Lyn Alden explains why tariffs can't fix America's structural imbalances, stressing the dollar’s dominance, China’s rise, and Bitcoin’s grassroots role in global finance.
Lyn Alden unpacks the complex interplay of global trade imbalances, the dollar’s entrenched reserve currency status, and America’s eroded industrial base, arguing that aggressive tariffs under Trump have backfired by hurting U.S. businesses without reversing decades of offshoring. She illustrates how China has rapidly ascended the value chain, dominating key industries and making it nearly impossible for the U.S. to build a trade coalition against them. Despite the U.S.’s massive debt and persistent global demand for dollars, cracks are forming in the system as nations explore alternative payment systems and neutral reserve assets like gold and Bitcoin. Lyn emphasizes that Bitcoin’s most effective path to integration is through grassroots and corporate adoption, not government-led initiatives, and warns that unless the U.S. urgently scales its energy and industrial capacity, it risks falling further behind China’s unmatched pace of growth and infrastructure dominance.
This episode offers a sobering look at America’s trade and currency dilemmas, with Lyn Alden explaining why quick policy fixes like tariffs can’t reverse decades of deindustrialization tied to the dollar’s reserve status. She highlights the rise of neutral reserve assets like gold and Bitcoin as important hedges, stressing that grassroots and corporate adoption will be more effective than government-led efforts. Lyn also warns that without a major push to expand energy production, the U.S. risks falling behind in an AI-driven, hardware-centric world, urging strategic humility and innovation to navigate the shifting global order.
0:00 - Intro
0:31 - Triffin's dilemma
8:10 - Debt leverage
11:04 - Fold & Bitkey
12:41 - Trump's goals and tariff policy
19:54 - Unchained
20:24 - China is not weak
30:07 - Energy
37:15 - AI/robots
41:11 - SBR
48:47 - Bitcoin credit products
52:40 - Eventful week for bitcoin
(00:00) They ramped up tariffs super high, super quickly. In many cases, were so high that they hurt us as much as some of our trade adversaries. China has ramped up to like unfathomable degrees. Nuclear, solar, pretty much everything that they can throw money at they're building. The trade is often described as us sending out pieces of paper and getting goods and services, which sounds like a really good deal.
(00:19) They take those slips of paper and then they buy our stocks. They buy our corporate bonds and government bonds. And so they end up owning a larger and larger share of corporate America. got the headphone hair. I'm all out of whack, Lynn. It's been a long week here in Austin. Yeah, I can imagine. It's been a long time since we've talked on the show. It's been two years.
(00:41) I was checking, which is a astonishing to me. But no better time than now. Uh I think quite literally based off of all the conversations we've had uh over the years. I mean, your famous saying, nothing stops this train. I think we're coming to a juncture where that's becoming abundantly clear. and you wrote uh a newsletter earlier this week, I believe you sent it out Sunday, that basically highlighted the crux of the problem, which is the dollar reserve status and the almost impossible task that Trump would like to accomplish, but
(01:21) likely isn't the case, which is sort of solving Triffin's dilemma of reshoring manufacturing while keeping US dollar dominance. So I think diving into this from first principles would be great. Sure. Yeah. And that's that's the um I can imagine the administration's challenge of trying to communicate this because uh the intricacies of how trade deficits and the reserve currency kind of pair together is very wonkish.
(01:46) It it kind of has this like academic quality to it that doesn't go over well uh in kind of political oriented speeches. Um like I would I would be terrible at a political rally for example when I try to explain any of this. Um and so we kind of have this situation where um and this was outlined back during the Breton Wood system by Triffin as you mentioned uh which is that having the reserve currency does come with a bunch of benefits um you know historically called a extraordin uh exorbitant privilege um but then it has certain costs to
(02:15) maintain it and those costs can vary a bit depending on how the system structure. So for example back in the Bretton Woods era the cost was that we kept draining our gold reserves. uh we basically had to kind of keep paying out our go gold gold reserves to maintain that part of the system and in the current formation uh instead we kind of pay for it with our industrial base.
(02:36) We keep kind of sending out little parts of our industrial base over time to maintain the the global reserve currency status. And there's a few reasons for that. One is that um because unlike every other fiat currency, the dollar has all these extra demands for it by countries all around the world. um all these different purposes.
(02:55) um there's this extra demand for dollars which sounds good on the surface and as for Americans for example we have tons of import power when we go on vacations to the rest of the world it's you know we have pretty strong purchasing power compared to when they come to the US um these things seem good on the surface but it also means that it's pretty expensive to manufacture lower margin things here at home uh and so we have this kind of situation where our imports are very strong our exports uh especially lower margin stuff is less uh
(03:22) competitive whereas we can still be competitive competitive on really high margin stuff, you know, technology, finance, healthcare, that kind of thing. Um, and then the other aspect is that even if you could somehow solve that, there's the more fundamental problem, which is that the whole world needs dollars uh for the you know, global reserve currency status to use it for international contract pricing, crossber financing, one side of every trade pair that they do, all these different purposes as a reserve asset. Um uh and
(03:51) when you step back and say, "Well, how do they get all those dollars if they're all using dollars? How did all those dollars get out there?" And the answer is trade deficits. Um basically that overvalued aspect forces open the US trade deficit. And every year we send out hundreds of billions or sometimes a trillion dollars in net outflows.
(04:10) And over years and decades, these have accumulated out there. And so, uh, kind of the way it works is that if you want to fix the trade deficit, which I've been I've been writing about since 2019, I think that's a I think that's a valid mandate to do. Um, unfortunately does come with trade-offs.
(04:26) Uh, some of the some of the benefits that that you know that we enjoy at the cost of the trade deficit. Um, if you do want to kind of fix that imbalance, it comes up, you know, with with basically giving away at least some of those benefits and prioritizing that that industrial base a bit more. And one of the dynamics that you highlighted in your newsletter, which makes sense, but wasn't very clear to me before, is that via these deficits, we flood international markets with dollars because we're sending parts of our industrial base over there. But then
(05:00) it's like cyclical. They take those dollars and then reinvest them in US financial assets. So it has this sort of flow where it goes out but then it comes back in into the financialized economy via equities and real estate and other such assets and that is good for asset owners here in the United States.
(05:19) But again I think that's is part of the bag of mandate is that sort of cycle has led to this large wealth gap in the United States that they're trying to fix. Yeah. Exactly. Um and so basically the opposite side of a current account deficit which is basically so the trade deficit plus things like interest and dividends.
(05:39) Um so we run a structural current account deficit and the opposite side of that is a capital account surplus. Um which is that funds flow in the rest of the world and buy our financial assets. Uh and so it's the the trade deficit is often described as us sending out pieces of paper and getting goods and services which sounds like a really good deal.
(05:57) Um but then the extra step of that that you mentioned is that they take those slips of paper or really those electronic digits that they have and then they buy our stocks, they buy our real estate, they buy our private equity, they they buy our corporate bonds and government bonds and so they end up owning a larger and larger share of corporate America as part of their kind of accumulated uh trade surpluses uh and reserve assets and uh international private assets.
