WEBVTT - This Is the Vision for DeFi Built on Bitcoin 0:00:10.960 --> 0:00:15.080 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:15.120 --> 0:00:20.520 I'm Joe Wisenthal and I'm Tracy Allaway. So, Tracy, you know, 0:00:20.920 --> 0:00:27.000 it's been obviously an incredible year for crypto overall, for bitcoin, 0:00:27.480 --> 0:00:30.960 for a bunch of things going on ethereum, defy, n 0:00:31.000 --> 0:00:34.080 f t S, etcetera. But I feel like, in some 0:00:34.200 --> 0:00:38.800 sense some of the narrative enthusiasm has moved away from 0:00:38.880 --> 0:00:41.720 Bitcoin at least feels like it in the last few months. 0:00:42.200 --> 0:00:45.480 Oh absolutely, I mean part of this. I think part 0:00:45.520 --> 0:00:47.280 of this is because obviously you and I are in 0:00:47.360 --> 0:00:50.120 financial journalism. We're talking with people who are in the 0:00:50.200 --> 0:00:53.360 financial industry quite a lot. But it feels like the 0:00:53.520 --> 0:00:58.320 enthusiasm from traditional financial players, you know, I'm thinking bankers 0:00:58.320 --> 0:01:03.240 and traders that has squarely moved on to defy two 0:01:03.240 --> 0:01:06.279 things like a theory um to places where there seems 0:01:06.319 --> 0:01:07.920 to be a lot of innovation and a lot of 0:01:08.000 --> 0:01:11.679 changes happening around what you can actually do with the 0:01:11.720 --> 0:01:15.920 technology and with a wider pool of crypto. Whereas, like 0:01:16.720 --> 0:01:19.840 I gotta say, the bitcoin maximalist, sorry you got me 0:01:19.880 --> 0:01:22.160 going now, but the become maximalists are sort of like 0:01:22.800 --> 0:01:25.480 they've turned into the like the gold bugs of the 0:01:25.480 --> 0:01:28.039 traditional market, right, Like everyone kind of makes fun of 0:01:28.080 --> 0:01:30.920 them a little bit. Um. They seem a little bit 0:01:30.959 --> 0:01:34.240 old fashioned and they're kind of just like watching while 0:01:34.280 --> 0:01:38.479 all this new stuff happens around them. Yeah, that define 0:01:38.520 --> 0:01:41.960 that definitely seems like the popular narrative. You know, obviously 0:01:41.959 --> 0:01:44.960 there's a lot of adoption overall or interest in Wall Street, 0:01:45.160 --> 0:01:47.480 and I think the story is like, yeah, bitcoin is 0:01:47.520 --> 0:01:49.080 cool and it's a good like you know, it's a 0:01:49.080 --> 0:01:51.840 store of value and if you worry about inflation, then 0:01:52.160 --> 0:01:54.280 buy it, or if you're an emerging market, it will 0:01:54.360 --> 0:01:57.000 hedge against currency collapse or something like that. But if 0:01:57.000 --> 0:01:59.360 you want to do anything that's sort of like very 0:01:59.400 --> 0:02:03.040 familiar or two people on Law Street, like trade derivatives 0:02:03.200 --> 0:02:06.320 or create things that resemble equity or debt or anything 0:02:06.360 --> 0:02:09.359 like that, then they're all like super hyped on building 0:02:09.400 --> 0:02:12.080 on like ethereum or Salona or something like that. Like 0:02:12.120 --> 0:02:14.720 that is sort of like where the zeitgeist is right now. 0:02:14.800 --> 0:02:18.160 I would say, yeah, absolutely. I guess you could boil 0:02:18.200 --> 0:02:19.760 it down to an open question of whether or not 0:02:19.840 --> 0:02:23.480 crypto is sort of outgrowing bitcoin, and whether or not 0:02:23.600 --> 0:02:28.720 you can have this massive crypto slash finance ecosystem that's 0:02:28.760 --> 0:02:32.040 built on an asset that's ultimately supposed to be relatively 0:02:32.080 --> 0:02:36.000 static and in limited supply. Right, And I think there's 0:02:36.040 --> 0:02:38.600 actually two things, and we're going to explore them today, 0:02:38.639 --> 0:02:40.880 But there's two things that I think, Like one is 0:02:41.280 --> 0:02:44.840 there's a perception that it's harder to build on bitcoin debt, 0:02:44.880 --> 0:02:47.680 Like it's not, you know, because it's designed to like 0:02:47.760 --> 0:02:50.679 do one thing it seems very very well, which is 0:02:50.760 --> 0:02:54.120 be this like secure store of value. It's not easy 0:02:54.160 --> 0:02:56.280 to build on That's one perception. And