Constraints Breed Creativity | Liam Nelson | FS-019

it all comes down to computers communicating the information Super Highway can be a confusing mix of onramps and off-ramps Bitcoin is worthless artificial gold is it still rat poison probably rat poison squared we need to get into the world of okay this is actually foundational technology what the internet of money does is it creates a single Network which can do a microtransaction to a giga transaction the internet is going to be one of the major forces for reducing the role of government the one thing that's missing but that will soon be developed is a reliable ecash alrighty welcome back to final settlement everyone today is Wednesday January 29th 2025 uh I'm joined by my co-hosts plural now uh Michael tanguma and uh Liam Nelson who we'll we'll get to in a minute lots to get to before uh before we get started just some brief housekeeping as we mentioned a couple weeks ago sort of a new format for the show um still going to be sort of every other week Cadence and uh one of those episodes is going to be sort of this internal group uh of folks across on-ramp and early Riders and really just talking sort of inside baseball what we're seeing in the markets uh topical news items Etc and then the other one uh on sort of a monthly basis will be an external guest uh coming in and riffing with the three of us so that's sort of the general uh new format going forward and lots to get to this week lots in new in the news from uh all of Trump's executive orders over the past couple weeks to uh you know uh Chinese uh open source AA AI model sort of uh adding some turbulence to us Equity markets this week we'll get into that but uh lots of uh topics on the list before we do that um do want to just uh introduce the new member of our team and and co-host of this pod Liam Nelson Liam uh is is joining us from a career in traditional Finance much uh much similar to myself he's finally made the jump out of the Fiat world into the Bitcoin ecosystem and so we're very excited for him to to be doing so but Liam maybe if you want to give the audience a little bit more on uh your background is what what you've worked on and and how you came to bitcoin and and ultimately early Riders yeah uh pleasure to be here my name is Liam I originally started off my career previous to that I was a finance major and then made the jump to 0 72 long short hedge fund based here in New York um while I was there for a little bit over three years understood pretty much how businesses and industries worked and the impact of the Performing businesses on the financial Market markets after that I made the jump to uh family office private Equity Firm focused on corporate car outs and during my time there ult and previously at 0 72 ultimately found Bitcoin um my journey into Bitcoin was fairly similar to many others even um even those who came way before me uh I always think of Adam back who originally created the precursor to Shaw 256 hashing algorithm which is used in Bitcoin proof of work and how he originally dismissed Bitcoin because it was too small um skeptical that it would work etc um I honestly was fairly similar to that as well but uh similar to him once Bitcoin started to gain some additional traction and um the best marketing for Bitcoin is the price increases I had to get curious especially when I found out that it had best risk risk adjusted returns of any asset um so from there I ultimately did a lot of research found that I think that this is going to be the and it will end up as the world Reserve asset and final settlement asset um to use by pretty much everybody that is self-interested and then after that um I found early writers and you guys through the white paper um originally what definitely resonated with me that Bitcoin is the hurdle rate and uh just because I started to price all of my uh decisions off of the marginal utility of more Bitcoin um and ultimately thought that there was a lot of infrastructure for Bitcoin that needed to be built out and building it out in a way where you consider the opportunity cost of having more Bitcoin is extremely interesting to me and so um trying to build businesses with capital constraints and while still benefiting from the upside of Bitcoin adoption and how uh and the higher prices was really interesting to me and resonated so that's ultimately how I found you guys and why I made the join uh jump to early Riders so appreciate you sharing that and we're excited to have you I think u a lot of your joining plays into the thesis of the best individuals that work in the traditional markets whether it's on traditional Finance tech companies across different professions ultimately will not only get Bitcoin but then really get that business building and Capital formation will fundamentally be different and then to start to rethink that from the ground up um and so it was interesting uh like last week chase the CEO of copis had a tweet um about reaching out have following following us and then reaching out being interested in what we were building and you know now he's leading one of the portfolio companies and I think it's an important thing to call out because the only way you can rebuild a lot of this structure um is really to have the worldclass individual join and that can see the vision because there's no shortage of things to rebuild um and the whole thesis has really been that the existing 15 years of Bitcoin while there's been a lot of infrastructure it's been more of a nent like tinker type industry there's been a lot of individuals telling everyone that you're just gonna have to go and you know put plastic devices in caves and you know have fun staying poor and just figure it out and you know the reality is like it's just such a big problem as we go into this next wave of adoption we seen you know past two weeks I feel like there's been no shortage of mishaps all the way to somebody getting their family their family getting their their fingers you know mailed to them after kidnapping and that it's really going to take individuals to understand where this Market goes and how do you commercialize products and how do you build for Mass Appeal while also stay still retaining the underlying ethos whether it's the protocol when we think about like multisig and what hr's doing but then also when you think about Capital formation and building that companies don't need millions and millions of dollars to build certain things and investment funds certainly don't need tens and hundreds of millions of dollars um because it may seem good at first but then when you go and look back you're going to Benchmark all those dollars that people were allow about against Bitcoin and when those prices deployed and you're going to get to really back into can you actually out reform you know that price so you think about the billion dollar funds they're definitely never returning the amount of Bitcoin but I would make the case that even if you you've expended hundreds of millions of dollars and you earmark Mark that against Bitcoin you're going to have a very tough nearly impossible rate of having to return that capital and so that's really what ties into um what we're building here and then your recognition that uh it was ambitious but also it's ultimately the end state right it's like Bitcoin being money's ambitious but we all know that's kind of an inevitability as long as the asset stays alive in the same way as long as the asset stays alive the only reason people are going to give it up is if you can give them a form of yield on that but it has to be yield it has to be yielded in providing real value in the real world yeah that's that's something I I've been thinking a lot about recently is this idea of yield and you know it feels like every bull market there are there's increased demand for people wanting to borrow against their Bitcoin obviously um and you know uh the sort of core underlying theme of everything that we've been doing at early Riders is like effectively there's a different form of yield in my mind that is you know actually just going out into the real world and producing value and then with that you know accumulating more Bitcoin over time like so how do you get a yield on your Bitcoin it's not just by Levering it up yes that's one way to do it uh but in our minds the the real Bitcoin yield is is going and deploying that Bitcoin into the real world to produce value to accumulate