The Last Trade E045: A Generational Reckoning with Jackson Mikalic

Brian Cubellis (00:02.574) Jesse, why buy Bitcoin? Why buy Bitcoin? Well, I've highlighted that one because it's by Andy Edstrom, who's part of the OnRamp team. And Andy was ahead of his time. He wrote this in 2018 for his clients and other wealth managers to try to make the case for why Bitcoin belongs in anyone's portfolio. And so, you know, ahead of his time, he doesn't get the props he deserves for that. And it's a good book. It actually helped soften the Bitcoin idea for my dad. So important in my family's journey towards accepting Bitcoin as part of our portfolios. Let's go. Bring it up. It's nice to see a bookshelf behind you. You've got your podcast set up coming together. Yeah, I got to fill it out a bit. Literally 30 minutes ago, I was like, I should probably put more than three books up there. So I unloaded two boxes and here we are. I need some help with that. We got some work to do in this room here. Well, at least you made your bed Yeah, this is the guest party. Come on. I'm not working in my bedroom I think last time I was on the show actually that the bed wasn't even in here. So we're making gradual improvements It's important podcast it took me years we actually maybe we'll look at a clip from a podcast from two years ago considering one of the topics we're gonna talk about and This studio looks completely different Yeah, we need I think we just got we're young we got things we focus on we're busy I'm lucky I got this damn painting behind me just because you kept talking about my blank background You need to you need to you need to get a curtain the blind I know the wife is supposed to she wants to come out and do all this stuff and We'll get it done. It takes time. I just got a Picture behind me for the first time. I've been here for two years. I've been sitting on the ground. I finally got my poster my picture up behind me next time Yeah, the art is coming next. Though I there's a couple pieces of Bitcoin art in prints that I want to get, but I can't justify like pulling the trigger on like a nice print now versus holding for another year and then buying it. So if you go to me, if you go to Madix, you can send him a Bitcoin and he'll send you the JPEG file. Yeah, it seems like a good way to go. Good for him. That was a pretty epic move. Responding to David Bailey with that. Brian Cubellis (02:35.278) I have a print of Delaware or Washington crossing the Delaware that I need to get up behind me and it's fitting because I look at the Delaware River here in the Bitcoin capital of the world of Philadelphia. We got some work to do Jackson. Jackson, on what basis is Philadelphia the Bitcoin capital of the world? Is that current or future? It's current. I think it's all marketing. What makes Austin or Nashville the Bitcoin capital of the world? We had a, we had 125 people show up to Bitcoin John on Monday to come, you know, meet other people in the space. We had people coming in from DC, Baltimore, the middle of the state, Makita and Andrew Hans, who organized the event, did a great job. They brought Lynn Alden in. So. I won't get too far ahead of myself. I'm joking when I say it's the Bitcoin capital of the world, but it's nice to see that people are starting to show up and there's more of a presence here in this great city. It is a great city. Speaking of Andrew, I got dinner with Andrew last night. Road Warrior in the space. Started his week in Philly. He was in Austin last night. We had a nice dinner. That man can talk about Bitcoin for hours. Yeah, we got to get him on. I think whenever he's ready to... to come on and know that they were working on some stuff that was a little behind the scenes, but whenever he's ready to talk about it and just his travels, we were referencing how much he's on the road. I'm sure he could educate us on a lot of things that are happening across the world. A road warrior to aspire to. Let's start with gold. I'm gonna go with gold. It's pumping right now. I think I've been doing a lot of reading on this this week, trying to prepare for this episode. And I think the big story really going back to 2020 is the divergence between treasuries and gold. And you have two assets that have historically been risk off assets that people have piled into treasuries. Brian Cubellis (04:41.901) being deemed risk -free assets, essentially risk -free assets by many allocators and the government itself. And it seems like that correlation, historic correlation broke and is really breaking now. What is gold telling us? Is gold having its day? Yeah, well, for people who aren't aware, and I wasn't fully aware, it looks like gold finally broke out of its $2 ,000 per ounce. level that it, I guess, has been stuck at since 2011. It first bumped up against that and then had, I guess, a bit of a classic cup and handle since then, bumping back up against $2 ,000 per ounce in 2020 and getting stuck there for the last three years and change. And then now, in the last two months, up to $2 ,300 per ounce. Which I guess in gold is a big move. Yeah. Without being, you know, I think the notion from macro finance experts is that gold has been held underwater for so long that whenever it makes moves like this, it means a lot of things are happening across the world and macro in general. I don't even think it's a temporary event that's driving these flows. It looks like something structurally is different in the market. where people are choosing gold over treasuries, which is not good for treasuries. I think Marty got it with how he led this off. And Logan, if you want to pull that chart back up, that tells the whole story right here. So for people who can't see on the screen, there's two lines. There's the price of gold for the last, it looks like six years or so, where it's kind of trending up. And the last half of the chart, Is it really kind of accelerating? The other line is treasury prices, which track gold for the first half of that six year timeframe. But then the last three years, treasuries has gone down into the right while gold has gone up into the right. And Marty, I think you're right. I think this goes back to that geopolitical shift, the end of Bretton Woods to Brian Cubellis (07:07.565) and the start of Bretton Woods three, as Zoltan Pazar put it right at the start of the Russia -Ukraine war when the US seized Russia's foreign exchange reserves. And from, you know, as Zoltan put it, it was the end of of inside money and the beginning of a of a shift towards outside money, meaning money that is outside of the financial system, outside of the control of international powers. And that means commodity money. And that means gold historically, first and foremost. It also means Bitcoin. And Zoltan noted that at the end of his letter, saying that if this is true, Bitcoin will probably be the biggest beneficiary of all, even though he's not a Bitcoin bull himself, or at least that's how he categorizes himself. So, you know, fast forward a few years, that seems to be what's playing out of why hold treasuries if treasuries can be seized. You know, like if you're maybe not on the best terms with the US, maybe you're China, are you really going to hold US treasuries as part of your reserves? Or do you, because of the example of Russia having their US treasuries seized, confiscated, maybe you don't want to hold that anymore. Maybe you want to shift to different store of value assets. And historically that's been gold. And of course, the narrative also plays in with what's going on with the sheer scale of the U .S. national debt and the math that's hard and fast that we're going to have to print more dollars to deficit spend, to service our debt, accelerating the debt, increasing inflation. And in that environment, U .S. treasuries are not what you want to hold because you're If you're holding US Treasuries, you're holding a small nominal guaranteed yield in a currency that's being debased. And you don't want that. So I think the shift makes sense when you view it from the macroeconomic perspective of it suddenly makes a lot less sense to hold US Treasuries. And if you don't want to hold US Treasuries, maybe it's time to shift back to the tried and true store of value asset like gold and make that a bigger part of what you're holding. Brian Cubellis (09:33.517) And that would explain the divergence of US Treasuries selling off and gold bidding up. Doesn't it all seem so antiquated? Like, you know, thinking about gold because you break down gold and you're like, okay, all right, now they got to store it somewhere. Now you got to have armed guards. Now you need armies. And you started thinking about all this stuff and not to tie it back, but like, you know, multi -jurisdiction, all these ideas and notions. It's like the whole thing of the futures here were just not, and it's not evenly distributed. It's literally like, we could also call this podcast this because it's just like these, and we know the end state or like directionally, it's just how long does it take to get there? Well, 100%. Look, and pull up that other chart, it's like, we do know the end state. Are we in the end? That's what I think. Gold in treasury is moving the way they are screaming at the markets right now. Something is broken. I don't think most people perceive the gravity of the structural break that is happening in financial markets right now. Like, this chart is astonishing. It's literally hyperbolic. So what we're looking at, if you're not watching on Spotify or YouTube, is US interest payment scenarios on the debt. We've accrued federally, and it's a hockey