{ "episodeId": "SLP442", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "joe_burnett_of_blockware": { "name": "Joe Burnett of Blockware", "role": "guest", "tag": "JOE" } }, "segments": [ { "speaker": "stephan", "time": "00:08", "start": 8.47, "text": "Hi and welcome to Stephan Livera podcast, a show about Bitcoin and Austrian economics, brought to you by Swan Bitcoin. Today my guest is Joe Burnett from Blockware, and we're talking about Bitcoin's long term security model, as well as why Ethereum is doomed. So some of the background, Bitcoin's security, people make arguments about it over the long term, and so they say things like, \"Oh, there won't be enough- Fees and therefore the whole network is doomed unless they add inflation and so on. But Joe joins me to talk about ways to assess and explain around that argument as to why Bitcoin mining relates more to finality rather than security. As mentioned, this show is brought to you by Swan Bitcoin, and with the Christmas and holiday season coming up, it's a great time to think about gifting. Swan Bitcoin makes it really easy to gift to your family and friends. You can send it to them on an email with a custom- Message, even with some holiday imagery, and that customer, that person will sign up, and then they will convert that fiat that you've given into Bitcoin. Now, you're not just giving them Bitcoin, you're giving them the gift of Swans' world-class customer service and education, so your friend can be taught about how to self-custody their Bitcoin using Swans' webinars and content material. So that website is swan dot com slash gift if you wanna give to your family and friends this Christmas or holiday period, go to swan dot com slash slash gift. When it comes to searching out Bitcoin transactions, I like to use mempool dot space. It's the leading Bitcoin blockchain explorer. It has a multiple layer display. You can see Bitcoin, you can see the mempool, you can see the blockchain, you can see the Lightning Network. There's all kinds of things you can explore, and with mempool dot space, you don't have to trust a third party. You can install and run it yourself using the different Raspberry Pi or other full node distributions such as Umbrel or Raspiblitz. You can run it and host it yourself. With an enterprise, mempool dot space offers custom mempool instances with your company's branding and increased API limits. If you wanna learn more, you can find all of that out over at mempool dot space slash enterprise. Are you a Bitcoin builder? The Build on L2 community is a community for Bitcoin builders by Blockstream. This initiative is a community led effort by contributors and companies building on core Lightning and the Liquid network. It's an interactive community platform where builders ranging from product managers, designers, and engineers can come together through events and joining. A mentorship program to fast-track success or simply explore a community space to learn something new alongside other Bitcoiners building the future of Bitcoin Layer 2. So go and sign up now for early access to the platform, it's over at buildonl2 dot com. And now here's my chat with Joe. Joe, it's been a while. Welcome back to the show. Thanks Stefan. Good to be on. So Joe, I've seen you've been doing some great work recently. I know you're over at Blockware now, and you had a really interesting thread that I wanted to chat about and get some of those insights out there in audio format just for some of my listeners, I'm sure they'll be interested to hear your thoughts on why basically Ethereum has various long-term security issues, while at the same time, Bitcoin is actually, we could argue, is safe in the longer term. and so This, this is a big point of discussion, so we'll, we'll have to break some of this down for everybody. but do you wanna just start with a bit of a high level about why you wrote that thread?" }, { "speaker": "joe_burnett_of_blockware", "time": "03:27", "start": 206.51, "text": "Yeah, definitely. So before this thread, Pierre Richard and I, who's VP of research at Riot Blockchain, we wrote a report about how Bitcoin's, security in the long term, as many ETH talking heads recently have, have, been tweeting about, they, they say that- You know, Bitcoin security is, is not okay after the block subsidy ends. And so we wrote a report that kind of rebutted that idea. And the, the general thesis behind my ETH thread specifically was going into, okay, you know, now that we've, you know, rebutted why Bitcoin's long term, quote unquote, security-- in, in our mind, it's more about transac-- transaction finality is fine, in reality, it's actually ETH that has a, a security problem problem and related to that, a value accrual problem, like how does the ETH token actually obtain and retain its value? And so I kind of came up with a short thread that analyzed, okay, what are the security problems with ETH and how can we attempt to value ETH and what are the problems with trying to value ETH today?" }, { "speaker": "stephan", "time": "04:37", "start": 277.36, "text": "Gotcha. Yeah. And actually, you know what? I think it would be a good idea to chat a little bit about the Bitcoin security side of it first. I think that is a common area of- Of, I think, attack or, or people just say this line without really thinking it through, right? So let's, let's just spell out the basics for listeners who are new, right? So Bitcoin's blocks, so on average, there's a new block every ten minutes that has a bunch of transactions in that. The reward that the Bitcoin miners receive is actually made up of two parts. There's the transaction fees, and then there is the block subsidy, right? That's the twenty-one million coins being issued out over time, whereas the transaction fees relate to Let's say Joe sends me a transaction or I send Joe a transaction, I attach a little bit of fee to my transaction to incentivize the miners to include my transaction into their block. And so this whole argument, I'm just spelling out the basics, so the basic argument goes, \"Oh, look, the subsidy is decreasing over time because as most people know, Bitcoin's block halving or the, the halving happens roughly every four years where that subsidy halves.\" And so can you just spell out kind of the high- Level argument that is made there about, oh no, why is that not gonna be enough? Or why is that a problem?" }, { "speaker": "joe_burnett_of_blockware", "time": "05:52", "start": 351.83, "text": "Yeah, it's interesting because we see this in like the, the no coiner camp and the bitcoiner camp where there's kind of two narratives, right? When, when fee, when fees are high, when transaction fees are high for the network, you know, the people that may not like Bitcoin or, or don't see Bitcoin as viable will say, hey, Bitcoin can't scale. But then when transaction fees are low, the same people are saying Actually, you know, Bitcoin doesn't have long term security. And so they're kind of painting the narrative to match whatever the current environment is. And to be honest, we kind of see this somewhat in the Bitcoin community as well. We see when fees are high, people say, and the Bitcoin community may be like, \"Hey, security is totally fine in the long run.\" And then when fees are low, people in the Bitcoin community, community might be like, \"Hey, Bitcoin is scaling.