more incremental Bitcoin like that is a a pure form of of Bitcoin yield in my mind but um just going back to uh to Liam joining we're very happy to have him and uh you know he credit to him he uh saw the vision early when he read the the white paper of ours um and also just put in the proof of work uh to start working on these ideas with us and thinking through things uh in a really analytical manner so very happy to to have him officially on board now and uh before we jump into the list of things I I do have a question for you Liam just because you are you're now the closest to having left trafi world I'm a few years removed now so I'm curious like as you leaving what is the sort of what's the uh what's in the air at the Trad five firms the 72s of the world the private Equity Funds of the world how are they thinking about Bitcoin is it being talked about more when you told your former employer you were leaving to go do something Bitcoin related did they think you were insane what is uh what is the general Zeitgeist in trafi world right now with respect to bitcoin yeah I think it was a a mixed opinion depending on who you asked definitely got some responses that everything in Bitcoin is fraud um which is which is fine you know people people if if you're making money and you are doing extremely well in your current position like there's no reason to spend a lot of time to understand why Bitcoin is different right um I just tried to understand it at a deep level because I thought had the best risk risk adjusted returns and that was really interesting to me um I think more and more people are trying to understand what exactly is interesting about Bitcoin at the moment just because it's gone up so much so there are people that I think really want to do the work and and think this is interesting and uh but are scared to financially be involved just because they think they can they should get in at a better price or they've missed the boat but um there are also people that are very very skeptical still so um still think there's a bit to do on the educational front and people ultimately will come when they're ready I mean on that thread it's it's a great one to start with Brian is uh how do you see the role of altcoins versus Bitcoin because I think like when you're in the the middle of it you kind of see it escaping from the pack but then reality is like my my instincts tell me it hasn't and that they're still going to be a lot of kind of touching the stove before people coales around Bitcoin but curious like you know I'm assuming with the price appreciation your network has been a little bit more interested in the space how have they come to like the different assets well um there was also a point a point 72 where uh there was a town hall asked town hall question asked to uh Steve Cohen um pretty much what is your view on bitcoin headed into the next year and the answer was uh well I don't really have a view on bitcoin um I'm really looking for the regulatory Clarity related to um crypto in general right and so I think there's starting to be some additional regulatory Clarity he may have switched his view since then but in general I think people are generally confused right now like there's trumpcoin um all my friends that you know know that I've been very interested in Bitcoin for a long time and I always clarify it's Bitcoin only uh have asked me you know what's your view on trumpcoin what's your view on Ripple um and I think they think of everything just in the same exact boat when um we obviously know that that's not exactly the same case yeah I think part of it at least from my perspective of having lived in that world for a long time I think part of the uh skepticism around Bitcoin specifically and not being able to discern Bitcoin versus crypto stems from effectively like living in this world of of traditional Finance or Asset Management um there's there's sort of this air of sophistication that comes with any investment strategy right like if you're a talented portfolio manager with a great track record like you have some Edge you have some advantage in the market where uh you know you're F you're finding undervalued opportunities before anybody else um Bitcoin kind of flips that on the head on its head in that well one this has been adopted by individuals first around the world globally um and you know there there isn't necessarily an edge outside of deeply understanding it um and and the other component when it relates to crypto is like it's kind of these uh these shiny things that people get distracted by but to that to that person that has that era of sophistication around investing they almost feel predis predisposed to say oh well there's all these different assets so what's my Edge how can I find an edge in understanding which of these assets are is going to outperform over time when in reality like they should just be focusing on bitcoin and Bitcoin only uh because it's fundamentally different but they get lost in the this sort of asset class of all these different cryptocurrencies and trying to have an educated view on which specific cryptocurrencies are going to Excel and and outperform um and so I think it's they almost without knowing it do themselves S A diservice and don't and aren't able to see uh the genuine differentiation of Bitcoin versus everything else because they want to almost feel that that uh error of sophistication like they have in their uh traditional World in this new quote unquote asset class of all these different cryptocurrencies yeah and just to that point I would say you know Bitcoin is completely decentralized there's no CEO there's um no marketing department um whereas for some of these other coins there is actually a company behind the issuance there are insiders that get um allocations of the coins prior to being able to give them to the rest of the public and so I think there is a big demand for the essentially inside baseball of crypto from a lot of VC and financial firms whereas they do not have that same opportunity or exposure um in Bitcoin and so I think it's just fundamentally different um and you know another reason why it takes some time to understand Bitcoin is there is it's completely different from the model of you know 2% inflation rate um there needs to be everything is Benchmark to the 10year yield plus maybe some Equity risk premium it's just completely different than what they're used to it's actually a great call out what you just said about um like what we see as a feature they see as a bug because it's a bug that there's no owner so you can't get in early and what's interesting about that is like because it's it's actually really like interesting thought experiment in that on the Bitcoin side um what other thing that exists that very notable individuals credentialed have been saying positive things about it for effectively 15 years I think you can go back to very early days and there's notable folks that have been adopting and not even like pre- Bill Miller and you know the Str the truck and Millers um Paul tutor Jones it's really weird and nonsensical when you think about like it's it's like one aspect to just be like look I didn't get in early and that's is why I don't want to touch it but it's another one to think like it has no value but that's I feel like majority of people sit there there but there's just this whole like body of work from individuals that have stake their careers and their names and their businesses on it when you think of fidelity it's just like so did they just like concoct some like ghost of an asset in their mind that's going to go to zero one day like it's just it's a very interesting Dynamic that plays in the markets and I think has to do with what you're describing and also just as a symptom of how messed up the whole financial world is that like you can't wrap your head around this thing that is so fundamental to like societal growth is like having a good form of money and not being able to be debased that you're like wait this doesn't make sense like this just is I can't wrap my head around it because it when you lay it out that all the proof is there from all these individuals and corporations and ETFs and presidents and people still are like yeah I don't know about that thing it's just it's so insane yeah I think part of it is um part of it's like what you know people often talk about like on its surface it does it does sound too good to be true to