then I think 0:02:56.320 --> 0:02:58.760 there's like a question of like do people want to 0:02:58.840 --> 0:03:02.040 build on bitcoin or do people want to trade on 0:03:02.160 --> 0:03:04.960 So like it's not obvious to me that a lot 0:03:05.000 --> 0:03:07.959 of the DeFi stuff and you know, earlier in the 0:03:08.000 --> 0:03:10.919 week we talked to Tom Schmidt about you know, yield 0:03:10.919 --> 0:03:14.160 firming and all that stuff and you know, automated market makers, 0:03:14.360 --> 0:03:16.560 it's not obvious to me that like the people in 0:03:16.600 --> 0:03:21.320 the bitcoin world like want those things. Whether there's really 0:03:21.360 --> 0:03:25.480 an appetite or an interest for all that speculation and trading, Yeah, totally. 0:03:25.520 --> 0:03:28.000 I mean it goes back to the sort of goldbug 0:03:28.080 --> 0:03:30.800 analogy that I was just using, right, but I think 0:03:30.840 --> 0:03:33.720 like it's also about who those people are and this 0:03:33.800 --> 0:03:37.800 idea that bitcoin is very very decentralized. It's not led 0:03:37.800 --> 0:03:42.640 by any single person. So even if bitcoiners decided to 0:03:42.720 --> 0:03:46.080 make changes to the overall structure of bitcoin, which they've 0:03:46.120 --> 0:03:50.200 done previously, but it becomes very very difficult to reach agreement, 0:03:50.200 --> 0:03:52.560 and then it becomes very very difficult to actually do, 0:03:52.960 --> 0:03:56.280 whereas with something like ethereum, you kind of have you know, um, 0:03:56.320 --> 0:03:59.520 a figurehead in the form of Vitalic, you like can 0:03:59.720 --> 0:04:02.960 how put some changes and help the thing actually adapt 0:04:03.000 --> 0:04:05.000 and get to the place where people agree that it 0:04:05.040 --> 0:04:09.920 wants to be. It just feels like two very different communities, definitely. 0:04:10.120 --> 0:04:12.600 So so that is the sort of perfect set up 0:04:12.640 --> 0:04:15.320 to our guest, because we're actually going to be speaking 0:04:15.400 --> 0:04:21.640 to a bitcoin maximalist, Bitcoin not crypto, and she's also 0:04:21.640 --> 0:04:23.760 a believer that all of these things, all this defied 0:04:23.800 --> 0:04:26.440 stuff that people are hyped about, that it will eventually 0:04:26.480 --> 0:04:28.680 all be built on top of bitcoin, and that it 0:04:28.800 --> 0:04:31.840 is more than just a digital rock, or that it's 0:04:31.880 --> 0:04:33.920 more than just digital gold. And so we're going to 0:04:34.000 --> 0:04:36.480 sort of like get this perspective, like what is like Okay, 0:04:36.560 --> 0:04:38.760 like we sort of a lot of people accept that 0:04:38.800 --> 0:04:41.839 bitcoin has the store of value properties, is there more 0:04:41.880 --> 0:04:44.239 that can really be built on it? I'm very excited 0:04:44.320 --> 0:04:46.720 to learn about where that is going and to hear 0:04:46.800 --> 0:04:49.600 sort of like the counter narrative of what's going on. 0:04:49.640 --> 0:04:51.880 So I want to bring in our guest today at 0:04:51.960 --> 0:04:54.880 least Kaleen. She is the founder and managing partner at 0:04:54.880 --> 0:04:58.760 the VC firm still Mark, which is only bitcoin focused. 0:04:58.839 --> 0:05:03.359 They buy equity take equity stakes in bitcoin related companies. 0:05:03.760 --> 0:05:06.440 She is on the board of Blockstream, which is one 0:05:06.480 --> 0:05:10.400 of the sort of like biggest builders of bitcoin applications. Man, 0:05:10.440 --> 0:05:14.960 we have it's employees contribute substantially to the bitcoin code base, 0:05:15.080 --> 0:05:17.840 to its uh the project. So at least, thank you 0:05:17.960 --> 0:05:21.280 so much for coming out. O lots great, thank you 0:05:21.360 --> 0:05:25.000 for having me. There'll be a fun conversation, I hope. Yeah, 0:05:25.080 --> 0:05:27.320 I'm really I'm really excited about this because you know, 0:05:27.680 --> 0:05:29.000 you know, we set it up, we know what the 0:05:29.160 --> 0:05:32.080 narrative is. You know. Actually before we sort of like 0:05:32.160 --> 0:05:34.880 get it into like the defy stuff, I mean, we 0:05:34.960 --> 0:05:39.080 sort of um talked about how development on bitcoin is 0:05:39.120 --> 0:05:43.040 perceived to be difficult and or slow it's conservative, but 0:05:43.120 --> 0:05:47.880 actually bitcoin did just have a pretty substantial update to 0:05:48.040 --> 0:05:51.200 the technology of the network, something called tap root. Can 0:05:51.240 --> 0:05:53.360 you sort of describe, like, what is this new thing 0:05:53.440 --> 0:05:55.960 that's going to be that's being implemented. I guess it's 0:05:55.960 --> 0:05:58.120 gonna be implemented in November, But what is this new thing? 