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Wall Street veteran Scott warns Bitcoin’s scarcity could trigger a historic short squeeze and expose deep flaws in global finance.
Scott, a former Wall Street trader turned Bitcoiner, presents his “Big Long” thesis: a scenario in which Bitcoin’s fixed supply and self-custody features collide with a derivatives-driven financial system dependent on abundant, loanable assets, leading to an unprecedented short squeeze and systemic crisis. As institutional demand surges during the next financial shock, Bitcoin will be rapidly withdrawn from markets, starving the derivatives complex of supply and triggering a feedback loop of panic and illiquidity. Unlike past short squeezes, there’s no mechanism to create more Bitcoin, and the rise of ETFs, Bitbonds, and annuities only accelerates this scarcity. Scott argues that Wall Street’s misaligned incentives and the fiat system’s inflationary rot have made a collapse inevitable, and that Bitcoin, like the Florin after the Dark Ages, offers a painful but necessary path to a more honest, decentralized monetary future.
“Bitcoin is a bearer asset. And that’s what’s going to create the biggest problem.”
“The game has gone upstream from small players to the largest players in the world.”
“You can’t print more Bitcoin, and you can’t force people to sell it.”
“In the next financial crisis, hedge funds will run to Bitcoin and take delivery.”
“This is a global asset. Highly liquid. There’s no one to tap on the shoulder to stop it once it starts.”
“The dollar is the world’s largest religion. Bitcoin is the antidote.”
“All of the financialization of Bitcoin is paradoxically reducing its supply.”
“The four-year cycle is dead. We’re in a new era.”
“Every investor will take delivery in a panic. That’s the loop.”
“We're not going to print our way out this time.”
Scott’s “Big Long” thesis warns that Bitcoin’s fixed, bearer nature will inevitably clash with a derivatives system reliant on abundant supply, setting the stage for a catastrophic short squeeze when the next financial crisis hits. More than market analysis, his message is a blueprint for Bitcoin as the only viable exit from a collapsing fiat system riddled with misaligned incentives and opaque counterparty risk. The takeaway is urgent: self-custody isn’t optional, it’s essential for those who want to survive and thrive in the financial upheaval ahead.
0:00 - Intro
0:55 - Scott’s background & thesis setup
5:11 - Options boogeymen
9:33 - Evolution of derivatives
12:19 - Rehypothecation & fixed supply
19:53 - Bitkey & Opportunity Cost
21:32 - 2023 companies fleeing to bitcoin
23:54 - Institutional scaling
29:02 - Will Wall Street recognize risks
35:48 - Unchained
36:14- Is the Big Long good for bitcoin?
38:35 - Timing and inevitability
43:42 - Liquidity or confidence crisis
47:26 - Stablecoins
55:25 - Scale & aftermath of The Big Long
58:02 - Powell and Fed merge
1:00:19 - Are cycles over?
1:05:49 - Self-custody
(00:00) With Bitcoin, we have a different scenario. There's no CEO to turn to and say, "Hey, we need to print more Bitcoin." And we can just look to the major short squeezes of the last few decades. Ultimately, Bitcoin will be the offering from the modern banking system combined with self-custody will lead us into a crisis the likes of which we've never seen before.
(00:22) The modern system is a debt based fiat ponzy scheme constructed to be an inflationary system. And when there's a problem, uh, the only way out of it is to print more money. I foresee in the next financial crisis, hedge funds are going to run to Bitcoin and take deliver. I don't see how they stop it once it starts. It starts as a liquidity crisis but quickly becomes a confidence crisis. The Celsius blocking of today is is now Goldman Sachs.
(00:41) The game has now gone upstream of small players to the largest players in the world. Warren Buffett called derivatives financial weapons of mass destruction. Are we better off having the current system uh you know implode? All right, take two. I think we're good to go here. Scott, thank you for joining me. It's a pleasure to be here, Marty.
(01:01) Thanks for having me. Well, I'm really excited about this discussion because uh as I was telling you, I had drinks a couple of times over the last two weeks with Puncher down here at the Jersey Shore and he was singing your praises and uh trying to explain your thesis around the big long, which is what I would like to dive into during this discussion.
(01:29) But before we dive into your thesis around the Bitcoin big long, um, how about, uh, we jump into your background, introduce you to the audience. Yeah, sounds good. So, uh, not to date myself, I started on the, uh, Philadelphia Options Exchange in 1989 as a market maker and, uh, kind of did a 25- year sentence on Wall Street, uh, trading Philadelphia, then out to San Francisco on the P Coast, uh, eventually landing in Chicago at the CBOE.
(01:59) Um, uh, finally moved upstairs, uh, towards the internet bubble and was trading sort of an upstairs hedge fund, for lack of a better description. Uh and then um uh after 9/11 kind of took some time off came back to the business uh on the brokerage side which was very interesting and um eventually leading into uh the construction of Dash Financial.
(02:22) So I I built you know I saw the writing on the wall with the the extensive electrification for lack of a better term of the uh options markets everything going electronic and digital and uh began to develop algorithms really focused around transparency uh in the options market and uh founded a firm by the name of Dash Dash Financial which I think today is one of the largest options executions house on Wall Street.
(02:47) Um 2013 I was on a flight to Spain to visit uh our clients at Bank of Santander. And uh on that flight uh I happened to grab a bunch of computer magazines. And funny enough uh one of the center cutouts of the magazine was the white paper and I remember reading it the first time and then I think seven consecutive times on that flight.
(03:11) Uh landed in Spain and downloaded an app called Local Bitcoins. Um met a random Spaniard behind the hotel in Madrid. uh took 500 euro out of the uh ATM machine and uh I became a bitcoiner in October of 2013. Uh then uh two weeks later retired from Wall Street and uh set out on a journey to really explore uh distributed ledger technology, blockchain technologies at a deeper level. Uh started a firm by the name of Alter Software solutions.
(03:41) uh really focused on uh database security using distributed ledger technologies and uh you know built that firm into quite my size. Uh exited in 2019 and uh have been traveling the country with my wife uh for the last I don't know 5 years in a 45 ft RV. Um really set out to explore the country and touch grass and and get to meet the local people. It's been an amazing experience.
(04:05) Uh, but yeah, now we're uh kind of retiring uh formally from the RV life and uh um just living my best life. Marty, I'd love to hear that. We have very um I want to say similar. I wouldn't say similar cuz I think the uh the pedigree and the degree to which you dove into options and Wall Street is way uh way different than my experience.
(04:29) But around the same time, 2013, fall of 2013, is when I I graduated college earlier that year and got my first job in a managed futures fund in Chicago. Um, sitting sitting in an office with a bunch of XCbot traders and they were talking about reminiscing about the days on the floor before the servers took over. Uh, and that's when I got into Bitcoin in earnest, too.
(04:55) It was that fall winter getting my first bonus check from the firm. Uh, and it's just funny. I always find that that traders particularly with options and commodities experience out of Chicago get Bitcoin almost intuitively. Yeah, it's funny, right? I think there's a natural skepticism uh of the system that comes with having traded the markets.