some extent like the idea of Bitcoin the idea of digital sound money open to everyone Fair launch all these things that sort of uh have occurred to to um get us to this place where we are now it does all somewhat on the surface if if you haven't done the digging into it feel a little too good to be true and then the other side of that is Michael to like sort of what you're alluding to is like it takes a good amount of killing one's ego to admit that they were wrong about it because up until this point if you haven't adopted it and you've been skeptical of it you're you know you're basically saying it has no value like if if you haven't bought it or you're saying you know it's a scam or a Ponzi in order to then adopt it and buy it even in a small uh you know percentage of your portfolio you have to then admit that you were you were wrong right and and most people don't want to do that about anything um and particularly this asset that's being adopted globally by institutions corporates nation states Etc um but as that continues to occur it basically you know it becomes more palatable to say you were wrong about it because basically more people are saying they were wrong about it so it there is that there's that sort of element of a feedback loop where once enough people are willing to say they were wrong about it it becomes more acceptable um so I think that's that's kind of how I perceive it is like there's this massive barrier inherently to someone adopting Bitcoin particularly if they come from the trafi world because they have to admit that they were wrong for the past 10 plus years years and and that's just something that most people in that world Liam to your earlier point it's like if you've been very successful in trafi you made a ton of money in private Equity or stress credit or or wherever else um you know it's you have a certain view of the world and a certain view of your own uh sort of talent and Edge in that world and admitting that not only did you not have an edge on this asset but you were actually wrong about it for some time um is a difficult leap leap for for some people to make yeah yeah and I would I was just going to say nobody gets fired for being consensus and wrong you get fired for being you know the only one on an island and you're wrong um and it just makes no sense to everybody else and so there's both like career risk to being the only one or you know one of the few people that think about Bitcoin or any asset in a different way than everybody else um but as it becomes more consensus there's less career risk there's less political risk as I'm sure we're going to talk about and um I think that more people are willing to not be on the island by themselves even just like having a couple friends that you know know about it and can speak to you about it is uh makes it less risky in your mind yeah and I know this isn't a topic of the show so we can move but I do want to call it like there's a big percentage that we haven't of this like adoption that hasn't happened simply because it's an ephemeral aspect said it's not tangible and you can't touch it because that's just a mental barrier it had me think of like a thought exercise where what you had something that looked like a bar of gold and just put a piece of Bitcoin on it and parked it in a in a cave like would they be more apt to adopt it right because people do that with gold it doesn't have you know any kind of like value outside of you know a little bit but not much that we know but uh people are just like it's just like it's always elusive it's always out there how can I allocate where is it exist and just by like anchored it's a real world and it's so it's just an interesting um it's an interesting asset yeah well let's get to the list Michael you sort of alluded to um one of the stories that I wanted to talk about earlier around um so this week us Equity markets uh were a bit turbulent and uh the main uh sort of culprit was effectively uh a new AI llm model that got released out of China called Deep Sea and the effectively the claim is that they used way less Capital uh to build what seems to be as good if not better model than chat gbt and other models being built in the west um who are obviously spending tens or hundreds of billions of dollars to build these things the alleged claim is that deep seek only uh spent about six million with an M uh dollars to build this model now that is obviously coming from China so it's it's hard to be super confident in that number but I think at least for me you know well the first sort of near-term takeaway is that if this is to be any sort of uh directional truth in that they did this uh with way less um Capital then it sort of you know brings into question the valuation of all the companies in the west that are building these models using way more money so you've saw Nvidia and a lot of uh the other sort of AI related stocks in the US sell off this week pretty materially um as a result of this the takeaways for me are are a few fold one is you know a lot of this relates to you know a theme that we have sort of internalized at early writers is that companies in this sort of new age are going to continue to do more with less and what that really means is leveraging deflationary Technologies and tools to be more efficient and so AI is a great example of this and this is an even more sort of micro example of this particular company in China uh you know using less Capital effectively to build a you know just as good if not better uh llm model than than what currently exists and so um you know I think this is just a prime example of what we expect to continue to see um around you know companies just being more efficient as they leverage these tools uh like Ai and Bitcoin um but I'll pause there to see if you guys have any any thoughts on this in general yeah I mean there's a lot there's a lot especially when you don't really there's like half what you can learn and then the other half that's probably not even true yet because of where it's come from and the the implications are feel so multifaceted um the thing that I think ultimately comes to mind and I don't know like again how true this is and Brian it sounds like you free us chatting you've done a lot or at least a little more research than we have is that they ultim had conr straints and their constraints allowed them to build this with a lot more than less and that's ultimately what Brian's referring to is at the end of the day well it sounds paradoxical if you give somebody a million dollars or hundred million dollars and tell them to go figure something out more nine times out of 10 on a long enough time Horizon the the person with a million that is GNA come up with a more efficient and optimized way to do it because that's just a natural order of things like when you have abundance that's what breeds all this craziness and it was always part of the discussion that like openingi is kind of really strange if you're raising billions and billions of dollars every like you know few months because the definition of having something is you don't give it away so if you're consistently having a raise well then what do you really have but then tying back to the constraints it's like well if you have less capital and then you can optimize for the best outcome well then the best outcome the reason you would optimize for that is naturally because you have the constraints but you also are trying to return some Capital back to yourself or your shareholders which ultimately means that you're trying to get to the fastest way to do that um and it's interesting because we joked before this we were talking about it if they weren't bitcoiners I can guarantee you the people that are bitcoiners can build at at half the cost that they did if they got to that point because if they were spending dollars or Yen or whatever the local currency is and now they're sitting on a money that we know went from 50 let's say they started working at this and the price was 50k and they had this long-term thesis of Bitcoin well they're looking at everything like do I spend this Bitcoin today because it's going to be 60 70 8090 and so every decision would have been over optimized and that's effectively what the whole position here at early Riders is whether it's a venture allocator or an entrepreneur you have to have the individual it cannot just be the capital stack you can give the best you give like an