D (2:28)

Usd the genius aligned digital dollar from frax it's secure stable and fully backed by institutional grade real world assets custody by blackrock superstate and fidelity it's always redeemable one to one transparently audited and built for payments defi and banking the best of all worlds at the core is fraxne an on chain fintech platform built to align with emerging us regulatory frameworks where you can mint redeem and use frax usd with just a few clicks deposit usdc send a bank wire or tokenized treasuries and receive programmable digital dollars straight to your wallet fraxnet users benefits from the underlying return of us treasuries and earn just by using the system whether you're bridging minting or holding your frax usd works for you frax isn't just a protocol it's a digital nation powered by the frax token and governed by its global communities join that community and help shape frax nation's future by going to frax dot com slash r slash bankless frax designed for the future of compliant digital finance ethereum's layer two universe is exploding with choices but if you're looking for the best place to park and move your tokens make your next stop unichain first liquidity unichain hosts the most liquid uniswap v four deployment on any layer two giving you deeper pools for flagship pairs like eth usdc more liquidity means better prices less slippage and smoother swaps exactly what traders crave the numbers back it up uni chain leads all layer twos in total value value locked for uniswap v four and it's not just deep it's fast and fully transparent purpose built to be the home base for defi and cross chain liquidity when it comes to costs uni chain is a no brainer transaction fees come in about ninety five percent cheaper than ethereum mainnet slashing the price of creating or accessing liquidity want to stay in the loop on uni chain visit unichain dot org or follow at unichain on x for all the updates bit digital ticker btbt is a publicly traded eth treasury company that combines the two biggest metas of our time ethereum and ai compute bit digital believes that eth will power finance and ai compute will power everything bit digital gives you direct exposure to both bit digital holds more than one hundred fifty thousand eth with institutional grade staking and validator operations on top of that the company owns roughly seventy three percent of white fiber an ai infrastructure business that runs high performance gpu data centers that adds a meaningful exposure to the growth of ai compute with over twenty seven million shares this is an eth treasury backed by real operations designed to capture staking yield today while positioning for the future of intelligent computing tomorrow the ticker is btbt this ad is not financial advice do your own research learn more about bit digital and try their m nav calculator at bit dash digital dot com that's bit dash digital dot com bankless is being compensated by bit digital for this ad you can find out more information.

A (5:03)

By clicking the link in the show notes well eth is one of those tokens that is actually outpacing bitcoin at.

D (5:08)

Least over the last ten days eth.

A (5:10)

Is up just three or four percent against bitcoin over a time period where others haven't really been able to keep up tom the last time we had you on the show you had zero point five percent of the total eth supply bitmine had zero point five percent of the total eth supply in the treasury today you are coming back on the show two point two five percent almost halfway to your five percent target how did you do that because there's now like a similar percentage of eth in treasury companies as there is in bitcoin and bitcoin treasury companies but bitcoin had a three year head start on eth and now eth has caught up mostly thanks to bitmine and the very aggressive eth buying that's been going on in your neck of the woods how did you get so much eth so.

C (5:53)

Quickly well yeah it's been twelve weeks since we started the company so the close of the initial pipe was july eighth so it's been about twelve weeks and bitmine has benefited from a lot of support from the public and from institutional investors that's why it's the twenty eighth most traded stock in the stock.

A (6:19)

Market today the twenty eighth most traded.

C (6:22)

Stock yes wow yeah and i think today might have been top fifteen in terms of trading volume where is that.

A (6:30)

Volume coming from that's so much there's.

C (6:32)

Many vectors because one the stock is you know is widely followed in by the public but it's also very widely acquired and purchased by institutions who have really helped propel bitminds ethereum holdings and especially cathie wood's ark funds which were a top ten holding for her and so you know and obviously she has enormous assets under management the stock is highly volatile so it's one of the i think it's the eighth most traded options chain today and in fact there's also been leveraged etf's launched so there's a bmnu which is a two times bit mine that also just got options listed so like there's a leveraged etf with so i think just give all.

B (7:19)

Your money away just go away trade that dog.

C (7:24)

So it's fuel liquidity because bit mine and microstrategy combined and microstrategy is you know of course the og in crypto treasuries but the two less combined is eighty six percent of all crypto trading volume of all the hundreds of debts in the world wow wow.

A (7:40)

There there has been just a revitalization of energy out of at least the ethereum cohort of the crypto world where before bitbind came around it was kind of like some dark times in the ethereum world what would you say about the timing of bitmine as it came in and now ethereum has a lot of momentum behind it at least the energy the asset price has a lot of momentum behind it the ethereum vibe i would say is just revitalized was that how much of credit will you take tom how much timing do you think that was just lucky luck on the side of bit mine what do.

C (8:15)

You think about all this well you know to me i think there was a lot of like pieces that fell into place in twenty twenty five that were favorable for ethereum you know one is of course the new administration in the us which is crypto friendly and the second is is the viral adoption of stablecoins that have really driven a huge rise in interest and activity levels on ethereum the third is i think the ethereum foundation has made a pivot that's much more markets friendly and i think that that's very evident even at token twenty forty nine we spent time with the ethereum foundation and we had that conclusion several months ago but it was reiterated really at our time in toka twenty four nine you know they want to build and modify ethereum and continue to upgrade it to be in a way that's friendly for capital markets and for ai so then i'd say the fourth element is bitmine has helped clean up the narrative around ethereum and i think that so all four were contributors i'd say arthur what's your read.