(05:25) uh you know I like to think of options traders uh commodities traders as the uh grease that makes the engine turn right uh you know we're so hands-on every day and uh we see all the uh the shortcomings and the failings of the system uh so that naturally I think is an inclination to get involved in Bitcoin uh which is in a sort of an offramp from traditional finance let's dive into that what are some of the the boogeymen that you see up front and close and personal in all trading options and and commodities. Well, I see a lot of big boogeymen.
(05:54) I unfortunately um look the the the modern system as constructed um is a what I call a debt-based fiat ponzi scheme. Um the way the way the system is constructed uh puts uh the banks and and what I'll call the banking cartel above the people, right? uh you know having lived through uh 0809 and and being on the floor during that time period um you really got to see how uh the system moved to save itself uh at what I would call um at the expense of of the ordinary man. Right? A perfect example and I think Larry Leard touches on this beautifully in his book the big print
(06:39) was uh the banning of shortselling. Right? markets require a short selling in order to function, right? You have to have two-sided markets. Uh but all of a sudden, you know, with one day's notice, the rules changed and uh the system uh morphed into something uh that really was anything but free markets.
(07:02) Um the money printing um which at that time seemed large by today's uh by today's scale extremely small. Um, yeah. I mean, everything I witnessed and and even, you know, going back well before that, we can go back to the Russian uh default. I mean, yeah, Russian default, uh, long-term capital management, you know, like I I've lived through these things and I I've seen the system kind of lurch and and and struggle at times.
(07:30) Um, and that's the way the system is constructed, right? The system is constructed uh to be an inflationary system. And when there's a problem, uh the only way out of it is to print more money. And uh now we've uh sort of achieved escape velocity in the system uh with uh money printing that I would call out of control.
(07:48) And um there is really one one real off-ramp uh non nonentralized off-ramp and that's Bitcoin. And and you know, I would add I was a gold and silver bug long before Bitcoin came around, right? uh you know I was I was stacking gold and silver and staying out of markets uh as early as 2002 after the internet bubble and seeing what Wall Street did there with the just mass printing of paper companies adding.com to their name you know simply to try to gater valuation.
(08:20) So yeah, you know, you become so skeptical of of markets and of the uh of the status quo and then Bitcoin comes along and you see something that's peer-to-peer and and probably most important and least talked about is the bearer uh the bearer asset that is Bitcoin, right? The the ability to take self-custody.
(08:45) Um, I remember back in the the late 80s, uh, there was still bearer bonds floating around uh, Wall Street and you people would buy bearer municiples, right? And they'd have little coupons on the bottom of bottom of them and you could clip them. And then, interestingly enough, the government did away with bear bonds again in the name of uh, I guess terrorism or whatever whatever the the term duour is.
(09:11) uh but uh yeah the ability to take delivery of Bitcoin is what really uh separates itself from any other asset and in turn is going to create the big problem. You know to touch on the big long we'll touch a lot about talk a lot about the bareer nature of of Bitcoin and and why that's going to present a real problem. Yeah.
(09:36) And while I haven't heard you explain the thesis in depth yet, I imagine it ties into the big long because it's a bearer instrument. And I believe your thesis revolves around derivatives markets which are essentially uh paper synthetic positions on top of underlying commodities which become extremely popular since the 1980s. I think famously at least a couple of years ago there was rumors swirling around that Deutsche Bank alone had something like a quadrillion dollars worth of derivative exposure.
(10:08) Um which seems crazy to me that that's even possible. And so I think diving into the nature of derivatives and they've how they've evolved over the years probably a good jumping off point. Yeah. Well, I I think the nature of derivatives is that they they are contracts between two parties, right? Now, what one of the terms that became very famous during 0809 was the work the term counterparty, right? Well, who what type of counterparty exposure does bank A have to bank B? Like we learned during the the GFC that AIG, right, had such counterparty exposure to Goldman Sachs
(10:48) that it turned out AIG had to be bailed out. If not Goldman Sachs would have failed. And if Goldman Sachs would have failed, well, probably every major money center bank in the world, not just in the country, but in the world would have failed, right? Because they have massive counterparty exposure to each other.
(11:07) Uh, and we saw this with when Lehman failed, right? I was running uh a self-clearing broker dealer at the time and the day they they shut down uh Lehman and and people just walked out the door. Well, what about all the trades that were settling T plus3, right? That that we didn't know whether they were good trades or bad trades.
(11:27) So, the entire street had massive counterparty exposure to, you know, Lehman going down. Now the government came in and made those trades good but just imagine if they hadn't right what does it look like when um you know you could you could take a major bank like society general credit agricult uh Deutsch bank right like right you can UBS right uh the large Japanese banks if any one of them were to go down the the counterparty exposure that they have to each other is so great and nobody understands it well you know Warren Buffett called derivatives weapons of financial weapons of mass
(12:04) destruction. Ray Dallio touches on this subject quite a bit, right? Nobody really understands what the counterparty exposure looks like from institution to institution. And the way I've understood because it seems like the potential for mass rehypothecation of these positions and these contracts exist in derivatives.
(12:32) And so it's like to your point of the counterparty risks that exist, the way I've come to understand it is that it exists because the banks will sort of get use the same instrument to get multiple points of exposure across the system. And so you may think you own one thing, but somebody else also thinks they own that as well. Yeah.
(12:55) I mean, and now you're hitting on the main point, which is that Bitcoin by its very nature and the ability to to verify on chain, uh, the ability to do chain analysis is a gamecher, right? Wall Street's never seen a product like this, right? We, you know, gold, gold, the gold market's a perfect example. Uh, gold, most of the gold is centralized.
(13:17) It's held in in large vaults by um banking institutions, boolean banks, and quite frankly, we have no idea how many claims there are, how many times uh those those gold bars have been leased out to different different entities. I mean, some speculate it's 100x, some speculate it's 300x, but with Bitcoin, you have a different type of security or or asset.
(13:42) Uh bit Bitcoin um is verifiable on chain, right? So, when we get to the point that Bitcoin treasury companies, uh, Bitcoin um, holdings, ETFs, uh, Bitcoin exchanges hold, let's just pick a number, 17 million Bitcoin, right? Well, then how are you how are you able to short it, right? Like, we we we're going to reach a point where you can actually verify and audit the amount of Bitcoin that exists.
(14:08) And just to kind of step back so the audience understands, any functioning derivatives market, well functioning derivatives market requires that the asset that the derivatives are based on is freely available for loan. Right? That is a that is a fundamental characteristic of any of any derivatives market.
(14:33) Um, you know, I would suggest to you that Sailor hitting the ATM so hard in Micro Strategy in the previous year was partly in, you know, because he was converting, you know, uh, Bitcoin uh, converting shares into Bitcoin and capturing the spread between the uh, the premium uh, to the net asset value premium to the price of Bitcoin.
(14:57) But more importantly, he was producing enough shares into the options market and derivatives market that it was freely available to be borrowed. And that was critical for him to have a freely functioning welloiled derivatives market on Micro Strategy or on strategy stock. Um, now with Bitcoin, we have a different scenario, right? There's no CEO to turn to and say, "Hey, we need to print more Bitcoin, right? There's a limited amount of Bitcoin and it's verifiable and auditable on chain.
