{ "episodeId": "SLP636", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "pierre_rochard": { "name": "Pierre Rochard", "role": "guest", "tag": "PIERRE" } }, "segments": [ { "speaker": "stephan", "time": "00:12", "start": 11.75, "text": "Hi everyone, welcome back to Stephan Livera podcast brought to you by Bold. For American listeners, go to getbold.io to buy Bitcoin over there. Now, rejoining me on the show is one of my longest time friends in Bitcoin, Pierre Rochard. He is the VP of research at Riot and also well known for his His commentary and, you know, his work with the Nakamoto Institute. Pierre, welcome back to the show." }, { "speaker": "pierre_rochard", "time": "00:36", "start": 35.99, "text": "Thanks for having me back on, Stefan. Happy to be here." }, { "speaker": "stephan", "time": "00:39", "start": 39.25, "text": "so Pierre, I, am really looking forward to chatting with you today because I think this is a theme that seems to be coming up now, and it's something I know you've been talking a bit about, which is, I guess- I'm not sure the best way to frame it, but maybe securitization versus tokenization, right? So it's kind of like, are people gonna just-- And I guess one way to think about it is like, are people gonna use kind of on-chain crypto DeFi things, or are they just gonna use TradFi to get their Bitcoin exposure? So I guess that's kind of the headline idea. Do you wanna just spell out some of your thoughts? I know this is something you've been thinking about a lot." }, { "speaker": "pierre_rochard", "time": "01:15", "start": 74.56, "text": "Yeah, absolutely. I, I've, I've been thinking about it really my, my whole career because I, I started out my career in securitization, so, it's a topic that I, I have a strong bias about, obviously, and, that I've also seen over the past decade of, you know, researching Bitcoin, i-, i-, in, in the wider crypto sphere, I've definitely seen some, some trends, and some things that have worked out and some things that have not. so I think the first is At the table, we have to look at, you know, I also have a product background, and in product, we're always talking about what are the users saying, what, what are the problems that the users are facing, and then let's build products around that. so when you look at the survey data of people who aren't Bitcoiners and you ask them about Bitcoin and what they think about it and why they aren't buying it or, you know, what- What the stumbling blocks are for them historically, the number one has been the regulatory uncertainty. And so people have always worried about, is the government going to ban it? you know, is it just for criminals, et cetera? e-even, you know, you look at Michael Saylor's famous first tweet about Bitcoin, where he was skeptical about it, it was exactly along these lines that there's too much regulatory risk around it. now If we look at how Bitcoin fared under what I think was the most unfriendly, administration towards Bitcoin, the Biden administration, they never really got around to, to banning Bitcoin or effectively acting against it. if we look globally, there are jurisdictions where, it probably is harder to, openly be a Bitcoiner, maybe in, in China, you know, so country- Countries that are totalitarian, dictatorial, communist, definitely challenges there that still exist from the regulatory lens. although you, you occasionally hear rumors about them opening up, so I, I don't speak Chinese, so I don't know how true those are. we'll, we'll let our Chinese audience, mail in their, views on the situation in China. But now that Trump's president here in the United States, I think that the regulatory question is no longer Number one, for a variety of reasons, obviously at the Bitcoin conference in Nashville, Trump gave a very forceful speech establishing his pro Bitcoin position, which was a big change compared to his previous position, you know, during his previous administration, where he was more of a Bitcoin skeptic, and at the time, Treasury Secretary Mnuchin, on his way out, kind of tried to sneak by some anti Bitcoin regul- Relations which failed, but really showed that things have changed even between the Trump administrations. his cabinet, which is for the most part confirmed at this point, is just filled with people who have a track record of saying pro Bitcoin things, disclosing that they own Bitcoin, right? So, clearly I think that the regulatory risk has, has become minimal here in the United States. And of course, when we look at what's the number two objection is the volatility. So people lo-look at the Bitcoin price, and this is something that the mainstream media reports on constantly. They, they-- In fact, sometimes they only report on Bitcoin when the price is volatile, right? Either it's going up a lot, it's going down a lot. And I think the this objection about Bitcoin is one that- That historically the Bitcoin community has had a very hard time being, empathetic towards, right." }, { "speaker": "stephan", "time": "05:22", "start": 321.63, "text": "Seen as like, just, just man up and huddle and that kind of thing. Yeah." }, { "speaker": "pierre_rochard", "time": "05:25", "start": 325.26, "text": "Or have fun staying poor. And, you know, it's, and I think that one of the reasons that we're, we're not-- we don't have the empathy that, that we should have, you know, the, the public Bitcoin discourse, all too often is dominated by young men. who kind of have that pro-risk attitude of, you know, just outside of Bitcoin, right? Just put Bitcoin aside, you know, young men just have too much testosterone and take on too much risk, right? relative to perhaps what society expects, from, responsible adults. So, that's been to the benefit of the people who a-have a strong ability and willingness to take on risk because it's come with very high returns, right? and so that's the second part where I think that we lack empathy is, okay, well, sure, high volatility, but take a look at, don't you wanna have ten x gains? you know, compare it to your, your boring bonds and stocks. Yeah, you don't have a lot of volatility, but you also just don't have a lot of upside. and so I think that this is, this, this is now the number one problem for Bitcoin adoption. It's not Not regulatory uncertainty anymore, now it's price volatility. And now we need to think about, okay, how are we gonna address that? you know, we fixed the regulatory risk by lobbying, right? By, by engaging with candidate Trump and orange pilling him and, you know, orange pilling people around him. so it's not like we are victims of history and we kinda just have to let things play out. No, we have to be actively involved In shaping the future of Bitcoin in order to accelerate adoption and bring on more bitcoiners. I think that the, the other part that really bothers bitcoiners with regards to volatility is the, the, the conversation around, the technology versus number go up, right? So, the hardcore cypherpunk ethos of, you know, let's just write code, We don't care about the Bitcoin price, one Bitcoin equals one Bitcoin. I, I think that there's really a ceiling to how many people are adopting that ethos, which is really an, an ideological one. And so in order to break through into the mainstream, I don't think that that perspective on its own, 'cause I think it's a really important perspective to have, right? Obviously, I, I share it, but I don't think that it's a complete perspective on how Bitcoin can fulfill its full potential. and so this is another area where, because of our emphasis, for example, not tricky is not your Bitcoin, right? So- Completely understandable where we're coming from on that, that you look at Mt. Gox, you look at FTX, you look at all the tragic, you know, outcomes of trusting a third party with your keys and, and then just the software engineering reality that indeed, if they're not your keys, they're not-- you know, you don't hold a UTXO, you don't have, BTC, you have a IOU. You've gotta trust me, bro. and so that also- So I think shapes the conversation around volatility, where if you're holding raw, real Bitcoin, you have to accept the volatility. It's part of the package of, of Bitcoin. A-and so then it's just, okay, well, you don't understand freedom technology if you aren't willing to see an eighty percent loss in your portfolio. which, I mean, yeah, sure, that's true, but that's not gonna persuade anyone, right? Yeah, pe- people are just gonna, go move on to the next thing. They'll go on Robinhood, they'll go trade, something else. so that's where I think that, what we've seen with regards to, the financialization of Bitcoin over the past, I, you know, I'd say really since the, the launch of the ETFs, right, over the past eighteen months, a rapid acceleration of the financialization of Bitcoin. it's not entirely Fairly new, we had GBTC before, but the SEC was not just keeping a lid on, altcoin scam-briean explosion, right? They were also keeping a lid on the development of securities that were backed by Bitcoin. The Winklevoss twins tried to launch an ETF in two thousand and fourteen. So it's been a decade of the SEC See saying no to the financialization of Bitcoin. you know, that's a double-edged sword. the Cypri punks will say, \"Hey, that's a good thing that helped push people towards holding their own keys and actually using Bitcoin.