Debasement Endgame: Bitcoin ATHs, Gold Near $4K, & Bonds Bleeding

It all comes down to computers communicating. >> The information superighway can be a confusing mix of on-ramps 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 gigat transaction. The internet is going to be one of the major forces for reducing the roll of gun. The one thing that's missing but that will soon be developed is a reliable ecash. >> Hey everyone, hope you had a great weekend. We're back for another episode of Final Settlement uh on a great Monday with the price of Bitcoin over $125,000. I believe it hit its all-time high this morning. We have uh an awesome episode. But I hope you make it through the full podcast covering everything from Galaxy 1's new launch to Morgan Stanley letting advisers offer 2 to 4% allocations to their private clients to talking a little bit more about you know venture themes and how uh in a future way it'll be the only logical um thing for asset managers allocators to benchmark against gold or bitcoin given the status of the dollar losing purchasing power by 50% in gold terms just this year. Hope you enjoy the podcast. Uh we're going to be out in Dallas this week. We're going to host a few happy hours, private dinners. So if you're around the area or thinking about making the North American Blockchain Summit, please do. We'd love to meet. If you're looking for tickets uh to the conference, I think we might have a few extra. You can shoot us a note. We'd gladly set you up. All right. Hope you enjoy the podcast. >> Alrighty, gentlemen. Welcome back to another episode of Final Settlement. Today is Monday, October 6th, 10:14 a.m. Eastern time. Q4, boys. Especially into Q4. Um, and we're breaking out. We're breaking out right now. Gold's at like 4K. Bitcoin is is is uh making all-time highs as we speak. I'll pull up the on-ramp terminal right now. 1249. It was just at 1253 or so a few moments ago. Um, but we are breaking out, boys. How are we doing? pretty crazy. I mean, I think this is um I think it's crazy that they're both together and the the sentiment shifting. I think this is kind of the discussion we had for the past few months on this would cause a uh like secular change if you had it in the market sentiment that they were just getting fleeced. You know, gold bugs and individuals have known this and definitely Bitcoin investors for 15 years, but you know, the rest of the world hasn't. And if that just becomes part of the narrative, you know, you can click a button and get a form of digital gold. Um it's pretty interesting for demand side. >> Yeah, absolutely. And and um you know, I think over the past several weeks, we talked about it a bit on this show, a lot on the last trade. Um but this notion of the debasement trade is is now very much in the zeitgeist. You know, there was uh some headlines from Morgan Stanley, which I can pull up. um but other sort of incumbent trad players as well. Um talking about gold uh and Bitcoin in in a light that you know historically they haven't. You know historically when you think about trad you you know if they have exposure to something like gold it's it's you know 2% uh sort of at most um sort of a disaster hedge in a portfolio. Um and that line of thinking is just fundamentally sh changing over the past really months um and as gold's been making this move. Um, but what was once sort of a 2% allocation is now, you know, uh, anywhere from a 20 to a 25% allocation recommendation from a lot of these types of firms. Um, and and naturally as as people come to gold and understand the thesis around protecting themselves from debasement, the natural evolution is to to understand Bitcoin as digital gold. And I think we're still early days of of that um, leg of the trade. But, you know, this is something we've been watching and and talking about it, you know, for a while is just looking at the performance of gold. You know, typically, you know, Bitcoin uh catches up in in somewhat of a lagged fashion, but but moves harder and faster once it does start to move. Um, and we might be seeing the first uh couple stages of that, you know, right now over the weekend and and into today uh in terms of Bitcoin sort of catching up with what gold's been doing over the past few weeks. I mean, gold is gold's up over 50% uh this year year to date. Um and now I think Bitcoin is around 33% or so. Um so the two you know two top performing asset classes uh globally uh one and two uh pretty remarkable and um I think this is again still early days of people waking up to this but you know as you have the Morgan Stanley's of the world the Goldman's of the world coming out and saying similar things um this is just going to continue to permeate. >> Yeah. I mean I think this is the solace you find in um in a in a trade like this, in an industry like this, that it's just technology. Money is just technology. And at the end of the day, you can't force technology back in a box in the same way you can't force um you know, gravity uh in a way you don't want it to that we it's not apples to apples, but we saw this play out with Blockbuster. We saw this play out with Netflix. Um, and we're going to see this play out with the largest institutions in the world that are historically staunchly against this asset have to come around. It doesn't even necessarily matter because of, you know, quote unquote what the market sentiment or debasement. It's like really just client demand. And if those clients assets are going to leave and the demand also comes from, you know, the the fact that the currency is being debased, but um it's similar what we we see with Vanguard. Um, so that's the the beauty of this, the way this all goes is doesn't matter if the the institutions adopted or not like you know Morgan Stanley 7 trillion in assets under management. If they want any chance of those assets to stay there and then honestly grow in dollar terms because that's what these two assets are going to be some of the fastest horses in the next decade. Well, it makes complete sense to uh put them in that the kicker here because I want to continue to try to bring this back to the business and opportunity side is that um a this I'm I'm fairly confident that institutions like Morgan Stanley and Visa and Ammex will be able to offer better products than the first versions of what we've seen in Bitcoin and digital assets. meaning because they have better distribution, better branding, better design. But I don't believe they will win the second version of anything digital assets Bitcoin related. Meaning that world-class entrepreneurs that come at this space from a native perspective will run laps around these institutions on a long enough time horizon. And it has nothing to even do with they don't have the right people because they don't have the right people. They leave to go start the other firms. But it's really because there's too much inertia in their existing 7 trillion dollars in assets that they can't actually compete. It's innovators dilemma 101. And that's really where the big opportunities are going to lie is how do you lay sound assets next to stable coins integrations, best-in-class financial uh services around counterparty risk. There's a huge opportunity there. Um and we this will tie into some other announcements that came out just today, but I know Liam probably has some thoughts. >> Yeah, 100%. It also is shifting the entire dynamic right now because Morgan Stanley wouldn't say two to four percent in Bitcoin and gold unless Bitcoin's volatility had uh come down a little bit. It's not quite as volatile uh this entire cycle as it has been in the past. Um we can touch on everything Black Rockck ETF uh related, but now that's top 20 ETFs in the world. Uh the open interest on the ETF is bigger than um everything on Darabit too. And so just the amount of hedge funds that just want to just make money straight off the volatility and any compression in spreads um that's going to continue to make this asset class less volatile which uh relates directly back to the Morgan Stanley of the world because um while they do get paid on AUM and uh of their clients they also get fired if their draw down is too um large and that's why you've seen many of these types of adviserss be willing to put their clients into long-term government bonds that they know will go down over time or and be negatively yielding in real terms. They're just more willing to open up the aperture to uh Bitcoin and gold um relative to just these uh the long-term bonds. But yeah, as you mentioned, um we'll we'll touch on this a little bit later, but everything Black Rockck related, like they've had extreme success getting out of the gates because everybody knows who they are. they're trusted right now and you know a lot of the Bitcoin native companies just aren't. Um but yeah, it's a it's a good transition into the Galaxy one because there's a lot to touch on there. >> Yeah, we can we can move to um Galaxy launching Galaxy one. Maybe just before we do that though, because Michael, I think you bring up a good point around um you know, how businesses react to this quote unquote trade um and the recognition that you know hard assets are are now you know more invogue than probably they have been in 40 or 50 years. Um and what does that actually mean for a business, an incumbent? I mean, on one hand, it means you should probably be storing some of your balance sheet in either of these assets, gold or bitcoin, but it also means you should be offering them to your clients. And so, you know, we've seen some early signals of this like with Caner uh coming out with a gold Bitcoin product. Um I think there will be more of that. Um certainly. And um I guess Michael the question to you is like put a finer point on what you mean what you meant by like you know the sort of V1 of these things may be won by the incumbent but the V2 may look somewhat different um and be won by more uh Bitcoin or cryptonative firms. Like what does the V1 look like I guess in your mind? Yeah. So I guess like if you go back to anchor and contextualize well what is that even how do you know right? Like what what are you talking about? It's like well if you go back for 10 years who were the first people that adopted digital assets and it was none of them. They just had no view in it. They had no no way they want to express it and it was obviously coming but they they were behind the eightball. And naturally as the price has ticked up and the demand has come they've said okay well we get somebody wants this. And well again the more sophisticated people like the Ray Dalios and others probably are have larger percentages