(06:22) Um, and the kind of the consequence of this, if you kind of like view the foreign sector as an intermediary, we're basically constantly kind of taking economic vibrancy out of, you know, Michigan and Ohio and, uh, you know, rural Pennsylvania where the steel mills were. We're kind of taking it out of our rust belt, causing it to become the rust belt, and then we're stuffing it back into financial assets in New York and Silicon Valley and and certain other places, mainly along the coasts.
(06:48) And you know this this this went on for approximately four four plus decades really ever since you can say kind of the the the early 80s uh this really kind of started. Um and these are cumulative. So one year of that is not a giant deal but when you have four plus decades of it that causes major imbalance.
(07:08) Um and a lot of academics will say well there's still room to go. This is not kind of an emergency. But on top of that, there is this political overlay that basically that that voters get angrier and angrier um when they're on the wrong side of that imbalance. And although many of them, you know, they don't work in finance, they might not be able to articulate the exact mechanisms that are call, you know, causing it, but they have this feeling that something's rigged against them, that something is just not right, that they're that they're constantly going uphill, um that
(07:34) they're on a treadmill. Uh and so we start to see this in it manifest in rising voter populism. it manifests in different priorities of when people vote. And so I do think that there's a pretty strong mandate to try to go after the trade deficit. Um but I think the way I I look at it is that because it's decades in the making.
(07:53) Um the best that any kind of one term can do is try to, you know, start changing the direction of it. Um but it's inherently kind of a multi-year potentially multi-deade project to kind of fully reverse um these really long-term trends. and doing it on extremely fragile ground because as you point out the amount of debt that exists both domestically and offshore for the US it's a leverage ratio of 20 to1.
(08:24) So I think we have 5.8 trillion in base money and over uh let's say 120 trillion in debt held domestically and offshore entities holding US debt. Yeah, that doesn't even include derivatives. That's just loans and bonds basically. Um that doesn't include derivatives because derivatives are more opaque, more ephemeral.
(08:50) Um and and the BIS has kind of um like bank for international settlements has kind of tried to uh map out the estimated size of that but it varies. So even the conservative measure is 20 to1 realistically it's higher and and part of that that so all of that debt creates demand for dollars. All that is like inflex inflexible demand.
(09:09) You know, if you've got a mortgage on mortgage on your house denominated in dollars, you have a demand for dollars whether or not you like the dollar or not. Uh and that that applies to the the whole world and and multiple domestic entities. Um and that's why like a lot of you know kind of views that the dollar is like doomed in the near term are always off because there's literally way more inflexible demand for dollars than there are dollars in the system.
(09:33) And that's why this this system kind of perpetuates itself for such a long period of time and why the network effects of a reserve currency are so strong. It's not as simple as a bunch of current countries getting together and decided deciding to repudiate the currency and switch another currency. Um kind of like how social media networks have uh network effects.
(09:53) Uh kind of like how communication protocols have network effects. Um in in financial markets, anything with liquidity has network effects. And the same thing applies to money and and debt structures. Um and so there's this big inter intertangled Gordian knot both domestically and globally. Um that kind of has to gradually be undone.
(10:13) Um as these rebalances reform themselves. Um and any sort of shift in direction tends to be jarring. Um there are people that are on the wrong side of it that become on the right side of it. But that transition process itself could could even be, you know, harmful and uncomfortable for those that have been on the wrong side of it because they could go through periods of inflation.
(10:31) They can go through periods of recession potentially as some of those those big forces uh turn around because whenever you have a disruption like that, it tends to harm productivity. uh when you have less certainty in planning purposes, when you have higher taxes in this case, um there are these kind of frictions that happen during this turning event where everybody can feel like they're losing and then the question is is it going to be well executed? Is that trend going to start going in the other direction and kind of shifting some of those
(11:01) imbalances? Um or is it going to be a lot harder than it seems? Listen, Freaks, I know you're tired of me talking about fold, but I'm going to beat the drum. I'm gonna beat the dead horse. If you're a Bitcoiner living in the United States and you're not using Fold, I'm just gonna ask one question. What are you doing? You're leaving SATS on the table. They've got gift cards.
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(12:40) world code TFTC20. It looks like it's going to be a lot harder than it seems to me cuz you think about Trump coming in, what he's been trying to do over the last 3 months, would love to get your opinions on his tariff uh policy. But I think just generally taking everything we've already discussed into consideration, the fact that sending dollars out into the world, doing that by sending in industry to other parts of the world, they're flowing it back into financial assets, which is where a lot of the wealth of the uh of America, of
(13:16) the American population sits, is in these assets. And you look at what Trump's been doing since he got back into office and he's saber rattling basically saying, "Hey, uh, we're done with this deal. We're trying to fix it." But then you you have to factor in like they make all of our stuff.
(13:35) And then on top of that, they have a bunch of US assets that they could dump and cause havoc over here. And so, how do you navigate all of that as you're trying to force the the warship to move in a different direction? So I I think I would separate into three things. One is um kind of the mandate, two would be the plan, and three would be the execution.
(13:56) And I think the issue is that they start off good and then they kind of deteriorate as you go through those three steps. I think the the mandate is there. So there are some some people in politics that would disagree that the mandate's even there. They say we shouldn't be going after the trade deficits or they're not a big deal. Um I I disagree with that.
(14:11) I I do think that and I've been writing about this for years that the imbalances have become big enough that they're actually starting to really matter uh financially, politically, um they're actually a big deal now. Um and if you don't if you don't ever focus on addressing them given the network effects involved, eventually it forces itself closed anyway, but that's from a position of weakness.
(14:30) So, it's better to kind of get ahead of it um before it's kind of fully metastasized and there's really no options left. Uh you generally want to try to correct it from a position of strength. So I do think that there is a genuine rising mandate to um reverse some of these multi-deade flows that are basically all going in one direction.
(14:50) Um so I think that that part is sound. The the second part would be the plan. Uh and if you look at at probably the smartest version of the plan, uh it would be Steven. Um that's that's Trump's uh uh chair of the um Council of Economic Adviserss. Uh he's an economist. Uh and he uh laid out this paper back in November 2024. So right after Trump was elected um and uh he outlined uh it was like I forget the exact title but it's like basically how to how to realign global trade.
(15:18) Um and it's it's this paper that kind of articulates the problem. So he talks about Triffin's dilemma. He talks about the overvaluation of the dollar due to it's it uses as a global reserve currency how the cost of that is is basically undermining our industrial base making us less competitive in manufacturing.