\" So people on both sides of the argument are like, constantly trying to like, make their side seem whenever the environment is. But the general thesis behind this report is, it's not necessarily about Bitcoin security when the block subsidy ends, it's more about transaction finality. And so in our, the report that we put out with Blockware and Riot, we came to the idea that, hey, Bitcoin security is more about private key storage, and Bitcoin's consensus rules are more about being able to operate and run your own node, whereas receiving or sending a Bitcoin chain transaction and miners building these digital walls of energy around those transactions. That's more about transaction finality. And as more walls or more blocks get built around your transaction, then that increases the, the confidence and the finality in the transaction that you sent. And so the general idea is, is hey, it's not that miners provide security for Bitcoin, it's that miners, introduce, you know, a level of trans- transaction finality, and over time, as more blocks come in, that tr-transaction finality becomes more, you know, confident and more final." }, { "speaker": "stephan", "time": "07:56", "start": 475.81, "text": "Gotcha. Yeah. So let me just replay that again, just to make sure new listeners are following along. The basic idea here, as you and Pierre argue, is this idea that it's not so much about more hash power equals more security, it's more like we should think of that more about as finality. So generally in Bitcoin, as we say, don't take transactions On the basis of zero confirmations, that we should wait for one confirmation. Now, that's-- there's a separate debate going on about in the RBF world about can people, can certain merchants manage a zero confirmation risk? That's kind of Bitrefill and John Cavalo and other people are making that kind of case, but here we're talking about this idea, and it, it is related, this idea that in Bitcoin, things can be reorganized. However, the basic idea is the more confirmations, the more blocks there are, the harder it is to reorganize. Organize. And so in that sense, what we're talking about with Bitcoin miners, you know, trying to find a, a new block, they are basically, they are sort of creating a continual wall or, or additional finality that the every new confirmation that is added, every new block that is attached to the Bitcoin blockchain." }, { "speaker": "joe_burnett_of_blockware", "time": "09:05", "start": 545.22, "text": "Yep. Yeah, exactly. And there's basically two ways that we outlined in the report that users can mitigate attacks. So right now, for example, people deem Most Bitcoin transactions perfectly settled within six confirmations, whether you're sending ten dollars or you're sending a billion dollars, you know, if you deposit it on Coinbase, they're gonna be like, \"Hey, it's six confirmations.\" No one even really worries about it. So a lot of this report is, is also talking about the idea that, hey, this is kind of like a theoretical problem that doesn't really exist currently, but potentially could exist in the future. But in the report, we talk about two ways that users can mitigate attacks if they're worried about their finality. Of the transaction. One, and we've seen this in reality with other less, chains with less hash, hash power like Bcash, we can wait for more confirmations. So like Rick said, a, a Bitcoin deposit typically is deemed final after six confirmations, with Bitcoin Cash, that, a typical deposit at Coinbase, Kraken or Binance might be deemed, final after fifteen or a hundred confirmations. And this- This is still, both of those are left less than twenty-four hours, which isn't a big deal for global trustless final settlement. And so that's something that, you know, can happen over time if, you know, Bitcoin's hash rate drops or people are simply worried about the finality of their transaction, they can just wait for more confirmations. The second way to mitigate attacks is, is increasing transaction fees, right? So if there is a active, you know, group of miners That are fifty-one percent attacking the network. Remember, they can't change Bitcoin consensus rules, they can't necessarily take your private keys, but they can censor transactions. That's effectively what all attacks stem from. So if miners are, you know, for example, doing an empty block attack and just mining empty blocks, this could be a state-level actor that, doesn't want anyone to transact on Bitcoin. All that would happen in that scenario is people would be bidding, their transaction fees In the minpool to try to get included in the next block, and we've seen like what happens when the minpool gets clogged or when there's not enough block space, to, to fill all of the transactions in the minpool, miners or transactions could go from, you know- Per block transaction fees could go from zero Bitcoin to ten plus Bitcoin really fast, as we saw in twenty seventeen, you know, during the peak when there was a lot of demand for Bitcoin block space, but there wasn't necessarily much supply for block space. So if there's active censorship on the network, the natural market-based response in the mempool is simply increasing transaction fees, and that's kind of the, the response and, and the way that Bitcoin naturally would mitigate against any sort of censorship" }, { "speaker": "stephan", "time": "12:01", "start": 721.07, "text": "tech. And just to spell that out, part of the idea there is the increased transaction fee increases the incentive for, let's call it an honest miner, to pick up that transaction that, let's say the, let's say the dishonest miner or the government attacker or someone attacking the network is, let's say, that person is trying to DOS that network, denial of service, and so they are trying to do what you said, the empty block attack, so they're just trying to do, and it's like not an economic attack, they're not gonna make money by doing this, in fact, they are losing To attempt this, but the point being, they may have a certain quantity of hash power, and they are trying to have enough hash power to just consistently deny and basically stop other people from using the network. But as you said, one of the countermeasures is that you people would increase their transaction fee, and so then even though that malicious actor is trying to, to empty blocks and block the network from proceeding, or at least meaningfully proceeding, there are the honest miners who do Do want fees, and they're just obviously motivated to earn fees. So the higher the transaction fees are going, the more they're inclined to, include or anyone is inclined to try to include that transaction in a block. And as an example, there may be even people who see, \"Oh, wow, look, there's so many people putting in high fee transactions, it might now actually start to make more mining machines profitable that were previously unprofitable.\" So that's part of how the dynamic there works." }, { "speaker": "joe_burnett_of_blockware", "time": "13:29", "start": 808.89, "text": "Exactly. And another interesting point that we- Found like researching this topic is at the time that we published this, Bitcoin Cash's block reward, total block reward was five x less than average Bitcoin transaction fees per block in dollar terms. And so even though that Bitcoin transaction fees are already, you know, providing much more reward to finalize and build these blocks on Bitcoin, Bitcoin Cash is still traded on Coinbase, Kraken, Binance, and they- Simply only require marginally more confirmations, and like I said, it's, you know, fifteen or a hundred confirmations, which is still rapid settlement without a trusted third party. And so that kind of gives hope that, hey, like even if Bitcoin transaction fees don't rise significantly from where they are today, we're, we're already seeing other networks being able to do trustless final settlement without having to worry too much about fifty-one percent attacks or, or double spends. another like topic that Pierre and I have been talking about recently Is, you know, all of your other assets that you hold, even in the fiat world, whether it's US Treasuries, your equities, your real estate, basically what's the walls around those, transactions of you acquiring those assets is basically just a legal system, and that's about it. In a way, the Bitcoin network still has like a legal system potentially, like that's one layer of se-security around Bitcoin transactions, like if Michael Saylor buys a bill- billion dollars worth of Teslas from Elon Musk, and he sends the Bitcoin, and then Michael Saylor double spends on Elon Musk. Well, in the real world, he's still gonna owe Elon Musk a billion dollars worth of Bitcoin, right? So Bitcoin not only has the legal system that may exist protecting the transactions, but it also has these digital walls of energy that add a second layer of security around Bitcoin transactions, whereas all of your other assets, with real estate, US Treasuries, equities, bonds, there's no digital wall of energy. Energy protecting, those assets. It's just whether the government says you do have it or you don't have it." }, { "speaker": "stephan", "time": "15:38", "start": 938.48, "text": "Right. And so that's, yeah, I think that's a great way to put it. And fundamentally, what we're talking about here is that Bitcoin is a system that exists outside of the government, and so it's a monetary system outside the government control. And I think the key, I think some of the key lessons that we've been talking about so far, one of those is this idea that it's the nodes that really protect the overall validity, of- Of transactions, right? Because y-yes, Bitcoin miners are involved in the ordering of transactions, but actually it's Bitcoin nodes that say whether it's valid or not, and so that's the really crucial part because when, you know, and I think sometimes people take this a little bit too far, there are, you know, individuals out there who try to make this idea of like, \"Oh, it's gonna be like a war gaming scenario and you need Bitcoin mining.