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Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.

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Speaker 1: I'm Joe Wisenthal and I'm Tracy Allaway. So, Tracy, you know,

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Speaker 1: it's been obviously an incredible year for crypto overall, for bitcoin,

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Speaker 1: for a bunch of things going on ethereum, defy, n

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Speaker 1: f t S, etcetera. But I feel like, in some

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Speaker 1: sense some of the narrative enthusiasm has moved away from

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Speaker 1: Bitcoin at least feels like it in the last few months.

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Speaker 1: Oh absolutely, I mean part of this. I think part

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Speaker 1: of this is because obviously you and I are in

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Speaker 1: financial journalism. We're talking with people who are in the

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Speaker 1: financial industry quite a lot. But it feels like the

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Speaker 1: enthusiasm from traditional financial players, you know, I'm thinking bankers

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Speaker 1: and traders that has squarely moved on to defy two

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Speaker 1: things like a theory um to places where there seems

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Speaker 1: to be a lot of innovation and a lot of

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Speaker 1: changes happening around what you can actually do with the

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Speaker 1: technology and with a wider pool of crypto. Whereas, like

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Speaker 1: I gotta say, the bitcoin maximalist, sorry you got me

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Speaker 1: going now, but the become maximalists are sort of like

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Speaker 1: they've turned into the like the gold bugs of the

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Speaker 1: traditional market, right, Like everyone kind of makes fun of

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Speaker 1: them a little bit. Um. They seem a little bit

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Speaker 1: old fashioned and they're kind of just like watching while

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Speaker 1: all this new stuff happens around them. Yeah, that define

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Speaker 1: that definitely seems like the popular narrative. You know, obviously

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Speaker 1: there's a lot of adoption overall or interest in Wall Street,

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Speaker 1: and I think the story is like, yeah, bitcoin is

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Speaker 1: cool and it's a good like you know, it's a

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Speaker 1: store of value and if you worry about inflation, then

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Speaker 1: buy it, or if you're an emerging market, it will

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Speaker 1: hedge against currency collapse or something like that. But if

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Speaker 1: you want to do anything that's sort of like very

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Speaker 1: familiar or two people on Law Street, like trade derivatives

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Speaker 1: or create things that resemble equity or debt or anything

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Speaker 1: like that, then they're all like super hyped on building

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Speaker 1: on like ethereum or Salona or something like that. Like

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Speaker 1: that is sort of like where the zeitgeist is right now.

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Speaker 1: I would say, yeah, absolutely. I guess you could boil

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Speaker 1: it down to an open question of whether or not

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Speaker 1: crypto is sort of outgrowing bitcoin, and whether or not

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Speaker 1: you can have this massive crypto slash finance ecosystem that's

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Speaker 1: built on an asset that's ultimately supposed to be relatively

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Speaker 1: static and in limited supply. Right, And I think there's

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Speaker 1: actually two things, and we're going to explore them today,

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Speaker 1: But there's two things that I think, Like one is

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Speaker 1: there's a perception that it's harder to build on bitcoin debt,

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Speaker 1: Like it's not, you know, because it's designed to like

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Speaker 1: do one thing it seems very very well, which is

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Speaker 1: be this like secure store of value. It's not easy

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Speaker 1: to build on That's one perception. And then I think

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Speaker 1: there's like a question of like do people want to

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Speaker 1: build on bitcoin or do people want to trade on

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Speaker 1: So like it's not obvious to me that a lot

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Speaker 1: of the DeFi stuff and you know, earlier in the

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Speaker 1: week we talked to Tom Schmidt about you know, yield

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Speaker 1: firming and all that stuff and you know, automated market makers,

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Speaker 1: it's not obvious to me that like the people in

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Speaker 1: the bitcoin world like want those things. Whether there's really

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Speaker 1: an appetite or an interest for all that speculation and trading, Yeah, totally.

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Speaker 1: I mean it goes back to the sort of goldbug

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Speaker 1: analogy that I was just using, right, but I think

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Speaker 1: like it's also about who those people are and this

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Speaker 1: idea that bitcoin is very very decentralized. It's not led

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Speaker 1: by any single person. So even if bitcoiners decided to

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Speaker 1: make changes to the overall structure of bitcoin, which they've

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Speaker 1: done previously, but it becomes very very difficult to reach agreement,

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Speaker 1: and then it becomes very very difficult to actually do,

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Speaker 1: whereas with something like ethereum, you kind of have you know, um,

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Speaker 1: a figurehead in the form of Vitalic, you like can

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Speaker 1: how put some changes and help the thing actually adapt

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Speaker 1: and get to the place where people agree that it

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Speaker 1: wants to be. It just feels like two very different communities, definitely.

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Speaker 1: So so that is the sort of perfect set up

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Speaker 1: to our guest, because we're actually going to be speaking

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Speaker 1: to a bitcoin maximalist, Bitcoin not crypto, and she's also

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Speaker 1: a believer that all of these things, all this defied

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Speaker 1: stuff that people are hyped about, that it will eventually

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Speaker 1: all be built on top of bitcoin, and that it

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Speaker 1: is more than just a digital rock, or that it's

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Speaker 1: more than just digital gold. And so we're going to

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Speaker 1: sort of like get this perspective, like what is like Okay,

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Speaker 1: like we sort of a lot of people accept that

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Speaker 1: bitcoin has the store of value properties, is there more

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Speaker 1: that can really be built on it? I'm very excited

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Speaker 1: to learn about where that is going and to hear

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Speaker 1: sort of like the counter narrative of what's going on.

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Speaker 1: So I want to bring in our guest today at

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Speaker 1: least Kaleen. She is the founder and managing partner at

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Speaker 1: the VC firm still Mark, which is only bitcoin focused.

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Speaker 1: They buy equity take equity stakes in bitcoin related companies.

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Speaker 1: She is on the board of Blockstream, which is one

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Speaker 1: of the sort of like biggest builders of bitcoin applications. Man,

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Speaker 1: we have it's employees contribute substantially to the bitcoin code base,

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Speaker 1: to its uh the project. So at least, thank you

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Speaker 1: so much for coming out. O lots great, thank you

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Speaker 1: for having me. There'll be a fun conversation, I hope. Yeah,

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Speaker 1: I'm really I'm really excited about this because you know,

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Speaker 1: you know, we set it up, we know what the

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Speaker 1: narrative is. You know. Actually before we sort of like

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Speaker 1: get it into like the defy stuff, I mean, we

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Speaker 1: sort of um talked about how development on bitcoin is

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Speaker 1: perceived to be difficult and or slow it's conservative, but

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Speaker 1: actually bitcoin did just have a pretty substantial update to

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Speaker 1: the technology of the network, something called tap root. Can

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Speaker 1: you sort of describe, like, what is this new thing

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Speaker 1: that's going to be that's being implemented. I guess it's

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Speaker 1: gonna be implemented in November, But what is this new thing?

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Speaker 1: What's it going to enable us to do with a bitcoin? Well,

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Speaker 1: tap it does quite a bit. But one of the

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Speaker 1: things that it does that's most topical for where the

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Speaker 1: cryptocurrency you know, sort of memes have emerged in this

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Speaker 1: market cycle, is that it creates efficiencies that are relevant

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Speaker 1: for smart contracting, both at the base layer and at

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Speaker 1: higher layers in payment channels for instance, like Lightning network.

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Speaker 1: UM So that's exciting. Tap root is will activate in November,

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Speaker 1: and not only will it have an impact on privacy

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Speaker 1: scalability of the um core protocol, but it will also impact,

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Speaker 1: like I said, opportunities in smart contracting, and it will

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Speaker 1: allow us it'll sort of set the stage for future

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Speaker 1: upgrades like any prevout which has relevancy for other sorts

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Speaker 1: of increased functionality at the Lightning network level. And that's

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Speaker 1: quite important because when we're thinking about defy in the

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Speaker 1: bitcoin space, we're thinking not just about how that's relevant

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Speaker 1: to traders, but really how it's relevant very broadly to

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Speaker 1: billions of people, not hundreds of thousands of people. UM.

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Speaker 1: Taking a quick step back to set context for the conversation,

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Speaker 1: all to defy. So what we see happening in the

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Speaker 1: ethereum or all coined space, UM, what's been called defy

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Speaker 1: now participants. There's about a hundred thousand participants in this space,

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Speaker 1: and those are highly engaged participants, sure, but it's quite

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Speaker 1: small and in terms of cultural relevancy or impact that

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Speaker 1: will be very limited. What has been frustrating, I think

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Speaker 1: for folks operating in the bitcoin space is that I

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Speaker 1: suppose it feels like it's in the background, um, but

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Speaker 1: in fact it should be, in my mind, in the foreground,

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Speaker 1: which is that bitcoin has been building a breadth of

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Speaker 1: decentralized finance tools that are relevant not just to traders

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Speaker 1: but to folks in emerging markets like El Salvador and

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Speaker 1: just to folks very broadly. And so we you know,

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Speaker 1: we're not we're really not limited um. And also not

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Speaker 1: prioritizing Bitcoin's relevance to traders, were thinking more broadly than that.

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Speaker 1: So I, Joe, I want to um. You know, maybe

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Speaker 1: kind of push bath about one of the ways you

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Speaker 1: characterized me at the top. So you said you called

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Speaker 1: me a bitcoin maximalist, which I think, um is a compliment,

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Speaker 1: but probably not I did. I meant it as a compliment.