(15:35) um and how some of those imbalances uh were the downside to that system have uh surpassed the uh benefits of the system uh for America broadly. And so he kind of analyzes different ways that this might be addressed. Uh and then also goes over some of the risks of addressing them. Like it's not it's not treated as like a a shorefire solution, but like if we were to go about this, what are the ways we could do it? What are our options? Um, and they include things like, you know, starting with some mild tariffs, um, which kind of, uh, is like the, you
(16:04) know, if you treat it like a carrot and a stick, that's the stick. Uh, and then when, you know, there's kind of multiple mild tariffs on that are that are somewhat disruptive, um, that they could use some sort of currency accord, a series of trade deals, um, that are in the United States favor, um, that could then bring down some of those tariffs and start to maybe balance out trade somewhat.
(16:27) Um then he faces the issue of okay well what's next what's after that because he's still there's still the issue that if you want the dollar to be the global reserve currency you have to supply the world with dollars. Um and so he focuses on well one you could give up some of the reserve currency status. Um so it's not a boolean thing.
(16:42) It's not like you either have global reserve currency status or don't. Um it's really a percentage thing. Um and so one thing I've been pointing out for years is that you can have a multipolar world where you know Chinese currency is kind of the main currency over in East Asia. Um the United States is dollar is you know the currency in our hemisphere and other parts of the world and and Europe's is kind of you know their part of the world and their their biggest trade partners in periphery.
(17:08) So you can have kind of three currency blocks of different sizes. Um you can have an elevation of neutral reserve assets. So he specifically calls out that this plan would be good for gold and cryptocurrencies which you know we realistically we mean bitcoin. He he uses the phrase cryptocurrencies. Um and so uh over time funding currencies that are crossborder can shift a little bit.
(17:28) um there can be different incentives to maybe have the world shove less of its like asset flows into US assets and instead buy things like gold or bitcoin or potentially some other uh assets from other countries and kind of diversify this to some extent. Um and then there's also various mitigants because if you weaken the dollar um you risk higher inflation, you risk higher bond yields uh at a time when fiscal deficits in uh US interest expense are very high.
(17:55) So he talks about as part of trade negotiations terming out the debt, you know, convincing countries like China or Japan to um increase the duration of their treasuries and basically agree to get like the reserve assets inflated away. Um and so I think the the plan overall it it's articuled.
(18:16) I'm somewhat critical of it because I think it overestimates US's negotiating position and overestimates the willingness of of other large countries to kind of play along with that. Um, but it is I would say a semi-realistic picture of of kind of if you were described how it would work opt like optimistically that's kind of how it would go. So that's that's the plan.
(18:36) And then we look at the execution. That's where I think it got messier because um you know they ramped up tariffs super high super quickly that in many cases were so high that they hurt us as much as some of our uh trade adversaries. Um and even you know it takes years to reshore and build a manufacturing base.
(18:56) So if you throw on really high tariffs right away we pay the consequences right away but we don't really get the benefits anytime soon. Um and so other countries like China can just say, "Well, we'll just wait then because uh you know your tariffs are hurting yourself as much as you're hurting us." Um and so so far that the US has kind of rolled back some of those tariffs.
(19:17) They made exemptions for like Apple and phone makers. They made exemptions for automakers. And the problem there is that you're basically exempting big businesses while little businesses that make all the widgets we don't think about, they have all the uncertainty and all the problems. Um, and so now there's like, you know, groups of small businesses asking for tariff exemptions.
(19:36) Um, and so I think that the overall outcome is that they're not going into the next phase in the negotiating power that that, you know, Steven Meyer would have, you know, hoped for, I think, as articulated in that paper. So I think when you go from plan, like when you go from mandate to plan to execution, each step was kind of a little weaker than than the prior one.
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(20:20) RSVP at unchained.com/tc. That's unchained.com/tc. Yeah, they sort of went Leroy Jenkins with the with the tariffs there. And I think optically, just as an external observer, it seems like there was a faction within his administration that was in his ear saying, "Let's get aggressive with these tariffs. Let's get aggressive.
(20:42) " They did pretty bad reaction from the markets and trade partners and businesses here in the United States across the board. And it seems that within the last month, month and a half, that maybe Scott Bent has sort of taken the reigns and said, "Hey, let me be the forward- facing voice of the administration and really try to be the quote unquote adult in the room and try to navigate this.
(21:07) " Cuz I mean, he has said publicly, he was saying publicly leading up to the election that he did believe there was going to be a global economic monetary reordering that he wanted to help the president navigate. And it it seems like there were probably some um power brokering going on within the administration about who was actually in his ear and giving the the recommendations and it seems like they went Leroy Jenkins noticed they messed up a bit and Scottison has stepped in and has been much more public facing since then. Yeah. One of their
(21:43) goals is to get the 10-year Treasury down. And during the peak market turmoil, one of the issues is that at so as stocks were going down, which is normal given all sorts of basic, you know, tax increases and uncertainty, uh normally you would see the dollar strengthen uh and the the bond uh market go up, meaning yields go down, capital basically get out of stocks, get into safer treasuries.
(22:05) Um it would get out of other currencies and get into the dollar temporarily. And even in in Steven Myron's paper, he talked about initially this would probably be dollar strengthening. Uh and unfortunately it kind of backfired. So instead there were there were net outflows similar to what you see emerging market which is we saw stocks go down, bonds go down, meaning yields up uh and the dollar go down altogether.
(22:27) And so instead capital was going toward gold. Um Bitcoin was holding up better than you normally see in a in a equity selloff of that size. Um other other currencies and markets were holding up better. Um and it was really not the playbook I think that they expected. Uh and then of course as the treasury secretary is you know pretty dialed into what's happening in the treasury market which wasn't looking very good.
(22:47) The move index which is the like the volatility index for treasuries uh spiked to near record highs uh basically the type of thing you normally see in a crisis. Um and so yeah I think they had a reverse on a number of their policies dial dial down the rhetoric um back up a little bit. And then there was an interesting shift in strategy.
(23:03) So instead of going after everyone at once, they pause for 90 days u for most tariffs on most of the world. There's still the baseline tariffs, but they they kind of pause the bigger things and they try to redirect everything toward China. Um and they kind of focused on let's build a coalition against China. You know, if you can get Canada and Mexico in your court, you get Europe in your court, um then you could put a lot of pressure on China because China is such a a kind of big uh central part of this. um in in recent days that seems
(23:32) under uh friction too because for example um Asian uh that group of like Southeast Asian nations as EAN uh one of those acronyms that has like a double meaning um they announced along with uh China uh South Korea and Japan who are not members but that are obviously near the region they kind of announced together that they're going to increasingly tie their trade together uh and they're increasingly going to focus on all these internal mechanisms between themselves.
(24:04) Um, and so that that's that's not China being isolated. That's actually China kind of strengthening their connections with um trade partners that there's sometimes frictions with, but that they're otherwise um all in the same region. So even that attempt to kind of isolate China uh seems to not be going well, which is what we'd expect given the fact that China is the biggest trading partner with the majority of countries in the world.
(24:27) So if you look at I I assume some some listeners have seen that map that shows like you know 25 years ago the whole world was kind of say blue which is that like the US was the biggest trading part with most countries in the world um outside of certain pockets of of Asia basically kind of like you know maybe 80% of the global map was blue and then over 20 25 years that map turned red and made out of China which is that China gradually became the biggest trading partner of most countries in the world.
