I was already, you know, really interested in economics and I was like, you know, I'd seen Free to Choose with Milton Friedman and some of those those video series. And so when I got out of college, uh I went to work at the Chicago Board of Trade and uh so it was kind of funny. I had uh uh I started uh at Credential Credential Beige, uh because uh I wanted to get back to California originally from college and uh I had a Bloomberg terminal.
(1:09:54) First time I'd ever seen a Bloomberg. was this little beige box with this little little funny little keyboard. But now I could see like 68 different commodity markets around the world. So I could be charting these things. And so I just started trading, you know, left and right on the commodities. And then I had a couple of uh blowups uh where I've been short coffee and into a dock worker strike and things like that and got caught in limit up moves and you know and so I said to my dad I said geez you know like uh I kind of kind of feel like I need to go
(1:10:23) to Chicago to learn this business and uh he says well he's like okay he's like you know you want to leave that job at you know it's a good job you know. I was like yeah I think so. He's like well how much money do you have? I was like, "Oh, I got a $500 credit limit cuz I just got my first credit card out of college, you know, and I had $500 in the bank.
(1:10:41) " I said, "I might need to borrow a couple thousand bucks from you to kind of get going in Chicago." I said, "Oh, no." He's like, "You'll be fine." He's like, "There's a YMCA and uh Chicago Avenue." He's like, "You just go move into the Y if you really want to do it. That'll be just fine." So, I went to Chicago uh with a,000 bucks in my pocket and was paying 168 bucks a week uh for rent at the YMCA.
(1:11:04) And the YMCA back in 40 Chicago a in those days was basically either people with an addiction issue or middle-aged men going through a divorce. And so, uh you know, it was a really interesting experience for me. Uh and it really put a lot of fire in the belly. Uh so I went down to the board of trade and just started handing out resumes because uh back then they didn't um you know they you know cell phones and things like that were not very common and uh you know the AOL and Compuser were kind of the online at the time and so I uh just
(1:11:39) handed them out just handed out my resumes and I had a switchboard and on my resume it had the YMCA and then the switchboard number because you know cell phone was very expensive and so I came back and they were like oh you got 13 calls from you know different board of trade folks folks and one of them was Refco. And so Refco um was very famous.
(1:11:58) Uh I had been an intern at the White House for President Bush 41. I spent nine months in Washington DC uh kind of in 1992. And uh so Refco was very famous for having managed Hillary Clinton's money. And so I knew immediately I heard the name. I'm like, "Oh, okay. These guys." I'm like, "This is interesting.
(1:12:16) " And um so I uh I went in there and so I had uh immediately had a Indiana alumni that brought me in, John New House. His son is actually a venture capitalist and pretty active in digital assets. And uh New Mr. New House offered me a job at the same salary as what I was making in San Francisco.
(1:12:35) It was I think it was 28,000 bucks back then for clerking in the Euro dollar pit. And then uh I went in to meet with the Refco guys and these guys were old school commodity traders uh you know there were two of them uh Jim Fritz and and John Rab and uh they said well this guy had like the grally voice cuz he was a smoker and they they drank a lot and uh the ceiling was like yellow from all the smoke.
(1:13:02) It was kind of crazy like uh they really smoked a lot in Chicago and I being out in California not used to that and uh so I go in there and he's all uh well he's like uh we saw your resume and uh I saw that you had interned for President Bush 41 fine man and uh and but that you now live at the YMCA like we thought we have to bring you in just to hear the story.
(1:13:28) And so uh so I I I ended up chatting with those fellas and I said well I said you know I have this offer uh from John New House over at New House Trading was a very well-known commodity trader. I was like do you think you guys could match that? And they're like nope. They're like if you want to work for Refco everybody starts at the same spot and has to work their way up. It's all merit.
(1:13:47) And I was like a I was like okay. So I had one friend who was in the hedge fund business. This guy Chris Kang who worked for Mark Stro. And Markstrom was one of the first hedge funds to create hit a billion dollars under management at that time. And so I called Chris Kane collect from the YMCA and uh he picks up the phone and he had a very foul mouth.
(1:14:06) He was like, you know, just really swore every other word and he's like, "What the are you calling me collect for?" He's like, "They just announced this on the speaker over by Intercom." He's like, "They're going to they're going to put me in the closet." He's like, "What the hell are you doing?" Like it's like, "Dude, got a question for you.
