The amount of Bitcoin buying is much higher than a Bitcoin being
mined, so it's just a question of when the sellers run out of
Bitcoin to sell or decide they don't want to sell anymore.
Is that your target? The half?
Any prediction? Maybe it's more, I don't know.
It's it's a, I mean, I think a good starting point is.
There is very little retail involvement this cycle.
Yeah, I mean, I guess that's from things like Google search
trends and things like that, right?
It's probably a last time to buy at 62 Bitcoin prices.
It's a race. And so, you know, Sailor has
said things like, well, he's he's just going to keep buying,
right? And he's fearful about not
buying enough. And so you've got new buyers
coming in and if you don't buy them, they will basically, will
Bitcoin reach parity with gold? Do you think it's a good thing
that nation states start accumulating Bitcoin?
There's a saying that everybody buys Bitcoin at the price they
deserve, and I think the governments deserve, you know, a
certain rate figure price, right, Yeah.
Welcome to another episode of Simply Bitcoin IRL.
We're here in the beautiful Lugano, and I've joined with
someone that doesn't need an introduction.
Adam, thank you so much for joining me today.
Hi Niko, how you doing? Good.
So Adam, it's been a pretty historic year for Bitcoin
regarding the Bitcoin treasury companies as a whole,
congratulations. With the Bitcoin Standard
Treasury Company, you're #5 with 30,000 and 21 Bitcoin on the
balance sheet. Well, it depends because we are
funded on close and we'll wait for regulator approval.
So there is 30,000 and 21 Bitcoin, but there's also $1.3
billion and we don't yet know how many Bitcoin that will buy.
So it depend on the Bitcoin price at the close.
So, Adam, I think one of the things that I've noticed this
year is just what the market is signaling, right?
So a lot of the treasury companies have gone a little bit
lower, you know, some have gone below M NAV.
Where do you see Bitcoin treasury companies and the
future of finance in general? Yeah.
I mean, I think the treasury company phenomena is making
genuine and sustainable advantage of the capital market
mechanisms. Obviously a raise for capital
formation for building products, but work fine as a vehicle for
running an operating company and reinvesting in the products, in
the services in them to develop more revenue and in putting the
cash reserves of the company into Bitcoin as a better
inflation hedged approach. So I think what you're seeing is
that active behavior like active Bitcoin management, active
operating companies going to be favored in the future most
likely because the markets developed a view on the Mnasses.
There are a lot of people shorting them at the moment.
Gotcha. And another question for you, do
you, because I think this is the main topic of this year, which
is you believe that the four year cycle is over?
We'll see. I'm thinking that you'll still
have cycles, but it may not line up with previous cycles.
And and I mean the reason you get cycles is the halving cycle.
I think it's a real effect. People are often sceptical that
it's a smaller percentage each time, but actually it's sort of
followed by another effect which is the Hoddle wave.
I people that learn the hard way the cold storing and dollar cost
averaging Bitcoin is a safer and more conservative approach than
market timing and so on. And so over time, the bigger
percentage of Bitcoin are long term stored, saved, called
stored. And so the percentage drop in
halving it should really be considered related to, you know,
as a proportion of the Bitcoin are on the market and these cold
stored Bitcoin are not on the market.
And so then effectively that ratio is not diminishing in the
way that people think it is. And also most technology
adoption curves goes through a kind of mass adoption surge and
I don't think that coin has seen that yet.
So, you know, could get the opposite dimension returns.
But this this cycle could be an interesting one for that.
There's a lot of people taking profit and new money coming in.
The people that are taking profit will eventually run out
of coins that they want to sell or the allocation that they want
to sell, the allocation they want to get called on to.
And there is a large amount of sustained buying from ETF buyers
from institutions. About 30% of the BlackRock ETF
has apparently the institutional.
And you know, most of that means most of the ETF buying is
actually just a new more accessible way to buy Bitcoin
for probably mostly people in the bracket of the top 10% by
wealth in the UK minus top 1%. So just people in a professional
like business owners, doctors, dentists, lawyers, people with a
share portfolio, small business operators, and when they decide
to buy Bitcoin, they just call their broker or financial
advisor and they reallocate from something else.
So it's not necessarily new money, it's reallocated money.
And so I think the ETFs enabled that second wave, the first wave
being people who bought on Bitcoin exchanges or OTC cash
transactions. And a third way of being
institutional, I think the institutional wave is actually
very new. Like that's, that's in effect,
it takes a long time to ramp up, but nevertheless, the amount of
Bitcoin buying is much higher than a Bitcoin being mined.
So it's just a question of when the sellers run out of Bitcoin
to sell or decide they don't want to sell anymore.
And then presumably that will have an effect on the price.
And then some of the people that sold my FOMO back in, because,
you know, they may be thinking that looking at the history of
Harvang and if they see that invalidated, that will change
their behaviour as well. So there's a lot of market
psychology in there. It's hard to predict.
Bitcoin typically surprises people in some way or other.
It definitely does. Bitcoin has a tendency of doing
the exact opposite of what everyone anticipates.
There's been the history of Bitcoin for sure.
Does it surprise you that so many OGS Adam have been selling
as much Bitcoin as they have been?
I'm a little surprised for the reason that anybody who's been
through prior cycles wouldn't feel that this is a particularly
high point. Like to a lot of people that
seems like this is relatively early in a cycle sort of price
wise in the distance from prior all times highs and the distance
from the prior all time low. But the price like was low and
things like that, right? Should bear in mind, people
forget quickly that in the last cycle there was a third all time
high shortly before the Harvin, you know which replace you if
you if you is out still for this cycle, right?