(24:58) Um, and so few countries in are in a position where they can say, "Yeah, we're going to help, you know, go against Chinese trade because for many of them, China is the biggest trading partner that they have or at least bigger than the US." Um, and so these are just ongoing challenges and that of course gives, you know, market participants a lot of uncertainty that gives businesses a lot of uncertainty.
(25:19) And as of this recording, we're still kind of in limbo to see what the next weeks are going to look like. Yeah. Like I mentioned before we hit record, I've been at a conference last two days. So did not catch that ASA announcement. The fact that Japan and China together sort of saying, "Yeah, we're going to do that's a bit bit surprising considering how much we've been leaning on Japan for many decades since the since the 80s after we um after we sable rattled at them.
(25:49) " And I I think China's obviously whether Trump wants to it does seem like he is implicitly admitting it, but that seems like the big elephant in the room. like when you I mean you shared some charts in your newsletter when you look at their energy production, steel production, manufacturing base. Um and the fact that while politicians and pundits may like to position that China needs the US because we're the largest trading partner, it seems like that they're they're even diversifying away from us in real time, too. So their
(26:28) their link to the United States and the United States being crucial to their long-term success may not be as true as it was maybe two decades ago. Yeah. The whole the whole world's interconnected. Um but it's it's not as though the US is just the pure center of the whole system.
(26:45) There are a lot of connections that go around us. Um and so you know 20 years ago China was kind of known for sneakers and plastic trinkets and things like that. But now they've they've kind of rised up the capital stack uh toward more complex goods. Um and so one of the things I I point out is that uh literally at a 4-year period um China became the largest uh auto exporter in the world.
(27:09) Um so for years they they had kind of pretty minimal auto exports and then from 2020 to 2024 a lot of their pieces fell into place and then just like they had a hockey stick of just just rampant um exports. Um and so they passed South Korea, they passed Germany and then they even passed Japan as the biggest uh auto exporter uh in the world and still climbing uh still taking market share.
(27:33) Um and uh we don't see it in the US because one there's there's we have kind of um uh extra tariffs on Chinese cars. Uh and two um their kind of key market is kind of if you think of like Hyundai you know two decades ago they were kind of known as cheaper cars um uh like starter cars for example uh China's really kind of in that market right now.
(27:53) Uh and that's kind of the pattern that automakers go through. So you know back in the day like Honda was in this position they were kind of cheaper cars. They moved up the quality spectrum. Then Hyundai was in this position and other other Korean makers. Uh and now China kind of entered the market and saying well you know in emerging markets around the world cars are a massive expense.
(28:11) I mean that's true even in the developed world but especially in the developing world cars are a huge expense. Um that's why a lot of people uh will ride you know mopeds, motorcycles or just not have a vehicle. Um, so China would come in and say, "Well, here's like a $15,000 vehicle or $20,000, you know, SUV or $25,000 SUV, for example, uh, with decent quality.
(28:32) " And they kind of they kind of hit that inflection point where the quality and price were very attractive. So, every year when I go to Egypt, there's more Chinese cars on the road than there were the prior year. just just like growing their their pie uh in that country and many other BRICS countries around the world, emerging markets in general.
(28:51) Um and and that's just a you know a part of the capital stack that they're going through. They also have uh a near monopoly on like solar production. Um you know they they have a bigger lock on the solar market than Saudi Arabia and all of OPEC has on the oil market ironically. Um then they have near dominance in rare earths.
(29:14) Um and then they have financial uh measures they can do by by holding a lot of US assets. They're able to sell some of those assets if they want to and disrupt uh US treasury market functioning temporarily. Um and so there are kind of big moving parts here both in terms of trade in terms of financial interconnections um that are harder to to unravel quickly.
(29:35) Uh and it does give them a pretty substantial negotiating position. Now they have weaknesses too. I mean you know they they don't want um you know to lose like 10% of their exports um or to face margin pressure um especially given some of the other challenges that they've had. I mean they went through really big real estate deleveraging.
(29:53) They you know their demographics aren't aren't great. Um they face a lot of challenges on their own. Um and so there are there is ammunition that both sides have but it is kind of a protracted complicated relationship. Yeah, as an American, I look at the the Chinese energy generation charts and I'm I'm a bit jealous.
(30:16) I think we need to bring that that type of growth back to the energy sector here in the United States. And it seems like with Chris Wright at the head of the Department of Energy and um sort of the posturing of Trump leading up to and after the election inauguration is that that is going to be a focus moving forward. And I guess just like what are your thoughts on how that actually gets implemented and what it will take to to catch up on that type of energy generation growth that I I think is desperately necessary.
(30:49) Yeah, I think that's a that's a key aspect. I mean, as part of our stagnant industrial base, we've had stagnant uh electricity production uh in the US uh for decades. Uh whereas China has ramped up to like unfathomable degrees. I mean, they produce more than twice electricity we do.
(31:04) Now, part of that's cuz they have a bigger population, but it's also a big chunk of it goes toward their uh manufacturing base. Um and then there's other ones that don't go directly to electricity. Like if you're in heavy heavy steel making and things like that, you need these big thermal, you know, high highowered energy production. Um, I mean, China makes like 10 times more steel than the United States does.
(31:23) Something like that order of magnitude. Um, which is relevant in shipmaking. It's relevant in all sorts of stuff. Um, and you know, for China, a big chunk of that is coal because in general, Asia doesn't have or at least East East Asia doesn't have a ton of oil deposits compared to other parts of the world, but they do a really big uh coal uh deposit.
(31:46) So, and also like when you build coal plants, they're quick to build. It's one of the fastest ways to kind of ramp up energy. Um, so they've been focused on coal, but you know, they're they're kind of across the board investing in everything, nuclear, solar, pretty much everything that they can throw money at, they're building. I think in the US it's probably less about coal and more about nuclear.
(32:05) Um, and but that's, you know, that's that's been tied up in red tape red tape for a while. Uh, it's not been a priority of of any administration really. Um, and I think that that's that's one of the ways that we could, you know, ramp up our electricity production and our overall energy production. And I think that one of the positive catalysts, and that this happened really starting a year or two ago, but I think is is accelerating now, is that the the data center needs, you know, as AI kind of took off and and became something that that people and
(32:32) businesses use on a regular basis rather than just something we talk about. um that's a very energyintensive thing unlike you know the prior uh round of tech growth which is mostly communication social media not very energy intensive AI is is quite hardware and energy intensive as you know um and so that's that's been like a catalyst where these big trillion dollar companies are basically they have the you know ear of the president saying we we need energy I mean if we extrapolate this out 3 5 10 years the energy needs
(33:02) are enormous and some of these things take years to build. Uh hardware is notoriously more difficult than software. Um and and so it just moves at a slower pace. And then ironically, some of the parts for like electricity transmission um or distribution transformers, a lot of that is made in China.
