Brendan Thibaut (3:22)

Welcome back to the crypto101 podc. I hope everyone is having a fantastic morning or evening because no matter where you are, you're certainly in the right place here today. You know how it is over here. We love to pull industry leaders from all over the crypto and finance space, pick their brain about what they're doing, what they're seeing behind the scenes and get the inside scoop on what's going on. And we got to give a quick shout out here to super producer tivo. He has been pulling in the best of the best, the cream of the crop in terms of guests here recently and we got another one here today. So got to give my kudu my kudos to Mr. Tebow over there. But today we're joined here by Nick Carey. He is a co founder and vice Chairman over@blockchain.com Nick is also a co author of the Future Is Decentralized as well as an entrepreneur and a co founder and chairman of skythelimits.org, which is a leading nonprofit digital business accelerator. Nick, pleasure to have you and excited to be able to talk to you here today.

Nick Carey (4:21)

Well, thank you Brendan Thibaut. It's great to be here.

Brendan Thibaut (4:24)

Absolutely. There's so much to unpack here. I mean blockchain.com has been around for a long time. You guys are, I mean a staple of the of the space. You guys have the name blockchain.com but clearly you're doing a lot behind the scenes. I want to make sure that all the listeners are familiar with what you're doing, but also a lot of the things that you're seeing and a lot of the companies that you know you're working with and what's going on? Because I think a lot of the retail listeners that tune in here are always so curious to hear how people who are in a position like yours, well, kind of just like the scoop that they're getting. But I got to break us off here with a little bit of an icebreaker. How hard was it to get the name blockchain.com because I'm thinking about that today, and I was thinking about it as we were going through, like, a rough outline for this that had to have been so hard to get your hands on. Or am I wrong?

Nick Carey (5:14)

It's a good story. It's probably a better one for some pints at a bar, but. So we actually had a predecessor project called blockchain.info. which many of the OGs in our space will remember. It was sort of the first bitcoin block explorer, and it kind of defined the taxonomy of block explorers themselves, the UIs for those things. And that was started very early on October 15, 2011. We had a big internal discussion after a few years between some of the nerds and some of the marketing people and some of the branding people, and it made sense to rebrand as blockchain.com. there's some interesting history with that domain. It may be one of the most valuable domains in the history of time. It was purchased in Bitcoin back in the earliest days of the industry, and we're proud of making that contribution and commitment. It then became confusing for some people. We call it positive brand confusion because everyone was talking about the blockchain and using that ubiquitously with sort of the naming of the technology. But long story short, everything that we develop and build and all the product and consumer and institutional experiences that we offer now are all under the blockchain.com umbrella. But when we were early days, there were just a bunch of nerds working on this stuff. And then we consolidated everything under that domain, and so now we just call ourselves Blockchain.

Brendan Thibaut (6:40)

Wow. Yeah. I mean, what, since 2011, is that right?

Nick Carey (6:45)

That's right. We celebrate our birthday. Our cake day is October 15, when we registered the website.

Brendan Thibaut (6:52)

Tell you what, that's early. Earlier than me, I thought. I always think, oh, you know, I found this stuff early on. 2011 is the early, early days. So kudos to you. We love to see how much you all have built and how long you've been around. We love to see OG players. Has anyone ever reach out to you in regards to that name? I feel like that has to be probably the second most Sought after title. I'm thinking Bitcoin is probably first. Right. Bitcoin.com or just the handle Bitcoin. And then I'm thinking Blockchain is probably second place or somewhere up there.

Nick Carey (7:27)

Yeah. How often We've had some unusual offers for that thing over the years, but obviously that's our namesake and it's our baby and you know, we were sort of there first. So a little bit like, you know, the game of Monopoly, conquering land, conquering domains is very important for us. Making sure we were protecting that was a huge deal and it's been a challenge because obviously lots of firms started buying up all these derivative domains and that caused lots of confusion. There are also bad actors doing that. So we've always been very keen to defensively and aggressively defend our brands. But it is, it's been a long effort.

Brendan Thibaut (8:04)

Yeah, I believe that it has. Well, let's run through the top level first here for the listeners out there who maybe just aren't as familiar with what you do and in how you operate. Can you give everyone a high level overview of what you do at Blockchain?

Nick Carey (8:21)

Yeah, thanks, Brendan. So for those that don't know, we were the first kind of company really to form and build a data analytics service. But that's sort of a euphemism for what now most people call a block explorer. It was basically a search engine for looking at a public blockchain. Now back in 2011 there was only one. It was the bitcoin blockchain. So all of the ways of looking at address histories, the charting that you witness, some of the key economic metrics that people are interested in, address distribution, how frequently funds move around, all those things. We were listening to the community users@bitcointalk.org and just building all that stuff for free in the public open source. And that was always kind of in the DNA of the business. Now in 2011, using Bitcoin was really annoying. If you think it's still confusing now, a decade ago it was much harder. And so we were persuaded that one of the most important things we could do would be to build a UI for On Chain Activity. And we did that by building the world's first non custodial wallet. And that was a really key piece of architecture that was software enabled. In the past you would have to host it yourself. We did it in a way that was kind of web enabled so you could access it like you would PayPal or other services you're used to from Web2. We were also very early in the App Store, which became a famous story a few years later when Apple temporarily censored crypto wallets. But we were in there for a great duration of time, built an Android wallet. And those are some of the key pieces of componentry that we're so most kind of well known for. And by the way, like those early adopters that came in from 2011 to your era, to the other cohorts, those ones became very interesting client segments over the next decade. And so we have evolved our product offering significantly since then. But I'll pause there because it's sort of interesting. Like that first era, we call that like a vintage of crypto adopters that a lot of people describe as OGs. They were very early. They understood non custodial to be a paramount feature in a network of self sovereignty for digital assets and early days. Brendan most people may not remember, but we had a lot of problems. Centralized services were being compromised. There was a famous hack at Mount Gox, there was a hack at bitcoinica. There were compromises happening all the time. And partially that was because when you store a lot of valuable things in a centralized space, you increase the incentives to breach it. You also had nefarious and bad actors operating some of these things. It was very confusing to consumers. And so we've always taken and made sure that we've had a self custodial offering so that you can do everything on chain as was intended by Satoshi. And really in the spirit and the philosophy of crypto,