stick chart. And there's two scenarios. We've released three scenarios. What's already materialized in terms of the gross of the interest expense on the debt. And then there's two lines, projection assuming rates stay stable, which it seems like they are. Jerome Powell came out earlier this week and said that they really don't want to lower rates until they're certain that CPI is under 2%, which doesn't seem like it's going to happen anytime soon. And then even if there's another line here, yellow line, assuming a 150 bips fed cut this year, and it really doesn't make a material difference in the growth of this chart. So we are in... Brian Cubellis (11:32.941) the debt spiral that many people have been talking about within Bitcoin for years now. We've been called crazy for saying that this is going to materialize and it's materializing right in front of our eyes. And you have pricing signals throughout the market, essentially confirming that people are dumping treasuries, going into gold, going into Bitcoin. And yet I don't think the broader public or even the broader mainstream financial Industry has really internalized this fact right now. We are in the middle of the death spiral I don't know if it's head in the sand cognitive dissonance people don't want to acknowledge it or just pure Oversight of what's happening in front of your eyes. Yeah, it's all of the above and and math is hard. I think that's a big part of it that that tweet was from Lynn Alden and she and Luke Gromen were the two people who were seen around the corner 18 months ago and we're dead right about at the time they were pointing out how it's really going to be head spinning for people when high interest rates, high fed interest rates are actually stimulative to the, to, to the, to GDP and, uh, and the money supply, which is completely counter to what you'd expect. Um, and the point they were making is that. because of how high the national debt is, once interest rates increase and the debt rolls over those increased rates, now the interest expense on the debt necessitates more deficit spending and necessitates more debt issuance. And that debt issuance goes straight into the economy, straight into the money supply, and actually stimulates the problem, makes it worse. rather than helping to bring down inflation from trying to reduce consumer spending. It kind of has the opposite effect of like the tail wagging the dog because yeah, consumer spending is decreased, but government spending is increased because they have to pay this interest expense and they're sure not going to cut other spending types. So it all amounts to more spending. They were dead right about that about 18 months ago. And that's like, that was a hard, Brian Cubellis (14:02.221) Um, mathematics concept to conceptualize, to hold in your brain and project forward and, and see how that all teases out. And most people, you know, or just don't think that way, I guess. So when you overlay the Bitcoin price with that chart, it just reminds you of the Weimar chart with gold and the, the, uh, the Y whatever the, the currency, what is it? The, what is it? Yeah. The, the Weimar. Yeah. Mark. Yeah. my remark, but it's very similar. Go ahead, Jackson. Yeah, I was just going to say that we all feel at this point that we're in a debt spiral. We're at the early stages of it. And what's coming is a sovereign debt crisis. And I have to think back to my grandfather, who silent generation, young in the Great Depression, fought in World War II. And how do those macro events impact human psychology and investor behavior. And the reason why I bring this up is because my grandfather and his generation invested primarily in or saved primarily with government bonds, CDs, some precious metals as well, even though that was illegal at the time. And then the rule of thumb changes, right? Like how does, how do you save? If you can't save in dollars or money, you have a proxy for money and that has become like I just mentioned, CDs, bonds, et cetera, for one generation. Then it became the baby boomers and Gen X that primarily used equities, real estate as their form of savings. And I think now we're really just still in the early stages of Bitcoin. Well, this is different because it is a form of money, but it becoming the de facto premier savings technology and it's being adopted at a much higher rate for. millennials and Gen Z than it is for Gen X, baby boomers, et cetera. So I think that's all to say that, you know, the great depression really was formative in how people chose to save their money. One thing I meant to mention that I overlooked was that my dad about 20 or 30 years ago had recommended to my grandfather who again was, you know, living through the great depression. Brian Cubellis (16:26.381) You should invest some of your money into equities. You know, here's why this is a good way for you to kind of protect your purchasing power. And it was so risk averse because of the stock market crash during the Great Depression that I don't know if he ever invested in equities at all. So I bring this up because I think we're really, you know, at the start of a big macro event for a sovereign debt crisis in the U S but also in other nations. And this will be extremely formative in how people continue or proceed in saving their money and protecting their wealth. Brian Cubellis (17:03.277) How do we think this impacts like housing? I don't know if you guys saw the blog or there was a Reddit post that went viral about an Austin person that bought real estate. It's under underwater $200 ,000. And so it's like interest payments or mortgages like 5 ,200, just completely kind of screwed. And like, there's like two notions, right? We can lower interest rates, prices get inflated across the board and we continue, but it feels a little bit like maybe that's not the direction this goes. And if that is the case, there's a lot of people underwater in their real estate. Yeah, my view on this, once I fully unpack all my books, I'd pull up When Money Dies, which is a bit of a deeper cut in the Bitcoin space in terms of books, but it lays out all these vignettes about what happened, what did it look like, what were the dynamics going on in Weimar, Germany as the Weimar mark hyperinflated. And Some of the takeaways from that is that the people who did well were those who stored their value in hard assets. Gold did the best. So people who stored their value in a few ounces of gold early on were then able to buy a bunch of assets once the hyperinflation had devalued everything dramatically. And Part of that process was during the middle stages of hyperinflation, property investors did well and stock market speculators did well because the nominal value of those assets went up. And so they thought they were doing great. In the long run, they didn't. But for a while there, deep into hyperinflation, anybody holding assets, thought they were getting rich. And I think that could be what happens with real estate. I mean, it's sort of already playing out. Canada is sort of a great example of what the path we could go on of real estate valuations just getting sillier and sillier in the nominal US dollar terms as the dollar is debased at a faster and faster rate and people are desperate to put their value into a savings vehicle. And, you know, Brian Cubellis (19:30.925) we pretty deeply have adopted the psychology of like real estate is a safe place to store value. It's a good savings vehicle. And so I think that, you know, as the dollar debases at a faster clip that like desperation and that that resorting to real estate as a store value will probably be the track that people follow rather than turning to gold or Bitcoin, which is really going to be the the asset that I think is the way for people to survive and thrive through the debasement of the dollar. I think a little of that breaks. It's breaking now simply because of the down payment for most people is out of people's reach. But, uh, well, the last pod we did with there and, um, Lepard was really like helpful myself being like, I think following closer to Marty and I think Jesse, you as well of like, I think we ended up in a lot smoother transition than everybody believes or like our peer group goes through. I think like the whole way this works out. because of the incentive models and the way that we can think about the distribution and however you want to decide to hold the asset is a lot different than historicals in the sense of it's going to be a thing is going to play out a lot more seamless. And I know a lot, you know, we obviously have a lot of friends and peers building in the space to help with, you know, accepting Bitcoin, storing it, different financial products that are just opening up to more and more consumers that once they get their tastes from, you know, BlackRock ETF or whatever, and realize what's happening. versus going and putting that hundred K in the house, they can, you know, store in a better form of, um, money to increase purchasing power. So then they can actually like transition in this way. And as people start to accept that because they recognize that, I think it just like aligned and smooth this all out versus what's traditionally known in the circles. We kind of follow or people that listen, think this is going to be a lot bumpier. I I'm starting to be a little more optimistic on how this all like turns out over the next decade. Even if it isn't, uh, something catastrophic or. Brian Cubellis (21:34.445) violent transition, right, in the sense of just like chaos. I think there still is like a big sense of urgency to adopting Bitcoin