(33:23) Um and so even to kind of start rebuilding our own power base, it's not like we can snap our fingers and and make it here. We have to kind of build it again uh from the ground up. And and so I think yeah getting energy right is one of the key things and we saw that you know when Europe fun fumbled their energy over the the prior years and then they got kind of called out on it you know due to the war um that's economically impaired them and we wouldn't want the US to be in a similar position.
(33:47) No, who would not? I I I think the pressure from big tech and AI, it's funny because Bitcoin miners been fighting for this for years and uh I've been getting a lot of push back, but as soon as Silicon Valley gets involved and say, "Hey, we need this for AI." It's like, "Okay, let's go drill baby drill." It seems like uh nuclear is definitely becoming more in favor.
(34:12) I think we had Ollo um get some of the red tape cut for their SMR projects. They're going to be doing some government some government uh applications uh and military bases I believe which is a good sign. But it is perplexing not perplexing but just like it does feel like there's a needle to be thread here and I think the next I'd love to get your thoughts on this like what is the window of time where we need to execute the threading of this needle.
(34:41) Is it 6 months? Is it a year? Do we have this whole four-year administration or does something need to happen rather quickly in the near term? I think there's no cut off, but there the earlier you go, the better. There's there's no benefit from waiting uh only cost from waiting. Uh and so anything that cuts red tape and can accelerate energy production here at home uh earlier is better.
(35:04) Uh and even even things we don't think about like for example going back to my prior point, why does why does China dominate the solar market? It's ironically because of their other energy sources, which is to say, uh, you know, the the process of of of, you know, uh, turning silicon basically into, um, solar panels is actually really energy intensive.
(35:23) Uh, and that's part of why we've, you know, the whole world's kind of pushed a lot of their dirtier businesses into China. Um, so uh, you know, kind of put on their their balance sheet. Um, and you know, that has optical benefits temporarily, but then it it gives us costs. Um and so um you know same thing for rare earths.
(35:43) I mean basically like the despite the name rare earths are in general not that rare. Uh it's that they have pretty big environmental impacts when trying to get them out of the ground and and and process theming and everything. And so we all the whole world was kind of like yeah China can handle that part. Uh which is great until it becomes the national security bottleneck or you're kind of um antagonistic with them.
(36:05) then it's like, oh wait, maybe we need some of that here at home, too. Um, and then even things like um refineries, like the US hasn't built a brand new refinery in decades, um, you know, for hydrocarbons. Uh, there's been some expansions, um, but really no new ones. Um, and so even though we've kind of ramped up our oil production, you know, we still have to import a lot of oil because different refineries have different types of oil inputs that they need.
(36:34) It's not like all oil is the same. It's not all funible. Um, so different refineries are built for different purposes. So we we ironically can export some of our uh energy, but also have to import some of our energy because we're not really building the types of refineries that we need. Um, and so there's trade-offs with a lot of this.
(36:52) And I think that just in general, the US probably faces a more hardware decade, which is that we need more power production. We need, you know, more infrastructure here at home, which then allows us to manufacture. So even when people talk about the US kind of um automating a lot of its new manufacturing which is which is likely true uh that's still it still needs energy uh it still needs kind of reliable lowcost energy in order to be competitive. Yeah.
(37:17) I mean, China's getting to the point, I forget if it was BYD, the uh the car maker, but they had that sort of drone view of the San Franciscoiz factory. Like we're getting to the point, particularly with AI, if these humanoid robot form factors accelerate and this the software and the firmware gets to a point where they can actually complete tasks like China, you could squint and see within the next decade they could have uh a system where humans aren't needed to build anything, even the factories themselves. And you look at the state of
(37:55) the industrial base here in the United States, we're we're nowhere near that. And that that's the other thing. I mean, I'm sure you've been diving into this as well, but just playing with the AI tools myself and over the last two years and seeing how much they've accelerated advance, just month, the advancements that are being made are mind-boggling.
(38:20) And we really need to make sure we ride that wave as it's happening not only in the tech sector, but I think it's going to be just important just as important in the physical industrial world as well. Yeah, I agree. And I, you know, for like I I've used it for AI generated art uh for a couple years now and so it's really interesting kind of every month seeing the improvements that happen there and then of course for research as well.
(38:43) That's a big area that I use it for and just seeing it become a smarter and smarter assistant over time uh is very powerful and there is a there is a big gap between say data center AI and portable AI or you know robots and drones which is everything gets harder when you have to make it portable. Um and so um you know I think humanoid robots at scale are probably farther out than than the average person thinks.
(39:09) Um even though they'll be increasingly relevant. Um, so, uh, back in, you know, decades ago, industrial automation became a thing. You know, giant robot arms building cars more so than people, for example. Um, a lot of that lowhanging fruit's been used. But yeah, I think we have we're going to have more mobile robots in factories.
(39:28) Um, and then over the long arc of time, even more mobile robots outside of factories, uh, which is also harder because you have less control over the environment that they operate in. Um, but basically across the board, we should expect to see more and more automation. um prior decades uh there's a lot of automation of blueco collar work uh this is kind of probably the era of automation of white collar work as well or at least a really big chunk of it um and so rather than just robots moving things for us and doing things for us they they
(39:54) increasingly can think partly for us um which depending on how you use it I mean the the kind of the meme is that you know humans don't think and just robots think for us but when used correctly it it it extends your thinking you know you can learn more when you have like a robot assistant helping you learn and organize information for you.
(40:14) Uh, and it's it's it's more efficient for information acquisition than Googling stuff often. Uh, it kind of can do the work of like 10 Google searches in in one organized question or prompt. Um, and so I think the the output's going to keep growing. I think the energy usage for that whole field is going to keep growing.
(40:34) The economic relevance of being on the right side of that trend is going to become increasingly important. Um, and what it all shares in common is you need energy, you need infrastructure. Uh, and so, um, and that's really different than the whole 2010's decade of just social media and communication technology kind of running everything. Yeah, it's insane.
(40:53) I've been, uh, I've been I I find myself using it more and more every month. Like, it I've gotten to the point where if you're not using these tools to extend your knowledge, you're you're going to get left behind. not left behind, but you're at a disadvantage to those who are using it. Absolutely. Is extremely powerful. But shifting this back toward this current administration and going to the Treasury Secretary, how do you think, if at all, they will incorporate Bitcoin? like you said, Steve, uh, Meerin talking about the the demand for for gold and
(41:34) cryptocurrencies. These neutral reserve assets should increase as we go through this transitionary period. Uh, obviously here in the United States, this administration has come in and said, "We love crypto. We want you guys to have fun. We're going to support your your industry." And it seems like the priorities out of the gate have been the stable coin bill market structure.
