Digital Oil, Financial Freedom, and the Long Game for Bitcoin in Africa

[Music] 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 giga [Music] 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. All righty, gentlemen. Welcome back to another episode of Final Settlement. Today is Monday, May 5th, 2025. Very special episode. We've got a great guest on Abubakar Nur Khalil, a uh a friend of the show. He's been on before. So, welcoming him back. Also an adviser to Early Rider. So, uh very excited to chat through some some topical news, uh that's been happening in the space over the past couple weeks. And, uh also just catch up with Abu. How you doing, man? I'm doing good. Thanks again for having me, guys. Yeah, we've got a we've got a big list. Liam Liam put together a list. I think uh let's just jump right into it. Uh a good place to start is the Nigerian government passing uh some laws related to digital assets in Bitcoin. Uh Liam, you want to preface this one and then we can kick it to Abu? Yeah. Um well, this was actually written by uh by you, Abu, so you're going to be uh the one who's going to be able to speak to this the best. Um but recently President I may butcher his last name but the the Nigerian president um signed into law uh saying that Bitcoin is a security in Nigeria. Um it sounds like this is you know not what many expected uh in terms of you know Bitcoin not being a security. We we know that based on you know everything that's happening here in the US but it does offer some regulatory clarity for the digital assets ecosystem uh you know understanding how different founders and people in the space can operate. Um would love to hear your thoughts Abu on you know the initial reaction by institutions founders uh everybody in the space over over in Nigeria too to this uh this regulatory ruling. Yeah, certainly. I think it'll be good to preface this with kind of an analogy to capture both the sentiment honestly just the reality of the regulation on the ground for a lot of us is imagine you're in a restaurant and you essentially have a bowl of soup that you want to eat request from the waiter to might bring you a spoon then rather than bringing you a spoon he brings you a knife. Now it's not impossible to still you know eat the soup with the knife but it just makes it very very challenging and at least some see it as uh the beginning of a very long conversation pretty much. So that's essentially what's happening with this regulation. I think for a lot of us on the ground especially over the years I can definitely say personally talking with regulators it's been very very challenging in the sense that there are a lot of things to gro cuz it's been very very difficult given the increased amount of capital coming in from you know place outside of Bitcoin the digital asset space whether it's stable coins etc. So for a lot of them they still have difficulty in disambiguating between Bitcoin and everything else. And I think that's kind of emblematic by the reason why they, you know, bundled everything up. I think it's also positive in the sense that a lot of the stuff happening outside of Bitcoin cuz for a lot of Bitcoin is we're mostly concerned obviously with Bitcoin. I think for the stability generally speaking of the digital asset space especially here in Nigeria where there's quite a lot of fraud as well as individuals trying to scam off of the guess the marketing and hype of bitcoin it's a very good cleanup that they've done essentially by wrapping everyone under a succinct law that kind of increases three things I see that are very pertinent which is one making ponzies explicitly prohibited according to the ISA which is the securities act that you're talking about and then two also instituting fines and penalties up to prison and sentences as well for people engaged in Ponzi schemes. Another one I think that's very interesting is also making distinction between the type of exchanges that we have here on the ground. So some are allowed to actually engage in specific assets which might be just Bitcoin exclusively. So that essentially captures a lot of the the fintex here on the ground as well as giving um uh the latitude for some of these other exchanges that list stable coins everything else really as one. And I think it's important to also note that despite a lot of people feeling which you know part of that bucket that this is not acceptable regulation it's definitely a first step given the fact that we haven't had regulation and this the first time the government is actually accepting Bitcoin as an actual uh legitimate asset on the ground. So the challenge right now really for us is to unpack all the aspects of this regulation that doesn't fit Bitcoin kind of move it into better uh a better direction. But I say it's also important to note that under this law technically any exchange that also enlists a commodity would still be regulated by the SEC in Nigeria. So even if we were to regulate this as a commodity if someone were to list this essentially they'll still fall under the same regulation. So definitely a lot of unpacking that has to be done. I think for entrepreneurs kind of split in between two buckets. one is those who fiercely believe that uh this is definitely bad regulation and the sooner we get to acting uh moving into a better direction the better and on the other hand a lot of folks definitely just see this as a good first step. I think you're going to see a mix between entrepreneurs trying to figure out exactly how they need to position themselves in the interimm to um be compliant with these regulations especially on the KYC ML side. Obviously the implication for that will be higher costs especially on the hiring side for folks actually helping that up. Then on the other side really I think for us it provides at least a small headway for them to kind of innovate and uh start building more officially as you know heritage mentioned in the space. Yeah that that's a great recap. I think it's um the analogy is a good one. It it's uh it's not impossible. It it helps maybe incrementally but I think it's um there's a couple things to remember. One of them and we see this in the US around capital formation. like you need some kind of framework for capital to come in, institutional capital individuals to feel like they can get a return on their capital because this thing is not, you know, shadowbanned, which I think in a lot of countries outside of the US or specifically the Middle East and North Africa might be. Um, but it brings up an age-old like it's kind of not fair, but it's like do you want to make money or do you want to be right in the sense of if you want to be right, there's a natural way to do things in Bitcoin. You could talk about being money versus a currency or digital, but it's like or do you want to actually just meet the market where they're at? And I I've never I've always, you know, as you Abu in the group here, we have a vast um vast uh like wide ranging group of friends and they all come from different angles and some want to be extremely principled, but sometimes being principled, even though it's right, it may not be the thing that is right at the moment when it comes to meeting the market and actually furthering the cause. And so it seems like that a little bit from the outside looking in. It's like look, something's better than nothing. And if you have no framework and everyone's looking over their head or afraid to like operate a business, well, you need capital to start to form. And then the other part of that sadly is as we know, you know, all cryptocurrencies will naturally trend towards zero in Bitcoin terms. It's still like that capital and again you can make the case it's all just destroying capital, but we've seen this in the US. That's overhead and overhang that gives like more clarity or more uh um like a shielding for Bitcoin to do its