And I think also the cycle has seen smaller drawbacks.
In previous cycles you'd see maybe a dozen 3035% drops.
So they haven't really seen that this time around.
So the the drawdowns are smaller I think because the ETF buyers,
retail ETF buyers, institutional buyers and the treasury company
buyers are not panic sellers, they're long term holders.
And so they are actually buying the dips and there's less
proportion of the new incoming Bitcoin holders in this cycle
that are prone to be shaken out by a drop does.
This surprise you that 2025 hasn't been as explosive as a
lot of people anticipated. And I know having anticipations
in Bitcoin is a terrible idea, having expectations in general.
But I'm going to get your opinion.
Well, I mean, it's kind of waiting game until people run
out of Bitcoin to sell basically.
I think because if you look at the imbalance, it's huge.
It's like 4 or five times, maybe 6 times the amount of Bitcoin
being mined are being bought on a regular basis.
You know, micro strategy is buying a couple of times the
amount mined. You know, since the halving
BlackRock ATF about the same. There are traders who are buying
4, 150 a day just tactically buying up cheap Bitcoin at any
time it pulls back reactively and you know, then you've got
the ETF buyers, there's really a lot of buying.
You know, I think the treasury companies are a factor as well
in total, in addition to, you know, micro strategy and the
rest because they are not sellers.
They've been buying and holding. So you know, if there's a
pullback that affects their share price, but it doesn't flow
through to the Bitcoin price, which is interesting.
So Pierre Rashad had described that, that the treasury
companies are bitcoins, shock absorber might price shock
absorber because price pulls back.
They don't sell right and say, you know, if you get a lot of
good investors, investors who buy and hold for the long term,
that changes the price structure for the bear.
So I think the price structure is surprisingly good.
You know, the big liquidation cascade we had in the last few
weeks didn't pull the price back that much, and there's a lot of
heavy buying as it pulled back. So I think that shows that it's
quite robust when people's confidence is quite high.
It's, it's different the way that it's behaved this cycle and
it, it seems like it's more institutionally driven.
It's this, you know, small tick up very methodically.
And one of the things I've noticed, Adam, is that there is
very little retail involvement this cycle.
Yeah. I mean, I guess that's from
things like Google search trends and things like that, right?
Yeah. I mean, I think, you know, it's
probably a last time to buy at the six digit Bitcoin prices,
right? So, you know, for people who
are, you know, skeptical because I think it's still early,
Obviously, you know, the percentage of people that own
Bitcoin is quite low. It's a race.
And so, you know, Sailor has said things like, well, he's,
he's just going to keep buying, right?
And he's fearful about not buying enough.
And so you've got new buyers coming in and if you don't buy
them, they will basically, right.
So I think, you know, if there's no, you know, the average person
doesn't really have an excuse. They've had a really long time
to buy. It's still early and, you know,
but sometimes people prefer to buy a higher price.
They feel more confidence at a higher price.
And that's been the case historically as well, right?
The and the price rise has generally been kind of bouncing
around the confidence and conviction that people have and
new people come, a number of new people coming in.
And so I think that continues to be the case.
It's human psychology right when the price is pumping.
Everyone just smashed by his. Yeah.
And that's that's also how you get the blow off top, which I
don't think we've seen yet in this cycle.
Do you think that's going to happen?
Do you think we'll see a parabola?
And I know we're getting into speculation territory.
But it, you know, it's sort of somewhat inherent in markets,
but maybe it'll be more muted and we don't know actually.
Of course, you know, what will happen if it will just keep
grinding higher for go through through to the next cycle or if
we'll have like moderate pullbacks.
Of course, you always have volatility.
But yeah, I think it's a slightly different price regime
and the and the retail may come back in, you know, some higher
price later in this cycle. So, Adam, I remember a long time
ago, I was watching one of your interviews and you had a market
order to buy all the Bitcoin. Yeah.
Do you still have that market order open and at what price?
So it was a 2 cent. So it was Alistair Milne, who's
kind of a very early Bitcoiner. He has a tweet from 2011 saying
something about Bitcoin and started a Bitcoin alpha fund in
Monaco. So he had placed an order for
18.7 million Bitcoin, I think it was, which was all the Bitcoin
that had been mined at that time at 1 cent.
And so I thought let's outbid him.
I put an order for 21 million just to be sure at 1 cent, at 2
cents rather which is $120,000. So it was actually a live order,
but I think if in practice it couldn't get filled because you
know, it was on the bid for next exchange and there only so many
Bitcoin on that exchange. So even if the Bitcoin price
fell through the order, you could only possibly buy what's
on the exchange. And of course anything like
that, everybody else comes out of the woodwork and places
orders. So it never gets there really.
So you'd probably be more to place a bid for a much smaller
amount of Bitcoin or a much higher price than you might
actually catch something in a flash crash.
I thought it was that was always.
Funny when I heard that story for the first.
Well, I mean, people like to say, oh, Bitcoin could fall to
0. And I think Bruce Fenton said
the same thing. It's like, no, because, you
know, even if something absolutely calamitous happens,
people try to buy them for collector's sake, right?
And that would reboot the market very rapidly.
So, Adam. You've been involved in Bitcoin
since the early days you mentioned and literally in the
white paper. How has that been?
Can you ever have imagined where Bitcoin is today?