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Speaker 1: I meant it as a compliment, I understand, So I

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Speaker 1: I appreciate the compliment, but you know, it's not where

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Speaker 1: I think of myself more as a sound tech maximalist

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Speaker 1: than as a bitcoin maximalist. And what I mean by

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Speaker 1: that is I'm really looking at protocol level, at relevant

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Speaker 1: infrastructure and what that means for sort of the security

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Speaker 1: and stability of technologies as a platform. So my background inventor.

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Speaker 1: I started Inventor about a decade ago, making investments in

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Speaker 1: UM emerging texts at the time like cloud networking, data

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Speaker 1: center software, cybersecurity, foundational sort of technologies and bitcoin. I

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Speaker 1: found Bitcoin in that sort of mind space, and so

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Speaker 1: I saw bitcoin first as a protocol, as a technology

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Speaker 1: that would be a platform for the proliferation of a

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Speaker 1: new sort of app ecosystem. And you know, in that way,

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Speaker 1: I approach it really as a sound tech maximalist, not

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Speaker 1: as a bitcoin um maximist. Per se. I also spent

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Speaker 1: time in looking at all coins. I I think that

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Speaker 1: I was the second or third maybe VC to do

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Speaker 1: diligence in UM the I c O space. Even so,

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Speaker 1: for example, the second ever I c O was for

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Speaker 1: a company doing decentralized storage, and I know that the

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Speaker 1: firm I was at the time, clear Stone enter Partners UM,

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Speaker 1: and through my leadership, did deep diligence on that opportunity.

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Speaker 1: And really, UM what I what we found. The conclusion

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Speaker 1: that we came to was that that sort of setup

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Speaker 1: didn't require a token, that there wasn't a need to

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Speaker 1: incentivize use of the software with a token. And you know,

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Speaker 1: I think that generally speaking, I've found that that conclusion

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Speaker 1: holds true across projects. So it's not that there's any

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Speaker 1: sort of religion against other cryptocurrencies. It just it's just

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Speaker 1: that there would need to be a value proposition in

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Speaker 1: that cryptocurrency of digital asset that goes beyond just its

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Speaker 1: use for trading. Don't feel bad about Joe calling you

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Speaker 1: a bitcoin maximalist, because he calls me a silver bug

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Speaker 1: all the time and it's not true. So he has

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Speaker 1: he has form in this UM. So I mean, just

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Speaker 1: on that point, I do think there is a perception

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Speaker 1: out there that bitcoin is an old their technology, and

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Speaker 1: I know it feels a little bit crazy to say

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Speaker 1: that because we're, you know, we're still supposed to be

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Speaker 1: in the early innings of everything crypto. But you know,

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Speaker 1: if you look back, like it is more than a

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Speaker 1: decade old at this point, and you have had newer

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Speaker 1: crypto protocols come on stream since then, so you can

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Speaker 1: see why people would say like, oh, this is maybe

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Speaker 1: technology that is slightly out of date, or it hasn't

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Speaker 1: been purposefully designed for a specific use case like a

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Speaker 1: defie scenario or some sort of other trading or financial

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Speaker 1: use Could you maybe dive into that a little bit more, like,

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Speaker 1: what is the technological difference between bitcoin and everything else

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Speaker 1: out there, and what is it in your view that

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Speaker 1: makes bitcoin suitable to doing new things when I think

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Speaker 1: other people instinctively will say, well, it's older and it

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Speaker 1: was designed for a very specific use case, right. So

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Speaker 1: most important to note is that bitcoin really is a

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Speaker 1: technology play first, whereas the theorym and other alt coins

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Speaker 1: feel a lot to me like a marketing play, and

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Speaker 1: so Bitcoin is a technology play. The Bitcoin starts with

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Speaker 1: the presumption that security and stability of the network are

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Speaker 1: the first most importance, and so Bitcoin's history is one

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Speaker 1: of of prioritizing just that, and what that means is

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Speaker 1: that the end result of that is that bitcoin um,

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Speaker 1: the cryptocurrency, can be a store of value. It's the

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Speaker 1: first true digital scarce resource that we have sovereign access to.

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Speaker 1: A Bitcoin. The protocol, of course, is a public informission

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Speaker 1: list sort of ledger system that operates in a decentralized manner,

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Speaker 1: and all of those things are necessary to establish Bitcoin

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Speaker 1: is a store of value. So bitcoiner's assumption is that

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Speaker 1: that's what's what's most important. And after you've established that

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Speaker 1: and have a history of of that being true, then

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Speaker 1: you can go and add functionality um at the core

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Speaker 1: protocol level and layers built on top of the core protocol.

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Speaker 1: Now ethereum and alt coins, other all coins were introduced

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Speaker 1: really to sort of propose that novel functionality could be

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Speaker 1: could attract a new audience. And so they start with functionality,

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Speaker 1: and the idea was that they would then migrate to

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Speaker 1: sort of secure, perhaps more decentralized networks, and we see

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Speaker 1: this with ethereum, right. So ethereum is has been for

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Speaker 1: quite a while planning for a state of ethereum two

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Speaker 1: point oh, where the network is secured not by proof

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Speaker 1: of work but by proof of stake. And you know,

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Speaker 1: I propose that that's sort of almost a wild thing

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Speaker 1: to do when the network has billions of dollars of

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Speaker 1: value on it, to think about then switching what secures

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Speaker 1: that network and that value, you know, to me, feels

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Speaker 1: um sort of risky, and you know, and I suppose

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Speaker 1: that's why I find myself One of the reasons why

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Speaker 1: I find myself in the bitcoin space is because we bitcoiners,

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Speaker 1: or at least the folks developing at the core protocol

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Speaker 1: level of respects that there's billions of dollars of people's

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Speaker 1: net worth that's secured by this protocol and that comes first.

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Speaker 1: Functionality comes second. So one could argue that it's like, Okay.

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Speaker 1: One thing I don't think anyone doubts about the sort

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Speaker 1: of bitcoin world is that focus on security, and there's

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Speaker 1: probably rightly an extremely conservative development mindset of not rushing

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Speaker 1: in any changes. Never I can't it's hard to imagine

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Speaker 1: bitcoin ever doing anything radical, such as moving from proof

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Speaker 1: of work to proof of steak any anything like that.

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Speaker 1: But in theory it seems like there could be a

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Speaker 1: spectrum where it's like, Okay, you have like security and

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Speaker 1: stability at one end of it, and you have in

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Speaker 1: a vation and ability to build on something at the

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Speaker 1: other end, and you sort of could in theory move

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Speaker 1: the dial towards the other end. You know, it seems

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Speaker 1: as though it's not that big from a sort of

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Speaker 1: actual numbers, but it seems as though there is a

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Speaker 1: lot of interest in the type of defy applications that

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Speaker 1: are being built on ethereum. There maybe aren't that many

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Speaker 1: people doing it, but there's clearly a lot of money.

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Speaker 1: Billions are flowing into the space. Just today, you know,

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Speaker 1: you heard that Injuries and Horowitz is has lot raised

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Speaker 1: a two point two billion dollar fund. I presume a

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Speaker 1: lot of that is going to be in this sort

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Speaker 1: of like defy realm, probably not all of it. So

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Speaker 1: it appears though that there is this sort of like

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Speaker 1: momentum and mind share that Bitcoin is missing right now.

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Speaker 1: So why aren't people being attracted to building on bitcoin,

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Speaker 1: or why are these people so excited about building on

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Speaker 1: a different platform. So I think, you know, it feels

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Speaker 1: like you're repeating back to me um fud spread by

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Speaker 1: theory or Ripple or other folks and other protocols. Just

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Speaker 1: to be fair, like this is literally, this is I'm

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Speaker 1: not criticizing bitcoin. I'm saying like, this is literally like

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Speaker 1: what I observe, like the Andrews and Horowitz two point

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Speaker 1: two billion dollar fund and so forth. Like my question

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Speaker 1: is not what's wrong with bitcoin or that there's something

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Speaker 1: that is insufficient about bitcoin. The question is what is

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Speaker 1: it that bitcoin is evidently missing that so many people

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Speaker 1: are looking to build on a different platform. Okay, so

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Speaker 1: a couple of things you said, a couple of things there,

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Speaker 1: I'll try to hit all of them. So you talked

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Speaker 1: a little bit about the attention shifting to defy this

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Speaker 1: space where a hundred thousand traders have permissionless access to

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Speaker 1: trade sort of the long tail of assets that they

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Speaker 1: might not otherwise have access to, and they can do

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Speaker 1: that without having to go through a k y C process.

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Speaker 1: And you know, it's also interesting to see folks making

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Speaker 1: money in a quick way and it attracts media attention.

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Speaker 1: Now and a bitcoin side, what's been happening is that

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Speaker 1: bitcoin has been declared a legal tender and al Salvador,

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Speaker 1: we've seen the folks in all Salvador use bitcoin on

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Speaker 1: a day to day basis by using the Lightning Network UM,

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Speaker 1: specifically in beach communities in the community called Bitcoin Beach.

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Speaker 1: We know that bitcoin is held on the balance sheet

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Speaker 1: of multiple public companies, including Tesla, which is on SMP

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Speaker 1: five hundred, and bitcoin has been growing in terms of

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Speaker 1: adoption at a more rapid clip than than Internet did

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Speaker 1: at a comparable time. So there's quite a bit. It's

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Speaker 1: really active time, a really dynamic time in the bitcoin

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Speaker 1: space in two ways. I talked just a moment ago

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Speaker 1: about how active adoption is and the breadth of adoption.