thing before the market wakes up and realizing how like impactful it is, but also it brings in capital that is also used uh to build other infrastructure that will benefit Bitcoin and we've seen that with like the blockchain initiatives in different states. They're never really Bitcoin initiatives because there's only so much Bitcoin capital that will invest, but there's plenty of crypto exchange capital. And so that also, I think, would be a beneficial byproduct of there's regulatory clarity now around cryptocurrencies and more capital is going to come in. That capital will naturally flow to the hardest asset. And over time, the the the market will be able to form in the right way. At least that's what it seems like from the outside just based on what we've seen across the world. Yeah, certainly. And it's also important to note that it's under this regulation, Bitcoin isn't going to be taxable, at least for the time being. That's interesting. Is that like uh like cap gains in like income tax or how does what is that all securities that aren't taxable? Right now, it's a bit vague in terms of whether it would be tax based on capital gains or personal tax, but there's definitely nothing regards to taxation right now. Interesting. So, is that is that kind of where you land on it, Abu? Like, this is better than what was the status quo? This is better than nothing. It's a first step in the right direction, even though it's a it's a crude uh you know, knife versus spoon first step. Is that is that kind of your your takeaway from this? No, certainly. And I can definitely tell you like hand on heart for the last couple of years it's been definitely difficult managing the lack of regulatory clarity but also talking to LPs as well as other entrepreneurs on the ground just trying to navigate it. So like I said it's a good stop gap in the sense that the same way everything else is trying to lynch onto Bitcoin to both relevant as well as uh regulated in the similar light is the same way I feel that Bitcoin will use this as a way to also launch itself into appropriate regulations. So think of it as like the whole basket of both crap as well as Bitcoin being bundled into this regulation and then just leaving this regulation specifically for things that are outright ponzies to be properly regulated by capital markets and the largest overseer of this is obviously the SEC area. So it's definitely an interesting long combo that we'll have to have for the next possibly two three years but I think is worthwhile. Yeah. Yeah. We and we better barely gotten that. It's like um when I was thinking about the securities law and I saw you post on LinkedIn, it reminded me of um how we kind of get lost in in our own kind of like system of feeling, you know, we we were like complain here in the US of like how things are going and regulation and the reality is like there's been market structure around Bitcoin as a commodity for I don't know maybe close to a decade now where we're still figuring out in other regions. Um but it's also very contentious here with the um I think it's the FIT act which is ultimately figuring out the market structure where SEC what the SEC will regulate and then what will be deemed a commodity and that seems to be very um contentious uh across both aisles on like who's going to oversee what. So we're still trying to figure it out here in the US and that's after realizing that Bitcoin is a commodity. Now they're trying to figure out if these other cryptocurrencies are commodities. So I think I still think we have a long ways to go across the world. No 100%. And I think the benefit for us is we don't have too many stringent regulation around digital assets to begin with. So this was kind of a long time coming the fact that last year the SEC already started giving licenses to to exchanges. So kind of figured down the line they'll likely be the ones regulating this. So it'll be really a battle of different regulators trying to pick apart different segments of the market. And I think that's going to be that's going to play into our favor to be honest in the sense that we have take apart this whole large uh omnibus regulation that we have for Bitcoin. and just see what fits where. So I guess you know the IRS here on the ground also stay apart as well as the SEC as well as the CBN etc. So it's definitely going to be an interesting next couple years. Got it. Maybe um sort of just extending on on this a little bit. Could you talk a bit about um you know just an update of of Bitcoin entrepreneurship entrepreneurship in Nigeria Nigeria generally and and more broadly in Africa and you know how how you're seeing this piece of regulation and how that's sort of immediately impacting sort of you know how you're thinking about businesses in your portfolio of recursive capital and also just you know people building in in the space generally. Is this um is this impacting their day-to-day and how they're about to go about you know uh going to market with various products and services or is this um you know is it kind of just a line in the sand now that there's a little bit more clarity to move forward on certain things. How is this impacting things on the ground I guess is a better way to to phrase all of that. Yeah, for sure. I think certainly the the most immediate one would be unlocking of larger amounts of capital just flowing into the country. I think in the last I say maybe 18 24 months a lot of the conversations for a lot of the entrepreneurs that we'll support as well as we talked to here on the ground has been attracting for investments or capital from other VCs outside of recursive capital and the challenge has been a lack of regulatory clarity which obviously makes a lot of sense already the is seen as so I think that lack of regulatory increase that I think now given the fact that there is some clarity I think you start seeing a lot more capital come say probably Q1 2026 terms just professional. I think what's interesting though on the for them is it's definitely been a battle in the last three years for a lot of terms figuring out whether what they're doing is either legal or what's the next regulation that come next government that'll clamp down on them. So I think now that everyone is aware where we need to go as an industry in terms of who the apex regulator is for our space which is the Nigerian SEC I think a lot of the entrepreneurs really are just having to figure out two parts. So on the KYCML side but also on the capital side too because again like I said one of the consequences for this uh regulation is that it'll likely favor a lot of folks that already are well capitalized in the ground which you know will be some of the requirements for getting licenses from the SEC. And it's important to also note that there isn't exactly a crypto license as of yet for a lot of these exchanges. So it's still going to take some time before this materializes into actual costs on the ground for a companies. But I think for the time being definitely going to be both the cost in terms of just the burden that will cost them structurally from adjusting these things all the way up to trying to figure out what the next regulation is and how they can position themselves. But like I said, it's going to be a lot of difficulty and a lot of discomfort for the meantime. Then it's our job I feel as both you know VCs as well as stakeholders on the ground to kind of move the regulatory conversation also including things like Bitcoin mining to them into a more well nuanced conversation as opposed to just Bitcoin being a security. Yeah, that that makes sense. And maybe switching gears a little, tying into the rest of the news, we've been talking about the past probably 3 weeks, it feels like there's a fervor of um in the Middle East region counting to Asia Pacific when it comes to um specifically like the UAE when and stable coins