0:05:58.200 --> 0:06:01.680 What's it going to enable us to do with a bitcoin? Well, 0:06:01.760 --> 0:06:03.680 tap it does quite a bit. But one of the 0:06:03.760 --> 0:06:08.040 things that it does that's most topical for where the 0:06:08.120 --> 0:06:11.640 cryptocurrency you know, sort of memes have emerged in this 0:06:11.800 --> 0:06:15.480 market cycle, is that it creates efficiencies that are relevant 0:06:15.560 --> 0:06:19.320 for smart contracting, both at the base layer and at 0:06:19.839 --> 0:06:24.159 higher layers in payment channels for instance, like Lightning network. 0:06:24.640 --> 0:06:28.040 UM So that's exciting. Tap root is will activate in November, 0:06:28.279 --> 0:06:31.520 and not only will it have an impact on privacy 0:06:31.680 --> 0:06:36.160 scalability of the um core protocol, but it will also impact, 0:06:36.240 --> 0:06:40.560 like I said, opportunities in smart contracting, and it will 0:06:40.560 --> 0:06:43.520 allow us it'll sort of set the stage for future 0:06:43.640 --> 0:06:48.320 upgrades like any prevout which has relevancy for other sorts 0:06:48.400 --> 0:06:53.160 of increased functionality at the Lightning network level. And that's 0:06:53.240 --> 0:06:56.880 quite important because when we're thinking about defy in the 0:06:56.920 --> 0:07:00.680 bitcoin space, we're thinking not just about how that's relevant 0:07:00.720 --> 0:07:04.120 to traders, but really how it's relevant very broadly to 0:07:04.240 --> 0:07:07.680 billions of people, not hundreds of thousands of people. UM. 0:07:07.839 --> 0:07:11.640 Taking a quick step back to set context for the conversation, 0:07:12.440 --> 0:07:15.000 all to defy. So what we see happening in the 0:07:15.040 --> 0:07:18.920 ethereum or all coined space, UM, what's been called defy 0:07:19.080 --> 0:07:23.800 now participants. There's about a hundred thousand participants in this space, 0:07:23.920 --> 0:07:27.960 and those are highly engaged participants, sure, but it's quite 0:07:28.120 --> 0:07:33.320 small and in terms of cultural relevancy or impact that 0:07:33.440 --> 0:07:36.600 will be very limited. What has been frustrating, I think 0:07:36.680 --> 0:07:40.200 for folks operating in the bitcoin space is that I 0:07:40.360 --> 0:07:43.760 suppose it feels like it's in the background, um, but 0:07:43.960 --> 0:07:47.600 in fact it should be, in my mind, in the foreground, 0:07:48.080 --> 0:07:51.520 which is that bitcoin has been building a breadth of 0:07:52.160 --> 0:07:55.160 decentralized finance tools that are relevant not just to traders 0:07:55.560 --> 0:07:58.600 but to folks in emerging markets like El Salvador and 0:07:59.360 --> 0:08:02.560 just to folks very broadly. And so we you know, 0:08:02.640 --> 0:08:05.360 we're not we're really not limited um. And also not 0:08:05.520 --> 0:08:10.120 prioritizing Bitcoin's relevance to traders, were thinking more broadly than that. 0:08:10.600 --> 0:08:13.640 So I, Joe, I want to um. You know, maybe 0:08:13.720 --> 0:08:16.080 kind of push bath about one of the ways you 0:08:16.280 --> 0:08:20.320 characterized me at the top. So you said you called 0:08:20.360 --> 0:08:23.840 me a bitcoin maximalist, which I think, um is a compliment, 0:08:24.000 --> 0:08:27.040 but probably not I did. I meant it as a compliment. 0:08:27.080 --> 0:08:29.600 I meant it as a compliment, I understand, So I 0:08:29.800 --> 0:08:33.440 I appreciate the compliment, but you know, it's not where 0:08:33.559 --> 0:08:37.360 I think of myself more as a sound tech maximalist 0:08:37.440 --> 0:08:40.679 than as a bitcoin maximalist. And what I mean by 0:08:40.800 --> 0:08:45.640 that is I'm really looking at protocol level, at relevant 0:08:45.679 --> 0:08:49.280 infrastructure and what that means for sort of the security 0:08:49.320 --> 0:08:55.360 and stability of technologies as a platform. So my background inventor. 