from risk 1 to 3%. Most of those advisers believe that's all it is. It's a risk asset. You're probably going to um you know cycle out a rebalance. And the point being is the V1s are going to be building exactly how the traditional market was built with you know omnibus is a great example. the insurance policies that manage it, not allowing delivery, maybe allowing delivery, but then having to figure that out just like the NA, you know, rehypothication collateral. And so that's really where you got to pinch yourself if you're listening to something like this and building looking to invest is well, it's just natural if you're holding a material position in Bitcoin. Doesn't matter if you're love, Morgan Stanley, Black Rockck or Fidelity, and it grows to 10 to 25% if not greater. Well, why like on hell would you why in hell would you trust them in an omnibus wallet to just leave it there? Um, and it's not that you don't trust them, it's just that can you afford if something happens that you don't get that that asset out. And so that's really where the multi- institution comes into play and then lending against it as well. There's just going to be native properties that come across that. And then you could start to think about the big gap I think that if we're right is that this notion that there's 21 million of these things. There's much less than that. And if that's going to be a base asset next to gold, then you're going to want the integrations and and um custody to be tightened into whether you are crossc collateralizing, lending against it, getting access to gold dollars. That's not how the existing plumbing works. It's not how they even want it to work. Uh when you think about a traditional 60/40 and so it's just ripe for disruption. Um and then to just make the last point is to your point around like TR Trifi's whole game is you know net interest margin holding the asset uh rehypothecation you know the fact of like multi-institution as the easiest example for them to say oh hey like we're not going to be able to have unilateral control and everything that goes into it is just a very hard thing for people to swallow. Now, I believe over time they will just how they had to adopt Bitcoin uh to put it in a 2 to 4% position, but that's the beauty of building right now and knowing these things. Um so hopefully that kind of outlined a little bit better. >> No, that was great. That that was perfect. Um Liam, any other thoughts or you guys want to move on to the um Galaxy deal? >> Oh, from me. >> All right. Uh Michael, I'm gonna hand this one to you. Galaxy launches Galaxy 1 platform. Um, I think Coinbase One is also a thing. So, they could have done a little bit more more creatively on the naming convention here. But, uh, what does this mean? What are the >> It reminds me of the flicks where you like the the, uh, the scripts get leaked and there's like different shows that kind of like start resembling other shows. Uh, they probably like somebody was working on it quoteunquote first and the other one's like we're going to get it out. >> Um, >> so Galaxy 1, yeah, they launch their platform. I think there's two aspects for me personally that were interesting. Galaxy just seems to really be executing at a very high level. Um they seem to really potentially being one of those firms that hits the intersection or convergence of Trady and the digital asset space. Um part of this launch had you know premium yield accounts for high net worth investors access to interesting products to start gold uh Salana Bitcoin and I think Ethereum. um and it's effectively their first kind of product out into the retail market where they've traditionally been institutional players. So between that and then um just their natural uh like cycle into AI, they they were holding a lot of bags when it came to when it came to uh power production. They've really I think their stocks taken a huge uh boom to that given that they're now you know AI um they're managing AI compute. The other thing is goes back to uh probably most relevant here and that we talked about just a second ago was just the notion that we're going to see this cycle out of TRDFI firms that are naturally going to have to start offering digital asset native services and then the in the other side of it and they're going to be doing it via building vertically integrated themselves or partnering with others. And then there's going to be the other side of that which are digital native firms that are going to be integrating more trady uh products like this 8% APY. And I think about that a lot in the context of like what we're building at on-ramp. And there's just a notion of people generally want to have a unified experience when they deal with their financial life. And so I don't think there's a one-sizefits-all. It's just going to be an interesting model to see kind of where the the winners end up uh on a long enough time horizon. >> Yeah. I mean, what do you make of this this yield product though? I mean, generally um I've been uh conditioned to think skeptically about uh any any sort of yield offering. This says high income investment note offering 8% APY, but only to accredited US investors. Um the yield is powered by Galaxy's institutional lending business and unlike 4% cash account, it is not FDIC in short. So, >> yeah, >> not a ton of detail on how they're generating that 8%. Well, there's a couple things. Like one is it's dollar yield, which at least gives me a little bit of less of a pause because it's dollars. So like I mean a like there's a lot of ways to get 8% yield in dollars. Um but also Galaxy's been around the block. Um they've managed lending markets where you know have a good lens into their work that they're doing with Arch. Um and they're very pretty conservative. So the point being is that you know Arch as an example offers over collateralized loans. They get you know anywhere between I call it 10 they charge anywhere between call it roughly 10 to 12% spread. Galaxy you know invested that or partners gives them um uh call it nine costs nine they give eight back. Just throwing out numbers. These aren't actually but you see where I'm going with it is there's a lot of investors that naturally don't want long exposure to BTC. Um, the other thing that's just a more meta point to 8% yield is I wonder how far I'll throw this back to you guys. How far we are from just the notion of anybody passing any kind of dollar yield without denominating it. it's something else whether it's gold or bitcoin persists or lasts for because I've been thinking more about this in the in the context of venture and obviously we're bitcoin denominated and we would don't make money unless we return bitcoin to investors but if you think about today or a year ago somebody raises a fund and let's call it whatever the the number is it can be 10 million it could be $und00 million well $100 million you know how much bitcoin does that buy you today is that a th000 I think BTC roughly let's say it's at 100k and So in just 10 years conservatively I think we'd all think it's a you know a million dollar BTC. Well that's a billion dollars um you know in US dollars you have to return in Bitcoin terms you have to return that Bitcoin. But the real point is that what does the dollar look like? So the dollar if it's already losing 50% of purchasing power to gold in one year well what does that look like in 10 years and how are people and the same thing could go for a micro example which is on an 8% APY like that's effectively kind of inflation rate so you're putting your capital at risk to the point I think Brian you're making was like why don't you just buy the Bitcoin right >> uh and now obviously we're still early to that but I don't think we're like we're starting to get closer to this realization of like the risk quote unquote risk-free rate if you can get custody right? Ends up just being holding the underlying, which has been my whole reason why the DAT thing doesn't make any sense because you're just putting all this capital at risk for execution risk versus just holding the underlying thing, but hold more of it because everyone's still under allocated. >> Well, yeah. I mean, that's a really good point and where my mind kind of goes is like, you know, I don't think we're there yet, but I think as this continues to play out over the course of the next few years, I think there will be a recognition that like the 8% yield is not enough, right? and and then that will cause um you know uh moving out the risk curve even further to offer even higher yields on these types of products or you know uh other other mechanisms and so that's that's what I would see occurring is like there there will there will be a recognition that like you know if the debasement rate is 7 to 12% then you know clipping your 8% um yield on whatever you know product or service uh you're you're going through is is just not going to be enough and then that'll force other people to um you offer 12 or 15 or 20% yields. Um, and we've seen like little sort of micro instances of that in in more of the crypto specific world where, you know, you have all these protocols where people do yield farming and you get 50% API APYs. Like I I I think I expect some of that type of mentality and thinking to blend over into the Tradfire world once people realize that, you know, it's very difficult to uh compete with if everyone's offering, you know, 5 to 8% yields, uh there will be a natural incentive for people to offer something that's a little bit higher risk and and, you know, could offer an even larger larger yield. But that's just kind of where my mind goes with it in terms of, you know, how this could progress going forward. Yeah, people don't know how to underwrite that and that's where all this um the the kind of natural deleveraging comes from. I guess the the second part to that I'm curiously your thoughts on for easy math is like you raise 100 million uh and you deploy it and you know you hit a 3x so you you you know get net return call it 300 400 million um actually net of fees you're definitely way lower than that but point B is like let's just say it's like at a billion dollar or a million dollar bitcoin that's a th000 BTC C, but that's actually like closer to.3 BTC you're returning. It's only like uh 300 of that Bitcoin is just like the the the math people are going to start to do on like why don't I just hold this underlying thing. Um I'm just curious how far you think we are from that. Well, I think we're we're going to be pretty far from that uh for the majority of people, but it always happens at the edges. Like just like Bitcoin was proliferated by just