and the banking integrations that are happening. Um I believe Pakistan among one other nation added Binance uh and I believe it was CZ as advisers to their uh sovereign council. Um how are you thinking about that from this legislation as well as just in the region the flow of capital when it comes to stables and bitcoin and just like overarching what are you what are you seeing at least in the west we've seen this kind of like new administration pop up and everything feels like it's it's um you know there's a lot of activity happening on M&A obviously like in the west tether feels like they're making a large entrenchment into different forms of um liquidity and and flow of funds and then it feels like a little bit in the east you're seeing Binance have a larger positioning. Just curious like what you're seeing and and all how that all ties together. It's interesting. I think so there are a lot of dynamics. I think one of the large ones which is just you know tethering off of what you just said with regards to the Trump admin is for a lot of the African countries that are just thinking geopolitic raw in terms of having better deal terms with the US. They are seeing the the stance of the US now being a lot more pro crypto. It's also playing into our favor to a certain extent in the sense that a lot of these conversations are taken a lot more seriously on the government side leading up until the the recent regulation that came out. I do feel like it played a huge part in terms of taking the space pretty seriously and even revising the law that governs the SEC here on the ground which is actually what this act does. I think what'll be interesting to see is the conversation moving away now which my opinion already has from kind of this more speculatory we can ignore this to okay how are we going to organize the the country in terms of our economics whether it's you know treasury management all the way up to dealing with the whole stable coin situation because again FX has been a huge issue for us here in Nigeria just in terms of both trading to companies but also making sure that we keep a reasonable flow between the nara and the US dollar too so stable coins definitely going to play a huge part and kind of the calculus in terms of both the regulatory side but at least how the government is taking a look at structuring our finances whether it's regulation with the central bank of Nigeria all the way up to some more regulation that will likely come as a result of this act. I think an a more interesting dynamic that I'm yet to see happen is the conversation around Bitcoin mining and how that affects both our energy challenges here on the ground and maybe the positioning on the regulatory side toward Bitcoin both in a favorable light as well as some more some more material way. I think yeah the dynamic on the Trump admin being pro crypto is definitely going to play a huge advantage in our sense both on the regulatory side and kind of how entrepreneurs and NAR move and I think again Bitcoin is going to play a huge role as well due to solving a lot of the energy issues we have on the ground so I say maybe those three dynamics will be very interesting obviously tether will likely make some more plays here on the continent given the clarity that we're starting to see the only thing I would say is other countries are looking to Nigeria now given we're technically on the forefront now of Bitcoin regulation or digital asset regul So I do hope they learn from the mistakes that we're making along the way as opposed to just taking on the regulations that we have currently as the convenient security all the way up to other things that might pop up historically. Is that is that kind of the case? Do other countries in Africa look at what Nigeria does and sort of try to replicate it or is there some give and take in terms of you know they could do something different or you know potentially superior to what was just enacted? I I say it's a mix and I think the determinant is likely the structure of the country in terms of the regulatory bodies if they mirror closely the Nigerian regulatory body. So Kenya is a good example where you know the CBN traditionally just like Nigeria well I say that Kenya central bank just like Nigeria central bank were kind of leading regulation for a while all the way up to looking at the SEC. So I really hope that doesn't get mirrored. And I think an interesting uh development that recently happened is like as a result of the announcement from HR's uh grants they gave a grant to the Africa Bitcoin Institute essentially which be an interesting arm coming out of uh Africa in terms of the regulatory side. I feel that would play a very interesting role if done right in terms of crafting regulation that's a lot more productive given you know taking a look at case studies presenting to governments a more formalized and organized way as opposed to done as like individuals from the ecosystem. Everyone, hope everyone had a great weekend. We had a fantastic quick rip with Abu Bakr uh from Recursive Capital touching on all things related to Bitcoin technology and also what he's doing uh on the investment side of the space. Um it was timely because Nigeria just had an update around their legislation and which gave some regulatory clarity into that side of the world but then also touching on all things related to um the topical you know point in the in the ecosystem around uh consensus core and um the block size limit. I hope you guys enjoyed the show. A quick um comment from On-Ramp. We have some insanely exciting things that we're going to be announcing later on this week in the market. If you want to see them first, I would encourage you to at least subscribe to our research. Um, as you guys know, we offer the most robust uh custody solution in the market. No longer do you have to worry about do you have a hardware device that secures the majority of your Bitcoin or do you have to leave it on a third party exchange. Now there's multi-institution custody where you can get the benefits of self-custody, segregated onchain, uh, the ability, but also the ability to move those assets if you're traveling. you don't have to take your hardware device, but you also don't have to rely on a thirdparty custodian. Um, there's going to be a lot more coming from our business over the course of the next couple weeks. Um, one thing to call out because we've seen an uptick, you can self onboard. So, if you're interested um in signing up but don't necessarily want to talk to anybody or just want to go through the onboarding flow, it's uh pretty awesome. You can go through relatively fast. What used to take uh me and my previous firm 2 to eight weeks to get somebody onboard is now about 2 to eight minutes. Um, yeah, go to shoot us a note, michael@honorantbitcoin.com or hello hell at honorantbitcoin.com if you want to get involved or if you want to get a sneak peek at what we're going to announce later on this week. Hope you enjoy the show. Gotcha. You mentioned something in there around mining which I found interesting and and going back to what you were saying previously around, you know, this piece of regulation in Nigeria and sort of lumping everything together. Do you see Bitcoin mining as an avenue to basically distinguish Bitcoin? Like this is fundamentally different. There's a different consensus mechanism mechanism. There's a different um you know way that this actually impacts society in a in a really positive way. Do you see that as sort of a a line of sight to better distinguishing like Bitcoin is is very different than the rest of this? No, 100%. And I think it's kind of two parts and one is the US side with you know the the SEC. I think it was last year like proof of work. Bitcoin mining is totally separate from everything else. I think we kind of lean into that as like kind of precedence given to some