A (9:23)

On the situation not just inside of ethereum but i want to get your perspective with that but dats generally so you know some dats of course microstrategy has a very positive m nav bit mine has a positive m nav but as soon as you start to go down the the chart beyond that the m navs really have started to compress what's your read on just the energy behind the debt like won't call it a trade but there's momentum that has dissipated from like the long tail what's your read on the on the market.

B (9:50)

Right now so like at maelstrom we are an advisor of upxi we've traded a few pipes upxi being one of them a bnb one and i think an athena one as well so you know the pipe trades initially were you know they look great and then you unlock and then falls off a cliff luckily we made money on the one pipe that we've done i think investors like our ourselves are like looking at these charts and like it's not that slam dunk thing you want to you want to trade anymore so i think people are getting a little bit more circumspect about how they subscribe to some of these things and then obviously as tomley pointed out this is you know a power law pareto whatever you want to fucking call it situation where the top dogs take the majority of what really counts as average daily trading volume and then everybody else struggles and i think that as we move out on the risk curve in terms of the types of corporate financing vehicles that these things use we're going to get some more riskier stuff which will be fun for traders like me to trade like i love trading funky derivatives but there's going to be some tiers at the end of this at the end of this story i don't think bit mine's going to be anywhere near that because they're able to raise very simple equity like things that are accretive to their stock price and let them acquire more eth per share and all that kind of stuff and i'm sure tom can get into details but like you know all these other motherfuckers are going to be issuing like shit you never even heard of and it's going to be some leveraged you know obfuscated you know bigger than me charging like twenty percent fees kind of bullshit and that's going to be what blows up in people's faces at the end of the cycle but i love that i love it.

A (11:28)

Right is that why you were laughing when tom was talking about the two x long etf the options trade i.

B (11:33)

Mean mostly because i was an etf guy for five years i've launched leveraged etf's in asia on you know various things and when my boss showed me how to structure these things and like the math behind this i was like okay so why would you ever trade one of these things they're absolutely the most dog product ever you should never ever ever ever ever buy a leverage etf just go buy a futures contract do you want leverage or two times leverage it's just the worst thing you could ever buy so it's just funny that you're going to add this negative gamma product you're going to put some options chain on a negative gamma product you just completely eviscerate all your capital but like that's the us stock market casino and they like to throw shade over here at crypto and the most dog shit product exists over there so that's just my own pet peeve and comedy around us capital markets tom this.

A (12:20)

Seems to be kind of like the pretty logical conclusion of what happens when like the crypto markets and the traditional markets touch there's kind of like a god and adam hands touching moment where like these things finally touch and then all of a sudden let's two x long the crypto dat etf things with the lever trades and the option chains and we're probably going to get a little bit over our ski tips because a that's what we do in crypto but also anyone in financial markets is happy to like you know put themselves out on the risk when there's a brand new asset class so it kind of makes sense that we're we're doing.

B (12:51)

This the bankers are making a lot of money someone told me i forgot where that a large bank made one hundred sixty million dollars in fees not a large break sorry a player that would not have been would not be known for capital markets virus we made one hundred sixty million dollars in fees just from dax facilitating that stuff in the last month one month wow so wow the powers that be are making a lot of money in this and they're going to continue the game which.

A (13:16)

Is nice tom should we be surprised by all of that or is this all kind of just par for the course when something crazy like the dat.

C (13:23)

World happens i mean you know if if we didn't if we ignored the last four years then then we'd look i i would probably say that i'd have a different context but in the last four years it's been almost impossible for crypto to access capital markets and and it's also been very difficult for people to even have banking relationships and in fact as you know even publicly traded banks regulated banks two of them were essentially shut down by the government in the last four years so i think twenty twenty five is a lot of pent up capital we know that some of the most popular ipos this year have actually been crypto ipos you know circle and figment and you know bullish i mean they've been very successful ipos and we also know that like as a bank the stable coins which are really century banks are a lot more profitable than their traditional tradfi bank so a crypto native business model is vastly more profitable with less employees so i think that there probably is a lot of need for people to find exposure but you're right arthur knows etf's because that was his world before bitmex leverage etf's is not the crypto industry's desire but it's someone who's trying to capitalize on the volatility the issuer and hopefully that's not going to to make this pro you know to make the process less profitable for investors because we don't really want investors to lose money getting exposure to crypto which you know they should just generally be long tom.

A (15:06)

Arthur we the on the weekly roll up the the episode that we record me and ryan every single friday we talk about the markets every single week and overall my vibe my state of the market my play is that we got a good thing going right now bitcoin has been up just incrementally for three years in a row without attracting too much froth there's no parabola on the bitcoin chart and you know eth got over all time highs but it's not there now and so there's seemingly just plenty of froth just not in crypto and if we were to play out the four year cycle tom i don't know what you think about the four year cycle but if we were to play out the four year cycle we would be topping sometime in the next one to three months like november december january and that's four years later than twenty twenty one and four years before that was twenty seventeen the tops of the crypto market and it just like i remember both of those market cycles it just does not seem that crazy and so i don't know what your attitude is if like the four year cycle is dead it's a prolonged cycle why are you even bringing up the cycle word to begin with i just want to get your read on the whole cycle nature of the crypto markets i'll ask this question to both of you maybe i'm writing an essay.