You're the CEO of two major companies, the Bitcoin Standard
Treasury Company and of course Block Stream, which is fantastic
work. The Jade, I love the wallet and
all the other incredible stuff, the satellite and space.
So could you ever have imagined this from the early days of just
working on Bitcoin? Yeah.
I mean, I think the sort of probability or the risk
perception about Bitcoin reaching mass adoption was much
as much more uncertainty early on.
So, you know, people were hopeful and excited about the
prospect of finally a deployed bare electronic cash that was
decentralized, that the previous ones were centralized and that
was ultimately the cause of their failure.
And so that started the kind of hunt or the applied research for
a way to make decentralized bare electronic cash that ultimately
Satoshi found the missing ingredient and made it happen.
But I think, you know, at least for myself in August 2008 when I
first heard about Bitcoin and then when it was released in
January 2009 source code, my thought was, so she has solved
the technical challenge, but now comes the market test.
Will it bootstrap? Will it get enough interest that
it doesn't kind of remain a kind of techie computer geek
experiment that fizzles or never takes off as opposed to gets a
sustainable market, you know, maybe volatile, but that that
will last Test of time. So I think that took some years,
obviously. So, you know, hope hoped it
would happen because, you know, people might might myself have
been working on trying to make something like that happen for a
long time. And we're very, there's a lot of
excitement in a sort of Bitcoin like vibe in the mid 90s with
Digicash, for example. But it failed.
And the lesson people took from it failing was not, oh, it's
over this give up. But what went wrong?
How can we engineer a solution to fix it?
And now some of the ingredients that went into that were
discussed and later used or rediscovered by Bitcoin.
So I think the motivation was there, the desire to see it, but
you know, the confidence about whether it's actually going to
happen grew organically over time.
And you know, when block stream started in 2014, even then there
was still a lot of uncertainty about the regulatory reception,
you know, where the major companies, countries would ban
Bitcoin and things like that, right?
So actually Bitcoin has had a relatively smooth and dramatic
growth and acceptance among users and even amongst
establishment tax authorities, regulators and so on, which has
been interesting to see. So do you think it's a good
thing that nation states start accumulating Bitcoin?
Well, I think there's two parts to answer. 1 is I think it's a
good thing that they're open for business because there was some
behind the scenes friction trying to slow down Bitcoin and
doing undisposed things like trying to debank Bitcoin
companies, trying to make it hard for them to get banks, hard
to have exchange on ramps and things like that.
So it's good that, you know, now we have a more level playing
field like, you know, maybe the there was a phenomena in the
Internet where they had a kind of let's just let it run and see
a developed value, right, rather than try to fight it.
So you see that more of that kind of vibe.
And then the other side of it is should we actually 1 government
super and up all the Bitcoin? And you know, I think there's a
saying that everybody buys Bitcoin at the price they
deserve. And I think the government's
deserve A7 or 8 figure price, right.
And so now, of course, selfishly for a small country, you kind of
want your governments by Bitcoin because then they'll have more
sovereign welfare, they'll be able to reduce taxes, improve
services and make a nicer, more economic country.
But on the other hand, it's actually better for the
individual if governments continue to be slow to adopt,
give individuals more time to buy Bitcoin.
And Bitcoin is really the one of the very few technology waves
where the individual front run the professional investors by a
decade or more. So I want to tell you about the
best place to build your automatic self custody Bitcoin
stack bitcoinwell.com. What makes Bitcoin well
different? What makes it unique?
It's an automatic self custody Bitcoin on ramp.
What does that mean? That means that when you buy
Bitcoin on Bitcoin well, as soon as the funds clear, it goes
straight to yourself custody Bitcoin wallet address which
perfectly aligns with the simply Bitcoin ethos because after all,
self custody is the revolution. By the way, if you go to Bitcoin
dot com slash simply as soon as you make your first purchase you
get 3 opportunities to win up to 1,000,000 Satoshi's just for
signing up and buying a little bit of Bitcoin.
Seems like a win win. What are you waiting for?
Go to bitcoinwell.com/simply today.
What will be the role of Bitcoin treasury companies in the
traditional financial system in the future?
Well, I think, I mean, I've, I've said that Bitcoin is the
huddle rate, by which I mean, in their hedge funds, they have a
concept of a hurdle rate, which is, you know, if they have a
fund which is trying to get a 20% return, they might charge
typically a 2% management fee because off the top.
And then they would say, and then you as the investor would
say, well, wait a minute, I don't want to, you know, pay you
20% on the return for the 1st 5% because I can get that in
something at low risk like Treasury.
So you haven't achieved anything by doing that.
So they OK, OK, we'll take off that.
So they didn't charge you the success rate above 5%.
And that's that 5% is the hurdle rate.
Another kind of hurdle rate or benchmark is, you know, what the
S&P 500 rate or what big stock index does, because you know,
that generally represents economic progress.
Now I think Bitcoin is the hurdle rate because it's
basically it's out of performed everything else.
And so in any kind of long time framework where you make an
investment and you leave it there for a long duration,
Bitcoin has outperformed anything else.
And so I think, you know, it's a neat thing to say to fund
managers that bitcoins are over Rakes, which says, well, you
know, if you're funded, there's no chance of keeping up with
Bitcoin, you should close it down and like start a Bitcoin
fund or tell your investors to buy Bitcoin.
And I think that translates for companies because a lot of
people have invested in startups that have obviously understood
underperformed Bitcoin even in the Bitcoin space, right?