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Speaker 1: So we see enterprise, we see countries, we see municipalities.

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Speaker 1: For instance, Miami, the mayor of Miami, Francis Sais, has

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Speaker 1: talked a lot about how the city feels it could

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Speaker 1: benefit from the use of bitcoin the asset and bitcoin

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Speaker 1: the technology. There's other cities and other countries that have

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Speaker 1: indicated they want to be second movers, are and are

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Speaker 1: in the planning stages. I'll take a conservative position to

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Speaker 1: propose that that's probably much more importance than the introduction

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Speaker 1: of trading tools for tens of thousands of folks, but

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Speaker 1: perhaps the media runs behind it. A bit um. At

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Speaker 1: the same time as adoption has picked up in the

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Speaker 1: bitcoin space, we've also seen really an explosion of technical

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Speaker 1: advancement in the bitcoin space. So that's both at the

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Speaker 1: core protocol level, at lightning network level, and in side chains.

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Speaker 1: I don't know, I suppose it's disappointing to me to

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Speaker 1: hear that. It feels like those that sort of work

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Speaker 1: has been overlooked um, you know, as a result of

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Speaker 1: the hype that exists around you know, all coin defy.

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Speaker 1: All that said, though, there are founders building products that

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Speaker 1: replicate the best of what's found in the quote defy

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Speaker 1: space in Ethereum. Now that will be built in the

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Speaker 1: bitcoin space on side chains, you know, by the end

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Speaker 1: of the year. So there's projects launching by the end

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Speaker 1: of the year, and I want to cover that too.

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Speaker 1: But you also mentioned the funding environment for um, you know,

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Speaker 1: for DeFi, for ethereum, for all coins, and I, you know,

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Speaker 1: I want to acknowledge that as being something that is

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Speaker 1: certainly true. And I think one of the I don't know,

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Speaker 1: maybe disappointments that I've had and how the cryptocurrency space

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Speaker 1: has matured, I think that there's certainly been UM, there

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Speaker 1: is today, and there historically has been a missed allocation

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Speaker 1: of funds and to venture funds into the space, and

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Speaker 1: I think that's because you know, there's um, of course,

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Speaker 1: an appeal of quicker liquidity, and what we've seen with

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Speaker 1: the introduction of tokens is that you can instead of

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Speaker 1: there being a standard venture cycle of you know, seven

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Speaker 1: to ten years where funds are waiting to realize returns,

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Speaker 1: that it's just a much quicker cycle where you can

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Speaker 1: get returns in eighteen to twenty four months, maybe shorter

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Speaker 1: than that, and you can get returns that are of

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Speaker 1: equal um you know, magnitude as you see for successful

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Speaker 1: companies that are taking seven to ten years to exit

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Speaker 1: to the public markets or through acquisition. And of course

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Speaker 1: that's appealing. And what I hope will happen as more

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Speaker 1: time in the space accumulates is that folks will start

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Speaker 1: to ask, really what's producing those returns and be cognizant

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Speaker 1: of um, you know, the dynamics that exists in eighteen

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Speaker 1: month cycle that we're seeing. So maybe now is your

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Speaker 1: chance to sort of rectify this misallocation of capital, as

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Speaker 1: you put it, But could you maybe talk to us

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Speaker 1: about some of the projects or changes that Bitcoin is

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Speaker 1: currently undertaking, UM, and you know, get us excited about it, Like,

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Speaker 1: what is it that people should be paying attention to

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Speaker 1: when they look in bitcoin other than the store of

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Speaker 1: value proposition which everyone seems to have been focusing on lately,

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Speaker 1: right of course, Um, I'd love to So, so the

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Speaker 1: bitcoin spit. Everything that's possible in other protocols is possible

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Speaker 1: on bitcoin, but also more. And the reason why there's

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Speaker 1: this also more addendum is because bitcoin is decentralized, which

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Speaker 1: means that things that are built on top of it

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Speaker 1: can also be decentralized. You know, while we can call

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Speaker 1: what's happening on ethereum defied decentralized finance, that sentence should

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Speaker 1: end with the question mark. Because if the base layer

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Speaker 1: itself is not decentralized, I'm not sure that anything built

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Speaker 1: on top of it can be. And so that's the

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Speaker 1: opportunity for bitcoin and we're seeing that emerge UM and

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Speaker 1: applications be live that represent that opportunity today. So an

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Speaker 1: example including with protocols built on top of bitcoins to

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Speaker 1: an example of that would be Lightning network. And examples

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Speaker 1: of products being built on Lightning Network are products, financial

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Speaker 1: chat products, for instance, like a sphinx chat, and what

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Speaker 1: sphinx Chat is is sort of a level three technology

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Speaker 1: that a layer three technology excuse me, that takes advantage

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Speaker 1: of the infrastructure of Lightning network to create this Bitcoin

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Speaker 1: native financial chat opportunity in which both messages and sets

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Speaker 1: the coin sets are sent through Lightning nodes. In this

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Speaker 1: sort of distributed network, you can also make and receive

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Speaker 1: calls in the same way. And one of the things

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Speaker 1: that we've seen be built on this layer three is

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Speaker 1: communities around content creators and example first example of that

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Speaker 1: are these podcast communities, and so we will see podcaster

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Speaker 1: gather their audience on the sphinx chat, create streaming podcasts

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Speaker 1: that are paid in UM, streaming stats stats back from

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Speaker 1: the audience members, and these sort of affinity groups emerged

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Speaker 1: to take advantage of the opportunities that are unique to

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Speaker 1: the decentralized network of Lightning network and Bitcoin. That would

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Speaker 1: be a sort of competitor to something like a whee chat,

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Speaker 1: where the opportunities are different than the dynamics of participation

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Speaker 1: are different. It's not permissionless, it can be permission list

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Speaker 1: and Bitcoin. And so we see folks like sphinx Chat

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Speaker 1: taking advantage of that. Now, to talk about some of

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Speaker 1: the development in the side chain space, we maybe I'll

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Speaker 1: start with STACKS, which is a side chain, a layer

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Speaker 1: one side chain they define it as in the Bitcoin

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Speaker 1: space that has fully functional smart contracts live. As of

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Speaker 1: January of this year, we're seeing contracts of up to

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Speaker 1: a billion dollars in act or get commitments be present

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Speaker 1: in that environment. Recently it was announced that there's an

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Speaker 1: accelerator built to fund companies that are that are building

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Speaker 1: in the STACKS ecosystem. You know, I think that my

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Speaker 1: expectation is that we will see projects like a unit

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Speaker 1: swap like project be built in a STACKS environment. Joe

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Speaker 1: mentioned that I sit on the board of directors at Blockstream.

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Speaker 1: Blockstream also has a side chain called Liquid Network, and

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Speaker 1: we're seeing similar sorts of activity there as well. The

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Speaker 1: opportunity of side chains, of course, is that you can

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Speaker 1: leverage the security of the Bitcoin network while also introducing

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Speaker 1: novel functionality, either ahead of its introduction on the Bitcoin

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Speaker 1: network or in lieu of it being present on Bitcoin.

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Speaker 1: And Liquid does that so. As an example, Liquid has

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Speaker 1: smart contracting capability through something called covenants, which just means

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Speaker 1: that you can essentially program the coin. So Bitcoin is

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Speaker 1: programmable money. It is that at the base layer. That's

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Speaker 1: you know, one of the areas of popular flood that

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Speaker 1: I've seen from this bowl market is you know, saying

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Speaker 1: that Bitcoin doesn't allow for smart contracting. Of course that's

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Speaker 1: not true Bitcoin smart contracting has always existed at the

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Speaker 1: core protocol level, but the sort of smart contracts that

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Speaker 1: you can do on liquid as well as other side chains,

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Speaker 1: take it a step further, and Bitcoin has that with covenants.

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Speaker 1: Now there are projects building on liquid that will replicate

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Speaker 1: a unit swap like experience. I'll mentioned one specifically that

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Speaker 1: has recently sort of made their R and D work public,

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Speaker 1: and that's a company called bit Matrix. And what the

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Speaker 1: Matrix is do is doing is creating an m M

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Speaker 1: and automated market maker on top of liquid, where your transactions,

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Speaker 1: of course are private, and where you can actually trade

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Speaker 1: in a gasless sort of state. What that means is

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Speaker 1: that it's a contrast to to the ethereum trading spaces

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Speaker 1: where you have to buy either in order to be

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Speaker 1: able to execute a trade. That's different in a matrix

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Speaker 1: environment on liquid, where you don't need to own the

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Speaker 1: underlying asset in order to execute a trade, because that

431
00:26:22,040 --> 00:26:26,200
Speaker 1: sort of settlement happens as part of the trading contract

432
00:26:26,440 --> 00:26:30,480
Speaker 1: contract and bit matrix. So this gets back to another

433
00:26:30,600 --> 00:26:33,240
Speaker 1: question when I enter when we started did the introduction,

434
00:26:33,320 --> 00:26:35,720
Speaker 1: I mean, first there was this question of like, okay,

435
00:26:35,760 --> 00:26:39,920
Speaker 1: building on bitcoin, and there's this perception that is not

436
00:26:40,000 --> 00:26:43,840
Speaker 1: as easy, but as you point out side chains such

437
00:26:43,920 --> 00:26:47,879
Speaker 1: as a liquid or stax um, they do exist. The

438
00:26:47,920 --> 00:26:50,880
Speaker 1: other question I have is like do bitcoiners actually actually

439
00:26:51,000 --> 00:26:53,080
Speaker 1: want this stuff? And you know, I remember like the

440
00:26:53,160 --> 00:26:58,159
Speaker 1: sort of like the block size fight in Seen, and

441
00:26:58,240 --> 00:27:00,880
Speaker 1: the question is like, should be the bitcoin base layer

442
00:27:00,960 --> 00:27:03,400
Speaker 1: be expanded so that it's cheap enough and fast enough

443
00:27:03,440 --> 00:27:06,440
Speaker 1: to buy a coffee with? And then lightning camera came

444
00:27:06,560 --> 00:27:09,359
Speaker 1: so that you don't didn't have to expand the base layer.

