{ "episodeId": "SLP451", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "stephan_livera": { "name": "Stephan Livera", "role": "guest", "tag": "STEPHAN" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 8.53, "text": "Hi, you're listening to Stephan Livera podcast, a show about Bitcoin and Austrian economics brought to you by Swan Bitcoin. Today we're talking about dissecting crypto scams and the outlook for twenty twenty-three with Brad Mills. Brad Mills is a Bitcoin hodler, entrepreneur and venture capital investor, and he joins me, we're chatting, it's a little bit of a post-mortem, but explaining a little bit of- About what happened, what went wrong with quote unquote crypto last cycle, and what lessons can be learned about the perils of fake decentralization, liquid staking, yield chasing, and more, and we get into some of his thoughts on why he's bullish on Bitcoin. This show is brought to you by Swan Bitcoin. Swan is launching Swan Premium. This service includes exclusive research reports, educational content, discounts on Bitcoin products, and privileged access to many Swan events. So normally it will be costing twenty dollars per month, but currently it's free right now for a limited time until the end of January for those of you who joined the waitlist. So Swan is making it easy to buy Bitcoin and learn about Bitcoin. So if you wanna get involved and sign up for Swan Premium, go to swan dot com slash Premium. Now, with Bitcoin, it's important to self-custody your coins, and for your larger stack, you wanna use hardware. CoinKite dot com are making Bitcoin hardware gear that you can use to help secure your coins and interact with those coins if you need to spend larger amounts. 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Now, if you are with an enterprise, mempool dot space has custom mempool instances with your company's branding, increased API limits, and more. Go find out more at On to the show with Brad. Brad, welcome to the show. Thank you very much, Stefan. Long time listener. Fantastic. Well, that's great to hear, and I, I know, you know, there's a lot going on in the whole world of Bitcoin and, and shitcoins or crypto, quote unquote, and I know this is an area you have previously delved quite a lot into, and I thought it'd be interesting to chat with you about it, but first, let's talk a little bit about- Sentiment, sentiment, and where, where are we at, in the cycle right now? Like, is, is, you know, is the crypto bubble over?" }, { "speaker": "stephan_livera", "time": "03:02", "start": 181.91, "text": "Alright, well, it's something that, I think a lot of people recently 'cause we've had the, the price run from the low of like sixteens into like twenty-one just as of, as of, the last week So a lot of people have just suddenly shifted from, \"We're going to eight K, we're going to ten K, Tether's a Ponzi scheme, it's gonna implode, the government's gonna shut Bitcoin down.\" There was a lot of like bottom fear, of a week ago. To, it's a bull market, we're going to forty K, and like might as well load up on NFTs and shitcoins because Bitcoin's back in the bull market. So I don't know, people are just, elastic banding from one emotion to the next when it comes to this market. So it just, it does remind me a lot of the last cycle, if anybody was paying attention to the last shitcoin cycle, where most participants that found their way to Bitcoin maximalism or the Bitcoin only thesis in the last couple- couple of years, they found that because they were involved in the two thousand and seventeen ICO bubble, and they, they kind of heard about crypto, from an influencer, from like, a story where all these people are getting rich with crypto, and they came in and they either just started buying shitcoins on, on the exchanges or they launched their own coins or and got messed around with doing that, 'cause a lot of entrepreneurs come into this Top of the funnel, thinking like, \"Oh, this must be technical financial innovation, \"blah, blah, blah. So they don't really come with that principled sound money thesis, and they go down the shitcoin rabbit hole and start their own chain or whatever, launch their own coin, not realizing it's kind of an unethical thing to do, and these are illegal securities and just in general overvalued pieces of equity that, that are, that aren't worth what they're selling for because of the bubble. And you had about a year into the, the pop of the two thousand Seventeen bubble where we all remember like Binance and Poloniex and Bitrex and all these big crypto exchanges of the last cycle, we're doing like lottery tickets at, towards the end of it, they were basically like, \"There's so much demand for shitcoin ICOs, we can't sell it to everybody, so we're gonna issue you a lottery ticket, and if you are lucky enough to be the person who gets to buy into the shitcoin, then you get to get the ten x.\" And that was kind of like peak insanity where Long Island iced tea changed the name to Long Chain and then pump three hundred percent. And the next year was like everybody realizing that that was a bubble and it was an actual bear market by November, December of two thousand eighteen, most participants realized it was a bear market, this was a lot of nonsense, and some things were still selling out. You still saw ICOs raising tons of money, even though it was clearly over, the bubble was clearly over. And the reason why I'm going into this detail here is because you go back and look at the- The cycle of the last, bubble, and you, you, you like mirror it onto the one we're currently in right now. We're almost exactly a mirror of the last cycle where Bitcoin topped, then altcoins topped, and the next year was just a very painful bear market that took a long time for people to recognize it was an actual bear market. And by a year in, which is where we are right now in both cycles, we're a year into the bear market of the, of the two thousand twenty-two pop and the two thousand eighteen pop, you had Bitcoin bottom after a, a major drop. In, in the last cycle, it was we were hovering around the, the six thousands range and then we dropped down to like the three thousands on really bad news and final capitulation. In this cycle, it was hovering around the twenties range, we thought like, \"Oh, the worst was over,\" Terra Luna blew up, Three Arrows Capital, In twenty Ks, and then FTX, and the end of the year, we, we drop even further, final capitulation. What happens then if you line up the charts as the next year, so all of twenty twenty-three basically, if, if we repeat the same cycle that we, that we had last time? What, what happened in twenty nineteen was Bitcoin recovered, Bitcoin found a bottom, Bitcoin had a really good year, it was accumulation. Tertium Ester released his, report on, I think it was the Great Reformation. Bitcoin Reformation, yeah. And, and went on Preston Pish's podcast and discussed about how, institutions are starting to get it and peop-high net worth investors are starting to understand Bitcoin's different from all this stuff, they're accumulating, and Bitcoin had a really good year while- Well, cryptocurrencies and altcoins, it took another full year for people to actually capitulate on all this stuff. So people right now are so excited still. For some reason, like you asked about sentiment, the sentiment right now isn't as bad as it should be in the crypto world and in DeFi and NFTs, and it's not surprising because a lot of Kool-Aid was served up over the last year and a half And there's, there's a company right now that got investment money from Andreessen Horowitz, FTX, Paradigm, you know, all these Shillikoin Valley vulture capitalists that were pumping the bubble in the first place. They're, they put two hundred million dollars into this NFT company and they're sponsoring the Super Bowl next month. To give away fifteen thousand NFTs. So like, it's still gonna be triggering, the next year is probably gonna trigger a lot of us because it's like, this thing clearly popped. Why are you guys still wasting your time with JPEGs and, you know, shitcoins that, that give you twenty percent APY? but it's gonna take a while for the, for the full cycle to play itself out, and, you know, like, it's gonna be a rough year, I think, for a lot of people that think like, \"Oh, it's a bull market, The altcoins that went down ninety percent in January two thousand and nineteen, that were already down ninety percent, people were deploying into them, the next year they went down another ninety percent, in most cases. So just because it's down ninety percent doesn't mean it's-- it can only go up from here. It can go down another ninety-nine percent from down ninety percent. And a lot of people are gonna learn that lesson over the next year, and I think that just means that by twenty twenty-five, we're gonna have a lot more Bitcoin maximalists minted in this next year of, I-- what There's gonna be a lot of pain to come for people that still haven't learned the lesson. And I, I think I, I" }, { "speaker": "stephan", "time": "09:19", "start": 558.95, "text": "broadly agree with you there, Brad. I think I've been quite critical of this idea of just people who are just totally pumping opium, and I think it's gonna take time for the cycle to play out. And just like in past cycles, right? As you and I have kind of been around over those cycles, I think people get overly exuberant and they want it to all be over soon, and I think there's a difference between what is happening and what I, I'm also curious your view, is the macro different this time, right? Because it's also