Brendan Thibaut (11:10)

I think it's very well said when we think about especially the last year or so here, it has been a crazy one, right? You have all sorts of positive adoption and fundamentals. But then we go on the roller coaster in terms of price action and maybe just like scary catalysts and in terms of price right, People have been on this roller coaster of up, down, up, down, up, down. And then recently it's been a little bit more down. But regardless, I mean, I think a lot of good has happened. Obviously some bad has happened. What has stood out to you the most here in the last year or so that's really caught your eye in regards to the whole industry.

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Nick Carey (14:40)

Well, so if you Fast forward from 2011 to today, you know, blockchain.com went from a few hundred thousand users to having 100 million people that have downloaded or used a blockchain.com wallet. And if you look at the market cap of the industry, it went from, you know, what would look like a tiny alternative asset class to something wildly more important into the financial infrastructure of the future. And that's because it's always on. It's operating 365 days a year and allows people to basically, you know, sort of ingest global geopolitical challenges, risk adjustments, liquidity, making payments instantly. And so it's really kind of found, I think, a great home for where we are today. Now, if you had told me five years ago, Brendan, that, you know, bitcoin and crypto would be a multi trillion dollar asset, like, I would have been thrilled. And I think if you zoom out, sure, there have been pretty strong fluctuations, but even the guys at Berkshire Hathaway watched their stock drop by 50% several times in their careers. It's just that it's happening on compressed timetables now because we have an always on infrastructure that can adjust and accommodate to wildly sort of different market conditions. And so, you know, there are many things happening fundamentally though, over the last 12 months that I think, again, if you just observe them and accumulate the impact of those things, you can have a lot of optimism for the direction of travel, for the industry, and also for digital assets generally. And I can speak to some of those themes specifically, but probably the kind of three categories of narrative for the last 12 months are very quiet. Institutional adoption. Now, institutions sometimes means native crypto users that have come along this whole journey and have now come up the financial wealth curve and are acting a lot more like high net worth individuals, like family offices or even building their own businesses and investing in everything from football clubs to property to alternative assets. And they want to do those things digitally, natively. So that's a whole category. And we've built a product around that called Blockchain Wealth. That's for people that are OGs that had so much risk on, that were totally exposed to crypto. And now guess what? They're trying to buy their first home. They're maybe trying to figure out how to diversify some of their wealth, and they want to do that via crypto native capabilities. And so we have that here@blockchain.com it's a product I'm proud to use and one that I help lead here. And it does everything from being a concierge for you. You can call someone, you've got advisory services, you can do security advisory services. We have 24, seven over the counter trading. We have preferable rates for lending. You can even collateralize a cash loan if you need to, to buy a property or a home. So these are some of the things that our oldest customers are sort of looking for. So that's one thing. And we're not the only ones doing that, but we're proud to offer that, especially because those oldest vintage customers have been with us for over a decade now and they hold billions and billions in bitcoin. So beyond that, you also have the tradfi space which because of the regulatory clarity, especially out of the United States, are all building up products. If you look at the jobs available in the industry and specifically tradfi that are looking for crypto expertise, that's a major category of hiring happening right now. And that's because they're all rushing to build stuff internally so they can offer that to their clients. Actually, I think that's a good trend. It opens up market access and I'm not surprised by those dynamics whatsoever. So you've got wealth clients moving in, you've got the tradfi space being kind of, you know, kind of built out. And then if you just look at all the announcements that are happening from the oldest players and operating businesses here, they are putting capital to work, they're building the next generation of products and services. People are expecting. It's everything from perpetuals on chain, which blockchain.com just announced, we're announcing Snap markets literally tomorrow. So we're so excited to share this news here. These are on chain wagering systems that you can go in and take a view on price activity, new events, cultural events and more. So if you've heard about prediction markets, this is an even faster, more on chain, more natively crypto offering that our team has been working on. And we're very proud to announce that here live with you guys. And so if you look at the speed at which innovation is happening, I have never seen it be so voracious. And so all these things coming together, plus the AI advantages and the kind of ways that, you know, computer systems are going to be interacting and exchanging value, you know, I think it's a good time to be optimistic. And of course, crypto goes through cycles of expansion and crypto goes through periods of correction. Just like the global markets go through bull markets and bear markets. Crypto does the same thing, tends to lead them. And that's because the people in our industry are really dialed in, locked in and paying attention to the trends and the details that move the needle on the little things.

Bryce (19:48)

Man, it's such an incredible story just how you guys have grown from blockchain.com, blockchain explorers, wallets, institutional service provider, AI. I mean, now you're a full suite of products and services for literally everybody who's not just a crypto person, but for everybody who's just an individual investor, you know, period. You know, folks could come in and whether they're an allocator or institution or individual, they could get out a lot from blockchain.com and I'm curious, from when you co founded blockchain.com, was this always the roadmap or did things kind of change? What are some of those inflection points or pivot points that really defined your business?