0:08:55.400 --> 0:08:59.280 I started Inventor about a decade ago, making investments in 0:08:59.679 --> 0:09:04.400 UM emerging texts at the time like cloud networking, data 0:09:04.480 --> 0:09:09.839 center software, cybersecurity, foundational sort of technologies and bitcoin. I 0:09:09.920 --> 0:09:14.319 found Bitcoin in that sort of mind space, and so 0:09:14.640 --> 0:09:18.520 I saw bitcoin first as a protocol, as a technology 0:09:18.600 --> 0:09:21.280 that would be a platform for the proliferation of a 0:09:21.360 --> 0:09:26.240 new sort of app ecosystem. And you know, in that way, 0:09:26.360 --> 0:09:29.679 I approach it really as a sound tech maximalist, not 0:09:29.840 --> 0:09:33.840 as a bitcoin um maximist. Per se. I also spent 0:09:34.160 --> 0:09:40.240 time in looking at all coins. I I think that 0:09:40.559 --> 0:09:43.880 I was the second or third maybe VC to do 0:09:44.600 --> 0:09:47.520 diligence in UM the I c O space. Even so, 0:09:48.679 --> 0:09:53.120 for example, the second ever I c O was for 0:09:53.520 --> 0:09:58.280 a company doing decentralized storage, and I know that the 0:09:58.360 --> 0:10:01.360 firm I was at the time, clear Stone enter Partners UM, 0:10:01.480 --> 0:10:06.319 and through my leadership, did deep diligence on that opportunity. 0:10:06.440 --> 0:10:09.680 And really, UM what I what we found. The conclusion 0:10:09.720 --> 0:10:12.480 that we came to was that that sort of setup 0:10:12.520 --> 0:10:15.400 didn't require a token, that there wasn't a need to 0:10:15.480 --> 0:10:19.679 incentivize use of the software with a token. And you know, 0:10:19.800 --> 0:10:24.360 I think that generally speaking, I've found that that conclusion 0:10:24.720 --> 0:10:28.520 holds true across projects. So it's not that there's any 0:10:29.040 --> 0:10:35.439 sort of religion against other cryptocurrencies. It just it's just 0:10:35.679 --> 0:10:38.719 that there would need to be a value proposition in 0:10:38.840 --> 0:10:42.199 that cryptocurrency of digital asset that goes beyond just its 0:10:42.280 --> 0:10:45.319 use for trading. Don't feel bad about Joe calling you 0:10:45.440 --> 0:10:48.240 a bitcoin maximalist, because he calls me a silver bug 0:10:48.360 --> 0:10:51.240 all the time and it's not true. So he has 0:10:51.559 --> 0:10:54.599 he has form in this UM. So I mean, just 0:10:54.760 --> 0:10:57.280 on that point, I do think there is a perception 0:10:57.360 --> 0:11:01.079 out there that bitcoin is an old their technology, and 0:11:01.800 --> 0:11:03.400 I know it feels a little bit crazy to say 0:11:03.480 --> 0:11:05.959 that because we're, you know, we're still supposed to be 0:11:06.000 --> 0:11:08.439 in the early innings of everything crypto. But you know, 0:11:08.559 --> 0:11:10.599 if you look back, like it is more than a 0:11:10.720 --> 0:11:13.720 decade old at this point, and you have had newer 0:11:14.240 --> 0:11:17.960 crypto protocols come on stream since then, so you can 0:11:18.000 --> 0:11:20.280 see why people would say like, oh, this is maybe 0:11:20.600 --> 0:11:23.079 technology that is slightly out of date, or it hasn't 0:11:23.120 --> 0:11:27.079 been purposefully designed for a specific use case like a 0:11:27.160 --> 0:11:30.600 defie scenario or some sort of other trading or financial 0:11:30.800 --> 0:11:34.280 use Could you maybe dive into that a little bit more, like, 0:11:34.840 --> 0:11:38.400 what is the technological difference between bitcoin and everything else 0:11:38.440 --> 0:11:40.400 out there, and what is it in your view that 0:11:40.559 --> 0:11:44.600 makes bitcoin suitable to doing new things when I think 0:11:44.679 --> 0:11:47.520 other people instinctively will say, well, it's older and it 0:11:47.720 --> 0:11:51.640 was designed for a very specific use case, right. So 0:11:52.559 --> 0:11:55.400 most important to note is that bitcoin really is