the individuals adopting it, those who adopt Bitcoin from their personal balance sheet are going to start thinking, okay, well, if I start a business, I want to get more Bitcoin with it. And that's why I'm going to make my internal hurdle rate actual Bitcoin. and then that will end up going out to other investors who are considering investing in venture versus just holding the Bitcoin themselves. um it's just broken at more so the company level than anything else which is why we go back to this 8% APY and um many other people out there trying to gain a few basis points on their internal cost of capital rather than understanding that the end goal is either uh more Bitcoin or or gold if that's what you prefer. Um, but at the same time, there will be many different pension funds and long-term capital who are going to be extremely far away from that and they're going to look at um Galaxy's premium yielding 8% uh APY and think, hey, this is interesting. There's obviously some um some risk involved, but they can, you know, make some arbitrage play on whatever. and they're going to think that they can pick up a few free dollars on the floor at the same time that they're just missing the fact that the entire trade is just uh how much Bitcoin can you really get on the other side of things and the the dollar is going to have so much more uh debasement between the next now and the next 10 years and they're going to be kind of picking up pennies in front of a steamroller. >> Well, how about this? So, uh, one is what if they don't necessarily have to know because I know that's pretty hard for a lot of like individuals be like, well, I'm trying to get more Bitcoin. That's the game. But it's what if they're just trying to get more dollars, which they are, and they come to the conclusion um that Bitcoin is just a proxy for net dollar expansion. And so the the way I'm working into this is because it's interesting. A lot of people be like, "Well, there's no way you can return more Bitcoin." And like the funny joke is, "Well, you can't if you don't try." And what I mean, no, but seriously, because what I mean by that is, well, you can't actually return more Bitcoin if you have a a venture in dollars because inherently you've baked into it that you get money if you return dollars, not Bitcoin. And so it's like, well, on our side, um, we don't make anything unless we return Bitcoin. Right? So then you already put the incentive on the right track and then you're basically putting your money where your mouth is like you get your money back and you're going to get some proxy of Bitcoin which is going to be much more than the dollars. And so what I'm really getting at is how far do does it take for the market if we believe this debasement trade is happening and people are going to wake up and again it starts at the at the edges but it'll be individuals start to demand from their GPS and other fund managers. you have to benchmark against gold or Bitcoin at some respect. And it's like because those are proxies for dollar liquidity and I need to make sure that I can't just go and buy those because I could just go buy those outright which is going to be beautiful because that means there's going to be much less asset managers in the world. Uh and there's also going to be a lot more efficient capital allocation because the second that happens you're just like well [ __ ] I got to make more money back. Now, I know this is probably like, you know, wishful thinking and we probably have a long ways to go, but that's the beauty of like where we're at is it's just rational. This stuff we were talking about the gold Bitcoin thing for a few years now. It's coming to light. Like this will happen because it's just a rational uh thing for an investor to do is to demand more of the thing that gives them more purchasing power versus less. And and then even if somebody says, "Well, I'll pay dollars. They can't return Bitcoin." It's like, we'll just benchmark against Bitcoin and then return the dollar still, but don't get paid unless you outperform. And they like, no, no, I can't do that. >> This is the this is a beautiful thing. Um because it's exactly how we talked about with um essentially Morgan Stanley trying to adopt Bitcoin, but it's going to cannibalize all their existing businesses. So, it's not going to be the super large incumbents who just recognize that the entire way that they benchmarked all of their funds was actually a flawed model and having to explain that to a very large swath of investors that already um have invested and saying, "Hey, we actually did this wrong." And so naturally it will be the relatively, you know, ones or twos at these bigger firms that try to get their firm to adopt it because they know at the end of the road like every individual is going to want to demand these things and they're going to um you know not demand it or not adopt it because it will be an implicit admission that their entire business model is wrong. And so the people will naturally go out and start their own businesses themselves. Um, and so that's essentially how this is all going to happen. It's going to be the um very and there will be LPS that demand it from their general partners too, but the partners have no incentive to admit that everything is flawed um unless they're actually starting to lose capital. Uh I think very few are going to admit it before they actually see the problem. It's kind of just like the entire debt situation that the US is in too. >> This is the true wild west in my mind. like if we had to go back, right? Like the people staying in Europe and they're like, "No, everything's fine. It's it's great. We'll like live under surfom." And then there's people that are like, "Fuck it. I'm going to America." And then there were people like, "Fuck it. I'm going further west." There's like there's no rules. Everybody is open to new things and then we're going to like make it work. And some people died along the way and some people had flawed models, but the ones that end up making it um there's a whole world on the other side of that. That's like effectively where we are today. And why I say that is because there's so many people now waking up with the quote unquote debasement trade where all this stuff was taboo. Now you can start to find your cohort and we find them. They come in, we invested in them, they're they're our LPS of like, wait, this just makes rational sense. It's like I've been investing them and saving money and I know there's things out there that need to be built, but people aren't building them the right way and it doesn't look right. It doesn't look right that people are going to hold these plastic devices spread across all over the world. doesn't look right that like people are selling lightning or other merchant fees but nobody's spending. It's like people just need infrastructure. People need access to gold and bitcoin. People need like these sound products. They need to be able to lend against it um based on where we are today. So wild west buckle up. >> Yeah. I mean I would agree with Liam's take that like you're not going to see a full embrace of this from the Trafi folks but what I would expect is like people to spin out as as you kind of alluded to. So, like I, you know, if if this continues, right, and let's say Q1 next year, gold's at 4,500, Bitcoin's at 150 or 200, like I would expect to see some some more uh boutique shops, not not the big names, not the incumbents, but like boutique shops, spinouts that are denominating in in either gold or Bitcoin. Uh I do think we're not too too far away from that. Um >> over under 12 months. I was just about to ask you that. >> Under under. I think under because I think this is going to accelerate the the debasement trade will accelerate through the end of the year and I think people will start waking up to not only that but what I'm going to pull up now is this is the year-to- date performance of of major hedge funds. They're all underperforming gold by like 50%. They're all underperforming Bitcoin. Um you know Bridgewater, Pure Alpha. Yeah, go ahead. So, sorry. One thing just before we transition to this, this was the whole pitch around why we're like is in a great spot is the debasement trade or if you're going to denominate your firm, specifically venture capital in a harder money isn't happen in a vacuum. Meaning like the companies actually have to have unit economics. They have to do things. Um, and so the point being is that not everyone can do it. It's like you even if they could transition and spin out. >> So this is where a lot of um the interesting angles will come from from our set of like if you just build a firm that has a proxy for higher discernment and efficient building in the new world where there's a cost of capital that's above you know basically printing dollars you're going to be in a very good position independent of returning the BTC you can hit you know our benchmarks 1.25x if you hit 1.21 two, one, you're still going to outperform every other firm and then all that liquidity isn't going to naturally come to you because like well wait, you actually understood this. You knew who to hire, how to think about building in a world where the there's no free capital. Uh is I think the last point on that just like exciting part as long as we can uh make our stuff work. >> Yeah, 100%. I mean, if you just look at this and you know, let's say hypothetically, uh, you know, we didn't mark up any of our business in our portfolio, we returned 1x Bitcoin at the end of this year, we'd be outperforming all these top hedge funds. Like that that is the moral of the story here is that if you just hold a denominate in a in a harder form of money, um, you know, one, it makes you more discerning, which is the the real critical part, but two, you can you can outrun all these fiat denominated people um that are just playing the wrong game. Um there was a few other uh Liam I don't know if you had anything else on that but there was um >> no I would just say the um it all goes back to the incentives and you know you can talk about sharp ratios and sortino ratios all today and how you're the best performing at all those metrics but at the end of the day what most people really just want is um more dollars and uh and more Bitcoin or or more hard assets too and that's why chasing these wrong metrics and being evaluated on all these wrong metrics uh is just going to drive worse outcomes. And you know, being in a dollar denominated world is just inferior relative to living your personal life on a Bitcoin standard as well as all of your investment decisions. Um, and it can be gold