445
00:27:09,720 --> 00:27:12,080
Speaker 1: But it's not obvious to me that bitcoiners actually want

446
00:27:12,080 --> 00:27:14,680
Speaker 1: to buy coffee. So even though maybe a theory that

447
00:27:15,080 --> 00:27:17,800
Speaker 1: you could, you know, I don't think like lightning is

448
00:27:17,880 --> 00:27:20,480
Speaker 1: like that. It's not that big, it's not ubiquitous. So

449
00:27:20,640 --> 00:27:22,680
Speaker 1: you know, it's been a few years around how much

450
00:27:22,720 --> 00:27:27,680
Speaker 1: does the bitcoin community care about something resembling unit slop

451
00:27:27,800 --> 00:27:31,480
Speaker 1: or care about having n f T s on the

452
00:27:31,720 --> 00:27:34,359
Speaker 1: side chains versus how much is it is it just

453
00:27:34,480 --> 00:27:38,919
Speaker 1: to prove that it can theoretically be done. Well, bitcoiners

454
00:27:38,960 --> 00:27:42,000
Speaker 1: are not a monolith, right, and so it doesn't I'm

455
00:27:42,040 --> 00:27:45,280
Speaker 1: not sure, you know, I'm not sure frankly, that I

456
00:27:45,400 --> 00:27:49,240
Speaker 1: care what bitcoin or that we should care about what bitcoiners,

457
00:27:49,400 --> 00:27:53,080
Speaker 1: which I imagine you're mostly referring to folks that are

458
00:27:53,080 --> 00:27:55,520
Speaker 1: active on social media. I'm not sure that it matters

459
00:27:55,720 --> 00:28:01,480
Speaker 1: whats want um. The importance of bitcoins to bitcoin is

460
00:28:01,640 --> 00:28:05,560
Speaker 1: that they are It's a stakeholder group in a multi

461
00:28:05,640 --> 00:28:09,960
Speaker 1: stakeholder ecosystem, so you have folks that use the tech,

462
00:28:10,240 --> 00:28:13,760
Speaker 1: and that's where being present on social media matters. Having

463
00:28:13,800 --> 00:28:18,960
Speaker 1: a voice and representing a community during a contentious dialogue

464
00:28:19,640 --> 00:28:24,640
Speaker 1: or ahead of a proposed change to bitcoin cops, that's important.

465
00:28:24,760 --> 00:28:28,720
Speaker 1: Other stakeholder groups, of course are miners and then developers,

466
00:28:29,200 --> 00:28:32,320
Speaker 1: and everyone has, you know, an equally weighted voice. That

467
00:28:32,440 --> 00:28:36,760
Speaker 1: was actually Satoshi's. I consider Setosia's most important innovation was

468
00:28:37,520 --> 00:28:41,520
Speaker 1: was the discovery of a way to inline stakeholder incentives

469
00:28:41,960 --> 00:28:47,520
Speaker 1: through the introduction of bitcoin. What's more important is making

470
00:28:47,600 --> 00:28:50,840
Speaker 1: sure that we take advantage of what bitcoin can do

471
00:28:50,960 --> 00:28:54,000
Speaker 1: as a technology. Now that bitcoin as a currency has

472
00:28:54,040 --> 00:28:58,080
Speaker 1: been established as a store of value and allowing its

473
00:28:58,320 --> 00:29:00,960
Speaker 1: full sort of opportunity to be real realized, so that

474
00:29:01,240 --> 00:29:04,000
Speaker 1: it's not you know, it's not the tens of millions

475
00:29:04,040 --> 00:29:07,800
Speaker 1: of users that use bitcoin today that are defining what

476
00:29:07,880 --> 00:29:10,800
Speaker 1: bitcoin is. But it's much broader than that. And that's

477
00:29:10,840 --> 00:29:13,480
Speaker 1: why my job is exciting, because I get to meet

478
00:29:13,520 --> 00:29:16,320
Speaker 1: with founders that are really thinking through what bitcoin means

479
00:29:16,360 --> 00:29:20,840
Speaker 1: for other communities. And you know, I think that best

480
00:29:20,920 --> 00:29:24,640
Speaker 1: example of that is what's happened in All Salvador, where

481
00:29:24,760 --> 00:29:28,400
Speaker 1: Joe people do use bitcoin and Lightning Network to buy coffee.

482
00:29:28,440 --> 00:29:31,320
Speaker 1: They use it to receive payments for coffee. So I

483
00:29:31,480 --> 00:29:34,160
Speaker 1: I push back on the assumption that bitcoin is not

484
00:29:34,280 --> 00:29:37,120
Speaker 1: being used for payments. It absolutely is. You know, I

485
00:29:37,280 --> 00:29:40,520
Speaker 1: use sets every day in my messaging at because I

486
00:29:40,640 --> 00:29:43,560
Speaker 1: use Sphinx Chat, and I think many people do that.

487
00:29:43,680 --> 00:29:46,640
Speaker 1: But remember that the activity on Lightning Network is not

488
00:29:46,920 --> 00:29:51,120
Speaker 1: all public, so we can't to measure actually what's happening

489
00:29:51,200 --> 00:29:54,840
Speaker 1: on Lightning Network is you know, not possible, and to

490
00:29:55,000 --> 00:29:59,200
Speaker 1: guess at it is difficult because we're not sort of

491
00:29:59,680 --> 00:30:04,840
Speaker 1: probably poritizing our ability to report accurate metrics we're prioritizing

492
00:30:04,960 --> 00:30:07,360
Speaker 1: the value that the system has to offer, and the

493
00:30:07,440 --> 00:30:11,800
Speaker 1: ability to transact privately is you know, something that the system,

494
00:30:12,040 --> 00:30:15,520
Speaker 1: the network, Lightning network can provide, and and so for

495
00:30:15,640 --> 00:30:18,400
Speaker 1: that reason, it's hard to measure the activity happen now

496
00:30:18,440 --> 00:30:22,320
Speaker 1: in Lightning network. However, that said, in the communities that

497
00:30:22,520 --> 00:30:25,680
Speaker 1: have received the most attention in the past couple of

498
00:30:25,720 --> 00:30:29,160
Speaker 1: months for it, like I mentioned before Bitcoin Beach, we

499
00:30:29,360 --> 00:30:33,400
Speaker 1: see that Lightning Network is a critical infrastructure to people's

500
00:30:33,520 --> 00:30:37,440
Speaker 1: everyday lives. I think it starts in All Salvador, and

501
00:30:38,560 --> 00:30:41,360
Speaker 1: we've already seen countries signal that they want to be

502
00:30:41,560 --> 00:30:44,840
Speaker 1: second mover here. I came into the space in in

503
00:30:46,440 --> 00:30:50,760
Speaker 1: really because I saw a bitcoin as um fintech for

504
00:30:51,080 --> 00:30:56,560
Speaker 1: the unbanked or underbanked, and so my hypothesis then was

505
00:30:57,160 --> 00:31:00,120
Speaker 1: that we would see adoption in emerging markets before we

506
00:31:00,240 --> 00:31:05,000
Speaker 1: saw you know, significant penetration and developed markets, and so

507
00:31:05,640 --> 00:31:08,760
Speaker 1: you know, I saw, I suppose that I expected to

508
00:31:08,840 --> 00:31:13,600
Speaker 1: see countries like El Salvador adopt bitcoin. And I'm happy

509
00:31:13,760 --> 00:31:19,160
Speaker 1: that there's companies like Gloy or Strike that have made

510
00:31:19,200 --> 00:31:22,720
Speaker 1: sure to think about how what they've built is relevant

511
00:31:22,800 --> 00:31:26,600
Speaker 1: to people that are you know, outsiders basically to the

512
00:31:26,680 --> 00:31:30,400
Speaker 1: traditional financial system. So I don't know if this is

513
00:31:30,480 --> 00:31:33,120
Speaker 1: a question that's actually possible to answer. But one thing

514
00:31:33,520 --> 00:31:36,760
Speaker 1: I was wondering is we've spoken about the perception that

515
00:31:36,920 --> 00:31:41,480
Speaker 1: it is difficult to affect change on bitcoin um protocol,

516
00:31:41,840 --> 00:31:46,680
Speaker 1: and secondly, we've also mentioned that despite this perception, there

517
00:31:46,760 --> 00:31:50,520
Speaker 1: happen changes in the past. So I'm wondering, could you

518
00:31:50,560 --> 00:31:54,000
Speaker 1: maybe walk us through, like, exactly how does change happen

519
00:31:54,640 --> 00:31:57,960
Speaker 1: when it comes to bitcoin, Like how do you build

520
00:31:58,080 --> 00:32:00,800
Speaker 1: consensus since the aligning of an sentives is one of

521
00:32:00,880 --> 00:32:06,080
Speaker 1: the big underlying I guess the fundamental things that bitcoin does,

522
00:32:06,240 --> 00:32:09,880
Speaker 1: Like how does that process actually work in practice? Could

523
00:32:09,920 --> 00:32:13,760
Speaker 1: you maybe walk us through it? That's important, So thank

524
00:32:13,800 --> 00:32:16,480
Speaker 1: you for reminding me to circle back to that. You know,

525
00:32:16,600 --> 00:32:20,480
Speaker 1: So one of the defining features of bitcoin is how

526
00:32:20,760 --> 00:32:26,360
Speaker 1: changes are introduced and the fact that it's not there's

527
00:32:26,440 --> 00:32:29,720
Speaker 1: no sort of leader that can suggest a change that's

528
00:32:29,800 --> 00:32:34,920
Speaker 1: as executed without community consent. And so what that does

529
00:32:35,240 --> 00:32:38,360
Speaker 1: is it creates a system that is truly opt in

530
00:32:39,120 --> 00:32:43,560
Speaker 1: versus something that is um, you know, in any way coercive.