\" My perspective is that that was a disastrous thing. It pushed people into the crypto casinos, whether onshore or offshore, like FTX. I think that it had lots of second order effects that were very negative for the financial outcomes of people, right? so it's kind of like- Is it better to have a purity test where somebody gets scammed into owning Solana or something, or, you know, be-- because they couldn't access an ETF, or, is it better for them to just get the financial returns of Bitcoin, the NGU part of it, without having any kind of understanding of what a Bitcoin address is, right? and that's a-- that I think that's a valid debate to have. Among Bitcoiners, but it's also, I think, something we can look at the market and see that, I think the debate's over, from a market perspective, and that there's lots of people who just wanna hold an ETF in a portfolio. Now To steelman, like the, the other side of this, it does present a huge amount of legal and jurisdictional risk for the people who are holding the ETF. So I think that the strongest argument for holding your own keys is, in particular, if you're in a low trust jurisdiction, right, where you don't have any semblance of rule of law, the courts are completely crooked, you don't have property rights, the government will just steal everything you have, you know? All the time, and now where you put the United States on that scale, okay, we could have subjective different views on the jurisdictional risk of holding an ETF here in the US. personally, my read of it is that it's kind of on the low risk side of things, and that especially if you compare it to, for example, holding Bitcoin at, at, at Coinbase, I think holding Bitcoin in a, in a- An ETF product is lower risk than holding Bitcoin in your Coinbase account, with the caveat that you, you don't have the ability to withdraw to your own keys yet. That's something else that the SEC has been blocking, which is what's called an in-kind creation and redemption. I think eventually you'll be able to convert your Bitcoin into an ETF and your ETF into Bitcoin on-chain. so there's just a huge amount of, user experience improvements, that, that will come along the way. I'll, I'll pause here. Yeah. I've got a lot more to say. So let me try and summarize" }, { "speaker": "stephan", "time": "13:27", "start": 807.24, "text": "a few of the thoughts, yeah, because there was a lot there. So I would summarize what What you were saying as in the earlier years, there was this regulatory concern of Bitcoin, right? Is it gonna get banned? Is the government gonna try to regulate it into the cr-- into the grave? We don't know. Now that seems-- it's fair to say now that is very, very low risk, at least in the US. Secondly, the other big aspect is the volatility. So that's the el-element where we've essentially, in some sense, Bitcoin has selected for those individuals with a higher risk tolerance, and that tends to be young men, right? And I guess even you and I, when we first got into this, whatever, twelve, thirteen years ago, whatever. We were young men, so we kinda had a higher risk tolerance then, right? So I guess you could sort of argue that, that that point. But I guess bringing it back to this kind of, is it gonna be securitization or tokenization? And I guess there's a little bit of a debate, some discussion online about what's the path forward? Is it gonna be all these kind of L2s and all these, you know, Bitcoin L2s or even shitcoin things that, you know, are people gonna be using like crypto DeFi to sort of get Or is it actually just that, wait a minute, there's all this money in the TradFi system, right? Because remember, who holds most of the wealth in the current fiat system? It's boomers, right? Like just statistically, objectively, they hold most of the wealth, and most of that wealth is on TradFi, typical, you know, brokerage platforms, and maybe it's physical property if they have real estate, it's stocks and bonds and property. That's, that's most of the world's wealth right now. So I guess maybe that's where some of the debate is or discussion Question is which pathway is gonna bring more people in to our Bitcoin ecosystem. And so as I'm reading from you there, it's like part of what you're thinking is that actually there's gonna be a lot of people who are coming in on the tradfi side, not necessarily in the kind of crypto, shitcoin, DeFi, casino, not, maybe some, but mainly from the tradfi world. so I guess would you say that's kind of a fair summary of, you know, would you amend any of that there?" }, { "speaker": "pierre_rochard", "time": "15:38", "start": 937.95, "text": "no, no, I wouldn't. I, I would just add, I think you set the table really well. I would add one element to it, which is that there's, y- on one hand, you have people who think Bitcoin's too volatile, on the other hand, you have people who wanna outperform Bitcoin. They wanna take on more risk and more volatility to get higher returns than spot Bitcoin. And historically, what they've gone after Is this world of altcoins, these less liquid tokens that are using a lot of the same underlying technology, but obviously, have different token economics than Bitcoin does, and are, you know, a lot of them are pump and dumps, where, by taking on additional risk, this person's able to temporarily outperform Bitcoin, and then it's a game of musical chairs of who can get out and, realize those gains. So in traditional finance, when you have a situation like this, some investors want less risk, some want more risk, some want, you know, less volatility, lower return, others want more volatility, higher return, you have to develop products that carve up that risk-return profile for those two different demographics. and if we look at different ways of doing that, you know, it comes down to equity versus Is debt. Equity is higher risk, higher return. Debt is lower risk, lower return, right? And so that's why traditional finance talks about stocks and bonds and a portfolio. If you look at, you can look at this at any level, right? Of whether it's a retail brokerage, you know, financial advisor and personal finance level or at an institutional portfolio level. every financial institution is just gonna have two big segments, the fixed income and the equity part. now of course, on the equity part, you can go further out with derivatives and options and futures and really, you know, magnify, that, that risk appetite. but that's where I think that, when we look at, okay, so that's conceptually what is-- what has been, what needs to happen, in order to bring in the next big wave of capital into Bitcoin is that the risk-return profile needs to be cracked Into those two separate demographics. Otherwise, I think that, there's not a, a huge pool of capital that is interested in spot Bitcoin. the reason we know that is because they're already invested in spot Bitcoin, right? everybody already knows about Bitcoin. There's no, the, you know, you'd have to be living on some remote island without access to the internet to not know about Bitcoins. I think that the demand for pure spot Bitcoin