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Samson Mow and Parker Lewis: Swan Signal Live E20

Posted 7/23/20 by Brady Swenson

Samson Mow, Chief Security Officer at Block­stream, and Parker Lewis, Head of Business Devel­op­ment at Unchained Capital, joined Swan Signal Live to discuss geopol­i­tics, Bitcoin mining, the integrity of Bitcoin businesses, and their expec­ta­tions for the next bull run. Brady Swenson and Yan Pritzker hosted this lively conver­sa­tion.

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Summary

00:00:00 — Intro­duc­tions

00:02:59 — Geopo­lit­ical tensions

00:06:57 — Inter­na­tional impli­ca­tions and game theory of a neutral money

00:14:08 — Geographic mining distri­b­u­tion and Block­stream Mining

00:22:29 — Contrasting the Bitcoin-only industry to the altcoin casino

00:35:56 — Legacy banks getting involved with Bitcoin and the future of banking services

00:46:03 — Block­stream Liquid — combating FUD and future expec­ta­tions

00:53:06 — The future of Bitcoin finan­cial services

00:55:36 — Societal call option payoffs

00:57:30 — The precoiner pitch

01:06:31 — Bull run predic­tions

01:15:35 — Closing thoughts

Transcript

Brady Swenson:

All right, all you Swan fans. Welcome back to another edition of Swan Signal Live. This is our weekly show that pairs up great Bitcoiners for compelling discus­sions that are unique here in the bitcoin content scene. I am Brady Swenson, head of educa­tion at Swan.

Brady Swenson:

Before we dive in, I want to give a quick word about the service we’re providing here. We believe that we have built the best way to automat­i­cally stack sats. We allow you to connect your bank account, your auto fund USD into your Swan account. We automat­i­cally convert that to bitcoin, on a regular basis. You set the frequency and then you can set up automatic withdraws to your own address.

Brady Swenson:

We were working on xPub support so that we can rotate those addresses and not have to reuse your automatic withdrawal address. We have a lot of other awesome innova­tions coming to the product. Daily buys are on the list. So, watch out for that. Yan and team are working day and night to improve the product experi­ence.

Brady Swenson:

So, check us out. Keep an eye on what’s going on and give Swan a try. We do all of this with low fees. We are up to 80% lower than Coinbase for recur­ring purchases, up to 57% lower fees in cash app for recur­ring purchases.

Brady Swenson:

You can get started at swanbitcoin.com/hrf for the Human Rights Founda­tion. You’ll get $10 of bitcoin drops into your account and every single one of your recur­ring purchases will support the work of Alex Gladstein and the Human Rights founda­tion. So, it’s a win-win situa­tion for every­body.

Brady Swenson:

And finally, if you’re not aware, we are chatting in Telegram @t.me/swansignal. We’ve got about a thousand fans in there. We’re chatting through the whole episode. We chat of course throughout the weeks between the episodes. It’s turned into a really cool bitcoin channel, t.me/swansignal.

Brady Swenson:

All right, let’s get into today’s show. Today, we have Samson Mow. He’s CSO at Block­stream. I’m sure almost all of you know Samson.

Brady Swenson:

And we have of course Parker Lewis from Block­stream. He’s head of business devel­op­ment there and is well known for his “Gradu­ally, Then Suddenly” blog series. I think this is an awesome thing.

Samson Mow:

Yeah, huge news. Parker joined Block­stream.

Parker Lewis:

Yeah. Making the announce­ment here.

Brady Swenson:

I’m even wearing the shirt. I’m even wearing the shirt.

Parker Lewis:

Brady has the shirt on and every­thing. He didn’t have the Block­stream hat on so things got kind of mixed in the ether.

Brady Swenson:

I was in the flow man and that just came out. Yes, Unchained Capital, of course Unchained Capital “Gradu­ally, Then Suddenly” series on the blog. And look, we’re also joined by cofounder and CTO of Swan Bitcoin, Yan Pritzker. What’s up, man?

Yan Pritzker:

Hey, guys. I couldn’t miss this chance to talk to you fine, folks.

Brady Swenson:

All right, this is great. All right, let’s jump in. We’ve got an awesome panel. I think every­body is going to really enjoy this one. Can’t catch it live of course, you’ll be able to find it on our YouTube channel, youtube.com/swansignal and swansignalpodcast.com.

Brady Swenson:

All right, let’s jump into talking about the very fasci­nating macro­eco­nomic and geopo­lit­ical situa­tion we find ourselves in.

Brady Swenson:

Let’s kick it off with Samson. There’s some inter­esting kind of give and take chess play, maybe three-dimen­sional chess that’s happening between kind of the two of the global super­powers, the United States and China. Hong Kong is right in the middle of it. Can you give us an update on your thoughts about this whole situa­tion that we find ourselves in here?

Samson Mow:

I haven’t been following the news that closely, but I’ll try my best. So, from what I’ve seen there’s like rumblings of a new cold war. There’s a bit of posturing on both sides.

Samson Mow:

And I think the most recent thing was US asked China to close a consulate or embassy in the US, I believe in Texas or something like that, but correct me if I’m wrong anywhere.

Samson Mow:

But I think this is just where we’re at today because yeah, you have two super­powers and they’re vying for control and influ­ence. And that’s where bitcoin comes in.

Brady Swenson:

Absolutely, yeah. Any other thoughts from Parker or Yan about the recent bill that passed unani­mously in the Senate or Congress through Congress, about I think not recog­nizing Hong Kong anymore as a special zone.

Parker Lewis:

Yeah, I think I’d be similar to Samson here. Probably, at least on the geopo­lit­ical landscape in the last week have been, we’re heads down on the work front. So, what I’ve caught has been more kind of headline based.

Parker Lewis:

My former employer that I worked for, Kyle Bass, and I gener­ally get a lot of updates from him on what his views are on what’s happening in China and Hong Kong, but haven’t touched base in last week to really have an up-to-date or informed view of what’s just happened last minute kind of I think that there’s clearly macro­eco­nomic trends and impli­ca­tions and what’s happening in the global economy with COVID shut down that are putting a strain.

Parker Lewis:

It seems like there were geopo­lit­ical tensions as is and then as economic trends are slowing down, kind of, I would say honestly, artifi­cially better on an accel­er­ated basis, that only certainly strains tensions. And then when you have two central banks maneu­vering to support both economies, that often­times work in opposi­tion to each other.

Parker Lewis:

It kind of creates extra issues that wouldn’t other­wise exist. But we also know that there are issues that are going on in Hong Kong, that there are polit­ical issues and whether it’s kind of entering a new cold war era or not, that the actual economic problems that are existing right now, only further to strain tensions.

Brady Swenson:

Yeah.

Samson Mow:

I think there’s other politi­cians … Oh, sorry. Go ahead.

Yan Pritzker:

I was just going to say that I think people are always looking for, you know that what’s the next enemy. If terrorism is defeated and then what’s the next enemy. Like China seems like a pretty good enemy to pick. They’re different from us. They have different cultural values from us. And I’m not in support of total­i­tarian govern­ments at all.

Yan Pritzker:

But I want to just point out that govern­ments in general, they always need some opposi­tion, so that people are focused on why should we spend all this money because we need to be better than China. We need to show the world that we are the leading super­power and that just gives them license to do more of the same.

Samson Mow:

I just want to add, usually, the politi­cians want to distract from troubles at home too. And the economy is not growing as fast in China. It’s stagnating because of the coron­avirus. And I think it’s pretty much the same in the US. So, it’s a really good way for them to hand wave problems at home away.

Brady Swenson:

Yeah, I mean, do you think that these countries, the sort of secondary powers as they have been over the past many decades since the 1940s, when the US really kind of claim the mantle, the global super­power and the US dollar became the global reserve currency. Do you think that these kind of smell some blood in the water, a poten­tial to invoke or encourage a currency crisis that maybe even spurred on by monetary policy choices at the fed?

Brady Swenson:

And now we have this extra player in the game theory called bitcoin that is really going to make this situa­tion extremely inter­esting. Do you guys think that we might see some nations really try to grab at some of that power vacuum using bitcoin? Let’s start with Parker.

Parker Lewis:

I think it’s an inter­esting kind of thought process to go through and I don’t think these are my own kind of unique thoughts. I’ve had conver­sa­tions with safe on the subject. And there’s a reality where I think if I was sitting again, I don’t want geopo­lit­ical or actual war between countries. But there’s a lot of power that’s exerted around the world through the US dollar.