a 0:11:55.480 --> 0:11:59.880 technology play first, whereas the theorym and other alt coins 0:12:00.360 --> 0:12:03.000 feel a lot to me like a marketing play, and 0:12:03.240 --> 0:12:07.520 so Bitcoin is a technology play. The Bitcoin starts with 0:12:07.679 --> 0:12:11.040 the presumption that security and stability of the network are 0:12:11.240 --> 0:12:15.360 the first most importance, and so Bitcoin's history is one 0:12:15.800 --> 0:12:19.959 of of prioritizing just that, and what that means is 0:12:20.080 --> 0:12:23.600 that the end result of that is that bitcoin um, 0:12:23.720 --> 0:12:27.280 the cryptocurrency, can be a store of value. It's the 0:12:27.480 --> 0:12:33.520 first true digital scarce resource that we have sovereign access to. 0:12:33.760 --> 0:12:37.319 A Bitcoin. The protocol, of course, is a public informission 0:12:37.440 --> 0:12:41.640 list sort of ledger system that operates in a decentralized manner, 0:12:42.040 --> 0:12:45.520 and all of those things are necessary to establish Bitcoin 0:12:45.640 --> 0:12:48.240 is a store of value. So bitcoiner's assumption is that 0:12:48.400 --> 0:12:52.360 that's what's what's most important. And after you've established that 0:12:52.600 --> 0:12:55.559 and have a history of of that being true, then 0:12:55.679 --> 0:12:58.600 you can go and add functionality um at the core 0:12:58.720 --> 0:13:01.720 protocol level and layers built on top of the core protocol. 0:13:01.840 --> 0:13:05.880 Now ethereum and alt coins, other all coins were introduced 0:13:06.400 --> 0:13:10.280 really to sort of propose that novel functionality could be 0:13:10.440 --> 0:13:13.880 could attract a new audience. And so they start with functionality, 0:13:14.120 --> 0:13:16.839 and the idea was that they would then migrate to 0:13:16.960 --> 0:13:21.199 sort of secure, perhaps more decentralized networks, and we see 0:13:21.280 --> 0:13:24.559 this with ethereum, right. So ethereum is has been for 0:13:24.760 --> 0:13:27.640 quite a while planning for a state of ethereum two 0:13:27.720 --> 0:13:30.120 point oh, where the network is secured not by proof 0:13:30.160 --> 0:13:33.360 of work but by proof of stake. And you know, 0:13:33.480 --> 0:13:37.040 I propose that that's sort of almost a wild thing 0:13:37.160 --> 0:13:39.439 to do when the network has billions of dollars of 0:13:39.559 --> 0:13:42.920 value on it, to think about then switching what secures 0:13:42.920 --> 0:13:46.560 that network and that value, you know, to me, feels 0:13:46.880 --> 0:13:51.400 um sort of risky, and you know, and I suppose 0:13:51.480 --> 0:13:53.400 that's why I find myself One of the reasons why 0:13:53.440 --> 0:13:57.600 I find myself in the bitcoin space is because we bitcoiners, 0:13:57.679 --> 0:13:59.960 or at least the folks developing at the core protocol 0:14:00.120 --> 0:14:04.079 level of respects that there's billions of dollars of people's 0:14:04.160 --> 0:14:08.200 net worth that's secured by this protocol and that comes first. 0:14:08.320 --> 0:14:28.040 Functionality comes second. So one could argue that it's like, Okay. 0:14:28.320 --> 0:14:30.840 One thing I don't think anyone doubts about the sort 0:14:30.880 --> 0:14:34.960 of bitcoin world is that focus on security, and there's 0:14:35.000 --> 0:14:41.640 probably rightly an extremely conservative development mindset of not rushing 0:14:41.720 --> 0:14:44.600 in any changes. Never I can't it's hard to imagine 0:14:44.640 --> 0:14:47.600 bitcoin ever doing anything radical, such as moving from proof 0:14:47.680 --> 0:14:50.400 of work to proof of steak any anything like that. 0:14:50.600 --> 0:14:53.360 But in theory it seems like there could be a 0:14:53.440 --> 0:14:56.880 spectrum where it's like, Okay, you have like security and 0:14:57.000 --> 0:14:59.800 stability at one end of it, and you have in 0:14:59.840 --> 0:15:02.600 a vation and ability to build on something at the 0:15:02.680 --> 0:15:05.240 other end, and you sort of could in theory move 0:15:05.360 --> 0:15:08.440 the dial towards the other end. You know, it seems 0:15:08.560 --> 0:15:11.080 as though it's not that big from a sort of 0:15:11.720 --> 0:15:14.360 actual numbers, but it seems as though there is a 0:15:14.440 --> 0:15:18.680 lot of interest in the type of defy applications that 0:15:18.720 --> 0:15:21.160 are being built on ethereum. There maybe aren't that many 0:15:21.240 --> 0:15:23.920 people doing it, but there's clearly a lot of money. 