Yeah, I might increase like four percent a year or something, right? but what the massive pools of capital are waiting for is the ability to either access, higher returns or, lower volatility. So how, in what format does that take shape? In what format do those products happen? And I think that gets to the, the, the key question that you posed is, do those products become SEC-regulated securities that- Have, you know, the legal system, legal contracts around them, or are they automated DeFi smart contracts that are on chain? Whether it's Bitcoin discrete log contracts with oracles, or if it's, Ethereum or Solana, you know, let's set that question aside first of all and just look at it of where is this activity, where has it been taking place, and where will it take place? So I would argue that it, the, it has almost, all been taking place on the security side of TradFi with regards to Bitcoin There have been a, a lot of, trading activity. And okay, now, I wanna also talk about the fact that, you know, you look at Kraken and some of the other, crypto exchanges, they've had, leverage trading as well, right? BitMEX famously, you know, you can go a hundred X leverage. So there's been centralized financial players that have been, playing this i-in this area for a very long time, and even, you know, you go to Unchained Capital Capital you can borrow against your Bitcoin. So I think that the centralized solutions have really, been much bigger, whether they're crypto-native or, tradfi, than the decentralized or pseudo-decentralized solutions, that are on-chain. So, you know, just s- putting, putting that in place. Now, why is that? Why is that, right? That's a, a valid question. I think that the, the on-chain solutions- What it comes down to is regulatory arbitrage, that, they can, do more things, without, being slapped on the wrist or sued by regulators, than the centralized players can. So if we remove the regulatory risk, right, which was kind of the, the number one we were talking about there, yep, or even if it's just a low risk, like I think that realistically it was a low risk in the past, and that's why we saw the flourishing of some of these platforms. Now, some of it had to happen offshore, right? BitMEX offshore, FTX offshore, et cetera. but I think-- so I think that it's going to come onshore in the United States. It's going to be centralized. And that all of the on-chain stuff, it really appeals to like a very, a, a subset niche of the degens, who, I think it, a lot of it comes down to just-- And I'm not, I'm not dragging them in the mud on this, but tax evasion, right? They don't wanna-- They don't want a ten ninety-nine to be filed with the IRS. They wanna just, you know, De-gen out on chain and, have a pseudonymous, permanent paper trail of, their activity, but they don't want their social security number attached to it. Okay, that's fine. that's just not going to be a, a mainstream product, from my perspective, and it hasn't been a mainstream product. So when then when we look at, in, on the other side, on the centralized side, we've seen, obviously, you know, the exchanges, the crypto exchanges, that has appealed to a large audience of people who made a lot of money off of spot Bitcoin, and then, you know, essentially got addicted to gambling, right? in some sense. now, it-- I also think that outside of the crypto exchanges, when- When we look at what MicroStrategy has been doing, let's, you know, rebrand it to strategy. It's gonna take a while, I still call it Twitter, I don't really call it X, but try calling it strategy. and, w- you know, they, they've taken the approach of really embracing the tradfi platforms. That is to say that, the stock is traded on normal exchanges. You can log on to Robinhood or ETrade or- Van-- or not Vanguard, probably. TD, Schwab, whatever. Buy shares of MicroStrategy. and then on the bond side, so this is where they take on a little bit of leverage and appeal to a different investor audience that has a different risk appetite than spot Bitcoin and a different appetite than, than MicroStrategy shares. and they've done private placements of these convertible bonds. And so- this is all just completely off-chain, right? I, I believe, you know, they, they use Coinbase as their custody solution, so it's all just SQL databases, and legal contracts But it's billions of dollars worth of Bitcoin, that are essentially moving around, off-chain. and this is, you know, what, what Michael Saylor refers to as the capital, the Bitcoin capital, with an A, that is, driving his treasury strategy. So you know, and of course, Riot, my employer, we've also done a convertible bond, Marathon has as well. we've seen, lots of companies, pursuing this strategy. Some were" }, { "speaker": "stephan", "time": "24:36", "start": 1476.09, "text": "scientific, others-" }, { "speaker": "pierre_rochard", "time": "24:37", "start": 1477.45, "text": "Yeah. With different flavors, right? Everyone's got a, a slightly different approach, but the end result is accessing pools of tradfi fiat capital and bringing them into the Bitcoin ecosystem by meeting them where they're at. And I think that, you know, for, for Bitcoiners who've been around for a while, w-w, you know, the, the immediate instinct is, \"Well, this is going to end poorly, because, you know, they're gonna- It's gonna get rugged because Coinbase is going to be seized by the government. So it always goes back to like the, the regulatory risk aspect of it. And when we take that off the table, and I'll tell you what, these tradfi investors, they don't think that the federal government is going to seize financial assets. If they did, they wouldn't be tradfi investors. They would be exiting all markets and going all in on spot Bitcoin in cold storage and gold. Gold and, you know, whatever else. So, I think that for Bitcoiners who have the libertarian ethos slash paranoia, which, y- and I remember, Saylor got in trouble for saying this, you know, he was like," }, { "speaker": "stephan", "time": "25:54", "start": 1554.2, "text": "\"Paranoid crypto anarchists.\" And in fairness, it, it's like, he adjusts his message for the audience or the person he's talking to, so, you know, but also" }, { "speaker": "pierre_rochard", "time": "26:02", "start": 1562.39, "text": "don't think he was wrong. Like, people were dragging him for it, I'm like, \"Yeah, I'll, I'll sign up for I am paranoid, part of me. Part of me is very optimistic and hopeful and thinks, you know, everything's gonna work out really well. So, I, you know, two things can be true at the same time, right? That's, that's how you manage risk. Fair enough," }, { "speaker": "stephan", "time": "26:21", "start": 1580.84, "text": "yeah." }, { "speaker": "pierre_rochard", "time": "26:23", "start": 1582.94, "text": "so, that's, that's where I think that, there's this strong dichotomy in particular around the narratives, which is that over the past decade, the altcoiners, the crypto VCs, all, all of this, Establishment has been pushing a narrative that we're going to see the tokenization of real world assets. Okay, what does that mean, tokenization of real world assets? you know, the-- I think that, you could use a very simple example. Let's say Apple, right? the corporation, Apple. We're gonna take Apple shares, right? A A P L that is traded on NASDAQ, and we're going to tokenize it by putting it on, blockchain where each token is backed one for one with a share of Apple. now, does that mean that any value has been created? No, none at all, because all you did was just change the form of the value. you didn't actually create any value, you just moved it, right? So it's like saying, okay, I have a pizza here, I'm putting the pizza inside of a box. Do I have more pizza now that it's inside of a box? No, you don't. You're just transporting it. and I think that it, this, this causes a lot of cognitive dissonance for the tokenizers because they'll say, \"Oh, tokenizing equities, that's a trillion dollar oppo- Opportunity. No, it's a zero dollar opportunity, okay? You're just changing the form of the asset. You're not creating new value, new wealth, new assets, right? So, that's first thing first. Then they fall back on, \"Well, okay, sure.