Parker Lewis:

And if I was sitting in the US and looking around the world saying, hey, if you were inter­ested in desta­bi­lizing the dollar, then bitcoin would seem to be a kind of an indepen­dent monetary system that kind of would be perceived as neutral. You couldn’t poten­tially claim that someone was doing it as a direct attack that it could be perceived. So, it could be a tool to use.

Parker Lewis:

But then there’s also the reality that once you go into the world of bitcoin, you are also giving up control. And that whether or not you have two competing central banks or two competing govern­ments that are fighting for world dominance, even if it’s not in an actual war, they both within their own countries exert a lot of power through the functional currency.

Parker Lewis:

And so, while it may seem, I don’t say logical, but that would seem to be a tool that they could use to whether you didn’t like the position of the US dollar as a geopo­lit­ical foe of US dollar, if you went over to a system that was based on bitcoin, you would also be giving up control.

Parker Lewis:

And so, while it may seem logical on one side, if they’re ultimately kind of exerting their own power to their own currency, it becomes kind of a catch-22 and it may not be an attrac­tive offer.

Parker Lewis:

I think about it or that you have to … Or really any country that has a currency that can be consid­ered a reserve currency status, that they naturally exert power through that currency both internal to their economies as well as external, very different stance.

Parker Lewis:

I view bitcoin as this world operating in parallel. And while the govern­ments are fighting it out for world domina­tion, whenever I find somebody whether regard­less of what country it is that they you see the power of bitcoin in one adopted, I know that we’re thinking about the world in some common way.

Yan Pritzker:

Yeah, I think it’s really inter­esting to see what happens between countries that can’t trust each other and need to trade. I think there’s like this force of digiti­za­tion is happening. We have all these central banks saying they’re going to digitize their curren­cies are going to be central bank digital curren­cies.

Yan Pritzker:

I think the way that I imagined it is paper money is really a relic of the past. I think most of us use digital payments day to day, and within one, two, three gener­a­tions is going to be wiped out. There’s really no point in having paper money.

Yan Pritzker:

Something like COVID has really brought that to people’s light. In every store, it’s like, we don’t accept cash anymore. We only want digital payments. Nobody wants to dirty money, your virus-laden money.

Yan Pritzker:

So, what happens in that world where all money goes digital and countries left to settle trade with each other, and then there’s the United States with basically their finger on the button saying, okay, we don’t like you guys. Let’s just turn that off. You can’t have US dollars, you can’t have US dollars.

Yan Pritzker:

People are going to need a system that works. I think it’s just way too early for bitcoin to be that system. It’s just too small for those kinds of trades, but as it grows, and people need a system where they can’t trust each other and they need a settle­ment system, why would it not be bitcoin. I think it’s a very likely possi­bility that will be used at least between any two countries that decide to settle any trade in the kind of neutral currency.

Yan Pritzker:

Then start off this chain reaction because now they’re using this thing and they’re giving it value. Nobody else is another have to play catch up. So, I think there’s a certain chain reaction that gets started if that takes flight.

Brady Swenson:

What do you think Samson? How’s it going to play out, man? It’s like kind of on a needle like pins and needles who moves first and do they have an advan­tage?

Brady Swenson:

Or is it going to play out that these smaller countries might go to a bitcoin and there’s some kind of united front by the world powers to suppress bitcoin and try to ignore it and demonize it.

Samson Mow:

I think I’ve talked about this on another show for which one, but it was a theory of which country will adopt bitcoin first. And my idea is that it will be probably that more prone to fail countries that are having polit­ical, economic issues that will adopt it because they have no recourse. They have nothing else to use because they can’t print money anymore.

Samson Mow:

I think the bigger countries and super­powers, they’re probably going to go first with the CBDC, Central Bank Digital Currency. Because if you have that dominance and that power, you don’t want to see that on your own volition. You’re going to go and try it. If you have the guns, you have the military, why not print your own money and try to vie for dominance in that arena?

Samson Mow:

I think there is interest in the US Federal Reserve to look at Central Bank Digital Curren­cies. We know for a fact that China Central Bank is going for a Central Bank Digital Currency.

Samson Mow:

So, as a Bitcoiner, I think it’s better if they just offer bitcoin, for cross border settle­ment, for the benefit of their populaces that they cannot print money, inflate the money supply, but the align­ment between the incen­tives of the people and the governing powers is not always in sync. So, I think it’s going to be a while before a major super­power or country decides to go the bitcoin route.

Brady Swenson:

Yeah. What do you guys think about geographic mining distri­b­u­tion? Do you think that will come at all to play in kind of geopo­lit­ical strug­gles?

Brady Swenson:

We know that a good portion of mining is in China, seems to be distrib­uting slowly but surely away in terms of percentage of total hash rate from China to other countries. Do you see this as a good trend? And do you think that a certain nation having a large percentage of the hash rate makes a differ­ence to the bitcoin network? Yan, or whoever wants to start, just speak up.

Yan Pritzker:

I can give a brief answer. I think that bitcoin is secured by more than mining. It’s secured by the nodes that decide what is or isn’t bitcoin. So, I’m not that concerned about “mining central­iza­tion”. I mean I think over time, whatever advan­tage somebody had in their natural resources like let’s say China has a lot of remote regions with hydro dams, and we can get really cheap electricity there.

Yan Pritzker:

While that’s an initial advan­tage and that creates a certain amount of central­iza­tion, but then over time, people are incen­tivized to hunt for cheaper sources of energy. So, we see things like stranded gas and oil fields and up in Canada, things like that, devel­op­ment of wind technolo­gies.

Yan Pritzker:

All of this stuff over time is going to get distrib­uted and it’s going to be based a little bit on like luck of the draw, how are your natural resources and a little bit on innova­tion. What can you do with the stuff that you do have? Can you harness wind divider? Can you harness your hydro better, than other countries and I think there will be a bit of a space race there. Even if it’s just a matter of national pride, why don’t we go to the moon it’s partially to say that we are the ones that made it to the moon was America.

Yan Pritzker:

And I think there’s going to be some of that national pride in being a producer of bitcoin hash. we take national pride in being a producer of oil or gas today.

Brady Swenson:

Yeah, sure.

Parker Lewis:

I mean, I know that Block­stream is more evolved on the mining side than changes, so I’d love to hear Samson’s views on the same. But I think that there’s just a natural reality that it’s bitcoins. Like, if you think about every layer of bitcoin as it grows, every­thing naturally decen­tral­izes both in terms of the distri­b­u­tion or who holds the currency.

Parker Lewis:

And if you had gone back five years ago, six years ago, there were a lot more people that would have had 50 bitcoin or 100 bitcoin or 1,000 bitcoin has just naturally value increases that the currency gets distrib­uted and it’s the value increase at all, it’s a dynamic equation.

Parker Lewis:

But mining hash rate increases just as the mining hash rate increases total, naturally, that who’s control­ling that hash rate decen­tral­izes over time, that it is a natural function and as the network scales and grows, that every function within it increases.

Parker Lewis:

And so, as we’ve seen over the last 10 years, the normal order for bitcoin in terms of mining and aggre­gate has gone down but the total purchasing power of that reward has increased. And those economics as they continue to increase as the bitcoin network grows, naturally demands that compe­ti­tion and national functional compe­ti­tion will take over where everyone will be going and looking for the cheapest sources of energy.

Parker Lewis:

And if they are in China, a lot of mining would be in China and they’re in West Texas, so they’ll be mining assets in West Texas. And the economics alone and in large part will help sort out perceived central­iza­tion of mining and we see compa­nies like Block­stream devel­oping their assets in North America as well.

Samson Mow:

So, I think it’s good to decen­tralize the mining hash rate. It’s better if it’s spread out, more or less evenly around the world.

Samson Mow:

I don’t think it’s as big of an issue though because if you really think about it … Okay, so let’s go back one step. I think the biggest concern about the central­iza­tion of hash rate is that a nation state could coopted it and launch an attack on the network.

Samson Mow:

But I don’t believe that’s actually that likely. It would really coopt the rule of law. If a nation state would seize an asset like that, then they’re able to seize anything. And that would really damage their prospects to be consid­ered a global player, a place where people can do business.

Samson Mow:

So, if you imagine the likeli­hood of something being seized in the US, I would say, it’s roughly the same likeli­hood of something being seized in China.

Samson Mow:

Of course, it is possible anything is possible, but it’s not going to be really conduc­tive for them to say, come to our country and do business.

Samson Mow:

But with the economy the way it is now, I think, for example, for China, they really want people to come and do business. That would really violate a lot of founda­tional trust in the ability to work with any entity in that country, because you’ll just fear like if I set up a factory, is it going to be just whisked away under my feet.