(41:54) And in a distant third is this Bitcoin strategic reserve bill. Uh yesterday Genius Act, the stable coin act failed to to get through um the Senate. Democrats blocked it. It looks like they're going to try and re uh get that back on the floor to revote for that. But what are your thoughts on the priorities as it pertains to legislation for our industry, the Bitcoin industry? um and whether or not Bitcoin is something that the Treasury should be implementing into what they're doing or should it simply be a private market
(42:30) thing that that people build their balance sheets around? Well, yeah, I think the first step is just not to be in the way. So, it's basically to say that, you know, if if if people want to send money to exchanges or brokers to to buy Bitcoin or other assets, you know, their their banks shouldn't be told to like block them from doing so or debanking them just because they work in that industry or or are sending money uh to buy those assets.
(42:52) That that's been a big trend uh for years now. So, yeah, I think uh just getting out of the way is step number one. Um, I mean, I think a a bigger benefit would be um exempting Bitcoin from capital gains, at least on a small level, to basically say everyone everyone gets like a a write-off every year of equivalent of a several thousand dollars.
(43:14) So, um, it's easier to spend with Bitcoin, to experiment with Bitcoin, to not have to worry about that every little thing, every little micro activity is like technically like a taxable event, for example. that would that would relieve a lot of administrative burden um and economic disincentives uh from it. Um I I view that as more important than a strategic Bitcoin reserve um overall even though obviously strategic Bitcoin reserve is fun for for price potential.
(43:37) Um if you go back to Steven Myron's paper that I mentioned uh when they talk about kind of a currency accord to weaken the dollar they mentioned ideally they wanted to use multi- um uh like um multilateral approaches. Um but there are some unilateral approaches that they can do which includes printing dollars to buy reserve assets.
(43:58) Um so so a lot of countries in the world especially a lot of these Asian mercantalist countries that that have these really big surpluses when they get these um big inflows of capital from all the exports that they're doing their currencies would naturally strengthen somewhat and so instead they they deliberately print more currency and accumulate reserve assets to present to prevent their currencies from rising.
(44:18) That that's kind of the manipulation that they do. Um and the US doesn't really do it. uh you we actually have the least reserves pretty much of countries around the world as a percentage of our GDP uh including our our gold reserves. Um so so many developed countries have 5 10% of their GDP in reserve assets. Uh many developing countries have 15 plus uh um you know percent.
(44:44) Uh many countries with with like long run current account surpluses have 25% or more. I mean some of them have over 100% of of GDP and reserves. Uh, and the US has something like 2%. Um, because we're the axim of the system. We're the ones that didn't need reserves because other currencies are kind of managing themselves around the dollar rather than the dollar ever really managing itself around others.
(45:05) But if we do enter a more balanced world, um, then the US can have higher reserves too. five five 10% of GDP in line with other developed nations and that can include buying other count's bonds which is not very attractive. I mean do we want to own euro denominated sovereign bonds and yen denominated sovereign bonds? I mean that was discussed in the paper and obviously that comes with inflation risks uh outright you know default or repudiation risks.
(45:35) Um gold is an obvious market just because it's so big. I mean it's over$20 trillion now in terms of estimated market size very liquid. um is you know there's already a big sovereign precedent for it. Um when you look around the world um there has been an uptick in gold demand recently especially ever since the the Russian invasion of Ukraine and the associated sanctioning uh of Russian reserves.
(45:55) Um but really that trend goes back to 2009 the global financial crisis. If you look at the at the the prior trend for decades, uh global tonnage of official gold reserves was decreasing. Um and it bottomed in 2009 and it started to inch back up for for you know 15 plus years now.
(46:14) Um and I think that trend probably has likes to it and now of course that the Bitcoin is you know roughly a $2 trillion asset. Um that's in the discussion now. It's still somewhat small uh for a reserve asset, but we can we can easily imagine that once it becomes a 5 trillion plus asset and you know maybe a little bit lower volatility and more liquidity um that's in the discussion.
(46:36) In addition, when we see all these different countries in the world, they're they're trying to build these like alternate payment mechanisms that go around the dollar. So whether it's built on on Chinese settlement um the BIS was like emphasizing Mbridge you know with a couple different central banks or several different central banks to kind of this like kind of like crossber CBDC's uh to kind of go around some of this and all of these are like closed solutions competing with each other and then staring them in the face is this big open- source settlement
(47:03) network um that that's capable of settling unlimited value um and you know it does come with risks volatility and things like that up front But as as it grows and becomes more mature, uh then in addition to being a a reserve asset for many countries, it's a settlement network, a non-dollar permissionless settlement network for many countries.
(47:23) Um for the US, I mean, if they want to, they can use as, you know, a dollar devaluation tool. Um they can they can accumulate more Bitcoin. Now, they've already kind of emphasized that they don't necessarily want to do that. They want to if they're going to accumulate it, they want to do it on a revenue neutral basis.
(47:39) Um which is the more conservative approach. Um, but yeah, I do think it makes sense for the US to to hold Bitcoin, but I I purposely focus less on covering it. There's there's more than enough voices in the space covering every single move of Strategic Bitcoin Reserve and cheering them on. Um, I like to focus on kind of more bottom up.
(48:01) You know, I'd rather have people buy it, business, you know, small businesses buy it, large businesses buy it, then nation states buy it. You know, that's that's kind of the I think the ideal approach. uh or even small nations first and then big nations. We can always pick the path that happens. Um but for me uh I like to focus on generally Bitcoin helping smaller entities um than the biggest of all entities.
(48:22) But basically I would I would phrase it that anytime you're running capital whether it's a household, a corporate balance sheet, an institutional fund or the finances of a sovereign nation, if someone gets Bitcoin and they want their thing to succeed, they they they should own Bitcoin. It's kind of simple as that. So, it depends on what your incentives are and what you're what you're responsible for running.
(48:45) Yeah, I completely agree. I think the strategic Bitcoin reserve is a nice to have, but I think and what's going on now with all the corporations and uh launching their pure Bitcoin treasury plays interesting, good development. Um, Micro Strategy's definitely proven the way. Is it repeatable? We will see. But going a layer down, just entrepreneurs, individuals holding Bitcoin on their balance sheet and incorporating Bitcoin into their financial lives uh in any way that they can.
(49:23) I think like you mentioned, that grassroots way is is going to create a much stronger foundation in the long run. And that that's I'm sure you've been following it, but that I think that um the this development of Bitcoin and structured credit to help sort of recapitalize credit products in the commercial real estate and other markets is very interesting to me as a theme because I think that's a an incredible bridge product to an inevitable Bitcoin standard where you sort of um co-mix the the different collateral assets. But
(49:59) slowly but surely over time, Bitcoin becomes the dominant collateral asset. And I think that has benefits twofold. One, you find a way to solve this massive credit problem that exists particularly in markets like commercial real estate um and corporate debt uh throughout the country and and the world more broadly.
(50:19) But then two, since these are structured credit products with durations, you sort of have a forward-looking duration curve of Bitcoin that's going to be held off the market for a certain amount of time. comes to your point about decreasing volatility, giving governments more uh confidence in using Bitcoin as reserve asset.