\" What about if Apple issued a token which was just, not backed by shares of Apple, not backed by like, it's not like a gift card, like you can't, you can't buy- Right, so not gift, not debt," }, { "speaker": "stephan", "time": "28:33", "start": 1713.34, "text": "not equity, like just a free-floating token?" }, { "speaker": "pierre_rochard", "time": "28:37", "start": 1717.33, "text": "Just, you know, it's, it's part of the Apple ecosystem. It's," }, { "speaker": "stephan", "time": "28:42", "start": 1722.47, "text": "you need to use these tokens to use your iPhone." }, { "speaker": "pierre_rochard", "time": "28:47", "start": 1726.77, "text": "Yeah, it'll have utility in the future. In the future, you'll have to use the token to use your iPhone. Not today, because that would inconvenience everyone, and then Apple would lose market share, and everybody would switch over to Android. But at some point in the future, right? There's a promise of it'll be part of the Apple community, right? We'll have good vibes. From the token, and that's why you should buy it today and, and bid it up, and, you know, like that's what XRP is, that's what a lot of these tokens that exist, today, and that's, that's kind of their vision that every corporation will have some kind of- Token that isn't concretely promising anything today, but by vague brand association might have some kind of benefits at some point in the future. okay, take the meme coins, for example. Because, there's no difference between what I'm describing and meme coins, right? the only difference is what the meme is. So, you know, there's the apple meme, there's the XRP banking meme, there's the Trump meme. I saw David Sachs on, on, on camera. He was saying, \"The Trump coin is just, it's a, it's like a commemorative coin that you would just-- you could go buy it at a gift shop. It's just commemorating the fact that Trump is president. It's not actually backed by anything. There's no promises associated with it in any way. It's just out there, and, you know, people can buy it and sell it, and that's fine.\" and, and then you have Dave Portnoy with- with, barstool sports, you know, he's going out, talking about different kinds of meme coins, h-seeing them pump, seeing them dump so I think that, that, that tokenization narrative, that's what it regresses to. It starts out as, \"We're gonna tokenize real world assets, so we're gonna put real estate on the blockchain.\" and then they realize nobody actually wants to do that. It's a lot easier for investors for you to securitize your real estate and to put it, you know, in a trust, and have legal contracts around it. That everybody is familiar with doing due diligence on, and it's just not even that hard to do, it's less expensive than tokenizing, and then they fall back on, okay, we'll just do, dog-related meme coins, right? So- Right." }, { "speaker": "stephan", "time": "31:21", "start": 1881.1, "text": "Yeah. And I guess I'll, I'll just add here as well, in crypto world, like to, to add to your point, there's this sort of- Like they have these ecosystems where they talk about like, \"Oh, we have like a DAO and we vote about it, right?\" So you get this token and you get a vote in the DAO, the decentralized autonomous organization, and they kind of have these sort of Rube Goldberg machines, and this is all part of the, let's say, the tokenization aspect of it as contrasted with the securitization and- Financialization, I would say." }, { "speaker": "pierre_rochard", "time": "31:52", "start": 1911.77, "text": "Yeah, that's right. let's look at the, the most famous DAO, which, was on Ethereum, that caused their, hard fork and, I forget what, what Vitalik called it. I think he called it an irregular state change." }, { "speaker": "stephan", "time": "32:07", "start": 1926.64, "text": "Back to the show in a moment. This show brought to you by CoinKites 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 the, the seed word cards, and keep that secure. Now, you can use this device to interact with the Bitcoin network using software such as Sparrow Wallet, Electrum, or Bep2 Desktop or Nunchuk as a few examples. Now, you have a range of security features that you can use with these devices such as pass- Phrases you can use seed x or, or my favorite is multi-signature. Now, if you're starting in a basic way, just start with the device and the USB-C cable, plug it directly to the computer and use it that way, and then later improve your setup. But I believe these devices are great at helping secure your coins, especially as you start to migrate up into multi-signature security. But don't be disheartened or don't be, scared away, they are accessible, and I think you actually do learn about Bitcoin in the process. So- To get yours, go to coinkite dot com, use code levera to get a discount on your cold card. This episode brought to you by Galloy, they are building banking software for the Bitcoin age. So if you are with a bank, a fintech or a startup looking to offer some kind of Bitcoin product, whether that is a Bitcoin collateralized loan, deposit accounts or payments, Galloy can help you. Their latest product is called LANA. It is a loans management platform, and you can use this to come to market quickly and offer a loans or Bitcoin Collateralized lending product for your customers. Now, Galloy have a lot of experience in the space. They started with Blink Wallet in 2020, and they've since grown this to become a community favorite over time, and so they have a lot of experience making things work in a secure, reliable, and scalable way. So if you need assistance coming to market quickly with a Bitcoin banking product such as lending or deposits or payments, talk to the team at Galloy. You can email them, the email is biz at galloy dot io, or go to the website, gal- Alloy dot io. And now back to the show. right, because they very much hate when you say, when you call it a rollback, right? They wanna say, \"No, we just amended this particular balance or transaction. We didn't roll back the whole chain.\" That's their kind of argument, I guess. Yeah." }, { "speaker": "pierre_rochard", "time": "34:35", "start": 2074.8, "text": "and the premise of that DAO was that they were financing a, a startup called Slockit, the-- and with Slockit, you would have a real-world lock, right? you know, the-- normally you would use a physical key, to unlock your house, but it would be digitized and you'd be able to use your Ethereum private key to unlock your house. and so- So, you know, what a great investment to participate in as a VC. Totally plausible business idea, right? Sure, why not? It's, I, yeah, okay. Now Is that gonna outperform Bitcoin? Probably not. i-is it, is it like, i, i, does it benefit in any way from being on chain as a DAO in terms of financing the enterprise? No, in fact, the opposite is true. It was a liability, it was a disbenefit to be on chain, because the, the, the, the contract got hacked. so- So, you know, it would have been much better if it'd been written down on paper, because then what would have happened if it had been written down on paper? Well, let's say the, the hacker saw the bug in the paper contract. Well, what does he do with that? He, he goes to a-- he sues them in court, right? He says, \"Hey, I found a bug in their, contract. It says here I can take all the money.\" The judge looks at it and is like, \"Well, that's just a typo. You're an idiot for suing over this. I'm throwing this out as a frivolous lawsuit. Go away. You're obnoxious.