(15:24) So that that's a very different asset than I've ever seen on Wall Street. Nothing like this has ever existed. And we can just look to two of the the major short squeezes of the last few decades, right? So let's start with uh Porsche Volkswagen. I don't know if you remember that, Marty.
(15:42) It might be before your time. uh but uh there was a large short interest I think 13% short interest in uh Volkswagen at the same time Porsche was quietly acquiring a significant stake at some point uh in I think it was 08 in that area they come out and announced that they own 74% of Volkswagen um and basically taking a controlling stake well the problem was that the local state, the the German government owns 20% of Volkswagen.
(16:18) So 94% of Volkswagen, we now know who owns it, but 13% of the float was short. And if you do the basic math, that means you have a problem. So what happens? Volkswagen goes up about, I don't know, 5x in a couple days. I think a trade was trading somewhere around €200, topped out at €1,000.
(16:41) But the way they the way they resolved the short squeeze was they got Porsche to go ahead and sell 5% of their stake in Volkswagen to to to create the shares available for the shorts to cover. Um let's fast forward to GameStop, right? That's a a memorable short squeeze. Uh GameStop trades, you know, goes goes ballistic.
(17:04) Um the first thing they do is they try to shut down the buy button. If you remember at Robin Hood, they shut off the buy button. Uh that didn't work. And then the next thing you know, of course, um the company has agreed uh to sell uh $3 billion worth of common stock. And of course, the stock gets cratered um and then the company sells the common stock.
(17:25) Now, I believe the same people that tapped uh Robin Hood on the shoulder and asked them to shut off the buy button are the same people that tapped the board on the shoulder and said, "Hey, we need you to sell stock." uh because if not you can't stop these things.
(17:43) Now in the case when you look at both of those squeezes they both came to an end with the creation of more supply right but that's not going to be the case in Bitcoin. There's nobody to tap on the shoulder right so ultimately you have a derivatives market that's growing exponentially and at the same time you have an underlying asset which is infinitely scarce and you can't print more of it and you can't force people to sell it.
(18:08) now make the situation even uh I mean unlimited I don't even know how to explain how much worse this is but imagine that at in 0809 had we had Bitcoin and you know as people became absolutely frightened about the stability of banks imagine they had had an asset that they could actually buy and take delivery of in in a matter of hours right what would have happened.
(18:38) Well, everybody would have pulled their money out of the banks, right? Bought Bitcoin and taken delivery. Now, I I foresee in the next financial crisis, and we will have a next financial crisis. We always do, right? You're going to have this feedback loop where um you hedge funds, uh asset investors of all types are going to run to Bitcoin and take delivery.
(19:04) And when they take delivery of Bitcoin, it's going to be removed from the market. So the amount of of Bitcoin available for loan is going to decrease rapidly at the at the very time in which they need it the most. And that's the the the kind of driving uh concepts behind the big log thesis is that we have an asset that's infinitely scarce. There's nobody to tap on the shoulder to print more of.
(19:30) And worse yet, in a time of crisis, every investor or the smartest investors will immediately take delivery, causing the derivatives market to lock up. And I can foresee a scenario in which this becomes systemic uh well beyond just the Bitcoin markets and and uh permeates throughout the entire banking system.
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(21:36) Well, before we get to that, it's it's interesting because I think we've already had like a small example of this happen particularly within the Bitcoin space, the end of 22, beginning of 23 with that that mini banking crisis that played out. Like we saw it at 10:31, a bunch of our portfolio companies, they were playing basically bank hot potato after uh after Silvergate went down or was taken, I would argue, taken down unlawfully uh forced to close its doors or their hand was forced to uh independently and under their own valition close down the bank. But then you had Signature, First Republic,
(22:12) Silicon Valley Bank, like those were a few of the banks that were at the time amendable to banking Bitcoin companies. And particularly when Signature, First Republic and Silicon Valley um got in trouble, we saw a number of of founders and portfolio companies just simply wire the funds they had from the bank to exchanges like Unchained uh and then put the Bitcoin in a two or three multi-ig vault because like we're just going to wait it out.
(22:44) You put all of our cash in Bitcoin because we have this bearer instrument that we can have a high degree of certainty. we can be ultimately certain that it's not going to get rugged by the bank because we hold the keys. Yeah, that's it, right? That's exactly that's exactly the the thesis except it plays out on a global scale much larger than those three banks.
(23:08) Uh imagine a major money center bank and you know we get a cascading of uh potential bank failures or bank trouble. Um, I would see, especially now that Bitcoin, I think, has crossed the Rubicon, uh, from a retail product to an institutional product, I think so many players, uh, large players are well aware of Bitcoin. I just think we're in a new world today.
(23:35) Um, and I don't see how they're going to stop this problem once it starts. There's no one to tap on the shoulder. It's global. There's there's exchanges located around the world, right? So, it's not just a US or a western banking uh cartel situation. This is a global asset, highly liquid. I don't see how they stop it once it starts. Well, let's dive into this and sort of get into the dynamics of the landscape and how this may unfold.
(24:08) And before we talk about the future, let's talk about the past. We've had examples, not necessarily of derivatives markets, but institutions within the Bitcoin economy that have essentially lent out Bitcoin to counterparties who destroyed it or simply lost it. I mean, go all the way back to Mount Gaus when we were first getting into Bitcoin.
(24:25) They were hacked and a number of their customers had claims to X amount of Bitcoin, but the hackers had stolen Y and they found themselves short Bitcoin. And so that went under and it took over a decade for the um the Mount Gox customers to get any any of their money back. Fast forward to 2020 to 2022.
(24:51) That's when Genesis um was lending Genesis BlockFi, Celsius. Others were lending Bitcoin out FTX to traders who were taking risk in altcoin markets and promising that they would uh they would get a return and return the Bitcoin. Those markets blew up and you found many situations where people thought they had Bitcoin but learned that their counterparty, their trusted third party where they were storing their Bitcoin had lent it out and wasn't going to get it back.
(25:21) Um, so we're scaling up and now as a stand 2025 as you mentioned cross the Rubicon institutions getting in. How do you see something like that playing out moving forward and what are the different dynamics that exist today that could act as a an accelerant to that process? Yeah, I mean it's a great question. So, you know, today the Celsius BlockFi kind of thing of today is is now Goldman Sachs, Morgan Stanley, uh the you know, tremendously huge banks.
(25:51) And now it becomes a systemic issue rather than a localized issue that can be uh stomped out by regulators and and sort of the the losses going to the investor. uh what happens when the losses are are taken by you know large financial institutions which then need to be bailed out or bailed in whichever way we head and that's another subject.