fair to say that up until, you know, for most of Bitcoin's life, the Fed has been relatively in an easing mood, and the, the central banks around the world have mostly been on an easing trajectory, whereas right now they're sort of in a tightening, or at least they have been tightening, and maybe they're going to hold still for a little while and see what happens with CPI inflation, not monetary inflation. And so, is the macro different this time?" }, { "speaker": "stephan_livera", "time": "10:12", "start": 612.02, "text": "Well, you know, I heard Bitcoin Tina on a space the other night, and a lot of people give him grief for going from \"There is no alternative\" to like, \"Okay, maybe there's, there's like a hedge, like Bitcoin's a hedge or whatever,\" and kind of like changing his narrative a little bit. But I still, I still listen to him, I think he's a smart guy. He gets, he gets things on a level that a lot of us Bitcoiners don't quite think about, compared to the macro stuff, which is like related to the macro stuff." }, { "speaker": "stephan_livera", "time": "10:41", "start": 641.14, "text": "And how it reacted to macro in previous cycles is, is just not relevant anymore because Bitcoin at a, at one or fifty billion dollar market cap, like as a, as an asset that's kind of an illegitimate asset, to most institution, institutions and high net worths, they, they, they looked at Bitcoin in previous cycles as like just a joke or for libertarians or whatever. But now at a much higher market cap, it's actually a thing that people pay attention to. And It's kind of, you know, we have our cycles and we can look back inside of crypto and inside of Bitcoin and see like how Bitcoin, how the, how the shitcoin markets react to Bitcoin's trends. I think that's relevant. But, yeah, it's tough to look at previous cycles of Bitcoin and say, \"Well, because, it did better in, you know, this period or that period where the Fed was tightening or not tightening or whatever.\" It's kind of hard to correlate previous cycles of Bitcoin to macro than it is now. I think I think it's kind of like, we kinda have to start fresh and start paying attention from, okay, this is an asset that now institutions, central banks, they're all paying attention to it now, so it's a fresh slate for like correlation, I think. so yeah, it is tough to, To see where things are going based on macro, although I do think that there's no other alternative besides stimulus that they have. we had a whole, a whole year of basically high inflation, induced by the Federal Reserve, kind of like tightening everything and crushing the markets, trying to stop inflation and cause Labor market participation, they call it, the, the wage price spiral. They're afraid of the wage price spiral where prices are going up, so people start demanding to get paid more. Imagine that, you want your wages to keep up with inflation. They don't want that, so they wanna crush everything, they wanna cause unemployment. there's too many jobs hiring, so, or too many jobs available, so that's no good in their eyes. They want people to suffer so that inflation doesn't take hold. it's a really, it's a kind of like an Actually, when you think about it, like the way that the Federal Reserve just continually manipulates things to cause higher and higher wealth inequality, but they're, you know, whatever you think about their policies and how they may have messed it up They definitely caused a lot of pain, like the Nonprofitable Tech Index is something that a lot of people were looking at as part of the everything bubble, you know, the macro guys like Jesse Felder and those guys were talking about the everything bubble for years. And the Nonprofitable Tech Index, if you look, look that up, it just went parabolic in twenty twenty-one. It was insane. This is like companies that are publicly traded that don't make money. Doesn't even make sense to do a PE ratio on them 'cause they're so, they're, they're just like meme value, right? They got crushed in the last year, just like, like it looks like a shitcoin chart. It's down, it was down like ninety percent, like the non-profitable tech companies absolutely got crushed. We all know the biggest, some of the biggest like, tech companies, Peloton and, Netflix and Facebook and things all got crushed. So yeah, Bitcoin got crushed as well, risk assets got crushed. But going forward, Seems like they seem to have gotten CPI inflation under control, or at least wrangled it down so the rate of change of inflation's not continually growing. I'm one of those people that thinks that CPI is a manipulated metric that is, isn't really what real people feel and pay attention to, but it's just a metric that the government uses to sort of like measure inflation linked assets like, like tips, bonds and stuff, and social security payments, like they're, that's all linked to inflation, so they're kind of in- Incentivized to keep that number looking as low as possible, because the higher inflation goes in CPI terms, the more benefits they have to pay out and the more interest they pay on the tips bonds. So they're incentivized to keep infl-CPI inflation looking low, but they've kind of gotten that under control, and so the next step is money printer go ber, and, unfortunately, that's what's Bitcoin is gonna do well in a situation where money printer goes ber. And causes more wealth inequality in the world. So we, you know, that's why I'm passionate about like sound money education in different parts of the world, and why I'm so pissed off about DeFi and NFTs and all this stuff because This stuff is just causing more wealth inequality, it's causing more people to just be gamblers and short term thinkers and jump on the rat, on the, on the, on the hamster wheel of, speculative gambling, short term thinking, whereas the monetary policy is creating conditions that makes wealth inequality worse and worse and worse, and Bitcoin is the solution, and why are we messing around with all this other nonsense? It's only rich people using DeFi, it's VCs and pro-token devs that have pre-mined the protocols, that's who's Using DeFi, that's, you know, primarily not gonna be used by regular people, whereas what we're doing in Bitcoin is actually spreading a savings technology that can benefit somebody that has five dollars to their name to start thinking more long term and saving it in Bitcoin. so I think Bitcoin's gonna do well over the next cycle of, monetary issuance, whatever you wanna call it." }, { "speaker": "stephan", "time": "16:00", "start": 960.19, "text": "Sure. And when it comes to the fake decentralization, I know this is an area you have done a bit of research and you've been, playing around in quote unquote crypto world. Can you tell us a little bit about what you saw there in terms of the fake DeFi or Dino, decentralized in name only?" }, { "speaker": "stephan_livera", "time": "16:19", "start": 979.47, "text": "Yeah, so this is a conversation I think is very worth having for a lot of Bitcoiners because, you know, there, it's, it's a lot more nuanced and it's more detailed and there's, there's actually some interesting technology that's been developed over the last two years because they've funneled billions and billions of dollars into development and that has actually created some interesting stuff. It doesn't change the fact that most of the tokens and the assets that are being traded in these DeFi protocols are overvalued, worthless meme tokens, and in some cases, illegal securities or whatever you wanna call it. But most of it is overvalued nonsense, and it's just recreating the same toxic derivative garbage that Wall Street has done time and time again to create financial bubbles on Wall Street and then cause a lot of pain. They've done that, but in, in crypto, they've done it, but we're- Where there's no central bank to bail any of them out, and that's why it's failed spectacularly with things like Terra Luna blowing up and Thryvus Capital and FTX Alameda, a lot of other DeFi companies that were like basically the VCs funding this stuff losing money to hacks because there's a lot of exploits in there and just Ponzi schemes generally like blowing up and people realizing that these yield farms don't actually make a lot of sense, when you're not in a Just low interest rate stimulus fueled Ponzi bubble, everywhere. So the question you asked was about decentralization, and for the most part, most of it isn't decentralized. I mean, we could start with kind of like back into, like the end of the last cycle, you had, Bancor raise quite a big ICO, and Bancor is this team from, I think Israel that were building- Out a automated market maker, AMM, and, that's what kind of started the AMM thing in, on Ethereum. It was Bancor raising this huge round, and then this guy Hayden Adams, this Ethereum developer guy, said, \"Well, that's annoying, like you don't need a token to do an AMM, it's just a decentralized exchange.\" So he got pissed off and he like rage forked a Bancor protocol and made Uniswap, kind of like what Nicholas did with BitPay, right, to make BTC Pay service He's like, \"This is so stupid, like, I'm gonna make you irrelevant, and I'm gonna fork it and then create an open source Bitcoin only version of, of like what, you know, the service that they were doing, that BitPay was doing.