B (16:20)

That'Ll be published i don't know if i get finished with it this week or early next week before i leave again but basically i did a market study if there was the most popular question that i got asked i just made i don't know thirty fucking speeches during twenty forty nine what do you.

A (16:38)

Think of the cycle what's your view.

B (16:39)

On the four year cycle are we topping is this it right so okay let me let me go back i i intrinsically believe just like what you said i don't think we're in the four year cycle i think we are in a cycle it lasts until it lasts but okay let's go back and think about there was there's been three four year cycles right two thousand nine to twenty thirteen twenty thirteen to twenty seventeen twenty seventeen twenty twenty one right and if we take a look and we and i you know try to make it as simple as possible and use the same chart in in each three periods and so i took a look at fed funds rate effective fed's funds rate i created a us dollar credit index a proxy which is basically just other deposits and liabilities from the banking system in the united states and reserves at the fed so that that'll capture quantitative easing or quantitative tightening and it'll capture bank credit growth up or down and then as a kicker i said well you can't talk about the united states without china because they're kind of interlocked and they either complement each other or go in the unopeness of directions and so you know i just pulled a a bloomberg credit twelve months change credit impulse index so if we take a look at the first cycle we have essentially the genesis of bitcoin which is i believe a reaction to the response of the united states to the global financial crisis it's it's i don't believe it's a coincidence that it was published on you know the third of january two thousand nine right right after ben bernanke announced twenty two easing infinity or one tarp all that kind of stuff right at the same time china did its part and they went on the largest expansion of infrastructure f credit fuel growth in its history and you'll see the chart and so basically you have yuan and dollar credit being issued at infinim in two thousand nine you know that sort of catches up with the bitcoin price by you know late twenty thirteen and we get that you know one thousand or one thousand four hundred dollars whatever you want to call it peak right before mt gox imploded you'll see in twenty thirteen that credit growth rolls over a bit you have the taper tantrum in the united states in mid twenty thirteen which finally catches up with credit growth in china they were not growing credit as fast as they were so the rate of it you know it decelerated even though it was still growing the second derivative was deceleration and so that popped the first crypto bubble then we move to twenty seventeen bubble the ico bubble and in that instance you had china leading the way where they went on a massive credit expansion in twenty fifteen which caused a high in the shanghai stock market a massive devaluation of yuan in august of twenty fifteen and this sort of brought bitcoin out of its doldrums and that lifted that started the twenty seventeen ico rally but the united states is going in the opposite direction fed funds was actually increasing once we get into twenty seventeen and credit growth was was falling and so finally that caught up with bitcoin because you can't really escape the time value of money nobody can and the bubble pops in twenty seventeen by the end of twenty seventeen then we get the third bubble or whatever you want to call it the COVID response obviously we know what that story was all about that was stimulus checks in the united states china was very circumstant in the amount of money issued but again its credit growth increased and by late twenty twenty one we had the fed talking about how it was going to restrain its balance sheet increase interest rates due to inflation and pretty predictably bitcoin peaked in november right around the time when everyone expected the fed to start on a tightening cycle and now we're in in the current cycle and basically this cycle has been about the reverse repo program which was the two and a half trillion that bad girl yellen injected into the markets starting in twenty twenty two and that has been that has basically run out until now and so if you're a proponent of this theory of okay for your cycle you would say oh well you know take a look reverse repo zero there's no more liquidity but the fed has started cutting rates you have trump and besson talking about how they want to run the economy hot which basically mean either the fed prince money or the biggie system principal i don't care which one you can listen to speeches they'll talk about either one interchangeably they want to juice the housing market i don't have the chart in front of me but it's something like trillions of dollars of home equity that has been that's basically sitting dormant on the balance sheet of the american public and their housing market and trump is going to lower mortgage rates however he does it there's very various ways to do it to unlock that money to then go into financial markets or buy a house buy a car but whatever trump is talking about stimulus checks china which has been in essentially on and off deflation in terms of credit growth over the last few years is making noise that they want to revitalize the housing market will it be as crazy as twenty fifteen no but it won't be as bad as it's been post covid so this cycle is different than the the last three if you want to take a look at chinese credit and us credit which leads me to say there is no four year cycle at least right now and so we are in sort of a extended cycle whatever you want to call it new world order change in you know trade situation whatever right and so i am of the opinion that this cycle ends when the trump administration ends because it'll be a reaction against trump whether you like it or not doesn't really matter and you know that's a twenty twenty eight late twenty twenty seven story when the rhetoric of the opposing team blue democrats starts to cause questions in investors minds oh what if they win and therefore what if things change therefore maybe should i should take some chip off the table so that's my guiding light and you know five minute plug for this essay that'll come out something in a.

A (22:16)

Few few days i thought that was very great tom what's your read on the situation do you like what arthur just said does that resonate with you.

C (22:23)

Yeah i mean i think arthur put it really well i i think he kind of put a lot of pieces together for people and maybe the only thing i'd add is two things one is it's very evident in sentiment because like in twenty seventeen there was a lot more exuberance in twenty twenty one too both in equities and crypto you know i think because of trump and the divisiveness that he is and also because of the swoon we had in stocks in april february to april that sentiment still really muted i mean we see that on the fund strat side and i guess the second thing i'd add is i mean he's i think he's spot on that you know crypto needs to really make overtures to both sides of the political side over the next few years because we don't want a change administration to result in like a complete flip in that in actually the way crypto is regulated i mean i think it's actually a really important policy thing he's flagging yeah we've been.

