{ "episodeId": "SLP604", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "alexander_leishman": { "name": "Alexander Leishman", "role": "guest", "tag": "ALEXANDER" } }, "segments": [ { "speaker": "stephan", "time": "00:11", "start": 11.19, "text": "Hi everyone and welcome back to the Stephan Livera podcast, brought to you by Bolt, the best place to buy, save and store your Bitcoin over at getbolt.io. Joining me today is Alex Leishman, he's the CEO and CTO of River. Alex, welcome back to the show." }, { "speaker": "alexander_leishman", "time": "00:27", "start": 27.14, "text": "Thanks for having me on." }, { "speaker": "stephan", "time": "00:29", "start": 29.09, "text": "So, lots of things going on, Alex. I think the current, one of the current topics of, of the day is does Coinbase have all the coins? Right? Now, there's been a bit of back and forth on this, and, you know, some people are saying, \"Oh, look, see, exchanges, you know, quote-unquote, paper Bitcoin,\" or, kind of echoing the concern, in years gone by of quote-unquote, \"paper gold,\" right? in decades gone by. And To, you know, give their perspective on it, but yeah, I'm curious to get your initial reaction on this as well. Does Coinbase have the coins they claim to?" }, { "speaker": "alexander_leishman", "time": "01:06", "start": 66.05, "text": "Yeah, I mean, I think directionally the answer is yes. are there some- Situations where maybe they're double-counting things and balances for settlement purposes, maybe. but I think really the issue is that This could be easily proven," }, { "speaker": "alexander_leishman", "time": "01:28", "start": 88.42, "text": "but it isn't being proven, right? And so I, I think what really the fundamental issue is, well, I mean, do I think Coinbase is running a scam? No. Do I think they're lying and to their auditors or, or, or, you know, stealing people's Bitcoin or lending it out without their knowledge? No. But what's great about Bitcoin is that you can prove you have one hundred percent of it, and so why not, right? And that's really what it comes down to." }, { "speaker": "stephan", "time": "01:56", "start": 116.1, "text": "Yeah. So now, of course, there are a couple, let's say, discussion points that often come up when this conversation comes, and, you know, there are some exchanges who have been doing this for years. Like I know, Kraken was relatively early on this, Coinfloor, which was the exchange that Obi used to run over in the UK, that, you know, before they were purchased To, a, a proof of reserves as well, but some of the common, the common points that come up, and we should, you know, discuss some of those. the big one most people say is, \"Look, you can do proof of reserves and prove us that you have X number of coins, but that says nothing about your liabilities. What if you, the exchange, or you, the business, have pledged out, you know, let's say, just to take an example, let's say you've got a thousand bitcoins in your reserve, but actually" }, { "speaker": "stephan", "time": "02:47", "start": 166.71, "text": "Out so many bitcoins more than what you actually have in your-- on the asset side of your balance sheet." }, { "speaker": "alexander_leishman", "time": "02:53", "start": 172.82, "text": "Yeah, and that's a fair criticism, and that criticism can be largely- Solved by also proving, or doing some reveal of your liabilities. now you could always lie about your liabilities, but you would have to find somebody Who you have liability to, who's okay with you lying about your liabilities in order to game that, right? And so that's really what makes, a proper proof of reserves and, you know, the way that we've built it at River, is, showing both sides. and while technically it's still gameable, it's much less likely. And really what it does is, it says, \"Hey, I want everyone to have...\" Their eyeballs on this. I want people to always be poking at the financial standing of my institution, and, I think more sunlight can never be a bad thing. And so overall, I think it's a huge improvement to do proof of liabilities, even though it does have gaps." }, { "speaker": "stephan", "time": "03:55", "start": 234.95, "text": "Let's see here. and so I guess some of this maybe depends on the scheme being done, but, some, let's say criticisms or downsides of some of these schemes are that they might require a certain level of You know, users checking balances. So I don't know exactly how your scheme works, and, you know, we can get into that, but as I recall from the Coinfloor scheme, they would put out like, I think it was a quarterly report or a monthly report, and the idea was that the user would sort of check their kind of ID number or some, something like that against a number and sort of check that that was the same. And it sort of relied on this kind of enough people are gonna do this check such that, you know, we would get found out if they were cheating, as So, d- do you have any thoughts on that as, you know, is that, is that a-" }, { "speaker": "alexander_leishman", "time": "04:46", "start": 286.48, "text": "Well, you know, it depends on how you define enough. From a regulatory perspective, no, right? We also undergo full financial audits. At the end of the day, any real financial institution should be getting full financial audits, right? Somebody going through your books, going through your legal situation, doing testing, internally and making sure there's no funny business. proof of reserves doesn't solve every single type of- You know, doesn't prevent e-every single type of threat, but it does drastically move the needle in setting a standard of transparency in the industry. So, and now, part of it is how easy do you make for people to, to, verify, you know, that, that their as-- their accounts are included in this proof reserve? We've tried to make that as easy as possible. I, I'm pretty proud of our implementation. I think we've made the UX a, almost as streamlined as possible while having a trustless verification process. you have to, you know, ha-have like the real legit version of the verification does require you to run some open source code, and so that inherently is a little bit, you know, specialized and technical, but you can make it pretty easy, and you can encourage people to put eyeballs on this code and to put eyeballs on the- On this process. And then, you know, if you think about how, how would you gain proof of reserves? Well, you would need to convince your largest account holders, you or you would need to have some confidence that your largest account holders aren't gonna check and you exclude their liabilities from this list of liabilities. But actually, like your largest account holders are probably the most likely to check, right? and so, you know, so that'd be a pretty risky bet to make, that your largest account holders aren't gonna check your proof of liabilities. And I, I don't know that anyone doing this would actually make that That" }, { "speaker": "stephan", "time": "06:42", "start": 401.73, "text": "sure. Yeah. So, I mean, yeah, it would be good, maybe you can just explain for us, just how your scheme works and what's the-- How does it work and what's the way that people are meant to be able to