\" And he became very successful with that, and most Bitcoiners don't pay attention to BitPay anymore, they only pay attention to BTC Pay server and Bitcoin only services. Well, that's what happened in DeFi with Bancor. Bancor was the big, like, blockbuster ICO that raised a ton of money to do it. Unis He forked it, he ripped the token out of it and proved that you don't need shitcoins to make decentralized technology. And so like, I kind of admired that guy back then because he's like, you know, at least there's still some like principled cypherpunk type people left building in, in that space that they realize that the token is just a grift, it's a bolt-on rent-seeking thing, it doesn't actually need to be there, and they can build the technology. So that was one of the examples when, when I used to try to have like nuanced conversations about With Ethereum, is it a bunch of just web dev people building or is there anything actually real going on? I used to look at things like Tornado Cash, Uniswap, and say, \"Look, there's real things being built here, and they're not all trying to grift with tokens. So we should try to look at what they're building without tokens that actually works, and maybe try to like put that on Bitcoin layers if it proves out to be valuable.\" And so the idea of like an exchange, it's like, if you are true like libertarian free market, philosophy Philosophy, right? You kinda have to think about disrupting and disintermediating regulators that, that regulate poorly. And what Bitcoin did to central banks or to like the idea that you can have a money that's distributed, decentralized, and can't be confiscated, can't be, stopped, you know, like a money that disintermediates those types of regulators from stopping you from using your money. That's what they, some of these guys in the- Ethereum and in crypto, we're trying to do with finance. They're trying to disintermediate like the SEC and the CFTC and the, and the, the FATF regulations and stuff, which a lot of us could probably agree if it weren't for like a lot of cognitive dissonance that even I suffer from and stuff that's like, \"Well, you know, we're the Bitcoiners, we're doing that stuff, we're disrupting, we're disintermediating.\" Well, look, some of the people over there are also trying to do that, it's just they And the, just the general concept of having a decentralized exchange makes sense. If you're gonna have a decentralized world, having the ability to swap, Bitcoin for A US Treasury or Bitcoin for a dollar in a decentralized way, it would be useful to have that technology. AMMs have a lot of problems, there's, it's like, especially on Ethereum where it's all transparent and, you have the ability to, for people to write bots that siphon value out of the decentralized exchange, through miner extracted value, I call it miner extorted value, MEV. They basically- Like can see everything that happens, and they know what they can take flash loans on and steal money basically from you and, arbitrage your trade, and this happens continually. It's like flashbots happening continually on Uniswap that siphon value from the market makers. So if you're an LP in, in an automated market making pool on Ethereum, somebody did research recently that showed that the biggest pool is ETH-USD-C, and it's the biggest, most deep and liquid pool. On, on, on Uniswap, and the guys that are doing the market making for that are down like a hundred and thirty million dollars in the last twelve months, because it's just not profitable at scale to use automated market makers. So while I'm saying that like there's some interesting technology and some stuff has really been built, there's also a lot of problems." }, { "speaker": "stephan", "time": "22:44", "start": 1363.91, "text": "Right. It wasn't sustainable, it wasn't profitable. I-- From what I understand, there were some LPs who were losing money from this, now I haven't done a lot of research in this, but I've Of impermanent loss." }, { "speaker": "stephan_livera", "time": "22:54", "start": 1374.24, "text": "Yeah, the, the, the impermanent losers came up with the loss, the, the term impermanent loss, which is, makes no sense. So the basically how impermanent loss makes sense under, to explain it simply for people, let's say you have a million dollars on one side of a token where, let's say you print your own token, you make it up from nothing, it's a dollar, and it's, you have a million dollars of your premine, and then you have a million dollars of stablecoins, right? And you put Making AMM like Uniswap, you, you become an LP and you, you fund it with a million dollars on one side of the token, a million dollars of real money on the other side, and then you start to buy it up and basically the way that the bonding curve math works on Uniswap, it's very easy to pump a token because it's not a deeply liquid market like on exchange. There's no real-- there's no real like efficiency there in that market because it's gonna pro-- it's gonna go up. It's like that's how Richard Hart was able to actually pump Pump the price of HX like a thousand X from the bottom on Uniswap because it wasn't on any centralized exchanges, it was only on Uniswap. So he exploited the bonding curve math, basically the, the idea that you can just put the two tokens, pair them up, and then just start buying the token, it'll just shoot to the moon because it's an inefficient market So they call it \"impermanent loss\" when, let's say, now you've pumped your token up a hundred x, well, if you had to just kept the million dollars of your shitcoin, then you would have a hundred million dollars worth of the shitcoin. And but because you paired it up with the dollars, it's actually now you've got twenty-five million dollars of other people's money in stable coins and only twenty-five million dollars of your shitcoin, so you've lost fifty million dollars basically if you had to just kept your token. They call that \"impermanent loss\" when the value The tokens goes up, but you've market, you've become a market maker and you've lost those tokens because you can't get those back. But I don't know why they call it \"impermanent loss\" because it's a permanent loss. So it's another weird Ethereum marketing term, but that's what automated market making is. It's basically like you're gonna lose tokens that may go up in value, and if they go up in value, but you've lost them, then that's called \"impermanent loss.\" I don't know why they call it that." }, { "speaker": "stephan", "time": "25:07", "start": 1506.54, "text": "Yeah, strange, right? And so it just, I mean, all this stuff I'm hearing, it just reminds me of how useful it is to just stay Bitcoin only, right? Like it is just such an obvious, just stay Bitcoin only, just accumulate Bitcoin, and, you know, as long as you have a long-term focus, obviously there will be times over which you, you know, you're down if you, if you are only newer to Bitcoin. but anyway, let's bring it back to the whole Dino thing, or Dino or Dino, however you pronounce it." }, { "speaker": "stephan", "time": "25:36", "start": 1536.32, "text": "Going on, right? There was fake volume, the TVL in Solana was fake. There were users who were bluffing in pseudon-- like using pseudonyms to bluff as multiple users to make it look like there was lots of activity in the developer space for Solana, and that's just one example, right? This is just Solana, one prominent example. And then, you know, obviously with F-FTX, there were these examples where Sam's coins were being valued on only a tiny percentage of the overall float, and so they would- Basically bluff the value up to a certain amount because, you know, what-- only a small amount is actually being traded. So, a-and then the other example, I think, probably the key example or another example is being able to just remotely shut these things down, right? If there's some-- If there's some-- something found, and then they magically, they magically find a way to shut it down and stop the network, right?" }, { "speaker": "stephan_livera", "time": "26:28", "start": 1588.05, "text": "Yeah, that's happened multiple times, and so they don't go to-- quite that far mo-- in most cases, they, they, it's- The thing that frustrates me about it is that they have the ability to do it in most cases. They try to, they try to like keep it appearing decentralized as much as possible. So it's like minimum effective decentralization. It's, it's like a, you know, minimum viable decentralization or whatever, you know, it's like a sort of like a Silicon Valley way of doing things to make it appear decentralized. That's what I think about it, like almost like the Ethereum DAO hack, right? Like there was a significant amount of Ethereum- Bitcoin consensus and Vitalik, I think, lost a lot of ETH in that. So they made the choice to roll that back, and that set the bar for most of us to say, \"Okay, code is law is bullshit. That was just a marketing meme. They've rolled it back. It's not code is law, it's law is law, and we are in control of this thing, and we're gonna reverse it because it actually affects us.\" But then you fast forward a couple of years, and then the multisig hack, the multisig exploit of Parity happened, where a hundred million dollars worth of Ethereum that people were using multisig for got locked up when somebody just borked the whole multisig contract, and there was the opportunity for them to rescue Gavin Wood and the others who had lost their Ethereum to the multisig parody hack. And, you know, they looked at it and they kind of said, \"Well, I guess we could do this. We've done this for the DAO hack, but we didn't lose any money in the parody hack.