And so the obvious thing for a company to combat that effect is
to buy Bitcoin with your own treasury, your own cash reserves
because they have to deal with volatility.
So maybe they keep a certain amount in Fiat and arrest in
Bitcoin for the long term. And so I think ultimately every
company becomes a Bitcoin company now, you know, for the
individual, you know, who feels like Bitcoin was for the little
guy, for the average person, I think that's true.
But you got to expect that anything which is a successful
new money is going to be adopted by all segments of the ecos of,
you know, the financial ecosystem of the modern economy.
So you see it in pension funds, you see it in sovereign wealth
funds, see it in governments, in states, in individuals, in
retirement plans, in companies. Why not, right?
I mean, companies are ultimately just a collection of humans.
And a lot of modern societies economic progress is actually
derived from the invention of, you know, limited companies and
organized by shares and a capital formation to build new
products. So, you know, some people are
kind of upset about companies or think that companies are the big
evil in the picture. But really companies are just
groups of people organizing to do something.
And if they're successful, they can grow.
They can become public initially in a small cap stock market and
then they can use the capital markets to raise money to grow
what they do. Do you think eventually I'll use
your company as an example? Do you, do you think eventually
the Bitcoin standard treasury company will become some type of
new type of bank? And I'm referencing how Finney's
original, you know, post from a long time ago or he's talking
about in the future there will be Bitcoin banks.
Do you see? Do you foresee that happening?
And the reason I'm asking you this, Adam, is the Bitcoin
treasury companies are going to be the ones that have all the
Bitcoin or a big portion of the Bitcoin.
Right. So I think the, you know,
bookstreams, sorry, the B star as we call it.
I got to. I got to call it that B.
Star Bitcoin center treasury, it just rolls off it's under there
as B star. So B star is trying to do some
things differently. Firstly, it's mostly Bitcoin
capital. About 2/3 of the money in came,
you know, is, is Bitcoin came from bitcoiners and reinvest,
you know, investing Bitcoin into a company that's going to
actively manage a Bitcoin, try to achieve a return on Bitcoin.
And we talked about that being a Berkshire Hathaway type of
endeavour, which is a long term capital where you try to achieve
a long term return and then you acquire companies, operating
companies that you put under the umbrella that generate
additional revenue to reinvest, create the capital and do it
again basically. So it's a kind of long term
capital growth activity. And you know, I think that
that's that's one approach. Another approach is just a, you
know, existing operating company plus of course all the pure
plays at the moment, as we discussed, the pure plays are
not doing as well. So one of your quotes that I
absolutely love is Bitcoin is not just a currency, it's a
revolution and how we preserve and grow value in the digital
age. You want to elaborate on that?
Yeah, I mean, it's, I think the younger generation has more
confidence in Bitcoin than they would in investing in shares and
stocks and bonds and even government bonds, let's say.
Right. And I think that's it's
basically because the Fiat money is being debased.
So, you know, when I was sitting in my mid 20s, I was just trying
to invest my own savings and, you know, looking at whatever
the highest rate accounts were, deposit accounts of those
accounts, shares, IPOs, things like that.
And one of the things you realize you start to look, well,
what's the benchmark? What's the total rate?
You look for the government inflation figures and as the
consumer price index and the retail price index.
And that's, you know, you've got to outperform that.
You're actually going backwards. Your savings are losing spending
power. And then you, you know, you do a
bit more research and you realize that, well, these
government inflation metrics are manipulated politically and they
don't represent the actual inflation that the average
person experiences. And you know, they're
continuingly to sort of erode and redefine them in creative
ways. So then it becomes uncertain if
you, you know, if you're achieving A4 or 5% return
actually becomes uncertain if you're actually losing money
because maybe the inflation rate is 7.
And of course, now probably inflation rates even higher,
right? So I think at this point people
need to primary concern is protect themselves from the
value erosion inflation and Bitcoin is a good way to do that
because it's much more scarce than any other asset and get
increasing this case at the time.
So it's kind of ultimately a fixed supply and a growing
population. And there's also a growth curve
because it's still early in the adoption.
So I think it's a good bet for both of those reasons as as an
inflation hedge. And you know, if not for
Bitcoin, I think you know what, what I would be inclined to do
is buy real estate like a rental apartment or something with a
mortgage, because in that way the inflation is working for
you, right? You, you benefit from the
inflation if you are buying hard assets with all people's money.
And if you like, that's kind of what treasury companies are
doing with convertible notes and the bonds and preferred shares
and things like that. They're buying a higher asset
with money from people who just want a fixed income or risk
return profile. That's something more
conservative. Do you think that the movement
has changed a little bit since, you know, Bitcoin has entered
Triadfy? I hope not, but I recently
posted a paragraph from the Eric Hughes 1993 Cyprus Manifesto to
ask the provocative question Are people prone to reinneur
themselves? Inuring was this kind of matrix
quote about the system that people in the system being
hopelessly inured with it, and so are we are people in a
Bitcoin space Bitcoiners looking to renew themselves as Bitcoin
gets, you know, more mass adoption?
And so my hope is that Bitcoin remains the slife plug money
because, you know, part of the story for me.
So you mentioned a revolutionary idea is that Bitcoin changes the
world, not that Bitcoin gets some success and then we mute it
and put it in a box and, you know, lose all of the bearer
properties or something, they say.
And I think some people are kind of more concerned about muting
Bitcoin or changing it to kind of conform to what they think
establishment might want, which is not really the point.
