Key Takeaways

Ryan argues that Bitcoin’s next great catalyst is its evolution into the core collateral of the global financial system, framing today’s under-collateralized dollar world as desperately in need of Bitcoin’s hard, auditable, globally liquid base layer; if Bitcoin grows from roughly $2 trillion to $100 trillion, that 50x move could underwrite another 100x in capital expenditure across AI, robotics, manufacturing, and U.S. industrial reshoring by enabling far more productive lending on sound collateral. Over the last five years, miners have become key AI infrastructure providers, public companies like MicroStrategy have normalized Bitcoin treasuries, and a cohort of mature, cash-flowing Bitcoin-native firms has emerged, leading Gentry to launch a $220 million SPAC to take operating Bitcoin businesses public so they can tap cheaper capital, greater institutional trust, and better hiring via public equity. He warns that big banks are about to custody Bitcoin and lend against it, giving Bitcoin-native lenders a short window to scale or be outcompeted on funding costs, while stressing that this isn’t “Bitcoin being co-opted” so long as individuals hold their keys and run nodes; instead, it’s the Bitcoinization of finance, where value flows out of treasuries and bonds into Bitcoin as the superior reserve asset. Lightning’s quiet maturation underpins this vision: interoperable with ecash mints, ARC, Spark, Liquid, and other side systems, Lightning removes transaction throughput limits and already processes billions in annual volume, with 28% of U.S. merchants now theoretically able to accept Lightning via Square and non-custodial routing yield emerging as real income for node operators. Gentry ultimately sees Bitcoin as the tool that lets the world recolateralize finance, rebuild industrial capacity, modernize banking rails, and extend top-tier property rights and capital markets access to anyone with an internet connection.

Best Quotes

“Imagine if adopting Bitcoin as a collateral asset to recolateralize this dollar system… that 50x in growth could provide another 100x of capital expenditure.”

“The value that is coming into Bitcoin is leaving other assets, US treasuries, German bonds.”

“We raised $1.44 billion in 8 days just by selling equity. That’s absurd. MicroStrategy has done all this work and they only own 3%.”

“What the Bitcoin revolution really is… is a war for the world’s capital, a peaceful economic war.”

“The U.S. dollar system desperately needs Bitcoin. It desperately needs more high-quality collateral.”

“Bitcoin isn’t being co-opted because I hold my own keys and run my own node.”

“You have like a year. If Bitcoin-native lenders don’t scale now, they won’t be able to compete with Morgan Stanley rates once banks custody Bitcoin.”

“What Lightning is phenomenal at is allowing for instant global Bitcoin transactions that settle for a fraction of a penny.”

“TVL was always a dumb metric. Capital efficiency is what matters, and Lightning is the most capital-efficient system that exists.”

“What the revolution really is, is extending the best property rights the world has ever seen to anybody with an internet connection.”

Conclusion

The episode positions Bitcoin as far more than a speculative asset or niche payment rail, it’s presented as the only viable candidate to recapitalize a strained dollar system, modernize aging financial infrastructure, and fuel a new wave of productive investment in AI, energy, and manufacturing, all while extending strong, censorship-resistant property rights worldwide. By tracing the maturation of Bitcoin companies, the rise of public-market vehicles like Gentry’s SPAC, the encroaching involvement of big banks, and the steady, underappreciated progress of Lightning and adjacent layers, the conversation makes the case that we are still early in Bitcoin’s mission to become the world’s reserve asset. The real work now, Gentry argues, is not just holding Bitcoin but building, educating, and directing capital into businesses and infrastructures that embody Bitcoin’s principles, so that as institutions finally recognize their need for better collateral, Bitcoiners are ready to shape the next monetary and financial era rather than watch it be defined for them.

Timestamps

0:00 - Intro
0:43 - New SPAC launch
6:14 - Retrospective on 5 years
18:16 - Bitkey & SLNT
20:04 - Bitcoin fin service firms
28:29 - Bitcoin co-option
31:07 - Token SPAC noise
36:47 - Obscura & Unchained
38:33 - Market timing
43:35 - 17 years in
48:49 - Ryan’s unique pitch
58:19 - LN infrastructure