because really fundamentally there's so much capital that's tied up in fixed income because people have been operating in a world where the US Treasury was sold to them as the safe haven asset, right? So I agree with you, Michael. I don't necessarily anticipate like Mad Max, right? I think that I think it'll be pretty peaceful. However, we transition into like a next monetary order. But that's all to say that a lot of people are going to be really financially crippled if they are over allocated to fixed income, in particular, you know, what was perceived to be the safe haven asset, US treasuries. And that's concerning to me, because I think there's a lot of retirees who thought that they were like, you know, in a good position financially, maybe they had enough to retire and then also pass them down to their to their children, but financial repression is an inevitability. So inflation will have to be higher than interest rates, which means that people are going to lose money. Maybe it doesn't happen like catastrophically all at once, but over the next five or 10 years, people who are overallocated to fixed income, I think are really going to be in for some financial hurt. And that's a sad thing. It's bad. It's bad. Look at that TLT chart. It's down 22 % over the last five years. And Jackson, as you were just mentioning, I mean, the complacency of the asset management space, particularly for retirement accounts, has these target date funds that literally force your allocation from a 60 -40 stock bond portfolio to 80 -20 towards when you're approaching retirement. You have. the most people ever in American history approaching that retirement age. More people are retiring every day in the United States than they ever have before. And they're retiring with a portfolio that's essentially 20 % underwater. Maybe their stocks are, let's say, 15 % underwater if their stocks are making up for the underperformance in these treasuries. And obviously there's probably a select few who took more agency over their portfolio allocations and maybe gotten some alts and some hard money, but... Brian Cubellis (23:54.765) I think it's safe to say that an overwhelming majority of the people who depended on these complacent asset managers to just construct their portfolios for them are running into a buzz solve right as they retire. That's why I think it was just saying this one thing it's important like to share this stuff with the people you care about the people that you don't necessarily care about like or they don't want to listen like they'll figure it out whatever but the people you generally care about you almost have to do be relentless and share stuff like this and because. The reality is like, I found out the other day that, you know, somebody close on my wife's side finally built a sizable Bitcoin position. And I thought like, oh, she got it. She wasn't that, she's like, she's a spike corner, basically. She's like, I had to do it just in case, you know, you were right. I couldn't have heard all this for years at the dinner table. And then... you know, like to your point and then retired and now they don't have any wealth because it messed up. So you just did it out of like hedging, which is fine. Like do it however you get there. But I do think that stack is a stack nonetheless. Okay. It's a stack nonetheless. And so, yeah, I think it's just important to like just this whole thing that we're doing, like it actually matters to share and have the conversations with your family and for the newsletters and all those things. Because to Jackson's point, like there's going to be a lot of repression with people that thought they had a lot of wealth that is just getting depleted year over year. Well, that's, I mean, going back to Jesse's earlier comments on when money dies, that's the most insidious part about all of this is because the dynamics of the system are such that two routes overt default or soft default, and they're going to pick the latter. And people are going to think that they're getting rich. They're the paper. They're going to gaslight you of their gaslighting. They're probably kind of already begun in that sense. You know, like, yeah, people are like, wow, the stock market's doing great. I mean, Inflation, 2%. Yeah. I remember in finance class 15 years ago, my professor being like, if you can find me a 7 % return equity, I'm interested. Pitch them to me. She was soliciting ideas for investing because 7 % was like a dream 15 years ago. Now we've just been consistently returning 10%, 11%. Brian Cubellis (26:12.461) for the last decade on average because we're debasing and so it's not real returns. Yeah, I think to go into the complacency piece, Marty, in the managed wealth space, I think it does come back to just kind of generational differences because I think the average age for an advisor is maybe 55 or maybe somewhere even later in 50s. And I was running some of the numbers for an article I had written a couple of months back at this point. And just the I was trying to find the data, but just the number of based on volume in terms of crypto buyers, right. So all encompassing Bitcoin and then other coins. It was about like 94 percent of all volume of crypto purchases are Gen Z and millennials. So I do think that. Unfortunately, just there's a complacency because people generally speaking are not willing to challenge their thought process or even ask the simple question of what is money and you know, what is this all for? Why am I doing this? What is financial planning? Right. Like there's a lack of first principles thinking and it's really just kind of a herd mentality when it comes to just looking back over the past 40 years from 1980 to 2020 and just assuming that whatever worked in the past will work going forward and feeling. okay with that, right? Like complacent, as you mentioned, just because most of your peers are doing that as well. I think this all kind of ties into the $80 trillion of wealth that's held by baby boomers. And as that continues to trickle down into younger hands, that is just kind of like a natural flow into Bitcoin and probably unfortunately crypto as well. But I do think as advisors get younger and then also their clients, we're going to see, um, quite an increase in allocations to Bitcoin and ultimately that becoming a form of money. Yeah, I have a spicy take here. I think that the Bitcoin is a generational reckoning. It's a karmic rebalancing of the excesses that the baby boomer generation received, whether or not they admit it. They had an incredible set of tailwinds for their wealth building years. And I think that's a very good example of how Brian Cubellis (28:34.253) A lot of baby boomers, whenever I bring this up, some of them push back and say, well, it didn't benefit me. Well, it could have, you didn't play the game the way that other baby boomers did. And they did very well. What it amounted to is the baby boomers have a disproportionate amount of wealth in America and the world. And it's, they're really interesting chart from the New York times that they should update, but. It tracks the percent of total wealth held by different generations at that age, at that point in time when they were a certain age. So like, you know, the baby boomers, I don't know, whatever the average age is 60 or 65. Gen X 45, millennials 35, whatever it is. And what percentage of the wealth have they accumulated? you know, tracking by, by, you know, by age 30, 31, 32. And the baby boomers have a, you know, high up into the right dominant share of wealth. The gen X is, you know, about half the trajectory, meaning they're gaining wealth relative to the total amount of wealth that exists at half the rate that the baby boomers were. And millennials are about half of gen X. So which means to say that we're gaining wealth at a quarter of the rate that the baby boomers were when they, you know, as they moved through life. So we as millennials, as a generation, we at this point in time have like a quarter the wealth that the boomers did when they were our age. And, you know, we're on the trajectory for that disparity to continue. So Bitcoin becomes this generational reckoning, rebalancing where. Millennials have an opportunity to catch up to the baby boomers. And, you know, the flip side of that is sadly the baby boomers are not in a position to embrace the new. They're in a position to hold onto the old because the old did very well for them. So they're disinclined to try something new to change it up when they've had such success building wealth with the 60 40 portfolio. Brian Cubellis (30:56.845) So they're going to hold on on net. They're going to hold on to what worked before and they're going to see their wealth slip away in their retirement as the millennials gain wealth. The ultimate rugging. It's the ultimate rugging. And for that matter, you know, if you're a baby boomer, the real the real play, the way to beat the millennials at the game that they're going to win is to jump the gun and adopt Bitcoin. before the millennials do. So, you know, you can as a baby boomer, you're not it's not guaranteed that you're going to underperform. The question is whether or not you will embrace Bitcoin before the millennials on average do. And and, you know, that that is in your hands and the opportunities there in front of you to beat the millennials again. But if you take no action, the millennials and the younger generations behind us will. eat your wealth as Bitcoin accumulates, monetizes and everything else underperforms. I think it ends up 50, it ended up 50, 50, like less millennial, more millennials