(26:13) uh but ultimately the game has now gone up upstream of of small players to the largest players in the world and that's you know should be a tremendous cause for concern because if if you understand the very nature of derivatives like I said earlier you need you absolutely need to have the underlying asset freely available for loan for the derivatives markets to function you know I'll give you an example a lot of people view shorting as betting the price is going to go down, but that's really not how derivatives markets work. Uh, a great
(26:50) example would be this. Um, I I hold just as an example, I hold a,000 Bitcoin. I'm an old school Bitcoiner. I go to Goldman Sachs and I say, "Look, I'd like to buy insurance on my Bitcoin, you know, price insurance. Um, I'd like to buy, you know, let's say the let's say Bitcoin is now um a million dollars. I'd like to protect it at 800,000. So, I'm going to buy the 800,000 puts. Okay.
(27:16) Goldman comes up with a price where they sell you an overthe-counter derivative product. Well, in order for them to hedge themselves, they need to go out and short Bitcoin, right? Because they have downside exposure. Now, nobody in this transaction that I just explained is betting on Bitcoin going down.
(27:34) Matter of fact, everybody in the transaction wants Bitcoin to go higher. However, because of of an insurance type product like a you know a put contract or portfolio insurance, you need to to to cover your downside exposure. So in this case, Goldman has gone out and shorted Bitcoin, but they need to borrow that Bitcoin to short it.
(27:53) Now, if we end up in a situation where, like you explained, people take Bitcoin off the market, they take delivery of their Bitcoin, throw it in unchained in a multi-ync, well where's Goldman going to get the Bitcoin right now? Goldman already has a short Bitcoin position on, but all of a sudden they get a a call saying, "Hey, you know, we we we need the Bitcoin and now we end up in a short squeeze, right?" So the what started out as being a small problem can quickly mushroom into a gigantic problem that's global, right? It's not just here in the US, it's not just Europe, it's all over the world. and and as this derivative
(28:30) market grows, you know, we're adding potential fuel um to a fire that could really grow out of control at a very quick pace. And again, the trigger to this can have nothing to do with Bitcoin, right? We could see, you know, some banking problem in Japan having to do with the long end of their their bond curve or some crisis coming out of Europe, but ultimately Bitcoin will be the off-ramp from the modern banking system.
(29:01) And that off-ramp combined with self-custody will lead us into a crisis the likes of which we've never seen before. Okay, a couple questions here. No, I think it's a great point and describe that's what one thing I don't think most people realize too is with these derivatives like you can literally go to a bank and if you have your your sort of books order and your thesis in order and you present it to them, they will go and make the product.
(29:26) I mean, most famously the scene in the big short when Michael Barry goes to all the banks on Wall Street and sort of gives them the binder about creating credit default swaps and they go and make a market for him. So, you're saying similar sort of dynamics will come into play with people who want different sort of diver derivative hedge products for their Bitcoin.
(29:44) They're going to go to the Yeah, absolutely. You know, look, as institutions pour into Bitcoin, they will manage risk because that's what institutions are paid to do is to manage risk. So, they will be looking to create derivatives to protect against downside price moves, right? That that's what that that's the way the system is built is to to manage volatility, to manage risk.
(30:07) But Bitcoin wasn't designed for this purpose. and and therefore, you know, we we kind of have the the um the immovable object hitting the immeasurable force at some point and it becomes a really scary situation. Add to that again, and I think this is the part that most people take for granted, is the ability to self-custody in a matter of of hours or even less, right? That changes the entire game, right? because all of a sudden uh in any type of crisis, people will pull their money out of Coinbase or out of uh any of the major exchanges or even out of banks and they will they will move it to self-custody, right? Unchained will see
(30:48) their their balances explode and um and what does that do to the derivatives complex, right? It it only puts it under more stress and you can you can almost see the the feedback loop, right? the the worse it gets, the more people will pull money out of the out of the system and that will just create more and more stress.
(31:11) So yeah, when I look at this from a derivatives perspective, what I see is a potential disaster brewing right now, right now it's not a problem because Bitcoin's freely available to loan, funding rates are very low. Um, add to that, Marty, that we now have futures, perks, right? all different types of paper Bitcoin, ETFs, IBIT, right? Like imagine what happens when all of those markets lock up in a very short amount of time.
(31:38) So futures will trade at a discount to the spot price, right? Funding rates will go through the roof. Per will become extremely illquid. I puts will trade at an extreme premium to the calls, right? IBIT will become hard to borrow, right? All of these things will happen in a very short period of time in any type of a financial crisis and everything just becomes a again I'll I'll keep repeating the term it becomes a negative feedback loop where you just can't stop it and there is no solution. You're not going to be able to turn to the regulators to
(32:10) solve this problem. You're not going to be able to turn to governments to solve this problem. I don't know how they're going to solve this problem once it starts right. I I don't see how it resolves itself. And and that's why I call it the big long, right? The inverse on Michael Barry's big short. And I think there's two important things.
(32:34) First thing is really highlight the point that this doesn't necessarily have to manifest within the Bitcoin economy. It can be an external factor, an external crisis in Japan, Europe, here in the United States, within the banking sector, whatever it may be. And it does seem like some of the banks are are beginning to weaken materially.
(32:53) I write some reports on Wells Fargo, Bank of America, uh Morgan Stanley and others. Even though some of them have had uh an increase in earning per share in revenues, if you look into the balance sheets, it's really driven by um trading, which isn't a sustainable revenue line. Uh if you look at like loan origination, deposits, all are trending in in the wrong direction, which is a long-term sort of revenue drivers, consistent revenue drivers of of those companies.
(33:19) And then the the follow-up question I like we're led to believe and I led to believe being uh doing led to doing the most the most work in that sense that the Wall Street finance types are some of the smartest people in the world. And it is just baffling to me that none of them can would be able to recognize that Bitcoin is this digital bearer asset with this ability to take delivery within minutes to hours if if anybody so wanted to that they wouldn't understand that these knock-on domino effect risks exist and like I
(33:59) guess what I'm trying to get at is like how does that not recognize on Wall Street or is it simply a product of like their mindset is like we're going go create as many products as possible because that's how we're going to make money in the short term and there's just like no avoiding it. This is what we're here to do. Yeah. With, you know, it's such a great point.
(34:20) Um the capital uh structures, the incentive the incentive structures of a Wall Street employee haven't changed since 089, right? They're still paid on the quarterly basis or annual basis bonus. And it's based on the amount of money you made this year or the amount of money you made this quarter, right? And and all of that is misaligned incentives, right? So people are incentivized purely to make as much money as they can today. Today, Bitcoin is freely available to borrow. The derivatives market is exploding.
(34:49) Companies like Susuana, Jane Street are making fortunes of money in the Bitcoin complex. So we're in the other problem and we learned this through 08 089 and I've experienced it personally is you're stuck in this situation when a large client comes to you and says I want you to I want you to uh build this derivative for me right you have the problem that if you don't do it another bank will and you'll lose your client right and and we saw that in 089 and we see it today so why would somebody write a derivatives complex that could potentially a derivatives contract that could potentially become extremely dangerous uh uh 2 years from now, a year
(35:28) from now. Well, because if they don't do it, somebody else will and they'll lose their client. And I think that's the incentive behind, you know, getting yourself into trouble uh and maybe trouble down the line. But what what choice do you have when your boss taps you on the shoulder and says, "Come up with a structure.