\" Well, no, it's the nodes that are deci-deciding, \"Is this a valid transaction or is it not?\"" }, { "speaker": "stephan", "time": "16:32", "start": 991.59, "text": "Sig, you know, whatever, whatever conditions are, is it a valid signature? Yes or no, and that's it. And then, yes or no, it's a valid transaction, or yes or no, it's a valid block or it's not a valid block. And that's just what it is. So it's the nodes that really protect the actual security of the network. And as we talk about in Bitcoin, the idea is that it should be accessible for people. Ideally, it's cheap for people to run a Bitcoin node. You can do it with, you know, your existing laptop" }, { "speaker": "stephan", "time": "16:58", "start": 1017.71, "text": "or" }, { "speaker": "stephan", "time": "17:02", "start": 1021.55, "text": "One point, one other area that I really wanted to touch on is this flywheel. So I see this in the report as well, where there's this interesting flywheel, and I thought it'd be fascinating to talk about this idea that we start out, you know, let's say there's a demand for cheaper settlement, then, you know, the fees go down because of that new technology, whether it's Lightning or batching or, and so on, then we get adoption, and then the fees come up, and then we, we sort of, it's like it's just a round and" }, { "speaker": "joe_burnett_of_blockware", "time": "17:32", "start": 1051.57, "text": "The, title than the report, the Bitcoin scaling cycle. And we've seen this play out throughout the history of Bitcoin, where, hey, there's, Bitcoin is increasing in scarcity, there's a halving, there's another wave of adoption, the price is going up, there's more demand to, you know, demand final settlement of actual bitcoins because people wanna acquire bitcoins for long-term savings. And because of this, there's, you know, a fixed amount of block space, like we said, we wanna keep block space Fixed because that's what enables everyone to run a full node and keep the network accessible, and, and verifiable from an individual perspective, so the global consensus rules of Bitcoin don't change. So there's a fixed amount of block space, but there's potentially lots of increasing demand for final settlement of Bitcoin. When that happens, transaction fees go up, so that's one reason that transaction fees can go up if there's scaling issues on the base layer Bitcoin. But when transaction fees go up, what we see happen is- People demand cheaper settlement, right? And so people, we see, we've seen this play out. We've seen exchanges batching transactions, we've seen the Lightning Network development, we've seen FETI Mint, we've seen Liquid, we've seen Rootstock, different Bitcoin sidechains. And so when, when transaction fees go up, we see demand for cheaper final settlement that encourages people and developers and, and companies to build out various scaling solutions on top of Bitcoin, and then people, you know, can put theoretically put more throughput through the same amount of fixed block space, and then fees eventually go back down, and then Bitcoin is scaling properly, and then we later see another wave of, of Bitcoin adoption where maybe there's ten x more people demanding fi-final settlement on Bitcoin, and they, the fees go back up again, and then we see, okay, we have, now we have another layer, or another period of, of increased, you know, demand for, for cheaper settlement. Because fees went back up, and then now Lightning Network gets more developed or Liquid gets more developed or Fettyman or whatever, and so we've seen this play out through twenty seventeen, you know, we saw Lightning really get created, you know, mostly after that or really get developed mostly after that, Liquid, exchanges started batching transactions, SegWit as well, so people started to do these, you know, different, technology like scaling, solutions, and that helps, you know, Bitcoin scale and, and, and lead to more final settlement." }, { "speaker": "stephan", "time": "20:01", "start": 1200.74, "text": "Yeah, it's Fascinating, scaling wheel or adoption cycle, and I think it, it is true to say that in twenty seventeen, there was a lot of-- the fees were rising and at, at that point, there were a lot of people complaining about the fees. I think at that point, at the peak, I think people were paying something like thirty dollars or fifty dollars a transaction, and so people were saying, \"Oh, how can this be?\" and then a lot of people were basically yelling at exchanges, \"Hey, get SegWit, when SegWit?\" And so SegW Say I'm an exchange and I'm paying out to the customers who want to withdraw, instead of me just doing one transaction per customer, I just do one transaction, but actually there's, you know, fifty outputs, so it's one transaction going out to fifty people. And so that, that batching massively saved on the block space, right? So as we've said, blocks happen on average ten minutes, and a typical block, you know, if you look on mempool.space, you can see the blocks go by, but on average, we're talking two thousand transactions, maybe three thousand per block. Like in an average. And so I think those techniques, SegWit and batching, I'm probably most to thank. And so now basically the major exchanges support SegWit and, pretty much all the exchanges do batching. And we saw a very big drop in the mempool, or at least in the block space market or the fee market, when, for example, Blockchain Dot Info turned on SegWit and started doing batching as well." }, { "speaker": "joe_burnett_of_blockware", "time": "21:24", "start": 1284.17, "text": "Yeah, exactly. So, so basically the key idea is transaction fees on the Bitcoin network can be high for, for one of two reasons. One There's a lack of scaling technology, which over time can get resolved with more scaling technologies, and then two, active censorship from, a select group of miners. And two, the reason, the, the response to if there's censorship, fees go up, and, and, and that's just a natural response, honest miners come back online, or the attacker says, hey, instead of attacking Bitcoin and not making any money, I should actually just honest mine these, these transaction fees and, and defect and- And play the, play the game because the incentives actually work." }, { "speaker": "stephan", "time": "22:05", "start": 1324.8, "text": "Yeah, that's fascinating. And I think I, for a while, speculated, \"Oh, we're gonna see more Lightning when we see another bull run.\" Like, this is years ago, right? I thought, \"Oh, we'll see more Lightning when there's like a big bull run and transaction fees spike again, and that will be the impetus, just like with SegWit, like this time around, that will be the thing for Lightning.