Samson Mow:

The hash rate, I think, is gener­ally moving out of China and that is a good thing. So, like Parker has mentioned, we have Block­stream mining now. And that initia­tive is largely because Adam and I realized that if someone doesn’t start moving outside of China, then hash rate will never really go anywhere.

Samson Mow:

It’ll be a slower process. So, we wanted to speed that up. So, we started up Block­stream mining, which is kind of a big step for Block­stream because we’re a software company and now we’re a mining company and software company.

Samson Mow:

So, I think it’s impor­tant for skin in the game that every company does a bit of mining. And one of our goals with Block­stream mining is it’s a hosting struc­ture. So, you can buy your own A6 hosting with us. And you can mine with whichever pool you choose. You can use our pool, you can use someone else’s.

Samson Mow:

But the idea is that we have a way for people to start mining, short of building up their own data center, because that is actually I would say, the most challenging part. It’s very capital inten­sive. You have to do a massive invest­ment in buying trans­formers, buying equip­ment, building out the facil­i­ties, and all that stuff, and then hit by the basics too.

Samson Mow:

So, typically, that will be very daunting for anyone to swallow. I got to do all this stuff to start mining. But hopefully with our service, we can take a bit of the pain out of it.

Samson Mow:

And that’s why we can get inter­esting people into mining that may not have been mining previ­ously. So, one of our clients is Reed Hoffman, we also have Fidelity as a customer, and a lot of others and I can’t disclose who they are, but they would not normally be mining if there was not some easy turnkey solution for them to just jump into and start.

Brady Swenson:

That’s awesome. It’s almost like coloca­tion for mining. Like, back in the ISP days, if you wanted to run your own sort of direct connec­tion to the backbone, like a T1 backbone, you could collo­cate some kind of like, broad­band modem and use it.

Brady Swenson:

I did the same thing and use it to serve like, my cul-de-sac people and friends when we were upgrading from our BBSs. Yeah, that was fun. We thought we were awesome. So, that’s really cool. And I’m glad to see that the diver­si­fi­ca­tion of mining and it’s really getting very exciting.

Brady Swenson:

The idea of using hash rate, the Blockchain and hash rate as sort of a battery, a store of value for accessing power that’s very remote that would require a lot of expen­sive infra­struc­ture to trans­port to locations where it’s needed, really cool devel­op­ments and love the arguments and the response to the very common fud that bitcoin is going to destroy the planet and melt it down. Oh, actually, guess what? It’s going to save the planet by encour­aging ever more efficient, renew­able energy. Pretty amazing.

Brady Swenson:

All right. So, I’d love to kind of pivot and talk about the emergence of this bitcoin-only industry, and that’s really coming about and Block­stream was one of the early compa­nies, sort of before this most recent spate or phase of bitcoin-only compa­nies that kind of led the way but we’re seeing the burdens of dozens more now that are really dedicated to bitcoin-only, really dedicated to being good stewards of the Blockchain, to educating about bitcoin.

Brady Swenson:

And to acting as kind of a front to what we all antic­i­pate to be sort of another wave of altcoins. ICO scammy madness as number goes up.

Brady Swenson:

What is your guys’ take on the emergence of this bitcoin-only industry? And do you think it’s viable in the long term? Do you think now is the time to really start a bitcoin-only business? Parker, let’s start with you.

Parker Lewis:

Yeah, I think I’ll talk about how maybe we think about it on chain. Yeah, I think I certainly have economic views as to why we likely only need bitcoin in terms of the monetary asset and why bitcoin will likely monop­o­lize curren­cies all over the world or I believe bitcoins directly competing in that when we think about the incen­tive struc­tures of money that there’s an actual economic force that will cause money to monop­o­lize.

Parker Lewis:

And so, I think from an economic perspec­tive, that there’s a natural shift that way. Then when we think about it from a business perspec­tive, kind of setting aside that kind of economic perspec­tive, looking at just the address­able market is one currency, repre­senting 60 to 70% of the overall value, but then on the liquidity adjusted basis, it’s 90%. So, would you rather focus all of your time and energy on figuring out how to service 90% of the market and doing really well or be expanding your bandwidth.

Parker Lewis:

And there was a time at that on chain where we went on chain launch and the second product was brand theory and just supporting the technical archi­tec­ture of that, there’s not a lot of multisig and supporting a theory of nodes is inher­ently harder than supporting bitcoin. So, there’s kind of the economic perspec­tive of the business and address­able market perspec­tive and then for technical perspec­tive and the ability to the ease of which you can develop on top of bitcoin.

Parker Lewis:

So, I think the natural combi­na­tion of those three things leads to focus exclu­sively on bitcoin. And if you’re doing that, you’re naturally going to be deliv­ering better value to your clients and I’m curious to hear a Samson perspec­tive. But I know when we had our bitcoin meetup in Austin and Allen showed us Liquid, who’s Blockchain director of product devel­op­ment. And I immedi­ately looked at it and I was like, “Oh, well, this removes the need to issue a token because it’s on Blockchain because they could issue an on liquid.”

Parker Lewis:

So, there’s a lot of other kind of future possi­bil­i­ties. It’s not the fact that bitcoin will be the only thing in the universe, but that there’s a lot of things that can be built on bitcoin that are currently being built on other blockchains that will ultimately be replaced.

Samson Mow:

Yeah, I think bitcoin-only business are a good thing. If I’m looking at it from the perspec­tive of a customer, I would feel a lot more, I guess safer just knowing something is focused on bitcoin because there’s a lot of risk if they’re running a bunch of other ship coins in their archi­tec­ture and supporting all those things.

Samson Mow:

They’re probably more distracted. There’s a constant threat of security breaches. There’s a story of Cryptsy. They’re running some lucky coin or something stupid, but that thing opened up a whole new systems for a hacker.

Samson Mow:

But there’s a lot of benefits to being bitcoin-only just for from a focus perspec­tive. But I think it is challenging for a business. So, if you’re an exchange, I used to run an exchange, there is a big need to drive revenue and shift coin trading is a revenue driver.

Samson Mow:

So, the question is like, should we admonish an exchange for chasing exchange revenue or should we just accept it? I guess that’s the question for Bitcoiners to decide, right? But there are benefits to having exchanges just be exchanges.

Samson Mow:

So, for example, I think BSV was delisted from a whole bunch of exchanges, but BitFenix left it, but they’re funding Peter McCormick’s defense against the Craig Wright. So, they’re taking the BSV fees and just rerouting it to defend their attack on Peter McCormick.

Samson Mow:

So, I think it’s a really inter­esting dynamic and I prefer bitcoin-only. But I think it’s not realistic to assume that every company out there is going to go bitcoin-only.

Parker Lewis:

Yeah, and I would just add to that, I also think that while I have my economic views as to why bitcoin will win, you can use as much as you would like about kind of intel­lec­tual kind of ideas around economics as to why this shouldn’t happen. But ultimately having a market test and because I do believe that compe­ti­tion is good for bitcoin. So create in.

Parker Lewis:

Certain type of actions can be viewed as attacks on bitcoin but bitcoin cash existing and people being able to see in the market, how much other people value one versus the other, and people being able to in a free market, build on top of bitcoin or try another currency and see if it works, the cold, hard facts of kind of market value and the market figuring it out, by and large and much more defin­i­tively helps people under­stand things over time.

Parker Lewis:

So, I don’t have the perspec­tive and it’s like within Unchained and what we’re doing to make sense for us to be focused on bitcoin only.

Parker Lewis:

I think I’m sympa­thetic and agree with Samson that in part many ways, not just from a revenue driver perspec­tive, but from if you’re going to support a free market, you want people to under­stand those that haven’t market tests and having kind of a free forma­tion, I guess.

Yan Pritzker:

Go ahead.

Samson Mow:

So, if you think back to the fork wars, the predic­tion market to X futures was a very impor­tant tool in this destruc­tion of that attack on bitcoin.

Samson Mow:

If that market was not there, it’s really question­able what would have happened. But because the market was there, and because Bitcoiners could vote with their money, you could see very quickly that this was going nowhere, and it’s going down into the ground. And I think a lot of Bitcoiners made a lot of money on that too. So, I think the ability to have a free market is impor­tant.

Samson Mow:

And maybe the line is how much one of these venues promotes those other things, like the ship coins. Are they saying buy this like Coinbase style, like here are 100 ship coins. Buy them all, buy this bundle. Or do they just say, “Here’s something we’re listing and you guys can decide for yourself.” And even better, they could disclaim it and say there are risks with this project. It’s not bitcoin. It’s not nearly as secure or decen­tral­ized, et cetera. Kind of like the disclaimers on a cigarette package or something like that.