check, the full reserve aspect?" }, { "speaker": "alexander_leishman", "time": "06:54", "start": 414.38, "text": "Yeah, so we follow the, the, the model that BitMEX, laid out, and what's nice about that is actually our, the files that we generate for all this also work with their open source code, so you don't even need to trust our open source code, you can also use BitMEX's. and at a high level, what we do is We publish our cold storage address, and we like to keep things simple at River, we only have one cold storage address. it's a three of five multi-sig, and, we pick a date to do a, an attestation every month, and so on that date, what we do is we, a, an amount to spend from this cold storage address is generated from some data on the blockchain, and I can share the details there if you want. and so, and we, we spend from the cold storage address with that amount that we couldn't, we didn't control what that amount was. it's chosen at the block height of the attestation time that we're, that we're picking, and that serves as the proof to, anyone watching that we control that cold storage address, and they can see how many assets or how much Bitcoin is in that address at that time. And then on the liabilities side, we, at the same time, we generate a snapshot of all client liabilities, of all account balances basically. And We, anonymize that list and we actually split up the account balances into like a lot of small pieces so you can't actually see the account distribution at River. And what a user can do is they can sum all of those together and see the total liabilities we have over here, and they can also verify that their account is included, in that list. And, you know, it's, it's, it's a Merkle tree structure, but, you know, really what you do is you download a file And you, clone our GitHub repo and you run the script w-with your account information in there, and what that does is, in that file verifies, searches for all of your account sub-components, adds them together, and says, \"Here's the liability that River's saying, you know, was included in this file for you.\" And here is the total liabilities for all clients in this file, and you can see that those numbers all add up, and you can also see that the amount of Bitcoin we have in the cold storage address exceeds the amount of liabilities at that time, at that point in time. And that's really the, the core of it. And now breaking that down and making it really simple for people to understand is non-trivial, and so a lot of the work that went into this was actually just design, and, and trying to make this accessible to people" }, { "speaker": "stephan", "time": "09:40", "start": 580.11, "text": "Great. And so, and you mentioned, like a quarterly thing or monthly, this one is?" }, { "speaker": "alexander_leishman", "time": "09:46", "start": 585.97, "text": "Monthly." }, { "speaker": "stephan", "time": "09:46", "start": 586.29, "text": "This is monthly. Okay, great. And so then, yeah, so, a-as I'm understanding you, then the idea is Enough, yeah. So you've got the cold storage address is, you know, you've made that public, and then the aim is that enough customers, and ideally the big customers, will Run that check for themselves, and, you know, if, if one of them finds something wrong, then that's where they're gonna start saying, \"Hey, like, my number didn't match up, what's going on here?\" That kind of thing." }, { "speaker": "alexander_leishman", "time": "10:15", "start": 615.03, "text": "Exactly." }, { "speaker": "stephan", "time": "10:17", "start": 616.77, "text": "Yeah." }, { "speaker": "alexander_leishman", "time": "10:17", "start": 617.07, "text": "And we're going to actively encourage it. We're going to actively encourage checking." }, { "speaker": "stephan", "time": "10:22", "start": 622.03, "text": "Right, yeah. And so in a way, it helps, people build trust and know that, you know, their coins aren't, being, you know, fractionalized. and I think the other thing, I think historically, if you listen to, you know, if you think about, maybe someone like Caitlin Long, how the way she spoke about it, about this kind of thing occurring in the, you know, the tradfi world, stocks and things like this. Where maybe, as an example, stocks might be-- you might think there's only one version of the stock out there, but actually it's been pledged multiple times as collateral to multiple parties. And I- I can't recall exactly, but this, a similar thing might have happened with BlockFi or maybe not BlockFi, Celsius maybe. but maybe, m- actually, I'm not a hundred percent sure about that, but at least in the case of ETF, or not ETF, but stocks of like, you know, equities that, Was a practice that someone like Kate Long has spoken about, at least, you know, stocks not truly, not knowing the true count of stocks. so I'm curious if you think that, that is any, has any relevance here into Bitcoin world, could that apply, maybe not today, but in the future?" }, { "speaker": "alexander_leishman", "time": "11:36", "start": 696.45, "text": "yeah, I think it could definitely get to that point, and what now it's a lot harder if you have proof of reserves, right? And it's a lot harder to pull off some of these shenanigans if we normalize this, and that's really kind of what we're trying to help push for is normalizing proof of reserves so that Everyone feels kind of pressured into doing it, and if that is the case, it just makes it a lot harder for the things you're describing to, to, to start happening." }, { "speaker": "stephan", "time": "12:08", "start": 727.53, "text": "The lead sponsor of this show is BOLD, the best place to buy, sell, and save Bitcoin. For listeners in the US, BOLD lets you secure your financial future with complete peace of mind by integrating a low fee Bitcoin only brokerage with next gen multisig vaults. With BOLD, you can smash buy Bitcoin or set a DCA plan for only zero point 0.99% fees and seamlessly deposit the Bitcoin direct to your Bold Vault. The Bold Vault is a two or three collaborative multisig where you hold two keys and Bold holds one as a redundant backup protecting against loss or theft. You can use Trezor, Ledger or Coldcard hardware wallets to spin up a Bold Vault in just a few minutes and the Bold Vault is the only collaborative custody vault available with zero monthly fees. They're also offering zero fees on your first ten thousand dollars of Bitcoin buys and twenty five dollars of free Bitcoin when you buy a hundred dollars of Bitcoin. Bitcoin or more. Try Bold today and upgrade your stacking experience over at getbold dot io. This show brought to you by CoinKite dot com, the creators of the best Bitcoin hardware security devices such as the Coldcard Mark IV and the new Coldcard Q. Now, we use Bitcoin hardware security devices to keep our keys offline, our private keys offline. Now, the way these work is you can do that setup, write down your twelve or twenty-four words on those, the seed word cards, and keep that secure. 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I see, yeah. now, I guess another thing, if, if I sort of pick through some of the responses from, as an example, Brian Armstrong from Coinbase or, Victor also from Coinbase, I think they were trying to say, \"Oh, okay, look, we've tried to do it, but it was too technically complex.