(1:14:22) " Like got this offer from Refco. uh $5 and65 cents an hour or new house trading uh 28,000. He's like, well, he's like, you dumbass. He's like, I can't believe you're wasting my time on this. He's you already know the answer. He's like, uh uh you should take the ref code job. I was like, a I knew it, but I needed to hear from a buddy that was in the game.
(1:14:45) And so, uh so I took that job and then uh I think it was like two weeks later or 3 weeks later, they they brought put me aside. They're like, "Hey, we just wanted to see how much you want the job. we're going to move you up to 28. And uh and so that was kind of my introduction to the board of trade culture. Uh you know, it it was uh I describe it a lot.
(1:15:01) It was like being in high school, you know, as a lot of friends, you know, working with each other and trading with each other and uh very uh strong commod camaraderie on the floor. And it was a fantastic learning experience because if you think about futures and the built-in leverage, you know, it's um I would describe it's like driving a Formula 1 car.
(1:15:26) You you have a small twitch of the of the steering wheel and all of a sudden you're you're into the wall, right? So, you really have to be laser focused and and by being laser focused with that kind of leverage, you you learn faster. And then just by being down on the floor, the exposure to the folks that you're learning from is just incredible, right? So, I I learned how to chart from Tom Dennis and Ron Vanderhden who worked for Richard Dennis who was like one of the original pioneers of trend following and momentum trading and futures. And so, it was just
(1:15:55) it was a fantastic learning experience. And uh you know uh after about 4 years uh I was like okay I think I've learned everything I can learn you know in Chicago and uh there was also kind of a kind of an idea circulating within Chicago that it would be going electronic and uh it took much longer than I ever would have thought but I I you could kind of see the writing on the wall that it was coming that it was going to all be electronic trading soon and so I was like okay I think you know I've learned what I can learn here and I
(1:16:26) went back California and got into the bond trading side of things. Now, I uh brought that up selfishly because I I'm jealous because I worked at a managed futures fund in West Jackson out of college and all a lot of my co-workers were excebers and they would just talk nostalgically about the days on the floor. Wonderful atmosphere.
(1:16:48) And yeah, compared to like I lived in New York for many years too and like New York finance compared to like Chicago, New York's like fast and quick and bit aggressive. Chicago's like salt of the earth. Yeah. I would say one's very transactional and one's more relationship driven, you know. Uh whereas also I would say, you know, I kind of always viewed I had offers to go to New York for pretty obscene amounts of money to be honest.
(1:17:12) And uh I'd go visit. I was like, man, this is like a dormatory for worker bees. Like I don't want to live in New York. Like uh no offense to the New Yorkers, but but I'd rather be visiting New York, you know. Um it's uh it's a different culture. Yeah. You know, no, but another point to bring up CB about too.
(1:17:31) You mentioned this last night like commodities traders like Bitcoin like studying those markets and you brought up like uh the doc strike on in the coffee port. I was following obscure funguses in Brazil on the coffee plant to figure out what was happening in those markets. But we we uh we owned Barges, the company I worked for, Refco, you know, Tom Dipmer was the founder and um uh he sold out in '98, I believe.
(1:17:59) But um but you know, he was a farm guy from Iowa, like middle class guy who had made a billion dollars for himself trading commodities. And he um uh owned barges that we would run up and down the different rivers. And it was all just for like market intelligence like you know if they broke even on the barge they were happy. Um on the Panamexes we had Panamex vessels down in New Orleans that we would uh do for shipping freight or you know uh grain and so that that was really just intelligence gathering so to know when the Chinese were coming in to buy wheat.
(1:18:28) we'd get the calls for booking freight and oh okay let's start let's start buying calls on out of the money calls on wheat you know and uh back then you know uh commodities trading doesn't uh have the same rules as stock trading so you could you could trade all that stuff and uh you know the biggest traders the most successful traders I met in Chicago were the spread traders that were doing relative value trades and those were the most uh most consistently successful traders it was super interesting just kind of observing the different types or
(1:18:58) you had your floor trader, your local, you had your kind of swing traders that were upstairs. You had these spread traders, you had these kind of, you know, trend followers and just, you know, so many different types. The Yeah, the one the turtles. The turtles. So, I have great stories about the turtles. I mean, so Tom Dennis, Richard Dennis, he's the one that created the the turtles, Richard Dennis.