531
00:32:44,280 --> 00:32:47,840
Speaker 1: So when bitcoin is introducing changes like a tap root,

532
00:32:48,280 --> 00:32:52,680
Speaker 1: that happens through something called soft fork, And really all

533
00:32:52,760 --> 00:32:55,840
Speaker 1: that that means is that you don't need to adopt

534
00:32:56,000 --> 00:32:58,680
Speaker 1: tap root to continue to hold your bitcoin or to

535
00:32:58,840 --> 00:33:02,720
Speaker 1: continue to use Bitcoin the network, so you could be

536
00:33:03,200 --> 00:33:05,560
Speaker 1: and I think that lowers the barriers to entry for

537
00:33:05,640 --> 00:33:09,800
Speaker 1: who can participate, right because you don't need to be

538
00:33:10,000 --> 00:33:14,040
Speaker 1: continually paying attention to Bitcoin, what's happening with bitcoin developers

539
00:33:14,680 --> 00:33:18,440
Speaker 1: or any of the sort of rigorous debate that occurs

540
00:33:18,600 --> 00:33:21,560
Speaker 1: in these ecosystems. You can unplug from all of that

541
00:33:22,280 --> 00:33:25,840
Speaker 1: and know that you can step away from bitcoin for five, six,

542
00:33:25,960 --> 00:33:28,120
Speaker 1: seven years and when you come back, you're going to

543
00:33:28,240 --> 00:33:31,880
Speaker 1: find your bitcoin. They're presuming that you've secured it properly

544
00:33:32,440 --> 00:33:35,640
Speaker 1: and that bitcoin the promises the bitcoin made when you

545
00:33:35,760 --> 00:33:39,040
Speaker 1: came into the system have been maintained. And so what

546
00:33:39,160 --> 00:33:44,480
Speaker 1: are those promises. It's things like that bitcoin is decentralized Bitcoin,

547
00:33:44,600 --> 00:33:48,960
Speaker 1: how there's twenty one million bitcoin, the ledger is public

548
00:33:49,320 --> 00:33:53,760
Speaker 1: and changes transactions. New transactions are committed to the ledger

549
00:33:54,520 --> 00:33:58,520
Speaker 1: through secure mining known as proof of work. Um, that's

550
00:33:58,560 --> 00:34:01,480
Speaker 1: sort of you know, definitely sal to bitcoin, and that's

551
00:34:01,520 --> 00:34:05,800
Speaker 1: what makes bitcoin the cryptocurrency as sound money. The fact

552
00:34:05,920 --> 00:34:09,400
Speaker 1: that those promises are there. It's not what the promises are.

553
00:34:09,520 --> 00:34:12,320
Speaker 1: If the toshi had said it's, you know, ten million

554
00:34:12,360 --> 00:34:15,839
Speaker 1: bitcoin versus twenty one million, it's not the number, it's

555
00:34:15,920 --> 00:34:19,759
Speaker 1: the fact that it's set and fixed and folks can

556
00:34:19,840 --> 00:34:23,480
Speaker 1: count on that. So you don't need to be actively engaged. Now.

557
00:34:23,840 --> 00:34:27,640
Speaker 1: In other spaces, for instance, ethereum, the way that changes

558
00:34:27,680 --> 00:34:31,040
Speaker 1: are introduced is through a hard work, and the community

559
00:34:31,480 --> 00:34:34,680
Speaker 1: has been the culture of that has been that the

560
00:34:34,840 --> 00:34:37,880
Speaker 1: leaders of the community will say, this is a change

561
00:34:38,000 --> 00:34:41,400
Speaker 1: that we're introducing it. It's happening in you know, in

562
00:34:42,040 --> 00:34:44,399
Speaker 1: a few months, it's happening in six months. It will

563
00:34:44,400 --> 00:34:46,960
Speaker 1: be happening through a hard work, And so folks need

564
00:34:47,120 --> 00:34:50,200
Speaker 1: to adapt to a new software, and if they don't adapt,

565
00:34:50,719 --> 00:34:54,319
Speaker 1: they're sort of exibit from the network because a hard

566
00:34:54,360 --> 00:34:58,520
Speaker 1: work is not compatible with its prior software. These are

567
00:34:58,600 --> 00:35:02,160
Speaker 1: two completely different pair times, and I hope that the

568
00:35:02,239 --> 00:35:05,839
Speaker 1: explanation of that sort of presented. Uh, you know why

569
00:35:05,920 --> 00:35:09,040
Speaker 1: the barrier to entry and to participation in bitcoin is

570
00:35:09,520 --> 00:35:12,600
Speaker 1: is much lower. It's just it's, you know, I think

571
00:35:12,640 --> 00:35:16,160
Speaker 1: it's just fundamentally different, to the extent that I would

572
00:35:16,200 --> 00:35:19,920
Speaker 1: almost consider bitcoin to be a different class of asset

573
00:35:20,080 --> 00:35:41,759
Speaker 1: than all coins are. So I want to actually ask

574
00:35:41,800 --> 00:35:47,320
Speaker 1: you about a controversy in the question of bitcoin development,

575
00:35:47,520 --> 00:35:50,560
Speaker 1: and there is a view that you're on the board

576
00:35:50,600 --> 00:35:54,120
Speaker 1: of Blockstream. There's all these criticisms even among bitcoin as

577
00:35:54,120 --> 00:35:56,560
Speaker 1: a block stream, that it exerts an extraordinary amount of

578
00:35:56,680 --> 00:36:01,560
Speaker 1: influence on bitcoin core development, that there are all their

579
00:36:01,880 --> 00:36:05,840
Speaker 1: other ideas such as drive chains, which is a different

580
00:36:05,880 --> 00:36:10,160
Speaker 1: idea for scaling bitcoin, that don't get momentum because people

581
00:36:10,200 --> 00:36:13,120
Speaker 1: who work at Blockstream aren't into it. Blockstream has its

582
00:36:13,200 --> 00:36:16,760
Speaker 1: own side chain company as you already met, or project

583
00:36:16,800 --> 00:36:20,160
Speaker 1: as you already mentioned, called liquid. What do you say

584
00:36:20,239 --> 00:36:23,320
Speaker 1: to that criticism that there are other sort of visions

585
00:36:23,680 --> 00:36:27,200
Speaker 1: and that the that the over influence of Blockstream within

586
00:36:27,280 --> 00:36:30,919
Speaker 1: the bitcoin developer funding a lot of the developers has

587
00:36:31,480 --> 00:36:34,640
Speaker 1: sort of cut off avenues of potential development in favor

588
00:36:34,760 --> 00:36:38,800
Speaker 1: of the blockstream business model. Well, I think that that's

589
00:36:39,000 --> 00:36:44,600
Speaker 1: another fun meme. Right, So that argument of Blockstream having

590
00:36:45,320 --> 00:36:49,600
Speaker 1: more influence in this space than other companies that are

591
00:36:49,640 --> 00:36:54,320
Speaker 1: operating in bitcoin was introduced by the leader of another

592
00:36:54,400 --> 00:36:58,640
Speaker 1: protocol of the b cash protocol. I believe, and you know,

593
00:36:58,760 --> 00:37:02,000
Speaker 1: I suppose that it can be sticky, but the fact

594
00:37:02,160 --> 00:37:07,000
Speaker 1: that I'm encouraged by folks critically reviewing the work of

595
00:37:07,120 --> 00:37:10,600
Speaker 1: anyone in the bitcoin space. I actually think that while

596
00:37:10,719 --> 00:37:16,040
Speaker 1: at times that can be frustrating, including when critiques feel unfounded,

597
00:37:16,200 --> 00:37:18,839
Speaker 1: like in this case, you know, I think that it's

598
00:37:18,920 --> 00:37:21,840
Speaker 1: one of Bitcoin's greatest strengths. So when you're in a

599
00:37:21,920 --> 00:37:25,719
Speaker 1: conversation about development happening in the bitcoin space, whether that

600
00:37:25,880 --> 00:37:28,800
Speaker 1: be in an open source protocol or in a private company,

601
00:37:28,960 --> 00:37:33,360
Speaker 1: the conversation is rigorous, and people are expected to be

602
00:37:33,440 --> 00:37:37,040
Speaker 1: able to defend their positions, their tech, the tradeoffs they've

603
00:37:37,080 --> 00:37:39,840
Speaker 1: made in the tech. There's always an ask that you

604
00:37:40,080 --> 00:37:44,600
Speaker 1: acknowledge both opportunities and sort of the risk that are

605
00:37:44,680 --> 00:37:48,919
Speaker 1: inherent in what you're doing and how the core value