\" Okay? That, that would've been the end of it. And so it really would've been better if that contract had not been on chain. they wouldn't have needed, a re-irregular state change. Instead, a judge would've laughed at the stupid hackers, you know, pointing out a typo in a contract that obviously wasn't the intent of the contract To give him all the money. and so that's where I think the, the crypto space really fell into a trap of, trying to find problems to solve, and being naive about it rather than kind of being more realistic about how the real world operates. Right. now let's say that A company, did, did actually succeed, right, w-with, the launching their product and making lots of money. would the investors have a higher return if it's a DAO versus whether it's, just a normal startup equity? no, it'd be the same return, right? It's, it's the same outcome. it's just taking on additional risk on something that's not even related to the product that you're building." }, { "speaker": "stephan", "time": "37:33", "start": 2253.14, "text": "Right. I think the, the, it's unrelated to the business risk, it's just like using a different database technology, right? If you use MySQL or PostgreSQL or something like that." }, { "speaker": "pierre_rochard", "time": "37:43", "start": 2262.85, "text": "Yeah. Or, or, or something that you just made up in house, like MongoDB or some" }, { "speaker": "stephan", "time": "37:47", "start": 2267.33, "text": "other database, you know? Yeah." }, { "speaker": "pierre_rochard", "time": "37:51", "start": 2270.75, "text": "yeah, so that's where I think the, the DAO narrative, I mean, it fell apart like right out of the gate, and, all, all we've seen is with these, DAOs or whatever it is, is that they just end up like launching another blockchain and just finding more narratives to grift off of rather than actually creating any real world value." }, { "speaker": "stephan", "time": "38:13", "start": 2292.51, "text": "Yeah. Okay. So let's summarize some of the key things. So as you said, it's, you know, that regulatory concern and then the vol-volatility And now, as an example, Michael Sailor with Strategy and other companies, they can sort of offer specific financial products that exist, and for people who really want more, like obviously we think of it, at least the way I'm seeing it, is Bitcoin is our savings, but if you want to invest, right? You're trying to earn BTC yield, that's where a person may choose to invest. In some kind of Bitcoin treasury company or some kind of strategy where they are trying to outperform Bitcoin and earn more in Bitcoin terms, or even in the other case, it may be that you don't want, you can't handle the full volatility of Bitcoin, so you just want something that gives you a bit less than that, but maybe it's a bit safer or a bit lower risk or a bit less downside, different, aspects to that. I think, yeah, and, I'm, I'm with you there. I think the other important thing is just fundamentally that World is already on the re-ta-- on the traditional tradfi platforms and rails, so it's unusual to think that somehow, you know, because part of the, the problem or the challenge with the crypto, defi, tokenizer kind of worldview is how are you gonna get that money out of these traditional platforms into your, into your little defi world?" }, { "speaker": "pierre_rochard", "time": "39:38", "start": 2377.56, "text": "Yeah, and, you know, if you, if you put on your, financial institution hat, and you look at what DeFi is, it's just, it's a back office technology, right? You're saying, \"Oh, we're gonna have a, a different settlement system, than we've been using in the past.\" it's not, the, the, it's, you know, it's completely uninteresting and it's just additional risk. Now, when you look at Bitcoin, that's a front office technology. Saying we're gonna use a completely different kind of capital, and that if you look at where these, the, these portfolio managers are, they don't have a mandate to invest in commodities, right? So they might think, okay, look, I think Bitcoin's great, I think that, it's going to perform well over the next thirty years or even over the next ten years, and that I'd love to have it as part of my portfolio. But I manage a fixed income portfolio. Right. I can't go buy a commodity, even if I think it's gonna do great, even I-- even if I size it to be a very small position so that it's not putting, you know, my career at risk or putting the whole, company at risk, it's just not something they can access. Now, that's where I think that there's going to be the continued development of Bitcoin securitization, that they're going to want- Securities that allow them to have exposure to the underlying Bitcoin collateral performance, that they don't, doesn't currently exist. and it's, it's gonna be driven by a number of different reasons. One, the Trump administration and the Fed are signaling that rates are going to stay the same or go down. And so when rates are, I, I wouldn't necessarily call them low today, but they're certainly not high, especially from a historical perspective, right? If you look back at 1980, rates were high at twenty percent, right? Today they're like four and a half percent. so now they're not zero percent like they were, not so long ago. Correct. Yeah. but Nevertheless, there is a challenge for fixed income portfolio managers to get a return that's going to be sufficient to meet, for example, pension plan requirements, right, of people retiring. You've got a whole generation of people who have underfunded liabilities, and they need a way to play catch up. Bitcoin's a great opportunity for that. so I think the low yield, low interest rate environment is going to drive a lot of risk on appetite for- For exposure to Bitcoin. And then on the other side, on the Bitcoin side, if you look at the history of Bitcoin, it is a story in fact of lower volatility and lower return. So Bitcoin's returns have been gradually decreasing over time. I hate to say it, right? Because I'm super bullish on Bitcoin, but that's just what the data shows. and, and, and, and the volatility has been decreasing along with it. now To put it into perspective, it's still much greater than any other asset class. So without a doubt in my mind, Bitcoin's going to continue to per-- outperform the broader stock market or, bond market, right? The, the-- there's no doubt. But it is entering an area where it's far more accessible and far less, let's say, speculative, even though, you know, we can, we can argue about that term. In finance, when they talk about speculative, you know, it, it kinda feels like they're betting at the roulette table, when it was Bitcoin in two thousand eleven. But what, what needs to happen is the education of, hey, Bitcoin in two thousand eleven isn't Bitcoin in two thousand twenty-five. This an- Asset has very much matured, both quantitatively in terms of the risk return, but also qualitatively. You know, it's just much better software engineering. the questions about is Bitcoin gonna get replaced, flippin', you know, I think any rational person would say that question has been answered conclusively that Bitcoin's not gonna get flippin', despite what, you know Highly reg-regarded people on Twitter might think. so that's where, y-y-you have an intersection point between Trantfy needing higher returns and higher risk and Bitcoin kind of compressing down to where their needs are, and then it's all about building the right products. There's going to be people who build the wrong products, right? That blow up, that will have too much leverage. Bitcoin is still, you know, has big drawdowns, and so, if you use securities to lever up too much and you get wiped out, that's not a good outcome for anyone. So I think that what investors will have to look for is products that are responsible, that are conservative. I would argue that, now this isn't financial advice or anything, but, you know, You look at what Saylor has been doing, he's been keeping his leverage ratio relatively low, so that even during the previous bull market, empirically we can say he didn't get liquidated, despite what a lot of critics were saying with Bitcoin. I mean, during the bear market," }, { "speaker": "stephan", "time": "45:13", "start": 2712.81, "text": "but go on, yeah." }, { "speaker": "pierre_rochard", "time": "45:14", "start": 2714.11, "text": "Yeah, they, they, they said he was gonna get wrecked in the bear market, no, he didn't, because he had a very responsible way of structuring his securitization of Bitcoin, so that it wouldn't-- it would survive and then be able to thrive in the bull market, and we saw the results of that with his stock price skyrocketing, you know, a-after the Trump election. So there's definitely gonna be, good ways and bad ways of going about, pursuing the- This opportunity. and, you know, I think that it's gonna continue to evolve. So, Sailor started, you know, he's been doing convertible bonds, now