entrepreneur a hundred million dollars in Bitcoin it doesn't mean they're going to go optimize and build warchest you I would take the other person has a better entrepreneur with 100 million USD they'll still run laps around the person that's the BTC because it's not enough just to have the better form of money you have to have the individual that is able to optimize in their brain and how they bring products and services to the market and it sounds like these guys just hit it like at some capacity again we don't know what the motivation was because I think that's the big missing part in all this is like what's the actual motivation were they just doing it are they really just a hedge fund um or is it something more yeah I think there's there's still some unknowns but I I what you hit on I think is the most important thing is that this this notion of constraints breeding creativity and actually forcing you to be more efficient and so there was a a a great write up by someone uh Jeffrey Emanuel basically wrote the the short case for Nvidia stock I'll link it in the show notes but he he describes part of what the unlock was for deep seek in figuring this out and he goes the technical break through here was their novel approach to reward modeling rather than using complex neur reward models that can lead to reward hacking where the model finds bogus ways to boost the rewards and don't actually lead to better Real World model performance they devel developed a clever clever rule-based system that combines accuracy rewards so verifying final answers with format rewards encouraging structured thinking so this simpler approach turned out to be more robust and scalable than the process-based reward models that others have tried so basically because they had these constraints they had to figure out a way to figure out a better reward Mo reward system to train the model and that's what they ended up doing and so it's just like if if it hadn't been for those constraints they probably don't get to that conclusion yeah and Liam I'd be curious your thoughts because something that I haven't really shared out loud and like it's a little bit on the edges but there's something I believe to it is so you come out of 21 and 22 and that 21 vintage everyone knows if somebody raised and allocated a fund in 21 they pretty much like write write it off or write it down or definitely write it off because of the the valuations there and so money tightened up from LPS and also Venture firms and so 22 there was really only one narrative to the back end was like AI so you had all these funds were either being raised or deploying on that and there was all these companies that naturally pivoted so there were existing AI companies or there were companies that put some tent of AI right everyone had something there but when this goes back to the uh incentives so you know whether they had called the the the Venture funds where they had called the capital already had the commitments they have to raise that money because they're looking at the management fees um for either their existing you know partnership structure to pay on and other expenditures liabilities but then also to grow and so they needed this narrative like it was almost like AI was the valve for this Capital to naturally go to so everyone was incentivized because like this didn't just it can't just pop up out of nowhere that what you just described and nobody pick up on it or build it's like everyone was incentivized to play the game because when you're an entrepreneur and everybody's raising money it's like sure I want more of that money and you're a VC and more LPS are looking and sovereigns are looking for the next AI breakthrough because they are by nature unsophisticated in the sense of this that's why they're picking specialist funds to understand this so it feels like everybody was playing along in something that was never really like sound like I think it it's the end state right the open source is going to inevitably be the the solutions when it comes to these models so just curiously does that like I I haven't fully worked through that one but it feels like there's something there that everybody was just incentivized to play this game in the same way everybody's incentivized to put all the money in the S&P even that we all know it's overvalued because it's just like a quasy money uh and store and savings yeah I think um for anybody that manages money you really if uh some view is consensus you really want to be on that consensus view right I think that there are if you you're going to uh you have career risk if you underperform the S&P on a really strong year and you have career risk if you significantly underperform in a really bad year but you don't have career risk if you pretty much do the same thing as the S&P and so I think that was the narrative at the time there was a lot of capital that was being allocated into the space and so essentially you had to just get on board um but ultimately many of the things that you're talking about too don't just apply to AI specifically but actually apply to every single company based on you know what the AI models are providing right like deep seek Pro uh providing open- Source um models that I believe can be self-hosted are pretty interesting and pretty much can help every business be more efficient no matter what kind of business they are and we just keep seeing everything from you know the printing press to now deep seek uh open- Source self-hosted models allow every company to be more efficient over time and that contrasting with the fact that consumer prices have ra uh only gone up over time just doesn't make sense um people and businesses continue to be more efficient and utilizing a money that doesn't allow you to benefit from that just honestly makes no sense to me what do what do you guys make of the fact that you know I think prior to this happening this week I think there was a perception or thought that everything that China was going to do from an AI perspective would be closed source and they kind of you know obviously flipped that narrative by open sourcing this model do we think that that is or what do we make of that one and two is it sort of like a purposeful just shot across the bow to the west to say you know your whatever moat you think you have around these am AI models which you know most of them in the west are closed Source you know open Ai and chat GPT being sort of the the one that's most adopted that is close Source you think that's just a shot across the B to say like you know those those valuations for these companies are are um probably excessive because the the Moes or the barriers to entry you think you have really don't exist so that's the part because we're definitely over my pay grade I think ours and it'd be interesting to have somebody on the Pod because I think there's so many different geopolitical implications that like whenever you see something pick up a narrative so fast as deep seek I'm always questioning like well what what's happening here but then also post Trump and inauguration it's like well that's interesting because we're Silicon Valley Freedom oriented all the things but then they came out and did this like is there requestioning who are the leaders the Free World when it comes to Innovation like that's an angle I have no idea if that's true just sounds kind of good so like I don't know I don't I think it's hard to like really again it's so multifaceted to know what the implications are and it's mul there's multiple orders of it yeah it's definitely above my pay grade but I thought it was interesting that it came out pretty recently after the Stargate announcement of $500 billion do to be allocated to the Pix and shovels and essentially gpus that are providing all of the models for um all these AI algorithms especially just given this company at least says that they were able to do it for significantly lower cost I do think um I'll leave it to you Brian if you want to go deeper here but I think there's something to bring up that's a corlar to to what Liam said that this exists across all the markets like there's insane inefficiencies because the existing system rewarded just malinvestment across the board and it's this like we're putting this together but like at a hint it's like this recursive feedback loop where VCS don't really know what they're doing so because they're not natural Builders like there's only