606
00:37:48,920 --> 00:37:52,800
Speaker 1: of decentralization is impacted. And so if folks are to

607
00:37:53,120 --> 00:37:57,520
Speaker 1: criticize block stream on UM, you know, having more influence

608
00:37:57,640 --> 00:38:00,920
Speaker 1: in the space than they should, you know, I don't

609
00:38:01,320 --> 00:38:04,239
Speaker 1: UM Well, two things I think we should acknowledge when

610
00:38:04,280 --> 00:38:07,480
Speaker 1: that's coming from outside the space as a way to

611
00:38:07,560 --> 00:38:11,520
Speaker 1: attack Bitcoin, and when it's coming from inside the space

612
00:38:11,840 --> 00:38:15,520
Speaker 1: as a sincere critique. I think that it's an important

613
00:38:15,840 --> 00:38:20,040
Speaker 1: UM conversation to engage in. But what I've seen historically

614
00:38:20,239 --> 00:38:23,880
Speaker 1: is that what people have meant, what the be Casher's

615
00:38:23,960 --> 00:38:27,680
Speaker 1: meant when they said that blockstream had undue influence, they

616
00:38:27,760 --> 00:38:31,320
Speaker 1: were tying that to its influence on core development. And

617
00:38:31,400 --> 00:38:35,400
Speaker 1: if you look at the number of core developers in bitcoin,

618
00:38:35,920 --> 00:38:38,440
Speaker 1: you know, it's kind of that critique is sort of

619
00:38:38,560 --> 00:38:43,040
Speaker 1: laughable because bitcoen small minority of those are folks employed

620
00:38:43,080 --> 00:38:46,960
Speaker 1: by Blockstream versus folks employed elsewhere, or you know, folks

621
00:38:46,960 --> 00:38:50,440
Speaker 1: said even are anonymous, that we're studnonymous, that we aren't

622
00:38:50,440 --> 00:38:52,440
Speaker 1: sure who they are. So I just want to like

623
00:38:52,719 --> 00:38:54,960
Speaker 1: sort of go back to like the big picture, and

624
00:38:55,080 --> 00:38:57,279
Speaker 1: that is, you know, we started this, like the premises,

625
00:38:57,400 --> 00:39:00,800
Speaker 1: like people for what you know, we could abate the sides.

626
00:39:00,960 --> 00:39:04,160
Speaker 1: We can debate the sustainability people are. There are a

627
00:39:04,239 --> 00:39:07,360
Speaker 1: lot of people who like this sort of like defy stuff,

628
00:39:07,400 --> 00:39:11,560
Speaker 1: whether it's swapping like a unit swap, whether it's collateralized

629
00:39:11,640 --> 00:39:16,239
Speaker 1: lending of tokens, dows um perhaps as part of it

630
00:39:16,600 --> 00:39:19,120
Speaker 1: there it obviously has called a lot of people's attention,

631
00:39:19,200 --> 00:39:22,520
Speaker 1: and it's captured imagination definitely among a lot of people

632
00:39:22,560 --> 00:39:26,040
Speaker 1: on Wall Street, Like is in your view the vision

633
00:39:26,600 --> 00:39:29,560
Speaker 1: to replicate that that all of that will be built

634
00:39:29,680 --> 00:39:32,080
Speaker 1: or can be built on Bitcoin, or is like, is

635
00:39:32,160 --> 00:39:38,480
Speaker 1: the vision of defy on bitcoin fundamentally something different? Well,

636
00:39:39,040 --> 00:39:43,000
Speaker 1: the answer is um, the Bolt propositions are true. So

637
00:39:43,280 --> 00:39:46,600
Speaker 1: all of that is being defy the way that you

638
00:39:46,680 --> 00:39:50,719
Speaker 1: know excites Wall Street. The sort of open nature of

639
00:39:50,800 --> 00:39:54,240
Speaker 1: being able to trade that's being built on in bitcoin

640
00:39:54,400 --> 00:39:58,600
Speaker 1: environments now across multiple side chain products. And my example

641
00:39:58,719 --> 00:40:02,880
Speaker 1: that earlier as bit Matrix, which will be introducing essentially

642
00:40:03,080 --> 00:40:06,520
Speaker 1: a unit swap like product on Liquid, and just to

643
00:40:06,760 --> 00:40:09,520
Speaker 1: take a quick pause to mention other side chains that

644
00:40:09,600 --> 00:40:12,680
Speaker 1: will see similar activity. We have not just Liquid, but

645
00:40:12,800 --> 00:40:14,759
Speaker 1: we have r s K, which is an e v

646
00:40:14,920 --> 00:40:17,720
Speaker 1: M compatible side chain. All of that, all that means

647
00:40:17,880 --> 00:40:21,120
Speaker 1: is that the same dynamic of smart contracts that are

648
00:40:21,200 --> 00:40:23,680
Speaker 1: possible in Ethereum are also possible in r s K

649
00:40:24,520 --> 00:40:27,800
Speaker 1: with Sovereign, for example, is built on r s K,

650
00:40:28,080 --> 00:40:32,680
Speaker 1: which has you know, also has automated market maker products

651
00:40:32,880 --> 00:40:35,759
Speaker 1: you can borrow, you can lend to earn yield. There's

652
00:40:35,920 --> 00:40:40,000
Speaker 1: liquidity mining on Sovereign. I mentioned stacks earlier. There's also

653
00:40:40,120 --> 00:40:43,239
Speaker 1: a side chain called gnomic which is a proof of

654
00:40:43,360 --> 00:40:46,600
Speaker 1: steak Bitcoin side chain. So that's I believe it's the

655
00:40:46,680 --> 00:40:49,719
Speaker 1: only proof of steak bitcoin side chain, and this team

656
00:40:49,880 --> 00:40:52,759
Speaker 1: is arguing that by matching proof of steak and it's

657
00:40:52,840 --> 00:40:55,680
Speaker 1: trade offs to Bitcoin's proof of work, you can get

658
00:40:55,719 --> 00:40:59,920
Speaker 1: this nice compliment that is advantageous for a variety of apps.

659
00:41:00,400 --> 00:41:02,440
Speaker 1: We have our g B and there's just there's a

660
00:41:02,520 --> 00:41:05,919
Speaker 1: whole list of side chains that are developing and stoe

661
00:41:05,960 --> 00:41:10,719
Speaker 1: Mark I plan to invest in activity happening across uh

662
00:41:10,960 --> 00:41:14,960
Speaker 1: you know, probably multiple side chains, not just Liquid. But

663
00:41:15,440 --> 00:41:17,520
Speaker 1: then I want to respond to the last part of

664
00:41:17,600 --> 00:41:20,640
Speaker 1: your question where you asked about how we think about

665
00:41:20,760 --> 00:41:24,080
Speaker 1: defy and the bitcoin space, and I think it's it's

666
00:41:24,280 --> 00:41:28,440
Speaker 1: really much much broader than than defy for training. So

667
00:41:29,239 --> 00:41:34,279
Speaker 1: the bitcoin is defy, and bitcoin is defy regardless of

668
00:41:34,680 --> 00:41:38,920
Speaker 1: how you're accessing bitcoin, but it's specifically defy if you've

669
00:41:39,000 --> 00:41:42,319
Speaker 1: taken control of your own bitcoin. And so that means

670
00:41:42,400 --> 00:41:46,400
Speaker 1: if you're self customing your bitcoin by holding a ledger

671
00:41:46,680 --> 00:41:50,480
Speaker 1: or by using a software provider secure software provider like

672
00:41:50,560 --> 00:41:54,319
Speaker 1: a CAUSA, then you're participating in bitcoin defy. By the way,

673
00:41:54,480 --> 00:41:59,279
Speaker 1: CAUSA helps secure billions of dollars of bitcoin through their

674
00:41:59,400 --> 00:42:03,880
Speaker 1: multi sig software and essentially it's almost like it's almost

675
00:42:03,960 --> 00:42:06,560
Speaker 1: like a banking app on your phone, but it's a

676
00:42:06,640 --> 00:42:09,600
Speaker 1: banking app where you're in charge of your funds versus

677
00:42:09,760 --> 00:42:14,520
Speaker 1: the bank. That's Bitcoin defy. We also see bitcoin defy

678
00:42:14,800 --> 00:42:17,839
Speaker 1: on lightning. Maybe if I could just run you through

679
00:42:17,920 --> 00:42:21,920
Speaker 1: a couple of quick ways that bitcoin defy exists on lightning.

680
00:42:22,560 --> 00:42:25,800
Speaker 1: I want to note that there's multiplex smart contracts on lightning.