\" And look, we're at four hundred days without an incident of rolling back or interfering with, you know, our meme of decentralization. So I think it's more valuable for us to keep up with the charade that this is decentralized, that way we can claim that this is like Bitcoin. So they didn't roll back the Parity multisig hack, they didn't fix that. But it doesn't make, change the fact that they are able to do that. That's the sort of key difference. A lot of the new entrants into the market in this cycle, they, they confuse like the choice of not doing it with the ability of not, you know, the, the restriction of not doing it. Like in Bitcoin, it's pretty much impossible for you to get consensus on something like that. It's, it's not gonna happen, unless it's like a real threat to Bitcoin, like an existential threat that we get overwhelming consensus on from all the participants in Bitcoin that, yeah, we wanna change to a quantum proof algorithm or whatever, we'll fork that point, you know, snapshot and fork away if a real quantum computing threat happens or something like that where everybody agrees, yes, this is what we're gonna do, otherwise Bitcoin's dead. That's, I think, the only way that you get consensus. On a change of Bitcoin to, of that nature, but in Ethereum, they have done it in the past multiple times, and it's going-- and it happens again in terms of the monetary policy. It happens every once in a while, six months to a year, where they'll, they'll fork and change things, and not just code, but monetary policy. So time and time again, they've proven that the market participants that go-- that are in crypto and Ethereum, they actually are aware I think they're aware that it's not actually decentralized, and they just don't care. They're like, \"Well, we prefer a money that changes its monetary policy to try to make the stock-to-flow compete with Bitcoin, because we're invested in this thing, and like, we prefer that there's no unlock code with ETH two point oh, because that locks up supply and helps put pressure to drive the price up.\" They're aware of all these things that are centralized, centralizing factors, and they just don't value what we value as Bitcoin investors, I think. now, I'm trying to be as like progressively describing this stuff and open-minded as I can, because I really don't think it's as simple as \"you're a Bitcoiner, you're a Shitcoiner.\" I think it's like a lot more nuanced than that, and because many people, like I said earlier, came into Bitcoin through the crypto funnel. Like they found their way to Bitcoin because they were trading ICOs on Binance, or they came in and even launched their own coin or something, and eventually realized they were honest with themselves, they thought, \"Okay,\" The important thing here is these things that Bitcoin does, not these things that I can do over here with this coin, and it doesn't add anything of value to the world. So I don't-- I, I like to talk about these things in a way that doesn't turn off potential people that could be, like, in that journey, you know? Like maybe they're, they're open, to the idea that what they've been doing is pretty much bullshit, and they should come and learn more about Bitcoin. So I try as much as I can to, yeah, be, be So hard to not call out all this bullshit and like look at it like a big, a big scam." }, { "speaker": "stephan", "time": "31:21", "start": 1880.61, "text": "Back to the show in a moment. Now, bear markets are a great time to work on your skills and build something, and Blockstream has a community to help you with this. Build on L2 is the initiative, it's a community led effort. Now, you can join this, and you need to join this if you are a product manager, a designer, or an engineer, and you're interested to come together. There are going to be events, there are mentorship programs available, and just And learn something new alongside other Bitcoiners building on the future of Bitcoin Layer 2. So this is especially important if you're interested in Core Lightning or the Liquid Network, go and sign up, it's over at build on L2 dot com. When it comes to securing your big stack of coins, Unchained Capital can help you with multi-signature. This means you have, three total keys, of which you hold two in different locations, and this can dramatically improve your security standpoint compared to just leaving your coins on the exchange. Or even using a single signature hardware wallet. So Unchained Capital can help you, walk you through this process. Now, if you just go to the website, you can do it on your own for free, but if you need guidance, they have a concierge onboarding program where you pay upfront, they ship you the hardware, they do a call with you, they teach you how to do this, even if you've never held your private keys before, and it can dramatically improve your peace of mind, giving yourself that peace of mind knowing that you don't have a single point of failure. So Un" }, { "speaker": "stephan", "time": "32:46", "start": 1965.68, "text": "Absolutely. And so thinking back to the comments about last cycle versus this cycle, I think you were also commenting on this idea that some people see it like, \"Oh, as you were saying, some people wanna load up on alts.\" But do you believe we're actually going to start to see Bitcoin separate from alts this year?" }, { "speaker": "stephan_livera", "time": "33:03", "start": 1983.19, "text": "Yeah, I do. I mean, I've been wrong on that in the past, though, to be honest. I thought we weren't gonna repeat the same bubble that we just repeated. I, I figured after 2019, it was a brutal routing of the idea of MV equals PQ and the fat protocol thesis and all this stuff that the, the, the Shillcoin Valley VCs were, were pushing to try to sell their token pre-mines on people. This, this narrative that like utility value is what gives value to a blockchain's token. And And therefore, you wanna have lots of activity of like non-savings use case or spending use case, like what you do with Bitcoin and the Lightning Network. You wanna have like derivatives trading on your blockchain, and you wanna have stablecoin settlement on your blockchain, and all of that billions of dollars of settlement value that gives underlying value to the token, like that was the thesis they were pushing. And That mostly got invalidated in two thousand eighteen and two thousand nineteen especially, and so we did see a decoupling in two thousand nineteen, where there was only like one or two coins that, that held their value against Bitcoin and maybe outperformed Bitcoin of the ten thousand or so coins that were on the, on the market at that point. And so mostly everybody kind of realized that, okay, Bitcoin's different. But then we got the, the Federal Reserve dropping interest rates to zero and like ten trillion dollars of stimulus that just reinflated everything. And the same exact bubble re-reinflated itself. The same people that were involved in the previous cycle, they restarted all their OTC Telegram rooms, the same WhatsApp channels. It was like pretty much the market makers and the, and the like crypto insider people that had already been deployed into a bunch of crappy ICOs from two thousand and seventeen. You know, we got all the guidance from the SEC and the CFTC and the Department of Justice and FinCEN and all these regulators were basically saying like, \"Look, this, this isn't compliance.\" This isn't compliance, you know, you have to follow AML KYC rules if you're gonna sell to US investors. You can't, you can't just like sell a token to US investors and say it's financial innovation. You can't put, interest rates, you can't promise interest rates, you can't be a celebrity and show this stuff to your audience without disclosing that you've been paid to do it. And so you see, you saw a bunch of actions that were taken, and a lot of people kind of thought, okay, well This is gonna be different next time. You're not gonna see the same ICO type stuff happen. And what they did was very sneaky. they changed it from like, they used some kind of like logical loophole, which, which ended up working, because nobody gave a shit about DeFi protocols. Like, I mean, there was like, nobody was using DeFi protocols by the end of 2019, early 2020. There was a bunch of stuff built. There was, Curve and Compound and, and Aave wasn't Built yet, but there was, Uniswap. So there was like a be-- the ability for you to borrow against your, your Ethereum or your wrapped Bitcoin on, Compound, which is like, you know, decentralized lending. Then there was Curve, which was an interesting DeFi primitive they call it, of like being able to make pools. It's kind of like what the Federal Reserve does with the dollar system. Why is a dollar at Chase Bank fungible with a dollar at JPMorgan? You know, at, with a dollar at, you know, Bank of America America, well, it's because the Federal Reserve actually acts as kind of like a liquidity pool between all these different bank monies and allows you to just have fungibility between any sort of like form of dollar, right? And that is kind of a, a, a function of the Federal Reserve That they built in DeFi land and called it Curve. So like, how are you able to exchange one USDC for one USDT? Well, it's because there's deep pools of liquidity in this Curve com- protocol, which is like a decentralized app where you can put a billion dollars of USDT in it and a billion dollars of USDC, and then that means you can pull out a ten thousand dollars of one or the other coin, and they're gonna hold their value and be pegged. So it kind of is interesting in that it d- Decentralizes the, the, the role of the exchanges, because before the decentralized pools, it was all up to the exchanges and the arbitrage between exchanges to provide a stable, or, you know, sometimes