(1:19:20) And so, I just I just was new to Chicago. Didn't know anybody at all. I was living in the YMCA. I didn't really want to go back there. So I would hang out on the board of trade floor after it closed and uh you know it' come down to me and Tom Dennis and Tom Dennis and Ron Vanderhen would be doing their charts by hand on the books back then.
(1:19:37) They had the little trade books you know for and they have to fill in the days high, low, close, open, all that. And so I just approached these guys. I said, "Hey guys," I'm like, "Listen, uh newbie here uh you know, could you tell me how this charting thing works and like what should I be, you know, doing here?" And so they every day we just you know we charted the markets and uh you know I kind of uh learned these things uh that I'm sure the turtles all were getting exposure to but you know like you know you start from the right and read to the
(1:20:03) left and so you want to overweight the current price activity versus the historical price activity. Uh you know we want to pick our pivot points based on if we had a a let's say a uh uh reversal off a high rather than picking the absolute high day. We want to look for the day where it opened on the high and closed on the low where the sentiment shifted, right? And make that as our point for connecting the dots.
(1:20:24) And so then I got to meet Tom Demar and we were, you know, Tom Demar's an amazing technician. Um, and then Steve Nissan who's the widely accredited with bringing candlesticks to America. I took his classes. I worked with Sheldon Nathanberg who uh wrote the book Option Pricing and Volatility Theory. Um, you know, Larry McMillan came in to teach classes for, you know, another options guru.
(1:20:50) Um, had a lot of friends, you know, at Connor Associates and Swiss Bank Corp that were trading options. And so it was just a very um a great place to learn the markets and to get a lot of exposure very quickly. And um you know definitely gave me a massive advantage I think in the fixed income world when I switched over because uh what we started looking at was we would trade you know Polish 5year 5year forwards versus euro 5year 5year forwards on a swap on a spread basis and you know we'd be using our technicals you know on custom indexes on Bloomberg nobody was playing
(1:21:22) that game and so it was like you know you just had this huge edge over the these folks and uh you know we're trying to figure out what those things look like in this this space in the Bitcoin space. Um, but I think that um, you know, the board of trade uh, you know, if I could if I could send kids back in time to kind of cut their teeth there, I would I would I would do that all day.
(1:21:44) Yeah. No, it's again I would it had gone complete completely uh, digital by the time I left college and so like everybody was just talking nostalgic about it. But the reason I bring it up too is because like these um these sort of market structures and tools need to be built for Bitcoin. I think much of the fascination around potential futures contracts has been focused on the mining industry.
(1:22:10) Like how do you create a market for hash rate futures, blockbased futures, fee futures, whatever it may be. And I think that's one nut that has not been successfully cracked at scale for for Bitcoin. And if it is cracked, could be massive for not only the mining industry, but Bitcoin in general. Because you think of whether it's uh a union strike at a coffee plant or a fungus somewhere in Brazil, Bitcoin has different things like a China mining ban, winter storm here in Texas or a very hot summer up in North Dakota, whatever it may be. Yeah. Yeah. Adam and
(1:22:46) I were bouncing some ideas, you know, because back when we were in the commodity markets, we had the co open interest, the commercial open interest that you could track, right? And you know, so in say like corn for example, you know, there's a natural short to the market um would be the the commercial, right? And so uh you know, as they're expecting uh if they if they expect that uh you know uh a normal average crop, they'll have their short position to hedge out their exposure.
(1:23:13) But let's say they think that all of a sudden the crop is going to be much smaller than expected. They will close out those shorts and you could track it on the open interest. And so we're trying to think like who's the natural short for Bitcoin and like there's really not like uh necessarily other maybe miners could you could say could be in a position where they could be a natural short where they could short Bitcoin today with the expectation they're going to uh cover that short with future production of Bitcoin at the from the mining
(1:23:39) activity. But like that's kind of the only one I could think of. Uh, you know, because I was trying to figure out like who could you track and how could you because you know sometimes the commercials are the smartest players in the game and you might understand what they're doing and how they're moving their their position.