Nick Carey (20:31)

Yeah, it's a great question, Bryce, and thank you for asking. I mean, our business has matured just like you've matured from the point you were 12 years old to where you are now. And I hope, most importantly, you have to, you have to listen to your customers. It is a basic rule of business, but your customers are your best teachers and also their expectations and what they want to do change over time. So in the earliest days, being a non custodial wallet was incredible product market fit. We saw all of these trusted systems basically violate the trust of their customers by having compromises, by poorly designing systems or sort of proving that, you know, when you run centralized infrastructure on a protocol whose entire point is to mitigate risk through decentralization, you create huge conflicts of interest. And so we always want to make sure that people can have firm control over their funds, manage it through a wallet if they desire to, and then exercise different degrees of custody if they desire to as well. And we've seen that because some customers prefer to have a very locked down but custodial environment that is shared. And then we have institutions that need off chain, deep cold custody services for protocols. So emergent L1s and L2s that partner with us for custody services get that type of product offering. And then you really have this whole spectrum of clients now, from the retail user to people emerging into wealth, to full wealth clients, to institutions that increasingly look like publicly traded companies. So just like people at home now are sort of sitting around the table going, God, fuel's expensive, food is getting more expensive, I'm earning some dollars, what can I do about that? Well, you could buy some Bitcoin, you might Want to buy other digital assets like digital exposure to gold, among other things, you may want to allocate into trading strategies that are neutral in their risk, but give you a risk, moderated return. And so these are the types of things that were usually only available to the ultra rich and people that had access to private bankers on Wall street or Canary Wharf. Well now from the palm of your hand, you can have access to the same thing, whether you're an individual or an institution. And we aim to serve this collection of customers and grow the market segments of digital adoption broadly.

Bryce (22:46)

Yeah, absolutely. And I'm so excited as well about the snap markets, the prediction markets that you guys are building. What's going into this? You know, how long have you guys been building? What can users kind of expect? And also, you know, is this something that anybody anywhere in the world with an Internet connection could use or is there certain stipulations on who can access this?

Nick Carey (23:09)

Okay, so for those that haven't been paying too closely attention, prediction markets have sort of found a product market fit over the last 12 months, but they're still sort of tedious to use. It can be kind of slow. Making predictions over things over a long duration of time requires a lot of patience. And we're trying to shorten all of that, make it much faster, make it more dynamic, and also make sure that at the end of the day you're on chain and empowered to engage with these capabilities on your own terms. And so we're very proud to announce snap markets. We're going to start with a prediction market specifically for Bitcoin's price in a contest that basically resets every 30 seconds, where individuals can come in and wager and take a view. But this is just the very first one of many that we'll be releasing into the coming weeks and months. So we're extremely excited about this. Ultimately, prediction markets are about forecasting and data and analytics and sentiment and markets are the true arbiters of truth as it relates to so many different topics in the world. So we're proud to do this in a crypto native way and one that really honors the foundations of decentralization and self custodial services. And also do it, we hopeful hopefully in a way that it's fun and engaging. And we'll have a historical troll box as well.

Brendan Thibaut (24:23)

Yes, there.

Nick Carey (24:24)

And, and make fun of people or read the troll box back or encourage them. Yeah.

Bryce (24:29)

So what, what kind of things can people be? I mean, I don't know, do you call it betting, speculating, Invest in In terms of these snap markets, is it going to be sports, political events, the weather in Tokyo, what's going to be the things that people will be predicting and then what will be sort of the Oracle mechanism? Are you guys going to be using certain, you know, secure data feeds from the likes of Chainlink or is it going to be more centralized there? How are you thinking about that?

Nick Carey (25:02)

Yeah, the best way to look at it is snap markets is sort of appear into the future over any sort of event. The first one we want to do though is really to, to honor the crypto native and honor Bitcoin as sort of the best price predictor and earliest mover in the financial world and then opening that up across a variety of other categories. Now we've seen some problematic interventions, I would say from a guy blowing a hairdryer on a weather system outside of the Charles de Gaulle Airport, manipulating a local weather market. So the trusted sources for, for data in these systems is concerning and I think it's something that deserves a little more caution before you just start opening up markets for literally everything. And we'll take a more thoughtful, cautious approach. And the other one that's obvious is that not every jurisdiction is copacetic with these types of capabilities yet. I'm actually quite optimistic that certain jurisdictions will lead in this though in Europe's one of those. The United States is sort of coming I think along on the journey here. But people are familiar with different capabilities for accessing these services and if they're in a geo blocked jurisdiction, however some jurisdictions we will obviously adhere to local rules around.

Bryce (26:14)

Yeah, absolutely.

Brendan Thibaut (26:17)

You know, when it comes to all this, it seems like everyone wants to get in on it. Right. Right now you saw it really start with like Polymarket. You know, Kalshi made their way in. I was reading earlier this week that Hyper Liquid just started adding this as well. You know, now you even have like traditional brokerages like Robinhood saying that they were going to add it. And then you have some of like the big asset managers being like well we could be open to this down the road. I don't know if you guys saw that.

Bryce (26:42)

I even heard Bitwise and Roundhill were trying to launch ETFs that settled to binary decisions on, you know, prediction markets that the SEC just this week said we need to keep reviewing this a little bit more before we launch it. So it's not greenlit yet. But I was like that's an interesting one.