\" You know, or they try to sort of point to the liabilities question. I'm curious if you buy that answer or is it more like they're sort of leaning more too much on, let's say, the, oh, we're audited by, you know, Big Four company or we're, you know, the regulators look at us regularly, therefore, you know, just trust me, bro. It's kind of would say maybe that's the criticism. I'm curious where you're at there on the complexity question. Is it true that it's, you know, it, it could be" }, { "speaker": "alexander_leishman", "time": "15:09", "start": 908.88, "text": "So for somebody like Coinbase, the answer is it's definitely more complicated, and I can touch on some of the reasons that this can be complicated, or, or it's particularly complicated for a Coinbase. It doesn't mean they can't do it. It's just that what they're saying is like, \"Eh, it's probably not...\" It doesn't just stack rank, right now for us. It's not like it's, there's no law of physics that says Coinbase can't do this. but a few things that make it more difficult for Coinbase. One, they have a lot of different assets, a lot. Right? And so now, you know, you could say, \"Okay, well, just do it for Bitcoin. That's a big step forward. That's the vast majority of your assets under custody. Just do it for Bitcoin,\" which would be very fair. And I think that's probably if they were gonna do this, what they would do. It's the only one that matters, anyways." }, { "speaker": "alexander_leishman", "time": "15:55", "start": 955.23, "text": "but second, you have to have the Bitcoin in, sort of, you know, snapshotable custody, you know, at the time you're doing the snapshots, and people have to be able to verify, you know, on chain, that all the Bitcoin is there. And If you have lots of Bitcoin always moving around in lots of different systems, that can be challenging, right? because You may not be able to do that at River. the reason that we're able to have more than one hundred percent of Bitcoin, in the cold storage, in our cold storage than, than we have liabilities is because we own Bitcoin as a company. And so all the Bitcoin in our Lightning nodes and in our hot wallet are River's Bitcoin, and, and so we can just make, say, a hundred percent of client funds are cold. it's harder, I think, for a company like Coinbase to do that. So, You know, that, those are really, I think, the main reasons why it'd be tougher for them." }, { "speaker": "stephan", "time": "17:00", "start": 1020.42, "text": "Yeah, and I think it's, in fairness, there is also an element here of if a business has been around for longer, they have more legacy things to support, and in the case of Coinbase, they have many business lines, right? So it's not just like the standard retail exchange aspect, there's, you know, the Coinbase Pro, there's the ETF, there's Coinbase Custody, dealing with ETF custody as well. So it is fair to say that they have, you know A range of services to support and lines to support, and maybe that does, you know, add some complexity, but nevertheless, you know, it would be nice if, you know, more people thought about, doing, proof of reserves at least demonstrating they have this number of Bitcoin even if they didn't do it for, you know, other, assets or shitcoins, as I prefer to call them. But anyway, nevertheless, I think, it'd be also good to chat a bit. I, I noticed you guys put out a report recently, bit, business Bitcoin adoption grew by thirty percent in one year. So this is a research report I noticed, you put out recently at River, and so do you wanna just tell us if you have any, interesting insights or something, yeah? Any?" }, { "speaker": "alexander_leishman", "time": "18:11", "start": 1091.22, "text": "Yeah. So, what we've seen is a, you know, like, like we said in the report, a pretty strong growth in the amount of businesses, Adopting Bitcoin, this is everything from restaurants to hot dog stands to cleaning companies to larger, you know, real estate firms, kind of get the full spectrum. And, typically these businesses are run by individuals who really personally have come far in the Bitcoin journey and have become personally convinced in the value proposition of Bitcoin, and now Bitcoin and the tooling and, and our product and, you know, in general sort of the- accounting understanding of it is far enough along where they go, okay, I feel pretty good buying this in my corporate treasury as well. And, we think this has also been compounded by accelerating- Lack of confidence in the US dollar as a place to put their treasury. We did an interesting analysis on, on Apple's treasury, and, what you can see is that Even if you have a treasury product that's earning you, you know, five plus percent in safe money markets or US Treasuries or anything like that, over the last four years, your tre- your treasury would have still, lost value in real terms. Whereas if you had just had a three percent Bitcoin allocation, you would be up, your treasury would, would be worth more in real terms. And, that's pretty powerful. so, you know, if you look at countries where inflation has really accelerated, like Argentina Businesses aren't sitting on piles of Argentinian pesos, they are always putting their, their treasury assets into something much, much more value preserving. And while we're still in an era of the US dollar being strong relatively, to all other currencies in the world, I think anyone who looks at the fiscal si-situation of the United States, and entrepreneurs are typically further along in their understanding of economics to go, you know, I, I'm, I should like evaluate other options for, for my corporate treasury and maybe take some baby step towards starting towards Bitcoin. And so that's generally what we're seeing" }, { "speaker": "stephan", "time": "20:26", "start": 1226.4, "text": "Fascinating, and I think, it seems like there were some key hurdles, like some of them are just relating to, maybe people just wanna follow the herd, they wanna follow the tribe, and they sort of wanna look at, if you think about what is a, What, what are typical treasurers in other companies doing? And, and then they might sort of look at that, and it could also be the accounting aspect of it. So I know there's been that new FASB accounting standard also that's coming out that, you know, might be beneficial for some companies in terms of how they huddle it. And then maybe questions around The safety and security and, you know, how do I custody it and things like this, these kinds of questions where maybe that business doesn't feel comfortable doing self-custody yet, they'd rather find a partner for that, and so I think these are maybe some of the things that are- changing over time, that then, make it more, you know, make that, that it just makes a lot more sense. and you mentioned even, you know, the situation with the government debt and all, I mean, what is it, thirty-five trillion, last I, heard the number as the government debt number, and, you know, outpacing Other large items in terms of, government spending, and now it's kind of bigger than the military spending and things like this. So do you have any comments on where things are going there? Like, how, how, how long will it take to sort of change the perception of what is safe?" }, { "speaker": "alexander_leishman", "time": "22:00", "start": 1320.0, "text": "I think the cracks are forming. What used to be fringe sort of Ron Paul talking points from 2012 around the Federal Reserve and the US debt. Have become mainstream. Elon is now tweeting about these things, they are, sort of it is a mainstream conversation in normal circles and, and the largest circles to See this slow motion train wreck of the US fiscal s-situation, and so then with more and more people realizing that, and this conversation becoming more mainstream, people are also starting to go, \"Okay, well, what do we do about it? What's next?