so much Capital that really should be out in the the real world so when you put all this Capital out there where you have to park it somewhere then you give it to people that shouldn't have it then they're building solutions that are not the most optimized and the example that I think of and this is super taboo but I'm confident true is like all these exchanges that pop up whether it's coinbase and you're listening to this you're like how can coinbase have a longstanding business because if their revenu is predicated on trade and then ultimately if custody ends up decentralized because it's nonsensical to think if Global money ends up as Bitcoin that coinbase would hold at all that means it failed then it's like how do you underwrite that valuation and that's like at the far end of the margins now like look at any Bitcoin only sat stacking business and it's like okay well you're investing in it and then what's the next move like raise another ground and then they have to go acquire more customers because it's a compression game on fees and then they don't custody the assets they tell them to all go hold them but then also is not great because the people holding them are getting their fingers sent back uh increasingly as Ransom goes so it's like what is that entrepreneur actually planning on for the long standing business are they going to hold all the Bitcoin because again that doesn't tie to like how money is going to end up there because we know we're gold failed and so that's sold to LPS and investors it's like we're going to go invest and do additional rounds and um so I think it's just like these inefficiencies are everywhere and that's what ties into once the entrepreneur really grops like hey Bitcoin but then while you want more of that you're naturally going to build the most efficient business that actually can have not only winning the client but then ultimately having the best form of like long-standing relationship with them basically and it doesn't have to be in Bitcoin this is just an example of like brokerage and how nobody has really figured it out yet well well maybe pulling on that thread um you know you sort of mentioned how do you have a long-term view on coinbase coinbase for example as a sustainable business model well one you you need to ascribe some value to everything they're doing X Bitcoin right like that is a lot of what they've built their business on is effectively pushing people out the risk curve getting them to trade all these other assets um and think much shorter term than you know what they really should be doing is thinking long term about Bitcoin specifically um and then you you sort of tie that into maybe we can we we can bring up um Sab 121 being repealed well okay the other the other component now is well if banks are going to custody it then why do you need a coinbase necessarily to to custody your your Bitcoin or your other digital assets if all the banks are GNA now get involved um so maybe maybe we can pivot there a little bit to some of what's been happening over the past week or two uh with the um creation of the digital asset task force as well as uh repealing Sab 121 any general thoughts on on all of this I know you know there was sort of some talk on Bitcoin Twitter some people were upset that they didn't name Bitcoin specifically and a lot of this stuff I think that's just to be expected like I I think it would have been insane if they had called out Bitcoin specifically uh you know whether it's talking about a stockpile or or whatever mainly because we already have seized other digital assets so it' be kind of crazy to just single out Bitcoin at this point in time uh but the task force being put together lumus leading that uh Sab 121 any thoughts on on General uh developments over the past couple weeks so Liam you could kick it off I mean well you can't really talk about this without talking about Trump launching a coin um and the fact that essentially the sitting president launched a meme coin and now like I think a past 14 billion in outstanding Value rumors are that he sold $500 million of that and that's essentially what we're we were alluding to earlier with um 80% of the supply is allocated to insiders or hasn't been issued yet um and then the remainder is just sold onto the public and so uh everybody wants the inside baseball of being able to allocate early and then you know they sold including the person who actually created the coin for them U mentioned that he sold and then right now it's like you know not not quite dead but kind of boring has G has gone down a lot and I think that kind of ties back into you know the the model that coinbase has of you know uh they now want to be able to have a faster process to issue 1 million new coins that are being issued per uh per week um which just you know the everything right now in crypto Innovation seems to be launching a meme coin and um you know being able to sell it to the public um with respect to Trump I think his executive order on digital working group uh or digital asset working group is um to be expected it sounds like um oh the one other thing that I forgot to mention is Trump uh Trump Media company is now acquiring Bitcoin and other digital assets as well so it seems like he's getting some information from somebody near his group that is into digital assets right and you know that may or may not I mean it's saxs in large part right like he's the AI crypto are like I think he's at least uh one one of the primary people in his ear I wouldn't necessarily just put it on sax I mean I think that there's a component of that but it's really just the natural like it's known within that Administration people close like for what however they're going to do it bitcoin's Rising this year so by nature of that you're just getting proxies whether sax is an e or not I don't I think it's actually less saxs it's more of you're just buying exposure in the same way like uh tenent and tapiero funds like thesis was we're going to go to pensions and all these funds that can't get exposure to spot Bitcoin and we're just going to buy in the growth companies of the Geminis and ledgers and these firms pre IPO because the sector lists as bitcoin's price lifts that's what it feels like in those because I think that post um from their company was like we're gonna invest in like exchanges and stuff uh versus like crypto coins yeah and and to the point earlier I think that you know uh most of the exchanges and other coins are you know uh either going to underperform bitcoin because they're not correctly allocating capital or have Insider allocations that are going to be sold to the public um without significant real value and so you know there was no mention of creating a strategic Bitcoin Reserve um that many people were hoping for but I think you know while it's probably a little early for that it's ultimately going to happen uh like I'm sure of that because essentially that's going through every single person's Journey you know I mentioned you know Adam back uh initially dismissed Bitcoin because it had like no value but then once it got bigger he was like okay this is kind of interesting let me do some additional research and um that's same with me that's going to be same with the United States and every other country in the world because once they realize that this is a decentralized asset which anybody can plug a node into it can not be censored it cannot be seized and you can send value anywhere in the world within 10 minutes um that's a value proposition that's while it sounds too good to be true once people actually understand why it's uh how it's created and um the rules that enforce it everybody essentially goes to it in the end yeah I think I think the other the other component to note here with respect to you know the the idea that there would be an executive order specific to a strategic Bitcoin Reserve I think was always a little off in the sense that you'd you'd actually much rather that come through you know bipar and Congressional support for an actual bill like lumus Bill as opposed to an executive order because if it's just an executive order then that is basically a a less robust uh form of legislation that in four years you know if uh party flips then they could just get rid of that and then sell the Bitcoin um and so I think the idea that it was going to come through an executive order was was somewhat misplaced um and it actually makes a