(35:46) We need to keep this client happy." What do you do? You come up with a structure. You do what you're told. Serious about your Bitcoin? Start acting like it. Unchain just launched the financial freedom bundle, a curated pack that includes a premium Bitcoin book, a new hardware wallet guide, and access to a private macro event with Tur demesterend.
(36:03) It's time to take control of your generational wealth. Go to unchained.com/tc to request yours. That's unchained.com/tc. Pretty hot package, freaks. Go pick it up. Yeah, you can see it getting crazy pretty fast. And I guess that like begs the question like is this ultimately good for Bitcoin? Like is this like a hard lesson everybody needs to learn? Is it uh s could it potentially snowball into such a big event to become like as you mentioned systemically a systemic risk to the global financial system that people will be pissed at Bitcoin or like how do you see this
(36:40) playing out in the Well again Bitcoin is money for your enemies right? So, I don't think Bitcoin cares uh whether the global financial system uh uh detonates itself through derivatives. I I think that the the seeds for this problem have long been uh sown. Uh but yeah, I do think that at some point it could become systemic and that's probably I I mean, please don't take this the wrong way, but that's probably a good thing, right? Look at the system we have today and realize just how toxic it is. Uh, you know, we
(37:14) could go into suicide rates and all of the all of the metrics around, you know, where we stand today, young people, you know, not being able to afford a home, uh, you know, multiple jobs, the the fertility rates, right? The birth rates, everything is pointing in the wrong direction. And that probably has a lot to do with broken money.
(37:35) Uh, that's probably a a full show of its own. Um, but you know, are we better off having the current system uh, you know, implode? Probably. Does that mean in the short term it wouldn't be an extremely painful event? Of course, it would be. But out of the ashes of of that old system would be born a new system based on hard money and uh, abundance would flourish, right? You know, I just think we we'd find ourselves in a better world, right? So ultimately, you know, you never know how much pain you're in uh until you get out of that pain. And sometime it just feels to me like it just continues to get worse. So, you
(38:14) know, that that's my my take. You know, a lot of people will say, well, what you're you're presenting is a doomer thesis. And and I think it's the exact opposite, right? I think the doomer is the one who's sitting in a burning building telling everybody to stay put. We're going to put out the fire, right? And what I'm saying is get out of the burning building.
(38:33) there's a better way to do this. Completely agree. I think uh that's what we have outside of our studio in Austin, Texas. Currently not there, but it's fix the money, fix the world. And that's I think I've been labeled a doomer as well many times. And I I think that's like the big question cuz I remember in 2013 my wife, my then girlfriend, she would come to Chicago.
(38:58) We were long distance and we'd go to brunch. And I got in trouble the first long-distance trips because I was so obsessed with Bitcoin in the financial system. I was convinced in 2013. I was like, "This is there's not sustainable. They're printing too much money. Too many derivatives out there. Like Bitcoin exists now. Like people are going to funnel in.
(39:19) " And I was convinced back in 2013, 2014 that it was going to happen rather quickly. Fast forward to 2020, 2021, same thing. But every time post 2008 specifically that a little crisis has bubbled 2023 with the banking crisis, the system seems to be able to self temporarily self-repair itself. And that's always a question on my mind.
(39:42) I'm sure many others minds like that's why I think Lawrence Larry wrote the big print. Like it seems like the big print could be on the way. Like how confident are you if at all that we're on the cusp? It's like is there a timeline to this or is it is it one of those things where it's like you don't know when but you know it's definitely going to happen at some point. Yeah, I think I'm in that latter camp. I I I don't know when. Could be next week, could be next month, 5 years, 10 years.
(40:07) I doubt we make it 10 years. Um the the metrics are just are really bad. I was talking to a good friend of mine uh who's a mayor of a town, Thomas Young. He was a mayor of a a small town in New Jersey and he said currently uh you know they're having a tough time hiring police officers and he was pointing out that a young police officer um I don't know cost their town $50 $60,000 uh first year but the health benefits and all the other benefits cost above 60 they're 60 to $70,000 a year right and that number is going up towards $100,000 a year. So, at what point does the system just break? I don't know. But
(40:44) we're probably a lot closer to that point today uh than we were at any point. Plus, I'll just add I think the Fed, you know, used to back, let's go back to 08, probably owned, I don't know, small single digits of our balance sheet. They're now up to, I think, 26% of our balance sheet is owned by the Fed.
(41:08) So, I mean, at at what point does this become a problem? Then is add in Japan which we all understand is a complete train wreck but ultimately they are Japan Europe right they are held afloat in any type of financial crisis by the US government and the feds willingness to provide them dollar liquidity right swap lines um if you look at what where we're headed with a new Fed chair uh assume it's someone like Scott Bent I don't think the willingness is there to bail out the world right I don't think the willingness the political will is there to bail out the US banks, right? So, I think we go more into a bailin scenario
(41:44) than a bailout scenario. And that's the most scary, right? The the concept of the great taking. I don't know if you're familiar with that, Marty David Rogers Web's uh piece. Um you know, if we go down that road with the DTCC problems, you know, failures at the banks and the DTC recapitalize itself through great taking, you know, that that's absolutely catastrophic.
(42:08) But you just get the sense that the willing the political will will not be there for the next bailout. Yeah. Part of David's thesis, right? Like he's read all the legal contracts that exist and in the the sort of small print details of the contracts that everybody has with the DTCC. It's like you actually don't own these shares at all at the end of the day. Correct. Yeah.
(42:35) Yeah. No, I mean we live in an IOU world. You know, you don't own You can go out and buy Apple stock today, but you don't own it, right? What you own is a claim on the broker dealer you bought it through. So, let's just assume you use Charles Schwab. Okay? So, I buy 100 shares of Apple.
(42:52) What I own is a claim on Charles Schwab for 100 shares of Apple stock. Charles Schwab owns a claim on the DTCC and the DTCC owns your Apple stock. Now, post Lehman Brothers and I think the the case that he's really pointing at was a legal case between JP Morgan and Lehman Brothers where the courts came and ruled that well Lehman uh JP Morgan was senior to Lehman Brothers and therefore the clients of Lehman Brothers uh would lose their assets to JP Morgan.
(43:26) Well, that means that the DTCC is senior to your uh to your claim on Charles Schwab. So, so the DCCC's claim on Charles Schwab is senior to yours. If Charles Schwab was to fail, well, then that they're not your shares of Apple anymore. They belong to the GTCC. Yeah. And so, what type of what type of uh data points are you following outside of like bond yields? Obviously, this week Japan's 40-year bonds screaming higher. You had the 30-year UK guilt bitting 2007 levels.
(43:57) like is this in your mind the beginning like alarm bells going off that something's breaking uh in terms of liquidity in the back end of the system? Well, that's the other question too. Excuse me for rambling here a little bit, but is it like at this time around is it even a liquidity crisis or is it more of a confidence crisis? is I think more and more people are becoming uh skeptical of the idea that government bonds are these gradea sort of savings vehicles for the long term. Yeah, I think you hit the nail on the head. It's both a liquid. It starts as a liquidity crisis but quickly becomes a
(44:32) confidence crisis and made exponentially worse by social media where you can actually explain to people what's really happening, right? people are able to get information outside of the traditional media which would tell you, oh, this is just a small problem. We're going to print money. Congress needs to step in.