I mean, the Internet didn't contort itself to, you know,
comply with the establishment control of media and stuff.
The Internet was just though, you know, the freewheeling soft
suffered individual space and largely kept that.
So I think it's important that Bitcoin keep that phenomena.
I think self custody, I want to get your opinion on this.
I think self custody plays a crucial role in that.
So I want to get your opinion on that the the role of self
custody specifically with individuals.
Yeah. I mean, I think that Bitcoin
held in self self custody is a a more bearer asset.
It's it's a better insurance policy and actually Bitcoin that
you somehow acquire without there being a record in a
traditional finance collective memory that gets reported on tax
returns and things. The better because money that
you know hard money and better form that nobody knows you have
is even a better insurance policy because the establishment
can't come in some kind of adverse situation where you need
the insurance policy. They don't even know you have
it. That's even better, right?
So I think Barack Obama, he gave one of the best inadvertent
advertisements for Bitcoin when he said, you know, well, if we
can't crack it, you know, he's talking about his security of
wallets on phones. Then everybody's walking around
the Swiss bank account in their pocket.
And I'm like, yes, that's that's correct.
I mean, he was thinking this is a very bad thing.
But I'm like, no, that's a very good thing.
And so here we are sitting in Switzerland and, you know, the
third Swiss private banking city actually.
So this is this is the competition, right?
The Bitcoin is lowering the barrier to entry to which is
asset protection, financial privacy and making it hard for
the establishment to seize your assets in your home country.
And in bitcoins case that's achieved through key storage.
So you know, it's it's a bonus setting if you get into some
unexpected situation where you need the insurance policy that
the establishment has to come through you to get to your
assets. Whereas if they just place a
phone call or write a letter to your broker or your bank and
then all your assets are frozen. Now you have a problem, which is
you can't even afford a lawyer to and defend your innocence in
whatever, you know, whatever they're thrown at you.
So the establishment, the governments are civil servants,
they work for society, they work for us, right?
And so, you know, some of the changes that they've bought in
in the name of law enforcement and criminal justice have swung
too far. And I think the South Park
technology is the way to re establish your, yeah, actually
legally protected rights that they've overridden or just to
reassert, you know, just to assert them individually.
Do you think central banks and Bitcoin can coexist?
Yeah, I mean, it's, it's a very interesting question because a
few years ago my worry would have been that the incentive
sort of the market incentives around Bitcoin that make it
work. You know, the miners, the users,
the the, the market people buying something Bitcoin, the
miners mining new Bitcoin. And they're incentive to do so
honestly, that there's a bit of a question if those incentives
would continue to function smoothly and effectively as the
ownership spread into public companies, sovereign wealth
funds, individual states, governments.
And, you know, when you would have politicians talking about
Bitcoin, I think, you know, with the benefit of seeing what's
happened in the last few years that actually it works better
than might be expected, which it was.
It turned out to be more of, you know, you don't change Bitcoin.
Bitcoin is you. And it seemed to change, you
know, the sitting president of the US and his kind of business
empire, his sons who work in it, that they got debanked
politically and they learned first hand why having very hard
money matters. And, you know, you have
politicians in the US who are, you know, seem to be
philosophically motivated, like they personally hold Bitcoin.
They seem to understand it. And so Bitcoin does change the
incentives of all kinds of people.
So it turns out the, you know, effectively incentives matter
and wholesome incentives are a very powerful force in the
world. So and actually quite hopeful at
this point that it will scale all the way.
And of course, there's still a lot of distance to go, right,
with bigger countries buying meaningful amounts of Bitcoin,
doing larger amounts of sovereign buying.
And what happens to the geopolitics in this new era?
And it's, you know, it's not without precedent in a sense of
a shift in the asset that people cover in a kind of global
geopolitics. And it used to be gold, and then
it became black gold like oil. And now it's Bitcoin.
And the resource is cheap, abundant power, access to
silicon fabs to manufacturer miners.
And that seems to be sort of mapped out to be the, the
geopolitical underpinnings of, you know, the next 50 years or
something saying, I think we haven't, you know, I think
there's a lot more interesting things to come.
Do you need liquidity without having to sell your Bitcoin?
For more than six. Years now, Leaden has been the
trusted source for Bitcoin back lending with transparency,
security and trust at their core, backed by $9 billion of
Bitcoin loans funded and over 1005 star reviews.
I absolutely love these guys because of their flexibility.
You can pay back your loan whenever you want and there are
no monthly payments so you pay at the end of the term.
You get lightning fast access to capital as soon as you send your
Bitcoin as collateral. You get the cash into your
account within 18 hours. Unlock the liquidity of your
Bitcoin without having to sell your Bitcoin.
Simply Bitcoin viewers get .25. Percent off their first loan by
using the link in the video slash podcast description.
What are you waiting for check out leaden today so Adam block
streams play a key role in trying to crack the crack the
crack the nut. I don't know if that's the right
expression, but trying to figure out the scaling.
So I think there's been a tremendous amount of progress
with Liquid, with Lightning, but nothing's, you know quite there
yet, right? I love Samsung's recent
implementation with the Aqua Wallet.
You got Liquid involved. So I want to get your take on
the current state of Layer 2 scaling solutions.
What's on your radar? What has you the most excited?
Yeah. So I mean, actually block stream
is kind of, you know, Bitcoin layer two company, but also
there's a lot of kind of core R&D.