A (23:25)

Big proponents of that at bankless is that crypto is technology not partisan like the internet is not partisan and neither neither should crypto be but also at the same time tom like we have as an industry made fantastic progress over the last two years blackrock is aggressively into this space with their two main etf products and their tokenization products which we know there's more coming down the pipe there and of course that's just blackrock i could i could rattle off twenty thirty forty more institutions that are now in crypto building in crypto materially that were not in the biden administration so to some degree yes i'm still worried about a pendulum swing in capitol hill but also we're kind of embedded in there like crypto has seized the opportunity of the donald trump administration to really dig itself in protect itself and make partnerships and do bd with the existing tradfi system so to some degree i kind of think we're also buffered maybe you agree maybe you disagree yeah.

C (24:24)

May i agree but i think that there are probably some things that are important to like democratic stakeholders such as like ubi or social policy that i think crypto can you know do some work around you know i mean i i think ubi is probably functionally only enabled because we have blockchain and you know the ability to to to validate transactions and finality and so i think that there is a lot that can be appealing to non republicans about crypto.

A (24:55)

As well i want to turn to the conversation back to home territory for me which is eth and ethereum tom you're approaching half of your target you're almost at two point five percent you want to get to five percent i think it's gone faster than anyone's expected you to get to to fight i think when even when i heard tom lee wants to put five percent of eth on bitmine i was like well sure so do i though and you're halfway there so i don't think anyone can really doubt the intentionality or the feasibility of actually getting there assuming you do get to five percent which maybe happens this year maybe happens next year do you stop what happens next you.

C (25:33)

Know five percent as you said as you pointed out was in some ways aspirational because we were just thinking about you know what's the level of eth holdings that isn't gonna be disruptive to the ecosystem but a level that can actually allow you to have a positive benevolent influence and so i think five percent was sort of that waypoint but we we've been we've spent some time with other researchers and especially thinking about the power law i i think you can especially in a in a competitive dynamic move even as high as ten percent without actually disrupting the ecosystem and then of course as you know a dat is essentially a permanent holder of eth so in in some ways it provides a lot of ballast to the network so i i think it's possible to go beyond five percent but of course we still have to get to five percent and i don't know how expensive it's going to be because eth has actually cooperated because it stayed in the four thousand range for now but as eth moves up especially in the fourth quarter you know it could get very expensive to get to five percent.

D (26:34)

What do you think arthur do you.

A (26:35)

Think tom can get to five percent.

B (26:37)

Sure i mean if you if you're able to sort of tap into the institutional pipes of money that wants to get into dats especially you know everybody is a momentum person now regardless of what stage in the capital structure you're especially in and traffic because everyone is trying to keep their jobs and so how do you keep your job you buy the thing that went up last month last month eth is up and dats are cool i mean i'm all about dats and so i'm assuming that whoever your banker is they're calling you off the hook pitching all sorts of interesting things and how to raise some money from you know very motivated individual clients who now all of a sudden want to do dats again whereas maybe two months ago because the market was kind of sideways they weren't so key.

A (27:17)

Tom with five percent plus i mean you're already bitmine is already the number one eth holder but at five percent plus it's it's starting it's starting to approach structural like a structural relationship with ethereum you called bitmind would be a ballast to ethereum and i also noticed i saw you you took a photo with vitalik lately which i thought was great are you meeting people around the ethereum ecosystem because of the position that you have like do you talk to people at the ethereum foundation or just other stakeholders of ethereum how have you found yourself just embedding yourself into the.

C (27:50)

Ethereum world yes the answer is yes you know the ethereum foundation has been a great organization to dialogue with we're very aligned with them and tomas has been great we really want to help bridge the tradfi and capital markets world and their needs and the specs that they care about to be heard properly by the ethereum foundation so i think us being a large holder of ethereum has given us a place to be a center point of that conversation and i think that's important we have been meeting with a lot of the core developers and we had a great meeting with vitalik and i don't want to overuse the idea but because bitmine has so much ethereum of course it's a source of liquidity and scale so the overused word is kingmaker but i think we can have a role in helping shape how some of the defi projects that gets seeded and and we can also make selective investments we're planning to use one percent of the balance sheet which is about one hundred thirty million right now to invest in projects whether it's crypto native or traditional like we made a small investment in a co which is the worldcoin treasury and i think that we're increasingly viewed as not just a debt but kind of as digital infrastructure but that was our thesis from the beginning that you know we're providing a security function by when we stake but that's not the only role that a large holder ethereum would play and i think there's this informal role that we played i think which is helping simplify and really improve the narrative around ethereum and i think that's also been helpful because that's how tradfi can also understand you know as banks want to build on the blockchain how which layer ones that they want to work with or you know which organizations and i think we we're sort of that non foundation entity that exists yeah certainly.