Yan Pritzker:

Yeah. I would agree with you guys that focus of building a bitcoin-only business is huge. You get lower customer acqui­si­tion costs because you’re only focusing on that marketing that one thing. You got to lower support costs because you’re not focusing on supporting all these other coins. Your devel­op­ment costs are lower. Obviously, you’re not actually building stuff out. And security of course is a lot tighter. I think these are all really impor­tant aspects.

Yan Pritzker:

I also would say that I think bitcoin and altcoins are almost like two different things. So, bitcoin is this idea that we should have this scarce defla­tionary money, freedom money decou­pled from states, all this kind of stuff. And we’re trying to get people to buy in to this general idea and market bitcoin to them so they under­stand why they’re buying it and that’s kind of like, I think the mission of a lot of bitcoin-only businesses.

Yan Pritzker:

And then you have altcoin, which are basically like pink sheet trading. People trying to trade penny stocks, a lot of them have no funda­mental value. A lot of them are known to be garbage compa­nies, but they still trade them. And they trade them to make money. And so, altcoins are traded to make money and money is US dollars or bitcoin, depending on your perspec­tive there. But basically, that’s what people do.

Yan Pritzker:

And I think the industry has been forced into that. Like Samson said, there’s a lot of short-term revenue in altcoin trading. There’s over 5000 coins now on coin market cap.

Yan Pritzker:

And Coinbase is coming out with tweets saying they listed 60 of them. And it’s like, okay, well, what’s the future of that? Is it going to be 600 a year from now? When is it going to be 6000? At which point, coins are created every day. It’s very easy to do that.

Yan Pritzker:

So, I think if you’re building a business that’s oriented towards trading, then you’re always in this kind of rat race of what other new thing am I going to add to keep my customers motivated and inter­ested?

Yan Pritzker:

And look, there’s nothing wrong with gambling. People want to gamble. Go with god gamble as much as you want. It’s not my place to tell not to do that.

Yan Pritzker:

But I think when we build bitcoin-only businesses, we are taking a moral stance on what we’re really inter­ested in is the future of money. We’re trying to get to the better money, so come to us and buy the better money and use it and so on, versus come here and trade and try to make money. That’s kind of a different thing.

Samson Mow:

Yeah, I think bitcoin-only businesses offer something very impor­tant. They provide a signal to the market, Swan Signal signal, that bitcoin is impor­tant, and it helps to cut through that noise of the compa­nies, they’re just listing things nonstop.

Samson Mow:

It’s like Yan says, where does it end? I don’t really think there is an end to this. There’s always going to be some new project with some new angle and some retail investor that’s going to eat it up. So, you need that signal to tell people bitcoin-only is impor­tant. Bitcoin is impor­tant.

Parker Lewis:

Yeah, I think part of that signal is you can come into the minority rule idea where every company that supports all coin trading supports bitcoin. But then that there are compa­nies that are bitcoin only, is a very loud signal because if there is a company that’s exclu­sively focused on an altcoin, I don’t know about it.

Parker Lewis:

And that there’s a wall. Yeah, there may be certain economic and ideolog­ical reasons or some business where I made … Well, now I do, I’ll send people that I know to a combi­na­tion of cash out signal or Swan and river to buy bitcoin, not just because Coinbase is trading a bunch of all coins, but because like you guys said, your focus is exclu­sively on that and over the long term, I expect that product to be better and to better meet the needs.

Parker Lewis:

Now, if somebody comes to me and it’s like, “Hey, I’m looking to trade a bunch and I’m a day trader.” I’ll be like, “Okay, you’re not going to do that on Swan, go to Coinbase or go to Kraken.” But then I also recog­nize in time that those exchanges are impor­tant assets for bitcoin at the same time that they are liquidity centers and liquidity centers are impor­tant.

Samson Mow:

Coinbase is not impor­tant venue.

Parker Lewis:

Well, just on a liquidity profile basis, that will likely shift to whether … Rather than other ways that people are trading today have been strug­gling.

Brady Swenson:

Yeah, I mean, I think I agree with that. It’s like you can kind of lambaste them for being decep­tive with their marketing. This is actually why Cory said this, our CEO, and I really agree with him, people don’t really hate on Binance very much because they never pretended to be anything else. They’re a trading platform. They always were about giving away lambos and come gamble here. They always said that very loudly.

Brady Swenson:

Coinbase purported to be a bitcoin on ramp and kind of shifted into like, now let us educate you about the 60 altcoins. And this framing of educa­tion, and like we’ll pay you to learn about these coins is really not morally good in my opinion. I don’t know how to say it without being offen­sive, but it’s not good because you people are coming there to learn and what you’re teaching them is basically false.

Brady Swenson:

Unless they believe this whole­heart­edly, which I have a hard time believing that they do, they’re not dumb people over there, dispute I suppose. But they’re really asking people to “learn” in order to really get them to trade. And we know that most people are just going to lose money trading, that’s just of trading. So, they’re getting people to come to their platform to lose money which is, I don’t know that.

Samson Mow:

Well, the other good thing about Binance is that CC can actually say the words “bitcoin”.

Brady Swenson:

Yeah. It’s beyond me, man. I just don’t get it. I mean, what is the deal? It just I don’t under­stand Brian Armstrong.

Brady Swenson:

Okay, by the way, the Telegram chat room is going like nuts over and over Samson’s Coinbase is not an impor­tant venue quote. That’s getting out there on Twitter.

Brady Swenson:

So, we have a question also from the Telegram chat room RDS and I think it fits in well here. We’re talking about bitcoin-only businesses, crypto-only businesses. What happens when legacy banks, we know Fidelity has been in the game for a while now, in mass start offering bitcoin and crypto custody solutions. How do you think that they will fare against the vanguard of bitcoin and crypto-only compa­nies that really started this thing? Parker, you want to jump in on this one?

Parker Lewis:

Yeah, sure. I think that compa­nies like Fidelity offer custody for bitcoin and getting involved in bitcoin mining are really impor­tant for bitcoin. Not only does it provide cover for anybody else who says the bitcoins for crimi­nals but that you have those large brands be leaders is impor­tant.

Parker Lewis:

I do expect the JP Morgans of the world have really shifted too and now they’re banking crypto compa­nies, and I believe most of the large banks are now clearing bitcoin futures.

Parker Lewis:

I think each one of those helps build credi­bility for the bitcoin network. I think that more banks are going to work toward offering bitcoin custody services. And I think that there is going to be a natural tendency for a lot of people that are involved in the periphery and partic­u­larly get involved in adoption race and hype cycles to go, there’s probably no better way to say it than the lazy route. They don’t want to do the work to really under­stand why they shouldn’t be taking counter­party risk.

Parker Lewis:

So, I think that there is a risk of that, but I think that that’s also just a natural progres­sion. I think that when people initially get into bitcoin, they’re going to hold it one way and that naturally, they will gravi­tate toward the right way, but they will evolve and learn through that process. And that it’s more likely that addition­ally as banks begin to custody bitcoin, they do it in a more tradi­tional way as banks do. But that even then, people will learn about the right ways to store bitcoin.

Parker Lewis:

But that there will always be a spectrum, I view it as a positive I expect to be increasing. I’m person­ally having a lot of conver­sa­tions, less so with banks, but more with wealth managers that are recog­nizing that there’s a place for bitcoin in their clients’ portfo­lios. And often­times, the banks move based on how what their clients demand and that it would likely be a customer-driven way where the banks recog­nize that if they want to maintain customer relation­ships, we need to deliver these products and if they aren’t that they’ll fall behind.

Parker Lewis:

And then just as our whether individ­uals will be an educa­tion process for banks and as to the right way and figuring out compe­ti­tion to develop solutions to store bitcoin, I think that’s all in.

Yan Pritzker:

Yeah, I think it’s super inter­esting that it’s like if you don’t offer bitcoin as a bank, then the next one will. Consumers demand that. It’s inside of Robin Hood’s. It’s inside of cash apps. It’s inside of these massive platforms, and you’re really kind of forced to compete in have a solution.

Yan Pritzker:

And I think it’ll be a combi­na­tion of some of these guys building it out themselves, maybe working in partner­ship with excel­lent businesses such as Unchained or Block­stream or Swan for that matter, to build out these services.