So the Schnorr signatures, the music that was a group effort
with independent researchers, people from other companies,
academics. But you know, a lot of the heavy
lift was actually done by Blockstream researchers,
Blockstream art labs and we have been active in a lot of layer
twos because we got into lightning early and then liquid.
So with Core Lightning, that was the first Lightning
implementation that we had live value, which is where the
reckless tag came from, because we're the first to put like an
experiment of implementation with live value.
And then with Liquid itself, partly A scaling solution, but
mostly about the ability to innovate permissionlessly on a
second layer, which is technically a side chain and not
unilateral withdraw layer 2 like Lightning.
But we also implemented, you know, did the R&D on what became
Fediment. So that was the block stream R&D
project as well. And you know, they're doing very
interesting things with that. Of course, you didn't have
cashew as well. And the other new phenomena are,
you know, arcade and spark productizing staging or mercury
layer. So they kind of, you know, made
A twist on somebody else's project.
And of course, they're also the kind of colour coin, Lightning
enabled colour coins like RGB and separate assets.
But one of the surprise scaling things, I always like it when
you know, because I think that technology evolution is not
something you can fully plan. You would just try to
organically build what you think is the best thing you can build
with the current state of the R&D.
But sometimes the market surprises you, finds a novel use
for something. And that's what happened with
this kind of hybrid Lightning liquid wallet, which is now
growing faster than Lightning wallets.
You know, so a pre event then yesterday Francis Pouillet
bought Bitcoin was talking about, you know, the new build
Bitcoin wallet, which is using the same model.
And there are Breeze was also there.
They have, you know, their own Lightning wallet, but they also
have SDKS to help other people integrate lighting into their
products, about 50 different wallets or applications built
using that. They're also seeing much faster
adoption of liquid Lightning hybrid wallets.
And you know, even the evolution of the trustless swap that
enables that came about because of the NFT spam wave a couple of
years ago where bolts exchange, which historically was operating
a trustless swap between main chain Bitcoin Utxos and
Lightning. So you could take money out of a
lightning channel or you could have money back to a lightning
channel without closing the channel.
And the spam is so annoying, this spamming stuff, but you
know, they, they pushed the fees up and it kind of broke their
application like it made it so expensive, it came unreliable.
And so they did a hackathon and hit on the idea of swapping
liquid Bitcoin for lightning main chain lightning channel
rebalancing. And even after the spam
subsided, now all the NFTS got rug pulled, etcetera.
Then that remained their highest value and highest volume use
case. And then Aqua Bitcoin was the
1st to get the idea of, well, let's use this liquid to
Lightning trust the swap because it's a, you know, so submarine,
non custodial trestle swap and it gives you a lot of
advantages. You know, it gives you the kind
of usability experience of a custodial wallet, but it's not
custodial. Of course, liquid has a
different trust model, the main chain or Lightning, but it's
quite compatible with lightning in some ways.
It's more secure. It's, you know, not as hot and
all this kind of thing. So it gives you that advantage.
Plus, you don't need the LSP setup stage where, you know, if
you want to receive some Bitcoin on Lightning as a new user and
you just installed a wallet while somebody has to send some
Bitcoin towards you or that can't.
And you know, that becomes a funding problem and it has a set
cost. So with Bolts Exchange, it's
actually it's using the liquidity of Bolts Exchange
basically. So that's all very interesting.
The one kind of area it's not able to do as well is the really
small zapping, because the minimum fee is basically the
minimum fee on liquid. Yeah.
Now I think the new area which is quite interesting as an Ave.
for improved Layer 2 security. So I think we're where the
action is, is improving the security of Layer 2 until you
can get more of the same security assurances to get on
the mainstream. So I think ultimately we can
need that for lots of people who are the soft custody or Bitcoin
to behave like the Internet of money where other things are
built in Layer 2, like, you know, on top of TCPIP that you
need to improve the security of Layer 2.
And Robin Linus Boot VM idea is, is a novel prospect that you can
actually verify a zero knowledge proof or some kind of challenge
response protocol in a lightning like reactive way and verify,
you know, disproofs about, you know, a small subset of a proof
that where the the cheat happened, where it's invalid in
existing Bitcoin scripts, which nobody saw coming.
It's a very interesting proposition.
And you know, I think there's there are multiple projects that
are improving on that rapidly. So there's bit VM 2 bit VM 3 bit
VMX and Glock, which are all using increasingly more
efficient anchors and proofs. But I think ultimately what
Bitcoin can do is add the mature sort of high security assurance
version of something like this natively or something like
simplicity. And then, you know, that might
require some OP codes or simplicity to have the
extensibility. Then we get closer to being on a
practically ossified Bitcoin, which I think is also important
for the long term. And it's getting increasingly
risky to have Bitcoin change and this this is so I think so also
by Bitcoin, we really need to be able to move all the
permissionless innovation into layer 2.
For that we need security. So we need things like bit VM.
So I think that's, you know where the new action is and
block stream has been active and some of those things as well
with Bulletproofs and Bulletproof Plus Plus and
collaborating with some of these projects with the cryptography.
I never forget one of the videos that you made and it always it
always stuck with me. But basically, I'm paraphrasing
here. So but you essentially said I
spent 6 to 9 months trying to see how I can make Bitcoin
better. And you obviously have the
background to do that. And the thing, the conclusion
that you got to was basically like, look, there's gonna come
trade-offs and none of those trade-offs are worth it.
Yeah, that seemed to be the case.
Yeah. It wasn't what I'd expected.