standard, too. But it just the world is kind of very very slowly waking up to that. >> And and the last part on that is don't let anybody convince you people can't return more gold or Bitcoin to you. It's like a very fiat take. One, because money is meant to be spent, but two is we got so far away from delivering value as a society that people literally lack the imagination of how to deliver value that can make more money. Uh, and that's where the DAT craze again comes into play. It's a lot easier to financialize Bitcoin versus just provide goods and services that individuals need and then to charge a nominal fee on it. Like that comes up a lot. It's like, well, how can you make more Bitcoin? It's like, well, you can provide value to the world and then they pay you for it and then you give it back to your investors. It's not like rocket science, but there's some version that people like, "We can't return more Bitcoin." It's like, "Yes, I can. I will, and I'll show you." Uh, it's just a very, it's a very like the world's gotten very crazy that that is actually even something you have to discuss. >> We're going to have to um put some research out on this because it's a great point. And when you think about the world in uh a state where we're eventually under a Bitcoin standard, there will be uh the value of your savings will actually just be a proxy for the productivity of people in society and the outcome of all businesses and people getting more efficient over time, which you know they should. But if nobody actually does anything and they just say, "Okay, I'm going to sit on my Bitcoin the entire all of my life and uh just sit at home and play video games or do whatever." um the money will actually become less valuable over time because there will be less productions and of goods and services into the real world and so the value of your savings will actually go down rather than increase if nobody actually goes out and produces anything. The uh net economic output will decline. And that's not to say that you have to go out and do it yourself, but it's just a like a framework to view the entire world under. And you know what would be more valuable outside of time than than Bitcoin in that world is your reputation. So like that's how you get the money and that's how you get like right now when you have dollars like the accountability doesn't exist. Think about how many like founders started companies whatever started another one left the VC firm started another like underperformance like it's all just hidden in this like haze of like nominal versus real. That's actually um I know we want to probably transition, but that's been the most interesting thing is for two years we've been really talking about nominal versus real returns and how it's been masked and that's what's come to light in this debasement trade is people waking up to the notion of nominal versus real and we need to come up with easier ways to understand that because it's not that hard but it just sounds so uh like to the normal person it's just like the thing that lets you buy more goods and services versus the thing that doesn't. Um but anyway, >> right. Yeah. It's like the concept of nominal sounds uh more confusing than it is, but it's just like you you're you're denominating the thing that's being debased. So, it's not real. Like, it's literally not real. Um I wanted to sort of jump back to a track that we were we were kind of on this before with with the Galaxy 1 deal and what we were talking about was uh both sort of cryptonnative firms and the incumbents sort of trying to bridge this gap. So another example of this I I would say is this Binance uh announcement with you which you brought Liam uh Binance to offer turnkey crypto as a service solution for Tread institutions looking to offer trading custody and compliance. So this this sort of just reminded me of the Galaxy one deal and and sort of the you know another example of the cryptonative firm trying to bridge the other way into into trady. >> Hey everyone, hope you're enjoying the show. Just want to give a quick word from Onramp. If you're not familiar, we have an incredible new institutional line of products that have come out, including uh a fundamentals research series that Glenn Cameron, our head of institutional, has been working on. I'd highly suggest taking a look at it, sharing with, you know, whether it's peers in the space, friends and family, as well as if you're an institutional allocator, taking a look. It's really foundational stuff about what gives Bitcoin value, uh, total addressable market, what how it works. really great, you know, content that uh meets the the middle between institutional allocators and the type of research and polish they require as well as um the uh understandings from a Bitcoin, you know, centric lens. This also applies to just net new holders that you've been trying to educate in the space. On-ramp um trade offers the lowest fees in the industry. If we ever don't, please let us know. Uh the main reason we can do that is because we offer other financial services outside of just um you know buying and selling Bitcoin specifically our multi-institution custody offering would encourage clients to check out our prospect of clients. Uh it's a great offering. You can find it on our website at onrebitcoin.com. Onto the rest of the show. Yeah, Coinbase is doing the same thing and it will probably as a V1 be split kind of east versus west on who adopts these types of um services. I do think it I wonder what the economics of these types of deals look like um for those institutions that are adopting like Binance or Coinbase's crypto as a service type business. But at the end of the day, it's going to more than anything, these firms who haven't built it themselves should ultimately do these types of uh aspects just because the data feedback from their clients is going to be really interesting as well as getting a front row view of how Binance and Coinbase actually operate. Um it's not going to be perfect. those those firms we know are not and we can discuss that a lot but um at the end of the day they need to start understanding where these how these customers interact with the different products and services what what they really want and need but um for a V1 they there needs to be and there will be a lot of adoption of these types of assets just because it's going to take a lot of these legacy firms years in order to build it themselves and they're going to have all these competing priorities internally early of um why this should actually take additional um manpower and skills and capital away from their existing business which is uh net making money. And everything from you know quarterly reports on how uh how much revenue and free cash flow companies are bringing in um versus actually going out and spending a ton of money in order to develop something new which is uncertain how much market share they'll actually get. It's going uh the incentive will probably just be pay a little bit more upfront and uh rather than trying to develop it in house and have all this negative free cash flow for a long period of time if you already have a sustainable business with you know operating and predictable free cash flows. >> Yeah. >> Yeah. I don't know. Brian, did you want to share? Do you want me to jump in? >> No, you go ahead. >> Yeah. I think um I think that's right. I think this is an interesting model for uh intermediary but between and probably pragmatic uh versus build or buy because um I think Fidelity has been a good example of this where they played the longer game and how to build a lot of that institutional inertia knowledge on how to you know develop wallets and offer goods and services and they're still probably very far behind something like Binance as far as like omnibus and and a lot of the um being able to receive and and take it in kind. And I think they just launched some of that after 10 years. Um I think it's right to it makes more sense like Binance doing this. You know, we see there's a lot of opportunity when it comes to integrating with what we're building, whether it's holding a key, not holding a key. I think the big gap and it's going to take a while is just the notion that if Bitcoin credibly enforces 21 million, it more than likely is a reserve asset. And if that's true, you're incentivized to get your your grubby little arms around as many Bitcoin as a business as you can. And that doesn't work if you're leveraging third party white labels. And as well as um you know this, this is what I, you know, talked to banks about is the disintermediation that has already existed with the top four and sub custody. You're going to see more of that. Everyone's working on stable coins right now and what's their plan there, but they're not thinking about how do they actually manage custody around Bitcoin and it's not an either or thing. I think the the folks that win whether it's crypto, digital asset and tradi firms are going to be the people that park best-in-class products around stable coins, Bitcoin, even potentially gold. And then how do you let people uh crosscolateralize and get access to dollars via lending solutions that are robust and resilient and then kind of bypass a lot of this stuff? Because like think about how much crazy stuff bit uh Binance does if you get the right label and you have because like there's a lot of complexity when you think about wallet architecture supporting you know 10,000 cryptocurrencies and everything under the sun and that's just going to be the trend for the next call it one to four years is people are just going to get inundated with so much slo just like keeping the focus especially empirically whether it's market cap weighted to uh trading volume it's all just Bitcoin and stable coins so you can just get you know the meat without the fat but nobody Nobody tells this story to them, so they just literally think it's like crazy and they're like, "Well, you're just close-minded and you got to focus on everything." And it's like, "All right, we'll see." >> Yeah, it's a bit of a, you know, bit of a catch 22 in the sense of like if you are the incumbent, the Tradfi or the fintech firm. I think you're right, Liam, in that it does make sense to do deals like this because there's sort of a, you know, you're on the clock in some sense in terms of you need to be able to offer this stuff to your clients. And while the sort of medium to long-term right decision would maybe be to build it yourself and you know think about it from first principles there is sort of a a race to market around this stuff particularly for the the TRA 5 folks and the