extent we do mirror US regulation a lot of the time just to be compliant obviously to help with the multilateral agreements and things like that. But I think the more interesting angle really is the difference is very very stark from just communicating to them that bitcoin has no issue has no decentralized etc. I think a more material way of seeing that in action through bitcoin for two reasons. As long as the fact that electrification from day one for a lot the mini grid approach that we've been using and chapping it's an effective fact there's no there's no off of that demand so a lot of projects are just laid in with a lot of loans and debt so pretty much a lot of that I think will be helped out by bitcoin mining coming into the continent but two I'd say once we achieve energy independence which I think bitcoin mining will play a huge role in doing I think the conversation will stop being around bitcoin isn't different from everything else. It's around how we can further kind of capture value from Bitcoin as an asset as also an infrastructure really as a continent and then moving away from looking at it as just one bundled up ecosystem. So I think we'll have a lot more nuance due to Bitcoin mining in my opinion. Yeah, there's a piece we we talked about it um I have this book behind me. It's called the prize and it just breaks down. It's called the epic epic quest for oil, money, and power and just breaks down from like the late 80s, 1880s in Titusville, Pennsylvania. I haven't fully gone through it, but it's the notion of um we were talking about before this call started that like Luke Groman, Arthur Hayes, and others all reference their uh hard money in amount of barrels per oil um like a Troy ounce or a BTC. And there's something to like Bitcoin's, you know, I know it's obviously digital gold, but digital oil in the sense that it's a proxy for oil and you know, whatever those units are, you can move them faster across the world. And then like AI and all these other things that you'll be needed from an infrastructure perspective. It just kind of like changes the dynamic from being a toy or something that you know everyone understands energy, artificial intelligence, compute, servers, and saying that like this thing will be running through it I think helps in that. Um, but you said something earlier that sparked the thought of consensus and you know we don't have to go deep here but I think uh it just happened coincidentally that there's this whole situation going on right now uh with core and updating and the block size and you know you'll be able to at least summarize it better than we can but would love to get you know maybe a layman's version of what's happening and then any color you want to share. We don't have to go deep on it but just I think we'll the big thing is most individuals have no idea what's going on. they're probably barely starting to hear from something because you know on Twitter you're always a couple days ahead of before other people start catching on but even by the time that happens they still don't fully gro like what's you know what's the dis the discourse and then also like what actually uh or the likelihood of any changes and what's the process around that. Yeah sure like you mentioned it's definitely a very dense topic. I can definitely say I've been trying to catch up as well, seeing if if it might arise as like a piece just to help with folks. But so far in terms of what I would say is first and foremost if anyone's looking for context, Noster is a much better source of signal for this conversation Twitter just in case was there's a lot of just noise really coming from that. So in terms of looking at the sources, I'd say no first and going all to the GitHub all the way up to the meeting list is very useful context. But the issue I find is so it's twofold. One, there's a conversation around censorship happening, which I think there are legitimate concerns in the sense that you don't want to have vague um vague law, not necessarily laws, but vague rules of participation on project are mirroring some of the whether it's code of conduct with regards to other projects just because of the sheer difference between bitcoins with development coming and just how it works as a project versus everything else even including other open source projects. So, I think there's definitely legitimate concerns around that. I think some of it is kind of a misunderstanding on both sides in terms of some of the core folks communicating more effectively what they're doing versus some of the reception on know the community's end. So I think with regards to that conversation it'll likely be one of those things where we just have to have a more honest conversation around it and likely figure out what a middle ground is because it's going to be a larger and larger issue given the fact that Bitcoin is such a huge large valuable asset that affects millions of lives around the world. So it's not a case where it's just a project egos etc. It's actually material. It's the difference between someone actually living in my opinion versus most likely dying or finding themselves in such a challenging situation. So that's on the censorship side. I think the interesting angle is that all of that came as a result of some of the work from the operator made this happening. So just to keep it clean, Bitcoin is essentially guarded by two types of rules or I see two sets of rules on policies. So one which a lot of people are familiar with is on the consensus side which is what dictates things like um you know the turn around million coins etc. what constitutes a valid transaction invalid transaction etc. But at the same time because this is a peer-to-peer network so you want to make sure that you have a tight grip on exactly the type of data that's being sent ensuring that things are not being sent that are large which will the resource requirements for individual nodes which will affect like the centralization. So there is a second level to this which is called you know the standards rules and that kind of guides three things but two are more relevant to this conversation. So one is ensuring that there isn't spam just going around on the network and two is ensuring that people don't make mistakes given the fact that there are lot a lot of kind of transactions that you can make that are technically valid from the consensus laws but aren't necessarily recommended for average individuals because they could lose their money given the fact that it's just complex wallets don't support it. So you might end up most likely more often times than none likely losing your your funds. So those are two aspects of how it's governed. Now the conversation around oper came as a result of the the spam side. So ensuring that people aren't necessarily putting arbitrary amounts of data on chain and the real way that was battled was introducing this operation code which is you know the operator turn itself. So the interesting angle is unlike other times where people are trying to put in data they put in things like the TXO set. So just to um I guess uh communicate that more effectively is essentially the state that is in charge of keeping track of all ownership of bitcoins in the network essentially gets bloated because people are using that as a mechanism to actually put that on chain as opposed to something which allows you to prune it. You can actually discard it if you're running a node. So that technically doesn't affect individual nodes. It's really a case where if people want to store it they can store it. If they don't want to they don't need to. Now the challenge with that is there has been a limit on the amount of data that that can be sent through as well as the number of op returns per transaction. So really in terms of the data that we're talking about think of a medium-sized sentence in in the English language is kind