lot more sense to come through you know something like the bill that lumus has put forward I think the other aspect though is like I think the number they floated was 157 million from like the crypto industry was in invested or helped support Trump it's like like lobbying efforts you mean yeah yeah so it's like well even if they want to do this and it's only Bitcoin in there like they have to throw these people a bone it's why you see these events in the crypto ball it's not the Bitcoin ball because they just gave you all that money so you have to like same way he kept his promise and did what he did with all these other executive orders it'd be kind of shitty if if you know because bitcoiners didn't do the full 157 it'd be lucky if we did half the reality is yeah this is why a6c has a huge Lobby and and political arm DC is because of that so kind of makes sense why there's just like naturally all of that um one thing I just want to share Brian and Liam though uh the asymmetry and like information and the bank stuff at the margins maybe there's certain banks that are somewhat sophisticated and there probably are because of just law of numbers but anecdotally I talked to somebody today um friends with I think a top 10 bank and talked to his buddy there and and this is like in good authority it's like they don't even know to have 121 got feel talk to another firm familyowned that's been trying to get into this space hard since FTX got slapped Down With The Regulators been very careful been was talking to them in the middle pre all this FDIC stuff so you always knew something was wrong but you couldn't really they couldn't talk about it and so super excited reached out to them like hey this is done let's talk you know there's a lot of opportunity in this space and they're like hey let's uh let's just wait you know they said this pre when it started looking like Trump was coming in and then they said this even after because there's so much scars and battle wounds of like the past few years and then to the point of what Liam said and what we talked about it's there's still so much learning of like why one asset versus the other and before you even get there then you or after you get there then you have to figure out custody and we all talk about here but like the difference between multiparty computation and multisig like we still have such a slow burn into that and the the best way I can describe is like in proportion of much dollars or the system is in proportion of how much like craziness will happen over the course of the next 10 years as it relates to crypto and infrastructure and vulnerabilities until the signal comes out the other side because there's just that much noise in the system yeah I mean the other thing to me around just just Sab 121 And I think there's a an assumption in the market that like oh yeah like the banks were just waiting for this and now they're ready to turn on bitcoin custody it's like well no not necessarily like unless they've had you know uh unless they've really been focused on it in preparation for this for the past several years like I don't know if these banks are ready to turn on bitcoin custody I don't know if they're ready to secure private key key material whether they have to go out and hire people to to figure out that that out or if like you know bny is the one that's that's floated as like the most ready because they got the exception or whatever you know prior to this being repealed but I I I mean and this is a blind spot for me I just don't know how much work they've done to actually be able to to custody the asset and Michael to your point it's like well you know if they're not even going to be Discerning uh Bitcoin versus crypto that do they just go down the NPC route multiparty computation they don't actually even use Bitcoin native multisig to store their Bitcoin is that who you want to be partnering with as your as your bank uh Bank grade custodian if they're using MPC with like an Anchorage or like a firebox like is it really even that differentiated or are they just going to Outsource its coinbase like the ETFs like there's still the all these massive outstanding questions and I think the perception is like oh yeah game on banks can now hold the asset it's like well well how how are they going to do that because I don't think they have the expertise in house 100% and one thing too it's still not it's still politically risky to uh custody Bitcoin if you're a bank um anybody who's been paying attention to the Bitcoin space and in particular has been following Caitlyn long and custodia knows that she's been trying super super hard to get a federal reserve master account or something similar Maybe um misremembering but she hasn't been able to and you know even despite a more friendly incoming uh Administration to crypto at large um you know the Federal Reserve hasn't changed over drone Powell is still the Fed chair and uh in order to be uh custody consumer assets you need a Federal Reserve Master Charter and then uh there are just concerns about you know the relationship with other government entities should any Bank try to custody Bitcoin yeah and this is such a great conversation because you don't get to talk or hear about it a lot but like Brian signal there are like they're close they were close back in the day they this sad uh the bulletin really messed up their launch um bny in particular but State streets going to roll out stuff there's other firms but to Brian's Point there's multiple levels to this because just because even you even get the tech stack right they're not equipped to like actually provide the services that an individual that owns Bitcoin wants so there's always at the margins going to be people that look at a name like a b and go there but then the end of the day like these institutions leverage generally Omnibus account structures and they're not equipped mentally or uh via uh technicals to actually create what in Bitcoin you just know as a a wallet which is an SMA and like traditional Finance base in these segregated parts and a cousin of this is where just like conflation of ETFs letting you take delivery means you can go and Par your own Bitcoin in or take delivery of the underlying like the authorized participants may do cash or or Bitcoin settled and Bitcoin in but independent of even if they knew how to send the Bitcoin there is so much compliance perspect compliance problems when it comes to ofac sanction address where do you send it Logistics where does it go that are frankly impossible at this point for anybody at that scale to manage this was like one of the big dirty secrets of why gbtc could not get Unwound there was a number of them but one of them was like the level of counterparties from The Brokerage you bought it from the intermediary uh which was effectively gray scale or yeah grayscale and then coinbase sitting there imagine the complexity of having to take those utxos send them to somebody's address that you had to make sure wasn't sanctioned by Iran or Venezuela like all this plummet is so far away that uh these people doing it is just like it again is just it's awesome to see because if you know the market and the majority of the market sits with bitcoiners that are quot sophisticated they had to be because they had to hold it this long and not get rugged at the margins again they'll go into these accounts because they have the names but then as a price appreciates they're going to look around and they be like either a I need a better solution or I need to get it off there because then the balance sheet risk becomes real because the name doesn't matter because the math is the math if they mess up that Omnibus account all their funds right exactly if they're doing it Omnibus you know how are how are you going to have assurances that they're not uh you know fractional Reserve re hypothecating the Bitcoin like that would be a natural sort of assumption of you know if they're G to if they're going to map their traditional banking practices to this new asset Bitcoin you know yippy now they can they can custody it well why wouldn't they just do the same thing they do with other assets where they're going to lend out your Bitcoin it's going to be in an Omnibus you're not going to have any transparency to say U you know here's my segregated wallet um so I think yeah those are all huge outstanding questions in terms of how this this begins to play out yeah and