(1:23:56) Um, so but yeah, we were kind of noodling on that like you know who who would be naturally well it's been very challenging to be naturally short the Bitcoin market. So dangerous, right? Yeah, very dangerous. Right. You have to I mean really the only guys I think that I could think of could be a minor that could actually take that chance. Yeah.
(1:24:13) And you know if they can avoid it, they're going to try probably avoid it, right? So it's not necessarily good for tracking uh purposes, but yeah, there's a lot of interesting elements. I do think that the reason you see these large um proprietary shops out of Chicago that are trading Bitcoin, so like DRW and some of these folks is that lineage back to the futures markets.
(1:24:32) I think that Bitcoin, you know, you know, because, you know, PES and stuff, you have built-in leverage and, you know, you can trade uh, you know, trade that stuff pretty aggressively and it does feel and look a lot, it trades a lot like what a futures trader would be used to trading. Yeah.
(1:24:48) You know, so it would be a very natural, I think, evolution for those folks to go into that space. I'm a little surprised to be honest that there aren't more of them in there. Agreed. There's something there. But I think who is the natural short? Like even if a minor could do it with hash rate growing like unless you're reinvesting in your ASIC fleet and able to keep a commensurate amount of overall hash rate percentage that just gets riskier. Mhm.
(1:25:11) Over time with um with variance risk that gets introduced and not a good natural short anywhere. I mean, at least they could um you know, they can mine Bitcoin to replace it. Whether the price goes up or down, they still accumulate Bitcoin. Like they might accumulate more or less depending on what the hash rate does if the price is down.
(1:25:34) But for most people, borrowing Bitcoin is like a super bad idea, right? Yeah. Yeah. What um I know we got to get going here soon. What uh any predictions, thoughts, uh expectations for the rest of the year for Bitcoin? Yeah, I don't know. It's just kicking off today, right? A new alltime high since last was in February.
(1:26:04) So, you know, presumably this is not a one and done, right? So, are you this could be the start. Are you a mega candle? Uh well, I don't know about but but I I just I just think that I mean the mega candle theory. Okay, I think you started it. So it's it's just that um you could see a a daily candle that was $10,000, right? And of course that gets easier to achieve as the price is higher because it's a smaller percentage.
(1:26:33) So, we've had quite a few days of half of that, like 5,000 excessive 5,000 moves in a day or closes with 5,000 moves. So, you know, maybe we'll get one of those one of these days. I think they've they might almost have been like a a swing intraday in that region. Um, so we'll we'll see. And but I mean in terms of you know where the market gets in this cycle I think it's becoming harder to predict because you can see the last cycle was you got this this you know a new alltime high at the end which never happened before you wouldn't see
(1:27:05) coming and um I think there are a lot more different participants in the market now who are persistent buyers and apparently the ETF buyers are a bit more sticky. say what Warren Buffett would call good investors that you know they buy more if the price falls and they don't panic sell you know they keep it for the long term kind of value investor outlook I think ETF buyer is not generally a day trader right there's like put something in their pocket for 5 years right so that's probably good for the market structure um and you know a lot of the
(1:27:41) institutional investors are longerterm outlook like pension funds sovereign wealth funds they're not generally day trader type of people right so that affects the um money multiplier for how much capital in needs to move a price a certain amount. Um so and I I think the other thing is you know you see a lot of news flow that looks very positive and different institutions are talking about announcing that they're going to offer products future tense but in practice those institutional uh or like financial institutions
(1:28:13) offering Bitcoin related products to their clients are slow movers. they got policies and training materials and guidance that they got to get through before they actually turn it on or they turn it on to a different segment of their users. So, I think they're still going to land and it's not it's not here in a big way yet.
(1:28:31) Sean, anything from you? Well, I I think um you know you know to Adam's point, I mean like the ETF buyers are accumulating maybe 500,000 a year versus 165,000 of new minted uh coins. So I think that uh you know when I looked at Bitcoin years ago I thought boy it's it's it is something that can go very hyperbolic very easily just because there's such a small float and you know there is this tendency for folks that do buy it to sit on it and hold it and take it out of circulation for all intents and purposes. So I think
(1:29:05) if there's any surprises they'll be to the upside uh on magnitude. Um, you know, we were looking at Metaf's law and some of those things for, you know, the, you know, for conversations with pensions and that would definitely get you into the 200,000 plus area sooner than later. Um, but I think it's also pretty pretty fair, uh, you know, it's not a stretch to say that Bitcoin could reach parody with gold.