Transcript

(00:00) Imagine if adopting Bitcoin as a as a collateral asset to recolateralize this dollar system. That 50x in growth could provide another 100x of capital expenditure, new productive capacities in AI and robotics. This merging of public markets and like private crypto bitcoin companies and these track people have no idea what they're doing.
(00:20) The value that is coming into Bitcoin is leaving other assets, US treasuries, German bonds. We raised $1.44 $44 billion in 8 days just by selling equity on the public markets. Like that's absurd that Micro Strategy has done all of this work and bought all this Bitcoin. They only own 3% and they've been at it for 5 years.
(00:44) Ryan Gentry would say it's been a while, but it hasn't been a while. We catch up behind the scenes quite frequently, but it's been a while since you've been on the show. 5 years. Five years. Five years depriving your audience of me, Marty. I mean, but in serious, five years, that's a long time. Um, especially a long time in Bitcoin, isn't it? >> That's basically a third of Bitcoin's life we've we've gone without catching up on this show.
(01:12) >> That's a wild way to think about it. Yeah. I mean, 5 years ago, November 2020, Bitcoin was at what, like mid teens? >> Let me check. 15K just started buying. >> I I go on the 5-year chart. It's been six like it doesn't even come up on the 5year chart. I have to go to all. What was it? November 2020, >> I think. So, yeah.
(01:37) >> Yeah, we were climbing. We were climbing. We were at uh 17K. 17K. Ran all the way up to uh 65, back down to 16. >> Mhm. Here we are sitting at uh $89,332 and everybody thinks our pet's heads are falling off. >> They don't know how good they have it. [laughter] They don't know how good they have it. >> They really don't.
(02:06) Uh, in honor of your first our first catchup on air in over five years, I'm gonna have a beer for for you OG freaks with our >> the original >> Ryan Gentry appearance on uh on this show. We drank a lot of whiskey. >> Talked a lot about the Lightning Network, talked a lot about Texas. Uh things were much different at that point and we will probably do a retrospective on what happened between now and then and look at what we were saying back then, what actually happened.
(02:41) >> Mhm. >> And where we may may have been wrong, where we were right. But first, uh you've got some big news, personal news. Launched, uh the Bitcoin Infrastructure Acquisition Corp. looking for Bitcoin operating businesses. Another spa, equity spack hitting the space. A lot of uh a lot of attention on this part of the market over the last >> 6 months.
(03:08) What are you trying to do here? What are you doing? >> I'm really excited. Um I think you know in the five years since we've talked the whole ecosystem Bitcoin and most importantly the companies building Bitcoin products and building products around Bitcoin the asset and the network we've all grown up um we've all grown up significantly and I think public markets as seen by the ETFs as seen by Micro Strategy as seen by kind of the wave of, you know, digital asset treasury companies last year or this year rather. Um, public markets have a
(03:49) huge appetite for Bitcoin. Um, and so I was approached earlier this summer with an opportunity to raise us back, a special purpose acquisition corporation, um, that's charged with taking an operating Bitcoin company public. Um, and so we just completed that IPO this week, raised $220 million. You know, very excited to note that, you know, the deal was five times overs subscribed.
(04:18) You know, again, like there's a a really big appetite amongst public markets investors for Bitcoin company exposure. They're they're excited about the possibilities and the prospects of, you know, Bitcoin native companies and and what they can do from a cash flows and growth perspective. And want to be really clear here that, you know, I'm not this is not a dad.
(04:41) This is not a treasury company. I'm not interested in competing with with Michael Sailor, with Jack Mers, with Adam Back, etc. Um, you know, my my five years at Lightning Labs, you know, was all focused on building, you know, real products and services and and working with Bitcoin focused entrepreneurs, um, that have customers and and, you know, again, cash flows.
(05:05) Um, and so that's where I'm specializing. That's where I'm focused is the companies who've been building Bitcoin products for the last, you know, 7, 10, 12, 15 years, right? those are the companies that I'm focused on and I'm focused on wanting to take them into public markets um in a manner that materially benefits their companies.
(05:28) Right? I think one thing that we've learned that I've learned at least um is, you know, being a public company, there are there are specific advantages, specific things that you can do as a public company that you just can't um as a private company. And I think there is a subset of the Bitcoin space that is ready to take advantage of those.
(05:51) And I think in order to take the next leap in their businesses and to provide kind of the next amount of value to their customers, to us, right, as Bitcoiners, um they need a vehicle to take them public. Um, and I I'm really excited to have the opportunity to provide that opportunity to, you know, one or a couple of our favorite companies.
(06:14) Well, maybe since you framed it in that way, maybe it is a good time to do a retrospective on our conversation from 5 years ago. From [snorts] what I understand, you relistened to it recently and [laughter and clears throat] we're laughing not only at uh our mental state, but the conversation we had and I think maybe the retrospective we jump into it right away.
(06:38) It's just to really highlight where we thought the market was 5 years ago, where we thought it was going, and how it's actually progressed since then, and why you think now is a good time to be launching this particular spa looking for operating businesses in the Bitcoin space serving Bitcoiners. Yeah, I think that the the core part of our discussion that as I was listening back to it, I was like, you know, we really we were on to something here and are on to something here was, you know, we talked about how like what the Bitcoin revolution is really is, you
(07:17) know, a war for the world's capital, a peaceful, you know, economic war, but it's, you know, there's as you're growing a brand new store value from scratch necessarily the value that is coming into Bitcoin is leaving other assets, right? And is leaving US treasuries, is leaving German bonds, is leaving, you know, you name it, right? All the other assets in the world.
(07:46) Um, and coming to to store itself in Bitcoin. And I think we talked a lot about the order of operations of kind of how that, you know, again, kind of war quote unquote progresses. And one thing that we bonded a lot over when we first met was how enthusiastic we were over um how like kind of the first cohort of big companies that really got Bitcoin and were interested in Bitcoin was the energy industry through proof of work mining.
(08:17) you know, from, you know, we talked a lot about oil and gas back in the day, but like look how that has panned out, right? Like um all of these companies that, you know, went public, a lot of them actually via Spaxs, right? That were um that were mining companies in 2021, 2022 have since become hugely important in kind of the AI buildout space, right? where they um first kind of got started just focusing on Bitcoin mining.
(08:46) They you know built great relationships with energy producers and utilities and all the folks in the energy industry generally and then you know now have these hyperscalers just paying them outrageous amounts of money um to leverage the skills that they built in the Bitcoin industry to build out kind of this next great thing in the AI space.
(09:10) So, I think that's kind of where things started and where we've seen again public companies, companies that took the leap and and became public um you know really benefit from being public companies um and from having their name out there and being able to raise the capital like didn't Iris um Iron just uh raise like a billion dollars at 0% coupon convertible note, right? that's they don't have to pay back for five years or something like that like is just it's absurd um what's been happening and I think those are all companies operated by Bitcoiners right
(09:48) um that are out making a difference in the world building with Bitcoin treasuries operating their company on Bitcoin principles and I think that's super important >> yeah I'm looking it up it was Iron just did two billion 1 billion at 25 basis points one at one and clean spark did 1.
(10:15) 15 billion earlier this year or last month less than a month ago um as well. Yeah. So they're raising a ton of capital. Is that the only advantage to being public in your matter? That's >> a lot of what no >> we hear. And I mean I'm >> I think there's when I think about it from first principles I think there's three there's three main categories that I would it down to.
(10:38) I think number one for sure is being able to raise like having a public trust from a kind of debt and equity capital perspective. And I think there's kind of two ways that you can raise the money. So first is like you know being able to raise debt capital through these convertibles or through preferred like Micro Strategy is doing. like you just you can't do that as a as a private company cuz you don't have the public public equity to pair with the debt capital.
(11:04) Um you can only really do that as a public company of being able to issue securities. [clears throat] Um the other thing is you know I was I had the great pleasure um of of talking with um Micro Strategy CEO Fong Lee u yesterday in Austin. He's doing a little road show. Um and he was talking about this new um USD reserve that they built the dividends.
(11:30) Um and he was like, you know, look, you know, we did this mostly to combat the FUD. Like it it helps me sleep a little bit better at night, but it wasn't really necessary, but you know, we raised $1.44 billion in 8 days just by selling equity on the public markets through the ATM, right? Like that's absurd.