fintexs um that you know near-term it does make sense to just either acquire or do a partnership like this um so at least you just you have something um but to Michael to your point like that's probably not the right long-term uh path if if you actually want to win longer term and get closest to the BTC and uh do things the right way and and own your own uh infrastructure etc. Um so it is a very interesting spot for those types of folks and um you I did want to move to a couple other headlines related to this. So we went from you know the crypto incumbents bridging into tradi and so now we're going the other way the you know tradi folks or um you know uh traditional fintexs moving the other way into into crypto. So, there was this headline, Walmart backed fintech one pay is bringing crypto to its banking app. Um, and then there was another one that I think you brought Michael around Stripe um getting into stable coins in a in a big way. So, maybe I'll hand it to you Mike on this Stripe deal, but just more broadly now going the other way from incumbent into crypto thoughts. Yeah, the um I thought this was fascinating because effectively Stripe is going to want to let anybody um their clients build their own stable coin and um pass or or generate that yield, right? Because I think that's going to be something we'll we'll talk about on this podcast of just some of the market mechanics around um circle and tether's dominance and how does that play out. But ultimately, I thought it was just very fascinating to see Stripe sit in the middle uh referencing the acquisition of Bridge and ultimately letting any kind of financial institution, fintech or just traditional commerce business, um have their accounts, which they generally probably already do as Stripe, launch a stable coin. And um know TBD how that plays out for a number of reasons when it comes to interoperability. But I do think that it makes a lot of sense that if you have a lot of distribution, why you wouldn't want to own that wallet balance and then ultimately be able to incentivize passing that yield back to the client and generate more of the the economics. Um, so I thought that was that was a pretty interesting kind of nugget and it ties into a little bit of the the Binance stuff but on the other side. >> Yeah. I mean, have any thoughts on this one? >> No, it makes sense. I think we're going to see Tether and Circle probably be larger players for at least the the near term and then we're going to see a bunch of niche smaller players pop up with um however much they have generally in terms of their existing deposits for their customers. I don't know how much additional distribution they're going to get outside of uh net new customers coming into the platform or their stable coin. um unless it's they have a really tailored strategy in particular, but this is a pretty uh easy way to just grab a couple additional bips uh if they're buying the treasuries themselves and just continuing to have their customers on the platform. >> Yeah. >> And uh yeah, go ahead. Or I was going to pull up your other link from Standard Charter talking about uh one trillion could exit emerging market bank deposits for stable coins. >> Yeah. Uh so I think we've had a lot of numbers thrown out in the past call it 6 months. Uh standard charter threw out 1 trillion exit emerging markets I think I forgot who was that had like 30 trillion by 2030. Um funny >> enough said right just in general he was saying that that would be the stable coin market would grow from whatever it is 300 billion to three trillion. Yeah. And so we just uh I think today's passed 300 billion in stable coins um issued or like you know total I guess total value locked up in them. Um what's what I was thinking about going back to the one pay deal uh I'm curious because I think Brian you brought that if you had any other thoughts there is the notion of um it's all going to end up looking like the same system again when you think about it because like the stable coins probably get obiscated away in the background like I think now when you know again I haven't thought deeply about it but the initial thought is like the tether stuff trying to raise that money is because their dominance has maybe peaked And um the notion of if you're going to need this stuff to be interoperable because if it doesn't then you kind of like unless you hit a flywheel of uh escape velocity and I would make the case nobody has because we're still so early like how many dollars are actually issued on chain versus still used it's probably like you know 1% or whatever. Point being is that's going to get obuscated and they're going to need to be interoperable. you're just going to naturally end up having um people not really even knowing what they're using. And because this ties back to uh Walmart, I don't know the numbers, but it's just like their scale when it comes to they're one of the few players that can actually get Visa Dynamics and Mastercard to move when it comes to interchange and being able to do just like in in uh uh lean on them when it comes to invoking like if they want to make changes. And point being is that one pay deal is kind of interesting because if they own that fintech application and they have distribution via their plat, you know, people going to Walmart and then they can get them to download that. Well, eventually they would launch their stable coin. But then over time, like if everything net settles to BTC and its interoperability at different layers, it probably looks and there's all this interoperability at the stable coin layer already, you can imagine like Satoshi start getting interoperable with stable coins and it all just like fuses together. Um, and so anyway, I was just thinking out loud like it's it's an interesting area we're going to because it makes complete sense for everyone to launch their stable coin because of the it's it's literally a click of a button. It's digital and there's not a lot of banking uh not there infrastructure, but like the the gatekeeping has been lifted. So now you don't need these large players like Tether and Circle to do it for you. But then if that is true then the interoperability is going to have to be there to make the consumer experience uh you know where you don't know what's happening which is ultimately just going to lead to nobody knowing what anything is just moving up dollars again. Um >> which means that a lot of these firms won't recruit a lot of value. >> I think that's exactly right. Like what was interesting about this One Pay deal in particular was, you know, and to be honest, like, you know, I've never used the One Pay app. Uh, but I'm sure it has a a good, you know, good amount of market penetration if it's associated and owned majority owned by Walmart. Um, so that's the the sort of distribution angle, but what's really, I think you hit it the nail on the head in terms of like it doesn't matter what stable coins they're using, how they're using it. It's just it's tightening the fidelity between your spending dollars and your saving in Bitcoin. So part of what this um whose article states is that they, you know, they want to probably won't happen until next year, but the offer the ability to hold Bitcoin and Ether in the mobile app, um convert the crypto into cash and use those funds to make store purchases. So, this is kind of, you know, we've talked about before is just like getting the the user interface and the user experience to the point where you don't really know you're using stable coins. Um, there's this Bitcoin thing that sits right next to your dollars that uh basically gives you more dollars over time. So, like you just hold you hold a certain amount of value in that in that bucket. It generates more dollars for you over time that you can use to spend on things. Um, and so I think that that's what stood out to me as interesting about this one is like they've got the distribution and now it's just about tightening that fidelity between dollars and savings. Um, and I expect to see more of this like you know Walmart and One Pay won't be the only people that are trying to get at exactly that use case and that interface to be super clean and really train consumers and and uh and clients to spend in dollars and save in Bitcoin. Um, I think that's where this is all headed. Um, and it's it's infrastructure and deals like this that will get us to that point. >> Yeah. And that's going to be really interesting, too, because a lot of uh well, not a lot, but um there are certainly Walmart customers out there who don't have access to bank accounts directly. And so being able to essentially store all of their finances into an app like this, it's not going to be all Walmart customers, but even a relatively small penetration of um different customers who can do this will be uh great to see. And then Walmart is one who definitely should be exploring Bitcoin based reward systems there. they have such a massive loyal customer base especially for uh you know Walmart one type customers or Walmart plus I think it's called um and the just ability to allow your consumers to save in Bitcoin will just drive additional uh sales to your business moving forward and be net good for you if all of your customers are uh actually saving their money in an asset that's going up over time and going to allow you to have a little bit more pricing power too as they just get a little bit uh richer over time. >> I will say this is a little bit of a a hot take, but uh I'm fairly confident that this proliferation of um stable coins at the same time that we're at the current debt levels and then lowering of interest rates will effectively call us the next global financial crisis. And um and the main reason for calling that out is because I've been thinking about well, you're naturally gonna either want to net settle or put Bitcoin next to it to to go into a harder form of money. But I also think it's going to matter for the self-preservation of the individual or the institution because um it goes back to like custody where you think everything's fine until it's not. And so the ones that do it right will naturally be uh insulated because our clients will have already parked the money in a form of you know money that can't be debased. It's sitting you know offchain ideally um multi-institution ideally where assets you know can't be moved or rehypothecated. But the point being is that the firms when you start inserting more dollars or risk goes out u further on the curve you're using it to back up derivatives like you're just going to and then they they can move at the speed of light versus what even Bank wires had