\" Now, it didn't quite happen that way. I think it's probably more fair down to where they are today, where oftentimes it will clear. But I think longer term, we're gonna have the opposite problem, right? Like we're gonna have a lot of people who want to transact because they want to open a Lightning channel or they want to do some kind of transaction using Bitcoin, whereas today they are very much not doing that. And of course, we have our scale, we have a lot of the scaling stuff that's, we're laying, we're laying the roads, we're laying down the piping, right? We have Lightning, we have people like, Gal Using Lightning day to day. You know, there are big exchanges who have enabled Lightning, so whether that's Cash App, Kraken, Bitfinex, or, you know, so many, so it's interesting to see where that's going. And I think the other really interesting thing I saw, and I picked this up from your report, where you point out that there are thirty-two million entity, according to Glassnode data, there are thirty-two million entities, or estimated, who store wealth on the Bitcoin blockchain, but almost all of them are using it as store of value and not Change or method of payment or whatever we wanna call it. And then, so then, what happens when we go to seven billion? Well, that's gonna be a two hundred x over two hundred x increase in entities competing for that block space. So if-- I think if there's any kind of suggestion that, \"Oh, see, the fees aren't gonna be enough,\" it's insane to think that, when I think if anything, the problem is gonna be the other way around." }, { "speaker": "joe_burnett_of_blockware", "time": "23:52", "start": 1431.93, "text": "Yeah, definitely, exactly. So it also kind of plays into the idea of where we're at in Bitcoin's adoption cycle" }, { "speaker": "joe_burnett_of_blockware", "time": "24:01", "start": 1441.48, "text": "store value because it's very volatile and its adoption is growing extremely rapidly. But in the long run, if, if more users do adopt Bitcoin as a store of value, it effectively would also become, you know, the default best form of medium of exchange that you use to actually trade Bitcoin for goods and services. And if, you know, not only does the amount of users go up in that scenario by a significant amount, but the amount of transactions those users are making also goes up by a significant amount. So if- If Bitcoin transactions, per user were, were about, you know, one to five per day, and we had about seven, eight billion people using Bitcoin, that's about a s- eighty thousand x increase in transaction throughput that needs to occur, occur on the Bitcoin blockchain. And obviously, it'll be, for that to happen, we would definitely need to be using second layer scaling solutions, but certainly, I, I definitely agree that the problem most likely in the future will be fees will be high and we'll be trying to build out more and more scaling solutions. As those fees become, or they, they end up pushing people to, you know, Lightning or Liquid or even third layer solutions." }, { "speaker": "stephan", "time": "25:10", "start": 1509.58, "text": "Back to the show in a moment. Are you ready for something huge? BTC Prague is coming. It's gonna be the biggest Bitcoin event in Europe. It's coming June eighth to tenth twenty twenty-three in Prague, Czech Republic. This is a massive three-day event, looking forward to welcoming ten thousand people, ranging from fresh newbies to Bitcoin developers or business insiders, and connect them together in a unique networking opportunity. There'll be more than 60 world-class speakers and 100 companies to ensure it'll be both educational and fun. I'll be one of the hosts, I'm gonna be the MC for one of the days, and I think this will be an excellent experience. I've really enjoyed the times I've visited Prague, they've got some famous Czech beer and affordable prices. You can go and get this, get the tickets at btcprague dot com, use code livera to get your discounted ticket. I'll see you in the Prague Citadel. When it comes to securing your coins for the long haul, multi-signature with" }, { "speaker": "stephan", "time": "26:01", "start": 1561.46, "text": "For large holdings or high net worth individuals, or perhaps for more famous individuals, Unchained Capital can help you. They've got a concierge onboarding program where they can help you set up with multisig, and they've got a new Unchained inheritance protocol to help make sure you're prepared for multi-generational Bitcoin savings. So Unchained can help you with that process. They can do a call with you, they can ship you the hardware, and as part of the inheritance protocol, they will give you some step-by-step checklists, letters for the executor or trustee, inheritance seed phrase And a proof bag. So if you're interested in this, you can find out more over at unchained dot com slash concierge, use code livera for a discount there. And lastly, coinkite dot com are the creators of some amazing Bitcoin hardware devices, most notably the Coldcard Mark IV, which is the latest and greatest. It has two secure elements, it's got NFC support, which is really cool, you can use that to tap and sign or tap and move the multi-signature information back and forth. It's got all kinds of features, you can use it in In single signature mode also, you can use it easily with wallets like Specter, Sparrow or Nunchuk. There's all kinds of options available and features, so I think it's a great tool to actually learn about Bitcoin also. For example, if you use it with wallets like Sparrow or Specter, you can get some more appreciation for how things are working under the hood. So that's a great tool. You can find all of this and more over at CoinKite dot com. Use code Livera for a discount on your cold cards. And now back to the show. Right. Yeah, and I think that maybe that's one of the, let's say, dangers or whatever in the longer term is that, you know, a lot of people end up being custodial without the ability to be self-custodial. But I think I'm still bullish on where things are going. I believe there will be new technology coming, and we just haven't had the impetus yet for some of those things. And I think once we get some of these ideas, like let's, as an example, let's say in the future if we got any pre-vault, and That enables L2, which then enables multi-party channels, and so maybe that is going to be part of the future scaling model, because, you know, it's just gonna be difficult for every-- if everyone wants to have a lightning channel on chain, because just today, it's not, it's not gonna scale to the world, at least non-custodial or self-custodial. But, I mean, I still think the point for me is that it's possible for people to self-custody, right? I understand there'll be people who are custodial, but I think that's probably" }, { "speaker": "stephan", "time": "28:29", "start": 1709.49, "text": "And you also had some estimates in terms of where you think things are going, because again, part of this whole argument, it's a long-term argument, so the argument, the way it's made, people say, you know, people say, \"Oh, look, there won't be enough fees or whatever for the miners to keep the thing secure, right? Because they use this term, the security budget, right? Which, as we've already mentioned, it's more about validity, not security. But the argument is, it, the argument goes that, oh, maybe by around twenty thirty-five or In the report, you sort of spell out what you think is a likely scenario where you say likely the fees are going to outpace the subsidy between twenty thirty two and twenty forty eight." }, { "speaker": "joe_burnett_of_blockware", "time": "29:09", "start": 1748.95, "text": "Yeah, exactly. And I think the general idea of just adding on to, the, the idea of a security budget, we kind of think that's kind of like a, a weird term and, and kind of the totally wrong way to look at it, 'cause we think that the security budget or the counterattack to an attack is higher fees. So theoretically, if, if someone is attacking Attacking the network or a miner is attacking the network or attack- attacking transaction finality or effectively censoring transactions, the response is higher fees, so the, the, the budget can be however high, you know, people are willing to pay for, for transaction fees, which could be very high because Bitcoin is the most or the least uncertain asset because of the ability to run your own node, like we talked about. So yeah, we, we think that by twenty thirty-two to twenty forty-eight, you know, Bitcoin transaction fees in aggregate will likely surpass On, on average per block, the block subsidy, and at that point, you know, it's, it's kind of up to the, the-- I guess the tides will change where people won't be attacking Bitcoin's long term security, there won't be much of an arg-argument at that point, as long as, you know, Bitcoin is still working and, and, and