there is FDIC Insurance of up to $250,000 for dollars right because you know uh dollars can be printed you can't print more Bitcoin so if uh your custodian loses your Bitcoin you're kind of done maybe you can get some dollars back um but you're not GNA be able to get the same amount of Bitcoin one the one of the biggest unlocks for me and this will be fun when we create a piece around it and talk about it more is that you know price is set at the margins Bitcoin is adopted at the margins and ultimately the Bitcoin products that will win will be built at the margins and sounds like oh yeah that makes sense but like it's so counterintuitive to everything else that generally happens when you think about the top down structure that was been created from traditional finance and the ETFs and bks and all the products that exist all the way to like Facebook and Google like the whole thing gets shifted because again talking about this it's just like you need that hold of the individuals to adopt the the the the standard or they just won't because the status quo has kept their Bitcoin safe um and so this is like the funny thing it's fun to go talk to these institutions because some laugh and they're like I don't get it and then the other ones are like oh that's actually interesting because I can't afford to not like be right here yeah and maybe um one other thing I wanted to bring up um sort of relates to you know what we're talking about from a regulatory perspective the you know the new Administration being more favorable I think uh it's worth pointing out that this isn't happening in a vacuum and other people are watching other nation states are watching and we had a report uh I think yesterday that uh the Czech central bank chief calls for uh them to buy billions this says crypto reserves I believe he said Bitcoin specifically I could be wrong on that um but any thoughts on this just general sort of sovereign Game Theory which we've talked a lot about um people waking up to you know even if even if the messaging has been somewhat mixed from the Trump Administration on bitcoin crypto I think uh other nation states can sort of see the force through the trees and say like you know Bitcoin is is the reserve asset that we need to be accumulating particularly if um you know the us is going to have this much more favorable stance towards the industry yeah I think some people saw El Salvador or heard about it last uh cycle in 2021 and we're like oh that's kind of interesting but it's not big enough for us or you know it's it's maybe a scam maybe too good to be true um and then you know the price went down they were down on their Holdings and then it went back up and now people are taking another closer look at it and they're trying to understand what exactly this is and some people are fully there into understanding that this is going to be the best way to store value over time um I think that is kind of the natural step we've seen I think 15 states file for uh strategic Bitcoin Reserves at the state level as well um and I respect I expect both most of those to be rejected um we've seen you know I think shareholder proposals to acquire Bitcoin from Microsoft Amazon meta um recently and they're likely all going to be um rejected until I'm proven wrong um at least that's my base understanding but I think it generally Shifting the Overton window a lot in terms of what is acceptable what is reasonable and people are getting more educated on this yeah can you can you close that one out real quick Brian I want to show I want to pull something up uh I've never Vis this is probably naive on my side but I've never uh viscerally felt that 21 million is such a small number until hearing really like thinking about all the tail ends happening right now right because we have individuals we have the ETFs we have corporate treasury narratives we have Sovereign narratives and then we have everything in the middle of all of that whether it's it's man wealth management Insurance like that 21 milh number is really actually super small when you realize like where we're at and to Liam Brian's points like it's been kind of like deris it's increasingly becoming deris and it's gonna eventually flip probably sooner rather than later on like wait you don't have any exposure like how the hell are you supposed to outperform anything else uh it's pretty wild yeah it is crazy I mean it's and it's like you it's it's the number right there's 21 million but it could be any number like it's just the finite nature of it that that's what's critical for for folks to grock around um you know I I talk about this a lot but it's like you know if I'm describing the Bitcoin thesis to a to a normal person or someone who's on the periphery as I was doing this past weekend I was uh I was out in Texas and uh you know having some conversations with some normal folks who were were genuinely curious right because I think that's one thing that is certainly you know we're in the midst of of seeing happen is is people getting more curious about it because it is so overtly in the zeist right now um and so there is the Curiosity but where I always sort of come at it from is just like this is supply and demand we know we know the finite Supply cannot be changed 21 million but like I'm saying like it could be one one coin like it all that matters is that it's finite and we know that and it's predictable and immutable and all you have to assume is that demand increases and everything the market is telling us is is a signal that demand is increasing from the individual level to the corporate level to the nation state level demand is increasing and so the price necessarily has to go up and so you know over what time frame does you know do we get to a million to 10 million a coin I don't know I I don't have a you know magic magic G all to say exactly when that happens but I know the trajectory the trajectory is simple supply and demand e you know economics 101 and so that's that's I think um you know what I always sort of anchor to when I'm speaking to someone who is really just beginning to understand this thing is like this notion of a finite asset has never existed before like that in of itself is is a powerful thing to bring to someone and bring to the four and then you say okay well that that is true it's also true that demand is increasing and so what does that mean price goes up over time the the scary part in that in like is if you don't play offense like you lose because like I think that's the big problem is people think like you can just like bypass it and it's cool and like you and I'll get it later which is true but if you're in a competitive World which we just like naturally always are whether it's like your dollars are competing for goods or you're a business and somebody's competing against you if you don't figure this thing out you just are going to be you know a victim of like inflation and fee compression or Price compression degradation of the goods and services there all the things that are happening right and like this is where we see you know all the different Tailwinds from interest rates High rising and people being laid off companies not doing as well tax receipts all those things so like if you don't play the game you you basically are like you're you're done um and so it's just a it's a crazy like dynamic because there's the the price and that's what everybody gets attracted to but the thing that they don't realize and I think that's a big part of like what we're doing here and and why it's important and where this is the end state for Capital formation is you have to adopt the Bitcoin standard is because you're just going to out compete the other person it's not enough just to have the standard you have to have the mindset to like build on it but that firm is going to go just run laps around everyone else and then and then it comes down to well what investments are you making and you better pick the right ones that are going to be able to build for the new world like the only thing more finite than that than Bitcoin is literally those human I get it because the whole world has been full of like the opposite so it's been like you know this got of probably like not the best to say but it's like you know it's kind of the different gender coming to play in a in a game like you just dominate because you're just it's an unfair game but what happens when you have to go play with your standard