681
00:42:25,960 --> 00:42:28,880
Speaker 1: So what does that mean. We see automated rev share

682
00:42:29,320 --> 00:42:32,920
Speaker 1: contracts on lightning, so where you can sort of split

683
00:42:33,040 --> 00:42:37,840
Speaker 1: payments between various recipients and that's part of your the

684
00:42:38,000 --> 00:42:43,799
Speaker 1: transactions M contract execution. We see screw contracts. There will

685
00:42:43,840 --> 00:42:48,719
Speaker 1: be something called DLCs that are available on lightning, and

686
00:42:48,880 --> 00:42:51,520
Speaker 1: really what what that can do or things that can

687
00:42:51,600 --> 00:42:55,600
Speaker 1: introduce things like to centralize options trading. But it can

688
00:42:55,640 --> 00:42:57,799
Speaker 1: do even more than that. And one of the things

689
00:42:57,880 --> 00:43:01,960
Speaker 1: that I think, um it's possible through DeFi on lightning

690
00:43:02,080 --> 00:43:05,680
Speaker 1: that is most you know that piques my curiosity most

691
00:43:06,280 --> 00:43:10,360
Speaker 1: is the opportunity for things like stable balance channels, and

692
00:43:10,520 --> 00:43:13,440
Speaker 1: so what that means is that you could have a

693
00:43:13,719 --> 00:43:18,040
Speaker 1: payments channel, a lightning channel that was denominated in your

694
00:43:18,160 --> 00:43:22,520
Speaker 1: regional fiats. So for instance, in us D UM, without

695
00:43:22,600 --> 00:43:25,759
Speaker 1: ever having to hold us D or to hold you know,

696
00:43:25,880 --> 00:43:30,640
Speaker 1: a cryptocurrency that was meant to represent us D instead,

697
00:43:30,800 --> 00:43:34,120
Speaker 1: you could just um, you could just denominate the channel

698
00:43:34,160 --> 00:43:36,719
Speaker 1: in us D through a smart contract that was fully

699
00:43:36,800 --> 00:43:40,320
Speaker 1: collateralized by bit coin. You know. So those are the

700
00:43:40,360 --> 00:43:44,799
Speaker 1: sorts of things that when introduced, you can there's two things. One,

701
00:43:44,840 --> 00:43:47,800
Speaker 1: you can understand how that could be relevant to a

702
00:43:48,040 --> 00:43:53,040
Speaker 1: breadth of people, not just in wealthy countries like the US,

703
00:43:53,160 --> 00:43:56,480
Speaker 1: but in emerging markets as well, not just for trading,

704
00:43:56,640 --> 00:44:01,840
Speaker 1: but for things like remittance, for cross border payments, etcetera, etcetera.

705
00:44:02,080 --> 00:44:06,440
Speaker 1: So there's defy as really broad on bitcoin. It starts

706
00:44:06,520 --> 00:44:10,360
Speaker 1: with just holding self customing your own bitcoin, and it

707
00:44:10,480 --> 00:44:13,439
Speaker 1: goes from there. So we see it at core protocol level,

708
00:44:13,920 --> 00:44:16,680
Speaker 1: um when your mom or dad is holding bitcoin on

709
00:44:16,760 --> 00:44:20,319
Speaker 1: their ledger. We see it on lightning, and we see

710
00:44:20,360 --> 00:44:23,480
Speaker 1: it on side chains. And so you know, my experience

711
00:44:23,560 --> 00:44:29,759
Speaker 1: of of one has really been you know, one of

712
00:44:30,000 --> 00:44:34,040
Speaker 1: sort of profound respect for the entrepreneurs building in the space,

713
00:44:34,200 --> 00:44:38,160
Speaker 1: because in bitcoin, when you're building, you're normally doing it

714
00:44:38,280 --> 00:44:42,040
Speaker 1: without fanfare, and you're doing it without seeking you know,

715
00:44:42,200 --> 00:44:46,399
Speaker 1: this really sort of like hit and run type of exit, right,

716
00:44:46,680 --> 00:44:49,440
Speaker 1: And so this isn't you know, there's no sort of

717
00:44:49,560 --> 00:44:54,240
Speaker 1: pump and dump dynamics here. It's really founders that are building,

718
00:44:54,440 --> 00:44:59,400
Speaker 1: hoping to build valuable companies. But in order to get there,

719
00:44:59,480 --> 00:45:03,240
Speaker 1: they need to create valuable products that are of value

720
00:45:03,360 --> 00:45:07,040
Speaker 1: and sustained value for a broad group, you know, not

721
00:45:07,320 --> 00:45:10,520
Speaker 1: something that accrues value for just for the length of

722
00:45:10,560 --> 00:45:13,560
Speaker 1: a bowl market. That's not enough for bitcoin founders. And

723
00:45:13,640 --> 00:45:16,920
Speaker 1: I think that's why you see really exceptional folks building

724
00:45:16,960 --> 00:45:20,440
Speaker 1: in the bitcoin space. And on that final note, a

725
00:45:20,520 --> 00:45:24,399
Speaker 1: couple of times in our conversation you've referenced I think

726
00:45:24,600 --> 00:45:27,960
Speaker 1: that it's harder to build in bitcoin. I want to

727
00:45:28,200 --> 00:45:32,440
Speaker 1: acknowledge that that piece is that's actually true. So that's

728
00:45:32,600 --> 00:45:35,560
Speaker 1: one of the memes that you see a shot over

729
00:45:35,600 --> 00:45:39,240
Speaker 1: a Bitcoin from other sorts of environments, is that there's

730
00:45:39,280 --> 00:45:43,880
Speaker 1: more developers in protocol X or Y versus Bitcoin. But

731
00:45:44,120 --> 00:45:48,560
Speaker 1: actually there's a sort of missing detail from that that's important,

732
00:45:48,640 --> 00:45:50,960
Speaker 1: which is that it's you know, it is harder to

733
00:45:51,040 --> 00:45:54,920
Speaker 1: build in bitcoin. The language required to build in bitcoin

734
00:45:55,160 --> 00:45:57,920
Speaker 1: is something that's um, you know, kind of like more

735
00:45:58,080 --> 00:46:01,200
Speaker 1: exclusive in terms of the skill set required. And so

736
00:46:01,440 --> 00:46:05,239
Speaker 1: while you can be a JavaScript developer and build a

737
00:46:05,400 --> 00:46:08,560
Speaker 1: smart contract in the ethereum space, that's not true in

738
00:46:08,600 --> 00:46:12,080
Speaker 1: the bitcoin space. And I think we're working towards that,

739
00:46:12,400 --> 00:46:16,040
Speaker 1: towards sort of lowering the bary barrier to entry for development,

740
00:46:16,440 --> 00:46:18,800
Speaker 1: but we're not there yet. So what you're seeing is

741
00:46:19,440 --> 00:46:23,239
Speaker 1: not that there's eighty percent of all developers building and

742
00:46:23,320 --> 00:46:29,320
Speaker 1: cryptocurrencies present in bitcoin, but you're seeing that maybe of

743
00:46:29,440 --> 00:46:33,799
Speaker 1: the top decile of developers building in the cryptocurrency ecosystem,

744
00:46:33,920 --> 00:46:37,279
Speaker 1: they're building on Bitcoin. I have one more question just

745
00:46:37,400 --> 00:46:40,080
Speaker 1: based on all of that, But like, we're talking a

746
00:46:40,120 --> 00:46:44,120
Speaker 1: lot about perceptions, and you made the assertion that you know,

747
00:46:44,520 --> 00:46:48,239
Speaker 1: defy as bitcoin, and yet that doesn't necessarily seem to

748
00:46:48,280 --> 00:46:52,080
Speaker 1: be the popular narrative that's out there. Is Bitcoin losing

749
00:46:52,560 --> 00:46:55,600
Speaker 1: the marketing war on this or is there something that

750
00:46:55,719 --> 00:47:00,040
Speaker 1: Bitcoin should be doing differently in order to counter a

751
00:47:00,280 --> 00:47:03,880
Speaker 1: lot of these perceptions or attitudes. Well, there's something we

752
00:47:04,080 --> 00:47:08,400
Speaker 1: could probably do differently that might be you know, helpful

753
00:47:08,719 --> 00:47:13,480
Speaker 1: in catalyzing media interest, which is that you know, bitcoiners

754
00:47:14,239 --> 00:47:18,560
Speaker 1: are folks that like to under promise and over deliver,

755
00:47:18,760 --> 00:47:22,520
Speaker 1: So folks folks that are building, whether it be at

756
00:47:22,520 --> 00:47:26,160
Speaker 1: the protocol level or at the app level or or infrastructure,

757
00:47:26,760 --> 00:47:29,759
Speaker 1: are wanting to talk a lot about what they've done

758
00:47:30,440 --> 00:47:32,960
Speaker 1: and less about what they think is possible to do.

759
00:47:33,480 --> 00:47:37,239
Speaker 1: And I think in other sorts of spaces, you see,

760
00:47:37,880 --> 00:47:41,200
Speaker 1: you know, less of that restraint, and so it's you know,

761
00:47:41,360 --> 00:47:44,600
Speaker 1: it's fun to hear about what can happen in two,

762
00:47:44,760 --> 00:47:47,239
Speaker 1: three or four or five years. And if we spent

763
00:47:47,320 --> 00:47:50,320
Speaker 1: more time talking about that in the bitcoin space, I

764
00:47:50,520 --> 00:47:53,880
Speaker 1: imagine that that would probably be a benefit in terms

765
00:47:54,000 --> 00:47:56,880
Speaker 1: of accruing you know, like sort of social media or

766
00:47:57,080 --> 00:48:00,800
Speaker 1: media attention. And I wouldn't mind seeing that myself. I

767
00:48:00,880 --> 00:48:03,160
Speaker 1: hope that we did a little bit of that today.