A (29:51)

Ethereum naturally because of what it is doesn't have a very large voice because the ethereum foundation has always intentionally pushed ethereum's voice to the margins right ethereum's voice is its community because the ethereum foundation doesn't want to be the voice of ethereum but then somebody like tom lee like bitmind rising up and being like well we have a voice it's roughly two point two five percent of the total eth supply and actually like embodying that voice of ethereum through the proof proof of the actual ownership of eth but also being active not like an active manager of the capital as it relates to growing the eth ecosystem is something that ethereum's never really really had before i'm curious there's been murmurings or just like people using their imagination about where bitmind would ever potentially get involved in governance over ethereum and this gets into the conversations of like all core devs calls or actual protocol design do you ever see yourself getting involved or some bitmind person getting involved in that level of granularity of ethereum or is it more from like the advocate and liquidity and capital formation side of.

C (30:57)

Things it's a great question you know i think it's a best practice it's better that you know bitmine have a more consultative view on on on development you know helping identify priorities and i think even acting as like a diplomat or liaison or a third party intermediary because i think that would play to our strengths you know we have a lot of connectivity to the traditional financial world and because we're in existing rails and operate in that side of the world that's what would be more of playing to the strengths of bitmind rather than as you're pointing out protocol design you know it we don't want to stretch beyond our capabilities.

A (31:44)

Arthur i want to get your perspective on eth's position as it stands in twenty twenty five as the author of an article that was once titled the two hundred billion dollars shitcoin do you think i think that was the right number do you think eth ought to be comped to bitcoin in twenty twenty five or should it be more comped to the other smart contract platforms of which there are many in the crypto space which do you think is the more relevant comp for ethereum i mean i guess from.

B (32:10)

From a higher level philosophical point and i know you may differ me from me on this is i i view eth i view bitcoin as money and i view eth as computer and so that's how i separate the two and they're both very important and obviously the two largest holdings in in my portfolio and so i believe e should be you know comped in that particular way it is the compute reference asset if you want to call it that and so i don't know what do you want to compare it to nvidia or apple or whatever amazon like something like that like like a tech company right that's kind of how i would think about eth like when is ethereum going to be more valuable than nvidia or tsmc or one of these backbones of the internet and ai and all that kind of stuff that's what i think eth should aspire to and all the other tokens can worry about how they compare to eth but i think eth needs to elevate itself above the rest of the muck down where i play very aggressively.

A (33:13)

Tom what do you think about that frame of reference for eth if bitcoin is much money eth is compute what is how does that land.

C (33:20)

With you yeah i mean i i i think that they're complementary so one is not a replacement for the other and in a way that makes that's that's part of our framework you know when we think of digital money and digital gold that's that's bitcoin and that's already been well established you know and in fact that's why many investors will own bitcoin but ethereum is an architecture that we can see wall street building on and ai and it's not that different than how in nineteen seventy one there was two forks gold because the dollar went off the gold standard of gold became that store value but then a whole economy was built around making sure the dollar which was now synthetic became the standard bearer and that's what wall street did and in in terms of value creation both created value you know gold is now a two trillion dollars network value and equities which is really came out of a synthetic dollar right we didn't want us to go onto a deutsche mark deutsche mark or yen standard that's a forty trillion dollars asset so i think both come out of crypto but address different markets so i think ethereum can grow even without having any cannibalization or competition with bitcoin.

D (34:44)

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A (35:54)

Or app you need real users doing.

D (35:56)

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A (37:35)

For more information i do enjoy the comparison that ethis compute but i'll point it towards ethis compute for banks or for financial institutions like who's doing the compute who's consuming the computer financial institutions are consuming that compute and like something that we've seen ever since we've had a more favorable regulatory environment is these financial institutions the more innovative ones the more forward looking ones are moving into this space again blackrock with the etf's and its tokenization fund and the other tokenization products that are coming down the line fidelity many of these people then stripe comes in and builds their own ethereum virtual machine blockchain and all of a sudden a lot of the forward looking finance category like companies are now building on blockchain so i think the broad question tom for you is like playing this out into the future if we fast forward and let this bake a little bit does blockchain just make the finance sector now also the tech sector if they're all running on tech rails to begin with what do you.

C (38:37)

Think about this that is our theory and our thesis because i think if i took jp morgan for instance and this is something we've written about at fundstrat that they are operating and supported by three hundred thirteen thousand employees but a jp morgan built on the blockchain might only need twenty thousand employees and operate with far greater clarity and vision and efficiency so jp morgan may end up being especially using ai more of a tech company they're replacing humans with tech spend and and using the blockchain for finality and security and the multiples of banks should change you know going from trading at price to tangible book to actually having a pe multiple and kathy wood has pointed this out that's exactly what happened with costco and walmart that they used to be traded like cons typical consumer staples you know fifteen to sixteen times earnings but because they essentially systematize their business walmart and costco trade thirty five to fifty times forward earnings that's a higher pe multiple than nvidia which trades at thirty times one.

A (39:48)

Of the bits of news that have come out recently is tether is looking to raise at a five hundred billion dollars valuation which if it was a crypto asset that would put it at number three behind bitcoin and then ethereum it would be number three arthur when you saw this news when you saw the five hundred billion dollars valuation for tether what was your reaction i was.