the individual that you're you're supposed to be playing with like when the standard changes you're just basically like oh you go from being number one to basically last and that's kind of this angle of like you're used to deploying dollars building on dollars returning dollars but then you wake up and you're like wait wait the Market's actually going to coales Around The Benchmark that's Bitcoin I got to build with this I have to be constrained in my whether it's Capital allocation or business building and there's very few people on the planet Earth today can really like manage that and it will increasingly grow but that's where we're all that's where this all heads because you have to wash it out right all this money has just been like there's been noise there so you have to reduce it um so it's just going to be a fascinating like five to 10 years that's for sure um well I know we're we're coming up on an hour any other sort of final thoughts on uh Liam you just joining the team uh or or anything else that's happened over the past couple weeks uh generally speaking Boyce dude there's there's there's too much we get on calls and catch UPS since like I can barely keep up um I'd flip it to you Brian and then maybe I'll think uh because there's no shortage of like interesting things that have happened since I would say the beginning of the year yeah I mean uh Liam sort of mentioned it as like we you know it's hard for us to talk about any of this stuff happening with the new Administration without like recognizing that the president of the United States launched a beam coin like that is I think uh just a perfect microcosm of like where we are with the crypto industry and just the in my mind the tcid admission of broader crypto that like there's no utility here this is just pure uh degenerate gambling this is a big casino and like Trump launching a meme coin is is sort of like the epitome of of that realization of all this stuff from you know ethereum calling themselves ultrasound money to you know moving away from proof of work to proof of stake like all of this stuff was nonsense it was all just them trying to find new narratives um to to sell their altcoin um and now they're kind of in the place of uh sort of just admitting like yeah no this is just gambling like we're you know Meme coins are are the thing uh you know less and less people are talking about like defi protocols or nfts or all these other sort of promises made by the crypto industry over the past several years and so I think we're at this very interesting juncture where on one hand there's an increasing recognition that you know uh Bitcoin is different and I think the biggest of signal of that is like ETF adoption like people sort of forget that like they also approved ethereum ETFs and the flows have been like almost non-existent to those products um I think that's a pretty big signal that at least at the institutional level like what people care about is Bitcoin um but at the same time you have like this continued conflation of like the literal president of the United States launching mecoin and I guess my hope is like it's so overt it's so in your face that this is is speculative that people wake up to the realities of Bitcoin being fundamentally different sooner rather than later but that's that's kind of you know what's been on my mind the past couple weeks is like I mean it's first of all it's just wild to to think we're on this timeline if you rewound one year even two years ago and told me like you know not only is uh the government considering buying Bitcoin but oh yeah the president launched a meme coin like we're just we're just in an an insane timeline right now yeah I think broader crypto at large is definitely more so just leaning into gambling as like the narrative which is fine um but I think uh I just saw a stat yesterday I think out of all of crypto as a whole Bitcoin is now 62% of that and just because I say that it'll probably crash but um I ultimately think of Bitcoin more as competing with gold debt real estate stocks anything with a monetary premium um unless you're actually doing the real work to evaluate a company yourself um or evaluate the asset by itself you're essentially giving it a monetary premium so everybody that just puts their 401K into the S&P or any similar type index is giving it a massive monetary premium and I think Bitcoin just competes with that moving forward more so than traditional crypto yeah I think the the thing that's on my mind having time to think about it is um it's it's somewhat related to crypto but more of like U this this whole multi-polar world we're heading to and like Trump's immediate past through weeks of like it feels like it ties into a little bit of the deep seek stuff of there's no more like exporting inflation I mean it is going to be somewhat but exporting IP and all this stuff it's like this realization of wait now we have to be first and be best across National levels so we've seen like what the Colombia you know president where that's going Mexico China it's like this version of not only accruing or aggregating Bitcoin but it's aggregating the best talent the best people the best businesses are going to start to competing versus just being able to like you know kind of play nice or be incentivized to play nice because everyone's playing the same game now everyone's like wait we're not gonna play the same game anymore we have to think about like National or our country first and that ultimately goes back to doing more with less right because now everybody's incentivized to actually be the most efficient the most optimized so it's a very interesting time where that always ends up back to like how do you get more BTC um which is just fascinating because our whole lives we've never lived in that world first one rip excited for this going forward um so Brian what's the deal like we're gonna do next pod are we gonna do with a guest from the industry talk about it yeah I think uh on an alternating basis so in two weeks from now we'll have an external guest on and then two weeks from there it'll be us three internal rip again and it'll sort of uh oscillate back and forth between those four Ms yep and uh you know to be a little cliche like this whole funny thing about like you can just do things it's pretty funny because uh you really can Liam reached out we had uh Chase but the the one that comes in mind everyone's shown this proof of work I think about Ralph who reached out when he knew we were working on some stuff and on R mea And Ralph's an incredible asset if you're in the Middle East or even anything interested in that region I'd reach out to him but similar if you're interested in building this space or the concepts we're talking about like obiously we're going to get more and more inbound from across to get interested get involved in early writers and build but the you can reach out but the thing that's the differentiation and something Liam had done extensively in Ralph um was just proof of work like everyone has their unique backgrounds and professional experiences and if you can translate that it didn't have to be with us I've always talked to folks wanted to break into the Bitcoin industry it's like they really need you even if they don't have any roles that exist you just have to show what you know and why what they're doing could like utilize it and then if they're a good entrepreneur or good founder they'll like well of course I need that because you just help me see something that was a gap and everyone has them so I'd encourage you anybody that's looking at if any of this sounds captivating or interesting to reach out to the folks you look at or admire because um there's a lot of work that's gonna need to be done it's very well said you can just do things so do it um all right boys uh thanks for joining us and uh we'll be back in a couple weeks all right later thanks for listening to this week's episode of the show if you found the information valuable please share the episode with a friend or leave a rating on your favorite podcast app all the links we discussed in today's show will be in the show notes inside your podcast app before we finish a quick reminder that onr media is for informational and entertainment purposes only and nothing should be construed as investment or legal advice regardless of where you are on your Bitcoin Journey we'd love 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