not stable price of stable coins. So Curve was kind of an interesting thing that they had built, but nobody was really using it because it wasn't a great user experience. And this is what Udi used to always say when he was kind of like more of a Bitcoiner and more rational about his arguments, he would, he would- I would say this all the time, and I think it's still true, that like nobody wants to use these DeFi protocols where it's not a great user experience, you have risk of smart contract failure, you have risk of being hacked, you have risk of- Them changing the rules on you, plus you have like transactions sometimes get stuck, and if you just wanna use a stablecoin, then you're just gonna probably use, an exchange or an app or something that just uses the stablecoin, and you're not pro-- a normal person's probably not gonna get over the hump of the, the user experience barrier of using crypto and DeFi. And so his argument, I feel like was, was correct, and over time, I feel like it's gonna be proven correct, because I, I still think the user experience of using- Using DeFi is, is very bad when you compare it to the ease of use of using something that's like, more s-clean app or a centralized exchange. But that's a separate argument. Back to the core argument of like, how did they, how did we see this reignition of the nonsense we saw in the bubble? Well, they started making it so that you would get paid to use these protocols. So that's where everything changed in summer 2020, and that's where they added the yield farming. So like, nobody gave a shit about Uniswap, nobody gave a shit about Curve, nobody gave a shit about Compound or Yearn or any of these DeFi protocols that, to their credit, some- Smart cypherpunk-esque devs were building some of this stuff, but nobody was using it 'cause it wasn't a good user experience. None of the crypto traders cared about it 'cause it was like Ghost town, nobody cared about it, but when they started paying you to use it, it changed everything and it re-reignited the, the kind of FOMO in the crypto trading scene And so it's like, you know, get paid to take a loan in these tokens, get paid to borrow, get paid to trade, get, get paid to put your LP tokens in this pool and create liquidity. And so they started incentivizing people by paying them and bribing them with these token rewards. And the sinister thing is, back in two thousand and nineteen, MultiCoin Capital and a bunch of other crypto funds, they, they were ba-blatantly obviously, blatantly open about what they were doing. They called it generalized mining. They, they made up another term and it was basically wash trading. They're like, \"We're gonna simulate usage of these protocols, we're gonna take some of our treasury, we're gonna put it in and simulate trading and simulate lending and simulate, like, put up actual liquidity and make it look like there's people using it that will attract people as a honeypot to actually start using it.\" So they called it generalized mining back then. They admitted they were doing wash trading. They started doing that, but it still didn't matter, people didn't care. It only changed when they started doing the yield farms, and that's the Ponzi's. That's what turned all of DeFi into a giant Ponzi scam that was not only unethical because it was like Breaking securities laws in the same way that they did it in the previous bubble, but they just did it so, it was like a logical loophole where it was like, in two thousand and seventeen, you give me money, I give you a token, that's an illegal security, right? Like if you give me money and I give you a token, I'm issuing an unregistered security and I'm a foul of the law. But if I write a smart contract where you give the smart contract money and then the smart contract gives you token That's cool, I'm not doing an unregistered securities offering, I'm in compliance, and then I can do generalized mining and wash trade it, and I'm not breaking any laws because, hey, like, there's no rules against generalized mining, there's only rules against wash trading. So I'm not issuing an illegal security and pumping it with, with wash trading. I'm doing a smart contract that's doing yield farming, and I'm just mining tokens. See how they were able to, like, so that actually worked, and, you know? Because they were putting hundreds of millions of dollars in liquidity into these pools to provide people with actual returns, the whole thing reignited, and then it coincided with the Federal Reserve pumping tons of money and, and the Congress and central and commercial banks pumping tons of money into the system, which caused rich people to go way off on the risk curve, pile their money into like SPACs, like stupid non-profitable tech SPACs and crypto funds, which the crypto funds like Alameda A16Z Jump Crypto, which is a spin-off of a massive Jump Trading, which is a massive market maker in traditional markets, all of these guys were working together in the back end to pump the living shit out of the DeFi bubble, and they were using it, going on podcasts like, you know, Tim Ferriss podcasts, and all these successful entrepreneurs that influence a lot of, a lot of like, you know, I don't know, gullible, naive, whatever. Wanna be like, entrepreneurs and successful entrepreneurs in their own right to think that this was okay because, hey, like Balaji Srinivasan is talking about how DeFi is the future, on Tim Ferriss podcast, and like Tim Ferriss is launching his own NFTs, like he's, he's an ethical guy, I guess I should get into Web3. And so the entire bubble caused this top-down, top-down Horrible logic to be propagated out amongst entrepreneurs who I don't think are like evil shitcoiners, but who are just people who've been duped and convinced that this is some sort of financial innovation when ninety-nine percent of it is actually just a, a nonsense bubble that's recreating everything that's wrong with previous bubbles in Wall Street, throwing it on a blockchain and like fooling everybody into thinking it's financial innovation. While all the while, Bitcoiners are actually out there building shit, building the Lightning Network, spreading the, the sound money thesis all over the world, and like not getting involved in any of this token nonsense. So, so I think in the end, like, we come out of this with The reputation, of not having been involved in this get rich quick bubble token Ponzi nomics stuff. And it's gonna take a while for this to sort of like people to, I think, grip-grasp it. So you're saying like, will we decouple? I hope so. I think that the regulators are gonna come in this time. I spent a lot of time in the last couple years going through previous history, cycles of, sorry, historical cycles of like bubble- Bubbles and what happens after they get so big. And typically what happens when it-- whether it's the gold rush or the oil boom or, the derivatives or the housing bubble, whatever it is, it typically, when it gets to a level where it affects like pensions and, and regular retirees and stuff, like it did this turn, like it did this time, you know, the Quebec pension, the Ontario teachers' pension, some, some people on, you know, Many, many people that were like following influential investors and stuff got wrecked by this. It does cause a reaction by the regulators to come in and tame the market, and there will be survivors, but it's gonna get tamed, and that taming of the market, I think, is gonna cut a lot of the nonsense. So I do think that what we're gonna see over the next eight years or so is, yeah, sure, the shitcoin, DeFi, crypto NFT bubble isn't gonna die, like the, the market itself- Itself isn't gonna completely go to zero, but I think we're gonna see like Bitcoin lift off and like break through the atmosphere as a competitor, a global reserve asset competitor to gold and US Treasuries and things over the next decade. And, you know, the, the altcoin stuff is gonna hit the atmosphere and they're gonna be competing with things like tech companies. They're not gonna be competing with Bitcoin, you know, like so the people calling for like Ethereum at a hundred thousand dollars while Bitcoin's at a million, I think that's kinda nuts. I think you could see Bitcoin at a A million and Ethereum at five hundred and two trillion of market cap of Ethereum competitors and NFT projects and all this stuff. So like, I do think that this whole segment is kind of here to stay. It's just gonna get regulated, and unfortunately, it's not gonna all happen on Bitcoin layers over the next decade 'cause it's, they've got too much network effects, but it will stop being this like, \"Oh, this is like Bitcoin, except it's...