(44:50) I I just don't think that's going to happen this time. Um, but yeah, I mean, all of the the the things you mentioned, right, from Japan to the UK, obviously capital flight out of the UK is a big one. Uh, we've seen all kinds of crazy capital flights.
(45:08) And then let's just kind of throw stable coins in there since uh we just had the Genius Bill pass. A lot of people are extremely bullish on stable coins and they're going to provide on-ramps to Bitcoin, which is all true, 100% true, but I think there's unintended consequences to uh where we're headed with stable coins and that is to destabilize smaller governments and then larger governments around the world as we look to have dollar dominance.
(45:33) Uh one of the things stable coins will do is they will get dollars in the hands of everyone throughout the world on crypto rails. Right? And today, if you try to send dollars, let's say, to um Egypt, let's just use Egypt as an example, right? Um it's almost impossible to get dollars to a friend in Egypt, right? You've got to send them through the Swift system.
(45:56) They're going to get taken by the the Egyptian government and then the Egyptian banks will take what's left and the Egyptian citizen gets the Egyptian pound, right, which is hyperinflating away. Now, if you go ahead and and introduce stable coins into that system, um my question to you would be, well, are we going to create more North Koreas, right? Because as these countries begin to see their ability to print money taken away from them, right, what do they do? Right? In a world where they can shut off the internet and they can do all kinds of crazy things to their people, um are we running the risk
(46:32) of destabilizing uh the third world? They're completely destabilized in the third world. And then what happens in Japan when people can use dollars rather than yen? Does the yen do we run the risk of hyperinflating away the yen? And if we do that, you know, as we talked about earlier, what are the consequences for Japanese banks and counterparty exposure? Right? I can just see how the introduction of stable coins, which seems like a great idea, right? On its surface, I understand it.
(47:02) But I think if you look to the second order effects and the knockdown effects of policy decisions like this um they can have lasting consequences which may not be what we're looking for. You know I've learned in my my few years here on the planet that you know what looks like a good idea up front uh can usually when the US government flexes its muscles abroad um it has negative consequences.
(47:27) Yeah, the whole stable coins thing is very interesting. I said this yesterday. I think that's one thing I'm interested to see if it actually plays out. Um, we got a few points on this topic. Like the Genius Act as it's written, it's unclear to me.
(47:45) Like it seems pretty clear that the reason the act came up in the first place cuz Circle was pissed off that Tether is absolutely eating their lunch in the global stable coin market. And so they want to create some regulatory moat. Uh, and I wonder, it's not clear to me the way the bill is written that Tether can operate in the way it has up to this point outside of the borders of the United States.
(48:10) And if that's the case that they can't, like I could see demand for US dollar stable coins falling significantly. But I think they may still be able to operate an El Salvador entity and do what they've been doing, not thrust KYC AML compliance on their users and just have free floating dollar instruments uh across the world.
(48:29) But to your point too there, like maybe it's like the second order sort of destabilization effect is intentional in the sense that if you and this is where we get like Alex Jones like cons like this is anybody listening to this is just a theory but it would uh would be pretty interesting. It's like you get the stable coins out there, you destabilize and parallel on the back end, as a government and as a country, individual citizens within that country really leaning into Bitcoin. And I think that's the big question.
(49:00) We've had this US dollar reserve system for many decades now and that's everybody's talking about forth turning just like cyclicality of how all this stuff happens. And if you're the US government acknowledging like, okay, it seems pretty clear, the writings on the wall, that the US dollar is a reserve currency, it's on its way out.
(49:18) Like, how do we extend the American empire into the future? It's like you push the dollar, destabilize every everything else, get them all pissed off at you, but then on the back end accumulate as much Bitcoin as possible and be like, "Okay, we'll go to this neutral reserve asset, and by the way, we've accumulated a bunch and our country is going to be on good good footing coming out of this.
(49:43) " Yeah, I think that's a very reasonable uh take. Um uh albeit for me to take off my tin foil hat. I I tend to like to wear it. Um but yeah, I I think that if I listen to the administration closely, uh what they're saying is they want a devalued dollar. At the same time, they want dollar dominance to increase. And those two things would seem antithetical to each other.
(50:08) Uh but, you know, if you look through the the clouds, right, I think you see that stable coins can accomplish both. Uh but again, I get concerned when we begin to meddle in foreign affairs uh to this degree. Um and and you know, you're going to remove the foreign government's ability to manage their currency and you're going to push dollars into the wild in all types of countries all over the world. You know, what is that second order effect? It scares me. I think it's inflationary.
(50:41) You know, obviously we'll we'll export as much of that inflation as we possibly can, but again, how much can you mess with the rest of the world before it comes back and hits you on the head? I I don't know the answer to that question. Uh but it would seem that that's where this is headed.
(51:00) Yeah, that's a question that has been lingering in my mind the last two years is is there I mean it was basically trying to think theoretically through things like running with the meme soft landing which Janet Yellen and others put out there um post 2021 stimulus and trying to navigate the waters of inflation and Fed interest rate policy and I think it's pretty clear that you can't really they can't manufacture soft landing. But I do think and it's part of what we do at 1031 and why I have this show and the media company is to educate
(51:34) people about Bitcoin because I do earnestly believe that if you can get Bitcoin into the hands of enough individuals, if you can get it into structure credit products the right way, like that's the way you manufacture a soft landing because you're going to have to hyperinflate the currency at some point. It's the writing's on the wall.
(51:53) Well, it's mathematically impossible. That that's not going to be the the ultimate outcome. Whether that's next year or 10 years from now is is another question. But like, can you integrate Bitcoin enough into the system where as everything's hyperinflating, if you have enough Bitcoin exposure, hopefully it's it's rising in value faster than then your money's being debased and you sort of get out of the other side of a a hyperinflationary, superflationary event, whatever it may be, and you're somewhat okay because you have Bitcoin exposure.
(52:26) Yeah. And look, that's that's the thesis behind Bitbonds. And uh for the individual, I've been talking a lot about bid annuities. Um these are this is the way to improve the balance sheet, right? You're not going to improve the debt problem that you know our system is based on creating more debt, but what you can do is improve the balance sheet, right? You can bring debt to GDP down to manageable levels.
(52:52) Um if you introduce bit bonds, I know that that's theory has been out there for a while now. I think that's one way of of taking on the problem headon. However, that's not with not without major secondary and knock-on effects, right? I if it turns out that the the real free cost of money is somewhere around 12%.
(53:15) What happens to mortgage rates? What happens to long-term bonds? What happens to the existing bond market? Right? So, you the the reality is that we're in a box, right? There is no easy way out. Yes. If you introduce hard money into the system through bit bonds, bit annuities, whichever way you want to do it, you're going to solve one problem and you are going to cause probably a bigger second one. Right? Ultimately, the system is is in trouble.