Nick Carey (27:01)

I think this is a good example of how, you know, competition in our space was really Sort of from startups over the last 13, 14 years. And a lot of them, some of them raised money, others, you know, were self organized, but. And then you had protocols. It's like a completely different business model for getting network effects. But one of the dynamics that no one's really sort of clear on how it'll affect market adoption and innovation in this space is just now the tradfi businesses and tradfi companies, especially in the United States, can custody can offer products like how are they going to enter this space? And I think it's a big question mark still. I mean when people talked about tradfi adoption over the last few years, it really paled in comparison to the structural changes that are now in place that enable them to directly market, provide customers their product and offerings. I think they're going to probably stay quite conservative and they'll kind of incrementally add things, but the fact that they're available, you know, we're competing with, you know, Goldman Sachs and you know, Morgan Stanley and JP Morgan and their conversation you know, includes, you know, OG crypto companies in those discussions to me is a wild validation of the space, but more importantly the asset class and the tooling and innovation that is necessary to basically drag the economy and the financial infrastructure out of a physical world and into a purely digital one. And that transformation is really happening now. We had to get them really uncomfortable with how these capabilities could dramatically, I would say, compete with them and disrupt them. And now the laws have changed and now everything can be a real competitive field.

Bryce (28:43)

I love it.

Brendan Thibaut (28:44)

It is and it'll be super special to see how this continues to evolve over the next couple of years because you know, you're seeing everyone get interested, right? You see institutional, you see retail. It's one of the really good things about your position is that you get to have interactions and experiences with both sides. Have you seen any kind of divergence between what retail and institutional players have been doing over the last year, year and a half and then what they're actively doing right now?

Nick Carey (29:17)

That's a good question, Brendan. So some themes, I would say that really old users that have been in crypto for a long time and you can witness this on chains, you can really kind of study the behavior and the psychology of the earliest adopters. They're all in, they're not selling, they're basically building up their positions or you know, sort of, I would say diversifying them across new crypto powered capabilities. And so again that sort of fits in this like blockchain wealth client segment, you've got, I would say a more tepid new adopter crypto user. Today they tend to sort of emerge from, I would say, jurisdictions or markets where there's a real foundational need for always on instant, quick payments online. And so whether that's been stablecoin adoption and especially emerging or frontier markets or sort of flaring up of pockets of different digital assets like tons of the Telegram native digital asset, which is up 30 or 40% in the last 24 hours. There are reasons for those things if you're looking under the hood, because they provide capabilities that are really needed by large communities of users. In the Telegram's case, they've got almost a billion active users, it's more widely used than Twitter, and they've natively integrated with digital asset cult time. And so they're making a bunch of sort of improvements to that, reducing fees and increasing the staking yield and a bunch of other things. And you're seeing some real, I say fit to purpose, purpose improvements on some of those things. When it comes to institutions, God, it's, it's really, it's a wide range of conversations. And a good example of that is just in the last five, six weeks here at blockchain.com we partnered with a digital asset treasury business here in the UK called Stacks. It's backed and supported partially by one of the most prominent political leaders in the UK who also really understands crypto, understands that dollars, pounds and euros are constantly devaluating over the duration of time. And this was a great opportunity for blockchain.com to provide the infrastructure for a publicly traded company to stockpile and build a position into specifically Bitcoin. Now we do that for a variety of other digital assets, but that's a really interesting new economic participant that was not here a few years ago. And those are just some of the emergent sort of examples of both retail users sort of behaviorally doing things based on their jurisdiction or their circumstances, but also institutional players, political actors and more coming into the industry, putting their money where their mouth is. And they actually, they aren't just doing this because it's fun or clever. They really foundationally understand that digital gold, especially Bitcoin, is a particularly interesting hard asset to own in a diversified portfolio of other assets. And they are talking to the public about that, they're talking to constituents and they're even talking to political institutions about it. And so if you had told me again 10 years ago that this is the kind of degree of discourse that we would have, I would not have believed or predicted that. And so to me, we've made a huge amount of progress as an industry over the last decade. There's still a colossal amount of effort to go through over the next few decades as we finally and completely finish retooling the plumbing of financial services. Get settlements down to seconds, enable widespread access to all asset classes, whether it's US equities or perpetuals or custody services or prime brokerage services or, you know, private wealth type of services, and build things that enable regular people, regardless of the circumstances of their birthday, to have the best financial offerings that make sense for them. And all of that will be sort of partnered with now AI tools that'll really work carefully, hand in hand at the sort of interface layer with the customer to make sure they're getting things that are desirable to them.

Bryce (33:12)

Wow, there is like so much to dive into in that nugget that you just said. I encourage everybody just to pause and just rewind for two minutes or three and just re. Listen to that because there, there was so many things we could double click on there. But I want to double click on Bitcoin's narrative and why people are buying it and holding it. And what I've seen over the course of, you know, almost 10 years here in crypto, it's like everybody holds crypto for a different reason. Maybe the big banks are holding it because they think that, hey, we got new products that we could monetize. Maybe the, the pension funds or the endowment funds are saying, oh, we want to put 1% in. And it's a unique diversifier. We could get better, you know, risk adjusted returns. Folks in, you know, Turkey or Zimbabwe or any other country that's, you know, fierce facing extreme inflation, they could escape that sort of inflationary regime and buy bitcoin and anybody can. And so there's so many reasons. And I heard you say the digital gold thing. You know, people are looking at the price of bitcoin throughout the, the most recent geopolitical crisis, and it's been the best performing asset apart from oil. And so I think one thing that's great about bitcoin and I want your opinion on this part, particularly one thing that's great is like, it means so many different things to so many different people. However, sometimes it trades like a tech stock, sometimes it trades like risk on, sometimes it trades like risk off. And people don't know how to think about it in their portfolio. Some people are like, oh, it's not used for payments. And so how do you make is how do you make of it? Like, you know, why are people buying and holding Bitcoin? And is that going to change? Is one narrative really going to glob on, or will it continue to be amorphous? I mean, you've been here for. Since, I think, 20, 2011 or 2010, pretty much since blockchains began. So I'm sure you've seen the evolution of how people think about crypto.