So you know, when people come to Bitcoin and they're sort of
dismissive or say, well, you know, it's the Model T Ford,
we're going to have much fancier cars with more technology in the
future or the same for the first, you know, the Wright
brothers kind of bicycle powered airplane, right?
So for the technology in general, it's a reasonable
assumption, but somehow Bitcoin exists in a narrow area of
design space where it's much more low level, fundamental,
connected to physical scarcity, free mining.
It's in a way it's a more low tech thing.
I mean, I know the programming in the game theory is not so
simple, but ultimately it's low tech and fundamental.
And it seems to me that anything you try to change to improve on
that, if you know faster processing time, ability to mine
with smaller equipment directly rather than using calls, add
more privacy, add more scalability, you know, it just
made it worse. It tend to break something will
get worse and the small gain you made was not worth it.
So it was kind of surprising thing I came to learn that now
you got to respect the building blocks.
The building block is like, you know, it's like the gold items
in the gold bars. When people's much started using
gold as money that you know, we have gold 6000 years later and
nothing changed. I mean, yeah, maybe gold as a
technology, X-rays and stuff like some stuff around it
improved. But gold is gold.
I think that's the way it is with Bitcoin.
The, you know, you can incrementally improve the
network protocols, add opt in, you know, smart contracting
things to help with layer 2 or to help us cold storage.
But the fundamentals now, the 21 million limit, the supply curve,
the mining, I think none of this stuff is ultimately proven to be
improvable. So now of course, it's not a
message that the altcoin phenomena wants to hear because
they're marketing improvements or branding and stuff like that,
but I think it's fundamentally true.
I want to give a shout out to our partnersat123.com.
Sovereignty isn't just about your money, it's about your
communications, too. When the grid goes down, most
people go dark. Cell towers fail, and
hurricanes, cyber attacks and blackouts.
But satellite phones? They don't rely on local
infrastructure. Iridium has 77 satellites in
orbit, giving you a Direct Line anywhere in the US, even
offshore. If you hold your own Bitcoin
keys, you should hold your own. commstoosat123.com also has
everything you need to start building your Bitcoin.
Citadel, Starlink, battery backups, Faraday bags to protect
your hardware wallets, and much much more.
It's a one stop shop for anyone serious about resilience and off
grid independence. Stay connected, stay
independent, stay sovereign. Go to sat123.com/simply today
and use promo code simply to get 15% off anything on the store.
One of the things that surprised me the most is the fact that
ultimately at the end of the day, I am not a technical guy,
I'm a media guy, right? So I interact with layer 2 as a
user and I tried setting up a self custodial lightning wallet
and it was an absolute nightmare and I could not figure it out.
But what really resonated with me was the custodial lightning
wallets. They worked extremely well.
And I think a lot of the success came from that wallet of Satoshi
and you know, became extremely popular.
The primal guys I think are doing a great job.
Do you think? But it kind of defeats the
purpose in a way, right, right. Do you think we'll ever get to a
point where we'll have we'll where we will have layer 2 non
custodial solutions? Yeah, I mean, that's the hope.
So I think that it's not easy to transfer the kind of bearer
unsusable security properties from the base layer to the layer
2. So Lightning partly achieves it,
but even that's making trade-offs, right?
To do it, you have a hot wallet, there are watchtowers, it's not
as cold. It's reactive security.
Whereas Bitcoin mainchain, you know, you can make a cold
storage backup, store it in a hole in the ground or a safe and
still receive money in it, right?
It's a much different picture, a higher assurance picture.
But Lightning has a lot of Vantages.
It's nearly instant payment, it's much more scalable, it's a
little more private, it's much faster settlement, It's much
better experience for retail trade uses.
So I do think the, you know, the hybrid wallet, the liquid
lightning wallet, which breeze is calling nerdless lightning to
give it give the concept a name. And I think that's sticking
because nobody else had thought to name the phenomena is is a
new interesting news sweet spot. And I think people are just
generally trying to converge and improve the usability, improve
the backup so that it feels safer, easy to understand and
just works, you know. And I think some of these, the
hybrid apps are getting there. And the other interesting thing
is that Lightning is finding a new home as well, which is a
connector between different Bitcoin layer 2's.
Do you think Bitcoin was discovered or invented?
I think it's a discovery. So people like to talk about
Drake's equation, which is the sort of probability there's
intelligent life on another planet in a Galaxy universe,
what have you. And so I think 1, you know,
indicator, new indicator now is, you know, is, is the thing
glowing hot from like all the mining around the Dyson sphere
or something, right? It's a new sign for intelligent
life. But they rediscovered Bitcoin
because I think it's, you know, it is a sort of very sort of
fundamental basic thing that would eventually be
rediscovered. And effectively, a lot of things
that were mechanical and analog got improved by the digital
world. Digital ignition on a car, you
know, once you have a digital capability, you can just make a
lot of things like, you know, combination digital analog
variants or pure digital variants better than the
original and say Bitcoin is that it's it's a better monetary
technology because it involves digital assurances, mathematical
assurances. And yet it's still, you know, as
physically rooted in the physical space as gold.
But you know, because the digital phenomena, you can have
much higher real time assay assurances and who who the heck
knows? You know how much gold is in
Fort Knox, right? It's hard to hard to tell and
they're not going to tell you. But with Bitcoin, you know how
many Bitcoin there are. You're talking about the hurdle
rate earlier. What do you think the and again
heading into speculation territory, but what do you think
the the CAGR is going to be moving forward?
I don't know. I haven't really been tracking
it, but I guess it's been between 60% and 30% generally.