(50:38) I think something like that is necessary to to develop that confidence. Yeah. And I think I mean the one of the biggest trends overall is that there is mandated capital or walled garden capital which is say there are really big pools of capital um that have a specific purpose. It could be that they're that they're a stock fund and they buy stocks and you're a manager that buys stocks.
(50:58) There's bond funds, there's credit funds, um there's real estate funds, um there's all these different types of entities that have kind of a specific mission. Uh and if you happen to work in that industry and be a Bitcoiner, like you're bullish on Bitcoin, long-term, structurally bullish, but you work in buying stocks, buying bonds, buying credit, um buying real estate, then one of the cheat codes you can do is incorporate Bitcoin into what you're doing.
(51:23) So if you're bullish on stocks and you say well this stock is buying Bitcoin um with kind of smart leverage. So if I want to outperform other stock managers and I I happen to get Bitcoin and say most of them don't I can buy the companies that are buying Bitcoin. Similarly uh you know I can buy their bonds that have a Bitcoin component to them.
(51:43) If I'm in credit I can see how Bitcoin can can fix credit or or give a price kicker to credit. Um, if I'm in real estate, I can look at, you know, real estate tied to Bitcoin. Uh, and so basically, it's this kind of like, you know, uh, way to slip into all these different kind of walled garden types of capital.
(52:02) Um, and I don't view that as competing with the cyberpunk, uh, aspect of Bitcoin. Um, you know, part of what makes Bitcoin successful is just being large and liquid. So, the more entities that want to use it, the better. as long as those ways don't get in the in the way of of individuals using Bitcoin and self-custodial permissionless ways.
(52:21) Um, so I think there's there's a bunch of different problems that Bitcoin can solve from small to the big and they're all kind of happening together. And I, you know, individuals have their own backgrounds. They find certain things more interesting than others, but basically whatever skill set or experience someone has, they can bring it to the Bitcoin network or or bring the Bitcoin network into what they're already doing. Yeah.
(52:40) And this week was an incredible validation of of that thought you just put forth, which is we had here in Texas, we had in Austin specifically, we had the Texas Energy Mining Summit Tuesday, Wednesday, we had Bitcoin Plus+ Wednesday, yesterday, and I believe it's still going on today. The same time we had a group of Bitcoiners going to the capital uh to talk about the the Texas Bitcoin Strategic Reserve, and they were pretty confident about that.
(53:07) And at the same time in Orlando, you have strategies uh Bitcoin for corporations conference going on. And I I think that's just like emblematic of um everything you just said. We have all these different events going on literally at the same week covering these different areas of the economy that Bitcoin um can can help alleviate some of the the pains that exist in the those particular sections of the economy.
(53:33) And I spent my time at Texas Energy and Mining Summit and Bitcoin++ here in the city and energy and mining in a very good spot. Looks like the future is bright for the intersection of those two industries. And then Bitcoin++ too like the I do think the cipher punk highlighting the cippher punk technology that's being built out has sort of uh flown under the radar and uh strategic reserve and corporate balance sheets have been the memes in the last 18 months.
(54:08) But it's become abundantly clear to me that on the tech side the protocol stack we're reaching a level maturation particularly on second layers where you have uh the lightning network acting as this connective tissue between different second layer protocols and the maturation of the inter interoperability of all those is getting to a point where we can build some really really cool stuff that can um enable incredible payments and savings tech and even um fixing things like mining pool incentives.
(54:41) Like I I think we're firing on all cylinders uh across the Bitcoin landscape right now. I agree. And it's it's funny cuz I because I analyze macro, but I also involved in in Bitcoin venture uh via Ego Death Capital. And so I I I kind of have like these windows into both sides of this like kind of cool stuff that's being built, but also how it inter interacts with macro.
(55:02) And it it just seems like especially outside of people that that focus on this so much, most people just fall into one camp or the other. They're either technical or they're just talking about the financial decisions. Whereas like across the board, it's just so interesting. Um, and I don't really view them as in opposition at all.
(55:17) I mean, there are people that are like, you know, Bitcoin's been captured or Bitcoin has lost its it it's it cipher punk root. Um, but Bitcoin is what you make it. Uh, it's an open permissionless network that works. Um, and we shouldn't take for granted that it works, but it works and it's getting better. Um, and you know, there are people that that that buy it and make Bitcoin IUS and Bitcoin financial products and, you know, it works for them.
(55:43) Um, but then Bitcoin is still a technical stack with plenty of design space um, you know, in the current configuration to still build on and use. And then especially as demand increases, um, you know, we have to make more efficient use of block space, more efficient use of resources. you know, sometimes during periods of abundance, you know, if if fees are low and if if demand is low, there's not a ton of incentive to to build vertically.
(56:06) Um, but whenever there is uh excess demand, one reason or another, um, you know, it's kind of like necessity is the mother invention, as they say. Uh, and so these things can develop and and I'm so optimistic on that whole, you know, all the technical aspects of Bitcoin. Yeah, that was uh the most I ran the the live news desk at BTC++ Wednesday and yesterday.
(56:28) And Matt Carallo, one of the most pessimistic people I've met in Bitcoin. He's he was a core developer for a long time. He's been working on LDK for those who are unaware. He was co-founder of Blockstream back in the day. um he was optimistic yesterday and he he actually to your point about um a bare verse bull market building like he he was he's pleasantly surprised at the uh amount of progress that the developers are making on second layer solutions despite the price going up above $100,000. Usually the price goes up and
(57:04) people are like, "Ah, we don't have to work. They get too distracted. They can't build stuff." But the pace of development is pleasantly surprising. Matt Carlo, who historically, if you've listened to the show throughout the years, I believe he was our second guest, has been um he's one of the he's he's very bullish on Bitcoin.
(57:21) He works on it. dedicate his life to it, but he's a sober analyst of Bitcoin's long-term uh potential success, and he's very optimistic now, which I was pleasantly surprised to find out yesterday. That's good to hear. What at the conference, what would you say the biggest takeaways are for L2s? Um I think lightning as this interconnective um this connective tissue for these second layers is is becoming clear.
(57:52) And um so for an example like you the development of cashew over the last year specifically that that chomia mint protocol and for those who are unaware listening to this jia mints allow you to lock bitcoin up you get a commensurate amount of ecash tokens back and when you spend those tokens whether it's in the mint um or outside of the mint it's it's very private.
(58:17) It's uses a blinded signature scheme where the mint operator doesn't know what people are transacting but it comes privacy benefits, fee benefits, um instant settlement benefits in terms of the speed but you can have these individual mints and what we're finding is that these mints can have lightning gateways to the lightning network.
(58:36) They can communicate not only with other mints but people simply using the lightning network, people using other second layer solutions like liquid or arc. Um, and I think the key takeaway as it pertains to second layer solutions that I've got after having many conversations over the last two days was the sort of synergies that are beginning to emerge due to that interoperability are accelerating development of really cool applications.