0:15:24.360 --> 0:15:27.760 Billions are flowing into the space. Just today, you know, 0:15:27.880 --> 0:15:31.440 you heard that Injuries and Horowitz is has lot raised 0:15:31.440 --> 0:15:33.520 a two point two billion dollar fund. I presume a 0:15:33.600 --> 0:15:35.600 lot of that is going to be in this sort 0:15:35.640 --> 0:15:38.960 of like defy realm, probably not all of it. So 0:15:39.960 --> 0:15:42.960 it appears though that there is this sort of like 0:15:43.120 --> 0:15:46.720 momentum and mind share that Bitcoin is missing right now. 0:15:46.880 --> 0:15:51.520 So why aren't people being attracted to building on bitcoin, 0:15:51.680 --> 0:15:55.000 or why are these people so excited about building on 0:15:55.200 --> 0:15:59.280 a different platform. So I think, you know, it feels 0:15:59.400 --> 0:16:03.160 like you're repeating back to me um fud spread by 0:16:04.080 --> 0:16:07.680 theory or Ripple or other folks and other protocols. Just 0:16:07.760 --> 0:16:10.360 to be fair, like this is literally, this is I'm 0:16:10.400 --> 0:16:13.200 not criticizing bitcoin. I'm saying like, this is literally like 0:16:13.280 --> 0:16:15.480 what I observe, like the Andrews and Horowitz two point 0:16:15.560 --> 0:16:18.240 two billion dollar fund and so forth. Like my question 0:16:18.400 --> 0:16:20.800 is not what's wrong with bitcoin or that there's something 0:16:20.880 --> 0:16:24.120 that is insufficient about bitcoin. The question is what is 0:16:24.200 --> 0:16:27.520 it that bitcoin is evidently missing that so many people 0:16:27.560 --> 0:16:30.920 are looking to build on a different platform. Okay, so 0:16:31.160 --> 0:16:33.080 a couple of things you said, a couple of things there, 0:16:33.080 --> 0:16:35.760 I'll try to hit all of them. So you talked 0:16:36.360 --> 0:16:39.960 a little bit about the attention shifting to defy this 0:16:40.120 --> 0:16:44.680 space where a hundred thousand traders have permissionless access to 0:16:44.840 --> 0:16:47.840 trade sort of the long tail of assets that they 0:16:47.920 --> 0:16:49.880 might not otherwise have access to, and they can do 0:16:50.040 --> 0:16:53.280 that without having to go through a k y C process. 0:16:53.960 --> 0:16:56.960 And you know, it's also interesting to see folks making 0:16:57.040 --> 0:16:59.520 money in a quick way and it attracts media attention. 0:16:59.600 --> 0:17:02.720 Now and a bitcoin side, what's been happening is that 0:17:02.880 --> 0:17:06.639 bitcoin has been declared a legal tender and al Salvador, 0:17:07.160 --> 0:17:10.879 we've seen the folks in all Salvador use bitcoin on 0:17:11.000 --> 0:17:14.439 a day to day basis by using the Lightning Network UM, 0:17:14.560 --> 0:17:17.800 specifically in beach communities in the community called Bitcoin Beach. 0:17:18.440 --> 0:17:22.480 We know that bitcoin is held on the balance sheet 0:17:22.560 --> 0:17:26.920 of multiple public companies, including Tesla, which is on SMP 0:17:27.080 --> 0:17:30.560 five hundred, and bitcoin has been growing in terms of 0:17:30.560 --> 0:17:34.199 adoption at a more rapid clip than than Internet did 0:17:34.440 --> 0:17:37.520 at a comparable time. So there's quite a bit. It's 0:17:37.960 --> 0:17:41.160 really active time, a really dynamic time in the bitcoin 0:17:41.280 --> 0:17:44.800 space in two ways. I talked just a moment ago 0:17:44.880 --> 0:17:48.480 about how active adoption is and the breadth of adoption. 0:17:48.560 --> 0:17:52.440 So we see enterprise, we see countries, we see municipalities. 