(1:29:31) Uh, you know, if it's not this cycle, definitely next cycle. Um, and that would that would imply something closer to a million dollars a coin. So, I think that I'd be pretty comfortable going on the record that we we will finish the year somewhere in the 200 plus area. And I think that if there's a a a surprise move, it's going to be to the upside.
(1:29:50) Uh particularly with all these state reserves and strategic reserves and if these people start buying Bitcoin and you know, we have the corporate treasuries that are hooing up Bitcoin, right, with the um uh Bitcoin treasury strategies. So, I just think like, you know, the risk is uh uh definitely to the upside. Um I I feel like the 64,000 72,000 area really held well on this last pullback and the pullback was a little more shallow than I think you know people would have anticipated.
(1:30:21) Uh I think you know as the market cap's going up uh we had a chart that we were showing the pensions where as market cap's going up on Bitcoin the volatility is coming down pretty steadily and you get that off glass node and what have you. Um but uh uh so I I think that you know the there's the risk is definitely skewed to the upside and that's where I'd be cautious like like again don't short whatever you do heard it here first million dollar Bitcoin I'm kidding the uh well you were talking about the uh uh bell curve fat tail.
(1:30:52) Yeah. So that that falls into it. You want to explain that? Yeah. Well yeah we can we can put that chart out on Twitter or something. Uh so if you look at like a bell curve distribution of the monthly returns on S&P and Bitcoin uh what you'll see on that bell curve is that uh the right tail or the right side of of the bell curve is got a very fat tail a lot of months with outsized upside performance with Bitcoin.
(1:31:17) Um so that is uh you know again just kind of illustrates that tendency for Bitcoin to surprise to the upside on returns. The left side of the tail's got a little bit fatter tail, but it's not not nearly as proportional as the right. That's it. Definitely skews positive in terms of return profile. Yeah, that's why many people yourself include it's like time in the market with Bitcoin.
(1:31:39) Yeah, time in because the number of days it moves. Yeah. Drastically or Right. Right. That's that interesting data point, right? That if you're if you are out of the market for the 12 best performing days in a year, Bitcoin loses money every year. So that's a good reason to hold and not try to time the market because the odds are against you. Yeah.
(1:32:00) Yeah. I think that's really really good point for listeners and you know people that are you know this not market advice in any way but I think in general uh take the Warren Buffett approach and let your Bitcoin compound. Well, the the other thing we're talking about in between talking to the pension guys is that um a lot of uh professionally managed funds do rebalancing like every month, every quarter and because of what you're trying to do with Bitcoin, that's not what you want to do.
(1:32:30) You're trying to get to the asymmetrical return. So, you need to stay there for five years or something, right? Otherwise, you're doing it wrong. 20% of your portfolio at one point, right? I mean, if you just keep rebalancing every time it has a month, it's not it's not helping you. It's not doing the job. Yeah. Yeah. And that's I think we really have heard this uh in California and Texas when we're visiting with pensions.
(1:32:51) You know there's a very strong uh cultural uh bias towards like okay we are going to rebalance quarterly at a minimum and we may actually rebalance monthly which of course with Bitcoin you you really want to avoid that. You know with your investment policy statement you want to make a provision in there that you're going to let the Bitcoin run um you know to let it have its full potential impact to the portfolio.
(1:33:12) uh with everything else, you know, stocks, bonds, all that stuff, it's a good idea to rebalance quarterly. But with Bitcoin, we think that you want to let that one have a much or if you're going to rebalance, stretch out as long as you can. Maybe it's once a year. Be bold. Let's be bold. Yeah. The uh the times call for boldness. Everybody out there listening.
(1:33:31) Yeah. Sean and Adam, this was an incredible pleasure. Thank you for joining me. Thank you for having us on. Thank you for having us on. Enjoyed it. I mean, most people listening to this know what Blockstream is, but go check out Blockstream if you haven't already. So, thank you guys. And uh let's have a fun night. Thanks.
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