of the amount of data you can actually put that's prunable. And the challenge is for a lot of people they feel we should lift the restrictions on that to make sure that people have the opportunity to use this as the primary mechanism to put data on chain given the fact that it's prunable etc. But the challenge with that is at what point do you make that arbitrary or do you uh cause even more issues with regards to relaying those transactions given the fact that does have a cost on the network side to relay those type of transactions given the size. So there are conversations around that but I say in general really without getting too much into the specifics on the technical side the larger debate in my opinion on two fronts or maybe three. One is what is the difference between laws that we want to govern on the consensus side versus on the standardness size? Because for a lot of people now, as a counterargument to those that are talking about the anti-pam filtering, they are of of the opinion that technically the standardness rules could be argued as a form of censoring transactions that are otherwise valid. Even though, you know, that isn't necessarily the case, but it's an argument that's brought up as a counterargument to the anti-PAPM crowd. And I think really the argument is are we looking at getting rid of these standardness rules and are we looking at integrating some of the standardness rules that we feel should be more on the consensus side or we just getting rid of all standardness rules and then just keeping consensus rules. There's that aspect of the debate and then there's a larger overarching aspect of the debate which is around Bitcoin is very very difficult to navigate in terms of maximizing freedom but also ensuring that practically speaking people can participate in this freedom enterprise. So talking about resource requirements for running nodes we're talking about the interaction between you know uh transactions getting relayed to miners versus around nodes which you know standardness rules affect. So I think one other aspect that plays which is the third component in my opinion is the rise of Bitcoin DeFi if there is such a category that you can define and I think that's what's pushing the boundaries of these conversations to be had more materially than previous years in the sense that is Bitcoin a protocol for money or is it a protocol for data essentially and for some of the folks in the the ecosystem they do feel that there is a middle ground in the sense that the status quo does lean into Bitcoin maintaining its core principle as a protocol for money, but allowing for uh a more a less destructive way of putting data in a way that doesn't mess up with that core functionality. And that boils down into kind of a fourth corery in my opinion, which is how do we define what exactly is Bitcoin moving forward even at the consensus level cuz there are some consensus rules that are a lot more uh I'd say defining of what Bitcoin is ontologically speaking versus other things like that might be a bit more arbitrary. So formarily things like the 21 million coins uh consensus rule versus you know some other more minutia details about how to verify transactions. So I think as long as so two fronts as long as we make sure that the anti- spam filtering conversation doesn't devolve into we want to filter all the spam but then we don't have a rigid definition of what spam is cuz then then I believe the other camp that's uh you know in contestation with these guys do have a good argument which is if you can't define clear enough what spam is then technically that's going to end up being censorship. So I do believe there are legitimate concerns with regards to that. But one thing I say just to wrap up is I'm glad this conversation is being had at all these multiple levels. It just shows that the committee still cares about Bitcoin in my opinion. I just feel we need to be a lot more honest and open about exactly what we're arguing versus some of the shoe horning that I've been seeing out some of the the clamor just oh you know core is acting crazy again the devel developers are trying to co-op bitcoin. So I think really as a company we just have to internally sort this out as continue to and and it's just going to be even more like this over 10 meaning is Bitcoin versus what we feel should be Bitcoin. Yeah, appreciate you running through that. Um it's very helpful context. I won't pretend to, you know, understand not that not understand like I feel good about certain opinions I have. I don't have strong ones on this other than sharing a few a few thoughts. One is um guy sw one is yes it's it's amazing that people still care uh and it makes sense because this asset's never been bigger right $2 trillion like you said it affects people actually could potentially die like that's how big money is and the impact it has on individuals and Guy Swan had a great quote of like hey you can say whatever you want but we we all still care which is which is kind of just nice to like uh to uh recognize the other one that ties into it is I think there's something to you start to learn in life whether you get older or run businesses that like the the devil you know sometimes better than the devil you don't. And this reminds me of this when it comes to like you know Bitcoin is working as money at least today. And these notions of well second and third order uh consequences are not always well understood or appreciated. And if we're going for money, that is something that I don't think like people discuss enough of like, well, if it's working today, it may and there's any chance it may not work tomorrow. We should all take a pause. I don't think that's fully like recognized by a lot of people. It's not to say things shouldn't change. It's just to recognize that at a very base level of like what's the prize? And I think that the the best if anybody's, you know, listening to to look at um John from Zapright had a really great uh tweet that was Bitcoin's not a simple database. That's that's the blockchain. Bitcoin is money of which a symbol data base is just one small part. If this is truly your stance, you don't understand what Bitcoin is. And then Parker had a subsequent tweet that said this is a good framing. If you can't accept that Bitcoin is money and instead look at as only a simple database to store value, you're looking at to solve problems in different ways, which independent of that being a right framing or wrong. I think that's like the crux of where a lot of this comes is like is this is money the only thing you're concerned with because everything else is a derivative of that if you fix the money or are you trying to do multiple things because if you try to do multiple things well then you're always going to have trade-offs with the most optimal outcome for it to be money and we have to agree almost like what's the point of this thing uh and so anyway I think that's like at least my take on it's like if it is if it's working today and there's the chance it doesn't work tomorrow and we're all competing to be money and it's working to be money today well why would you do anything to it if there's not consensus around it. Yeah, there's there's a couple we could take this in a ton of different directions, too. But one thing to uh understand also is that there is a spam mitigation uh policy in play right now, which is essentially just you have to pay minor fees. And uh based on looking at the memp pool, I can look at it right now. There are less than 3,000 transactions in it. And looking over the past day, a lot of the blocks aren't even full. So a lot of it's really important to note that there's I mean you could always it's all relative but there's not a ton of demand for uh you know block space and and inscriptions and uh storing data within the the blockchain. Um so that's just important to note and