\" And logically, a lot of those people see Bitcoin as the lifeboat, and I think that trend will continue to accelerate. Now, I don't know what the timeline on this is. I think it's probably on the order of, you know Decades to reach its full conclusion, but, and we're, we're still just in the foothills of this journey." }, { "speaker": "stephan", "time": "23:04", "start": 1383.85, "text": "Any thoughts on, let's say, gold versus Bitcoin here? will people be running to gold instead of Bitcoin? what's it gonna take for people to head for Bitcoin instead of gold?" }, { "speaker": "alexander_leishman", "time": "23:18", "start": 1398.1, "text": "I think the times will just change and I think the people who do go to gold are older. And gold does have some great properties, right? It has thousands of years of, of history as money. but as- More and more people realize they need an alternative to the US dollar and they reevaluate their priors and they, they look at gold and they go, \"Well, the Bitcoin, hold on, like, with gold, I've, I've gotta deal with this...\" These, this heavy material that I, frankly, I don't even know how to verify if this is real gold or not, whereas with Bitcoin, I can do this stuff with a click of a button for, you know, orders of magnitude, of less of, of, of a cost to transport, it's gonna start becoming very obvious that Bitcoin is a better alternative, so I think a lot of people will- Are still using gold today, but that will change over, over the years. Yeah." }, { "speaker": "stephan", "time": "24:15", "start": 1455.19, "text": "Yeah, I mean, let me steelman it for a second. Obviously, you know, I, I hold Bitcoin, I don't hold gold myself, but, you know, the steelman could be, look A lot of people are just gonna use custodial Bitcoin or custodial gold, so from their perspective, what's the big difference?" }, { "speaker": "alexander_leishman", "time": "24:31", "start": 1471.08, "text": "Well, I think the big difference is Also, they're gonna realize that custodial gold is what sort of led to this to begin with, right? the whole fiat system was able to grow to what it was because we all just put our gold in the banks, and then the government issued money backed by gold, and then they started changing what that meant. And, I, I actually think that with the right education, people will realize that we learned this lesson the hard way, and we shouldn't be repeating it. And they'll also see things like proof of reserves that exists for Bitcoin, and it will just make it even more compelling, to sort of, why take the risk? Why- You know, why, why do this if you don't have to? Additionally, a lot of the gold custody is held in places people might not trust, right? A lot of the, a lot of this will lead to a lack of trust in the US hegemony potentially. And so, are you really gonna trust- you know, is half-- is, is the eastern half of the world gonna trust their, their wealth in gold vaults in London? I, I don't think so." }, { "speaker": "stephan", "time": "25:42", "start": 1542.01, "text": "Right. And so in many ways, I mean, there's multiple things here. One, it's easier to self-custody Bitcoin than it is to self-custody gold, especially in larger amounts. and it's easier to even find different versions of that trade-off, whether you have, you know, multi-sig, different, or, you know, part of it held with this institution, Institution in another part of the world, you can sort of diversify your risk out there, and of course, that's not even going to the level of, okay, what if you're doing now multisig across different countries, different jurisdictions, different institutions? All these things can be layered, to a way where, you know, you get so much more confidence in your actual ownership. Now, I think This does maybe raise, like, while we're on this whole topic of custodial and of course, proof of reserves helps, it's, it's an important tool. what about this question that a lot of people are asking now, that, oh, look, so many of the ETFs are custodied with Coinbase custody, as an example. I'm curious if you have any thoughts on that. Does that represent a centralization of custody?" }, { "speaker": "alexander_leishman", "time": "26:47", "start": 1606.7, "text": "Yes, it does. it's sort of very clear that Coinbase is a bit of a systemic risk here, if Coinbase were to get Hacked or, you know, mess up, that would cause havoc across the Bitcoin ecosystem and, and probably very negatively impact the Bitcoin price, depending on what happened. maybe if they lost the keys, it'd be a good thing. but, So yes, now the real question is sort of how does this play out? Well, the market will decide that. I think that Coinbase has a very early- Lead as a very early moat, but I think over time, we'll see custody re-diversify a bit. Bitcoin isn't really like dollars. It's not like Coinbase is JP Morgan. It's not like your Bitcoin is Safer at Coinbase than it is at River, right? Because none of this is fractional reserve, or if, if Coinbase is fractional reserve, it's much less safe at Coinbase than at River, right? So, I think the centralization forces that apply to banking aren't going to apply as much to Bitcoin custody as the industry matures." }, { "speaker": "stephan", "time": "28:03", "start": 1683.06, "text": "Yeah, I see. And I think it, it's, yeah, as we were saying, like it is easier to self-custody, though not perfectly, you know, it's not that all eight billion today can self-custody, but, you know, if it's, we're talking in the order of millions or tens of millions of, let's say, Bitcoin banks or Lightning banks that could exist today, and In practice, you know, there's like a power law anyway, so there's gonna be certain larger, let's call it, Bitcoin banks or exchanges or providers or vaults or custodians, whatever we're calling them, and so in practice, there will be this kind of power law sort of, distribution, but nevertheless As you said, it's that people should be critically assessing their custodian. They should be critically assessing these things, whereas I, I would say What has historically happened is the government has sort of come in and said, \"No, we'll provide a central bank. That central bank will be the lender of last resort. We will bail out and try to provide...\" In their, in their eyes, you know, in the statist perspective, \"Oh, we're giving certainty, we're giving, you know, customers confidence that they can put their money with these banks and therefore they can keep business turning and keep the money rolling and keep the world turning.