\" You've got utility value of derivative trading. It's like, no, this is like, this is like a stock, you know? Compare this to what it's like, don't compare it to Bitcoin. So I do think we're gonna see separation in Bitcoin terms over the next decade, but I don't think unfortunately we're gonna see like complete logic come into the markets and people gonna act rational around this, 'cause there's a lot of money to be made doing this DeFi token launching stuff, just You know, w-we'll see how it shakes out." }, { "speaker": "stephan", "time": "46:36", "start": 2795.99, "text": "Yeah, that was an, a great, dissection of this last cycle, and I think there's a lot of different dynamics, as you mentioned, it was people were put into this low rates environment, so all these people were chasing for yield, and they, they thought, \"Oh, wow, I can get some money on my stables and on my stables,\" and then that drove them to do all this yield farming and chase, chasing the yield, and in many cases, unknowingly, right? Like they put their Or Celsius or Voyager or whatever, and then actually no, they got wrecked. And I'm also curious if you have any insight or interpretation of what happened with the whole GBTC trade, because that was partly what drove the three arrows Capital, they were making all this money on that GBTC arbitrage, and then what happened is that premium flipped, it then turned, negative. and I wonder whether that was also part of this cycle, the come down, right? That was part of the, the collapse or the popping of- Of that, let's say crypto DeFi bubble." }, { "speaker": "stephan_livera", "time": "47:37", "start": 2856.87, "text": "Yeah, I think the thing that I don't know a lot more than most people following this about GBTC, the thing that, like, the way I understand it to have worked was just a lot of leveraged stuff happening outside of DeFi, say, right? Like, there's a lot of nonsense that was happening inside of DeFi and a lot of yield, like promoting yield that attracted a lot of, entrepreneurs and maybe people that had- ten thousand, twenty thousand dollars of, of, of capital to put at risk. I had a lot of friends talking to me about like, \"Hey, I'm gonna, I'm gonna do this, this ten percent yield thing, you should do it too. It's called Anchor Protocol. You gotta go on the Terra Luna blockchain, buy some Luna tokens, put it in Anchor Protocol, and then you can go and put that onto Magic Internet Money on Ethereum, and then loop it over towards, and then you get a hundred percent APY.\" I've done my research, it's safe 10% if you do it. So there was just like a lot of crazy nonsense in DeFi that was extremely leveraged derivative nonsense that people were even still, you see it in DeFi like staked ETH. So I was very critical of the staked ETH, ETH thing. And I think the best comparison from GPTC and BTC is staked ETH, ETH So what Three Arrows Capital and DCG and Genesis did with the, the block, the- The GBPTC trade was very similar to what Celsius did with the staked ETH trade. They were, they were earning yield, so Celsius was taking customers' bitcoins, stablecoins, Ethereum, shitcoins, whatever. They were taking all that money in, they were buying Ethereum with it They were then putting Ethereum into staked Ethereum. So we're talking big money too, like, like a significant amount of the money that Celsius brought in, they funneled it into ETH. And then they staked it into the SD ETH in the, in the, they call it Lido, and they bought staked ETH, which locks the Ethereum, Lido does it for you, this is a company that locks the Ethereum into the staking contract of Ethereum, and then they take a fee from managing the validator nodes and all that stuff, but they like basically it's called liquid staking, and they let you- Now take that staked ETH, which is a derivative of Ethereum, and trade with it in DeFi. So then you can take your staked ETH, which is a derivative of Ethereum, put it for one to one par value in some sort of like curve or other lending pool, and borrow against it at a pretty risky rate, like seventy percent loan to value or something, where then you can go back and you can get point seven ETH. For one stake ETH. So if you have a thousand staked ETH, you can borrow seven hundred ETH, and then you can take that seven hundred ETH and you can go do some other nonsense with it and farm some more money, and you just keep leveraging that up, and that's how it grew to like billions and billions and tens of billions of dollars in- Crazy overleveraged, undercollateralized lending in DeFi through things like Celsius. And even still, Celsius has about four hundred and fifty thousand staked ETH on the treasury, that's like assets of the creditors. there's not enough liquidity to sell four hundred and fifty thousand staked ETH in curve. You can look at the curve pool and see that if they tried to sell even half of that staked ETH to get back Ethereum or dollars, they would completely crater the staked ETH price. It would drop to like point six or point five discount, you know? So that was one of the things that, like, for some reason Celsius and whoever was involved in chasing their liquidations down, they chose to sort of- Not sacrifice ETH, which is the weirdest decision, because instead they sold all their Bitcoin, they allowed, like Celsius had a one billion dollar loan with Tether, so they gave Tether two billion dollars of Bitcoin, I think these numbers are kinda rough, but they're in a range of, of reality. They gave them like two billion dollars of Bitcoin, they got like a billion dollars of Tether, 'cause it was a way over collateralized loan. A lot of people thought Celsius, Tether was giving uncollateralized loans to companies Companies like Celsius, because you can see mints of, of USDT going to companies like Alameda and Celsius. So a lot of people on Twitter are like, \"Tether's a part of the Ponzi, they were part of like giving fake money.\" No, like Tether actually had a pretty conservative strategy. They never issued loans of Tether from nothing. They took Bitcoin Over collateralized from risky companies like Celsius, and that way when shit hit the fan, they can liquidate them with no losses. So Tether was able to liquidate a billion or more dollars worth of, Celsius's BTC that they had when shit was hitting the fan, and that was part of the reason why when Tether, sorry, when Three Arrows and Celsius kind of collapsed in that weekend in June or May or whatever it was, that we hit such a max-- massive drop in price of Bitcoin because there was two big, huge scam- Wales getting liquidated on all their Bitcoin loans, because that's the most deepest liquid pair. If they tried to liquidate them on the staked ETH, it wouldn't have gotten them as much value back, 'cause not as much ETH would have tanked. So that's the kind of what's happening, that's what happened with, with Three Rivers Capital and Genesis as well. There was all this sort of similar, like, gen- Three Rivers Capital gets unsecured loans And then they buy GBTC, and then they put their GBTC up as collateral with Genesis, which Bear, Bear Silver Group owns, Genesis, and give them a loan, and then they've got now a loan on GBTC at a similar risky lending rate as the staked ETH situation. So then the worst part of all this is that then Three Arrows Capital goes and takes all that money they borrowed from the GBTC, so they're using Bitcoin as collateral basically. Right? For these big loans, and then they're going and putting it into Avalanche and Ethereum DeFi ponzi's, and they're basically taking customer Bitcoin and using the lent-- the loans to go pump shit coins and go launch ponzi scams on Ethereum and Avalanche and Solana, and they were part of Terra Luna. So a lot of the money that these guys got was actually Bitcoin collateralized loans or uncollateralized loans that they used to buy Bitcoin and then take a loan on that, and they took all that money and they made a bunch of ponzi scams And promoted a bunch of Ponzi scams and did a bunch of pump and dumps. So not only were they like doing crazy risky stuff with Bitcoin and kind of hurting Bitcoin, they were also elevating network effects of all these other shitcoin chains that also like pay, you know, Greenpeace to say that Bitcoin proof of mining is proof of, work is bad and flood Bitcoin and promote Ponzi scam narratives. So a lot of people are kind of like given a pass to Kyle and, and Suzzu and them now, but I like, I, I think what they did was highly unethical Off like, \"Oh, it wasn't our fault, it was the fault of these guys or those guys.\" But really what they did was kind of the same as what A16Z and Coinbase Ventures and Paradigm and all these other Silicon Valley and crypto funds were doing, multi-coin. They were all amplifying the network effects and wash trading Ponzi scam, basically Ponzi scam like DeFi schemes. And what it caused is now, now Barry took a lot of his treasury's profits from, from the Grayscale, Bitcoin Trust, which is probably the most profitable thing that they, the whole digital currency group owns. They were taking the profits from that, and they, as the, as the discount was dropping on GBTC, they started buying GBTC to try to like get the discount back into par, but they couldn't ever do it. So then what they ended up doing was just like how Celsius ended up acquiring a massive bag of staked ETH, which- Which is very liquid. The DCG ended up acquiring a massive bag of gBTC, and so you have to like, when you're becoming insolvent, you can't meet your bills or whatever, you're gonna have to sell your collateral, and so what Digital Currency Group owns is a lot of gBTC. So the problem is if there's insolvency there in the market with DCG, they may be forced to sell their gBTC, and that might drop the discount even further. I don't think it's any kind of- systemic problem with the trust itself. I'm not worried about the trust collapsing or anything like that. The Bitcoin is there, like lots of people have done analysis to show where the Bitcoin is. It's just there's a risk of the discount being not closing because of problems at DCG, and that's the same with the Ethereum holders with staked ETH on the DeFi side. Celsius has to do something with that staked ETH, and unless they can get the unlock code written in time for the creditors of Celsius to sell, like, to, to not have to sell the staked ETH, that's the big thing. Like, ETH has a big problem looming where if four hundred and fifty thousand staked ETH have to get sold by the creditors of Celsius, well, that's