it's not necessarily the the most biggest deal that is very existential at the at the moment. Um but it's telling just that there's uh a lot of very heated controversial opinions going on right now all across the space uh for something that in my view isn't all that big of a deal and uh there will be much larger you know imp implications longer on whether it's quantum computing and etc and uh you know the the fractions of people that care about different aspects of Bitcoin is going to significantly change over time as it gets larger too whereas uh you know and and there's overlapping here, but a lot of people just care about like lightning payments technology. Some only care about store value. Some care about the the DeFi, etc. on Bitcoin. There, you know, some that I'm sure there are like uh devs out there that are, you know, funded by, you know, countries that actually want to see Bitcoin uh fail. There's going to be a lot of different fractions out there in terms of uh people who have different opinions about what Bitcoin should be and um you know trying to please everybody isn't isn't going to work ever. Yeah. I mean my my kind of take on all this going back 12 to 24 months when I think a lot of this actually started to emerge as a discussion around inscriptions and ordinals and now we've gotten to this point of an actual um policy change proposal. But, you know, going back over the past two years, my my take has always been sort of like long-term, I don't know if this really matters because I think non-financial transactions get priced out ultimately. And so there, you know, as you're alluding to, Liam, like the sort of free market of uh transaction fees will take care of this ultimately. Um, but I did want to go back to one distinction and just a a sort of question around clarifying what the change actually is being proposed because in my understanding basically what's being proposed is um and I'll pull up a a a tweet that I thought captured um some of some of this um but effectively people can put arbitrary arbitrary data on the chain today but they do it through the witness data. And so I think what is being proposed and please correct me if I'm I'm misunderstanding this is like we're saying just get rid of that um limit so that instead of putting it in the witness data people can just put arbitrary data in in oper and it would be the the you know basically getting rid of the fences in this photo like people are already putting data on chain is the thinking that you know this proposal would make it basically a cleaner more efficient way of doing it by you know in some way opening the floodgates, you know, removing that fence but making it more efficient on chain. Is that part of the argument? Am I understanding that correctly? Yeah, certainly. I think this definitely captures it to a certain extent. So the change I believe from Peter Todd is proposing is kind of twofold. One is um getting rid of again is on the proposal from the mailing list but getting rid of the restrictions on how many of these type of op returns. So the clean version of putting data on chain can be attached per transaction and also the actual limit on the data that can be attached to these uh these operator code. So I think in a way it definitely is a case of expanding the the mechanism that's a lot cleaner or I should say the cleanest to add data on chain but again because of that change itself is why the conversation evolved or I guess progressed to well why do we even have oper right now like you mentioned given the fact that people are still evading that and that was a convo honesty that was had as a result of you know well I should say at the time that oper was proposed I think by some other folks in the community And the thinking really was we might as well make this as straightforward and with the least amount of consequences moving forward of affecting the chain with regards to persistent data being there versus prune data. And I think it's just an extension of that conversation or maybe you could say a part two to a certain extent of further increasing that scope to ensure that people we capture a lot more of that that's been dangerously done. But at the same time too like it still wouldn't necessarily like people can still be able to put these transactions to miners again even if you do increase the OP return. So really the with the change the hope is just that this will be done cleanly through that and that's why some of the conversations also been around just getting rid of the op return for at least a very small group of on the ground versus even just the standardness rules like I mentioned which play a part into this of why we even have anti-PAM filtering to begin with. So I think there are a lot of nuances here and there. There are a lot of dis analogies and pretty accurate analogies too at the same time. So I think over the coming weeks you'll likely see a a dying down of this conversation from just the sheer heat that it has currently to something more technical which typically happens of core propose a change people go out complain shout cause issues and then it revolves back into being fully technical again. So I think likely two things will likely happen. either this PR gets closed because it's controversial or gets too heated or there isn't too much maybe a source of signal or it needs to be rescoped or it could be jammed through and then cause us to even have more material conversations about what exactly is Bitcoin and what it should be cuz while this might just be a technical minutiae for a lot of the community, it's changes like these that could have a longerterm effect with regards to undoing all the issues that will likely come as a result of a consequence of these type of changes being proposed. osed or included versus just you know infighting between the community members. Gotcha. Yeah. No, that that's super helpful. And I guess where my mind goes is like so you know as you articulated this is a this is a policy change not a consensus change. And so in terms of sort of how the development community works, uh, core and other developers, you know, uh, can you sort of walk through the difference between, um, sort of the amount of consensus roughly that one needs to push forward a policy change like this versus a consensus change and why, you know, as you just articulated, like maybe it just sort of dies down, you know, it it doesn't get merged or they force it through. Can you like add color on like what that forcing it through would look like and what that means relative to like something that was an actual consensus change and you know the difference in those two processes I guess is what I'm trying to get at. No, for sure. I mean there's definitely a lot of context that I'll likely have to butch just to convey this succinctly, but with regards to how changes get pushed through, it is a very very dynamic process on the core project. It's not as straightforward as we have 20 ACKs which is you know acknowledgements versus uh NACk's disagreements and then seeing just materially what's the count and then just merging if each time there is a change depending on how complex depending on the bandwidth of folks reviewing it depends on that group of folks taking a look at that time so whether it's consensus versus non-consensus the the main distinction I would say is there's definitely a lot more scrutiny just naturally speaking if we're talking about consensus versus something like policy And then at the same time too there have been situations where you know I mean this is more more historical than pretty recent where some changes that even though in retrospect might have been something that should have been uh taken not necessarily more seriously but should have had a lot more eyeballs taken or taken a look at just get merged. And there are situations where things that might seem trivial again like