than boomers end up early adopters, but boomers with more capital. So you end up with this allocation and then the rest of the laggards all just have to adopt it because it's just the thing that has to be used. Cause I think it's more of a lens thing of the world than anything like the meta version. Yeah. It kind of becomes a litmus test for the boomers of like, can you Can you preserve your wealth? All right, great. You made your wealth with a bunch of tailwinds, but are you savvy enough to realize that the winds have changed, changed hack and preserve your wealth by shifting your strategy. And that's going to separate the wheat from the chaff in the boomer generation, the real savvy investors, the smart wealth retainers versus those who got lucky. And we'll see what happens. Logan, can you show that stacking? Brian Cubellis (33:00.909) stacking screenshot because I think that's like the positive from a Gen Z or millennial or anybody that's looking just to start today. The chart showing buying $10 of Bitcoin every day from April 1st, 2019 to 2024 and 18 ,000 turned into 70 ,000, a 285 % increase. And this is like ultimately what we're talking about, whether somebody has zero Bitcoin today and starting this idea of preserving your wealth and being able to like say for the future is the whole idea, whether you have zero or you're sitting on 10 million plus as a boomer. Yeah, $10 a day, five years, you wake up and each $10 that you spent is now worth $28 .50. It's pretty crazy. Yeah, it's crazy because you think about the freedom. If you're working day to day and you're living paycheck to paycheck, you make enough and now you're sitting on close to $100 ,000 in 12 months, what is that? And now you can actually go do something like the level of productivity on lock from you know, what we know this can do is just like, you just have to start somewhere. Yeah. Yeah. I've been reading a lot this week about the history of eras and where we find ourselves. Michael, do you wind up reading the rest of that piece? I haven't. Do you want to summarize it or should we like read it? And is that a book club homework for next week? I think it's book club homework. It's a long 45 minute read, but I think really the most profound piece I've read since the sovereign individual. Again, putting our current, the Sovereign Individual was written in 96 and was very prescient and prophetic for what has played out over the last 30 years. But this is a piece that was written about like, all right, here's where we are now. Not really harkening back to the Sovereign Individual specifically, but a very similar piece that tries to define. errors throughout history, sovereign individual broken up into 500 year super cycles defined by technological innovations that really spurred on different errors, whether that's the Protestant era with the printing press, the Industrial Revolution with the steam engine, the digital age with the microprocessor. This was similar but a bit different where it really defines errors throughout history very... Brian Cubellis (35:24.013) binary, we've had centralizing errors and decentralizing errors, eras, and it's pretty clear that we're moving into a decentralizing era. And it was actually, I forget what the piece was called, I'll put up a link that Logan can flash up on the screen, but it was very illuminating and clarifying and actually a bit, not cathartic, but... give me peace about the current state of the world because a lot of people get pissed off about politics, the state of the American government, and red team versus blue team. But this piece, particularly the last third, did a really good job of just saying, hey, this is just the product of the end of a centralizing era that we're transitioning out of and into a decentralizing era and the bureaucracy that has been built up in the central government. is not something that you're gonna change. No politician's gonna change it. No amount of voting's gonna change it. The bureaucracy has been set up and it really runs the show, not the politicians that you vote in or out of that bureaucracy. The point being is that the level of centralization in that bureaucracy is getting to a point where it's about to collapse in and of itself, which as we've discussed, throughout the show, the debt levels, the interest expense on the debt, the state of treasury performance. I think those are the clear signals that that's happening. And the big question is, is what's the transition into the, the error of decentralization that we have before us look like? And it's a bit unnerving in the piece. They say to probably not going to be Mad Max, but it's going to look way different. And we're beginning to see examples of. what it may look like on the other side materialize with states asserting their autonomy against the central government like here in Texas, Florida, the states that have legalized marijuana despite the fact that marijuana is still schedule one drug and it'll get even more local. So like to your point about like how does this play out and I do have a point with this long rant. It's that these problems that we're talking about are going. Brian Cubellis (37:45.997) To persist and get worse, but what you're gonna find, I believe, and what this piece did a very convincing job of convincing me of is that things are gonna get very local. You're gonna fall back to the Fed and the Treasury are not gonna solve this problem. This is something anybody listening to this should begin to internalize and think through moving forward is the problems are gonna be solved locally. Your pensions are gonna get blown out. Your house value is going to... be decimated. Bitcoin's probably going to go up a lot and the other side of this playing out of the end of the centralizing error that we find ourselves in will be very decentralized and local. Sorry for that long rant. Should we read it or not? I was about to say I'm excited about it because you kind of got me excited about maybe a format like once a month we find a piece and we do like a popcorn we each switch and then like because Leon Woncombe's coming on next week and the idea is I was gonna say we can share this piece and we all read it and then come back for like 15 minutes next week and discuss because I think what you interpreted is probably gonna be different for Jesse and probably for myself on like what it's saying. It could be make for an interesting discussion. There's probably gonna be directional themes that we all agree on but I think it could be fascinating. The chart I think about when I opened it and then I fell asleep because I opened it like at midnight was that right there. Yeah, I think scroll down, there was like where it showed what people perceive as, yeah, there is like the top part is what people perceive is what will look like if we were to like separate and then you scroll down and then it's like what it will most likely look like. Yeah, and this for any history buffs out there, it's a really good piece to put a lot of historical things in context and basically the long thesis. that is put forth in this article is that decentralized errors happen when very powerful technology has reached the point of commoditization and is easily accessible to everybody. And this is why it harkens back to the sovereign individual. It's when any individual can have extremely high leverage against a powerful force like the government with accessible technology. And it's becoming clear that with Bitcoin, private -public -key cryptography, the internet, Brian Cubellis (40:09.741) the communications technology that exists today and then even upgrades and military tech, whether it be just pickup trucks or cheap drones, whatever it may be. I think we are at that point where very small individuals can be very, have a lot of leverage with very few resources and capital. Yeah, I guess that's in tension with the sort of sci -fi trope of like technology is most useful to governments trying to get and maintain greater and greater control over a population. So we'll see how that plays out. I mean, the idea of like neo feudalism is pretty interesting. And we'll see if it's possible. It does kind of bring back that like philosophical question of like, you know, Are we as people, as animals, really intended to be ruled by a worthy ruler, who in a meritocratic way, the way that in theory, monarchy was at least originated of a ruler leading from the front, sort of William Wallace type of leadership. And... It's kind of impossible to imagine that returning in our world where there's so much fakeness from the political class. And I think if we get to that extent of like Balkanization that that map showed of the US and did like fiefdoms, that would mean a pretty Mad Max sort of political landscape, I would think. So I hope there's some happy medium. Yeah, we had this discussion a while ago in Austin. This was like early days when COVID was people were coming down and about what Jesse's referring to. And it's like, nobody, everybody wants to theorize about a king, a king ruling them until they're under rule by a king. And it's like that democracy probably is the best that we have. We just messed up the money. And so we have a good form of money and democracy. We're probably in a good, good spot moving forward. But I do think to Marge's point, it'll be good to like read through that and see like how this actually. Brian Cubellis (42:35.213) you know, our feedback because when you reference as cathartic, maybe you meant cathartic or like comforting in that like a lot of historical texts are helpful because they just anchor what's happening that