(11:52) Think about I mean you're you know vaunted venture capitalist now Marty like how hard is it for a company to raise 1.4 a private company to raise $1.44 billion and on like what timeline even $und00 million like on what how long does that take? >> It depends what if you're an AI right now maybe not as long as others but uh >> it's not as easy.
(12:15) It's definitely not as easy >> and And so that's and not of course not every company micro strategy. So that's you know not every company can do that but it's it's materially easier as a public company to be able to do that type of stuff. But that's not the only benefit. I think that's the most obvious one.
(12:33) The second one that I think is very important is public trust from a like business development perspective. um having the audits, having um the kind of rigor around your financials, having the just trust that you're a public company, it just makes it easier to do deals, especially with kind of banks and the more um uh the more conservative entities in public markets.
(13:02) It's just easier to do that type of stuff to get those doors opened if you're already a public company versus a private company. Um and so I think you know especially for the kind of um the Bitcoin companies that are financially minded, financial services minded that will materially improve their ability to gain new enterprise customers.
(13:27) Um and you know also having a a public equity, right? Letting your customers share in the upside of your business, right? That was always the the argument for tokens um in the Shitcoin crowd, right? But you don't need a token, you just need a a public equity to um >> and maybe it will be tokenized. Maybe that public equity will be tokenized at some point in the future, you know, >> and at some point maybe um we'll see.
(13:51) I'm I know that there's, you know, I'm I'm following the Clarity Act with interest. I'm not super optimistic, but maybe they'll figure out something that that works there. It's possible. Um but so two is I think that public trust from a BD perspective and and you know institutional customers will kind of you have more you have more substance as a public company than you do as a private company and retail customers like getting to share in your upside is is a big deal.
(14:20) And then third is just hiring and retention, right? As we were talking about uh before the call, like not all potential employees like being paid in illquid um stock options, right? um being able to play your employees instead in RSUs, restricted stock units and like public equity that they can, you know, sell whenever they like. That's makes a big difference for a certain class of employee, right? Employees that have families or, you know, different situations and aren't really willing to take the startup risk.
(14:56) Like being a public company allows you to just hire and retain a certain class of employee that you just can't get otherwise. And so I think those three are like those are real material benefits that help offset, you know, the downside of being a public company. You have to spend a couple million dollars in compliance costs and audit costs like every year just to just to be public, right? And so there has to be some benefit for that additional cost.
(15:20) And I think for certain class of companies, those benefits very materially outweigh those costs. >> Yeah. And I mean, and all these benefits can only be gained too if you have something legitimate to bring public. cuz I think that's again going back to the retrospective and really leaning into the timing of this and why it's right now is I mean for the when we met 5 years ago outside of industrial scale miners how many companies were in the right spot from a product market fit revenue cash flow IBIDA perspective for this to even be viable
(16:01) outside of maybe Coinbase and a few others and why >> that's what I think is that's exactly what I think is so interesting about thinking about this time and in terms of the order of operations that we talked about because the way we talked about it is like look if you wanted to you know as a Bitcoin community like march forward and grow you know Bitcoin's um total market cap as like a measurement of world domination of reser reserve asset right? Like first you'd want to start with the energy industry. Um and
(16:37) you'd want to make sure that energy executives, energy companies were like aligned and bought in on Bitcoin, understood the value prop, and were hodlers and incentivized to, you know, protect 21 million. Um and then kind of the next area you want to verge into is financial industry is you know tradi um and you'd want to make sure that you know companies were holding Bitcoin on their balance sheet.
(17:04) you want to make sure that the finance years were, you know, um comfortable with Bitcoin as collateral. Uh and we're starting to adopt Bitcoin as a as a collateral for, you know, people to borrow against. And um and and I think we're right smack dab in the middle of that right now. Um and I think there's a lot more work to be done there.
(17:31) But it's interesting that like this current cohort of, you know, Bitcoin companies, crypto companies, if you'll excuse the term that are going public, right, are companies like Bitcoin, you know, companies like Circle. Um, but they're this kind of next wave after Coinbase are the kind of fintexs built on Bitcoin and crypto rails.
(17:56) And that makes sense, right? That's kind of the next wave of companies that got started in Bitcoin, that started making a lot of money in Bitcoin and are at the scale where they can be public and um bear the the cost of being a public company, but also tap the upside [clears throat] um of everything, all the new things you can do as a public company.
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(20:26) 44 billion in 8 days. Um for the financial services particularly those building around the use case of Bitcoin as collateral um or Bitcoin as an asset you can put in an IRA or whatever it may be. How important do you think access to the public markets is for them to flourish? >> I think a very like you know simple left curve model of it which you know which we also talked about 5 years ago.
(20:56) I think the bell curve meme was like new [laughter] and so we talked about that a lot. Uh but it still remains I think the best model of the world and I try and be as as left curve as possible as much as possible. Um think about like a Bitcoin lending business that's lending against you know dollars against BTC and that I think is you know although of course we would all love to be um just 100% Bitcoin only spending Bitcoin through you know all the square terminals that support lightning now which is a fantastic
(21:29) development. Um there just necessarily is a need for dollars. Um if you're operating in in the modern world um and I think if you're lending against Bitcoin, your main challenge right now is that interest rates are high, right? Like I think you know unless you're borrowing I think like CleanSpark borrowed um $100 million against Bitcoin from Twime and they paid like 7 to 8% 7.
(22:02) 75% or something like that which is you know that's probably the best rate against Bitcoin that I've seen because they borrowed $100 million. If you're retail and you're borrowing 50 grand, 100 grand, something like that, I mean, you're paying like 10, 12%. Something, that's steep, right? So, you think about these businesses that are lending, their cost of capital, what they're doing is they're borrowing dollars from somebody else and then they're lending those dollars back out to the end user.
(22:34) So, their kind of ability to make money is 100% dependent on how can they lower that cost of capital, how can they lower that cost to borrow. Um, and you know, that's something that's really only unlocked by accessing bigger pools of capital. Um, and the way to access those bigger pools of capital is to, you know, do what Micro Strategy is doing in terms of getting credit ratings.
(22:58) um which necessarily involves you know to get the best possible credit rating being a public company um you know selling um debt for lower and lower costs uh and just kind of through growth through selling securities through working with the credit agencies you know getting that cost to borrow down closer to you know whatever a bank has to pay um which [clears throat] is closer to four or 5%.
(23:26) So there's like a big delta between this current cost of capital for these private Bitcoin lenders and what kind of like the terminal cost of capital should be. And I think that's only unlocked by being a private company >> or being a public company, sorry. And I think it's very important to dive into the details of this too because I think a lot of people will look at the rates attached to the Bitcoin collateralized lending desks that are currently private um across the industry and they see 10 12 14% depending on where you go and
(23:57) they say ah these guys are are ripping us off not understanding that >> the company itself would love to give you a lower cost of capital but they have liquidity providers of that desk that are demanding a higher cost and they simply take a little rip on top of that. There's a delta between the cost at which their lending provider gives them the cash and the cost to which ultimately you take the loan at and the company issuing the loan or your counterpart whether any of the companies offering collateralized loans just takes
(24:29) a little a little rip on top of that to your point to like make more money in this product you need to basically get more volume or >> more liquidity on that desk and so the you know, only way to attract that more and more liquidity is to get those rates down, the cost of capital down for the end user and then the the margins on top of that cost of capital will be similar, but you'll just have so much more volume that you're able to make more money.
(24:56) And I think that's >> an unfortunate reality of the current state of the Bitcoin lending market because a lot of people think the companies offering these services are ripping off the end customer, but it's they're really beholden to the risk takers on the other side who are offering private credit dollars. >> Exactly.