Nick Carey (35:03)

Yeah, you're right. Like, the p. The reasons people get comfortable with buying bitcoin for the first time really ranges for a huge number of reasons. And so it's one of my favorite things to do, is to educate people about bitcoin in the first place. But I never go into asking them about, you know, how confused they are about or anything like that. I just ask them what their goals are. You know, what are your goals for managing your family's money, your wealth, your personal savings? And then I listen to them. And it's really important because individuals have different fluency with money. It's one of the topics that, you know, Americans are a little more comfortable talking about. A lot of cultures are not. And even in America, it's kind of a taboo subject in some places. But everyone, you know, graduates from school, if they're lucky enough to do that, and they have to go into the real world, and they desire to earn income and earn money, but where does it come from, you know, and why does the dollar have value versus the peso versus the euro versus some other currency? And unfortunately, this stuff is not taught in school. Financial literacy is really not something that's emphasized. And so most people enter this with a grave asymmetry against people that are really studying it. And so you can look at economics, you can look at modern banking, and then there's just investing generally. And so I share all this because one of the most important questions in the world is, what is money? And where does it come from? And, you know, money pre exists written word. You know, you can find burial sites in northern Scotland where there are pearls and beads that come from the Middle east that are 8,000 years old. So what's important is to understand money is basically a shared understanding of how we exchange wealth over time using tools, which is a euphemism for technology. And we tried a lot of different things. We've tried beads, we've tried feathers, We. We've tried coins and paper. And in the age of the Internet, you know, being able to exchange precious information bilaterally with anybody else, it can be done now. And that's through a digital asset and using an infrastructure on a blockchain. And so bitcoin pioneered this concept and Satoshi wrote a white paper who was the kind of originator of this alternative financial system called Bitcoin. Peer to peer electronic cash. Now, we're not going to have a great philosophical debate about where we are today. I'll just share that. That white paper sparked a wild amount of imagination about what kind of features you would want your money and financial system to possess in the age of the Internet. Well, you'd want it to be counterfeit resistant, you want it to be indestructible. You want to make sure you can transact with anybody else instantly, basically for free. You need to have settlement with finality. So I can't send some money to Brendan and then take it back and send it to Bryce and trick him. And so you have to have all of these capabilities that are built on thousands of years of knowledge and investment and losses across categories of different economies. And I think bitcoin really has earned its place as a trusted alternative to other historically safe assets like real estate or gold. So there's a lot of people talk about bitcoin being digital gold and not necessarily being a digital cash instrument. And there are factions in the crypto space that have strong opinions about all of that. But at the end of the day, we've proven this thing can work. And I think bitcoin sits nicely in a portfolio for people as a hedge against many other alternatives. But it is one that's very liquid. And so you've got people that are very trusting and believing in the long term around sound economics. And that's a position you have because you believe that if things are scarce and rare, they command a market price. And bitcoin has those features in it. There are also people that want to trade oil on the weekends and don't have a way to do that. So they have to own a bunch of bitcoin in order to potentially sell that down and basically hedge a bet that they've made about something else. And so bitcoin right now is acting as an entire collateral offering for round the clock trading and hedging around other things. So unfortunately, you get very clever speculators, you get hedge funds operating in the space and more. But at the end of the day, that volume increases. And also think the conviction around using these technologies improves over time. And bitcoin's our oldest digital asset. It has the longest operating track record with the most amount of technology. From a security perspective, operating in the background. And so because of that and its name recognition and having, I would say, help crystallize the industry, it's still a really good place for people to dabble and practice learning about crypto or digital assets. You know, as a, as an asset class. It would make sense to own a

Brendan Thibaut (40:06)

bit of, of bitcoin.

Bryce (40:08)

Yeah, absolutely. And I love that framing of like, you know, bitcoin, you know, it trades 24, 7, people use it. You know, many different kinds of investors use it as, you know, salable assets over the weekend when markets are closed. And so makes sense for it to change, you know, its trend and its regime pretty regularly and not be as consistent because there are so many, you know, traders and, and different kinds of investors out there that are changing their stance. That's what makes a market different. Different viewpoints and differing theses evolving over time. And so that's, that's really cool color. But I'm also curious about your, your user base that you could speak to, particularly in terms of like, where you see their interests gravitating towards your institutions, your high net worth. Are these folks really primarily focusing on, you know, we'll call it 90% on Bitcoin and then 10% wanting to learn a little bit about crypto? Or do you see more of an even split with people saying, hey, bitcoin, we, we're sold on that. We, we want your offerings for that. But also tell us a little bit about defi, tell us a little bit about RWAs and how we can actually grow more into crypto in, in blockchain.

Nick Carey (41:19)