(53:40) Um inflation the the inflation boogeyman has just run wild. Uh the cost of everyday goods is going up, you know, at high levels. And look, I I don't believe the current inflation uh numbers as they're presented to us. CPI, I don't believe GDP, I mean CPI as an example, right? We count microchips. We count things that are that go down in value.
(54:05) But how many how many how many SD cards do I need, right? But I need I need steak. I need food. I need beef, right? The price of steak goes up. So then they shift to ground beef in in the CPI number, right? like it's just constantly juggling, you know, the statistics to try to create a narrative. But in the end, you know, you can't convince somebody who goes to the grocery store that the price of goods today is is only 2% higher than it was last year when they they know it's 20% higher, right? Like that's just a fact. So, yeah, we're running up against, you know, the amount of lying that can
(54:39) happen um in a in a believable society, right? at some point uh just everybody, you know, calls BS and and confidence begins to break. And and I think you you made the point earlier about confidence. Look, we are a confidence-based system. The US dollar is based but on faith, right? What makes a $100 bill worth 10 times more than a $10 bill? Well, they're both the paper is worth the same, right? So, it's purely faith.
(55:11) I like to say the dollar is the world's largest religion, right? And in contrast, if you own 10 Bitcoin, there's no question that you own 10 times more than if you own one Bitcoin, right? So that's the real difference in the in a hard money system versus a faith-based system like the US dollar. Yeah. And bring this back to Bitcoin and how it reacts in a situation where things begin to unravel in the global financial system.
(55:35) I mean, you mentioned that uh it's the big long like how big are we talking like how weird is this like hyper bitcoinization? What what does it what does it look like? Well, you know, I obviously I I don't exactly know what it looks like, but it doesn't look good, right? I I think that the the existence of Bitcoin and the um institutional adoption of Bitcoin will create a systemic problem for the entire system, right? the ability to have capital that you're able to take uh delivery of through as a bearer asset, right, through self-custody. Um that's not
(56:14) something we had during 0809, right? That didn't exist. That's sort of why Bitcoin was created. I I would like to suggest, right? Satoshi's vision was a monetary system outside of the banking cartel. So what does it look like when the banking cartel, you know, implodes? It it probably looks really bad, right? Really, really bad.
(56:35) and they will um try, you know, a CBDC of some type. You know, I imagine going back to David Webb's thesis. Uh but I I just think Bitcoin wins in the end and um I think we'll we'll end up on some type of hyper bitcoinization. What do you think the system looks like on the other side? It's just assume that the big long thesis is correct and it plays out like how do we reorient the global economy around a Bitcoin standard in your mind? Yeah, that's a great question.
(57:07) I've kind of speculated that by at the time that happens, I of course it depends on timing. Um, will we have a fully built out layer 2 like lightning and and people will live on Bitcoin? And I mean, imagine, you know, I like to look back at history, right? So, we go through the dark ages.
(57:26) Had we come out of the dark ages, uh, the Medici family in Florence introduced the Floren and the the the government of Florence, right? And we they had a hard currency. Um it was a standard unit rate measure of gold, a gold coin uh that was then adopted throughout Europe. And uh they came out of the dark ages and went into the Renaissance.
(57:45) Uh what did it look like? I'm sure it didn't look good, right? Uh but um you look, you get to a point where you're in so much pain that the next system's better, right? And I think we're we're quickly going down that road. I mean the the system we're on now with the inflation rates we have is not sustainable. Agreed. And that's like the other thing.
(58:09) It'd be interesting to get your thoughts on this this sort of flogging of Jerome Pal publicly over the last month. It's really accelerated. It's really been going on since before the election, even last year. Trump's been berating him. But now you've got pileon effect from senators and representatives and other academic economists sort of in the Trump circle.
(58:32) And it seems clear to me that the ultimate goal is to merge the Fed and the Treasury. Just eliminate any illusion that there is an independent Fed and just get the people in place at the Fed who are going to move in lock step with the Treasury with whatever they want to do. Um, and that's my big question going back to like confidence and this is a confidence game like that is like emerging market like activity that that Yeah, that's crazy, right? That would happen.
(59:00) Like I know they have goals and intentions to just really turn it on turbo and you need the Fed and the Treasury to move in lock step to effectuate your policy goals. But is that a step too far in the minds of the public in terms of their confidence in in the system overall? Well, I don't really think the public even understands the Fed or less has confidence in it.
(59:23) Um, look, you know, we're at a point now where we can't even print our own money the way the system is designed without paying a bunch of banksters interest for the pleasure of doing so. Right? So, when the bank go when the Fed goes out into the open market and buys back a bunch of 20-year bonds, uh, essentially monetizing the debt, right, we're printing money, but at the same time, the Fed now owns those bonds, and we, as the citizenry, uh, get the pleasure of paying them interest, uh, for printing our money. That's a ridiculous system. Everything about it makes no sense. Uh, I would suggest to
(59:56) you, Marty, that we, uh, replace the Fed uh, with the difficulty adjustment, completely predictable. uh everybody will understand how much money is being created uh when it's being created on what time series it's being created and uh we can get past our monetary issues and focus on uh creating a better society.
(1:00:20) Um and as somebody who's been in this for almost 12 years now, like how how do you view this cycle compared to cycles of of years past? Is it I I hate to ask the question, does it feel different? That's a good question. Yeah. So, look, I I believe the the four-year cycle is dead.
(1:00:40) I I actually think it died last the last four years, but of course, choke point 2.0. Uh I believe FTX, Celsius, all of these things were sort of born out of a government's desire to kill Bitcoin. Um I I I just in my heart of hearts uh I have a tough time understanding why at the same time that they were cutting off uh in deep banking any entrepreneurs in the space right the same at that same time we had FTX Celsius all of these things and they all seem to be in one way or another uh attached to government FTX obviously giving a tremendous amount of money back to politicians um so yeah my my take is that that that those cycles are dead the
(1:01:19) four-year cycles is dead. We're in a new a new era for Bitcoin. That doesn't mean there won't be bare markets in US dollar and bull markets and US dollar price. But yeah, I still yeah, I'm one of those that focuses on uh bit one bitcoin equals one bitcoin and what really is volatile right now is the dollar, right? So when you see uh US dollar price in bitcoin, focus on the fact that it's really the dollar that's fluctuating in value, one bitcoin is is equal to one bitcoin and that hasn't changed. Yeah. And you mentioned a couple of
(1:01:50) things like bit bonds, bit annuities. You'd like to see second layers like lightning network mature. Like what else sort of tickles your fancy in terms of like Bitcoin products going into the cycles to your point about bit bonds and bit annuities? Like that's what like we're the sole outside capital for battery finance and that's something that we've been really bullish on for years now.
(1:02:17) And it seems like they're um really at a point of maturation where they're going to be able to go out and create these structured credit products with dual collateralized commercial real estate and Bitcoin. Like I think that this in my opinion this is the cycle of Bitcoin not only being recognized but preferred as collateral in debt instruments.