(25:17) And I think that's that was a really interesting thing that um you know following from Micro Strategy said yesterday was uh you know this is public information um when Micro Strategy got their credit rating right they got a B minus credit rating the ratings agency like didn't value their $59 billion worth of Bitcoin at all right like it didn't count for their creditworthiness despite the fact that like it's $59 billion Right.
(25:46) And that's like obviously a mistake and obviously an oversight. But one thing that is just, you know, again, if if what's really happening here is kind of Bitcoin is is competing to store all the world's capital and just kind of needs to be convincing bigger and bigger institutions of its creditworthiness and its of its of its safety as a as a store of value.
(26:09) um is he talked about how, you know, next year um the big banks are going to start releasing custody products for Bitcoin, right? Morgan Stanley is going to not just offer IBIT, but is going to offer, you know, being able to to buy Bitcoin that they custody or BNY Melon or somebody custodies.
(26:28) And the next step beyond that is like just logical for them to be able to count your Bitcoin as collateral in a mortgage or something like that. But before these big banks can do that, they're going to have to go to the credit agencies and say, "Hey, um, I want to lend against my customers Bitcoin. I want to give them some dollars for it.
(26:52) Like, how should I score this? Um, can I lend it at 40% loan value? Can I lend it at 70? Like, what's the right number? You got to give me some of guidance." So, you know, although of course we all got into this for um to disrupt the banks or to allow people to be their own banks, ironically, just due to the power of Bitcoin and the incentivization that it um takes hold in all institutions that touch it where all of a sudden like they start acting in its best interest.
(27:28) the big banks are ironically going to be, you know, kind of acting on our behalf um to help Bitcoin on its next leg in its journey, right? And I think that's one of the things that, you know, to me running the spa, I see that and I say, "Oh man, Bitcoin native lenders, Bitcoin companies that we all know and love, you have like a year to start getting big or else these banks are going to come in and they're it's going to be really tough to compete with Morgan Stanley rates if they're accustomed to Bitcoin, right? it's going to be really
(28:04) tough to compete um with, you know, the entities that have the lowest cost of capital in the world unless you really start raising money and getting big now. And so I think there's a sense of urgency um for these companies if they if they want to maintain their business and they don't just want to sell out to the banks to like take the leap now.
(28:28) >> Yeah. How do we uh how do we square this round? Is Bitcoin being co-opted? Is this good? Is this what we want? It's inevitable. >> That's a great question. Bitcoin is for enemies, right? Um, Bitcoin is for enemies. And I think the co-option question, my Bitcoin is not being co-opted because I hold my own keys and I run my own node, right? Um, and I think as long as a plurality of Bitcoiners have that attitude and maintain their soul sovereignty and as long as protocol development is focused on making that barrier to entry as low as possible,
(29:18) then I doesn't really matter what the big institutions do with their Bitcoin. Like Micro Strategy has done all of this work and bought all this Bitcoin. They only own 3% of the network, right? >> And they've been at it for 5 years and they have to >> for 5 years and like who is going to come out and buy 650,000 Bitcoin to eclipse them, right? Um, like I totally understand and get that the focus on Drafi adoption appears antithetical to Bitcoin principles, but again, it's like if the goal is to become the global
(30:01) reserve asset and the global reserve currency, like at some point these big boys are going to have to buy it, right? And if you really believe in what Bitcoin's about and you really believe in, you know, Bitcoin's principles and you focus on the fundamentals of like what is actually decentralization mean? One big entity buying 100,000 Bitcoin does not affect Bitcoin's decentralization at all.
(30:30) Bitcoin's decentralization is up to all of us to hold our own keys and run our own nodes, right? >> No. And I think as long as you know the um protocol development focus isn't focused on um how do we make it easier for Micro Strategy to buy more Bitcoin which is you know I don't think any of that has come up in the Knots versus Core debate. [laughter] >> Let's touch on >> I think we're I think we're fine.
(31:01) I think we're okay. I really do. >> No, I do too. And um it's been tough this year because you you've seen obviously the digital asset token companies spaxs hitting the market this year really forced people to be like what's going on here? Um, and if you're not pragmatic and nuanced, it's easy to, and I'm not trying to speak from a high horse or come off as pompous, but I I I've thought long and hard about this and I've had to grapple with it myself and it's like, yeah, to your point, like what did you expect to happen to see
(31:40) that for Wall Street and all these institutions to see us uh plebs riding the uh the monetization wave and not not participate eventually like part of the process. And to your point, it's incumbent upon us to make sure that we're holding on our own keys, running our own nodes, supporting payments infrastructure to make Bitcoin everyday money, which you dedicated the last 5 years of your life to.
(32:05) Um, or many more or six or seven and you still are. Um, and it's just like, yeah, we're we're playing in this ocean with with bigger fish now, and we just got to hold hold our own. And that's like at 10:31 like we have the uh the Bitcoin development co spa out there right now and we're looking to acquire just an operating bit business that wants to bitcoinize, right? And like that's the like >> like if Wall Street's getting in, we want quote unquote mainstream to get in as well.
(32:41) So, you want businesses that have nothing to do with Bitcoin, but would benefit from incorporating Bitcoin, whether that's if they're an energy company into their systems, if they're a large retailer into their payment systems, and then obviously any company, no matter what industry in you're in. We think it's incredibly advantageous to use Bitcoin as a treasury asset.
(33:02) And uh this makes people uncomfortable, but this is what growing up is like. Look at us. Five years ago, I had a beard for co lockdowns. I was drinking whiskey like a sailor. And now I got a nice nice sweater on enjoying a nice pint of Guinness on a Friday afternoon. Uh you got >> Were you >> Were you a dad yet 5 years ago? >> I was. I was. Yeah.
(33:23) >> You were. Okay. So that's I mean that's been a big change. I guess that wasn't a change for you. That's obviously been a big change for me, right? That changes your whole perspective on >> what's important and where priorities lie. And yeah, I have, you know, a little one now and another one on the way.
(33:38) And >> yeah. >> Yeah. Growing up, it happens. >> I was a father of one at the time and uh two more have been added since the last time we talked on air. >> Yeah. >> And uh that that I mean the the more children you add, the uh the more chaotic in a good way it gets in a good way. It's all it's all wonderful for sure.
(34:00) Um, but [clears throat] it is I think going back to like what we're doing here is we're helping Bitcoin progress and like soak up more and more of the world's capital as it becomes the global reserve asset. You know, one thing that I think a lot of us just didn't understand was um you know, what that actually requires in order like like you know, the cipher punk looks at kind of institutional mandates and you know, investment agreements and all this stuff is like that's just nerd lawyer talk, right? Like you should just buy the Bitcoin. But like you know these
(34:39) insurance these pension plans these insurance companies that you know legally they they have to hold 40% of their money in bonds um or in like public securities right like that's the brilliance of what Micro Strategy is doing is they're kind of meeting these investors where they are who want Bitcoin exposure um and they're saying okay well here we've created this little funnel where you buy our preferred because you can we'll give you what you want which is this cash flow so you can you know pay off your pensioners and all that
(35:17) different stuff and we'll go and buy Bitcoin with the proceeds um because you can't right and I think that's that's kind of the state that we're at where um needing to do these kind of clever financial engineering in order to allow all of these big pools of capital to get the Bitcoin exposure that they desperately want and need.
(35:44) Um is just the work that's required for this next step. And I think again what we were talking about before we got on the call or before we started recording is um the thing that we didn't understand 5 years ago was that rather than Bitcoin like out competing with all the world's capital and being adversarial against you know all the nation states of the world.
(36:14) What we found out is like, oh no, the US dollar system desperately needs Bitcoin. Like it desperately needs more highquality collateral to support the system, right? All of these different fiat institutions are struggling just as much as, you know, individuals in the face of inflation and rampant money printing, right? and they need a lifeboat um just like we do, but they're not able to just buy Bitcoin with their dollars, right? They need different sort of structures and and products to be able to do so.
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(37:43) Use the code TFTC for 25% off. When I say account, you just get a token. It's a string of token. It's not connected to your identity at all. Token sign up. Pay with Bitcoin completely private. Turn on obscura. Surf the web privately. Obscura.net. Use the code TFTC for 25% off. Supreaks. 2025 left many wondering, was this an underwhelming year for Bitcoin or the quiet setup for an extended bull run? On December 17th at 1 p.m.