Yeah, great question, Bryce. So again, it really comes up to this like, financial fluency curve. And when you go through, I would say, the kind of basic foundations around sound economics, why things like gold, why things like bitcoin and property actually share some similarities, except that crypto is borderless global, instantaneous settlement and trades 24, 7. If someone thinks that gold is interesting or that owning physical property is interesting, they can almost always be persuaded that there's something quite interesting about bitcoin. Now that's when you have the opportunity to continue evolving the conversation. And there are lots of pathways for doing that. It might be diversification, it might be the alternative use cases, it might be stablecoins. And then you can explain that there's even more sophisticated capabilities, especially for individuals that really understand market structures. And that's where defi comes in. That I think the most risk on, you know, innovators in crypto really took the market in a very interesting and just Such a compelling way. Defi still in a lot of ways to me feels like where Bitcoin was in like 2012 or 2013. We got a long ways to go. Have these like mysterious, magical compromises and it's very difficult to explain and it puts a lot of onus on, you know, the developers and the firms that have created some of these capabilities to, you know, explain away why that won't happen again, you know, or how it'll, you know, how they'll correct for some of those problem sets. Whether that's, you know, smart contract exploits, individuals just accidentally screwing something up or fat fingering a problem. So these are real challenges. And so every time one of those things happens, it makes, you know, institutions especially, I think a little bit more skeptical about specifically using Defi. But here's the good part. We know that the traditional financial system, when it screws up the, you know, the losses are socialized to absolutely everybody. And these are things that in the long term create a terrible mal incentive for the participants in that system. They know they can get away with basically anything in the long run. And that's why after the great financial crisis where no one was really ever properly held to account, you just create these perverse incentives in the economy. And even though defi definitely has some challenges, it's a self correcting mechanism. The market structure and incentive for defi products and services, whether it's a lending protocol, a prediction market, a decentralized exchange, are to constantly improve and harden their infrastructure and make things that are better and more useful for their customers. Where on the other side it's arguably the exact opposite of that. And so I think if you're to morally, you know, sort of invest in one system versus the other, I'm much more comfortable personally with the DeFi one. But this conversation sometimes can't be, you know, explained in a headline. You need to scratch below the surface, you need to look at history and you need to understand incentives. Now that was one thing Charlie Munger always said, if you understand the incentives, you can understand the outcomes. And so one system has proper incentives to continue to improve. Although accountability is high in that system, the other has the opposite. And I know which one I'd rather operate in.

Brendan Thibaut (44:36)

I mean, so much to unpack there. You've been through every bear market and every bull market and that's something that I don't think many of our other guests can claim that kind of thing. And something that we've been debating internally is just the whole idea of the four year cycle right Is this just another normal four year cycle? Is there something different about this one? We go back and forth not only with our analyst team, but we have members of our community. I'm curious to get your thoughts on this. Like, do you think that this is just another normal four year cycle or is there something different this one?

Nick Carey (45:14)

Oh, Brendan, it's a great question. Yeah, look, here's, here's all address that. For those that are not familiar with this, it's worth re explaining it. But basically bitcoin had a fixed and limited supply of tokens that it would issue over a four year cycle. And every four years, the amount of tokens that would be issued to the validators or miners of the network that helps secure the transaction history would decrease by 50%. So just like if you were to create a hard asset that was very valuable and limited in supply in the earth's crust, like gold, relatively evenly distributed, there's a fixed amount of it, and every year people go out and get some, but there's less and less of it over time and it requires more and more effort and energy to acquire it. Bitcoin use some of those same thermodynamic principles in its design. And so we're now entering the next halvening two year cycle. So what has historically happened is every four years, half the amount of Bitcoin gets released in the market. There's speculation that goes into that about how valuable it'll be if there's less supply. And if there's less supply and an equal amount of demand, prices go up. So what's this cycle? This cycle is a little bit different. It doesn't look exactly like the last ones, but some things are rhyming. And the good news is this is very predictable. Unlike speculating about whether or not the Federal Reserve or the ECB or the bank of England or the bank of Japan are going to change their economic policy. We know exactly what Bitcoin's going to do. And so what happens inevitably though is we start the countdown clock and everyone starts to talk about what's going to happen. And economists and analysts and special teams all come up with their predictions. And because of that, we get to educate an entire new investor class every four years about this special moment and about the economics of hard money. And so to me, it's always kind of a welcome time of year, like Christmas. And you know, I think we'll have another one of those now, especially in the context of all of the kind of broader geopolitical problems, the labor dislocation that AI is going to bring the argument that maybe computer systems are going to need some kind of always on payment system are all going to be interesting narratives in the next halvening cycle. And so the fact that it hasn't, the, you know, the overall trend in market price maybe hasn't mirrored previous cycles. I think it is well early into the next sort of education phase around, specifically Bitcoin and the impacts bitcoin has across crypto in general. So I'm enthusiastic about it generally, but that's kind of how I, I think about that.

Brendan Thibaut (48:03)

You know, that's what we need a prediction market on. We have prediction markets about all these other things we need a prediction market on. Is this a normal four year cycle or is this time different?

Nick Carey (48:13)

All right, well, we're going to make one for you.

Brendan Thibaut (48:15)

There we go.

Bryce (48:18)

Love it. Well, look, I've got, I've got a little lightning round of questions that I've thought about and I wanted to get your opinion on because it's not, it's not every day that we get to speak to somebody who's so entrepreneurial and so founder focused and somebody who's just weathered the storms of crypto and done it with grace and been able to have such a, you know, successful firm. And so are you, you open to a little lightning round where everything, you know, answers are 30 seconds or so.

Nick Carey (48:50)

Let her rip. I'll try and be brief.

Bryce (48:51)

Okay. I'm thinking about some of these. I'm like, it's going to be hard to distill this down in 30 seconds, but that's what makes it fun.

Nick Carey (48:59)

All right, I'll set a shot clock.

Bryce (49:01)

Yeah. So what belief about crypto did you hold strongly in 2011 that you no longer believe?

Nick Carey (49:09)

What belief did I hold in crypto in 2011 that I no longer believe?

Bryce (49:16)

I'm starting with the hardest question first.

Nick Carey (49:18)

Yeah, that's a, that's a good tough one. One of the things that was really pleasant about the earliest days of, of crypto was that it really felt like, you know, everyone that was participating was sort of on the same side and that was us against, you know, the, you know, evil corporations and institutions and you know, rent seeking financial system. And we all sort of saw ourselves I think, maybe identified in that way. And then basically three or four years into building firms and the industry and some of the politics. I think if you wanted to really slow down adoption, you would have found ways to turn these early actors against themselves. And I think some of that happened and I think that competition is Absolutely important and necessary. And I'm in a very competitive person. However, I think there's sometimes a little. We, we've struggled to act in unison against wider, more, more dangerous adversaries. And I think, you know, that's been a little bit sad and a little bit challenging in our industry. But I guess the belief would, would just be that I had hoped that we would all sort of, you know, remember who the big adversaries and bigger problems are. And sometimes, you know, we've done a little too much, you know, civil warring and maybe that was necessary, I, I don't know. But it certainly wasn't helpful in some ways because it confused consumers and, you know, caused a lot of, I would say, reputational damage internally to the industry.