Yan Pritzker:

But I think these two services are clearly coming. You know what I mean? You can’t fall behind. You basically can’t throw your hands up and say, “Hey, Bitcoins for crimi­nals,” because every­body else is doing it around you.

Yan Pritzker:

And that in and of itself reinforces narra­tive that bitcoin is actually good. It’s a finan­cial product, you should have it in your portfolio. And whatever narra­tive makes sense, whether it’s your finan­cial narra­tive, as a hedge or whether you really believe in this kind of like defla­tionary money, freedom money future, people will have different reasons for buying bitcoin. But at the end of the day, those insti­tu­tions are going to be forced to serve those customers.

Samson Mow:

Yeah, I pretty much agree with Yan and Parker. People still say, bitcoin will kill the banks, but I think bitcoin kills the central banks. The banks themselves are not really part of the problem. They just offer services and they’re more retail focused. And I think they can make an active choice to survive or die. If they want to survive, then they need to give the people, their customers what they want.

Samson Mow:

I believe there’s some news on CoinDesk markets today just came out that US banks can now offer custody services. That’s pretty big news.

Samson Mow:

And there is always going to be a segment of the popula­tion that will want these services. As much as bitcoins like to say, keep your keys, there’s going to be someone that doesn’t want to keep the keys and it’s probably better that they keep it with some reliable insti­tu­tion than to try to do it on their own or fail doing it on their own.

Samson Mow:

At least this is part of the cycle. I think with the younger gener­a­tion being born into a bitcoin world, it’s easier, but there will be older people that just are wary to take that respon­si­bility or to play with a Ledger or Trezor or gold card and they still want to deal with it.

Yan Pritzker:

Yeah, I absolutely think that … We’re seeing that with our customers. A lot of the older folks comes on, they don’t really want to do withdrawals. They don’t know how to do it. They want to have it in custody.

Yan Pritzker:

And then where it’s our job, I think, as a bitcoin company to try to educate folks on how to take custody only when they’re comfort­able. Because I agree with Samson, it’s way easier to screwed up if you’re not ready than the chance of a licensed and regulated trust company losing your bitcoin versus you losing your bitcoin without having any knowl­edge of how to store it.

Yan Pritzker:

So, I think there’s an educa­tional compo­nent. I also think there’s a user experi­ence compo­nent with devel­oping really good wallets.

Yan Pritzker:

So, I think things like Block­streams, Green or Casa or Unchained, these are all really good steps in the right direc­tion. I don’t think we’re quite where I would say, “Okay, here, mom, just like go use this product.” A lot of these are still pretty technical. But I have a lot of faith in all of us working on that to try to really improve the user experi­ence so that it does become very easy and a no-brainer to set up your own custody. But we’re in the early stages of that right now.

Parker Lewis:

Yeah.

Samson Mow:

Yeah, that’s inter­esting. Sorry.

Parker Lewis:

Yeah, I was just going to say, I do think I envision a world where there’s always this combi­na­tion of needs, where it’s never, like we do like to say, not your keys, not your bitcoin.

Parker Lewis:

But we also recog­nize that if somebody’s coming into bitcoin for the first time, and often­times, what I found is for people to really want to engage to learn. They need to have some Bitcoin. And that really draws them in to learn more. In almost by defin­i­tion, the first time you buy bitcoin to the T plus one month, six month, twelve month, you’re going to learn more.

Parker Lewis:

And that is an educa­tion process, and so to expect while it’s certainly possible for people to go direct to that place, it’s also not advis­able in every situa­tion or even 50% of situa­tions that I would expect that to change, at least not to far distant future where, Yan, you’re describing where things have been devel­oped and they’re easier and new eyes built and the whole world’s on bitcoin.

Parker Lewis:

But, I also recog­nize I think when we often­times talk with bitcoin, we say not your keys, not your bitcoin becomes more ideolog­ical. I talk to either higher net worth individ­uals or larger insti­tu­tions where they connect with his counter­party, where they think about as less like, okay, I’m not doing this for ideolog­ical reasons or sover­eign reasons, but I’m having a discus­sion where I had a large family office asked me, “Hey, when Goldman offers this, why would I do this with you or work with Unchained and with my keys rather than with Goldman.” I just simply said, “Because I can deliver it to you without a counter­party.”

Parker Lewis:

But even then, it’s always going to be both individ­uals, businesses, family offices, there’s always going to be a range and having all those options for people to transi­tion and find the right solutions is really what’s going to create better solutions in the long term.

Samson Mow:

So, I think it’d be good if the banks go more of like a Casa route or even by Casa and offer a multisig custody, where you’d have Bank A with one key you keep on yourself and then Bank B with a third key, or even some other insti­tu­tion, or Casa itself could be that third signer.

Samson Mow:

I think this is a better model than just put all your bitcoins in one bank and it’s all under their control. I think there’s a happy middle ground somewhere, we’d just have to find it. And as we’ve been saying, it’s still early and we don’t know how this is all going to evolve quite yet.

Yan Pritzker:

Yeah, I think that’s a great point. And I think as more banks do start to custody, bitcoin and there’s a standard devel­oped that’ll them to do collab­o­ra­tive custody, that’s great, because you really are just distrib­uting that risk and making it really, really hard.

Yan Pritzker:

People trust things. I mean, I’m not worried that tomorrow I’m going to wake up and my Chase account is going to be empty because Chase stole from me. I mean, this is still a rule of law country. And I’m not worried about my US dollars disap­pearing.

Yan Pritzker:

And so, I think people trust banks and they will trust them even more if there’s multiple insti­tu­tions involved, and you’re holding one of the keys. I mean, that’s pretty ironclad right there. So, I think it’s just a matter of user experi­ence getting to the point where that becomes super easy to do.

Parker Lewis:

Yeah, and that’s also how we think about it, where we have a company like Tantra that’s using Unchained where they’re a bitcoin-centric business, but they’re holding to their own keys and we hold the third. They don’t have to invest in tests or the bitcoin technology stack, at least the multisig and cold storage side.

Parker Lewis:

And then also, a company like Amber in Australia, where they’re able to focus on their core skill set and their core market and then leverage them.

Parker Lewis:

So, I do think as banks come into bitcoin that they’ll often­times be looking to compa­nies like Casa or Unchained or others that arise where they can leverage technology but then don’t have to recreate it all.

Brady Swenson:

Awesome discus­sion guys, really appre­ciate that. I’m going to turn to another question that came in from Twitter from Thibaud Maréchel, hope I’m saying your name right buddy. A longtime Bitcoiner and having conver­sa­tions that with him a lot on bitcoin Twitter, I’m sure a lot of you will recog­nize him.

Brady Swenson:

He wants to talk about Liquid and combating the Fudd like the two or three uses that aren’t trading related. So, what is Block­stream’s bet on Liquid? Is the narra­tive of capital efficiency interex­change arbitrage, current use case, what are the plausible main use cases in the next cycle or the future for Liquid?

Samson Mow:

Right. So, I’m always happy to talk about Liquid. I guess you could say the two main focuses at Block­stream are really Liquid and the mining side of the business.

Samson Mow:

So, for Liquid, if you don’t know, it’s an interex­change settle­ment network. So, it’s a way to move funds quickly between crypto exchanges, broker­ages, OTC desks, anything.

Samson Mow:

You peg in bitcoin on the bitcoin main chain into Liquid, so it’s always a one-to-one relation­ship. There can only be 21 million Liquid bitcoin. But on the Liquid chain, the blocks are faster. Every minute we get a block, so you have full settle­ment in two minutes.

Samson Mow:

And we also have confi­den­tial assets and confi­den­tial trans­ac­tions. So, every trans­ac­tion in Liquid, you really don’t know what it is. It could be a Liquid bitcoin trans­ac­tion, it could be a Liquid tether trans­ac­tion, or Liquid CAD or Liquid JPY, but it’s a really big boost for privacy.

Samson Mow:

And touching back on another point that bitcoin-only thing like one of the Fudd points that we get is that Liquid is an altcoin. But Liquid is not an altcoin because there is no native currency. You only have Liquid bitcoin if you lock up your bitcoin and use it in Liquid, and you can unlock it by banking out.

Samson Mow:

The other thing is you do need a few things to trade. So, before I joined Block­stream, I was at BTC China, and we kept getting pitched Liquid. We were actually one of the first to sign up for Liquid and the value prop was you can use this to move quickly from exchange to exchange.

Samson Mow:

But one thing I realized was what’s the other side of that trade? Because if you’re trying to use it for arbitrage, you need to be able to bring it back either through USDT or some other fiat currency or something else that stable.