it's happened before. And so you can actually feel comfortable and like there's nothing new under the sun. It's just a different lens or like different way it's happening. Yeah. And it's. It was a good it's good context to zoom out, be like, don't get. Triggered. by the day -to -day monotony of the political system and the moves by this current administration, the next administration, previous administration, it's all, you gotta zoom out and understand that you're on a wave that you likely can't control to any large degree and don't get triggered, focus on what you can control. Stacking Bitcoin, holding your own keys, building out tools to make it easier for people to do so. Well, on that note, we don't have to get too heady on the esoteric philosophical musings of a paper I read earlier this week. But... something that the audience should be aware of, very interesting development for Bitcoin, very sad development for the world. Massive earthquake in Taiwan earlier this week, 7 .5 magnitude earthquake, I believe, caused a lot of damage throughout Taiwan. Why does that matter for us? Well, TSMC is one of the largest semiconductors manufacturers in the world and they produce chips for bitmain for the asics in taiwan and so i think it is yet to be determined the extent of the damage that was done to the tsmc facilities in taiwan from the earthquakes but i think um regardless if there was a lot of damage or no damage at all it is something that we should highlight is that this is a centralizing force Brian Cubellis (44:43.821) in Bitcoin is this chip production, but it also provides an example of how something like an earthquake, which isn't intuitive to individuals thinking about Bitcoin, can be a black swan event for the Bitcoin ecosystem. So again, it's yet to be determined what the overall effect of the earthquake was on TSMC's facilities. Still trying to figure that out, but potentially if the facilities are damaged to a point where They cannot operate. They could have significant effects on the supply chain of Bitcoin mining machines, predominantly Bitmain machines. So you can have something like a weather event, like an earthquake, not weather, a geological event, seismic event, like an earthquake, affect Bitcoin hashrate. What does that mean? If you reference the, you shared the clip from two years ago, the guy from brains that was describing how just like, yeah, like I think that's interesting in that, that just the movement, subtle movements disrupt the manufacturing to the point where the chips are non -usable. So I think that goes without question that there, that it happened. I mean that. It wasn't subtle movement. It was an earthquake. So there's already a bunch of chips that were in production that are not going to be able to be used. Yeah. Any chips that were currently, that were literally in the process of being laser sketched and layered as the earthquake are going on, probably need to be thrown out. And it's yet to be determined if Bitmain and other producers had chips that were actually being manufactured on the floor as the earthquake is happening. But beyond, Capich from brains, co -founder of brains and an extremely smart guy in the mining space. We've got a clip here that will play from two years ago in the studio. I was referencing earlier, the studio looks a lot different than it did back then. It takes time. The silicon is growing, the different layers, and you just can't speed it up. The process. Yeah. So it's very similar. So you have an estimate when the chip is going to be ready. But if... Brian Cubellis (47:02.925) there is, for example, a seismic activity, so like a micro -earthquakes in Asia, where some of the foundries are, this affects the process because we're at such small dimensions where we're like any seismic activity, is that in English? Seismic, yeah. Seismic, yeah, sorry. So when the earth moves, it influences the manufacturing process and sometimes it screws up the chip, the wafers. Really? So they have to redo it. Really? Or they have to stop the manufacturing. So it's sort of like weather that has impact on growing crops. Here, it's not weather, but like geological processes have effect on manufacturing sometimes. I don't know why, but that's what I heard. Like they have to account for this. That's insane. I didn't know that. And then what was the context for him bringing that up? Context was he thought there should be. futures hedging products for the chips, the ASICs specifically, the wafers, not necessarily the full final form factor of a Bitcoin miner, but literally the ASICs coming off the foundry for to account for this. For manufacturing or yeah, for ASIC, for Bitmain and MicroBT, companies like that to hedge their risk because you can imagine, Bitmain has sold a lot of S21 futures orders that are due to be delivered later this summer and fall and if there's a scenario in which those wafers for those particular ASICs that they've already sold, the futures orders that they've sold, were being produced as that earthquake was happening, they have to scrap that whole line and start over which delays the delivery of those machines I would have to imagine and probably adds more capital on Bitmain's side. unless maybe they have insurance to account for something like this, but you could imagine there will be more capital pushed into this, which could affect the price of ASICs. And then if the foundry was critically hindered from operating as it has been up to this point, and you have something like a large reconstruction that is necessary to get it back up and running in the first place, that could have profound Brian Cubellis (49:30.605) lasting effects on the supply chain of basics which could artificially Hinder hashrate growth over the next 18 months 36 months, whatever it may be Isn't it that bullish Bitcoin though? Right? Like just a beautiful hash price I mean if you have miners plugged in right now, you're yeah, so officially like this is awesome. Well, I mean like the long -term Viability of the network and decentralized like the idea is in a free market if that happens You go and set up shop somewhere else. So you're not sitting where? earthquakes happen and see you have a more resilient manufacturing and it gets accelerated or pulled forward because of this. Yeah, it's funny how with Bitcoin, you have to contend with things like the Ring of Fire and adopt your operations accordingly. So like on both sides, because, you know, I'm still bullish on volcano energy. I think we'll see more and more geothermal mining over time. because it's there, it's there for the taking and people just have to like, you know, invest that CapEx. But at the same time, you probably don't want your chip manufacturers on the ring of fire. So it's a funny geological element that you have to contend with as in Bitcoin mining as an industry. I also, Marty, I also thought it was funny how we could see how your memory of seismic activity and weather got linked because of that conversation. They're different. And it's, no, obviously. Brian Cubellis (51:12.301) purrs out to everybody in Taiwan and the affected areas, Japan with the tsunami and all that terrible shit to see. But it is like, it was a little fun. I was like texting people that night after the earthquake. I was like, is it fucked up? Like my first thought is, what's going on with TSMC? Are these chips gonna be okay? A true businessman there. Yeah, but yeah, it's something to be aware of if you're out there learning about Bitcoin. It does. Many think of it as this ephemeral digital thing that you can't touch, but there are aspects of the network that are very physical and highly dependent on hyper industrialized processes to actually make it work in the real world. But it's also a great little microcosm example of Bitcoin's antifragility and the incentive model that that allows for antifragility because. You know, like if it's unprofitable or if it's a business risk to be running a foundry on the ring of fire, then over time you would expect competition to, to go elsewhere to account for that. And then that makes that decentralizes chip creation. And it also gives that new foundry a competitive advantage over people who are having to deal with tossed out, um, uh, screw up. chips because of earthquakes. And right there, you've got a little example of how the profit incentive of Bitcoin mining causes adaptation, which overcomes problems. And that is anti -fragility and baked into how Bitcoin runs because everyone's trying to make money. And to add more context, this TSMC produces the ASIC wafers, the chips for Bitmain. The biggest competitor to Bitmain is MicroBT, which leverages Samsung foundries in South Korea. So that'll be another interesting thing to see, because this affects every, I mean, most people are focused on TSMC over the last couple of days because of Nvidia. They've got large purchase orders in for GPUs that. Brian Cubellis (53:36.589) want to push out for AI. Only Bitcoiners are like, what's going on with Bitmain chips? So that's the other interesting factor beyond this. If TSMC is materially hindered and it's yet to be determined, it could have very robust foundries that are prepared for these types of earthquakes. And we'll be able to operate business as usual moving forward. Just have to scrap the stuff that was being made at that particular point in time. But playing down the hypothetical that it's not the case. South Korea, Samsung, that's where MicroBT makes their chips. And I think that would be the next thought in people's minds. It's like, oh, is this an opportunity for MicroBT to take market share? But