(38:10) Central joined Preston Pish, Connor Brown, and Unchained for Bitcoin in 2025, a year in review. A concise breakdown of the macro trends and policy developments that truly shaped the year. You'll hear what mattered most, where the market stands now, and what these inflection points reveal about Bitcoin's long-term direction.
(38:24) If you want clarity on where Bitcoin has been and where it's headed next, don't miss this event. So, go register now at unchained.com/TFTC. That's unchained.com/tc. It's almost like it's too good to be true. Like, wait a second, what's happening? And that's and I would attribute this reality to the very understandable apprehension like are we being co-opted right now? It's like maybe maybe some maybe some people are maybe some institutions are >> but I think the the stronger force is this external recognition of oh crap um we've got a big problem here and Bitcoin
(39:00) is a tool that can help us begin to solve that problem and I think maybe taking a slightly different direction too. bring it back to the Bitcoin industry specifically and the companies within it um and why they should go public now get access to public markets and then putting it in the broader concept context of spaxs which particularly post 2020 had a uh negative connotation associated with them.
(39:33) a lot of >> yep >> spack offerings were simply in retrospect proved to be u sort of exit liquidity mechanisms but I think you and I we've talked about this at length over the last >> um last few months I think the timing for these Bitcoin companies again if you're mature you're you've got revenue product market fit your cash flow and you got material IBIDA and if you basically take what we've been discussing today particularly with the institutional fora into Bitcoin if that's happening in earnest like the upside potential growth potential for
(40:11) these companies is is massive as well as we're looking at a $1.8 8 trillion market cap right now. There's >> Vanguard open up the floodgates, Bank of America 1 to 4%, >> Square rolling out to 4 million merchants. Like the need for individual consumers, enterprise consumers to get access to Bitcoin infrastructure is only going to increase from here.
(40:37) >> I couldn't agree more. And I think like obviously um I think what's what's important too is you know one of the things that you know my chairman of my board um Parker White who's you know an Austin Bitcoin guy um worked at Kraken for a number of years um and is now you know the CIO of a of a public DAT um you know one of the things that he kind of convinced me um on when he was pitching me on the opportunity was he was like this merging of public markets and like private crypto bitcoin companies is happening now. It's a one-way merge. Um,
(41:17) and these tradey people have no idea what they're doing, right? Like they have no idea what value looks like. And so if people who if nobody who understands where like real value is in this community, in this ecosystem don't stand up, all this trashy money is going to go into a million avalanche stats, right? Like it's just going to all get destroyed and all of these capital markets people are going to feel like they got scammed just like what's happened in every single crypto boom and bust cycle we've seen so far, right? And
(41:52) so I think there's, you know, uh there's a responsibility to try and direct some of this capital into some of the great companies that we know exist, right? And that we that we know around and and put it in the hands of um you know, quality, responsible entrepreneurs um that can really put this capital to work and you know, not only build great companies, but also be great spokespeople for Bitcoin.
(42:20) Like, are we happy that, you know, obviously Sailor does a great job, but are we happy that the other people that get to talk about crypto all the time is [ __ ] Tom Lee? [laughter] >> Hey, we're going to do in January of next year. >> Like, is that the representative or do we want, you know, I don't want to put any people on the spot, but just like people that come top of mind like wouldn't we love to have Alex Leechman talking about Bitcoin on CNBC and giving that perspective? Um, right.
(42:46) Wouldn't we love to have Elizabeth Stark? Wouldn't we love to have, you know, Joe and Drew from Unchained? Uh, you know, you go down the list, right? Um, there's there's all of these wonderful representatives of the Bitcoin community that have focused on, you know, their customers and their products and their companies, but I do think at some point there's a duty um to educate the rest of the world um and traditional financial markets on like what real value looks like.
(43:16) And instead of just hoping and [clears throat] being disappointed when the masses fall for Shquin scams over and over and over again. [clears throat] >> What about the Zcash debt? That's a big one. >> I am just unbelievable, right? But I mean, we've we've [snorts] been in this ecosystem long enough that like I I'm not mad, I'm just disappointed.
(43:36) >> Yeah. Well, I mean, this brings up a good point. something like obviously I think you'd be an incredible representative but it is it is frustrating like [ __ ] excuse my language almost 17 years in cuz I remember when I first got in like 2013 2014 you had was it Brian Kelly on CNBC Tom Lee was around back then they let Trace Mayer on obviously he's had his downfall and like still the quality of people actually like highlighting where the value is and listen credit where artist dude like Sailor and other people now like the last 6
(44:12) months it's been all this D that thing where it's like all right don't wor it's going up like buy the stock um I think strategyy's far and away like separated and demar demarcated from um a lot of the DAT focused uh companies that have hit the market this year but like again I think really bringing the public the message of like hey this is superior savings and payments technology ology that is objectively better when you actually touch, see, and feel it.
(44:41) I mean, you saw this and you see this at Lightning Labs like the ability I was just talking about. I was on Nostra. We were live streaming was live streaming Walker uh 3 hours ago and people were sending Bitcoin to his wallet peerto-peer as we [clears throat] were live streaming. It's like that is a Twitch competitor that nobody realizes yet, but it is superior.
(45:02) Like you don't have to wait >> once a week, once a month, whatever it may be. like you were getting paid immediately. You have the proliferation of other second layer solutions like arc spark cashew mints or ecash mints uh liquid these are all becoming interoperable. Obviously um the development at the protocol layer with miniscripts and what you can do to secure your collateral is getting extremely robust and it is true sci-fi tech that is better and we need [snorts] in my opinion and I think in your humble opinion as well uh more people telling
(45:38) this side of the story which I think is being very underappreciated obviously we have luckily I mean I think outside of Jack Mers I can't think of anybody who's going on CNBC and telling a story like this. >> Exactly. And I mean, I think there's a Bitcoin has always had, you know, a little bit of a not a marketing problem, but like a >> it's had a marketing problem.
(46:07) You can say it. >> Yeah. It's had a marketing problem, right? And and I think Bitcoiners are not predisposed to the salesmanship and the marketing that needs to happen, but it just it's important, right? Uh it just is. Um and I do think that, you know, now that we're at this at this point and at this level of scale, you know, I think there's a real responsibility.
(46:32) You know, there's kind of like there's kind of two choices that you have um when you've been at Bitcoin for a long time. one, which is, you know, respectable, is to ride off into the sunset with your bitcoins um and just go enjoy your life, right? And um be financially secure and kind of do whatever you want.
(46:53) The other one is the other choice is to give back um to the community that's given you so much um and to, you know, incur a little bit of self-sacrifice to help get other people into the lifeboat, right? And I think that that's kind of a little bit where we're at where [clears throat] um you know, as we've heard, this year has seen a ton of OGs selling, right? We're over 100K.
(47:17) If you bought Bitcoin at 10 bucks, 100 bucks, something like that, like you know, congratulations. That's fantastic. You retired your bloodline. That's awesome. Um but I would challenge those people that like, you know, there's a there's more going on here. We're not done. 100k is $1.8 trillion is not the terminal end of Bitcoin, right? Like we got another 100x to go to really fulfill the mission and this next leg of the journey is just necessarily takes a little bit more than just buying and holding, right? Um there's more convincing to do. there's
(47:56) more convincing of, you know, entities that aren't just retail people looking to make money, right? This is like serious institutions that need to be convinced of volatility, of safety, of um, you know, that that that the custody of the Bitcoin is with reputable entities, etc., etc.
(48:18) Like there's more work to be done [clears throat] on this next leg of the journey. Um, and I think we need all hands on deck. Um, and you know, I think that's kind of the next thing that I'm really interested and really passionate about doing. And you know, I can um I think I have a unique skill set to be able to do that.
(48:37) And so that's why I'm focused on on this back and um on working with, you know, the best Bitcoin founders to take this, you know, next leap of the journey with me. What uh you're so you're going to find a founder with an operating company spinning out cash flows set up for growth. But before you find that that founder, it's going to be you.