\" but in, in Bitcoin land, there is no central bank. And so you really are taking that risk, and so you, you should be assessing, your custodian. And, you know, maybe smaller players won't, you know, maybe they won't care as much, but if you're a bigger player and you've got a lot of money at risk, it, it really behooves you to actually scrutinize and actually, really, yeah, to basically to scrutinize your custodians." }, { "speaker": "alexander_leishman", "time": "29:44", "start": 1784.0, "text": "Absolutely, and I think what another nice part of this industry is we have people like yourself who spend a lot of time educating, new bitcoiners, people new to this industry, on how they should be thinking about this. And, we're creating a, a new class of asset holders that really for the first time in a long time are asking real hard questions to their financial institutions. And I think the cultural shift with Bitcoin is very powerful as well. You know, we're, we have a new generation of depositors that I'm, I'm trying to help push to ask for proof of reserves, right? And so, or, and, a lot of them are asking for self-custody. They say, \"I know, I wanna get my Bitcoin out and self-custody it.\" And, You know, even if a small per-cent, even if just a few percent of people are doing this, it's an extremely powerful force to help keep these institutions in check. I always say the important thing about Bitcoin isn't that Isn't that you don't trust anyone, it's that you don't have to. and that's really what it comes down to." }, { "speaker": "stephan", "time": "30:45", "start": 1845.03, "text": "This show brought to you by mempool.space, the world's leading Bitcoin visualizer, and now they've got an accelerator program. So if you have a transaction that you sent at a fee that was too low to get confirmed, now you can fix this at, with the mempool accelerator. The way it works, you can go and search your transaction, scroll down, click accelerator, and you don't need an account, you can pay with Lightning, and then On the process of being accelerated, and then after a few minutes, it's confirmed. And so this is a great way to help you out if you are stuck, and this can happen where maybe your wallet doesn't have RBF or CPFP, or it might help you in situations where it's impractical to go and re-sign, so for example, multisig with keys in different locations. And thirdly, even in some lightning scenarios, perhaps a forced close, you might not be able to use RBF, and so in this case, the mempool accelerator can help you out. So keep it in Lot space slash accelerator. And now back to the show. Right. And I think the other interesting point that people have tried to make, and I guess statistically people could try to make this point, I mean, we don't know for sure, how many co- basically the question or the point we're trying to get to here, or the point I'm getting at is, how many of the coins are actually held in self-custody by the individuals or companies who believe they own those coins versus how many of those coins are with- A custodian who's holding them on behalf, right? And so you might have seen, and I'm sure, I'm, I'm curious what your view is on this, but basically there are, you know, these different websites showing, okay, this is how much this company, you know, whether it's MicroStrategy or whoever else, this is how many coins they have, but actually that's a small percent of the overall supply of coins, many of which are still held in, let's call it self-custody. But I, I mean, I guess we could get philosophical and" }, { "speaker": "stephan", "time": "32:38", "start": 1957.64, "text": "The person who believes they possess those coins, but I'm curious to get your take." }, { "speaker": "alexander_leishman", "time": "32:43", "start": 1963.23, "text": "Yeah, I mean, I think that the, the vast majority of coins- Acquired after, call it, 2014, are held with a custodian. I think that's probably the reality, I would guess it's around Seventy to eighty percent of those coins, of like any new coins bought, we see about that trend at River, and it's just sort of how Humans work, people want the lowest friction, way to acquire Bitcoin, and they, you know, it's sort of specialization of skills, it's very sort of Adam Smith, it's like, I- want Bitcoin, but I trust this person to spend all their time and energy knowing about how to make keep Bitcoin safe. I don't wanna worry about that. The cost is, you know, the trust I'm putting in that, you know, that firm. And so, I think we're just seeing sort of basic economics play out but unlike cash, right? You can take all of your Bitcoin out, and so you have the twenty percent power users who do do that, and that's what keeps-- and that force is what the big difference is. That's what keeps the institutions honest." }, { "speaker": "stephan", "time": "34:01", "start": 2041.45, "text": "Right, and so yeah, as long as there's enough people keeping the companies and institutions honest, then, yeah, I think that's an interesting, angle and direction that Bitcoin is gonna go down. now- I'm curious if you have any view on, you know, people talk about store of value and, you know, directly using Bitcoin as a medium of exchange and things like this. Now, a lot of people in the industry have sort of- said they're not necessarily against each other, but let's say we're gonna see Bitcoin used more for store of value, you know, in these early years, and you could argue that based on, you know, things like UTXO analysis of saying, okay, these coins haven't moved for this number of time, this amount of time, therefore, you know, I could argue that actually the most popular use of Bitcoin right now is hodling, right? I think you could make an argument about that. I'm curious where you're at there. Are you seeing it as, you know, Lightning, do you see an interest or for people who are actually using it for trading purposes in terms of doing commerce with Bitcoin?" }, { "speaker": "alexander_leishman", "time": "35:06", "start": 2106.49, "text": "So, you know, my, my take is that Bitcoin still doesn't have, mass market product fit as a medium of exchange. There are some, there are some niche use cases where, where Bitcoin is better. you know, small online payments, Lightning really unlocks some cool stuff there. large international transactions, Bitcoin wins in a number of use cases, but really for the vast majority of payments and commerce, fiat is a better user experience, and that's just objectively true. me going to a cafe and swiping a credit card is a lot easier, even if they accept Bitcoin to be honest, than paying in Bitcoin. And, now if you're, you know, an aficionado, you'll pay in Bitcoin 'cause you like it and it's fun for you, but the average person doesn't care and won't, no one will never will. So my take is that Bitcoin will continue to grow in its trajectory as a medium of exchange, and there will be some cool things built there, and even if it's a small percentage of transactions, that's still an absolute The in absolute terms can become a large number. but, you know, until we see total