at that point, and people still deem it, you know, the least uncertain monetary technology that humans have, have ever discovered." }, { "speaker": "stephan", "time": "30:22", "start": 1821.58, "text": "Yeah. And so let's go into that a little bit. So for people" }, { "speaker": "joe_burnett_of_blockware", "time": "30:30", "start": 1829.87, "text": "So Bitcoin is, you know, an open and accessible network, like anyone can join and anyone can run a Bitcoin full node, right? And anyone can hold their own Bitcoin private keys. And because anyone can do that, Bitcoin has these unique monetary properties that are immutable. so Bitcoin has immutable scarcity, it's portable, it's durable, it's divisible, it's fungible. And because of these unique monetary properties, we know With real, with the highest degree of certainty that, hey, this is what Bitcoin is today. No one can change it, no group of, of, no government can change it, no group of developers can even change it. All of these properties are, are set in stone and immutable, and that's what makes Bitcoin the least uncertain monetary technology. If you compare it to, I'm sure we'll probably get into this, something like ETH," }, { "speaker": "stephan", "time": "31:20", "start": 1880.32, "text": "yeah," }, { "speaker": "joe_burnett_of_blockware", "time": "31:21", "start": 1880.56, "text": "the future supply of ETH is, is extremely uncertain. In fact, the future supply of ETH is lit- literally determined by By how many ponzi's and dog tokens are being traded, or minted at any given point in time. So the future supply of ETH is, is extremely uncertain as far as even in the market, but also we have a, the Ethereum Foundation, which can make, you know, consensus altering changes to Ethereum and completely change the, the monetary supply schedule. So something like Ethereum is very uncertain, something like gold is even relatively uncertain. it's more certain than almost all other monetary technologies except for Bitcoin. But theoretically, you know, we could find a, a massive sum of gold at the bottom of the ocean when new technology is created to, to mine gold. And so you're kind of, with gold, you're kind of relying on, on nature and you're kind of short technology. With Ethereum, you're kind of relying on the Ethereum Foundation to not change things and, and people to, you know, mint Dog tokens and, and Ponzi coins. But with Bitcoin, there's not a specific central group that can change Bitcoin's monetary properties, and that's what makes Bitcoin so special." }, { "speaker": "stephan", "time": "32:27", "start": 1946.69, "text": "Yeah, Explanation, and I think it really is important to ho-- to hammer that point that there's a reason to hold Bitcoin because we believe it's going to be money. So if you're coming from an Austrian way of thinking about money, you're thinking, \"What is the most saleable good? What's the most saleable commodity? That's the one that's most likely to be money, and that's where we get into all this stuff, right? The scarcity, the divisibility, the durability, the portability, the, you know, all of these aspects, the verifiability, all of" }, { "speaker": "stephan", "time": "32:57", "start": 1977.41, "text": "How do we even hold money? It's because we're uncertain about the future. We don't know what the future is gonna be. I could, as I say, I could break my arm tomorrow and I, I need to go to the hospital and pay for an operation. I need money to do that. And so the argument here is that Bitcoin is the least uncertain. It is the best at doing this alleviation of our future uncertainty. And so that, I think, gives us a strong reason for why people want to hold Bitcoin. That's reservation demand for Bitcoin. And so I think this is probably distinction between Bitcoin and altcoins, because I think that's really one of the big factors that a lot of people don't understand. There's no, there's no or little raison d'être to keep holding that token if it's a utility token, and I think that's really that distinction that is worthwhile people understanding. So could you explain how, how you see that?" }, { "speaker": "joe_burnett_of_blockware", "time": "33:47", "start": 2027.42, "text": "Yeah, definitely. So I think it's, like you said, money is an, is an interesting concept, right? It's basically an intermediary tool that we use to trade various goods and services with. So So for example, economic systems inevitably converge on, on one monetary tool, because if we didn't converge on one monetary tool and we had infinite goods and services being traded with each other, that kind of defeats the purpose of money to begin with. The purpose of money is to find one intermediary tool that we use to trade with every other, tool, and, and it's we, we use it to price things, we use it to store value, we use it, use it to reduce future uncertainty. So first, I think you have to come to the idea that, hey Okay, economic systems and individuals inevitably converge on one monetary tool, that monetary tool is the least uncertain monetary tool, and, we think that's, that's Bitcoin, obviously. So when you come to that idea, okay, you have to realize, okay, if ETH isn't a monetary tool because its future is, is very uncertain relative to Bitcoin, what is ETH and how could you, could you value it? Well, you could argue, in my opinion, that ETH is some sort of like semi-decentralized equity, right? And so like any equity, all of ETH's value is derived from the estimated present value of future free cash flows. And ETH's future free cash flows are based on how busy the network is and how busy it will be in the future, and this will be, mainly from transaction fees, that, that's basically ETH's, future free cash flows. So you can think of stock buybacks as like fees burning on the Ethereum network, and you can think of ETH staking yield as dividends being paid. Paid out to, to ETH holders. And I think it kind of leaves an interesting problem when you realize, okay, ETH isn't money, and its future value is built on the idea of, of future transaction fees on the Ethereum network, it kind of leaves a, a very interesting problem, right? 'Cause if fees are high, DeFi, if it's even a, you know, viable, technology or NFTs or whatever is being built on ETH, DeFi will be built on other chains if, if, if, if- If, fees on the Ethereum network are high, and this could be, you know, other like Solana or whatever, or Bitcoin side chains potentially as well. So if fees are high, all of this gets built el-elsewhere. If fees are low, ETH has no future cash flows and, and the token, you know, is kind of not worth anything because that's how you would derive the value of the ETH token. And so, in my opinion, this means that ETH can't even successfully scale for it to be a valuable token, because if ETH finds a- Scaling breakthrough will fees become low and the present value of the ETH token becomes low because that's how you derive the future, the, the value of ETH, it needs transaction fees to, to be valuable. And if ETH doesn't scale, then fees become high and DeFi gets built elsewhere. So it's kind of this nasty circular feedback loop until ETH has a very low present value in the long run. And I think unfortunately, like all non-money layer ones have this Value accrual problem, and it ultimately kind of leads to a security issue for ETH and other non money layer ones, because if the ETH token isn't worth enough money, whether it's worth less than, you know, ten billion dollars, it can't securely settle a hundred billion dollars worth of stablecoins or wrapped Bitcoin, because you could theoretically, you know, buy the ETH and then use that ETH to change the transaction finality of all the other assets that are being built. On ETH. So I think kind of in the short term, as we've seen, you know, markets can certainly remain irrational, people minting and trading, dog tokens and monkey JPEGs for, for billions or, or millions of dollars. But I think in the long run, like markets are more of a, of a weighing machine rather than a voting machine, and, and I think ETH generally is designed to, to trend towards zero." }, { "speaker": "stephan", "time": "37:53", "start": 2272.76, "text": "Fascinating. And so let's walk that through just to make sure everyone's following along. So So basically put it this way, Bitcoin is very clear about what it is. It's, it's trying to be money, right? And so for that reason, it's trying to be a hard scarce money, and for that reason, there's a reason people wanna hold it, because it's, it's the, it, it helps resolve their uncertainty. Now, if you're not trying to be money, then you're kind of in this category of being a utility token. But as with any of these tokens, if you even think of like frequent flyer miles, where the airlines have an incentive to just" }, { "speaker": "stephan", "time": "38:27", "start": 2307.43, "text": "issue. Why do people wanna hold the thing? Now, it's interesting as well because over the years, the Ethereum people have constantly shifted the narrative, right? It, it comes and goes, right? Because at times they've said, \"Oh no, we're not trying to compete with Bitcoin, we're not trying to be money, we're just trying to be like gas, like you just use this gas token to do this utility thing.