0:17:52.560 --> 0:17:55.920 For instance, Miami, the mayor of Miami, Francis Sais, has 0:17:55.960 --> 0:17:59.080 talked a lot about how the city feels it could 0:17:59.119 --> 0:18:02.000 benefit from the use of bitcoin the asset and bitcoin 0:18:02.080 --> 0:18:06.200 the technology. There's other cities and other countries that have 0:18:06.320 --> 0:18:09.119 indicated they want to be second movers, are and are 0:18:09.200 --> 0:18:12.720 in the planning stages. I'll take a conservative position to 0:18:12.840 --> 0:18:17.600 propose that that's probably much more importance than the introduction 0:18:17.800 --> 0:18:22.879 of trading tools for tens of thousands of folks, but 0:18:23.119 --> 0:18:26.840 perhaps the media runs behind it. A bit um. At 0:18:26.880 --> 0:18:29.960 the same time as adoption has picked up in the 0:18:30.040 --> 0:18:35.200 bitcoin space, we've also seen really an explosion of technical 0:18:35.520 --> 0:18:39.080 advancement in the bitcoin space. So that's both at the 0:18:39.119 --> 0:18:43.720 core protocol level, at lightning network level, and in side chains. 0:18:44.280 --> 0:18:46.359 I don't know, I suppose it's disappointing to me to 0:18:46.520 --> 0:18:49.680 hear that. It feels like those that sort of work 0:18:49.960 --> 0:18:53.280 has been overlooked um, you know, as a result of 0:18:53.320 --> 0:18:56.520 the hype that exists around you know, all coin defy. 0:18:57.080 --> 0:19:00.760 All that said, though, there are founders building products that 0:19:01.160 --> 0:19:04.919 replicate the best of what's found in the quote defy 0:19:05.080 --> 0:19:09.560 space in Ethereum. Now that will be built in the 0:19:09.640 --> 0:19:13.359 bitcoin space on side chains, you know, by the end 0:19:13.400 --> 0:19:16.119 of the year. So there's projects launching by the end 0:19:16.160 --> 0:19:18.560 of the year, and I want to cover that too. 0:19:18.680 --> 0:19:23.440 But you also mentioned the funding environment for um, you know, 0:19:23.560 --> 0:19:27.000 for DeFi, for ethereum, for all coins, and I, you know, 0:19:27.080 --> 0:19:29.560 I want to acknowledge that as being something that is 0:19:29.640 --> 0:19:34.359 certainly true. And I think one of the I don't know, 0:19:34.480 --> 0:19:38.600 maybe disappointments that I've had and how the cryptocurrency space 0:19:38.840 --> 0:19:42.920 has matured, I think that there's certainly been UM, there 0:19:43.040 --> 0:19:45.840 is today, and there historically has been a missed allocation 0:19:45.960 --> 0:19:49.520 of funds and to venture funds into the space, and 0:19:49.880 --> 0:19:53.480 I think that's because you know, there's um, of course, 0:19:53.600 --> 0:19:57.520 an appeal of quicker liquidity, and what we've seen with 0:19:57.600 --> 0:20:01.639 the introduction of tokens is that you can instead of 0:20:01.680 --> 0:20:04.720 there being a standard venture cycle of you know, seven 0:20:04.800 --> 0:20:08.320 to ten years where funds are waiting to realize returns, 0:20:08.440 --> 0:20:10.639 that it's just a much quicker cycle where you can 0:20:10.680 --> 0:20:13.520 get returns in eighteen to twenty four months, maybe shorter 0:20:13.640 --> 0:20:16.320 than that, and you can get returns that are of 0:20:16.640 --> 0:20:21.280 equal um you know, magnitude as you see for successful 0:20:21.720 --> 0:20:24.000 companies that are taking seven to ten years to exit 0:20:24.160 --> 0:20:27.680 to the public markets or through acquisition. And of course 0:20:27.760 --> 0:20:31.880 that's appealing. And what I hope will happen as more 0:20:32.080 --> 0:20:37.720 time in the space accumulates is that folks will start 0:20:37.760 --> 0:20:43.080 to ask, really what's producing those returns and be cognizant 0:20:43.400 --> 0:20:47.640 of um, you know, the dynamics that exists in eighteen 0:20:47.720 --> 0:20:52.119 month cycle that we're seeing. So maybe now is your 0:20:52.200 --> 0:20:56.000 chance to sort of rectify this misallocation of capital, as 0:20:56.040 --> 0:20:57.600 you put it, But could you maybe talk to us 0:20:57.600 --> 0:21:01.639 about some of the projects or changes that Bitcoin is 0:21:01.720 --> 0:21:05.280 currently undertaking, UM, and you know, get us excited about it, Like, 0:21:05.400 --> 0:21:07.920 what is it that people should be paying attention to 0:21:08.400 --> 0:21:12.280 when they look in bitcoin other than the store of 0:21:12.359 --> 0:21:15.600 value proposition which everyone seems to have been