(49:01) You're going to be on CNBC. We've heard uh we've heard the pitches from Sailor and everybody. It's digital capital. It's the best asset on Earth. What would your unique pitch be? Why we should lean in to Bitcoin? Like why Bitcoin? Why now? Is it a store value hedge? Like how how would you paint the full picture? Because I think you are particularly suited to to do a good job of it.
(49:26) One thing a a term that's been rattling around in my head for the last several months um has been like look I'm outside of Bitcoin if you remember like my background I'm an engineer right like I started my career at Intel which was like the >> talked about in the first episode >> we talked a lot about it in the first episode it's like it was the I think you know arguably the preeminent American manufacturing um you know for like our entire lives, right? You had kind of you think about the you know GE, Boeing, Intel, right?
(50:04) Intel does massive massive investments in manufacturing in in the US. And so one thing that I'm like extremely interested in and have been following very closely is all of the efforts to kind of reshore manufacturing in the US and like bring back um you know those postcoid bring back supply chains uh and things like that.
(50:28) And so this is a long-winded way of saying that like in order to do that work and another thing we talked about 5 years ago was that like Bitcoin is just as much a hardware evolution as it is a software one right but in order to do that work we need to without inflating everybody away. We need to recolateralize the financial system, right? Like the financial system is dramatically undercolateralized and without recolateralizing this financial system, we will not be able to successfully make the capital expenditures we need to
(51:03) make to bring back manufacturing and like ensure American national security, right? And I think if you adopt that frame, what asset can we use to recolateralize the financial system, right? Like it's not going to be treasuries. Um, gold's been doing great obviously, but like gold kind of had its time as collateral and we're not going back to it.
(51:30) Really, the only option that you have is Bitcoin, right? And imagine if adopting Bitcoin as a as a collateral asset to you know lend against to to recolateralize this dollar system as Bitcoin goes from 1.8 8 trillion to hundred trillion right like that 50x in growth could provide you know I don't depending on what multiple like another 100x of capital expenditure of of dollars issued in order to you know provide new productive capacities in AI and robotics in space travel and all the things that we want to invest in but like you need that underlying collateral in in order
(52:14) to do that lending to productive entrepreneurs, you just you have to have it. And so I think that's that's the thing that I've been really interested in is like thinking about Bitcoin as the tool that allows us to recolateralize the financial system and invest in all of these new productive economies that we're so excited about.
(52:36) >> Yeah. Another way to say is we're uh we're for the Bitcoinization of finance. It's not the financialization of Bitcoin, right? It's >> a thousand%. I mean that's and so that's you know Elizabeth Stark is is you know my my former CEO boss at CEO at Lightning Labs is phenomenal um at kind of all things branding and terms of phrase and so she was about you know bitcoinizing the dollar is is that what that's what we were doing with with tapered assets and I think similarly to your point Bitcoinizing the financial
(53:04) system um building it allowing it to you know grow on a firm solid solid foundation based on 21 million, based on lack of rehypothecation, based on, you know, audit auditing and verifiability. That's a better way to to organize as we move into the future. >> Yeah. I'm not sure if you caught it, but the um the national security strategy memo that went out this morning about like the uh Trump administration, >> it's pretty profound.
(53:41) I've only read a few pages. I recorded with um somebody right before this about it. Uh if you're listening to this episode and listen the pre previous episode, you heard it with Susan. But just this whole idea like leading into reshoring, we're getting away from the global wars. We're going to focus on the western hemisphere.
(54:00) I think that's another great frame for Bitcoin is like, hey, not only does the system need to be recolateralized, but a lot of the banking infrastructure um and securities infrastructure, if we're being honest with ourselves, is running on tech that was built in the 70s and it's not >> fine-tuned. We have this incredible reindustrialization or re-engineering of the financial system potential.
(54:25) We can build a new banking stack, a more sovereign banking stack. a obviously a modern banking stack on this protocol as well. So there's like a number of different narratives. There's reclateralization, >> the supports of the energy infrastructure build out and like one that I don't think is getting enough tick yet.
(54:46) Maybe it's because the timing is not right. of operations type thing is like literally I mean I think Ethereum probably for being objective does a better job of marketing it this way but like you could rebuild the financial system on top of it >> and it is I think uh >> I think that like seeing that in the minds of not only the administration but the American people of like hey there's an incredible opportunity here to do something brand new it's going to create a ton of jobs kind of opportunity and when it's all said and done the monitor
(55:16) arian financial system is going to look completely different in a better way. >> One thing that's really interesting about that and and I agree with you is we talked a lot about this with you know tapered assets was at Lightning Labs the protocol was predominantly focused on stable coins and bringing stable coins to lightning.
(55:34) Um, but there was this whole other aspect to it of, you know, doing tokenized assets. And I always kind of thought that that was like a little silly and like, you know, why would you, you know, mint a token, a tokenized asset instead of, you know, just issuing equity on a stock exchange? But one thing that was really interesting as we talked with um you know other other folks is you know if you grow up and you create a company in Mexico in Guatemala in Colombia like there isn't a capital market [laughter] like it it doesn't exist right like like
(56:12) you you can't go and raise money or do the things that you can do as a US company in these other places. Um, and one thing I've always thought about Bitcoin, um, is like what what the revolution really is, is it's extending like the best property rights the world has ever seen to anybody with an internet connection, right? Like if you want to have Texas level property rights, like you got to be in Texas, right? um if you're born in China or you know I don't know name a a worse country um in terms of property rights like you
(56:45) just you can't get that level of of assurances over your property unless you move to the jurisdiction of Texas with the exception of holding your own Bitcoin private keys and I think extending that same level of property rights to people that want to issue equity that want to raise debt that you know want to do these different capital markets activities piece um via the Bitcoin blockchain is an unqualified good, right? And I think to your point like I think that will unlock a tremendous amount of prosperity um by extending these property rights to
(57:19) because you know as as we know well from some of the best entrepreneurs I worked with at Lightning Labs were based in Nairobi, right? We're based in Medí. Um we're based in um you know Chiang Mao um in Vietnam, right? Um and you know thankfully you know they were able to get into the Bitcoin community, figure out how to you know create a corporation and all that sort of stuff.
(57:46) But you know to take the next step to really operate at you know billion dollar company scale like you kind of need US capital markets access. Um and and lowering that barrier to entry to just anybody with an internet connection I think is is an unqualified good. >> Yeah. It's very optimistic too. It's very uh motivational if you will.
(58:06) There's a lot of black pills out there. Can't do it. >> You can't black pill. >> It's all black pill. >> It's all open source, all accessible. >> Not all of it, but uh the protocols are mainly open source and you can you can build. [clears throat] But I mean with that being said too, I mean I think it would be remiss of me not to to really lean into Lightning Network, how it's developed over the last 5 years.
(58:31) And again, mentioned it earlier, but it's something that's made me incredibly bullish. I think it's incredibly I mean it's not even on the radar of the broader public but it's incredibly underappreciated within the Bitcoin space which should be paying attention to it but like the emergence of the lightning network not only as this very decentralized distributed payments protocol on top of Bitcoin but this connective tissue between these budding uh second layer protocols that many would have assumed would compete with lightning but we're finding out
(59:01) they're actually symbiotic. many years ago um a guy Zachie Manion who was like one of the main engineers and architects of the Cosmos ecosystem was >> um I remember when I was at Multicoin him telling me that like look the master architecture for like a blockchainbased payments network and again this is a guy who worked on Cosmos like he was not interested in lightning any of that sort of stuff is he was like the master architecture is you have a single settlement blockchain um and then on the sides of that single
(59:38) settlement blockchain you have these you know um trustless two-way pegged liquidity pools you know side chains rollups etc um and then all of those liquidity pools are connected with a payment channel network right so I've kind of always had that vision in my head of like how things were going to develop and it's just interesting that the Bitcoin community chose to have the settlement network and then build the payments channel network next the interoperability layer and then we had all of these custodial venues like Gold