he's doing preferred shares. There's different slices of the capital structure that appeal to different segments of, investors, of, portfolio managers. So that's just gonna be, I think, a huge trend over the next ten years. There's also, I think, going to be a trend on the sovereign- Issuer side. You have portfolio managers who can only invest in sovereign debt. So, you know, if you're being creative and whether it's, Besant here in the United States or Bukele in, i-i-in El Salvador or any others, I think that we're gonna start seeing not just strategic Bitcoin reserves, but that combined with very creative ways of financing Those reserves so that they're able to essentially leverage up and gain access for, portfolio managers that, you know, can only buy bonds that are guaranteed by the government, but that want- To have a taste of those Bitcoin returns, right? that, that will actually lower the cost of capital for the government, just like it does for a corporation, and unlock, other pools of capital. So I think that at every level, it's going to be beneficial. at the individual level, what I think will also happen is that for people who have been using products like Unchained Capital in the past You know, one of the criticisms, and I, I don't want to criticize Unchain 'cause they're a great company, but one of the challenges for them and their customers is the high interest rates. the, you know, fourteen percent on something that is super secure, you know, that's, that's pretty high. a one year term, that's pretty short. So as Bitcoin's volatility decreases, as investor confidence in Bitcoin increases, I think the terms on- loans will improve, and so Bitcoin backed loans will start going beyond one year and have lower interest rates than they have in the past. and that also has to do with how the banking system approaches Bitcoin. just today, we saw that Chairman, he's got a lot of chairs, Fed, Fed Chairman Jay Powell, he was on Capitol Hill testifying. you know, one of the criticisms of the Fed over the past year Years has been that with the help of the FDIC, they have been locking Bitcoin companies out of the banking system. And part of that is perhaps a good faith concern about the risks involved, with Bitcoin, but I think another part of it is that they just don't like Bitcoin from a political perspective, from a policy perspective, they don't like Bitcoin and they wanna censor it. this is a form of capital controls where they say Say, okay, if you're sending Bitcoin to-- or sorry, if you're sending dollars to an exchange, we're gonna lock your bank account because we don't really want you investing in Bitcoin. i-in, in, if you're a Bitcoin business, we're not gonna bank you because we don't wanna make it easier for people to be able to buy Bitcoin. and if you're a bank, there's, so there's this huge amount of documents that have been coming out of the FDIC because Coinbase sued them. with FOIA requests to understand why are there challenges in terms of getting banks? Well, it turns out that there's lots of examples of banks that have tried to get involved with Bitcoin. Okay, why do ba- why do banks wanna get involved with Bitcoin? To make money. Obviousl- they obviously they see a business opportunity here, and they see Coinbase making money off of people buying and selling Bitcoin. Why shouldn't they have the ability to-- Why, you, you know, why shouldn't you not be able to go to JPMorgan Chase and be able to buy and sell Bitcoin from your checking account? There's no reason, other than every time they tried to create a product like that, the FDIC would start sending them letters and say Say, \"Hm, are you sure you wanna do that? this is gonna cause a lot of complexity as we evaluate your regulatory compliance. This is going to affect your scoring. This is a reputational risk. we don't like this risk. Are you sure you wanna do this?\" And they, they would do this month after, month after month until the bank would finally say, \"Okay, we get it. You don't want us to do it. Alright, we won't do it.\" And so this was a form of censorship. There was no- It, it's not like there was a law that said that you can't bank Bitcoin or you can't use Bitcoin as a bank. No, it was the regulators that were fabricating objections, and, and they knew that this was illegal what they were doing. The reason we know they know is because they were trying to hide it. So, they, they tried to hide it even from the court that was asking, for this information. so-" }, { "speaker": "pierre_rochard", "time": "51:07", "start": 3066.63, "text": "Excuse me. The, that is all changing. including Saab 121. Saab 121 was this accounting guidance to try to prevent banks from cussing a Bitcoin. That's gone as well. The SEC is saying that they're going to be a, a merit regulator only going forward, so they're not going to be blocking s-new Bitcoin backed securities, you know, just based off of being anti Bitcoin. as long as they follow the law, and disclose everything, then those securities are gonna get approved. And so I think that there's a tr-tremendous sea change in terms of the amount of capital that's gonna come into Bitcoin from, trad- Fi, whether it's bond portfolios, equity portfolios, derivatives traders, right, the, the d-gens in tradfi, or the commercial banking system, a- and, you know, everything in between. So, that's why I'm, I'm super bullish on this space, and I think that it's really the only way that you get to a million dollar Bitcoin. You don't get to a million dollar Bitcoin from people staying humble and stacking sats twenty dollars at a time like I do, right? it's really from having- massive, institutional grade inflows." }, { "speaker": "stephan", "time": "52:24", "start": 3143.5, "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 nine nine percent 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 cold card 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 or more. Try bold today and upgrade your stacking experience over at getbold dot io. And now back to The show. Yeah, I think you, that's really well explained there. and I guess the, probably a common question, and I think you touched on this a little bit before around the kind of not your keys, not your coins aspect, and I guess some Bitcoiners listening may think, \"Is there a risk of system capture by the state here? Is there a risk that, you know, a lot of the coins end up with Coinbase or something like this, and there's a centralized point that the state could try to capture the coins or something like that?\" What would you say to that kind of concern?" }, { "speaker": "pierre_rochard", "time": "53:53", "start": 3233.28, "text": "Yeah, it's, it's, it's interesting because it's, the horseshoe theory that, on the fiat side, the fiat bros are panicking because they're worried about the opposite happening, of bitcoiners capturing the transfi system. And, in-- I was just listening to the, the hearing where, you know, Brad Sherman, he was like, \"Isn't all this going to infect...\" The fiat system with Bitcoin, you know, he's, he, he-- So, it's, it's a concern that clearly cuts both ways. so I, I think not, because I think that what happens is, that, in fact, Bitcoiners do enter into positions of power, and that their interests are aligned, with not seizing Bitcoin. now Are there gonna be hard lessons learned? Yes, absolutely. Could Coinbase custody get hacked tomorrow, and then all of TradFi, you know, BlackRock, they're, they wake up in the morning, all their Bitcoin are gone, iBit is destroyed? Sure, might happen. is that a problem for Bitcoin? No, I don't think so at all. I think that the, what would happen in response to that is that Larry Fink would go on national TV and he'd say, \"You know what? Not your keys, not your Bitcoin. We're building our own custody solution.\" It's, you know, \"Oh, the government seized the Bitcoin? Okay, we're building a multi-jurisdictional multi-sig.