Bryce (50:52)

Yeah, no, very well said. That was not where I thought you were going to go with it, but I think that's a great one in early where you think, you know, we've all got this common enemy, everybody's on my side, right. And then you're like, oh my God, there's going to be the Protestant revolution, then the, you know, all these different revelations and you've got all sorts of different sects and soon you can't even recognize people who you thought were on the same aisle as you. Yeah, so very interesting. So inversely, what is sort of one conviction that you had in the early days that has carried through and become even stronger today.

Nick Carey (51:25)

I went to a bank this weekend. I needed to pull some cash out. They didn't have an atm, I had to wait in line, I had to show an id, I had to put in a pin, I had to be asked to survey just to get some cash out of a bank. And it took me like 25 minutes.

Bryce (51:40)

And you can only get out a tiny, certain amount of what you actually have in there too, by the way.

Nick Carey (51:44)

Crazy. And then I'm being upsold on all this crap I really don't need. And I, I was just so reminded of the elegance and the beauty that crypto sort of stands for. And you know, I got into all this because I was so persuaded really by Satoshi's vision originally around building an always on financial system that was an alternative to the traditional one. And I didn't like what we were inheriting. I graduated in 2007, right into the Great Depression. I watched all of our, you know, most established institutions basically betray their trust with users, socialize this colossal amount of loss, you know, start printing money out of thin air through quantitative easing and introducing all these confusing terms. And I believe that it would be noble and worthy of building something that would enable all people, regardless of the circumstances of their birthday, to be able to send, receive secure trading exchange, digital instruments of wealth. And Bitcoin was sort of the first thing that did that. And then it's gotten wildly more interesting. And I think if that purpose and vision was there, you know, 14, 15 years ago, that persuaded some of the earliest people to put their careers into this, you know, that conviction is stronger today than ever. We've gone a good distance on that, but we have so much more to go still. And it requires building things, you know, responsibly, ethically that are useful and valuable to customers, listening to them, and then behaving in a long term way that adds value. And so, you know, I expect this to be my life's work and I'm committed to that. And that conviction is, is stronger today than at any point in time.

Bryce (53:21)

Beautifully said. Now, you've been through, like we said, multiple boom, bust cycles, pretty much every single one that's ever existed in crypto. So who better to ask than what separates companies, crypto companies in particular, that survive from those that disappear every cycle? What separates?

Nick Carey (53:40)

Yeah, the most important one here, Bryce, is the do no harm principle. So you got the Hippocratic oath for doctors and you got to do no harm principal to customers. And the, the firms that get this wrong, that see their customers as products that don't align building things in an incentively aligned way, centralize too much risk and disobey the foundational principles of crypto in the first place. If you build rent seeking systems here, if you're arrogant and think that controlling people's custody of money and data in the long term is the right call, you are building on a foundation that was designed to materially disrupt and change that paradigm. And unfortunately, there are people that come into this industry that raise of lot a money, that sell a concept, and they're very persuasive. And some of those characters have historically been the greatest villains in our industry and unfortunately have caused significant consumer harm and damage. And so those are the ones you got to look out for. And it is important to understand that the foundational principles and philosophies of this emergent and disruptive technology and then pick your own path with it. But you know, this is why working with firms that have been around for a while, even though we're starting to sound like the older boomers of the crypto space, there's a reason why that's a thing and building trust in this Space is exceedingly difficult. And it starts with always taking care of your customers. Love it.

Bryce (55:13)

Couldn't have said it better. I didn't know if you were going to go that route or leverage, say, just avoid leverage.

Nick Carey (55:19)

Also dangerous.

Bryce (55:21)

Also dangerous. Now, I want to ask a question. I don't want to bring up any bad vibes or bad juju or whatever, but I always find something interesting from asking this question of successful entrepreneurs is what was the hardest lesson that you've learned in your entrepreneurship journey? What was the hardest lesson,

Nick Carey (55:40)

Bryce? That's a good one. It depends, you know, I'm asked this question, you know, sometimes and also trying to help younger or earlier stage entrepreneurs navigate the answers to their own stress and things. I think it's one of those things where you do have to kind of put your mask on first before you help others really understand your why. Why are you here? And whether you're pursuing an entrepreneurial endeavor in crypto or in AI, or helping your parents change their business and modernize it, make sure you're really there for reasons that give you a lot of purpose. And if you've got that, then, you know, you can overcome huge amounts of stress and obstacles because you've got a real reason for doing it. And so that, to me, you know, is probably one of the biggest, most important observations across my entrepreneurial journey. And then I think other than that, it's, you know, a lot of people will say this, but you just have to do a great job with your team and your customers. So you know, your team is going to be critical in helping provide the best offerings and services for your customers. And your customers are your best teachers. And so listen to them. You'll be okay.

Bryce (56:50)

Yep, absolutely. Take care of your customers. Take care of your people. Two more questions and then Brendan has a closing question for you. But I was curious just in terms of what you think will bring the Next, call it, 100 million users to crypto. Will it be payments and stablecoins? Will it be, you know, the investing and speculating opportunity? Will it be gaming or something that we're not even talking about? Maybe even like AI and the next hundred million customers won't even be humans. They'll just be agents that will be economically as powerful. Who knows? So what's your answer on that?