And there is a, you know, I mean of course fear is a moving
target, it's getting inflated heavily.
But even if you use sort of net present value inflation adjusted
dollars as your benchmark, I think there is an addressable
market that will eventually get saturated.
And we don't know if it's a full Bitcoin standard of like safer
move safety and a moose likes to talk about or if it's, you know,
a gold analog that gets more adoption than gold.
And you know, the Fiat currencies continue as a
parallel system. And this is for saving and the
Fiat currency is for borrowing and spending.
So we don't know where that's going to shake out or how fast
it's going to be to get there. But you can see that, you know,
how Finney's crazy prediction before, like on the first day
the network launched of 200 trillion or 10 million a coin is
already, you know, 100 times out roughly from where we are now,
right? And there's realistically been
quite a bit of quantitative easing driven inflation since he
said that, right? So, and maybe the addressable
market is actually a bit bigger than that because, you know,
it's the crude analysis and there's a lot of money and money
substitutes in the world between, you know, the stock
market, bonds, real estate, all of the things where people are
just trying to preserve spending power.
So it's not, it's not clear how how long it will take to get
there. You know, where that's another
decade or two decades or what have you, you don't know.
So it's hard to say what the inflation rate, you know, or the
Kaga would be. But I think even once it's
reached saturation, the other interesting thing is, you know,
would you diversify away from Bitcoin at that time?
And I think the answer's no because, you know, it's a, the
scarce hard money that preserves its value in the same way that
gold has over remarkably long periods of time, right?
But you know, the, the adoption curve would slow down at that
point because it's basically reached some kind of stable
point where everybody that wants Bitcoin exposure has got Bitcoin
exposure at the ratio, you know, the level they want.
So I'm I'm not sure. Where are we on the adoption
curve? Right, because there's the
innovators, the early adopters. I don't know what comes after
that, but you know the, the, the bell that makes the the rounds
on. XI mean if you look at the half
any addressable market, we're at 1%, right.
So that's a long way. And but I think it's also a
little misleading because there's a capital multiplier in,
in any investment asset where prices set at the margin.
So, you know, for the price to go up 100 times for half,
Philly's target doesn't require 100 times more money.
Because, you know, if you if you try to, if a government tried to
buy Bitcoin in volume, they'd exhaust what's on the market and
push the price up ahead of themselves.
So it's a plausible amount of money that would have to go in
over the next decades to to make that happen.
And you think is that your target, the half?
Any prediction? Maybe it's more, I don't know.
It's it's AI mean. I think a good starting point is
will Bitcoin reach parity with gold And gold is on a all time
high right now, right? But it's still.
It's like one point, something million.
Right, Yeah, yeah. So I think it used to be like a
million, now maybe it's a million, two per Bitcoin for
gold parity. But I do think there is some
feedback loop between gold and Bitcoin if it gets closer,
because the people investing in Bitcoin ETFs are reallocate from
something else. And you know, an obvious answer
if a broker asks you, well, what do you want to sell to buy the
digital gold is who sell well, sell the physical gold, right?
And the proportion of physical gold that is in ETFs is a much
smaller proportion than the Bitcoin that's in Bitcoin ETS.
So if, if the, I don't know if it's the case, but you know, for
the price formation there's in the ETF markets, it's it's much
closer to parity in terms of market, you know, available
market size. So if that were the market
that's sort of transitioning and normalizing, it could start to
cannibalize and take the shrine off of gold along the way.
So it's not just that it has to, you know, meet gold as a static
target. It can see a reallocation from
gold. I think it's also a generational
thing. I think gold is something the
older generation probably likes more.
As the younger generation inherits portfolios with gold
and stocks in it, they're more likely to reallocate to Bitcoin.
Final question, Adam and I have a caveat.
I have a there's one rule. If you can go back 20 years and
tell one thing to your younger self, what would it be?
And it couldn't be buy Bitcoin. OK, that's my good tool.
I think it's important for technology to publish early and
often. So sometimes I will sort of self
criticize an idea and not publish it.
So I'm like, oh, that's not good enough.
It's not, you know, it's not efficient enough.
It's not practical enough. Try harder, like try to work on
it privately to get to be better.
But actually that was the case with confidential transactions.
I thought, oh, it's not efficient enough.
So I just kept working on it. And then I made some kind of
mistink and I thought, oh, I found a way to make it
efficient. I published it and I realized,
oh, that's wrong. You know, that that that
efficiency is actually worse than I thought.
But then it was out there. I know people tried to improve
it, never really managed to improve it very much.
Greg Maxwell made a like an incremental improvement and then
we implemented it, but it got implemented at an efficiency
level. So I was like this is this is
not good enough. And now of course my target was
actually Bitcoin adoption or Bitcoin later 2 adoption.
But still, it shows you that you should publish everything often
because it invites collaboration.
And effectively the bulletproof direction came out of the
confidential transactions track in a way because we and they
reached out to some academics with block stream and to see if
they had any ideas how to improve confidential
transactions. And what they came out with was
bulletproof, which does like to make a more compact confidential
transaction, but it's also a whole, you know, snark like
competitor with a more Bitcoin like security model.
So it's basically iterate as fast as possible and then that's
how you'll run into discoveries. Yeah, well, I mean, and, and
also, you know, share the, you know, publish, share, discuss
the pot finish solutions because you get more brainpower and
feedback from interacting with other people.
Gotcha. Adam back, thank you so much for
joining me. Thank you.