Samson Mow:

So, I think that is another area that Liquid is benefi­cial, which is you can create a stable coin, or another asset that can be moved back quickly along that same rail. And if you have those assets in Liquid, you can do things like atomic swaps where it’s a trust the swap. We construct the trans­ac­tion and then we both broad­casts and only if we both sign will the trans­ac­tion be executed.

Samson Mow:

So, that’s a bit about Liquid. And I guess the question about where it’s going is just where do digital assets want to go? So, a focus for us is Liquid security. So, we’re building this suite of services on top of the Liquid Blockchain to handle things like security tokens.

Samson Mow:

So, I guess it’s just a question of if people value security tokens and the ability to trade more seamlessly, to have 247 trading, and to do things like atomic swaps and have better privacy. But if that is where we are headed, then I think Liquid offers a lot of value for enabling those kinds of trades and fluidity of liquidity.

Parker Lewis:

Hey, I actually have a question because this is something that I talk quite a bit with. Since the shutdown, I haven’t been seeing some of the awesome Blockchain folks as frequently.

Parker Lewis:

But one of the things I’ve talked about in the past was the idea that if you issue a security token on Liquid, the ability where I could poten­tially be trans­acting a security token, but then having the ability at any point in time to dividend bitcoin to the holder of that token.

Parker Lewis:

Because that’s one of the things that, one of the kind of flaws that I see in outside of Liquid securi­tizing equity is that ultimately it may make sense to track equity and owner­ship but ultimately whatever company that is, is going to be earning some other form of money, whether it’s US dollars or bitcoin in the future.

Parker Lewis:

And that there is a big challenge as it relates to trading to know that who’s holding any stock in a company system? The company needs to dividend money. How do you do that?

Parker Lewis:

And I think from certain conver­sa­tions, there had been some idea around that, or at least you were thinking about that. Is that something that you guys are working on devel­op­ment?

Samson Mow:

Yeah, so that’s definitely part of Liquid securi­ties. A company issuing with Liquid securi­ties will be able to create a list of their investors and they’ll be able to construct trans­ac­tions to pay out dividends and the like.

Samson Mow:

Right now, it’s not all built in to Liquid, but that’s where things like simplicity will come in. So, that’s a smart contracting language that we’ve been working on for a few years at Block­stream, but poten­tially you could create a smart contract that would handle a lot of that dividend payout and other kind of, I guess, overhead for running a company and managing a security.

Yan Pritzker:

I think this stuff is super inter­esting, because being the technolo­gies, there’s a lot of hype in the “Blockchain ecosystem” about we can build this or that. And what they’re building are essen­tially databases with their own fake money.

Yan Pritzker:

And the problem with fake money is that doesn’t have value, but does have value as bitcoin. So, I think it’s really inter­esting to see something a future like Parker and Samson talking about where people are getting paid out dividends in bitcoin, which is money based on some database token of owner­ship, which is that securi­tized token.

Yan Pritzker:

At the end of the day, that’s using a database and coupling it with bitcoin as money to deliver that promise that a lot of these other Blockchains are trying to deliver. But at the end of the day, they’re really just giving people tokens that are being traded against retail investors to fleece them, which is not a good situa­tion.

Yan Pritzker:

So, I think a lot of stuff I see in the “Blockchain ecosystem” is very inter­esting, but it’s early because it’s not done right. It has to be built on the platform that is money, which I think is bitcoin. And that makes these services actually really useful. We just have to be patient for them to be both out properly.

Samson Mow:

Yeah, I think it’s all coming. And Token­Soft is one of the platforms that has integrated Liquid securi­ties, also a stocker in the EU. And I know that Token­Soft is doing something very inter­esting with Liquid securi­ties. And it’s supposed to be out in Q3. So, keep an eye on Token­Soft in the next couple months.

Brady Swenson:

Very cool. Very cool. We’re getting perfectly into the next question that I wanted to ask. And this is kind of getting back into your world, Parker, before you dove down the rabbit hole.

Brady Swenson:

What do you guys think about struc­tured finan­cial products that incor­po­rate bitcoin, like high yield, fixed term deposits, life property insur­ance, perfor­mance bonds, volatility, targeting funds, things like that? Do you think we’ll see these sorts of bitcoin-based finan­cial products being devel­oped? Is Unchained working on that kind of thing?

Parker Lewis:

I do think over time, I mean, each different finan­cial product … If Bitcoin is money then kind of a natural product to go along­side of this finan­cial services, and I think it’s still unclear exactly kind of what that future will look like.

Parker Lewis:

And I think that there will be a progres­sion where certain products make sense as bitcoin scales and as volatility decreases and others will make more sense today.

Parker Lewis:

And so, I certainly think that there will … and there will be today we do bitcoin backed lending, where we hold bitcoin as collat­eral and lend dollars. There’s obviously people who are lending bitcoin today. I think that there will emerge a world where I think that bitcoin will largely result and the finan­cial markets will be smaller or it will lead to definan­cial­iza­tion. There will certainly be stock trading and bonds.

Parker Lewis:

And that probably when we get to a point where bitcoin is actually stable, that people will actually be demanding bitcoin to go do capital projects and then it would be debt nominated in bitcoin. Much of the bitcoin-denom­i­nated debt today is related to actually trading bitcoin, but I think that there certainly will be capital markets instead on top of bitcoin.

Parker Lewis:

But their existence and the demand for those products will naturally evolve as bitcoin scales matures and like today, I don’t think it would make sense to be lending somebody bitcoin to go build a project in a world where dollar financing and all the customers of that person that’s doing that project want to be paid in dollars. So, it’s almost depen­dent on density of bitcoin owner­ship and the volatility for certain of those finan­cial products to exist.

Brady Swenson:

Sure. All right. So, this is a question from Cory, founder of Swan, and we’ll start with Parker on this one as well. He’s curious what elements of the economy and society today might have call option payoffs and the inverse as well?

Parker Lewis:

I think bitcoin has a call option payout. When bitcoin exists, it’s harder to focus your time and energy on other kind of asymmetric bets because while I think of bitcoin as both being asymmetric, it’s also in my view, not a low proba­bility.

Parker Lewis:

So, when I think about the converse, it is really every­thing that’s most levered to the credit system that is highly depen­dent on the dollar credit system as a funding mecha­nism.

Parker Lewis:

So, if I look to the world, I would say that the two markets that are most depen­dent on dollar credit or credit in general are sover­eign debt. And then people whenever they buy a home gener­ally pay 80% in mortgage, and that mark mortgage price has artifi­cially been manip­u­lated lower to function the Central Bank.

Parker Lewis:

So, I think about it. And then if I was just to concep­tu­ally think as a deriv­a­tive those interest any market that is either advan­tage or highly depen­dent on artifi­cially cheap credit as a funding mecha­nism.

Brady Swenson:

Yan or Samson have thoughts? Want to weigh in on this?

Samson Mow:

I would not bet against bitcoin. That is the asymmetric bet of the century.

Yan Pritzker:

Yeah, pretty much on that.

Brady Swenson:

That’s the only call option I’m looking at. All right, let’s finish off with two questions. We’ll go around the horn. First of all, how do you guys talk to precoiners in your personal lives, when people come up to you? How do you present it? I know it depends on the type of person you’re talking to. What are some of the common elements of your precoiner pitch? Yan, let’s start with you.

Yan Pritzker:

So, I used to start people off with various articles about bitcoin like things from Unchained, which I still do. I love the Gradu­ally, Then Suddenly serious. Thank you, Parker, a big part of my arsenal.

Yan Pritzker:

But actually, I find that these days because of what happened in the economy, and because of COVID, and the money printing and every­thing that happened, that basically Bitcoiners have been talking about for years, it’s actually happening live, and people are aware of it a lot more than they were in the past. It happened before obviously, it happened in 2008. And I certainly was not aware of what was going on in 2008 until I read Parker’s paper called Enders Game.

Yan Pritzker:

But a lot of people slept through that. They knew the economy crashed. They knew something happened. They knew the govern­ment to bail people out. But they didn’t really under­stand the nuts and bolts of what’s going on. I think people are hearing it more news now.

Yan Pritzker:

So, what I find has actually been working for me in terms of having people engage in my discus­sions is like not talking about Bitcoins, talking about what’s happening now, cancel on effects, money printing, what is the fed doing? Why are they doing that? Infla­tion and defla­tion? What are these things that are happening? What are the monetary forces in our world?

Yan Pritzker:

And starting conver­sa­tions around that and just kind of mainstream media topics around that helps people just start to ask questions, and then I hit them with a bitcoin after they started saying like, “Oh, yeah, this doesn’t make sense. Why do the banks get a bailout and I don’t? Why is that happening?”