to do at Silicon Valley Bank. It's just going to add a level of volatility that nobody's prepared for. And um yeah, it's going to be very interesting, but I don't see how it doesn't play out that way given all the initial. It's less about stable coins. It's more about the existing market and then you just add basically gasoline to that and that's how you end up with like a you know a crisis. >> Yeah. There's it's just going to be easier and easier to escape the um perpetual debasement of money through either Bitcoin or and stable coins honestly are less risky. If you're just in Japan and you know that your money is going to be debased and you're going to have higher inflation rates and they're going to continue to uh perpetually offer easy financial conditions, you're going to want a unit of account initially that you know goes down a little bit slower than uh than actual Japanese yen. And that's going to be stable coins. And then you're going to realize that Bitcoin is right next to it everywhere and that's actually going up in value versus just going down slower than the Japanese yen. Um, and so it's going to the distribution of Bitcoin is going to kind of be turned on everywhere all at once, uh, right next to these stable coin assets too. Um, as well as, uh, all the different cryptos and there will be a lot of money lost, but um, ultimately it's it's going to, uh, really drive a lot of net new eyeballs onto the asset class as a whole. >> Yeah, that's well said. I Michael, you did allude to um this notion of the the duopoly in stable coins. So, Tether and Circle. Uh Nick Carter wrote about this last week um effectively saying that the that du duopoly has topped um you know I think forget the exact numbers here but it was around you know 90% market share a year or two ago and now it's um down down from there. So, any other takeaways from this uh write up from Nick just on the the sort of market share of stables? >> Yeah, I think um we kind of touched on this with the bridge deal, but it's just the notion that if Tether and Circle had the duopoly, they were taking the majority of um net interest margin and taking it for themselves, not passing it through. what are they? Um, they're in a in a situation because ultimately that's how they're sustained their valuations and their moes and you're going to have all these other competitors step in to allow you to launch them and then they're incentivized because they can pass that through. I think there's another angle which isn't really widely discussed and it was part of that hyperlquid situation is that uh let's call uh yeah so tether and um tether and circle let's call it have 200 billion of the $300 billion market uh of stable coins today well that 200 billion sits on places like you know Bitfinex owned by Tether has some portion of it and then Coinbase has some of circles But the reality there's all these other places um that have that and they're not receiving any of that yield. And so in a world where an exchange or another firm financial service firm wants to issue its own stable coin and then maybe they split the uh fees or the economics and they give you know two and a half% back to the client the holder and then they they keep the other two and a half%. There's just going to be a lot more competitive forces there. Um, and that goes back to the valuation kind of like top ticking and and extracting it at the the best point before this kind of plays out I think is the essence of uh and that's where this piece right here bringing up is yields are race to the bottom. Yeah. And what this chart here specifically is showing this is pretty wild. Stable coin supply excluding Tether and USDC. So you can see really from the beginning of 24 you've seen this rise in sort of the the everyone else bucket outside of those uh two major players. >> Yeah. And the last part like what Liam said about um the Japanese yen and and safe havens, they will be with the caveat like they still are susceptible. Forget about like being seized or turned off that you don't know like where the risk lies when they start to um everything feels like it's going to get obiscated and blended together on you know if it's a corporate bond that it's going to or generating other yield and then that corporate bond is insolvent and all these just different things. just like, "Oh, sorry. Your actual uh because you decided to, you know, opt into the 3%. These are this was in the terms of service uh or the the the T's and C's and um ultimately you kind of like have to take a haircut of 50%." You know, because like we've already had we've had claims on it or whatever it is. I think that's the angle of people don't actually they're still not your dollars. Um in the same way the bank's dollars are still not your dollars. And that's I think the thing that's going to play out on a long enough time horizon where people realize there's still counterparty risk outside of just the fact that they can be turned off or censored. Your bank your account can just be wiped. >> Yeah, exactly. It's going to be uh there will be a ton of bank runs and there will be lock up of funds and you can only take out certain amounts over certain periods of time. Um, and there will be a lot of rehypothecation in there and uh your counterparty risk will also be important. Um, especially if you're holding stable coins that are outside of the US too. I think that's going to be uh an even bigger um issue as other currency or other nations just want their own uh debt to be monetized rather than just the US in general. >> Hey everybody, hope you're do enjoying the podcast. Just wanted to give a quick word uh from On-Ramp and the the knowledge center specifically. I think there's a lot of individuals that have been listening to this podcast for a while. We hear from them every week when they finally decide uh maybe giving an on-ramp a try for some of their financial uh you know services when it relates to Bitcoin. Um we have a knowledge center that covers a lot of the commonly asked questions. You know, you can always reach out to me. You can book a consultation to learn more. But common questions around what does our insurance by Lloyds actually cover? Uh what are the best IRA providers in multi-institution? Who holds the keys? Um really how does multi-institution custody protect against physical threats? You might be familiar with the launch of Honor Guardian that uh was announced a few weeks ago. That adds additional layers on top of just the multi-institution security along with video verifications. Um as the price creeps higher, you know, 125,000 all-time high, we'll look small in the places that we're going. Um, and so when you think about $175,000 Bitcoin, $250,000 Bitcoin, naturally having built in this space for a very long time, most individuals are not prepared for that. Um, whether it's a hardware device or, you know, collaborative custody setup and understanding the Xpubs, the wall config file, how do they plan for inheritance, how do they access financial services where, you know, to make sure that the the keys are secure, but they now need to access them to take out loans or sell Bitcoin. um we saw for that and a bunch more. I'd encourage you to reach out. Um we'll be here when you're ready, but to the extent that this price uptick has been one of the reasons you kind of want to learn a little bit more, I'd glad gladly take the consultation. We have a full team that will also support. All right, on to the rest of the show. Hope you enjoy it. >> Yeah, I don't know if this is a good if you had anything, Brian, or this a good transition to the uh the car deal. um because >> I'll I'll go there in a second, but just one more one more thought on the this stables report from Nick. I I do think that this is a important closing thought in the sense that um and I'll just read some of this. You know, I used to adamantly believe that we'd only need one or two major stable coins. Network effects and liquidity are king. But do stable coins actually benefit from network effects? They're not they're not the same kind of business as Meta RX or Uber. The blockchain is a network rather than the token. If you can swap in and out of the token token frictionlessly and swap between blockchains quickly and shapely, the network effects start to matter less. So I think this is actually the most critical point of everything that he's saying is that as interoperability uh improves across these different blockchains, across these different stable coin networks, um as those exit cost trends to zero, there's there's really not a lot of lock in across these things. Particularly if you know someone's just using them in a trading format, they're going to be in and out of them pretty quickly anyway. they they start to care less about what the actual stable is and just getting in and out of it quickly and cheaply. Um so I think this is a fundamental point of of why perhaps this duopoly might not uh continue to exist. I think there's still a lot of fragmentation um but that is likely to improve going forward in terms of u reducing those barriers. Um but you wanted to go to this cars deal. Uh yeah some some you know maybe offiscated risk right now generally in credit markets. I think this is what uh this is referring to but I'll hand it to you. Yeah, and I think the main reason why I reference this post that conversation around uh stable coins and risk is it just if we understand most people listening and that are long bitcoin that there's u long debasement long volatility and as more monetary units get inserted that just gets more distorts the signal around the capital allocation which inherently means more businesses either get funded that lack fundamentals or uh propped up that should go away and um so it doesn't insulate that from being long bitcoin or dollars like uh stable coins that as interest rates lower and more stable coins get issued the capital still will get misallocated and so this came to light uh a firm called uh shows same cars tied to thousands of loans and some of the the key points or initial review ofricolor holdings shows that at least 29,000 loans pledged to creditors were tied to vehicles already securing other debts roughly 40% % of the 70,000 active trifolar loans contain attributes identical to those of at least one other loan. Um it's the point that this exists everywhere in the financial system. It's it's very easy and people are incentivized to do this. It's similar with the subprime where you're making your money on generating and offering up dollars from a banking or financial service business. And so you're incentivized to not do the due diligence. You're