B (40:09)

Like okay i guess i go to ipo otherwise why they don't need money i imagine that giancarlo and jl are probably up there with cz in terms of how rich they are who knows right because of all the crypto they own and equity values are there other companies but as tom said right they're the best bank ever created they have one hundred and fifty employees and make ten something billion dollars of net income every year and i would much rather use tether to pay my ski guide in argentina or buy a product in southeast asia or whatever than ever try to fucking use jp morgan outside of new york city right it's just like why would you ever want to shoot yourself in the head repeatedly and survive and so i i think that's what it feels like every time i try to use a commercial bank and versus like okay you know log into my my metamask or phantom wallet or whatever and send somebody some money so i think obviously the the emerging world gets it and these banks are going to either have a business model like tether one or two of them in every big market or they're going to be zeros right they'll fight tooth and nail the politics right because that's what a bank is it's an extension of the local government in which they operate and they'll try to do all sorts of things to forestall the inevitable but you know we drive cars instead of driving horse and buggy even though the horse and buggy guys wanted to make sure there were no cars and so it'll happen over time and the banks that are forward looking are the ones that'll be that'll survive and maybe in five to ten years time there won't be all these you know thousands of banks and everything you know totally around the world there'll be one or two tech forward banks that can compete with a fintech or a social media company and then there will be nobody else and that'll be great because we can you know free all this amazing human intellectual capital from the drudgery of working for a dog bank.

A (42:07)

Tom the tether five hundred billion dollars valuation was that sticker shock to you was that or you're like no that checks out what were.

C (42:15)

Your thoughts yeah i mean i think it checks out because you know keep we have to keep in mind and that's actually equity value so it's not the value the tether token but really the value of the issuer you know tether has been the central bank for crypto i mean in twenty seventeen if you if we go back they were incredibly novel and ingenious i mean they were bitcoin holders but they've proven that they're not just bitcoin ogs they created a business that acted as a central bank and i think even companies or entities like being finance et cetera wouldn't really have existed without the existence of tether and in the ensuing years tether has actually increased its circulating supply if you look at the at how much tether has grown its usefulness is growing as crypto has expanded and even as crypto has become more regulatory accepted tether's growth rates accelerated so to me i think it's pretty evident tether is a growth company and at five hundred billion it might actually be a bargain i mean we should maybe think about the fact that tether you know when does tether flip jp morgan as the largest bank in the world and and i'm not i don't know tether's financials but because of how much growth they've achieved just even in the last few years i i think we have to realize that this may be as arthur says you know one of the best banks.

A (43:46)

In the world yeah the when you go to coingecko our favorite website to go just look at their market cap rankings they put stablecoins on there of course and so the stablecoin market cap of tether is coming in at one hundred seventy seven billion it's one hundred seventy seven billion dollars of tether circulating on all the blockchains you add them all together you get to one hundred and seventy seven bitcoin is at two point five billion arthur do you think that tether the supply of tether the stablecoin could ever flip bitcoin is that a realistic statement of course it is.

B (44:17)

I think so i mean the the.

A (44:19)

The dollars the tether tokenized dollars i.

B (44:21)

Mean if if if buffalo bill besson and trump had their way that would absolutely happen and it would come at the expense of euro dollar deposit it would come at the expense of banking every single person outside of the united states with a dollar bank account in opposition to their local central bank like that is exactly what they want to happen and they will issue as much debt as you know tether or whoever else wants to acquire with the the deposits that they bring in so i absolutely think that is is possible and that's the goal obviously of the united states administration tom do you agree i.

C (44:54)

Do and then again if we're just doing the math so from let's say a hundred let's say two hundred billion surf healing supply to two trillion that incremental one point eight trillion what value capture would tether have it's enormous i mean it this is probably why crypto equities might you know surprise us because they're turning into better businesses because they're using the blockchain what message do you.

A (45:23)

Think wall street is hearing when they see circle ipo and then just have an incredible price action after that stripe comes in and makes a stablecoin blockchain everyone is just whoever does anything in crypto gets a twenty thirty forty percent boost in valuation the the new crypto equities are popping right off the gate what message is wall street hearing right.

B (45:48)

Now control f control r crypto and then s nine that you're about to produce is it that simple that's the message and then the really smart ones will actually build a business around it but fuck that that's like that takes time and money and well that makes.

A (46:05)

Me think you know what that makes me think of arthur is the whole long island blockchain tom you know the.

C (46:10)

Story yeah that was like twenty seventeen.

A (46:13)

Yeah where long island iced tea changed their name to long island blockchain and stock popped by like it's two x in a day and that was also at the top of twenty seventeen that was like the time to be selling.

C (46:24)

I mean today i might say that today blockchains look a lot more attractive because of the security risks of centralized software entities you know i mean like i think cyber hacks are becoming so visible and companies are getting crippled and which is maybe raising the need and the benefits of actually having public blockchains you know for finality and maybe that's part of the hidden message because you know i think seven years ago even if the administration was friendly it's not like a bunch of people would have been wanting to issue stablecoins or build a new business on the blockchain or at least show it but i think today it's really in demand now it's.

A (47:11)

Interesting that you say that because usually i think when people hear about loss of money via hacks or exploits it's from crypto like some crypto protocol got hacked some bridge got hacked and then north korea just found themselves twenty billion dollars or something like this that's the typical story granted we haven't had one of those stories in a while in fact vitalik recently wrote an article about how defi losses like just capital losses inside of defi is something less than zero point three percent because hacks and exploits are just down so low so it's interesting that you say that tom because that's an inversion from what it's been historically if you think about the.