something like this that have just so many eyeballs looking at it. I think I say really the the difference is very dynamic. It's not black and white in the sense that this is exactly how it works each time. Say it depends on a case by case basis. But for something like uh let's say tap routt for example, there was already consensus on the actual change itself. And ironically the biggest delay came from how to deploy that change. So there are kind of weird instances like that where there is agreement on the change itself but maybe the mechanism of deploying that change or even sometimes just the change is agreed upon and then so when I talk about the forcing it down the line I mean kind of goes into the censorship question so it could be a case where some of the and there is noise really if you look at the pull request from people outside of Twitter or people who actually aren't contributors on the space which just created GitHub accounts just to comment. So if it's a case where everyone within that uh noise category is expanded and we have former contributors also being included as noise and then comments get deleted all the way up to the only thing remaining is essentially all the proarguments for that change itself then that could naturally also swing know some of the some of the maintainers or some of the folks on the ground that are reviewing this code as like okay you know this isn't as controversial. So that's what I mean by like forcing it down the line. I don't expect that will be the case. they still have um high uh what would I say awareness I don't necessarily say maybe trust but I do lean into the competency and the level of vested interest that core developers also do have in the project because people also forget that these are folks that use Bitcoin on daily as well that also hold Bitcoin so it's not like it's a random set of people that just care about the project for caring sake so I think that's what we're leading into or I guess leaning into in terms of is sorting itself out and how the mechanism is or the process for making changes and and accepting them on margin hey everyone hope you're enjoying the podcast uh episode with Abu Bakr. He always brings a ton of great insights and technical law knowledge um to a to a show that maybe we don't always get into deep technicals. Um quick word from on-ramp. Want to let you guys know we have some big exciting updates coming uh forward in the coming days. If you want to sign up to our research to get a sneak peek, please do. And also we offer financial services across the board, not only multi-institution custody. So, if you're ready to self sign up, you can go through a self onboarding. That's something most people don't know, but once you onboard, you're actually can get the ability to trade, lend against your Bitcoin, get a tax advantage uh Bitcoin account via your IRA, as well as set up inheritance, and it's all backed by Lloyds of London with a $100 million policy. Um, if you're curious on what we're building, want to get involved, please shoot me a note. Love chatting with everyone. michael@ honorbitcoin.com. Now, on to the rest of the episode. Thanks. Gotcha. Yeah, thanks for running through that. I mean, I'm not I'll probably get crap for this. I don't agree with it, but I I can see where Sailor's uh stance on funding devs comes from where he's like, "Hey guys, maybe we don't need all this money out there floating around with ideas on changes to the Bitcoin protocol. He likes how it work. He likes how it works today." And just describing what you just said, probably make his eyes glaze over. Um, no, I appreciate you running through. I think maybe switching gears. something I wanted to call out that you referenced in Q4 when you came on the show last was u the interest in Bitcoin and stable coins sitting next to each other and uh I believe that that if if I recall correctly there was that interest in seeing what that looks like and I think that's something that we've been talking about more u you don't see a lot of Bitcoin companies sitting with you know uh infrastructure able to have BTC and stable coins um but given you know this new administration the new global flows that are come about uh tether you know what we're talking about with you know whether it's treasury markets or um uh exposure into the US markets there was a report that came out from the treasury uh department that was actually pretty good from a you know government agency this show it shows that um over the course of the next three years roughly they expect stable coin supply to be up to$ two trillion dollars um and then it also had some I think here referencing a little bit of um the different markets and sectors uh that it would impact from you know tokenized deposits all the way to to CBDC's. We don't have to talk about the exact report. We'll link it to it in the show notes but just curious Abu as you're thinking about you know you're you're investing you're looking at the global landscape in Nigeria as well as outside. How uh has that kind of progressed since our last discussion? what are innovative things you're looking at interested in um when it as it relates to Bitcoin and then like digital banking around stable coins? No, for sure. I think we're definitely past the whole, you know, uh, hesitation in the ecosystem with regards to stable coins cuz initially I know some of the conversations were around um, using lightning specifically stable coins and then that just materialized I guess towards the end of Q4 like you mentioned the flows pretty much the volumes kind of dictating exactly where the market is heading which is that a lot of that really has been captured by stable coins as opposed to lightning which makes a lot of sense and it's a lot more practical really if we're talking about it more materially given the fact that They're just converting like I mentioned I think in in the last time we spoke all the demand that traditionally would have gone to US dollars into stable coins pretty much. So does make a lot of sense. I think what we're most keen on looking at in terms of the company side is infrastructure that like you mentioned has the capacity to handle both bitcoin as well as stable coins. But I think at least personally outside of the kind of looking at it from the VC side is making sure that there still is that distinction made between the two as opposed to maybe blending them down the line in terms of how they work some of the engineering side about you know how these interactions should be dictated too because at the end of the day as much as a lot of these flows are just being translated from stock uh kind of locked up I guess liquidity from FX it is important to note that there are still dollars essentially. So for we're looking at financial freedom etc and things like that there still needs to be at least mentally in terms of the mental models that a lot of these entrepreneurs have of where they'd like to lean users in the either direction and kind of clarifying exactly what these assets are for users practically speaking whether it's on self-custody side or even if it's on inheritance and things like that. So I say making those distinctions very very clear and solid right now is what would make the space a lot more easy to navigate down the line facility having even more complexity both from the builder side as well as the entrepreneurs the marketing the language because I think language is very very important in terms of how you communicate products and services and that kind of sets the expectation at community level or I guess at an ecosystem level which could either make or breaks in terms of the trust people place in the asset itself and the builders and things like that. So say those are kind of the things we're looking at on the VC side and kind of personally where I hope yeah it's something I was thinking about. Um it's