then you have to think, does TSMC foundries going down create a crazy spike in demand for Samsung's foundries that extend well beyond Bitcoin mining? And that actually hurt MicroBT's production of their ASICs as well, because the AI companies are able to pay more. that founder space. You're listening to the ramblings of somebody who's heavily involved in the mining industry and has to think about these things. I think to Jesse's point, it's like the market dynamics are amazing in the sense of if the price of chips or ASICs increase, then it hits a certain equilibrium point where people go out and start to produce or get in capital investment. So it naturally just rises, specifically also with the Bitcoin price or AI proliferating. Uh, Marty, I'm curious, uh, something kind of like, I don't know how big it was, but Coinbase and light spark and, and lightning and just knowing the, what 80 million users or whatever Coinbase has, what's your take or have you thought about like what they're the reason why they would be investing or partnering with them to open it up and like where it fits in their model? Because wasn't it like two weeks ago or three weeks ago, um, Coinbase came out with they're like, commerce or merchant payment where it was like a closed loop system where you could only pay if you were like, I think had an account with Coinbase. But this seems like kind of contrary or like the opposite of that because that would have makes, I guess maybe a lot of things they do don't make sense. So maybe they would only do it within a Coinbase lightning wallet. But do you have any thoughts there? Brian Cubellis (55:54.989) First thought coinbase is completely spread thin and does not know how to actually build Bitcoin products And so the fact that they're outsourcing this to light spark is a whole half of all Not surprising though light spark another a 16 Z portfolio company And that's what a 16 Z likes to do is to get their portfolio companies to work together Yeah, I mean it's good to see they should implement lightning they should have done it years ago many exchanges crack in Bitstamp, Bitfinex, River, Cash App, keep going down the line, have implemented. Lightning, well before Coinbase, which is supposed to be the largest, most reputable, most professional exchange in the world, has done so. I mean, it's a good deal for Lightspark, big splash for them. But any thoughts on like implementation, like why they would like what they would use the use case would be I think is like, like what would be the purpose? I mean, they withdraws is it withdraws like similar to the Bitcoin native companies you're referencing or is it for, you know, like, you don't have to if you don't have an answer, it's okay. I just don't know. Withdrawals are enabling payments. You mentioned the commerce thing. I think they shut down the ability for individuals to pay. Coinbase, commerce, invoices with Bitcoin that wasn't already held in a Coinbase account because they're worried about on -chain fees and they didn't want people sending small UTXOs that would be expensive to consolidate down the line. But I think that was a lot of hand -waving by Coinbase and a abdication of their ability to actually implement. Bitcoin upgrades like SegWit and Taproot, which would make that a lot cheaper and catch them up to speed with everybody else. Yeah, I think, I mean, and I think the market, they've been sort of bullied into this over the years. Brian Armstrong tweeted, I think a year and a half ago, okay, okay, you've been asking enough. We'll implement Lightning. The fact that it took them this long to come out with a big announcement, the announcement being we're partnering with somebody who's gonna do it for us is hilarious. The fact that they can't do it themselves. They're more focused on. Brian Cubellis (58:17.837) Ethereum their L2 base whatever they're calling it and getting people to trade degenerate shit coins because that's where they get most of the revenue Coinbase will be a funny case study when we look back at all this because like what you just described that that's a like a micro example I think the macro one is that they hold no Bitcoin or very little Bitcoin Over the course of 10 years or whatever is like how far they missed the mark on this? 2012 how far they missed the mark on this whole thing? colossal screw up. I mean, if they had played their cards right, they would be the single largest holder of Bitcoin. Instead, they are the single largest custodian of others Bitcoin, but they don't own any or at least very little. It's really a shame. I mean, they're early user base individuals probably have more. Bitcoin just from Coinbase's referral program than Coinbase has the company on their balance sheet. Because at the very beginning, Coinbase referral program was like, if you get somebody to sign up via your link, you're getting 25 million sats, you're getting a quarter of a Bitcoin. Oh, wow. That's high. Back in the early days. If you sign up 100 people, you get 25 Bitcoin. Which if you think about like from a counterparty, eventually people wake up and they're like, wait, why do I hold? sailors like, why do I hold five billion with firm that doesn't even hold any of this? Like that doesn't even seem like consistent. Jackson, what was the quote from the the RIA yesterday that he gave about the pain point? He's like, how can I custody a Coinbase if they can't even ensure the total balance of the coin that they hold? I mean, there's a there's a palpable concern as well. Just the fact that it's one entity who cusses 90 % of the Bitcoin ETF assets. And yeah, Michael, to your point, the sophisticated financial planner in the Philadelphia area just has been trying to figure out, he's kind of got the thesis wrapped together or has formulated the thesis and understood it around the Bitcoin investment, but still trying to figure out how do you allocate to this thing, right? Because he has high net worth, ultra high net worth clients and doesn't feel comfortable from a fiduciary standpoint for them to hold. Brian Cubellis (01:00:40.141) devices and backup seed phrases to do self custody. But then also he looks at the counterparties that are out there, such as Coinbase and really can't get comfortable with trusting those individual institutions to manage the Bitcoin or custody the Bitcoin for his clients as well. So to me, it's still kind of shocking that Coinbase is the custodian for eight or nine ETFs, 90 % of the assets. But then on the other side of their business, to your point, Marty is just, you know, Trading revenue from shitcoins like Pepe and dog with hat. It just like, I don't know how institutional investors kind of balance those two things. Brian Cubellis (01:01:21.389) But you don't hold any, you don't hold any Pepe? Brian Cubellis (01:01:26.893) I've got a big bag. Brian Cubellis (01:01:37.197) experience allocating money large swaths of money for institutions and that was a big conversation and it became very clear deep into discussion about like why haven't the institutions got it and so many of them got burned by Celsius FTX BlockFi was the one in Canada. Quadriga. Quadriga, FTX. They're all throwing the baby out the bathwater. That was like a big point of our conversation last night. It is going to be shame on Coinbase because obviously they've not collapsed like the companies I just mentioned, but they're incentivizing the same sort of misallocation of capital at the retail level and confusing a bunch of institutional capital and not providing. what I would deem to be necessary services for people that want to hold Bitcoin, which is the most important asset, not only in the space, but it's the only important asset in the space, in my opinion. But what's going to happen is people already burnt the career risk card at the institutional level. Many people did, who allocated to these crypto funds and aped on the FDX and Celsius in all these companies last cycle. And that's going to be the really sad thing to watch play out for the institutions that did burn that. The managers within those institutions who burnt the career risk card last cycle is, I think, as we discussed beginning this episode, it's becoming abundantly clear that the time is very nigh to get into Bitcoin. And there are a number of institutions out there who got burnt last cycle that think Bitcoin is crypto and are not going to participate this cycle. And... they're going to eat the career risk on both ends where they burn it by going into all this crypto grift and they're going to burn it on the back end by missing out on Bitcoin's price appreciation over the next few years. And it's just really sad to see. Yeah, I will say though, go ahead. Go ahead. I was just going to say that there's a lot of sophisticated people paying attention. Was it up in New York a couple of weeks ago for the Bitcoin investor day event and Brian Cubellis (01:03:56.365) 700 people or so that showed up for this one day event that was hosted by Pomp. And the big names are there to speak from Fidelity Digital Assets, BlackRock, SkyBridge. And to me, it was pretty clear that serious people, sophisticated investors on the institutional side, managed wealth, ultra high net worth individuals are really starting to pay attention. One thing in particular that stuck out to me was, Anthony Scaramucci's presentation. It was one of the few that I actually caught during the day. But the one thing that he pointed out that is maybe obvious to the three of us, but still not obvious to Wall Street or Main Street when it comes to owning Bitcoin is just pretend like you're dead with Bitcoin. Avoid