(59:04) One of which uh we talked about was hash pools. this idea that you can create a new mining pool um sort of structure where for anybody who's listening, Lynn, you you typically pull in a lot of uh uh macro people who aren't focused on Bitcoin. So trying to explain this mining pool uh layer of Bitcoin right now is particularly centralized and it's due to the trade-offs that are necessary to get consistent payouts for miners.
(59:31) Um so miners are pointing their hash rate at free pools predominantly um foundry amp pool. They have a big portion of the network and they're able to attain this because they can pay out pretty consistently. Um, so hashpool is trying to combine ecash mints with lightning to make it so you point your hash at a hash pool and you exchange immediately your Bitcoin mining hashing shares for eash tokens that you can then immediately sell for Bitcoin over the lightning network um to people that are willing to stomach the variance risk of Bitcoin
(1:00:08) mining. So you can create a liquid market for your hash, an immediate liquid market for your hash, combining ecash and the lightning network, which is pretty cool. So you can spread out the volatility of the payments so it's not all just focused on the minor. Yeah, that's smart. Yes, I like that. And you can sell you basically pull forward revenue by selling to people want to speculate on the luck of that individual pool. That's powerful. Yeah.
(1:00:34) Yeah, it's happening, Lyn. It's happening. Is it like do are you finding yourself having to pinch yourself because it seems like it almost seems like uh Star Fox 64 level two. It's quiet. Too quiet. And then you get ambushed. It's like it's too good. It's too good. I'm about to get ambushed. Great reference. I love that game.
(1:00:54) I played that a ton when I was a kid. Um I I think it's in a good position. I I think it's it's it's actually I like seeing Bitcoiners pessimistic and arguing with each other because that's healthy. Um, but I think when you zoom out, the network's in a great space. Uh, I think, you know, there the the network has uh years of of potential political cover.
(1:01:12) Um, so at least like, you know, less less chance of attacks um including attacks against privacy, attacks against ownership, that kind of thing. At least in the US, Europe's a kind of a different uh beast. But um you know, there are pockets around the world where it's politically uh pretty in a decent place.
(1:01:28) And then the whole tech stack that allows the tech stack to to you know flourish pretty well. Um I I think you know the fact that Bitcoin is kind of forming this like price base above and below 100k I think and 100k is kind of boring now uh I think is bullish. Um so whether you look at potential price action integration into into you know existing financial structures the tech stack the political um you know risks and opportunities around it.
(1:01:54) Uh I am bullish. Um you know I I it's not something you want to take for granted. Um but I think that everything I see now the future's pretty bright for it. And you know that still takes a long time. You talked about the network effects of the dollar and the network effects of all these existing things.
(1:02:11) Um so never expect too much to happen in one year or two years. Um but looking out in the in the longer term it's it's almost all bullish. It's it's a great it's a great place to to work in uh to be following. Um and I think it's only going to get better. I agree. I think that's uh as Bitcoin turned 16, people that have been in it for a while, they're sort of uncomfortable with how nice people are playing with Bitcoin and talking about it.
(1:02:40) They're like, "Wait a second. I thought you were supposed to hate this thing." And now everybody's like, "Ah, well, actually it solves a problem we have." And I think a lot of people are trying to uh come to grips with the fact that like oh no, people are waking up to Bitcoin. It's actually happening.
(1:02:53) We've been talking about this for for quite some time. I mean, it's funny the people that push back against it. The game theory has been not the game theory, the sort of people have described the adoption um the order of operations of adoption over the course of the last 15 years. It's always been we'll start with individuals then maybe companies will get involved and eventually if Bitcoin is as good of a monetary asset and network that we believe it is then governments and other large entities will want to use it as well and it's happening and I think uh I
(1:03:26) think David Bailey said it best. It's like your your favorite band went mainstream and you got to come to grips with that pretty much. I mean, that's that's part of Bitcoin becoming a multi- trillion asset. That that's that's what happens uh if it's successful. Um and then the cool thing about it is that it doesn't have to lose any of its traits that existed, you know, when it was smaller. Uh it's still permissionless.
(1:03:48) Um you know, that the the tech is more useful than, you know, years ago. Uh there's more ways and easier ways to interact with Bitcoin than ever before. I mean, harder wallets and and NFC cards and things like that are better. uh lightning network is is easier to use, more liquid. Um eCash is great. Um there's all these different things that work together.
(1:04:10) Um so, uh it's, you know, on the individual level, it's great. And then as these bigger entities buy into it, um over time, they can dampen the volatility somewhat. Um because instead of having tons of coins in Mount Gox or FTX or, you know, these other places and like you know, kind of one thing can kind of blow up the market, the more distributed, the more entities that hold it.
(1:04:32) um the more it can kind of remove at least some of those those price shocks um and then allow people to use it as money uh first and foremost. Um and so you know it can just keep seeping into everything and you know the existing global financial system I mean global broad money is over a h 100red trillion then you have bond markets that add hundreds of trillions more um and bitcoin is this you know relatively unlevered2 trillion dollar market that's just kind of growing into that over time getting its tentacles into everything um and the way I often describe it is that
(1:05:05) it's not bitcoin changing to get into those things those change those things are changing ing to incorporate Bitcoin. Um, so it's not like Bitcoin did anything to get included in ETFs. The SEC and asset managers changed in order to incorporate Bitcoin. Um, so you know, they're locked in here with Bitcoin. Bitcoin's not locked in there with them.
(1:05:24) Uh, and that's that's how I see it for the next several years. Bitcoin is catching on. You may want to get some. It's uh it's that's that's the part we're at. Lynn, uh, let's not take two years to to catch up on the show next time. That's my that's on me. Um, but, uh, this is was incredible. Thank you for the work that you're doing.
(1:05:46) Thank you for joining and, uh, hopefully we can do it again soon. Always happy to catch up and I appreciate the work you do in the space. Oh, peace and love, freaks. Okay, freaks. Thank you for listening to the show. I hope you liked it. If you did like it, please make sure you subscribe, rate, review the show.
(1:06:02) It helps us out a lot. And also, if you like these conversations, I've come to realize that many people listen to the podcast. They don't know we have another sort of layer of this media company. We have the newsletter, the Bitcoin Brief, go to TFTC.io. Make sure you subscribe there. A lot of the topics that are discussed on this podcast I write about 5 days a week in the newsletter.
(1:06:24) We also have the TFTC elite tier. If you sign up for that, become a member. We have a private Discord server for the elite freaks out there where we're dropping adree versions of this show and having discussions about everything we talk about a day early. Logan wanted me to make sure if you want to get the show a day early, become a TFTC Elite member.
(1:06:48) You will get that. We have our Discord server right now. conversation between myself and TFTC elite tier members, but we're going to expand that. We'll probably do close Q&As with people in the industry. Uh I may be doing macro Mondays. So, join us. Go to TFTC.io, subscribe, find the button in the top right corner of the website, become a TFTC Elite member.
(1:07:14) Thank you for joining us.