incentivized to look the other way. And everyone's incentivized to take out more debt. And it just brings again just this notion of uh that you know fiat economics don't work on a long enough scale and so there's risk lying everywhere and I think that's the thing that most people discount when they go into stocks bonds and don't see Bitcoin as a true store of value uh and gold and bitcoin as savings is they're just discounting the risk that lies within the traditional fiat system as uh yeah like I think I don't know how to express that like we'll need to do more on it. But it's the ultimate point is like the the 60/40 in your capital is not risk-free. And so if you think Bitcoin's risky, you should probably do a little bit more work because this lives within the whole financial system globally. Yeah, this is um this headline in particular comes on the heels of of what I would consider sort of related headlines in terms of um you know what we covered a few weeks ago around a lot of uh private credit funds that are offloading basically you know some bad credit uh repackaging them and and you know selling them off to insurers uh CLA's buy now pay later deal um with I forget the specific insurer that they sold a bunch of those loans to. Um so you start to see this across different areas of the market right where risk credit risk in particular is being offiscated and hidden and disguised and repackaged. Um and it's not too dissimilar than you know anything we saw in 2008 but it's all sort of coming to a head again. Um and so this is just another example of that. Um, and then there was a there was this tweet which this now has a uh a community note on it, so I'm not exactly sure how accurate this is, but the the report was that 40% of Coca-Cola's revenue comes from uh food stamps. Is this accurate, Michael? We know. >> Yeah, I believe so. I mean, I think the community note was actually giving more data around the revenues and profits. Um, but ultimately whether it's exactly 40%, it's the core notion that uh Coca-Cola's stock and their free cash flows took a huge hit with the recent MA announcement and the ability for SNAP benefits to go to sugary, you know, beverages and other things. And it's this idea again going back to to tie this back to business building is whether it's investing in businesses or looking at it from if you're uh managing your personal portfolio or an asset manager. It's like well what businesses actually don't even have s sustainable unit economics because they've been propped up by a system. Um there's again that goes back to there's no shortage of these different businesses that exist that inherently shouldn't but because of the amount of liquidity in the system they justify it. And again, we've talked about this multiple times, whether it was like 21 and and lower interest rates or even go back to the Weiwork uh examples. There's no shortage year after year, cycle after cycle, where um the counterparty risk exists. And something like Coca-Cola, obviously a foundational business to America, but there's a lot of valuation that it's crept into there that's been embedded by the government subsidies. Uh we obviously know Tesla is another example of this. Um, and I just thought it was more interesting because these things don't happen in a vacuum. I think we just want to look at stuff and be like, "Oh, that was just a one-off, like the credit loans and then this Coca-Cola subsidies." But these are just the most acute kind of like loudest exaggerations that are easy to point to, but they inherently are everywhere because that's the incentive model of when money costs nothing but a button to click to create. >> Yeah. So, I just realized this this tweet was actually from December 22, so I'm not exactly sure how it got resurfaced, but it was kind of go going viral over the past week or so. Um, but Liam, did you have any other thoughts on that? There was some AI stuff I wanted to get to. Um, but before >> one last thing, I think the reason why it got resurfaced was because they're uh spitting out of uh free cash flows basically like either went negative or took it a huge hit and people were going back to that it had to do with a large part of it subsidies. >> Yeah, it was negative free cash flows and uh I mean we don't need to touch on this too much but uh the SNAPS benefits will ultimately be issued from an AI uh or I mean through stable coins. Um the New York is actually piloting that now of offering stemmies of uh,000 to,200 in USDC. Um and you know UBI already exists just in the form of unemployment benefits. Uh but it's only going to ramp up from here as there's more that we talk about of asset holders and especially people that own gold and bitcoin and Elon Musk hitting $500 million in uh his total net worth uh or 500 billion. And there are many people out there who actually have zero or negative amount of uh personal wealth. Uh so it's only going to ramp up. there are going to be more distortions in uh actually how people have capital and and where uh what signals your business is getting in terms of is this a sustainable business is this not everything from you know the 0% interest rates that was getting back in uh the co time and uh allowed them to issue more loans on top of that to additional uh stemmies that are coming either from SNAP benefits or just to the lowest uh end of the population and so it's just going to be more and more distortion of uh the cost of capital in real business unit economics. >> This is wild. I had not seen this. Um >> yeah, no strings attached. Uh 10,000 to 12,000 issued in terms of USDC and New York City for a couple thousand people. Well, I just think yeah, I think the USDC aspect because I'm sure we sent money to a lot of people, but the the putting it into the um you know the the um the market and understanding like I mean I think we all knew this direction it goes but to see them already trying it out in USDC uh and USDC obviously the logical course is is pretty wild. >> Yeah, there's a couple there's a couple interesting notes in here towards the end of the article. Still, stable coins like USCC don't always live live up to their name. Serious market shocks can cause coins to lose their peg and become worth less than a dollar. Um, and then it says, uh, there's also a question of how easily recipients will be able to spend the funds. Stable coin use is not exactly ubiquitous. Some retail retail stores like Home Depot or Chipotle take USDC. I didn't even know that. Um, but they're not a common method of paying rent or for example tuition. Um, so yeah, that is kind of wild that they uh are piloting this, but I guess it's pretty small in scope, at least initially. >> Yeah. But on the other side of it, I think Trump was saying he there were like something about passing $2,000 back to somebody. >> Yeah. >> Yeah. Yeah. That rebate headline was pretty wild. Uh$1 to $2,000, you know, tax rebate. They're going to fund it through uh tariff revenue. That's like, you know, if you take the upper end of that $2,000 for every taxpayer is about 165 million taxpayers. It's like $330 billion of stemmies. Um, so it's not nothing. That that is a lot of uh a lot of debasement headed our way. Um, so continue to take note of the demasement trade as some might call it. It's the last trade. Um, but let's move on slightly here. Uh, there was some AI headlines I wanted to get to, mainly this one. So, um, OpenAI is taking a stake in, uh, AMD chip manufacturer. Um, and so you could take this a few different ways, but, um, you know, it's somewhat of a divers diversification, uh, away from reliance on Nvidia for Open AI. Um but there's it's you know the larger point to me or takeway was something we've mentioned on the show uh over the past couple months and seems to be a prevailing narrative is like this sort of like interdeings and um almost incestuous uh AI economy that that has sort of emerged over the past six 12 months where um you have you know this is now open AAI taking a a multi-year strategic partnership with um AMD they will commit to deploying 6 gawatt of AMD GPUs. Um, this will start in the second half of 26. Um, and you know, it'll be structured as a performance-based warrant granting Open AI up to 160 AMD shares, which would be a 10% stake at 1 cent each. So, vesting on certain specific milestones uh related to the deal. Um, and so like I said before, diversifies OpenAI's chip supply beyond Nvidia. um elevates AMD's market position. So, yeah, as as the headline here shows, AMD stock went up 35% this morning as a result of this. Um but it does you know raise the broader concern of of industry concentration and um just general centralization around a lot of these uh AI companies and the chip makers um and sort of this this back and forth circular economy that's that's going on because um you know I think Microsoft who's uh deeply intertwined with open AI obviously is also a large client of AMD already. So there's just lots of these sort of um uh sort of circular nature of a lot of the deal making in this in the AI space over the past several years. Um and then maybe one other thing to reference uh in relation to this is just uh AI venture funding um continues to surge throughout the third quarter. So um global venture funding in the third quarter increased 38% to 97 billion and about 46% of global venture funding for the third quarter went towards AI companies with 29% of that solely in an anthropic deal. Um so again this this speaks again to the concentration um of broad funding venture funding that is going specifically towards uh AI companies. Um thoughts on any of this gentlemen? Yeah, it's uh when things are going good, everybody looks like a genius. Uh the money continues to go around in a circle and uh you literally can't be wrong in any of the different bets in the AI space just because everybody else is wants to get in and as long as you're not the last sucker at the table, you're going to make out like a bandit in dollar terms. Um, but it's just the most fiat thing ever in terms of uh Open AI, which you know is hemorrhaging cash uh getting stake in uh other companies. It's just sending all of the wrong market signals of nobody actually being able to deliver uh real value and free cash flow. But it's just everybody chasing this um idea that at one point if there is enough scale then uh the unit economics and cost can come down without actually really focusing on when if that will ever happen and uh will the money be cheap enough in order to actually continue spending like drunken sailors until there uh there is that um breaking point. in which costs of compute and uh the models