B (47:48)

Largest hack recently with the bybit hack right yeah i don't think you i don't think it's fair to say that that's a hack of a public blockchain that is a hack yeah correct that was a no safe and improper implementation of that by a centralized entity and so i think this goes to tom's point centralized entities face these risks the more that you can have processes finality whatever you want to call it that is completely adjudicated by a public blockchain of course yes there are risks inherent in those in those blockchains and if you use something that's not very secure nothing obviously not like ether bitcoin then you you know have all the civil fifty one you know pick your sort of issues with the proof of work or proof of stake blockchain that can happen but you're not the centralized company is always the risk and if the more things that we can have on these public blockchains the safer we are in crypto and in traditional finance and that'd be amaz it'd be amazing if that is a message that corporate officers are receiving i don't i doubt that they're that subtle i think they're more let's just change the words in the s nine to start with and then maybe the young kid in the technology department can finally get some political capital to build some really cool solutions for a starting company yeah and i think.

C (49:00)

If we just sum up everything from like traditional financial ledgers you know like jp morgan six percent of their transactions are suspicious along with merchant fraud and then all the hacks that have happened to you know department stores and all the identity leaks i think it dwarfs the losses from crypto and of course and then bitcoin and ethereum have actually as you know have not have any recorded history of a breach on their.

A (49:30)

Blockchain i'm gonna knock off some last subjects here as we get into the final stages of this interview one of them i wanna talk about is this whole emerging concept of like financial entertainment and i think this is kind of centered around prediction markets but also things like pump fun so pump fun has a live streaming platform where you can launch a token and you have a stream as twitch stream associated with it there's a bunch of content producers making a ton of content about poly market contracts just will will taylor swift get engaged and you know not that much volume in the grand scheme of things but a ton of content production just being made around that one market tom i don't know if you have any thoughts or if you've been thinking in this world but like this whole growing attention towards just financial entertainment on blockchain rails what do you think about all.

C (50:18)

This yeah i mean i think financial entertainment might even understate really how important everything these prediction markets are doing i mean to me the twenty twenty four election and trump polymarket and the role polymarket played in calling that election tells me that it's not just for entertainment it's really serious wisdom of the crowd knowledge that's coming into play as long as these betting markets don't influence by itself by reflexivity the outcome but to me i think that that's as we move to tokenized equities and real world assets and when you overlay that with prediction markets that's really the alchemy that's going to cause the financial system to actually be a lot more liquid and for capital to be raised more easily but i'm over glossing i mean arthur has a lot more interesting anecdotes about.

B (51:13)

That yeah i mean the sad part is that the inflation that has come and is to come globally around the world has created a class of speculators and that everyone who doesn't own enough financial assets to call ninety five percent and ninety nine percent of the population your salaries ain't going to cut it everybody knows that intrinsically whether or not you can do the math or not and so they gravitate towards the stock market because that's been spin allowed in most countries or they go to casinos or now we have crypto which is okay i can take my small amount of whatever savings i've been able to accumulate whatever the new hot thing is i think crypto you know crypto or pop fun and meme coins i intrinsically understand okay will this be popular in five minutes time versus today i'm going to go and trade that and then maybe i can be like that guy or that girl that i see on instagram or tiktok and you know buy my house buy my car you know pay off my bills whatever it is because i know in my gut that what i'm doing right now and anything i aspire to do in the future there is no way that i'm going to be able to afford the things that i've been told i should be able to afford whether that's a house starting a family debt free lifestyle and that's not an american thing it's a global thing and it's very sad but that's the world that we live in until people throw off all these governments and we reform the financial system this is going to be the state of play and so pump that fun poly market all these things that bring markets and this is why a lot of governments are scared because markets bring transparency like what the people actually want versus what they're delivering in terms of policies and services and goods usually aren't are at odds and i am a firm believer and you know i love free markets and i wouldn't even say the united states is a free market economy it's you know it's very controlled economy in very various states and every country is on a continuum on this this journey but you know i think markets give good signals and let's see what the signals give and if the signals are that everyone is going on pumped out fund trading on you know somebody taking a on somebody else and that's the most trending thing let's bet on a meme coin on it what does it tell you about the value of money and what people will ascribe to how the government globally have sort of respected our dignity as is human beings and what they've created of this this energy derivative of money so i think it's a philosophical indictment on the bankruptness of global governments that people gravitate to trade these things because they have no.

A (53:35)

Other option wow arthur that was profound i was not i was not ready for somebody to connect some pump fund shitcoin streamer to the to the hollowness of our money supply it's all related.

C (53:48)

It'S almost shakespeare there yeah this close.

A (53:51)

To shakespeare yeah on the other side of the speculation spectrum tom arthur here of course invented the perpetual swap as i'm sure you know is something that was birthed in crypto as a just a neutral financial tool do you see perps making their way going backwards into tradfi and being adopted in tradfi or do you think kind of perps are just going to stick around on the future side of the financial world i don't know if you have a taker.

C (54:16)

Opinion here i mean we know that in the crypto world products have emerged and leaked into the traditional financial world and they've been quickly adopted i mean stablecoin is like the biggest one that really has been so widely adopted yeah i think that there are a lot of benefits to perpetual futures and that's a little bit outside my world because i typically focus on cash settled item or even cash traded but without question i think you're going to see innovation moving in both directions arthur do you.

A (54:53)

Think tradfi is going to adopt your beloved purpose baby yeah i mean i.