focusing on lately, 0:21:17.000 --> 0:21:20.879 right of course, Um, I'd love to So, so the 0:21:20.920 --> 0:21:25.280 bitcoin spit. Everything that's possible in other protocols is possible 0:21:25.320 --> 0:21:29.200 on bitcoin, but also more. And the reason why there's 0:21:29.280 --> 0:21:33.160 this also more addendum is because bitcoin is decentralized, which 0:21:33.240 --> 0:21:35.040 means that things that are built on top of it 0:21:35.160 --> 0:21:38.560 can also be decentralized. You know, while we can call 0:21:38.840 --> 0:21:43.520 what's happening on ethereum defied decentralized finance, that sentence should 0:21:43.600 --> 0:21:46.160 end with the question mark. Because if the base layer 0:21:46.160 --> 0:21:49.480 itself is not decentralized, I'm not sure that anything built 0:21:49.520 --> 0:21:51.440 on top of it can be. And so that's the 0:21:51.520 --> 0:21:57.119 opportunity for bitcoin and we're seeing that emerge UM and 0:21:57.760 --> 0:22:01.800 applications be live that represent that opportunity today. So an 0:22:01.880 --> 0:22:05.639 example including with protocols built on top of bitcoins to 0:22:05.720 --> 0:22:08.760 an example of that would be Lightning network. And examples 0:22:08.800 --> 0:22:12.800 of products being built on Lightning Network are products, financial 0:22:12.880 --> 0:22:15.760 chat products, for instance, like a sphinx chat, and what 0:22:15.920 --> 0:22:19.920 sphinx Chat is is sort of a level three technology 0:22:20.119 --> 0:22:24.360 that a layer three technology excuse me, that takes advantage 0:22:24.520 --> 0:22:29.360 of the infrastructure of Lightning network to create this Bitcoin 0:22:29.480 --> 0:22:34.520 native financial chat opportunity in which both messages and sets 0:22:34.600 --> 0:22:38.040 the coin sets are sent through Lightning nodes. In this 0:22:38.240 --> 0:22:41.919 sort of distributed network, you can also make and receive 0:22:42.040 --> 0:22:44.640 calls in the same way. And one of the things 0:22:44.720 --> 0:22:48.000 that we've seen be built on this layer three is 0:22:48.520 --> 0:22:52.840 communities around content creators and example first example of that 0:22:53.080 --> 0:22:57.240 are these podcast communities, and so we will see podcaster 0:22:57.440 --> 0:23:01.560 gather their audience on the sphinx chat, create streaming podcasts 0:23:01.640 --> 0:23:06.760 that are paid in UM, streaming stats stats back from 0:23:06.760 --> 0:23:10.560 the audience members, and these sort of affinity groups emerged 0:23:10.600 --> 0:23:13.119 to take advantage of the opportunities that are unique to 0:23:13.240 --> 0:23:18.280 the decentralized network of Lightning network and Bitcoin. That would 0:23:18.320 --> 0:23:22.040 be a sort of competitor to something like a whee chat, 0:23:22.480 --> 0:23:26.320 where the opportunities are different than the dynamics of participation 0:23:26.400 --> 0:23:31.080 are different. It's not permissionless, it can be permission list 0:23:31.080 --> 0:23:33.880 and Bitcoin. And so we see folks like sphinx Chat 0:23:33.960 --> 0:23:37.680 taking advantage of that. Now, to talk about some of 0:23:37.800 --> 0:23:42.560 the development in the side chain space, we maybe I'll 0:23:42.640 --> 0:23:46.440 start with STACKS, which is a side chain, a layer 0:23:46.560 --> 0:23:49.560 one side chain they define it as in the Bitcoin 0:23:49.680 --> 0:23:54.000 space that has fully functional smart contracts live. As of 0:23:54.160 --> 0:23:58.600 January of this year, we're seeing contracts of up to 0:23:58.720 --> 0:24:02.240 a billion dollars in act or get commitments be present 0:24:02.359 --> 0:24:05.639 in that environment. Recently it was announced that there's an 0:24:05.680 --> 0:24:09.719 accelerator built to fund companies that are that are building 0:24:10.000 --> 0:24:13.440 in the STACKS ecosystem. You know, I think that my 0:24:13.600 --> 0:24:16.440 expectation is that we will see projects like a unit 0:24:16.480 --> 0:24:20.760 swap like project be built in a STACKS environment. Joe 0:24:20.920 --> 0:24:24.480 mentioned that I sit on the board of directors at Blockstream. 0:24:24.560 --> 0:24:29.000