the yield, avoid the active management and elaborate strategies that exist out there to trade Bitcoin and other cryptocurrencies and just buy Bitcoin and act like you're dead. It's really that simple, right? The people who've performed the best with the asset are those who have done absolutely nothing with it. And it's so counterintuitive to the Wall Street culture where it's all about generating alpha. How do you outperform a benchmark? What's your edge in a particular market, you know, geography region? how do you maximize Sharpe ratio? And it's just, it's not intuitive that you could own a better form of money that even on a risk adjusted basis to use a Wall Street metric with the Sharpe ratio, it outperforms all of these active strategies. So I think that's all to say that it was impressive for, you know, first year of an event, there was about 700 people or so in a room. I think they oversold the event and it was largely traditional finance folks who were there. and they're really starting to pay attention. I think of the digital gold rush and thinking back to the 1800s in California. And it's interesting that you guys may know this, but gold I think was first discovered there in January of 1848. But there was so much skepticism around the discovery of gold that it really wasn't until December of that same year, and I believe 1848, that President Polk, Brian Cubellis (01:06:20.397) shared in his State of the Union address a report from, I think, Colonel Mason about the gold discoveries in California. And it was at that point that there was widespread belief of the discovery of this precious metal in California and people from all over the US and internationally traveled there for what became the gold rush. So I think the ETFs are kind of like the President Polk moment of Bitcoin. And it's starting to be really clear and that event in New York two weeks ago was just one indication of that. I completely agree, but I want to make it clear to the listeners out there, Scaramucci, you have to watch out for this archetype of people talking about Bitcoin, because they can talk the game, they can say, just pretend like you're dead, look at the Sharpe ratio, look at this, but then they're going to try and sneak all the shit behind it, because they don't really care about Bitcoin, the revolutionary aspect of it, the fact that we have this non -sovereign money in the digital age. I don't think he's in it for the revolution. I think he's in it for the gains that he can see. Like, Scaramucci, play the clip Logan. Like, this is, he's gonna say all, like this is an archetype and I don't wanna pick on Anthony Scaramucci specifically, but he deserves it. And there's many people like him who can talk the Bitcoin thesis and explain it very well, but then they're gonna try and shovel shit to you. on the backend. Almost feel like you've got one foot in the coffin and the other one on a banana peel. How are you going to compete with the big boys? This season on the all new Killer Whales, these crypto entrepreneurs from far and wide. Pitch to me in 60 seconds or less. Come to pitch their projects to some of the industry's biggest names and hope they'll pitch the next big crypto project. You got to relax, man. Roll the shoulders, loosen up. There it is, we there. Walk me through exactly how it works. Brian Cubellis (01:08:22.029) If the whales take the bait, they'll give the project a swimboat. Even a child can create these whorls. So it's a swim for me. But if their project fails to whet their appetite, they'll sink it to the bottom. I just think the project is really bad. You just love being the villain, don't you? You kinda creep me out, so for me it's a sink. Watch to see who will swim to victory. It's not a crypto business. I'm your only hope right now. and who will be deep sixth to the seabed floor. I see lots of potential in you. Frank, I'm gonna disagree with Grayson. If we fail, the world is fucked. I think it's time to sink or swim. This is Killer Whales. It's two yeses, two nos, and the vote is down to Wendy, who didn't understand. order now at Hello. It's a game to these people. Yeah. Can you keep us on this screen? Cause I think this is actually a will be an awesome way to like rapper just a conversation. Um, cause there's a lot of things that I haven't said that are all like coming together based on what you just described. And I think there'll be a lot of, uh, feedback and interesting things. Um, the first one is Jesse referenced earlier about boomers and individuals. And I think it's less about. age and I think it's more about a mindset. I think there's something like very just wired and individuals that see what we're talking about in allocating. And I think that goes all the way down to reputation in the short term versus long term. And so Marty is right in the sense of it's just anybody being careful for what people say and then what they do. Because like, I don't know, Skerabucci and a lot of folks that are now coming up the curve maybe are grokking it's Bitcoin and that's how they store their value. And that's what they position in the ETF, because that's the most kind of forward public thing right now. But the reality is the incentives in the system we exist in, you cannot raise capital on that story. You cannot raise that. This is partially why you see people support the long tail of crypto assets. The easiest example is Bitwise. Bitwise will go out and tell you the ETF, but then they have a basket of no shortage of things that they will put you in. And the reality is whether they knew it at the time or not, that was the only route. Brian Cubellis (01:10:35.725) way they could raise their $100 million. The beauty of that is that they're actually kneecapping themselves and they don't even know it because every cycle, every year, if you go and put people in the bad products, the chicken, the truth always comes out. The cycle always, you know, kind of flattens and people are left holding a bag of crap and people don't forget and their reputations are aligned. And when we go to rooms with these individuals and other individuals like that, They'll tell us behind the scenes, man, that was really smart doing Bitcoin only. And this isn't, you have to be about ideological reasons or it doesn't even have to be about anything related to the efficacy or value of other cryptocurrencies. Anybody you ask or talk to is 80 to 90 to a hundred percent weighted in BTC, whether it's the custody, the trading revenue or just their exposure. But they're forced to show all this stuff because they can't go and raise money. And that's the beauty of Bitcoin. when you store your value in it, when you save in it, when you have people align with it, you can build companies like OnRamp and you can actually produce the value from a long -term sustainable business. And so everybody can go do whatever they want. Everybody will play the game that they want. But the long -term game we know directionally, we've seen this for the past five years being in this space, is this game because it's the one that's going to outlast everybody. So anyway, there's just like a tight bow of like all these different things that are happening. And we look at it and we're like, oh, I guess the last point is, Going into a room with a sophisticated investor, if you give them a buffet of cryptocurrencies, you're basically telling them like, you know nothing except for put one to 2 % because that's all they're ever going to do versus if you can type, be very singular and expose the asset from a multidisciplinary aspect, how we do with research content education and in the conversations we have, now somebody can start off the bat three, five, whatever percent. And they can actually look at this as a different form of savings versus a casino chip. and that's where the custody comes in. So that's the point to tie it is that like everybody thinks, oh, so you offer more things, you get more market share, more trading revenue. The reality is they're going for one to 3 % of somebody's allocation. Reality, we all on this call and the most people that join are sitting on 30, 50, 90 % because we understand the trade -offs and that is the last trade. Brian Cubellis (01:12:48.045) And that's the ultimate game. And none of these people can play that because they literally have to sell a buffet of 10 ,000 cryptocurrency. So they hurt themselves even though they believe that they're doing the right thing. And that's just the fiat mine. They can hurt investors who fall for their scams. Oh, yeah. Don't buy their bags. That's where we say it. I mean, that's the point of like showing this. And we've been in these rooms with the firms that are out there. We've been in the rooms with the large ETFs that are showing 40 billion, 50 billion consulting firms. And they'll call us in to say, like, let's talk about Bitcoin versus crypto and explain it. And we leave and they're like, oh, wait, what have we been doing? Looking at this cryptocurrency thing. Like, if you ever get them and they won't, we can have them join. We'll have anybody join a pod and discuss. They probably wouldn't want to, but it's always open for anybody to discuss because it's pretty binary in the results of Bitcoin versus any other asset, whether it's a bucket or a singular asset other than maybe like Pepe or whatever local. racial slur coin that's out in the past 30 years. I think it's imperative that we, in Jackson, it was in no way trying to stomp on the, I mean what Scaramucci said was right, but I think... These people in crypto have done the Bitcoin industry dirty. We have to go and literally rewire people's