\" Elon is is building a satellite system of custody that is outside of any nation's jurisdiction. You know, it's gonna be in space, it's gonna be in international waters, it's gonna be at the bottom of the Mariana Trench, it's on the other side of the moon. So like, Bitcoin's anti-frugal. Anything that attacks Bitcoin is going to cause an immune system response that is going to cause a decentralization of Bitcoin. Conversely The better society is, the stronger our institutions are, the more stable our civilization is, the more centralized solutions can be because that's more efficient, right? And so it's like, it's almost like, if you want people to, hold their own keys Then, and I'm not saying anybody should do this, but like, start cyber attacking Coinbase, right? Like, you wanna be a cypherpunk who, you know, is, i-i-i-is decentralizing Bitcoin, then Either you can complain on Twitter about TradFi and the financialization of Bitcoin and have zero effect on history, or you can become a cyber terrorist who attacks infrastructure in order to accelerate your chaotic future of a low trust society where people have to hold their own keys because if they don't, it, their Bitcoin are gonna get stolen from them. So like, it, it's very dystopian. I think that it's almost like the people- Who are warning about this outcome. Part of them wants it to happen, right? Like they wanna be the hero in this story, which I don't think that's healthy. I, I think you kinda just have to accept reality as it is and manage the risks, right? So, you know, yeah, there is a risk that Coinbase screws up their, their key custody. I think that's a higher risk than those keys getting, stolen by the government. I think there's insider threats, right? Maybe somebody at Coin, working at Co- Coinbase sees an opportunity to steal the Bitcoin for themselves, right? and maybe they get caught, but when they get caught, they destroy the keys or something, you know? It's like, sure, lots of things could happen, an EMP attack, whatever. So, yeah, I, I completely understand that, we should be paranoid, but we also have to accept reality that there's lots of risks that aren't going to manifest themselves and they're not gonna materialize. And, in fact, mainstream society is built on the premise that they're not going to materialize. so, you know, if, if part of your risk management is prepping and all of this stuff, that's great. is that gonna go mainstream? in the absence of a catastrophe, no." }, { "speaker": "stephan", "time": "58:33", "start": 3512.57, "text": "Yeah, interesting thoughts. And I think one, maybe it's like a psychological thing. Maybe people aren't ready to win, right? Like they're not used to winning. They don't realize if you are a Bitcoin holder now, especially if you have your own co-keys, your own keys and your self-custodying, you're winning right now, right? Like we're basically at all-time highs. Okay, yeah, we're a little dipped down, but whatever. I mean, you wait a bit more, I'm sure, you know and I think I'm curious, is it a psychological thing? Like, are there just people out there who just have been so used to losing that they're not ready to just accept this victory?" }, { "speaker": "pierre_rochard", "time": "59:10", "start": 3550.24, "text": "I, I think that it's actually about their understanding of Bitcoin, where if, if I tell them, \"Look, you can, you can basically trust financial institutions,\" right? If you tell them that, then they're-- they immediately jump to, \"Well, then what's the point of Bitcoin? What, why do we have Bitcoin if, if you can, if people are just gonna use third party custody? There's no point to this whole experiment. We could have just stayed with the dollar.\" And that, I think, is where we really see the giant chasm between- Like my monetary maximalism understanding of Bitcoin and their, cypherpunk understanding of Bitcoin, where I think that Bitcoin is both, and that they're missing the fact that Bitcoin's monetary policy and the option to not trust a financial institution is inherently valuable. And so the fact that you can opt out is what holds these financial institutions accountable so that they are limited in their misbehavior. that is that if everybody is stuck inside of their walled garden, then yeah, they can do whatever they want and they will abuse their power. If people are free to exit, well, the whole game theory changes for them. And so It is a paradox that is, I think, challenging for folks to wrap their minds around because they have this black and white either or view of it, of either we're all running a node, all holding our own keys, and all benefiting from the central premise of Bitcoin, or people are completely missing the point and we might as well stick with fiat. And I just don't think that's true at all. I, I think that there's a, a lot more nuance to it than that, a-and it really- It really does come down to the freedom to exit, and in order for that freedom to be credible, yeah, we have to exercise it, right? Like, we gotta, we, we gotta run our own lightning nodes, yeah, we gotta have people who are actually building out the technology. The, the, you gotta buy a hardware wallet, you gotta, I'd argue you gotta do both, right? At the very least, you know, I recently saw my friend Gladiator on Twitter, who's been like a huge MicroStrategy bull, he, he used a hardware wallet for And like his eyes lit up, and he was like, \"Wow, this is really cool.\" So it's also the case that the financialization of Bitcoin is a top of the funnel marketing that is going to bring people to that cypherpunk ethos where they're doing both. They're both a Bitcoin maximalist and, you know, also interested in tr-trading options and all this stuff that is, you know, anathema to cypherpunks, but, you know, they're interested in it. So, I- I think it's been really cool to, to see that evolution." }, { "speaker": "stephan", "time": "01:02:06", "start": 3726.86, "text": "Yeah, and a-as you mentioned, I think that is the, the bigger on-ramp arguably, right? It's not necessarily gonna be the kind of the crypto world. I think the on-ramp for a lot of these people, especially nowadays, is gonna be this trad-fi, world. I'm curious what you see kind of the stablecoins play into that here. Like, do you see stablecoins also as an on-ramp or a stepping stone for some people, or is that just like" }, { "speaker": "pierre_rochard", "time": "01:02:31", "start": 3751.69, "text": "so I, I think that for folks who don't have a dollar bank account, you know, that's a great option for them, especially if it means that, you know, i-if they're choosing between their local hyperinflationary currency that is permissioned with a terrible banking system Or, dollar backed stable coins where, you know, they've gotta trust the issuer, they gotta trust, trust Tether. but other than that, it's basically permissionless, right? They can create a wallet, they can send it back and forth. Now, now Tether's on, on Lightning, which is a really interesting development. or they use Bitcoin, right? And my, I'd say, \"Oh, wow, you should just use Bitcoin, right?\" It goes back to our conversation about volatility. Bitcoin is too volatile For them. And I think that they have to essentially-- and this is advice I give to anyone, it's like, before you start investing in Bitcoin, make sure you have some dollars in your emergency savings so that you don't have to go panic sell your Bitcoin if you lose your job or if you have to repair your car, et cetera. So what stablecoins allow is for people in foreign jurisdictions to develop their emergency savings, save up enough, and then It'll be really easy for them to flip from a stablecoin into Bitcoin, right? There's also-- This is where I think DeFi makes sense. If you don't have access to a brokerage account, DeFi makes sense. If you don't have access to a banking account, stablecoins make sense. but it goes back to the fact that there's low trust jurisdictions where, the, the products needed are very different than the products we need here in the United States, and then we get lots of miscommunication on Twitter over what- It's better," }, { "speaker": "stephan", "time": "01:04:23", "start": 3863.1, "text": "right? Right, right. and I'm curious if you have a take on the whole surveillance aspect, because that seems to be a big kind of criticism. I sort of go back and forth on it. I'm, I'm not-- I mean, obviously, I wish the government didn't enforce surveillance, you know, all that, but, I, yeah, I-I'm curious your take on whether the, the, the, the concern, as best as I can understand it, seems to be, \"Oh, you're building a surveillance system.