do actually come down enough and it's just more so a bet on it's the same thing as the debasement trade but just a worse version of it just because there are so many different layers of counterparty risk and signals here uh that are distorting the market. It's just um it it makes a lot of sense when you understand that all of the fiat space is just uh chasing the same exact deals in the same markets and hoping that um there will be another deal to come in and actually see this. I don't necessarily know the this deal quite as much as some of the other ones out there, but they're all in the same exact space, which is um I don't know when some of these companies go uh public or they actually get free positive free cash flows, but it's just uh sad to see. >> Yeah, I think um I think there's an there's a negative incentive like what you referenced on the venture side and certain aspects of the AI boom specifically like when you think about a net new incumbent or net new person coming in to YC and launching an AI company and they're going to get funding from it. It's where the markets, you know, the distorted signal. Not to say there's not value there, but you know, at that level, in the same way, VC funds can raise more capital. They can tell their LP base. They can get the markups. With all that said, I don't think they're playing for the dollar returns in the sense that um or or exactly, we talked about it like last week or the week before. or I think there's a notion of just the amount of energy that's going to be required among other things that are going to be this massive inflationary spike where and it'll be almost like public utility. You could see this coming from different angles of this stuff becoming systemic. And I think that's the race is to become so large at scale and systemic that you're uh you're obvious or you're you're um you're not prone to the laws of gravity or like unit economics in the sense that if you get to a certain size whether the government's going to own a portion of these or you're trading dollars that we know are basically somewhat worthless. they can make more of them into energy IP equity uh the GPUs the real estate you're just getting as much of it you're incentivized because you know that you're going to be made whole in some capacity and the real like value if you look at like Bitcoin is a value for moving into digital world is the value is to own the equity in that business and all of uh the underlying technology from compute and everything I just said because in that future world where we get to you're going to be uh too big to fail. And so I think that's where you see all this like capital being deployed. And like you came out a couple weeks ago with Sundur and it was like similar sentiment between uh Sundar from Google, Zuckerberg, um a few others where it's like we can't we'd rather go to zero than like lose this race. And that's kind of like a different way of saying we're not worried about the money and the ROI. it'll be there as long as we can be one of the winners in this like new category. Um, so I don't think they're trying to hit this like notion of profitability and un economics. It's more of like it's just get to that scale and then they're going to be too big to fail. And I don't know exactly how it plays out or what their mind frame is, but I think like it's on the margins that that's there. The rest of people are just chasing the wrong underlying unit economics incentives. But I think some of these bigger players like Open AI um they know it doesn't make sense, but it's free dollars. they keep getting arrays from sovereigns and others to go and deploy and then they're going to own those data centers. They're going to own all that infrastructure and then when they don't have the right numbers the government's going to be like oh here's some cap capital stay float and now the real value is owning all the wallet share client relationship AI models everything outside of it independent of the dollars and I think they c they caught on to this probably pretty early. >> Yeah, I think that's right. It's not about dollars. It's not about human economics. It's this very um somewhat unique uh technological state where there's the ability to say like there is this there's this end goal that's so great that'll allow us to out compete all our competitors have you know the sort of beach head that you're referencing. Um and that that opportunity is so great that it doesn't matter. The numbers don't matter. We're going to throw as much capital as this as possible. we're going to do as many raises as possible um because that that opportunity that goal is so great that you know it doesn't matter in the near term. It doesn't matter what what um our unit economics are, what we're burning. Um and so it's it's uh I would say that that's a flawed line of thinking though, like that like it's >> well here here's the angle. They're they're basically this isn't apples to apples, but they're like what DATs wish they could be because no seriously think about it. Like so Adat is trying to access the capital markets to take dollars, buy Bitcoin, raise their enterprise value and then effectively be able to leverage that. This is a story they say and then they will make more Bitcoin and they will have that. Well, which we all know that's just it's BS. We've talked about it for long enough. But when you look at these businesses, they're accessing doing the same market mechanics of taking cheap dollars to go and buy infrastructure that can't actually be inflated inflated away like the the um whether it's the IP potentially, but then the physical assets they own that and you can make the case in that world where things get repriced, their valuation will still be greater than Bitcoin if they would have just bought the do the the Bitcoin today because there's only going to be, you know, Bitcoin's finite but also accessing the computing that they need. I'm not saying this is right, but it's a trade on in that future world, people uh in Bitcoin terms, they will actually be okay because they're delivering some product of good and utility and the market will have to be forced to price it if they need that kind of goods and services. Now, TBD if other businesses come out and they're better, blah blah blah. But you see what I'm saying with it? It's like a similar trade. It's like, well, we're just going to take as many dollars. We're going to go to it in this new world, whatever the world's uh underlying unit gets priced in. We're still going to be very valuable, and we're actually using the free debt markets um and capital to go and buy that with like, you know, zero cost to us. Um and that's where I think that it actually kind of makes sense. >> Yeah. I mean, I I see that I see that angle like what is the alternative to doing this? I I think um you are more likely uh you have a higher probability of losing if you don't take this mentality effectively because there's also some game theory associated with it where like if everybody's throwing as much money as possible at it then like you kind of have to to keep up to even have a chance of um achieving the goal or coming out the other side on top. Um so yeah, it's very interesting. Liam, any other thoughts? I know we're a bit over time here, so we can wrap soon, but any final words? I just well well we were thinking I just wanted to so we got uh you know definitely I think all time well I guess the alltime high was one 343 that was like Saturday night or I don't know if that was >> No it was like an hour ago. >> Oh yeah that was an hour ago. But this this chart I wanted to pull up because it's something that doesn't widely get shared, but it's just like how can you as any anybody on the planet earth um you know look at uh Bitcoin profitable days and not just like be interested um because it just generally comes up from everybody whether it's an institutional allocator individuals like past performance is indicative of future uh performance or whatever. It's like well kind of is you know like what would cause it to go the other way? Um, I don't know. Profitable days is always one of my favorite. >> It's all reflexive. It streng strengthens the actual network and uh people who want to participate in the network. Um, there are only 21 million. There's going to be uh stronger um amount of hash that are securing the network and so it's going to only drive more network participants. Um, it's uh it's looking pretty good for Bitcoin. >> Exciting time. >> Not for dollars. not for dollars. >> Uh call out this week we'll be in um Dallas. So for anybody that's around a lot of exciting things we have in the coming weeks big announcements on uh companies we've invested in. We're going to host a happy hour with Tetra Trust on Thursday night in Dallas. Um so if anybody's around wants to reach out um meet up, come to the event, just shoot us a note. We'd love to see you. >> Good stuff. All right, thanks gentlemen. See you next week. >> Thanks guys. >> Thanks guys. >> Hey guys, I hope you enjoyed the show. Uh, if you liked it, please give it a like and a share or subscription. Um, like I mentioned, we'll be out in Dallas. The team from Early Writers and On-Ramp will be hosting a few events. If you're curious on what Early Writers have been up to, you can go to early riders.com, see some of the uh, portfolio companies. We haven't publicly announced yet. There's some very exciting announcements that are coming in the uh next few weeks when it comes to, you know, looking at from the first treasury company uh Bitcoin treasury company business in the space that we backed uh when it looks at the quote unquote debasement trade that's now being talked about today. Um backed a company playing in the gold and bitcoin space all the way to new uh firms building globally on multi-institution custody. There's a lot of exciting things including the stables with the accelerator that we launched and then we have new teammates joining across the world from investment banking to um traditional portfolio management. We are really building a very exciting platform that should be pioneering um what asset management on a Bitcoin standard looks like. If you're interested in getting involved, I'd encourage you to reach out or you can shoot me an emailers.com. All right, hope you guys have a great week. We'll have a awesome podcast this week and see you next Monday. 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 Onra Media is forformational 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 to hear from you. Visit onrampbitcoin.com/cont to schedule a consultation with one of our private client adviserss.