Yan Pritzker:

So, I think it’s impor­tant to under­stand the problem first. And a lot of people, they try to write people, write folks on bitcoin without really telling them what the problem is. They just tell them, “Here’s the solution to this problem you never knew you had.” And I think that’s kind of not that effec­tive. I think having the problem in mind is effec­tive. And so, focusing on monetary policy and focusing on how society is changing, the riots, the inequality and looking at where did all that come from.

Brady Swenson:

Good answer. Good answer. Samson, do you have anything to add to that?

Samson Mow:

So, what is a precoiner? Someone that’s kind of inter­ested in bitcoin that doesn’t have bitcoin?

Brady Swenson:

Yeah, someone that might come up to you and ask about what the hell is going on at this money situa­tion and infla­tion. One question that I get commonly is, from my friends now is, well the govern­ment can just print all this money, why do we pay taxes?

Samson Mow:

It’s not even a meme. It’s a legit question.

Brady Swenson:

No. It’s a legit question, but it’s turned into this question is being answered, a question like, more and more I see it on Twitter every day. And I think it’s going to become this thing in people’s minds. Like, why? Why? Why is this just struc­tured this way?

Samson Mow:

Yeah. But sadly, I think most precoiners I get to engage with are asking like, what’s cheap that I can buy? It’s a really bad way to start it and I just try to steer them into math and say, do the math, like how many Ethereum are there? How many of ripple are there and calcu­late how much it really costs per unit if you normalize them to 21 million.

Samson Mow:

But the problem is most people are really bad at that. And bitcoin is almost like somebody that rewards people to under­stand numbers, at least at a very basic funda­mental level. But if the discus­sion progresses, typically I will talk to them about, like Yan is saying about why are things happening?

Samson Mow:

And then when they really want to under­stand bitcoin, I try to compare it to gold. I think that’s the simplest concept of a mental construct that they already have. And it’s easier to go from there as a starting point about why bitcoin.

Yan Pritzker:

Yup. Although I found that a lot of people don’t have a concept of gold either because they don’t under­stand that it has monetary premium, like that’s a concept that most people are not familiar with. They think of it like okay, it’s used in jewelry and dentistry, and that’s why it’s valuable. People don’t under­stand like the gold is hoarded in bank vaults. And so, I think that’s also an inter­esting conver­sa­tion to have. I agree it’s a good angle.

Yan Pritzker:

But I think it requires also diving to rabbit holes a little bit and saying, “Look, there’s like $8 trillion of the gold out there. And most of that value is not because it’s used in jewelry. So, let’s figure out why that’s the case.”

Samson Mow:

Peter Schiff would disagree with you.

Brady Swenson:

I listened to an entire episode of Peter Schiff talk with Peter McCormick on what bitcoin did. And I just decided that I was going to subject myself to it from the very begin­ning. I put it on to X and listen to it all.

Brady Swenson:

And man, it was so hard. It was so hard to listen to. And I wish I’d been a part of that. I just feel like it was not. Anyway. So, Parker, do you have anything to add to the precoiner pitch?

Parker Lewis:

Well, one thing I would say is I don’t try to explain bitcoin to anyone that hasn’t come to me inter­ested. Because with the Peter Schiffs of the world or anyone who’s new, I find that it’s not worth trying to convince. Somebody intel­lec­tual curiosity has to, they have to have seen something or heard something that has led them to ask the question, because other­wise it’s just like talking to a brick wall and no one is really going to under­stand it unless they’re genuinely or honestly trying to under­stand.

Parker Lewis:

And then I do think that there’s a natural function of, do you guys still hear me?

Samson Mow:

Yup.

Brady Swenson:

Yeah.

Parker Lewis:

That there’s a natural function of what the feds done where it’s just been like ripping the Band-Aid off effec­tively, that the shock and all campaign in and three trillion, I think it’s really caused people to wake up when they other­wise wouldn’t if it wasn’t so large, so quick and so broad.

Parker Lewis:

And that’s just naturally causing more people to ask the question. And when they do, it’s easiest to send them to resources like The Bitcoin Standard, Yan’s book.

Parker Lewis:

I increas­ingly send them my own writings depending on what their questions are. Because the type of questions are naturally recur­ring. And when I simplify it for people, when they do ask me for the first time, it’s the simple question of what somebody would like to be paid in the form of currency that can’t be manip­u­lated versus knowing your govern­ment can and does, and constantly prints money.

Parker Lewis:

The average person doesn’t have to partic­u­larly need to know how or why bitcoin works, but they would choose that first option nine times out of 10. They just need to know that it exists and knowl­edge was nation­ally distrib­uted.

Parker Lewis:

So, it’s like the principle of don’t force somebody down somebody’s throat that’s not inter­ested in learning. It’s not worth your time or theirs. And waiting for them to ask the question and then depending on it, send them the resources that are tailored to either who they are for and what the questions are they asking.

Samson Mow:

Yeah, I think it’s also another angle that’s for me is the freedom aspect like looking at the human rights abuses of other … A lot of people in America don’t think American govern­ment abuses human rights. This is a question of some debate.

Samson Mow:

But compared to certainly other more total­i­tarian govern­ments is probably pretty good. But if you focus on some of the other places that have imple­mented digital means of payment, censor­ship, and stuff like that, and tell them about what’s going on there, as well as places with like strict capital controls, people can’t take money in or out of country, they can send money back home for remit­tance without going through capital controls and official conver­sion rates.

Samson Mow:

These things help, especially in America when people are so in their American bubble, they don’t realize that half the world lives in a completely different reality and that we are so privi­leged with having the US dollar as the world reserve currency, and to be able to print just gobs of it and like the world will eat it up.

Samson Mow:

What’s actually happening elsewhere is quite different than I think. Again, it’s a relatively deep topic, but I really love the video that Alex Gladstein put out two minutes of how currency is digitizing and how that it will impact our ability to have freedom with our money.

Samson Mow:

And I think that’s super awesome when I share that a lot, because it hones in on the freedom aspect of money, it’s so impor­tant to have freedom with our money and anybody’s come from regime where that was not the case, they know what that’s like. It’s not a good situa­tion.

Brady Swenson:

Yeah, I think that’s a narra­tive that we Bitcoiners need to push more often leading with the problems with money, I think is impor­tant as well. But talking about the problems with human rights abuses and capital controls and the way money is used to control people and how bitcoin can improve that situa­tion is also really impor­tant.

Brady Swenson:

So, the last question I want to talk about kind of just looking at the future, every­body wants to know, expec­ta­tions for the next 12, 18 months, it’s going to happen, we’re sort of in this period of accumu­la­tion now that we saw happen in 2016, the five or six months of just sideways action before things really popped.

Brady Swenson:

What do you guys think are going to be the major driving narra­tives over the next cycle? I think we hit on one of them being gold. And what are your expec­ta­tions for the next bull run? I partic­u­larly want to hear about the expec­ta­tions on altcoin front. Are ship coins and ICO is going to have another heyday. And is it going to be if so, to the degree that we saw in 2017?

Brady Swenson:

Let’s go Yan first in this one, and then back to Samson and full finish with Parker.

Yan Pritzker:

Yeah, to me, so I discov­ered bitcoin a long time ago, but I only entered into the space properly like around 2016 when I started actually paying atten­tion to the price.

Yan Pritzker:

And I remember arranging it like 600, 700 and then 900s for one time. This feels a lot like that. Like it’s changing the 9000s in the same way range with the 900s. The dollar moves are bigger, but the percent­ages are the same. So, to me this feels very familiar. And I think that it’s very inter­esting that we’re now talking, well, bitcoin dropped to $6,000 or will it go all the way down to 4,000. Nobody’s ever asking the question, is that ever going to come back to 600? That price is forgotten at this point, in my opinion.

Yan Pritzker:

So, I think that’s inter­esting is estab­lishing a new price memory and a new expec­ta­tion of value. And prices have memory. This is where we’re devel­oping that pattern.

Yan Pritzker:

I don’t know where we’re going in the future. I don’t have optimism around altcoins going away, just because there’s more of them. I mean, go to coin market cap, what do we have, like 5000 of them, 5777 right now. Okay, so I think I looked at this like a month ago, and it was in the lower 5000s. So, we just printed 100 new curren­cies in the last month, or hundreds of them.