(1:00:13) Wall Satoshi the exchanges those were kind of our liquidity pools which you know obviously be better if those were non-custodial um but now we have those this heterogeneous mix of liquidity pools whether it's you know Alpen Labs style rollups botanics style spider chains you know, Spark with state chains, um, uh, Arc, of course, um, the Cashew Emmens, all of which interoperate via Lightning.
(1:00:42) And the really funny thing about that choice versus the choice that the crypto people made is thanks to having a native interoperability solution, all of these Bitcoin, you know, side systems just kind of work together naturally, right? Like there's a there's a native interoperability language. Like going between roll-ups and Ethereum is a [ __ ] nightmare, right? Like they still haven't solved that and they have no idea how they're going to solve it.
(1:01:06) >> Well, let's dive into that. I mean, again, going to make an order of operations, which has been core theme of our conversations throughout the last 10 years or seven years, however long we've known each other. um is order of operations by like so like Ethereum and other blockchains went for like all right we're going to build these second layers and they're going to compete with each other but some of them have properties that others want and if you're in this one you want to use that one like how do we connect them the
(1:01:32) bridge has become the popular nomenclature for how you connect them but then once you build these second layers is like how do you agree on a on a standard language for them to communicate and then you get into dick measuring contest and coordination issues where it's like, oh, you built the copy language first, built these individual second layers after that.
(1:01:55) >> Yeah. >> And I don't think there was any intention behind that, too, to your point. I think it just happened almost >> Yeah. >> You know, it's it's I like I wasn't around at the beginnings of the lightning network. I don't think like I do know that, you know, in the very very early days.
(1:02:15) Um, I think because Litecoin had SegWit before Bitcoin did, I think actually like L like I know L & D had support for Litecoin for a number of years. It was only Sunset like in the last couple years, but there was like some early ideas that it could be used for kind of crosschain swaps, but never like, you know, it took way too long to figure out that liquid and lightning were a good combination, >> right? Shout out to uh Francis and the Bull Bitcoin team for really and the awkward.
(1:02:45) >> Yeah, I mean like that works great and like you look at what what Breeze has done with the Breeze SDK, you know, building on on liquid, like they built like a really slick nice solution u what Boltz did with with submarine swaps between Liquid and Lightning like that, you know, a great solution that, you know, really provided a good user experience.
(1:03:07) It's like that was something that you know I think I was I was waiting a long time for and then when it once people finally started building I was like oh of course and now seeing it work with you know that was another thing that like in my my years at Lighting Labs um you know I pitched a lot of things and a lot of things that were like not very wellreceived the most wellreceived pitch I ever gave um was to these Bitcoin layer twos about integr ating with lightning and the pitch was very simple.
(1:03:40) It was look you as new side system you're going to get spun up and you have two options. You can either go and do business development and get a direct integration with every single one of Binance, Coinbase, Kraken, Wallace, Satoshi, you know, every entity on the Lightning Network, which now is in the hundreds, thousands, you know, it's a lot of people.
(1:04:01) Um, a lot of businesses, all of whom who have other road maps and like trust me as a guy that did integrations with Lightning, like it is not easy. Um, you can either do all of those integrations directly or you can integrate with one submarine swap provider that will bridge your side system to lightning and you get instant deposits and withdrawals from all of those customers for free, right? And every single Bitcoin layer 2 was like, "Oh, I want option number two, please.
(1:04:26) " Like, "I want to integrate with the submarine swap provider and get all the whole lightning network for free." Right? It's like it's the it's the easiest pitch in the world. >> Yeah. And then like the e-cash mints, it's like you just natively build in a lightning gateway and out of the mint. And it makes a ton of sense.
(1:04:46) And again, I think it's extremely underappreciated right now. Like I think Baltic Honeybadger was an incredible example. Like they just ninja launched ARC from Arc Labs their their implementation on the back end on the payment processors at the conference and it was so cool. Unfortunately, one of two Baltic Honeybadger conferences I've ever missed in my life, but like watching from afar, there was people paying from ecash mments to ARC.
(1:05:13) So, it was like ecash to lightning to ARC happened automatically like completely interoperable. if you an end user with your particular preferences. That's like the magic of it that people really have not appreciated yet that um unless you know ball unless you know ball you don't really appreciate it. Uh and and again that's when you think of the potential to rearchitect the financial system from the ground up, the banking system from the ground up.
(1:05:44) And tying this into the whole conversation of people being worried that Wall Street is co-opting Bitcoin. It's like no, this technology is superior. User experience is superior. >> The ability to build on it is superior because they're open interoperable protocols. like it's the shelling point is going to be through these systems whether you realize it or not.
(1:06:06) And tying the whole conversation of companies whether they're in the Bitcoin space or outside the Bitcoin space going public to really accelerate this or to accelerate the Bitcoin integration into their businesses like and comparing it to Spaxs of 2020 which people really anchor to. It's like they don't compare the upside potential here is is massive.
(1:06:29) It's massive. It's massive. And I think like like again the the stat that I like I couldn't believe um when Miles and and Square first started talking about it but is such a staggering stat is like no the the 28% of US merchants that can now accept payments over lightning. >> We we we met right after we like we went we both went to like uh with the cost miles immediately after he got off stage.
(1:06:56) Like I remember >> crap and macaral being like, "Oh my god, this is crazy." >> Yeah. I mean the yield that that was nuts. I again that was a number that I'd been waiting for for like 10 years. A thing that we talked about 5 years ago was the lightning pool launch and about like earning yield as a routing node operator and how like eventually someday you know real businesses are going to be making real money um running lightning nodes and now yeah I mean a non-custodial yield on your Bitcoin the risk-free rate you know Nick body was
(1:07:24) talking about that years before we got onto it like it's happening it's happening for a public company for company >> yeah like a big one um yeah I mean I I [clears throat and snorts] I think that's Lightning has grown up so much um over the last 5 years and has matured so much and again it's you know >> there's so much hate around it though.
(1:07:47) Why do people hate it? I think >> I I honestly think people hate it because um uh the mental model of what it was what they thought it was supposed to do is not what it does. Right? If you think about what what lightning does from a fundamental basis is it removes the um transactions per second limit from the Bitcoin blockchain.
(1:08:14) Right? What it did was it scaled the transactional capacity of Bitcoin but it did not scale the number of people that can hold private keys. So like what and this is you know again the tiein to um what we were talking about with these new site systems and interoperability is like what all those systems are really good at is allowing more people to hold their own private keys and transact efficiently.
(1:08:41) What lightning is not good at is allowing people to hold their own private keys because you have to manage your own channel right and you have to hold manage your own hot wallet. So I think you know the self-custodial lightning you know UX was was never really able to get up to par of you know a MetaMask extension or Phantom wallet or something like that.
(1:09:04) But that's not really what Lightning is for, right? We kind of always needed these additional systems to plug in at the end of Lightning to solve that problem because what Lightning is phenomenal at is allowing for instant global Bitcoin transactions that settle, you know, for ten of a penny. Um, it's just it's not good at the supporting self-custody.
(1:09:29) That's not that's not really what it's for. >> Yeah, >> I think people people get upset about that. But hopefully this next generation of lightning wallets that are built on ARC, that are built on Spark, that are, you know, built on these new um uh I call them last mile solutions in a blog post I wrote a year and a half ago um that are based on these new last mile solutions will kind of change that opinion.
(1:09:53) Um and [clears throat] you know, I think what Lightning is really good for is saving every 28% of US merchants from having to pay Visa taxes, right? Um, Mastercard taxes, credit card network taxes, right? >> Great framing. We should just call them Visa taxes, not interchange fees. Visa taxes. >> That's what they are. >> Yeah.
(1:10:14) Visa and NASCAR are the like most profitable. They have the highest operating profit of almost any company in the S&P 500. They make like 60% gross margins or something. It's outrageous. >> At incredible scale. Um, >> an incredible scale for like not really doing that much, right? They just pass messages between banks. >> Yeah. Well, disruption.