gonna tank the price even more of Ethereum. So they're-- I think they're gonna try to write the unlock code so that people can start slowly, orderly exiting the Ponzi so it doesn't completely blow And then they can just swipe, you know, swipe that under the rug just like they did the DAO hack and like the code is law stuff and the DApp narrative and all these other narratives that they use to pump, like, to create marketing. And then, you know, when that, when that bubble is done, they swipe it under the, under the rug and then there's this big giant pile of failed narratives under the Ethereum rug, and this is probably gonna be one of them. I do think they're gonna probably be able to pull it off without, without massive damage to the It seems for some reason like they're able-- I don't know, maybe they won't, because it's gonna take a year and a half once they even do write the unlock code to, to unstake your staked ETH. They can't just let everybody out all at once because that'll cause problems with validation. So the-- there's gonna be like a year and a half wait to get out of staked ETH. So there's still a lot of risk in the Ethereum markets and in the DeFi markets, and, I-- that's why I still think the next year is gonna be Or DeFi coins, NFT coins, Ethereum itself, and a lot of people are way too ex-exuberant about this, but, you know, I, I don't think the GBTC price discount is gonna affect the, the Bitcoin price as much as I think the staked ETH and DeFi stuff is gonna affect the crypto prices, you know, if it keeps going down." }, { "speaker": "stephan", "time": "58:13", "start": 3493.45, "text": "Yeah. And so when it comes to Bitcoin, then, I know you're also active in Bitcoin venture capital, and obviously you're bullish on Bitcoin, as am I. Do you have- Any views on what, what we're looking forward to in Bitcoin this year? Whether that's building stuff, is there any technology or any particular trends that you're looking forward to seeing in the Bitcoin space?" }, { "speaker": "stephan_livera", "time": "58:33", "start": 3512.82, "text": "Yeah, I'm, you know, we could do a whole podcast just on that. Like, I, I'm invested across a whole bunch of Bitcoin companies, probably like twenty-six or seven Bitcoin companies at this point, and, I have a lot of like criticisms of DeFi and crypto and Ethereum, so somehow I like to talk about that a little- Too much, then I like to like brag about and be excited about the Bitcoin companies, but I'm just as excited about what's going on with the Bitcoin space as I am with like my frustrations of what happened in the crypto space. So, yeah, I mean, there's like the, it comes back to the fundamental thing of like DeFi and crypto was built on perverse incentives. It's a top-down force-fed narrative by VCs where real people aren't gonna be using it. Like the only real thing that was happening in crypto and DeFi was people playing the slot machine on these DeFi games. There was like three million people playing Axie Infinity and buying SafeMoon and buying NFTs to flip them, but like that to me is incentivized Fairweather friends. So you're gonna have a lot of users in a bubble, and it's gonna look good if you're just looking at things like users and total value locked, but when you actually look under the hood, it's all VC top-down narratives that they've already been complying, they've been surveilling everything, they're all like OFAC compliant, they've already used the admin keys to sort of like invalidate the decentralization thesis, do things like stealing money from whales to liquidate them before they get liquidated, kicking out protocols, like supposed decentralized protocols, actually using emergency keys to kick out other protocols and, all kinds of crazy shit, like Right now, the biggest stablecoin, algorithmic stablecoin Dai, actually just signed an agreement with BlackRock, so they're giving a bunch of their money to Coinbase and BlackRock to manage their treasury to buy US Treasuries. Like, how is a decentralized stablecoin buying US Treasuries through BlackRock? Like, that doesn't make any sense. It's not, it's not decentralized. Uniswap has a twenty-five million dollar lobbying arm. They hired Obama's, one of Obama's advisors. To go to DC and lobby for Uniswap, like that's not decentralized. So the whole thing is super frustrating. There's tons of examples of how it's not decentralized. Contrast that with like the actual ground up Usage of Bitcoin in all these different apps, like the value for value stuff that's happening with like Fountain and, all these different like Lightning Network micropayments companies. The Lightning service providers, there's a ton of like exciting things happening where companies are building like Lightning SDKs basically to be able to integrate into po-point of sale systems. And, you know, one of the biggest things actually, I'm very excited by the, the, the, the Bitcoiners that are like building out cool, cool stuff on the Lightning network and just Bitcoin generally. But what makes me kind of like gives me solace and gives me hope and makes me not get too much in my head about all the crap that's going on with the crypto stuff and how, like, you know, maybe they could win if, you know, if they've got all these tens of billions of dollars going towards lobbying and, and wash trading and shit, and the regulators aren't seeming to do anything about it? What makes me like still super confident in Bitcoin is seeing how, one, how many people in the crypto world are completely sleeping on what's going on in Bitcoin, like they all still think we're at like two thousand and seventeen level of Lightning Network. They're just totally ignoring everything happening in Bitcoin. They think that there's like a hundred Bitcoin developers and like they've got ten thousand, you know, DApp developers over in Solana and Ethereum, so like that's where the future is. Like they're totally like sleeping on all the global, Adoption in Bitcoin that's happening in terms of development, like tons of people are building on top of Bitcoin and Bitcoin adjacent layers. So like, there's like the two sides, there's the, the top down VC funded shit, they're, they're not paying attention to what's going on in Bitcoin, and then you have Noster and Hole Punch and a TBD and like Square and Cash App going all in on Bitcoin with like their lightning wallet stuff and their physical wallet stuff, they're gonna integrate lightning network into the Square system. You got Bitfinex and Tether supporting, John Carvalho with Synonym, Synonym to do, to do all the decentralized identity stuff. You got like, Hypercore, Hyperdrive, all that. Like, there's actually another whole side of people building the decentralized web. You know, they're calling this Web three over here, and they're doing it basically, it's like pre-mining the future of the internet so they can dump it on you. And over on the Bitcoin side, you got Bitcoiners and non-Bitcoiners actually building out the decentralized web with useful and simple open-source peer-to-peer technologies and distributed technology that doesn't need a blockchain. It doesn't Don't even need Bitcoin. It just is actually the, the, the real cypherpunks that are over there really building the technology that I think we're gonna see by the next, you know, twenty twenty-five or so. When you see the, the, the, the fruits of all the labor that's been happening over the last few years in the lightning space and, Bitcoin adjacent, like, like I'm saying, the decentralized web stuff I do think it's gonna be hard to ignore for all these guys that have been sleeping on Bitcoin and the Lightning Network and all the development happening. And I will say that, like, the other thing that gives me some, some solace and some, you know, I'm, I'm breathing more easier and sleeping more easier lately about all this shitcoin stuff, is the freaking AI revolution, 'cause that's draining a lot of people who were just kind of like opportunistically minded about crypto, Web3, DeFi, they were just like, \"Oh, well, all the money's here," }, { "speaker": "stephan_livera", "time": "01:04:28", "start": 3868.21, "text": "Does build hard to, hard to stop network effects. When you have tens of billions of dollars going to like fund smart people to build on Ethereum, I mean, that does build Lindy effect. So the fact that you have like all the other shit coin chains, like Binance Smart Chain and Solana and all that Siphoning away value from the Ethereum, Lindy effect, the network effect. I was a supporter of that, I'd like to see that happen because it weakens the, the, ability for Ethereum to like overcome Bitcoin's network effects because it siphons value away and they cannibalize each other in terms of their network effects. But now you have a whole new class, AI, which is sucking away all these Web three gaming people and, and DeFi people to go and look like this is actually real technology. There's no perverse token grifting happening in it at least At least not yet, but it's actual real important stuff. So people that were maybe not so fulfilled working on DeFi stuff, token drifting, now they can-- now they're like very smart people, now they can also be fulfilled like intellectually and ethically because they're going and just building something that's neutral technology that's not like to dump tokens on somebody. So those two things, like the AI stuff sucking away value and, and like network effects from crypto, that makes me very bullish. VCs are also starting to redeploy from crypto. So Web3 stuff, they see the bubble has popped, they're going more