\" But then other times you see them trying to have their cake and eat it too, right? Because there are other prominent, Ethereum huffers who try to" }, { "speaker": "stephan", "time": "38:57", "start": 2337.41, "text": "Don't have your cake and eat it too. You need to choose, and I think with Bitcoin, we've very clearly made that choice. It's money, and we're not, you know, that's the most important thing. Whereas with Ethereum, it's sort of, it's not really clear because people in their community seem to want to have their cake and eat it too. They're not willing to just make that choice and say, \"No, we're just doing this one thing.\" And I think the other point that you made is that we should view Ethereum more like equity, as Michael Saylor The nature of this thing is more like equity, and so it really puts them in-between a rock and a hard place, because fundamentally they either scale successfully and it's, you know, it's, it's gonna fail for, because there's no, reason to hold the thing, or the other way around, people go use other chains to do things with. And, to be honest, I think that other path around of like, e-- somehow people choosing it as money, to me, just seems, you know, even a- Crazy scenario, right? Like it would just have to-- Like, why would people choose this thing with this uncertain future, uncertain supply, with a foundation that can control it? It's just, you know, there's so many levels and layers of, you know, absurd that you have to go to, to, to actually go there. Even-- But even then, I think I appreciate that you're, you're trying to steal, man. So you're trying to at least give them, like, okay, hypothetically, what would that look like?" }, { "speaker": "joe_burnett_of_blockware", "time": "40:21", "start": 2420.82, "text": "Yeah, exactly. I mean, when you" }, { "speaker": "joe_burnett_of_blockware", "time": "40:27", "start": 2427.41, "text": "During certain periods of time, US dollar and Apple stock could be considered ultrasound money according to their definition, right? I mean, if you look at the shares outstanding over, like, I think like the last five years or so of, of Apple, it's slowly decreasing and becoming more scarce. But of course, Apple stock is, is controlled by a select group of people and that depends on being able to produce future cash flows that enable them to buy back their shares. Same with the US dollar, it's like, okay, there might be short periods of time where- The M2 money supply is actually decreasing, but in the long run, we know that, hey, the only way to, to get out of this problem is to create more money and encourage people to go into more debt and effectively creating more money. And so during short periods of time, Ethereum could be ultra sound money, but the-- at the end of the day, if it's still controlled by a small group of people that have in the past just recently made consensus altering changes to the network, and at least it's certainly more uncertain than the future of Bitcoin to be able to make consensus altering changes. changes, then there's just like it's, it's a non-starter when it talk, when it comes to being actual, the least uncertain money." }, { "speaker": "stephan", "time": "41:35", "start": 2494.65, "text": "Yeah. And I think probably at this point, like an Ethereum huffer might say, \"Oh, look, see, but it was always the plan to go to proof of stake, and therefore it wasn't just kind of like a, a last minute rug pull by the centralized foundation. It's more like, oh, somehow it's, 'cause they're trying to sort of do the mental gymnastics of the, you know, of trying to" }, { "speaker": "stephan", "time": "41:55", "start": 2514.75, "text": "say And it's not, as I said, it's not a security from their point of view, but, you know, somehow the community knew this was coming and this was always the plan, and then when things are found out that it's wrong, oh, oh, oh, no, that's, you know, we need a new band aid for that, that's coming in a few years' time, and we're just gonna paper it over with marketing." }, { "speaker": "joe_burnett_of_blockware", "time": "42:14", "start": 2534.34, "text": "Yeah, no, I mean, it's, it's very interesting. They always are, are, you know, painting the narrative to, to Cashless is gonna produce because it's clearly not very certain to be money, even though they say that, hey, we're gonna do this inevitably, even if it works, like the future of ETH, the monetary policy is dependent on, you know, how many dog tokens and, and ponzi's get minted and traded on the network, and it's like, is that really a sustainable way to generate a ultrasound monetary policy? I would argue it's probably not." }, { "speaker": "stephan", "time": "42:50", "start": 2569.62, "text": "Yeah, yeah, and I think you've, I think you've done it there. So look, I think that's enough More broader about where things are going. Now, I know the first time we spoke on my show was about this idea of valuing Bitcoin, and what kind of valuations, so I'm curious if you have any thoughts on that. I know you also put out some data around like pricing things in Sats over the long term. So what's your overview there? Yeah, definitely. The" }, { "speaker": "joe_burnett_of_blockware", "time": "43:19", "start": 2598.88, "text": "Blockware team, Blockware intelligence team actually put out a report somewhat recently, within the past six months, about analyzing the future purchasing power of Bitcoin Bitcoin, and the way that we thought about it, and it was similar to how we talked about it, over a year ago, was, hey, Bitcoin is this, you know, the least uncertain monetary technology, and today we don't have a, a, a very scarce monetary technology to store value in, and it's not very, it's, it's rather uncertain, right? A lot of people use the US dollars as their monetary technology to value other assets, and so we think because of the dollar is lacking in its, future. future certainty, people resort to other assets to store, you know, massive amounts of, of their net worth, and, you know, most people hold a lot of real estate, they hold a lot of equities, they hold a lot of bonds, they hold all of these other assets except the actual dollar in itself. And in fact, some of the like the wealthiest people in the world actually probably have negative dollars, they owe more, more dollars than they actually hold on, on, on their balance sheet, and that's because they know that by design, the dollars is, is going deflate or inflate against other assets. And so in the purchasing power report that the Blockware team put out, which is on the Blockware website, we show that, hey, these assets are all still gonna exist. You're still gonna have real estate, you're still gonna have equities, you're still gonna have things like gold, but their monetary premium will likely get siphoned into Bitcoin itself, because now we have this new least uncertain monetary technology to where you don't have to, you know, put your money in a massive diversified portfolio portfolio of five thousand different assets, you can just hold Bitcoin and any sort of like technology, technology gains that the world, creates will kind of go to two separate groups, groups. It could go to the entrepreneurs that created that tech, tech, technology, and it can also go to the Bitcoin holders through, you know, increased competition for the technology, making products and services cheaper over time. And so Bitcoin is kind of this like ultimate savings technology in a way, it's kind of like a, a productivity The index without management fees, and, and that's kind of what people are looking for in their four one K, but they've just kind of created a very bizarre, like, diversified way to get that, that position for their portfolio." }, { "speaker": "stephan", "time": "45:42", "start": 2742.07, "text": "Right. And I think we can see that also when people show money supply growth and correlation with the markets, right? And they say, \"Oh, okay, is it, is it all really just...