fiat chaos, I don't see Bitcoin as a, Widespread mass market medium of exchange, and I think really the, the proof is in the pudding here, to hammer it home is, if you look at Argentina, right, and you look at their terrible currency, right, the Argentinian peso, like a level of inflation that most people in the world couldn't even reason about, The Argentinian peso is still the def- the de facto transactional currency. Everyone's still transaction pesos. No one saves in it. Everyone saves in US dollars and Bitcoin and land, but everyone still transacts in pesos because it's so sticky. Like fiat rails are so sticky, even if the trans- even if the currency itself is absolute trash, it's still used for payments. So that's my take." }, { "speaker": "stephan", "time": "37:06", "start": 2226.3, "text": "Yeah, okay. And I guess also related, so- Maybe some of this gets into the, let's, let's call it the Bitcoin conservatives and the Bitcoin progressives, or let's say the, the kind of the people who don't want to change Bitcoin as much and those who are sort of They really want, let's say, covenants or other things, op card and other things like this, right? Because the people who are very, very pro, you know, quickly technologically upgrading Bitcoin, as I'm sure you're quite familiar with, some of those people, they might argue, \"Oh, no, Alex, actually what we need, the reason for that is because the self custody, technology isn't good enough yet. The experience for a Bitcoin self custody user isn't, you know, good enough, and in their view, they could make it better change to make self-custody and make the ex-make the experience better. I'm curious where you see that or where you're sitting on that today." }, { "speaker": "alexander_leishman", "time": "38:02", "start": 2282.02, "text": "you know, I think my, my nature is the bias towards the conservative side of things, Where the arguments around needing new tech upgrades to make the user experience better, where this falls short for me is That they typically fail to spell out exactly how that's going to happen. Like, you know, they typically fail to work backwards from an actual, like, \"Here's the protocol that will actually- Make payments work for Bitcoin, and here's why. you know, we have precedent for this, like the Lightning white paper and the, the intellectual work done around the Lightning network existed before the Bitcoin protocol was really ready for it. We didn't have SegWit, we had transaction malleability. And we had a very well fleshed out, like, \"Hey, look, this is how payment-- like, scaling payments on Bitcoin could work. We need a fixed malleability for this to really function well. Like, let's work towards that.\" Great. Like, Lightning wasn't a silver bullet, and, you know, it was never meant to be, but, you know, if, if there are other, Layer two or scaling things that could really move the needle for Bitcoin, the right approach would be to like flesh that out and work backwards, and figure out, okay, is there something that would really unlock that for Bitcoin versus saying, \"Let's build this catch-all\". Like toolset that allows us to do cool things, TM. that's my take." }, { "speaker": "stephan", "time": "39:35", "start": 2374.84, "text": "Yeah, and I, I, I agree with you. I think that's totally fair. and I guess for some of those people, I mean, to be fair, some of those people have slightly different aims or goals, right? Because some people are of the view, like, let's say a B-casher, their, their, in their view is kind of like, \"Oh, we could have done so many more transactions kind of using Bitcoin as opposed to people using fiat rails.\" Maybe some We could have improved our self custody numbers by now, because just like even just for hodling, self custody, you know, there's all these people who are just leaving it on exchanges, and, you know, they might argue that as an example, something like OpVault or OpCat could be used to make the self custody experience so much better, and therefore more people would self custody with this new technology. So it can kind of play not just on the transactional side, but also on the hodling, you know, self custody side. So I'm curious Is your answer the same or do you, do you sort of see them having a different, you know, do you see them in a different way there?" }, { "speaker": "alexander_leishman", "time": "40:37", "start": 2436.73, "text": "I don't think any protocol upgrade is going to drastically unlock more self-custody. At the end of the day, everything still reduces to managing a private key and having full responsibility for your decisions. there's some impossibility result there, right? You're either trusting somebody else or you have full responsibility. Now, there, there are some sort of in-betweens, but if you wanna say, \"I control my Bitcoin,\"" }, { "speaker": "alexander_leishman", "time": "41:01", "start": 2461.45, "text": "There's no getting around you need full responsibility for that key material, and so, I think that's really the big hang-up most people have, and I don't think a protocol change solves that." }, { "speaker": "stephan", "time": "41:12", "start": 2471.71, "text": "Yeah. Yeah, fair enough. and then speaking of Argentina, we s-- you know, we were talking about how a lot of people are, you know, using dollars and stablecoins and things like this. I'm curious how you're viewing stablecoins. Are they a hindrance to Bitcoin adoption? Are they just a necessary tool for people in the world who can't access US dollar bank accounts like you and I can? Are they, maybe even for people who do-- who can access US dollar bank accounts, are they, more frictionless? way to kind of go about the, the ecosystem per se. I'm curious if you have any thoughts on that and whether it's something you would look at for River or it's, you know, maybe it's the regulatory aspect is too much and you wouldn't touch it that way" }, { "speaker": "alexander_leishman", "time": "41:56", "start": 2515.7, "text": "yeah, so I think stablecoins, regardless of my opinion on what people should do, really at the end of the day, they're gonna be huge. they're effectively, You know, dollars outside the banking system that can be frictionlessly and permissionlessly transacted, with some caveats around, you know, Tether could freeze your funds, Circle could freeze your funds, but It's incredibly useful for people who don't have access to US bank accounts, and the most in-demand currency in the world is dollars, and I think it's logical. You know, if I'm, you know, running the US, what do I wanna do? I want my dollar to continue, to spread to as many places as possible. I wanna be able to print as much money as possible without it causing too much inflation at home. well, the way to do that is to get more demand for your dollars. And so, there's so much latent demand in all these developing countries that have restricted dollars from flowing in, and now they can. So, I think it's inevitable. so I don't really- View stablecoins. I actually don't even like the name, it's, it's just dollars. I personally prefer fiat" }, { "speaker": "stephan", "time": "43:04", "start": 2584.49, "text": "coins to be honest, but I mean, that's the term people