into AI stuff, and the Bitcoin stuff is picking up, and the network effects of like the, the builders on Bitcoin layers and sidechains, and like non, non, non-Bitcoin even, just like decentralized web stuff, that's also strengthening as well. So I, I'm, I'm super bullish, man. Like, I think we're gonna have like, by twenty twenty-five, imagine how many important Bitcoiners came from the two thousand and seventeen ICO bubble. You had like Corey from Swan, he's like one Important network effects for Bitcoin in, in my opinion, at this, in this phase of the cycle. And he came from the token side of things in two thousand and seventeen, and he openly talks about that. So another guy, the guys from Galloy Money, they were the same thing. They came from VR, then they were doing token stuff, like crypto blockchain stuff, and then they realized, wait, Bitcoin Lightning Network is the thing. So they started building the Bitcoin Beach wallet, and now like Bitcoin is legal tender in El Salvador, and that came from a guy coming into an ICO and thinking And now he's like, Bitcoin is the way, building like the foundational technology for communities to adopt Bitcoin globally. So I'm just super excited, how many more Michael Sailors, Corey Klipstans, Galloymonies, like how many more of those people do we have that are gonna emerge in twenty twenty-four and twenty twenty-five? I think it's gonna be pretty exciting for the next phase of adoption of Bitcoin." }, { "speaker": "stephan", "time": "01:07:08", "start": 4028.02, "text": "Yeah, that we're going to have more people get activated and become Bitcoiners and really start pushing this thing, building something, developing, and I think it's also Point out that Bitcoin has a lot more grassroots community. B- for example, there's no Ethereum beach, there is Bitcoin beach. There's Bitcoin Island. There's, you know, Bitcoin Ikasi in South Africa. There's Bitcoin Praia in Brazil. There's, there's, you know, there's all these Bitcoin projects, there's actual real world grassroots and meetups and conferences and events. And so I'm still really bullish on all of that also, right? Because I think that all, it all helps, right? The more people there are out there using Bitcoin Whether they're stacking, you know, whether they're stacking Bitcoin, whether they're doing it as a merchant, it all adds together or whether people are investing in Bitcoin like you and I are, bit-in Bitcoin companies and things like this. So there's a lot of things to be excited about. one other area, I know you commented on this recently, Nigeria and they, it looks like they are trying to force a CBDC. So did you have any comments on what's going on there?" }, { "speaker": "stephan_livera", "time": "01:08:12", "start": 4092.65, "text": "Yeah, so that, that's another area that I'm, I'm very excited by just, just intellectually, I guess, because I got into Bitcoin in 2011, and it was like, I was so excited by Bitcoin back then because it was so cool and new, and it was like, you could send money to somebody through the internet without a bank or PayPal, like that was actually cool. Like now, that's just a given, like every coin can do that. It's not that interesting to most new people coming in to be like, \"Oh, Bitcoin can let you send money With no intermediary, it's like, \"Well, every shitcoin wallet can do that.\" They kind of like ruined the excitement about that, about that specific thing. But back then, it was like very much peer-to-peer, it was grassroots, it was like people meeting up and trading Bitcoin with each other and talking about Bitcoin. And what I see happening in African countries and in some Latin American countries too, the energy around Bitcoin is exciting because it's back to that grassroots- Sort of like belly to belly, peer to peer thing that in some ways in the West we've kind of not lost our way, but it's become less and less of the, the important thing because We have a lot of people educating us about Bitcoin as an investment, Bitcoin as, you know, like a technology or whatever, but when you go to Google search and you look at like, Nigeria, for instance, for search terms for Bitcoin Crypto, NFTs, CBDC dollars, like when you compare what actual Nigerians are searching for, they don't have the monetary privilege to be like, \"Oh, I wonder what NFT mint I should get into, ten x my money,\" because they're actually going through some real problems with, with like the limits on the, you know, the amount of naira they can take out of the bank in a week. I think it's like equivalent to a hundred dollars, and the new CBDC, this has no uptick, so they're actually changing Something now, so you have to give all your existing paper bills to the bank by, I think next week or the week after, and then you're gonna be basically locked in to this system 'cause they're gonna invalidate all the cash that's currently out there. So if you've been able to squirrel away a few thousand dollars worth of, like, naira, it's gonna not be legal tender anymore. So there's gonna-- the same thing that happened in India like five, six years ago where they switched it up and got rid of the higher value bills. And what happens in Cuba all the time, they're always rotating the bills. It does cause financial oppression and ca-- it's, it's very oppressive capital controls in my opinion because it sucks you into this system of you can only take out X amount of dollars a week, and if you want more than that, you have to use our CBDC. Like they're actually trying to force feed CBDCs on people. And it's gonna develop a black market, I think, for the old naira bills. People are still gonna use them because they're- Like I, I don't, I don't think people are actually gonna trade them all in, but they did that with Lebanon too. Like I have a friend from Lebanon who, he was able to like escape the Leban-- like three, four years ago when, when they, when they froze everybody's bank accounts, he was able to like escape that system with Bitcoin. Actually, he used Tether to get out. He, he like got Tether from somebody, created a Binance account, and then he started realizing like, \"What's this Bitcoin thing that they're talking about?\" He learned about Bitcoin These finances, this guy from Lebanon that moved to Canada. So all over the world, you're seeing like a war on cash, a war on high value bills, and trying to shove these digital surveillance coins on us, and people are turning to Bitcoin. So I'm very excited, like I invest in African Bitcoin companies in Kenya and Nigeria, and willing to invest really anywhere globally that Bitcoiners are trying to solve a real problem that is the biggest total addressable market on the planet, like solving the money problem. It's not just a meme, Bitcoiners say, \"Fix the money, fix the world.\" Compared to what they're doing in crypto, like Bitcoin and money is the biggest thing that you can spend your time on and the most impactful thing that you can spend your time on to fix money for people. And, you know, making money with trading coins or building a metaverse for a game or something like that, sure maybe that's got a high total addressable market, decentralized finance, doing derivatives and stuff, whatever, but like it's not exciting and it's not solving real problems. So that's why I'm excited by what's going on in Africa, 'cause they're, 'cause they And it's, it's actually like they want Bitcoin, you can see it." }, { "speaker": "stephan", "time": "01:12:46", "start": 4366.3, "text": "Yeah, that's, that's amazing. And, yeah, look, I, I think, I think I'm seeing it in a similar way to you. I think maybe this next year we'll be kind of hanging around this level price-wise with the development and the building is going on, and give it a year or two, and, you know, it will be so different by the time we are rolling around, you know, i-in that, let's say, two years time." }, { "speaker": "stephan", "time": "01:13:08", "start": 4388.01, "text": "so" }, { "speaker": "stephan_livera", "time": "01:13:11", "start": 4391.0, "text": "well, typically I'm on Clubhouse, honestly. There's like Clubhouse kind of started 2021, the beginning of the bull market, and it was a bunch of us on the, on there, and, you know, it was, that's where I first met American Hoddle, and, you know, me and him have actually become really good friends over the last couple of years because we've, we're just like constantly on Clubhouse. Not many, many people don't realize like Hoddle's on Clubhouse all the time. It's like he" }, { "speaker": "stephan_livera", "time": "01:13:40", "start": 4420.18, "text": "What's going on in the space? Half the time it's about Bitcoin, half the time it's just like world news or shooting the shit or whatever. But there's a bunch of us over there, and you can find me on Twitter at brad mills can or honestly just come into the clubhouse rooms and, hang out with us if people have questions they wanna shoot the shit about Bitcoin, shitcoins, politics, whatever. We're, we're, we're usually there like twenty-four seven just hanging out." }, { "speaker": "stephan", "time": "01:14:05", "start": 4445.85, "text": "Fantastic. Well, Brad, thanks for joining me today. Thanks, Stephan. So I hope you found that an interesting dissection of what went wrong with crypto, and this is a great one to share with any of your friends who might have been curious or maybe they got sucked into it, and this might be a useful one for them to get an outlook on what's going on. So share this episode. It's stephanlivera dot com slash four five one to find the show notes. Thanks, and I'll see you in the citadels." } ] }