\" Basically correlated to what the money printer is doing, right? Like, is it all just-- Is it really just that simple? And so I think the other aspect, I, I've seen you chat about this recently, and I know you put out a thread, now, funnily enough, I think you put that thread out in, I, I wanna say December two thousand and nineteen or maybe January twenty twenty-one, you were saying, \"Look, here's, here's a thread I did last bear cycle talking about the extreme bull and bear markets in Bitcoin.\" So in your view," }, { "speaker": "joe_burnett_of_blockware", "time": "46:20", "start": 2780.19, "text": "why Bitcoin, they think, okay, Bitcoin's maybe cool, but it's very volatile, so how can it be this money? Whereas I kind of look at it a different way, like, okay, Bitcoin is actively being monetized from zero, and the only way for Bitcoin to actively be monetized from zero by eight billion people is probably through extreme volatility and, and extremely rapid growth, right? I mean, Bitcoin has outperformed virtually every asset over the past ten years. And it's, you know, still if you look at entities on the network, even during dark bear markets, more and more people are, are adopting Bitcoin, using it as savings technology, and, and, and using it ult-ultimately as, as an alternative form of money. And so I think that these bull and bear cycles kind of are, are helpful and actually end up speeding up Bitcoin adoption. We have the bull cycles, which, which is where the price just goes crazy, we see more- Developers come in, we see more institutions come in, we see more speculators come in, and we see more Bitcoin adoption generally come in at a more rapid rate. Of course, the price gets kind of overheated relative to what's sustainable at that time, and, and people just kind of get in a speculative frenzy, and then we have these like dark bear markets where we basically end up washing out everyone that doesn't fully believe or, or understand what they hold, and they end up selling it at, at the low Or capitulating, and maybe they were over leveraged, maybe they understood it, but they just took on too much leverage at the top and, and ended up getting wiped out near the bottom. But then the only people buying Bitcoin when it's down seventy, eighty percent at this point are like true hardcore believers that understand, hey, Bitcoin is the least uncertain monetary technology, and I've been fairly conservative or responsible when it comes to like my personal balance sheet, my personal income statement, to where I know I can accumulate Bitcoin if it does fall further. Whether that's fine, but I know in the long run, like I said, this is the least uncertain moni-monetary technology we've, we've discovered, and therefore in the long run, we're likely to go through another massive bull market until eventually we see global adoption sort of peak, and then we can see Bitcoin potentially growing with, you know, global productivity." }, { "speaker": "stephan", "time": "48:43", "start": 2923.07, "text": "Yeah, and I think one point I would add to what you were just saying there is, it's often in these big drops that new, quote-unquote, maxies or maximalists are minted, right? It's- Actually, that is the time that people dig in, because up until then, they were just sort of going along with the flow. Maybe they bought some Bitcoin and left it on a custodial platform somewhere, and then after this whole wreck, wreckage happens, some fraction of those people actually dig in, and that's the point where they start maybe listening to a podcast or reading some books or reading your research reports or things like this, and then that's when they actually go on that journey. And so I think that's been the pattern that I've seen, and this is, you know, most- Multiple cycles, I've seen this same pattern happen, and what we typically see is a bunch of people who say, \"Yeah, you know what? I'm gonna, I'm gonna sell the shit coins, you know, sell the Ethereum, sell the shit coins, and just go to Bitcoin, learn and learn about, you know, securing my coins, running my Bitcoin node, all this kind of stuff.\" So that's the trend I've seen, but I'm curious, is that what you've seen?" }, { "speaker": "joe_burnett_of_blockware", "time": "49:43", "start": 2983.03, "text": "Yeah, definitely. I mean, that's w- kind of my personal experience getting into Bitcoin. And on Reddit and, and Twitter, and it was so interesting 'cause I'd been, yeah, as a kid, like looking at stocks, like looking at something like Coca-Cola or IBM, like, \"Wow, you can earn two percent a, a year in dividends forever if these companies still exist,\" whereas this Bitcoin thing just went from two hundred dollars in the twenty fifteen like bear market low up to twenty thousand dollars, like, \"This is insane,\" like obviously something, something might be here. And so I, I kind of dove into the whole crypto space Broadly, and then during the twenty eighteen bear market, I started interacting with other people 'cause I was like, okay, you know, there's probably something here. I don't know what it is exactly, but there's something. And, and I personally dove in deeper into, okay, like, what is Bitcoin? Why is it important? Why is transaction fees per second not like the critical, stat you need to be looking at when you're comparing different altcoins and, and, and Bitcoin. And eventually you learn like, hey, it's not about, you know, how much transactions you can do per sec-per second, like you can do a lot of transactions on Visa or PayPal, that's not the invention here. The invention is being able to run your own node, being confident that Bitcoin is the least uncertain money because of its immutable monetary pol-policy. So yeah, I totally agree. I mean, I think that we're gonna see more and more people, and I think we have seen this Seeing more and more people demand self custody, 'cause they realize, hey, I can't trust third, trust third, trust the third parties. I need to like run my own node, take, ownership of my Bitcoin, take self responsibility, and hold the private keys to my Bitcoin, and, and, and they understand that, hey, you know, it's not FTT token that I need to be buying or, or, Dogecoin, it's actually, Bitcoin." }, { "speaker": "stephan", "time": "51:38", "start": 3098.24, "text": "Yeah. And so when it comes to the broader macro world with, The Fed and all of this going on, I know you were commenting or maybe just kind of speculating that inflation might slow down and then that might actually spur the Fed to at least pause or even start cutting rates, as in pause the rising of the rates and then potentially even start cutting rates again." }, { "speaker": "joe_burnett_of_blockware", "time": "52:03", "start": 3122.57, "text": "Yeah, one thing that I found interesting the last Bitcoin bear cycle, Bitcoin bottomed at the end of 2018 and early 2019, right when the Fed paused that rate hiking cycle. Now, you know, that doesn't mean that when the Fed pauses this cycle, that that's gonna be the exact bottom for Bitcoin per se, like there's certainly things that have changed. But I think it's certainly possible that, hey, inflation is already starting to come down on a year-over-year basis according to CPI. And if that does happen, and the federal funds rate is, is relatively high relative to that inflation, it, it would make sense for the Fed to say, okay, hold on a second, like we see that our rate hikes may be working to bring down the CPI inflation, maybe we can pause, see how things look for a while, and then maybe something ends up breaking in the treasury market, and then all of a sudden they need to start cutting rates again, doing QE, incentivizing more people to borrow, take on leverage, and then we're back at the, another bull cycle for Bitcoin equities and pretty much every asset on Earth." }, { "speaker": "stephan", "time": "53:08", "start": 3187.87, "text": "Yeah. So, and I think the other aspect people are normally asking is this idea that this is the first time Bitcoin is going through, a bear cycle and the broader, you know, markets are also in a bear cycle, whereas you could argue, okay, since two thousand and nine and ten, basically it's been mostly a bull in the normal, in the fiat asset world. so I'm curious your thoughts on that idea." }, { "speaker": "joe_burnett_of_blockware", "time": "53:33", "start": 3212.93, "text": "It's interesting because in the Bitcoin world or outside the Bitcoin world, I guess, I think a lot of people have very short time horizons. They see Bitcoin was trading at, you know, sixty-nine thousand last year, now it's trading at seventeen thousand, and they're like, \"Wow, this is like obviously a Ponzi, a bubble.