use, right? Stablecoins." }, { "speaker": "alexander_leishman", "time": "43:08", "start": 2588.05, "text": "Yeah. Yeah. I mean, they're really just dollars. they're just- Kind of, there's a different way of claiming the deposit than a, a bank account, but they're dollars at a bank somewhere. it's, you know, the whole dollar system's turtles all the way down. This, the, this turtle just has a different type of shell." }, { "speaker": "stephan", "time": "43:24", "start": 2604.41, "text": "Yeah. I mean, in fairness, there's the different types, right? So there's, there's the tether style, there's the, let's say stable channels, there's DLC, there's stable sats, I mean, there might even be some other approaches I can't even think" }, { "speaker": "stephan", "time": "43:43", "start": 2622.52, "text": "Let's say RGB or Taproot assets. Do you see, do you think that those things will kind of bring more people, like that they might be a stepping stone for people? Like, 'cause as an ex-let me, let me back up a step. I think sometimes, you know, some listeners are sort of like, \"No, it should be Bitcoin only.\" And, and I, I think the question here and some of these protocols, maybe they're not necessarily trying to target already existing Bitcoin maximalist hodlers who are already Bitcoin-denominated. The idea is, could you bring in somebody who wants dollars today into some kind of, you know, Bitcoin app that could support some kind of stable coin or fiat? Bitcoin feature and would that help or would that hinder as an onboarding vector? now, to be fair, the downside could also be, look, maybe that attracts the regulatory, you know, the, the powers that be, maybe there's some downside there or maybe it won't actually save money or it won't be, you know, as frictionless as we think. But, I'm curious where, where you see any of those concerns?" }, { "speaker": "alexander_leishman", "time": "44:46", "start": 2686.0, "text": "I think it helps a lot, and I think it'll actually even help improve self-custody adoption. you know, a lot of stablecoin apps teach people, you know, it, it, it, you gotta meet people where they are, and where, where the vast majority of the world is is I want dollars, and this is like, okay. Try these dollars, like, these are the easiest dollars to get access to, but you have to learn these new things. You have to learn like a, a seed phrase, you have to learn what a, a crypto wallet is, and, you know, they're learning these new primitives and ways of transacting, and I think that then opens the door for them to go, \"Well, you, you know, that app might also offer Bitcoin.\" And so, I think very much this is a door to people exploring Bitcoin and, and even more so if Tether does become popular on Taproot assets and, and, and Lightning and, you know, you see have a seamless interplay of, of dollars and Lightning, and Bitcoin on, on the Lightning network that, that could open up a whole new, a whole new, wave of adoption, who knows?" }, { "speaker": "stephan", "time": "45:47", "start": 2746.8, "text": "Yeah. And when it comes to these, I'm curious as well, I don't know how deeply you've looked into any of these, but, if you have any comments or if you've looked into things like stable channels or, like the DLC style, I know that, actually, un-unfortunately, there was a startup, 101010, who recently announced that they were gonna be shutting down. you know, there were some guys who were out there trying to do some of these things. in a more Bitcoin, let's say Bitcoin way, as opposed to, using fiat backed, let's say, coins. I'm curious if you have any thoughts on You know, the usefulness of those things, like as an example, stable channels or DLC coins." }, { "speaker": "alexander_leishman", "time": "46:26", "start": 2785.98, "text": "I think they're cool projects, I'm skeptical. I think the simplest thing is just to have Tether. I think that's what the vast majority of people are gonna use, and it's the most straightforward and easy to understand. 'Cause really the logical step is, I want Bitcoin, or sorry, I want dollars, and then I want Bitcoin. where, whereas kind of with the stable channel stuff, you're almost starting with like, \"I have Bitcoin and now I want dollars,\" and that's like a little, I think that's like a, a much smaller sort of group, so That's, that's my take." }, { "speaker": "stephan", "time": "47:03", "start": 2823.02, "text": "I see, yeah. speaking about Bitcoin and where things are going, obviously the, you know, presidential election is sort of coming up soon, and there's been a lot of talk, at least from the Republican and Trump camp, I'm curious if you have any thoughts on, you know, where things might land, depending on, you know, who gets voted in, and what that will mean, you know, for us in Bitcoin." }, { "speaker": "alexander_leishman", "time": "47:33", "start": 2852.98, "text": "Yeah, I mean, I think our life is probably substantially easier if Trump gets elected. From a regulatory perspective, I think that You know, I don't think either political candidate frankly cares about Bitcoin. I think that what, what really will matter is like kind of who surrounds them, what's, what, what's sort of the ideology and agenda of the people that will just end up in these positions. And I think- The reality is that, that the Trump camp, much more so than his first, you know, time in office, is going to be way more orange-pilled, way more, I would almost call it progressive on the, on the, the Bitcoin issue, and, Will ease a lot of the sort of like banking choke points and other regulatory restrictions that we've seen. I don't think it's gonna be perfect, I think there's a lot, a lot of this stuff is just career, you know, bureaucrats who, you know, like the old fashioned way and like, like controlling things, I think if Harris is elected, it's unclear, like is it just the same as we've had for the last, you know, three and a half years? is, is she more gonna be more chill about it? it's, we basically, it's an unknown. I wouldn't be optimistic about it, but I also- Think there's a chance it's not materially worse than today? 'Cause it is a similar administration." }, { "speaker": "stephan", "time": "48:54", "start": 2934.39, "text": "Yeah. Yeah, it's interesting. also, I, I wonder if, you know, Just kind of socially and culturally where things are going as well, I'm curious if you have any, any take on that, like in terms of where things are going, you know, in a Bitcoinized world, you know, what kinds of social or cultural changes you think we might see?" }, { "speaker": "alexander_leishman", "time": "49:18", "start": 2958.11, "text": "Yeah, well, I think that what we've seen, I mean, I think there's a few ways to take this issue. I, I think that we're seeing society somewhat- Sort of stratify between the people who wanna take agency over their lives, and those people are going orange, and you have sort of the people who wanna stick to the current Regime, they wanna just be told what to do and kind of live life by the rules that, you know, the powers that be tell them, and those people are, are, you know, Team Green. I, I think what's kind of interesting is, you know, in biology sort of created, you know, kind of