\" By using these things. That's as I understand it. I'm curious how you see it." }, { "speaker": "pierre_rochard", "time": "01:04:55", "start": 3895.69, "text": "without a doubt, the existing traditional financial system is a financial panopticon. it is a mass surveillance system. It's a huge problem. I hope that Elon Musk and Doge, and kind of the new wave of liberty-minded politicians take a look at it and dismantle it. or that the, the Supreme Court dismantles it because it does violate the Fourth Amendment. So the Bank Secrecy Act has to go. It is a gross violation of human rights. Now, should we- Be, like, is that the problem that Bitcoin solves? to some extent, yes. You know, go look at the Satoshi Nakamoto's white paper. He explains how Bitcoin's privacy model is arguably better than the traditional financial system, because it's pseudonymous, even though it's public. and so there's that. Now, does it completely fix things? No, because we've seen the emergence of chainalysis and all this stuff. Stuff is Lightning a lot better? Yes. it, it does trade-offs, right? There's still, privacy concerns, within Lightning. but is it kind of like the, the biggest problem that currently faces humanity? I don't think so. I think fix the money, fix the world. and it goes back to kind of changing the game theory and the incentives. I think in a hyperbitcoinized world, all of this surveillance stuff, the- The anti-money laundering stuff, it just kind of becomes irrelevant. these people just become weirdo peeping toms. they're not really like, weaponizing, this information to go after people. so that, that I think, you know, it's, it's something that we need to work on to like get all the exchanges to delete their databases, delete their KYC information, delete all the, so I'm all board with that. the- Now, is, is there an opcode, a new opcode that's gonna magically fix all of this? No, there isn't. you know, there's, there's cool opcodes, without a doubt. some of them are more interesting than others. There's no silver bullet for fixing privacy. And, you know, in particular, it's like, you'll, you'll hear people who talk about Monero and Zcash, and they're buying it at Kraken, you know, where they're fully KYC'd, and it's like, I'm scratching my head of like What are we-- So, there, there's just very bizarre, it's almost like just S-Coin narratives that's been out of control, but most of the privacy problems I've seen are self-inflicted, right? Of people reusing addresses, and, not really thinking about, UTXO management, So yeah, I, I, I just, I, I, I s- I struggle with that question myself, of how big of an issue it is because You know, I, I, I like to do a lot of statistical analysis of Bitcoin, so I'll, I'll look at, okay, Bitcoin network had more than ten trillion dollars of activity over the past year, and somebody will ask me, \"What was that activity?\" I have no idea. I ask Chainalysis, \"What was that activity?\" They have no idea. They know that like one, less than one percent of it was criminal activity, but they don't know what the ninety-nine percent was. So I'm like there's no, yeah, it's not as objective" }, { "speaker": "stephan", "time": "01:08:44", "start": 4124.85, "text": "or, it's kind of not reproducible and there are, I guess, concerns around that, but yeah, I, I think it's- To, to the point you were making, I agree that, the primary thing Bitcoin is fixing is government control of money, right? Like if we just change that, then I think the, some of the surveillance considerations, whether that's Bitcoin or with stablecoins, I think those things are likely to be, you know, they, they maybe, they could be fixed on L2s or other layers, but Also, it-- maybe that's not the, the primary problem. I think, yeah, that's how I'm seeing it. Yeah." }, { "speaker": "pierre_rochard", "time": "01:09:22", "start": 4162.42, "text": "And then also like, it always-- I, I, I found on social media, it comes from the Monero people. Monero had a bug in it that caused it to be de-anonymized years back. So that's where I'm like, okay, you can come up with your privacy solution, but should you rely on it? Probably not, because it might get- De-anonymized in the future. So, even from that perspective, it's like kind of dodgy to, to say, \"Oh, I'm gonna build, you know, my whole dark net drug market on Monero under the premise that it'll, it will always be anonymous.\" that's You know, huge assumption. I, I, I don't think that's a good idea. and, and more likely, you know, the government will seize your hard drive or whatever and like, they'll have the whole database and they'll, they'll unwind all the transactions from" }, { "speaker": "stephan", "time": "01:10:12", "start": 4212.8, "text": "that, right? Yeah. Because they'll have your key, your viewing key or whatever. They're not doing" }, { "speaker": "pierre_rochard", "time": "01:10:16", "start": 4216.78, "text": "on-chain, tracing for it. Yeah." }, { "speaker": "stephan", "time": "01:10:19", "start": 4219.8, "text": "Yeah, so I think fundamentally it's about, I guess, having the right understanding of Bitcoin, like understanding what problem does it solve, how does the system actually work? To, let's say, defend itself or remain, viable even if indi-certain individuals or certain companies get wrecked or get hacked or something, h-what happens at the system level? And I think that's the important, thing. So I guess summarizing some of the key points We've spoken about this idea of securitization or financialization of Bitcoin as opposed to the, let's say, tokenization in this kind of crypto DeFi world. And sure, this crypto DeFi world may-- you know, will still exist, it'll still be there, but I think the main show really to watch is Bitcoin adoption and Bitcoin, securitization, isn't it?" }, { "speaker": "pierre_rochard", "time": "01:11:08", "start": 4268.54, "text": "I think so. and I think that's what's going to drive the speculative attack, where people are going to be borrowing dollars to buy Bitcoin and then paying off those dollar-denominated loans using the gains that they got from Bitcoin. And it really, it shows that, you know, the central critique of TradFi, of Bitcoin, was always that Bitcoin doesn't have any cash flows. And that is categorically false. Bitcoin has a cash outflow when you buy it. And then it has a cash inflow when you sell it, right? So, you know, if you're thinking about it from a fiat perspective. and, you know, that's all you need, to have a business. and so I think that's, that's been something that has confounded the, critics over the years." }, { "speaker": "stephan", "time": "01:11:54", "start": 4314.89, "text": "Fantastic. Well, look, I think that's probably a good spot to finish up there. Any, any last, thought? Any, any closing takeaway for people?" }, { "speaker": "pierre_rochard", "time": "01:12:04", "start": 4324.18, "text": "you know, I'm not, I'm not providing any financial advice in this episode. there's definitely, the necessity of looking at all those SEC filings, right? the SEC is very good at making sure that everything's disclosed and transparent, whereas maybe in some tokenomic white papers, they're not held to the same standards. so do your own research. and not your keys, not your Bitcoin, obviously. and, and I- I think that, we gotta stay humble and stack sets, that's, while also being realistic about what is going on in the wider world outside of our echo chamber on Twitter. So, you can find me on Twitter at bitcoinpierre. I'm always looking at both sides, right, of the, looking at the tradfi system and then looking, on the Bitcoin side of the system and, always looking, to, to find insights there. So, so follow me on Twitter and, have I'm happy to take questions as well, my DMs are open. And, thanks for having me on, Stefan. This was a great conversation." }, { "speaker": "stephan", "time": "01:13:11", "start": 4391.51, "text": "Excellent. Well, thank you for joining me, Pierre, and, yeah, follow, listeners, make sure you go and check out Pierre's work online. All the links in the show notes. Thank you, Pierre. Thank you." } ] }