brains and be like, no, Bitcoin is not this. It is completely different. I know you got washed out with the tide last cycle because you allocated to all these crypto projects and these companies that were highly leveraged on this crypto thesis that is not materializing. But Bitcoin is different and does the Bitcoin industry a disservice to a degree? I do think it is imperative to like stand up and say like draw a line, a demarcation. Like there's Bitcoin and then there's crypto. And you have to separate the two if you are a competent institutional investor. Yeah, that's right. I think it all comes back to like, I think we forget how few people understand Bitcoin. Brian Cubellis (01:15:00.013) and what Bitcoin is. And the vast majority of people who are in crypto or excited about crypto or think it's the future are still in the fiat mindset. They're playing the fiat game. They're trying to find the next venture capital pump and dump to make dollars. They're trying to ride the next wave to make dollars, to buy low, sell high. It's venture capital. on a faster timeline. It's penny stocks on a faster timeline. And so it's no surprise that you do have a lot of these characters who belong in those worlds stepping into crypto and seeing it as like a new frontier for their business model of how do you buy low, sell high. And unfortunately, they're the noisiest people and the people that the culture, mainstream culture, believes because mainstream culture is fiat. And so we sound like the crazy radicals when we're saying, no, just buy this, this digital scarcity and act like you're dead and just hold it and you'll, your purchasing power will appreciate over time. Like that, that sounds crazy versus ride the next wave, buy low, sell high, because that is part of, you know, how the world works today. And, and people understand that. And so, you know, for me, it's all about when we hear Scaramucci talk about things, he's right about some things, but he's coming from a world that is antithetical to Bitcoin. And he's trying to bring those games to he's trying to play both games. He's trying to make as much money as he can. And that includes stuff that is counter to how Bitcoin should be engaged with, which is, you know, just just. focus on that, hold it, keep it safe, forget about the crypto noise out there. But if you're a Wall Street person who's made a fortune by buying low and selling high, crypto is kind of irresistible. And unfortunately, everyone has to go through that learning process of thinking that crypto is part of the future and eventually getting burned or going deep enough down the rabbit hole to realize that it's not a part of the future. Brian Cubellis (01:17:29.165) and then focusing on Bitcoin because that is where this is all headed. So it's a learning process. And I guess the positive spin on it is if you understand that it's all about Bitcoin, you're way ahead of everyone who's talking about crypto. And that's a blessing. That's an edge. That's your opportunity for you know, securing your Bitcoin wealth way before the rest of the world has arrived to California in 1949 and is trying to scramble to stake a claim. You're in California in 1948. Congratulations. The 1848 and 1849. Sorry, guys. Marty, the counter like that counter, but to the point of not picking on anybody, but the dinner last night and that person or. the art type that went into Celsius and these other firms, it's like, honestly, don't blame Celsius. They did their own, you know, misdeeds or whatever. It's, there was always going to be the art type of a person that was going to go out on the risk curve and they didn't do their diligence. And like, cause we work with the other side of that where the person's like actually from a first principles thinking about the whole digital asset space and they're building up from understanding gold and then thinking about what's the counterparty risk associated now that they're at Bitcoin. And so I just think that there's a natural lens of who got washed out is a very small micro example of the reps to people that have been sitting prudently, like as a fiduciary looking at the whole ecosystem, waiting to jump in and make their move. I think obviously there's a lot larger position there that will come in this next cycle and hopefully they learn from the previous. But I do hear you that like people have been kind of burned. Yeah, people have been burned, but I think like there's also those people got burned because those were like fiat thinking people that like like, oh, that's right. And they weren't like naturally, you know, oh, it's like they weren't they didn't think through it because all you had to do was like do a little research and you're like, maybe this thing doesn't make any sense. You got to take it back to basics. The trap that so many of these people fall into is being too smart by half, as Greg Foss likes to say, overthinking it, being trying to be the smartest people in the room and the. Brian Cubellis (01:19:44.045) I think the perfect example of this is the cash and carry trades that pop up all over crypto. There's all these opportunities to short something and collect the premiums for futures funding rates if people are off sides disproportionately long. If you short it, you get to collect the funding rates and then hedge that out by going long. So from a position standpoint, you are neutral, but you get to collect the yield from funding rates. That's just one example of cash and carry trade. You know, there's lots of opportunities like that with amounts of some sort of hedging scenario where you get to collect some nominal yield in the middle. And the thing is, is that Wall Street has developed in a way that they think that's the play. That's the smart move is to just have the risk neutral. um, allocation of capital where you get to collect the risk -free yield. And so that's, that's what people get excited about. And that's how you get burned in block fire Celsius, because you don't, you don't understand the hidden risks there, the actual counterparty risks of, um, what if the counterparty that I have half of this, this trade with goes under, and then suddenly I'm shit out of luck for half of my deployed capital. That's how you get burned in that. And the assumption, the mistake that so many people made is assuming that these counterparties are as robust and safe and tried and true as people are used to in Wall Street with the behemoths that have been operating for a hundred years. It's just not the case in this market. So that's the trap that fiat thinking gets you in is how do I get the risk -free yield? by finding some inefficient frontier in crypto markets and exploiting it. And that's where most people are going to start, especially the Wall Street types. They start by trying to find some clever way to get their money without any risk, not realizing that they're actually taking on a great deal of risk and actually missing the much bigger opportunity cost of just parking your value in Bitcoin and riding the 30 to 50 Brian Cubellis (01:22:11.405) percent cager every year, you know, and outperforming everything in the market in the process. Counter -party risk matters much more just because you can't print more Bitcoin. So what's the we have that chart, right? That in our presentation materials where it's one hundred and twenty billion dollars of Bitcoin and crypto lost from either just losing it yourself or having exposure to the wrong counterparty, whether they stole it outright, it was hacked or it was just Poor management, which led to insolvency and you losing your crypto. I think that figure now is closer to 300 billion because that was originally produced in the depths of the bear market. So it is, people really have to think about counterparty risk, which in the Wall Street, you know, with 2008 as an exception, people are not used to thinking about that in traditional finance. Like no one really cares to think about where are my equities or fixed incomes. 2008 just removed counter like they're working on the assumption that counterparty risk doesn't exist because you always have that lender of last resort that'll step in. I think you will get bailed out. The crazy part about that is that was 16 years ago. 2022 and everybody blowing up was literally 16 months ago and nobody talks about nothing has changed in the market structure. Like not one thing. Yeah. We saw everybody blow up, everybody showed their hand and nothing changed other than like maybe some patsies went to pretend jail or whatever. Like that's the crazy part. And what does that look like next year? And when all, what is it? 2X leverage ETF just came out this past week. Be aware, just be aware. This is a big be aware segment of the show. Stuff exists out there. Brian Cubellis (01:24:01.837) Yeah, you were south there gentlemen. This is a pleasure. I have to run. Yep. Sure we all do. Are we are we is it homework for next week or not? Because it's a 45 anything that's some real homework and I got to send it to Leon Wonka who's going to join us. I mean, I think you should all read it. I don't we don't have to discuss it. You can read it and determine if we should discuss it next week. I'm happy to but very illuminating piece. Okay, let's check it out. Good history lesson. Jackson, thanks for bringing the gold rush history into it. It's an important lens that, you know, it's very helpful for thinking about our current place with Bitcoin and the historical precedent. Like, it's the fucking gold rush and act like it. That's a great place to end. Just act like it, right? All right. Thanks, guys. See you, gentlemen.