like on the the book ends there's the infrastructure being laid but it's like how does it connect and what I mean by that is like so you have like cold storage solutions whether it's on-ramp or like collaborative custody or even self custody with like pure you know you holding a hardware device and then over here you have the way that you pay for goods and services globally. It can be in the US and you have you know whether it's Apple Pay cards and it's like how do you as more like I think we're all here living in the future and people listening by holding larger and larger amounts of wealth in BTC and understanding it's different than a stable coin or the US dollar but we still live in a dollar denominated world where you have liabilities and how do you actually stay in BTC longer but then ultimately can get to like some form of wallet that sits here that has some uh basically ability to convert to to USD or whatever. whatever the stable coin is when you're spending it. So, you can stay in BTC the longest if you want. You can always move to dollars as well, but there's uh that connectivity doesn't fully exist yet. And there's and it makes sense because most people don't even know why they would want to hold the majority of their wealth in BTC and spend from it. But but we're going to that world and we're going to that world where and that's where like I kind of you know for have always thought like bit stable coins weren't as interesting until it just hit me like well the reason why stable coins have been interesting and specifically tether is because it's helped global flows into BTC because it's digital and so then you take that to every other capital market or every other consumer uh you know flow of funds and then that actually applies across the board if you can put stable coins get your dollars into stable coins and then next to the scarcest digital asset we've ever seen in Bitcoin that's just going to further accelerate that transfer of wealth from dollars into BTC and then back and forth will naturally happen. And so yeah, I think that there's still a huge amount of opportunities that I've been thinking about um to help bridge those gaps globally. No, 100%. And I think maybe just tying the the entire conversation into a need would be there's definitely a lot we need to do on the regulatory side because that affects how governments permit a lot of this innovation. But general space is built on permissionless innovation. There are ways in which you can still maintain using Bitcoin outside of that. But just the sheer amount of people that would be affected by u adversarial regulation is really why we care about regulations. And two is really kind of taking off of the the sailor conversation broadly also the conversation around controversies recently. I think it's important to note for folks listening and watching as well that software generally isn't a thing where it's done or like other things in life like software is either not maintained or maintained. So for something like Bitcoin that we're planning to have into the next couple decades, it's very very important to take it as software that needs consistent means. Not just for it to keep working as it is, but for it to even work better than previously what we've been enjoying to kind of iron out what it for Bitcoin to be Bitcoin for generations to come. And that leads into obviously diversifying funding for developers because as much as developers are integrity and very competent there are ways in which they can be influenced from funding. have a lot of them concentrated in a single place for example and I say that conversation leads into things like you know B trust and the work that we do and trying to distinguish between funding and dictating to the space vising and kind of enabling that and kind of where we lean on that is ensuring that we pump out developers that are extremely competent honest and have a high degree of philosophical understanding of exactly what Bitcoin is and how we can persist that into the next couple decades. So see that's very that's one of the things I think people should keep in mind when all those conversations come up and at least for capital allocators as well to kind of look at where they'd like to provide the most value. Is it in case of funding companies in case of maybe putting their stake in terms of funding developers or organizations that do this developer funding and kind of how they can think about these things. And lastly really on the stable coin Bitcoin distinction I think you put it very very succinctly. is making sure that we know what direction of the future we'd like to have a vested interest in in terms of the infrastructure and kind of directly have bigity and how in the meantime we can graduate that more consciously and moreistically practically any jurisdictions as possible with the sole aim honestly of just allowing for freedom to kind of yeah right now we have to contend with all the freedom versus slavery or fiat etc as folks like to express. So see those are the the main key points I think should be kind of looking into these conversations across everything just discussed. Yeah, that's a great recap. And I think the thing that stood out there is about the um developers and just like individuals coming up is remembering what you know at least bitcoin is or or explaining the importance of money because I think like when you conflate technology and you know iteration and because that's general right for technology versus like money they're fundamentally different and I think that's probably like a substrate of what's lost in this discussion of optimizing versus thinking through from first principles what are we trying to change 100%. So with that in mind, hopefully folks can navigate as effectively as possible the ecosystem. But then again, this the beauty of having a decentralized project, all the opinions, all the folks around the world. It's healthy to check in everyone's biases and also everyone's motivations where their head is at. So we all have to keep ourselves accountable. I love it. I know we had a shorter rip today, but we've grown our following. So, if you want uh anyone to figure out, you know, where to find you or want to shill anything, let let them know. I know uh you I think you may have closed the fundraising process already, but any updates around that would be helpful for people to know to find you, get in contact, you know, for sure. For on the fund side, definitely can reach out to us either on X or, you know, even our contact at rcrsv.xyz. If you're looking at personally, I drop quite a lot of articles on Forbes. You can take a look at that. Follow me on as well as X. And other than that, I'd say just generally keeping tabs on what's happening in this part of the world. So, specifically Africa and the rest of global south because I feel it's going to dictate and kind of set the precedent for everywhere else in terms of both innovation, regulation as well as where development. Love it. We need to recap. Uh I want to talk uh been going on the gold rabbit hole and figuring out how that's going to flow flow with everything. We didn't even get to touch on that in China. So, we'd have we need to get you back on at some point. No, for sure. Looking forward to that. It's a very interesting combo. We still have a lot of gold bugs on the ground. So, yeah, the guys have been hearing they're tired of hearing about that from me. Michael loves his gold. He loves his he loves his shiny rock. No, I just I the the angle is that gold and Bitcoin are going to persist much longer than both sides uh want them to or think is the is the angle. So, till 2B TBD will part part two with AU coming soon. Fair enough. Looking forward to it. Thanks again for having you guys. Thanks, man. 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 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.