Nick Carey (57:23)

Yeah, I'm sure you've heard some, some different perspectives on the this question, Bryce. Look, I think almost everybody that's entering the workforce today and setting up, you know, their first digital bank account to receive a salary, most of those people are going to use a digitally native service. And so you're going to get millions of users signing up for everything from blockchain.com to all the other companies that are neo banks or new banks after that, you know, I do think you're going to see a large number and a prolific number of economic agents that are AI agents. They can't set up a bank account, they can't go to bank of America or Wells Fargo, but they can instantly set up a wallet, you can give them a budget and they can start to perform activity. And so I think that category of economic actor is going to be wildly, it's going to grow wildly. And then, you know, the other ones are sort of, you know, market dependent. But a good example is we've seen wide scale usage of things like stablecoins, especially in emergent markets like Nigeria and Ghana, where we've expanded to in the last year. Just speaking specifically from blockchain.com's perspective, while those consumers in those regions sometimes care about, I would say like raw crypto, like Bitcoin or digital gold access, or even tokenized access to U.S. equities via our partnership with Ondo, stablecoins are really interesting to them and that's because they'd rather, you know, transact in digital dollars that they can save and store and move around instantly. And so, you know, and here's the last one, Bryce. If everybody that owns crypto today sets up five other people with a crypto wallet and sends them two bucks, five bucks, ten bucks just to show them how it works, we'll hit 100 extra million users by the end of the month. And so that's the challenge that I always encourage people, is that if you want this all to work better, bring your friends in, set your mom up, set your dad up, set your friends, parents up and just give them a small amount. And like, watching the value of that, you know, move around in real time does sort of trigger this. Oh, you know what? There is a global market for data and infrastructure and edge and you know, now I kind of get it. And so it's really on everybody that owns some to become an advocate, to help educate. And ultimately, if everyone that owns some crypto right now set up five other wallets in the world, it wouldn't be a hundred million users, Bryce, we would pass a billion and a half users in the next year. And that would have some wild implications for the market prices. So my challenge to everybody is just go be a little bit generous, set up some people, send them a little Bit of crypto, whatever you got, and teach them how to use it.

Bryce (60:07)

My last sort of thought there is that you were speaking to the choir. I mean crypto101, you send them some crypto, also send them a link to Crypto101 YouTube channel or Spotify. Then they got the cash, they got the education, and you're all rocking and rolling. I know we're up here at Time and so Brendan, any last questions that we have before we let Nicholas go for the day?

Brendan Thibaut (60:34)

Yeah, you know, I was just thinking as we wrap up this podcast, we're also pushing into the almost the second half point of this year. It's been a wild ride here in the first five to six months, the time of recording this. Nick, I'm just curious, you know, what are you looking forward to as we approach the second half of this year? Is there any kind of big crypto market milestones or anything else that you're watching out for?

Nick Carey (61:01)

Yeah, great question. I think in the US we're still sort of in this confusion about whether or not major legislation will pass. It sounds like some compromises have been made and it's still possible that that ends up to be voted on over the couple months. And I think generally, while there's a lot of debate about the nuances of this bill, the fact that the US legislator is even contemplating it and arguing on behalf of an industry that is fighting against a much more powerful rival and everyone knows they actually need to future proof the US economy, it's a very important dialogue. And the good news is it's partially and mostly bipartisan. In an era of extreme different political opinions and an always on frustrating, you know, social world. There's one area here where there's some cooperation happening. And so I'm looking at that. But that, that that's not going to be deterministic about the future of digital assets or innovation or crypto. I think it would help especially bigger actors that are currently not able to participate from having some confidence. If they have to sit on the sidelines for another four years, that's okay. The incumbents in the digital asset space will continue to grow and build market share. And so, so it's sort of a win win from my point of view. Either way. The other kind of key themes this year I'm really interested again in products that consumers are engaging, interacting with and desiring. And so everything from asset management offerings to snap markets, prediction markets and more perpetuals on chain things that sort of plug into the most important foundational nature of crypto all very exciting. The fact that most stablecoins are all on layer one blockchains, I think was an incredibly strategically valuable thing that happened in a market structure element that I think is wildly underestimated and I know it's a broken record. But last but not least, the amount of innovation that'll happen with digital agents performing economic activity on behalf of individuals, families, businesses, or even weirder organizations of software, I think it's almost impossible to predict, but I can predict that it will grow. They will find always on utility from that. And if you ask agents and AI systems what the preferred form of money is, you can do this on your own. They'll tell you digital assets and crypto because the features going back to the very earliest point of our conversation around what are the capabilities you want your money to have? Well, AI has looked through all the history of mankind and it knows it doesn't want to use pearls or beads or physical artifacts or coins or paper money that can be inflated to death. It wants to use digital assets. And so in that category alone, in any one of those things kind of working out, I think is very optimistic. And so if you put them all together, you can have a little bit of a maybe a scaffolding for how the rest of the year could go.

Bryce (64:03)

Beautiful, man. This was incredible and we are so grateful for the the time that you spent with us today. Every sort of link or related information that our listeners need will be in the show notes, so go ahead and please click through there. But Nick, do you want to shout out any quick, you know, domains or Twitter accounts or blogs before we let you go?

Nick Carey (64:27)

Thanks Bryce and Brennan. I appreciate the opportunity to come and share a little bit of our perspectives. Blockchain.com has been around for a long time. We've been serving the oldest crypto ogs to the newest ones to institutions and everybody in between. We'd love to to earn your business and you can Visit us@blockchain.com you can follow us on those handles on all social media as well. Thank you very much.

Bryce (64:47)

Awesome take.

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