first formalized this dichotomy of like orange versus green, and what you see is, you know, it, it has been interesting to see it's like, well The orange people aren't like always sort of like MAGA Republicans, right? you actually do get this quite diverse array of, Sort of, sort of ideological views about, about the world, but what everyone agrees on is like taking agency over your life and some sense of individual freedom. and so I think we're seeing this sort of very- hard-headed, stubborn group of people find something they can organize around that they didn't really have before, 'cause the political spectrum in the United States, at least, never really- Gave this group of people something that was kind of pure and, sort of not sort of socially loaded to, to, to orchestrate around it, but Bitcoin is now that." }, { "speaker": "stephan", "time": "50:57", "start": 3057.27, "text": "So right. As an example, RFK aligning with Trump, kind of, it's sort of in a similar way to that, right? Like you wouldn't have expected RFK to kind of cross over and align, and align with Trump like this." }, { "speaker": "alexander_leishman", "time": "51:11", "start": 3071.06, "text": "Exactly. So like the battle is almost being waged on a non-election plane. Right? On a non-democratic plane. It's, it's an ec- It's like, it's almost we're seeing an ideological battle on an economic plane. it's like kind of the sly roundabout way evolving. And While the political plane continues to get crazier. so I don't know sort of how this interplay all works out and plays out. I don't know what it means for, for the US in the next few decades because Bitcoin doesn't fix everything. There's a lot of other things that can go wrong that Bitcoin won't fix. So, yeah, I wish I could, you know, I wish I had more insights there, but" }, { "speaker": "stephan", "time": "51:52", "start": 3112.24, "text": "Yeah, sure. No, I think in some ways it's, we are seeing sort of- People who have some libertarian instinct, they don't, they wouldn't necessarily call themselves a libertarian, but they have, they might be either a more right aligned libertarian or maybe sort of left aligned libertarian, and they're sort of allying and sort of coming to the orange camp, they're coming to the orange team in a way, and so, yeah, you are getting this kind of Strange bedfellows kind of dynamic where you wouldn't expect to see these pe- these people don't normally, ally together, but they kind of are now because, you know, it's sort of gotten serious enough. And, I think it's interesting to see that you're seeing this kind of flipping of people who previously were, you know, never Trumpers or just kind of, they just hated the side of Trump, wouldn't ever wanna align with him, and now they're like, \"Yeah, I'm donating to Trump.\" Or you're seeing people talk about how they wanna vote Really sort of strange, but, yeah, interesting to see all these weird things happening. so let's, let's, shift a little onto Bitcoin technology. Now, we covered a little bit of this before, but is there anything in the world of Bitcoin technology that you're excited about, interested to see develop further?" }, { "speaker": "alexander_leishman", "time": "53:09", "start": 3189.2, "text": "well, you know, I'm on the board of Brink, which is, and, you know, supports open source core development, and what I always care about the most is keeping the foundation solid, right? the, you know, we have a motto at River is like, you know, our number one focus is don't mess up, and that's even more important for core development. And so, while the shiny new things like covenants and stuff are cool, what I'm-- what, the things that get me most excited is just the work people are Core. there's been great work done by, to, to remove dependencies, to improve the build system, to, make the code, easier to, to read and develop on, refactor, to add Large amounts of new tests, like fuzzing and much more advanced test, test harnesses and test suites to catch bugs that we couldn't catch before. And, it's actually that kind of stuff that, you know, is, I think, the most important work being done. 'cause who cares about covenants if- We get some inflation bug, and so, maybe that's a boring answer, but I think a lot of people forget about that kind of stuff. in terms of new things, there's a cool new, well, it's not new, maybe new at this point, but, one of the things that will eventually land, hopefully in, in, in Bitcoin Core is Erle, will substantially reduce the amount of, Traffic, or data that is passed between Bitcoin nodes and make it much more, much less, resource intensive from a networking perspective. you know, and it uses really cool math to do that, set reconciliations, like super, super cool stuff. and, you know, basically continuing to lower the minimum resources required to run, run Bitcoin Core, is, I think, so powerful, it makes bit-running a Bitcoin node that much easier for people. And strengthens the, the sort of censorship resistant and sort of cockroach nature of, of the network." }, { "speaker": "stephan", "time": "55:15", "start": 3315.26, "text": "Yeah, and I think that's a great answer, in terms of, what you were saying before about You know, focusing on reliability and bug fixing and, you know, testing and these things. You know, we talk about being low time preference and all this stuff, like that's, that's important, right? I think it is a good thing to focus on that. actually, I will have an upcoming episode with some of the guys from Brink as well, so we'll be chatting a bit about that there. but yeah, as you said, you know, some of these improvements are coming, things like, you know, assume UTXO and, things like improvements in the way the mempool works and transactions, in, in things like this that, hopefully set Bitcoin in a good position for, for the future, to come, which, you know, most of us are anticipating, you know, a lot of people are gonna come to Bitcoin, maybe not all right now on chain today, but- There's gonna be a lot of people coming and the system will hit a certain level of load and use, that maybe we're not so used to, or maybe we got a bit of a test of it with like, you know, retards and the inscriptions and all this other crap, but, you know, we'll, we'll get it, we'll get, we'll get it for real with monetary transactions, eventually, sooner or later, and so having some of these, in-improved systems around, you know, transactions and ancestors and dealing with Outputs and all these kinds of aspects, that will be improved over time. So that's cool to see. yeah, any, any closing thoughts for listeners before we let you go?" }, { "speaker": "alexander_leishman", "time": "56:50", "start": 3409.96, "text": "Well, I think, you know, the thing I always like to leave people with is, you know, we're still in the early days of this. There's still a lot left to build. There's a lot of work left to do. and, you know, in the words of Matt O'Dell, \"Stay humble and stack Sats.\"" }, { "speaker": "stephan", "time": "57:05", "start": 3425.26, "text": "Great. Well, Alex, thanks for joining me today." }, { "speaker": "alexander_leishman", "time": "57:08", "start": 3428.05, "text": "Thanks for having me on." } ] }