B (54:57)

Know when people say traffic i think they really mean the united states capital markets they're not really talking about everywhere else in the world and you know i've spoken to a lot of founders who are having some sort of iteration on purse and they talk about i'm going to go into the us and da da da da and i think you know my message to all of them they think that they're going about it they're not barking up the right tree yes you can get some sort of license to operate some sort of exchange in the united states and that's not really why the cme and the cboe and some of these exchanges are so entrenched and powerful it's because the clearing system in the united states is based on an antiquated model that works for you know equities trading in the nineteen thirties right not in today's right like not even any exchange does real time settlement talk about the risks to cboe and cme like these are very under capitalized institutions relative to the volatility of products that they list and the margin they collect from you know the citadels and the virtues of the world so if any founders are saying i'm going to take this perp and i want to bring it to the us i think the battle that they have to fight is how are they going to open up the designated clearing organization licenses that are have i don't think one's been awarded in thirty or forty years there's only fourteen of them in the us and so if they're able to somehow some way get one of those licenses and allow the centralized the socialized loss insurance fund model to persist then they're going to be able to issue thousand x leverage things because they're not going to be putting their exchange at risk by using these antiquated clearing things that force you to use force you onboard some volatility in your business model which you otherwise wouldn't so i know it's a bit in the weeds but i hope there's some you know perp dex founders to be you're wanting to be you know if if that's where you're going to spend your energy attacking i think that's issue that's what you should attack if you really want to fuck up the us market and take the cme down to zero which.

A (56:51)

Is where they belong seems all very complicated it actually just seems like the simple thing to do is to just make a perp dex and not really worried about the regulations.

B (57:02)

Yeah yeah why.

A (57:03)

Not try it out yeah you tried that once man arthur tom this has been great one last question for you guys it is october sixth so we've got two months three weeks before the end of the year bitcoin just hit an all time high the day of recording at one hundred twenty six thousand ether yeah i would like it to get at least above five thousand this month hopefully arthur what do you think the year end ranges will be for both bitcoin and eth so i'm going.

B (57:31)

To stay consistent two hundred fifty thousand dollars bitcoin ten thousand dollars eth ten.

A (57:37)

Thousand dollars eth you think eth can do more than a doubling in two and a half months yep all right tom the tom you dropped off really quick but the question is end of year price targets we got two months three weeks before december thirty first what do you think eth is going to be what do you think bitcoin's going.

C (57:51)

To be yeah but by year end our target for bitcoin is two hundred to two hundred fifty thousand and for ethereum somewhere between ten and twelve thousand.

A (58:01)

Eth even higher than arthur so that's basically what arthur just said.

B (58:07)

I mean if tom says it this is going to happen.

A (58:13)

Is that not a little bit fast tom so like i said about this last year of price action especially bitcoin over the last three years it's just been slowly incremental up if.

D (58:23)

You'Re telling me eth is going to.

A (58:24)

Do like almost a two point five x in two months to me that is no longer incremental that is starting to become closer to a blow off top territory which i don't want i want the slow incremental price rise for years are you would you if it did do a two point five x wouldn't you be worried about it kind of just being a little bit too.

C (58:43)

Fast i mean as you know ethereum's basically been basing for four years now just broke out of the range so to me it it wouldn't be a blow off top but rather seeking essentially price discovery at a new level and then at a time when i think there would be a lot of fundamental things happening next year so i don't think it's the top but i'm sure but it is a big level be a big level but a happy level.

A (59:09)

Yeah tom arthur i don't know if i'm going to have you guys back on again by the time that that's your wraps but if you could think forward into twenty twenty six and kind of just make a broad wish list for the crypto industry goals that the crypto industry should focus on maybe goals that you're doing at bitmine or arthur you're doing with your trading and writing what do you want to happen for the industry in twenty twenty six the near term midterm goals tom i'll start.

C (59:35)

With you for bitmine of course growing its eth holdings and staking but i think we would also be closer to moving towards that phase two and phase three of the company where we would be you'd see us involved in some specific projects that are going to strengthen really the efforts of bitmine and then for the industry i'd love to see some innovation around the betting markets and tokenized equities i think that that could be a twenty twenty six thing will.

A (60:03)

We see a tokenized bitmine i'm less.

C (60:05)

Incented to tokenize bitmine because i think what's more important is to see tokenizing a company so that we can extract and identify the portions of value like i'd rather see nvidia tokenize and then trade it as if we can own nvidia's china revenue streams or its blackwell sales and then using prediction markets to actually hedge that so we could be betting against fed tightening on and the implications for its margins or blackwell cells so i think that's really what i think is exciting about tokenization arthur twenty.

A (60:43)

Twenty six aspirations goals goals for yourself.

B (60:45)

Goals for crypto here's my macro wish list like let's go down the list france leaves the euro ecb bails out euro billions trillions of euros china reflates their housing market dollar dollar yen goes to two hundred boj capitulates and just starts printing a lot more money and trump takes over the fed and goes yield curve control and then in terms of the crypto product landscape i'd love to see twenty four seven perps on you know mag seven big big us tech stocks i know some there's some projects working on it be great to see that that market kickoff and sort of you know give leverage trading in the united states from the traditional players a run for their money and let people trade some other things beautiful tom.

A (61:27)

Arthur this has been great thanks for coming on bankless thanks for having me thank you bankless station you guys know.

D (61:32)

The deal crypto is risky you can.

A (61:33)

Lose what you put in but nonetheless we are headed west this frontier is not for everyone but we're glad you're with us on the bankless journey thanks a lot.

C (61:46)

Sa.