Yan Pritzker:

I’m not optimistic for that number to go down. I think it will only go up just because the ease of creating these things is going up. The ease of creating tokens is going up. User experi­ence improve­ments on tokeniza­tion platforms are also a thing. And if it’s easy to create your own money, people are going to click a button and they’re go do it.

Yan Pritzker:

This is something Andrea said long time ago and when he was doing videos on bitcoin back in the day you were saying one day it will be as easy as a click of a button to create curren­cies and like Johnny in fifth grade will do it. And I fully agree with that. It’s going to be a thing, right? We’re seeing it play out just like pink sheet stocks are a thing and they haven’t gone away just because pink sheet compa­nies are crap compa­nies. They’re still traded.

Yan Pritzker:

So, I think the world is here to stay. But I do think that the value will crew, like Parker said, yes, look at it in a liquidity basis, not just by market caps. Market caps are completely fake, junk. Look at what’s being moved, what’s being traded. Where’s the depth of market? And it’s all in bitcoin. Where’s the depth of brand? It’s all in bitcoin. Look, go outside on the street, talk to anybody, if they’ve ever even heard of B cash or Ethereum. Nobody knows about these things.

Yan Pritzker:

So, I think we’re going to see more and more value liquidity of bitcoin, more serious insti­tu­tions come in and give bitcoin that reputa­tion that it needs to really succeed. And that’s where we’re going. And the rest of this stuff is going to be there. It’s going to flounder and people will trade it and try to make more bitcoin and mostly fail.

Samson Mow:

Yeah, so I agree with Yan. Like, all the coins aren’t going away, but I find it harder and harder to believe that they’re really going to have a good run like Alt Season.

Samson Mow:

Yeah, I think there’s a lot of new cannon fodder. But there’s also more and more material. If people do any research at all to under­stand the shit runs downhill. No altcoins really sustain like bitcoin. They have no staying power. They have no real utility. And it’s getting so easy to make them. Any idiot can make an altcoin now. And they’re super low liquidity.

Samson Mow:

There’s no market depth there. They can pump but then that’s it. And by the time they pump, they’ll bring in someone looking to funnel in, but it’ll be too late for them and they might be left holding bags and they’ll look for the next thing, but it’s just not going to go away. But I think really matters. It’s really all about bitcoin as we’ve been saying. It’s the only thing that really matters in this space.

Samson Mow:

So, for the next bull run, it’s hard to predict what’s going to happen, but I think in the next four years, we’ll see 100k bitcoin. So, the question is, when do we get that because bitcoin makes all of its gains typically in a very short window. When we jump from, I don’t know, 600s to thousands, that’s just like a couple months. So, no one’s going to see it coming. It’s just going to happen and people are going to FOMO, as they would call it.

Brady Swenson:

10k to 20k was three weeks, you know?

Samson Mow:

Yeah.

Yan Pritzker:

Yeah, as we complete disbe­lief, every one of those days as all my friends are asking me, “Should I buy it at 11?” I’m like, “No.” “At 12?” “No.” “Fourteen?” “Definitely not.” “Seven­teen?” “Absolutely not. Are you insane?” And so, we’re going to see that again. It’s just going to be more ridicu­lous this time.

Yan Pritzker:

And I think what’s inter­esting is going to be harder for the bitcoin critics like a Peter Schiff type because it has been basically harping the same message for like what, half a decade now maybe more, saying bitcoin is going to fail, bitcoin is going to fail. I mean, it’s very hard to keep telling a story once bitcoin is 15 years old, 20 years old, 30 years old. It’s like, at which point does that story just make absolutely zero sense and you have to capit­u­late.

Brady Swenson:

Until it’s 5000 years old.

Yan Pritzker:

Yeah, maybe. Maybe I don’t know, gold took a long time.

Brady Swenson:

Parker, what are you looking for when you lay back and dream about the next 18?

Parker Lewis:

I think I’m just gener­ally in agree­ment. I think that I’m not someone who believes that just when bitcoin runs that all coins will run higher. I think that there’s obviously economic forces at play in just kind of on an anecdotal basis when people call me that haven’t been exposed. They’re asking, “Hey, how do I buy bitcoin?” They’re not asking me how to buy crypto.

Parker Lewis:

Now, many of those people when they get plugged in if they go to a place where they can trade more, I’m sure that they’ll have exposure to it. But that when the bitcoin rally will be kind of driven by a combi­na­tion of existing hodlers continue to accumu­late, but then new hodlers coming in.

Parker Lewis:

And I think that as a function of what’s happening with global central banks every­where, we’re starting to see that happen increas­ingly, and that there will likely be some grind to the prior all time high and the real FOMO will start to happen once it kind of get sustained over that level.

Parker Lewis:

And that in that moment, the all coin traders of the world are going to be faced with the same FOMO that the people who aren’t yet involved in bitcoin and they’re going to have to decide whether they continue to hold their altcoin or shifted into bitcoin and that that will happen in an increasing way when bitcoin does begin to break prior all-time highs. And I think that that’s also the market test kind of educating people at the same time.

Parker Lewis:

And so, I gener­ally agree with Samson’s view again. I think putting the four-year timeframe out, no one knows when it’s going to happen, but I do. I think about it really in terms of adoption, like will bitcoin adoption increase by an order of magni­tude? Yes.

Parker Lewis:

And gener­ally, it’s also logical that kind of as bitcoin grows, it becomes relevant to higher net worth people so that the people that are adopting it for the first time – because it is becoming more mainstream – will gener­ally have more wealth and the type of people who are thinking about it in terms of, “Oh, I need $100,000 worth of bitcoin, not do I buy one bitcoin at $9,000.” And so, the paradigm does shift in those times.

Parker Lewis:

But I’m also recog­nizing that when it does do that run, as we’ve seen histor­i­cally there takes time for true liquidity to sustain higher value. So I also think that volatile, that we’re not just going to get 200,000 and be stable up. There will be pullbacks to 60,000 or 70,000. The same type of trends exist and they will for a reason that when bitcoin does have those astro­nom­ical horizon there are those periods of people that just want exposure and are having that FOMO period of buying, that then that period there­after is really where people will start to learn about bitcoin and what it is.

Parker Lewis:

And even if a small percentage of those people that you get drawn in ended up sticking, that creates multi­ples higher in terms of forming a base and allowing for liquidity to form. So, expect volatility to remain high, probably grind to the prior all time high and then the FOMO starting there.

Brady Swenson:

All right, all right. It’s going to be exciting times to watch. That’s what we’re here for. That’s what we stick around for. I person­ally am proud to be in here in this fight for bitcoin along­side the likes of you guys. I think everyone here listening and watching will look back here in half a decade, a decade and beyond and be really proud of the work that we did here. The fact that we realized what was happening so early and we’re able to be a part of the thread really appre­ciate y’all being with us today.

Brady Swenson:

Don’t forget you can get the podcast at swansignalpodcast.com. If you’re not able to catch this live in the future, always find it there. That’s it. Thanks everyone. Check out swanbitcoin.com, Swan Signal is out.

Parker Lewis:

All right. Thanks, guys.

Samson Mow:

Peace.

Yan Pritzker:

Thanks. Bye.

Other Episodes

Episode 8 –Andy Edstrom and Ansel Linder

Episode 9 –Rockstar Devel­oper and Jeremy Rubin

Episode 10 – Bitcoin TINA and CK Snarks

Episode 11– Gigi and Knut Svanholm

Episode 12 –Adam Back and Preston Pysh

Episode 13 –Alex Gladstein and Matt Odell

Episode 14 –Robert Breedlove and Tuur Demeester

Episode 15 –Isaiah Jackson and Max Keiser

Episode 16 –Gigi and Udi Wertheimer

Episode 17 –Aleks Svetski and Jimmy Song

Episode 18 –Stephan Livera and Marty Bent

Episode 19 –Mark Moss and Ben Prentice

Links

Swan Bitcoin

Samson Mow

Samson Mow on Twitter

Samson Mow on Linkedin

Block­stream

Parker Lewis

Parker Lewis on Twitter

Parker Lewis on Linkedin

Ender’s Game –Paper about the Fed

Gradu­ally then Suddenly –Bitcoin Blog Series

Unchained Capital

This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends. Swan Bitcoin is the easiest way to buy Bitcoin using your bank account automatically every week, month, or paycheck, starting with as little as $10. Sign up or learn more here.

Brady Swenson

Brady is the Head of Education at Swan Bitcoin, the best place to buy Bitcoin with easy recurring purchases straight from your bank account. Brady also hosts Citizen Bitcoin, a podcast focused on documenting his journey learning Bitcoin, featuring some of the biggest names in the Bitcoin world.

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