(1:10:32) >> I mean, we could why I like to nerd out about this stuff with you. The other thing, too, is like the Lightning Network, I would argue, is so good at what it does. Um, particularly from a privacy perspective, it's really hard unless you have companies like Block publicly reporting their numbers to actually know what's going on >> in within the network.
(1:10:59) And so people see that opacity, I guess, and say, "Ah, there's probably nothing going on." But I I can tell you for sure, I think literally via this podcast, I receive at least maybe not every minute of every day, but like every 5 minutes at the very least, I receive a lightning back on average every day. >> It just it just keeps growing.
(1:11:21) And I think, you know, there's so much of the comparison to is was always comparing Lightning to these other shitcoin systems, but like if you just look at Lightning's growth independently and not comparatively, it's fantastic. I mean like the growth of of volume, the growth of nodes, the growth of channels, the growth of companies, the growth of investment dollars into startups, like all of the everything is up and to the right very steadily at you know like 20 to 50% kagger or something like that.
(1:11:58) Like all all of those things all all of the metrics that we tracked were were were great. Um and especially like the most important one volume you know like [clears throat] I think we were I don't know exactly where the network will end this year but you know uh if you look back at like the old river reports or the arcane um reports where they did like the state of lightning you know it was like five 5 years ago lightning was doing like singledigit millions in volume annually right two years ago maybe lightning got
(1:12:30) to you know hundreds of millions if not billions Now we're already on the order of, you know, potentially $10 billion in annual volume, you know, if not more, right? That's phenomenal growth. [snorts] Um, and there's hundreds of, you know, I think Visa, Mastercard combined generally for like $20 trillion in total payments volume and about half of that is debit, which is the right comparison for for Lightning transactional volume, right? Like getting up to $10 trillion in total volume.
(1:13:02) Like the way I looked at that when talking to entrepreneurs and businesses, it's like look, there's a 100x here left, [clears throat] right? Or a,000x here. >> If it keeps growing at that rate, we'll get there quicker than anybody expects. >> Exactly. And like again, like you know, and and the way these network effects work is you just kind of like unlock greater and greater scale as each each entity comes on board.
(1:13:29) and Square bringing on, you know, almost a third of all US merchants to access is an enormous unlock for scale, right? And the fact that it works and it's [snorts] being operated by a really quality professional company um like Block means these people are going to have a good experience and all of a sudden like this stuff goes word of mouth.
(1:13:49) If you're as a brick and mortar retailer saving 3% because you switch to Lightning, >> you're not paying the tax anymore. not pay Visa taxes anymore. You're going to put a little note on your on your terminal that says, "Please, you know, discount if you pay with Bitcoin, right? This, you know, here's how you pay with Bitcoin via Cash App.
(1:14:09) " >> That education is just going to be word of mouth, which is um I remember in the in the early days of podcasting 2.0 with Adam Curry, Adam Curry being like, "You lightning people don't understand how big this is. Every podcaster is going to be showing lightning to his audience, to his or her audience.
(1:14:27) They're all going to be saying, "Here's how you set up a lightning wallet. Here's how you start streaming sats to me." It's true. >> Yep. And I mean, podcasting 2.0, I've talked about this a few times, but I think we were top five, one of the first podcast, >> one of the first five podcasts to put a lightning address in our RSS feed.
(1:14:46) Like, it is. And it's like it's not obviously it's not going to replace advertising revenue overnight, but like it is the the thing that makes me most optimistic is number one, it's been consistent up and to the right. It's not crazy parabolic growth, but slowly but surely more people are discovering Fountain and other podcasting 2.
(1:15:05) 0 apps, downloading them, listening, contributing. >> Um, and it's happening. The growth is there. It has not it never like went up and then died and never went back up again. It's been consistent up and to the right. Um, and the other thing, last thing, cuz I know we've uh got families. It's Friday afternoon here. The other the I think it's important to touch on for anybody who's trying to compare Lightning to other L2 protocols and looking at TVL specifically.
(1:15:33) I think that's another thing. They look at like channel capacity like, "Oh, look, it's up, it's down, it's not as much as what's it wrapped Bitcoin on this chain or whatever it may be." and completely misunderstand dynamics that that is actually an incredibly high signal that this thing is working cuz you can do more with less.
(1:15:49) And >> another factor that many people don't take into consideration when they're just opining on this as a pundit is the fact that the Bitcoin price goes up. So you don't need as much Bitcoin as these channel in these channels as before if you're denominating the purchases in US dollars and it takes less Bitcoin to complete that purchase.
(1:16:10) >> Absolutely right. And and you know, I don't pay nearly as much attention to the crypto people as I used to, but it was really funny a couple years ago um when the Uniswap founder all of a sudden started coming out and saying that TVL was a bad metric because actually what we should be optimizing for is like capital efficiency volume divided by like to TVL.
(1:16:36) >> Locked capital. Yeah. >> Yeah. Locked capital. And I was like, "Oh yeah, that's what lightning people have been saying this whole time." [laughter] Like, "Yes." Like, like we're supposed to be designing capital efficient systems here, not just having people stick their Bitcoin in hot wallets and put them at risk for vanity purposes.
(1:16:54) Like that was never that's always been dumb. Um and I think again like the fact that lightning can process the volumes it was processing with the um well actually uh the signal of block being able to earn 10%. That is the natural signal that shows that there's a capital shortage in the network finally, right? That means that there is more demand for payment capacity than there is actual capacity allocated.
(1:17:23) And that is the market signal that should incentivize more entities to add more capital to the lightning network to soak up that demand, right? And that's how it should work. Now, the tricky thing is like, you know, how do you actually measure that? Um it's kind of hard. You got to like be constantly monitoring the network.
(1:17:43) You got to look at the fee rates that are being charged. You got to look at like how often um certain nodes are opening and closing more channels, right? Like you got to look at I think most importantly how much volume is flowing through Lightning Labs's loop service which is you know a big sync in the network and and processes a lot of um uh a lot of submarine swap volume and without running the nodes yourself like that's kind of hard to find.
(1:18:09) It's it's doable to be able to sus out if you really know what you're doing, but it's kind of hard to find and and really importantly the entities that are doing well, they don't like to share their secrets on Lightning because they're making a lot of money and they don't want to invite new competition. >> Yeah.
(1:18:24) No, but like now there's people that are noticing this market and you have companies like Voltage, Ambos, Lightning Pool obviously like >> they're building the tools to make it easier than ever to do that and participate in that >> that yield. >> Yield is a dirty word in this industry, but this is this is true yield. You lock up your capital in a 202 hashtime lock contract that you have um control over and you offer a service of facilitating transaction um transactions on the lightning network and you're going to get paid for it.
(1:18:57) >> Yep. It's a useful service and becoming more and more useful every day. >> Yeah. Damn. But we're going to have to wait 5 years for the next one. I'm going to be I might have I might have like two more kids. My hair might be [laughter] my hair might be completely gone by then. Who knows? Who knows what's going to be happening in 5 years.
(1:19:14) I'll [clears throat] do my best to make sure it doesn't take that long this time. >> All right. What uh where should we send people? What what should they look out for? Last message. >> Um follow me on Twitter. Um Ryan the Gentry. That's kind of where everything is happening. Um I think it's going to be I'm very very very bullish on 2026.
(1:19:34) I'm always very very bullish on Bitcoin, but most importantly, I'm bullish on Bitcoiners. Um, and I'm really bullish on Bitcoiners taking kind of this asset and this market to the next level. Um, and all kind of growing up together, professionalizing and winning the war for the world's global reserve asset. >> In other words, we're going to win.
(1:19:58) Stay positive. >> We're going to win. We're going to win, freaks. >> Peace and love. Thank you for listening to this episode of TFTC. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family. We're looking to get the word out there.
(1:20:18) Also, wherever you're listening, whether that's YouTube, Apple, Spotify, make sure you like and subscribe to the show. And if you can leave a rating on the podcasting platforms, that goes a long way. Last but not least, if you want to get these episodes a day early and add free, make sure you download the Fountain podcasting app.
(1:20:37) You can go to fountain.fm to find that. $5 a month gets you every episode a day early ad free. Helps the show. Gives you incredible value. So, please consider subscribing via fountain as well. Thank you for your time and until next time.

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