768
00:48:03,320 --> 00:48:06,000
Speaker 1: I think it's exciting. You know, that's the space that

769
00:48:06,040 --> 00:48:09,440
Speaker 1: day I live in right and working is thinking about

770
00:48:09,560 --> 00:48:13,000
Speaker 1: how what's introduced in these open source protocols, and how

771
00:48:13,120 --> 00:48:16,200
Speaker 1: that's relevant for the business of bitcoin, how that's relevant

772
00:48:16,239 --> 00:48:18,839
Speaker 1: for entrepreneurs building in the space, and what that means

773
00:48:18,920 --> 00:48:21,120
Speaker 1: our next sort of like five to ten years will

774
00:48:21,120 --> 00:48:25,200
Speaker 1: look like. And you know, I'd love to hear sort

775
00:48:25,239 --> 00:48:29,200
Speaker 1: of more of that at least. Thank you so much

776
00:48:29,280 --> 00:48:32,000
Speaker 1: for coming on the odd locks that was great. Thanks

777
00:48:32,040 --> 00:48:35,320
Speaker 1: for having me. Thanks at Laz. Yeah, that was really appreciate.

778
00:48:35,360 --> 00:48:39,160
Speaker 1: Its great to finally have you. Likewise, it was it

779
00:48:39,320 --> 00:48:54,520
Speaker 1: was great, thanks guys. So Tracy, that was a really

780
00:48:54,560 --> 00:48:57,279
Speaker 1: interesting conversation. I was thinking back to something, you know,

781
00:48:57,440 --> 00:48:59,720
Speaker 1: like when we were talking the other day with Tom Schmidt,

782
00:48:59,760 --> 00:49:04,080
Speaker 1: a defy on ethereum and like the sort of like

783
00:49:04,360 --> 00:49:08,120
Speaker 1: the eye popping ap wise that they get you get

784
00:49:08,160 --> 00:49:10,040
Speaker 1: for like yield farming, and it's like get these extra

785
00:49:10,120 --> 00:49:12,799
Speaker 1: tokens and stuff like that, and you know, it does

786
00:49:13,000 --> 00:49:15,960
Speaker 1: feel like and at least I think really said it

787
00:49:16,040 --> 00:49:19,319
Speaker 1: in the last answer to you specifically, but it really

788
00:49:19,400 --> 00:49:22,960
Speaker 1: does feel like there isn't some level even if technologically

789
00:49:23,719 --> 00:49:26,800
Speaker 1: some of these things can be replicated, it feels like

790
00:49:26,920 --> 00:49:31,920
Speaker 1: there is like a very different cultural attitude towards a

791
00:49:32,000 --> 00:49:35,360
Speaker 1: lot of this stuff, like this sort of like slower longer.

792
00:49:35,520 --> 00:49:38,160
Speaker 1: Even in her case she's talking very specifically about like

793
00:49:38,400 --> 00:49:40,680
Speaker 1: you know, not investing for tokens or anything like that,

794
00:49:40,840 --> 00:49:44,600
Speaker 1: but like equity and companies, like it definitely feels like philosophically,

795
00:49:44,719 --> 00:49:47,879
Speaker 1: it's still even even in this sort of like pure

796
00:49:47,960 --> 00:49:53,160
Speaker 1: like defy replication, like a very different mentality I would

797
00:49:53,480 --> 00:49:56,239
Speaker 1: totally agree with that. And again this is something I

798
00:49:56,320 --> 00:49:59,440
Speaker 1: mentioned at the top of the conversation, but you definitely

799
00:49:59,520 --> 00:50:02,320
Speaker 1: see a lot more banker and trader and finance industry

800
00:50:02,400 --> 00:50:06,520
Speaker 1: types gravitating towards defy in its current form, and not

801
00:50:06,760 --> 00:50:10,719
Speaker 1: necessarily Bitcoin, which still has this overhang of you know,

802
00:50:10,960 --> 00:50:14,040
Speaker 1: changing the world, challenging the existing financial system and stuff

803
00:50:14,040 --> 00:50:16,960
Speaker 1: like that, which might not necessarily appeal to that base.

804
00:50:17,080 --> 00:50:19,719
Speaker 1: So I totally agree with that, although I will say,

805
00:50:19,800 --> 00:50:21,480
Speaker 1: like I have a hard time keeping up with the

806
00:50:21,520 --> 00:50:25,600
Speaker 1: bitcoin narratives because they do seem to change quite often,

807
00:50:25,680 --> 00:50:28,320
Speaker 1: and clearly bitcoin means different things to different people. But

808
00:50:29,000 --> 00:50:31,399
Speaker 1: I would broadly agree that there is a split there. Yeah,

809
00:50:31,440 --> 00:50:33,640
Speaker 1: I mean I think like that, like, as she pointed out,

810
00:50:33,680 --> 00:50:36,000
Speaker 1: like these other like chains that are sort of like

811
00:50:36,520 --> 00:50:41,719
Speaker 1: built off of like bitcoin security, they exist already, so

812
00:50:41,920 --> 00:50:44,279
Speaker 1: like there're on some level, like you know, if there

813
00:50:44,400 --> 00:50:47,520
Speaker 1: was if there was a lot of excitement or sort

814
00:50:47,560 --> 00:50:50,080
Speaker 1: of like interest and like these like eye popping yields

815
00:50:50,120 --> 00:50:52,040
Speaker 1: and stuff like that, and if you mentioned there's like

816
00:50:52,160 --> 00:50:54,800
Speaker 1: more of this like being built, like she mentioned that,

817
00:50:55,120 --> 00:50:57,560
Speaker 1: think bit Matrix, which is getting launched, like the units

818
00:50:57,600 --> 00:51:01,520
Speaker 1: wi pon. We'll see how much action there is. Like,

819
00:51:01,640 --> 00:51:04,759
Speaker 1: I'm not convinced still that a lot of the people

820
00:51:04,800 --> 00:51:09,080
Speaker 1: who are like into bitcoin are into doing more than

821
00:51:09,160 --> 00:51:12,520
Speaker 1: holding it, although she said, like, you know, in different contexts,

822
00:51:12,560 --> 00:51:15,920
Speaker 1: maybe different countries, etcetera, maybe some of the maybe some

823
00:51:16,040 --> 00:51:18,640
Speaker 1: of the dynamics will prove to be different. Yeah, And

824
00:51:18,760 --> 00:51:22,560
Speaker 1: I'm still very, very interested in that sort of consensus

825
00:51:22,640 --> 00:51:25,399
Speaker 1: building aspect of it and whether or not you can

826
00:51:25,640 --> 00:51:30,080
Speaker 1: align incentives in such a way as to, I guess

827
00:51:30,120 --> 00:51:33,440
Speaker 1: achieve different outcomes in different things. Because it gets back

828
00:51:33,440 --> 00:51:36,160
Speaker 1: to that split, right, Like, it doesn't feel like no,

829
00:51:36,320 --> 00:51:38,680
Speaker 1: I mean, there really does seem to be this trade off,

830
00:51:38,760 --> 00:51:40,759
Speaker 1: and she was obviously at least was you know, like

831
00:51:41,160 --> 00:51:44,680
Speaker 1: it seems like okay, So like Ethereum, it has like

832
00:51:44,719 --> 00:51:47,719
Speaker 1: a live, existing founder who is an extraordinary I don't

833
00:51:47,760 --> 00:51:50,920
Speaker 1: think like the tolic is the dictator, but obviously his

834
00:51:51,080 --> 00:51:56,160
Speaker 1: extraordinary sway. But so on the one hand, perhaps development

835
00:51:56,360 --> 00:52:00,759
Speaker 1: is faster on a network in which one person has

836
00:52:00,760 --> 00:52:03,080
Speaker 1: a lot of vision. But on the other hand, you know,

837
00:52:03,280 --> 00:52:06,160
Speaker 1: she would point out, you are you are paying the

838
00:52:06,200 --> 00:52:10,239
Speaker 1: price of decentralization by having to trust Vitellic, by having

839
00:52:10,280 --> 00:52:16,759
Speaker 1: to trust his judgment and obviously bitcoiners plays decentralization and

840
00:52:17,000 --> 00:52:21,359
Speaker 1: store of value properties like clearly above everything else. Right,

841
00:52:21,400 --> 00:52:23,680
Speaker 1: But then, of course the flip side is it does

842
00:52:24,080 --> 00:52:27,800
Speaker 1: become more difficult to build that vision and agree on it.

843
00:52:28,080 --> 00:52:30,320
Speaker 1: I think, like I think of anything like over the

844
00:52:30,400 --> 00:52:33,000
Speaker 1: past five years or so, we've sort of like come

845
00:52:33,120 --> 00:52:38,240
Speaker 1: to appreciate centralized systems, and maybe that's going too far. Okay,

846
00:52:39,000 --> 00:52:42,160
Speaker 1: can we leave it there. Let's leave it there, all right.

847
00:52:42,280 --> 00:52:44,880
Speaker 1: This has been another episode of the All Thoughts podcast.

848
00:52:44,960 --> 00:52:47,440
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at

849
00:52:47,520 --> 00:52:50,520
Speaker 1: Tracy Alloway, and I'm Joe Wisn't Though. You can follow

850
00:52:50,600 --> 00:52:53,600
Speaker 1: me on Twitter at the Stalwart, And you should follow

851
00:52:53,640 --> 00:52:57,000
Speaker 1: our guests on Twitter. Elease Colleen. She is at a

852
00:52:57,120 --> 00:53:01,520
Speaker 1: Lease Kaleen. Follow our producer Laura Carlson. She's at Laura M. Carlson.

853
00:53:01,760 --> 00:53:05,680
Speaker 1: Follow the Bloomberg head of podcast Francesca Levi at Francisca Today,

854
00:53:06,080 --> 00:53:09,040
Speaker 1: and check out all of our podcasts at Bloomberg under

855
00:53:09,080 --> 00:53:11,600
Speaker 1: the handle at podcasts. Thanks for listening.