(1:02:41) And when you think about what that does for the market structure of Bitcoin, particularly if you get longer duration credit instruments that Bitcoin is playing with, then that is like I think I'm in agreement with you that the four-year cycle is not going to look how it has in the past simply because of products like these coming to market that allow you to create like a forward-looking duration curve of Bitcoin that you can have certainty is going to be locked up. Yeah.
(1:03:05) And to that point, look, I think that's what Sailor's up to, right? So when he's introduced Strife, Stride, Strike, uh the three perpetual preferred, uh Strife is really, I mean, if you really think about what that product is, it is a uh high a low essentially he's creating a fiat yield curve on Bitcoin, right? And we saw that come out at somewhere around 12%, it's now down into the eights.
(1:03:36) uh as that approaches the sixes and the fives, right, I think that product uh will absolutely at some point trade better than long-term treasuries. And boy was that going to be an interesting time. But, you know, to circle back to the big long and what you were just talking about structured products, mortgages, annuities, bit bonds, you know, all of these products require the sequestration of Bitcoin, right? You can't have a Bit Bond unless you have Bitcoin backing it.
(1:04:05) If you're going to do a 10-year bid bond, you're going to have to take Bitcoin and sequester it for 10 years, right? Well, that Bitcoin is not going to be available for loan, right? You can see where all of where we're headed with the financialization of Bitcoin is that it's going to create a a a lower supply of Bitcoin for the derivatives market. Right? So, when I look at these products, what I see is just more trouble on the horizon.
(1:04:30) Um, and I think the Bitbonds thing is coming. I don't know who goes first. I imagine it's coming really soon. I know, uh, CJ Constantinis has talked about it, People's Reserve. I know you guys are working on that. Um, but when it comes and people are able to get essentially AAA rated paper that looks to yield north of 10%.
(1:04:50) What does that do? I mean, what does that do to our markets? What does that do to the derivatives market is all of this Bitcoin gets create, you know, sequestered on chain with proof of reserves. And that's another thing like when when Jack Bowers and 21 went full proof of reserves, you know, again, these are all of these things, all of these pieces to the puzzle that are going to create um of extreme tightness in the Bitcoin market.
(1:05:15) And and when you're able to actually identify on chain where this Bitcoin lives, well, we're going to get to a point when you know what happens if we know that the the Bitcoin treasury companies own 22 million Bitcoin. Well, that would become a problem, wouldn't it? Right? So, I mean, this is this is what I mean by keeping the system honest and and Wall Street's never seen a product like this, right? Where where you can verify and audit the network every 10 minutes on average, right? This is something new and while it's working well and
(1:05:45) everyone's making money today, I can see where this is headed tomorrow. Yeah. And that's why I've been a long-term advocate and I really am happy that Jack and 21 did proof of reserves, but like I wanted to go a step further like bring the Unchained collaborative multi-IG model to all of these products just to basically force the hand of we're not even going to give you the potential to rehypothecate cuz I want it in this two or three or five m of n multisig whatever it comes out to be and I want to be able to like look at it and have certainty that it's not moving and that you're not rehypothecating. And if you're trying to
(1:06:26) um give somebody else a claim to that Bitcoin, they can also see that it's in this multi-IG and sort of assume, wait, wait, it seems like that's tied up with some other instrument right now. I don't I don't really trust this. Yeah, I think that's where we're headed, right? I really do. I think that the market's going to demand it.
(1:06:43) um more people are going to offer it and and as it becomes popular, these Bitcoin treasury companies are going to compete with each other, not just on their ability to buy more Bitcoin, but also on their ability to show proof of reserves. I think that's where we're headed. Yeah, it's a brave new world. And do you see the I mean, they're going to compete on that and that I think that's a big question in my mind.
(1:07:13) I think there is a level of complacency that exists in the market right now that really isn't forcing people to take delivery of of UTXOs and that's not your keys not your coins January 3rd um sort of historically but in recent years really hasn't been that big like pull your coins off the exchange to make sure they have it like part of me where is that that sort of mentality has been getting weaker over the years and complacency can drive people just to not take custody and allow these problems to become exacerbated or blow up even more than they let the bubbles blow bigger than they otherwise would if if self-custody was taken more seriously
(1:07:52) than it is today. And with that being said, I think more than half of all Bitcoin on the market today isn't self-custody. But you could squint and see the trend going in the wrong direction if people get comfortable with IBIT, with banks custoing Bitcoin for them. all all stuff like that. Yeah, I think that's a great point.
(1:08:12) Um and obviously Bitcoin and self-custody is the gold standard. Um I think it's going to take that financial crisis we were talking about earlier to to reverse the trend, but the trend will reverse. We will hit trouble. Um you know, one thing I've learned in markets is that there's always there's always troubled water over the horizon.
(1:08:31) Um, so yeah, I'm I'm convinced that, you know, the next financial crisis might be the last one, but will certainly lead to a mass exodus from traditional custody solutions. Can't wait to see that day. Take control of your Bitcoin. It's a beautiful thing. It's a It's a digital bear asset, the first one we've ever had. It's fun. It's a bit unnerving at times.
(1:08:58) can can uh can be a bit stressful, but practice makes perfect. There are options on the market. We've explained uh Unchained others out there that will help help hold your hand as you're taking self custody. But I think uh don't wait too cuz that's the last that's the other thing like you you don't want to be complacent because when does ultimately hit the fan, there is a chance that when you go to get your Bitcoin, it's not going to be there. And it's better to be safe than sorry.
(1:09:28) Safe now as opposed to sorry 5 years from now or whenever a crisis may emerge. Yeah, I think that's great advice, Marty. Um, look, it you got to get out in front of a crisis. Uh, once the crisis hits, uh, it will be too late. Um, you know, the Coinbases of the world will probably be shut down, uh, by the government as we saw.
(1:09:54) let's let's just go back to 089 when you couldn't short sell, right? Uh the they will do the same thing around taking delivery of your Bitcoin. So, yeah, the time is now. Get your Bitcoin into self-custody. Um enjoy it. It's an incredibly empowering experience and the options that are available today compared to 2013. Oh boy. I mean, yeah, for $250 a year, Unchained does an incredible job. They'll walk you through the process.
(1:10:20) that create a a really safe environment uh for you to self-custody Bitcoin. So, and that's just one example, Kasa. There's a whole bunch. Yeah. Yeah. You don't have to spin up an Electrum wallet on your desktop and save a wallet. File. It's uh it's much easier these days and only going to get easier from here, too.
(1:10:42) Scott, thank you um for taking some time to discuss all this with me today. Is there any parting notes, final thoughts, things we didn't touch on that you think the audience should be aware of? No, look, just thank you so much. You know, be careful. Um, self-custody your Bitcoin. I think we hit on all those major points. Um, you know, be prudent.
(1:11:02) Uh, hope for the best, but you know, plan for the worst. And, um, you know, it's, you know, it's coming. It's just a matter of time. So, uh, get out in front of it and and do the right thing. Get on it, freaks. Get on it, Scott. I hope you have a great rest of your day and great weekend and hopefully we can do this again at some point in the future. Absolutely, Marty. I really enjoyed it.
(1:11:20) Thanks so much for having me. All right, peace and love, Freaks. 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. 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.
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