\" And we saw the exact same like narrative play out the previous cycle where Bitcoin made it up to nineteen thousand, eighteen thousand, fell all the way down to three thousand, and people were gloating on Twitter like, \"Oh, Bitcoin was obviously a Ponzi Bubble, yet even during this macro collapse almost, or at least, you know, the, some of the largest drawdowns we've seen in equities and the treasury market and, in the history of, of the treasury market really, we're seeing that, hey, Bitcoin is still about five x higher now than it was at the previous bear market bottom in twenty eighteen and twenty nineteen. So it's very interesting that, hey, you know, Bitcoin is doing actually very well compared to just, you know, three years ago, if, if you- Bought the bottom and you held to potentially this bottom, but people, you know, lose sight of, of what's really happening in reality, and they say, \"Hey, they cherry-picked dates like the twenty seventeen top that happened for like two seconds, or, you know, the top of, of last year, and they say, \"Hey, like, obviously this is a terrible investment, what are you doing? \" But in reality, like, Bitcoin is very clearly trending up in the long run, even during like very, you know, treacherous times, from a macro perspective" }, { "speaker": "stephan", "time": "55:02", "start": 3302.29, "text": "Finding out a lot of people just say, \"Oh, twenty thousand the whole year.\" That's actually not true. For seventy-five percent of the year, it was under five thousand. So I think it, it only went above five thousand around September of that year or so, or maybe October. And then it was, it was under ten thousand for, I think, ninety percent of the year. So for actually most of the year, it was well below ten thousand dollars, and it was just that last month or two that it really went crazy. So, but people cherry pick certain dates and say, \"" }, { "speaker": "joe_burnett_of_blockware", "time": "55:33", "start": 3333.31, "text": "Yeah, exactly. I mean, it's very interesting 'cause like in the short term, anyone can, Bitcoin can trade at any price, right? Like I could sell you one sat for one dollar, and then all of a sudden, Bitcoin's trading at a hundred million dollars. Doesn't mean that that's a sustainable price, and other-- obviously people aren't gonna sell if, if you're gonna be bidding, that price. But, yeah, I mean, that, that's basically what happened in twenty seventeen. There was a massive speculative frenzy, and obviously the price was unsustainable where More miners were mining, and that was kind of siphoning, you know, as more miners start mining, they have electricity expenses to pay, they have ASICs to buy, obviously they're gonna be selling some Bitcoin to do that because it makes sense to do so at that time. so yeah, definitely, I mean, it's, it's definitely interesting to see like how certain people cherry pick dates, to, to, you know, make their point, heard." }, { "speaker": "stephan", "time": "56:25", "start": 3384.7, "text": "Yeah. Okay, so we've spoken about a lot, I think it's good to just summarize" }, { "speaker": "stephan", "time": "56:32", "start": 3392.35, "text": "Bitcoin's long-term security. We should think of Bitcoin blocks and confirmations more as being finality rather than security. Like having more hash rate doesn't necessarily, like, it's not necessarily making the whole thing more secure, per se, beyond a certain threshold, let's say. And then we've spoken a bit about why Ethereum has problems, and why it's really caught between a rock and a hard place that they're kind of, they're trying to have their cake and eat it too. And so, yeah, we've covered a lot of things, but I think- Fundamentally, it's that a lot less people are using Bitcoin today than could be, right? So if that Glassnode estimate-- and okay, the, the report's maybe a couple months old by now, but it's probably still roughly right-- thirty-two million entities around the world who are storing wealth i-in Bitcoin, and that number, we believe, is going dramatically up. So do you want to, tell us a little bit about where you see it, see it as going as, as a closing thought then?" }, { "speaker": "joe_burnett_of_blockware", "time": "57:26", "start": 3446.34, "text": "Yeah, definitely. I mean, Bitcoin is the least uncertain monetary technology, Security, post-block subsidy is fine. Bitcoin's the least uncertain monetary technology because anyone can run a full node. Its rule set isn't, isn't mutable. We can't change Bitcoin's supply schedule. No single person, no single entity can change Bitcoin's supply schedule, and that's what makes Bitcoin value. It's not the, the miners, it's not a government, it's not a single corporation, it's the users running Bitcoin full nodes, holding their own private keys, and demanding final settlement in Bitcoin. That's what m- makes Bitcoin valuable. So in the long run, I'm- extremely bullish on Bitcoin. I don't know timing wise what's gonna happen. I think for, for Bitcoin to really go on another bull run, I kind of, expect like the macro situation to have to shift, because if, if dollars are ultrasound right now and, and the M2 money supply is decreasing, then it's gonna be more difficult for Bitcoin to go on a, a bull run. But at the end of the day, we know that fiat money is designed to debase, people are, are, are designed to take on debt to buy businesses, to buy houses And if money is getting, dollars are getting more valuable, that's gonna cause a major deflationary recession for, for many people as people default on their debt, whereas Bitcoin, you know, is this hard, more certain asset where there's only gonna be twenty-one million forever, and if you have, you know, infinitely increasing dollars with only twenty-one million Bitcoin becoming exponentially, exponentially more scarce over time as there's more, Havings, then I think Bitcoin will just inevitably win in the long run as it simply is the best monetary tool we've ever discovered." }, { "speaker": "stephan", "time": "59:06", "start": 3546.42, "text": "Phenomenal. Joe, thanks for joining me and, just before we let you go, where can people find you?" }, { "speaker": "joe_burnett_of_blockware", "time": "59:11", "start": 3550.6, "text": "Yeah, thanks for having me on. you guys can definitely check out blockware solutions dot com, which is where I work. you can also check out blockware intelligence, which is where we put out the recent report with Riot. We also put out a ton of other, cool reports and we have a podcast there" }, { "speaker": "joe_burnett_of_blockware", "time": "59:29", "start": 3569.06, "text": "Burnett, but my handle is, three capital I, I, I capital." }, { "speaker": "stephan", "time": "59:34", "start": 3573.5, "text": "Fantastic, thank you. I hope you found the show informative and if you think this is a great episode for your family and friends to learn about or if they have concerns about long-term security, send them this episode. You can get the show notes over at stephanlivera dot com slash four four two and a transcript will be up there sooner or later. Thanks for listening, and I'll see you in the citadels." } ] }