← CRYPTO 101
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- [00:00]
Paolo Ardoino
Foreign,
- [00:09]
Bryce Paul
Everybody. Welcome back to another episode of the Crypto 101 podcast. I'm your co host, Bryce Paul, as always, joined by my good buddy, Brendan Veeman. Brendan, how are you this morning?
- [00:21]
Brendan Veeman
Bryce? I'm doing fantastic. I'm feeling good. The markets are doing good, man. We have you here for an early one and what an important one it's gonna be. This is going to be a legendary rating podcast. Lots of good stuff to talk about with one of the legends of the space.
- [00:40]
Bryce Paul
Yeah. We are very pleased and honored to have Paulo Ardoino, the CTO of Bitfinex joining us. Paulo, how are you doing?
- [00:48]
Paolo Ardoino
I'm great. Thank you very much for having me.
- [00:51]
Bryce Paul
Absolutely. We're excited to dive into all things Bitfinex, everything you guys are building over there for more than a decade now. I mean, you guys are some of the, the OGs of crypto. We want to know the whole story and a little about what you guys are doing. But first let's just dive into who you are. Introduce yourself to our listeners here at Crypto101. Who are you and how did you get into crypto? This crazy world of crypto.
- [01:16]
Paolo Ardoino
So absolutely. Bitfinex was born 2012, right. So yeah, we could call it OG because, you know, not many exchanges before Bitfinex to revive to this day. So we try to maintain that ethos that we also feel that I think was at the core of Bitcoin. And sometimes it's tougher over the years with players that joined late and might not have the same ambition of keeping bitcoin. True. But I was lucky enough to join Bitfinex. In 2014, I joined as a senior software developer. My career has been all encoding. I was, I started coding when I was 8 and then, wow, was a hacker for as long as I can remember and then went to university computer science and math and then become a researcher. Then it was paid nothing as always happened as a researcher in Italy and then decided to move on and learn about finance. So I studied finance by myself and then build some financial applications. And then I met the co founder of Bitfinex and the founder of Tether, Giancarlo Di Mazzini. I joined into Bitfinex and since then, basically I completely focused my life on this adventure and I was extremely grateful. For the first two years I just was working on the trading engine, just the core part of the platform, purely designing, you know, the, the next phase of, of growth, of, of performance and, and the optimizations to sustain, you know, when I, when I joined all the exchanges felt more like e commerce use for Bitcoin rather than actual trading platforms. I had the opportunity to, to, to work on some important trading platforms. So I was like when I joined was, was kind of weird. The, the, the, you know, was very amateurial and then but we could see already in 2014 the need of, of stepping up the game and because more professional traders were coming in. And so you know, I, I, I was tasked to build at core the engine and you know, 2016 was a big year in negative and positive. So bitfinex was hacked 2nd August and I was tasked to rebuild the entire platform, also take care of the security, become the cto. And so since then, you know, I proudly became and still I am the CTO of Bitfinex trying to keep the platform running and you know, now we have an amazing team that is continue to accrue value to the platform at the same time maintaining the, you know, old, good old standards of security that we were able to set in, you know, early days after 2016.
- [04:28]
Bryce Paul
Man, definitely a lot has changed since the unpaid days of researching now, you know, Bitfinex is one of the most profitable exchanges and you know, one of the most successful internationally in terms of many different metrics. So bravo for finally escaping the unpaid research life and, and building something really incredible and lasting.
- [04:51]
Paolo Ardoino
Yeah, yeah, I mean it's, yeah, sorry, go ahead.
- [04:54]
Brendan Veeman
Oh no, I was just gonna agree. I've been around for a while in this space as well and I remember you guys back in the day and you guys have just continued to grow and grow and what people don't realize as listeners is back in like 2012, 2014, really anything like pretty pre like 2016ish. If you wanted to get your hands on crypto, it wasn't like you do today where you can go to any brokerage, any account. You know, there's all these different crypto exchanges. There's lots of safe ways to do it. I mean, heck, I think now you can get paid, you can get exposure through like PayPal and Venmo and everything. Yeah, but it's, I was just going to say it's been super interesting to watch the crypto space change over the last like 10, 15 years and you guys have really been at the forefront getting to pioneer and being a part of a lot of those changes.
- [05:41]
Paolo Ardoino
Yeah, we also trying to do that, as I said, to maintaining our, our spirit. Right. So it has been in a certain way the last few years the change accelerator. Right now you have also the ETFs I remember since I joined in 2014, there was always the meme institutions are coming. You know, for, for ten years institutions were coming, but actually were not coming. So every cycle was the new narrative of institutions coming to space. And then eventually 2024 you had the ETFs approved. And yes, institutions are finally coming. But you know, we were running an exchange that saw different market cycles. There was the ICO boom in 2017 and there was a lot of craziness in 2018. The market tanked. And then I remember was March 2020 with a pandemic when, when I think was still Trump that back then that announced closing of the inbound flights into the United States because of COVID And so the market tanked. And I was very proud in that moment because we every single exchange was down. So the price of bitcoin went from $9,000 to $4.5K. BitMax and everything was bitmaps was huge back then and the coinbase, everyone was down. And we were like there running orders and liquidating in a good order the long positions. But at the same time we were able to serve everyone with the good latency. And so we always prepare Bitfinex for the worst of the market so that when that comes, we are basically the last man standing. So I like that about us. I mean volumes are of course good in the platform, but really is the place where when hell breaks loose, you can still find liquidity and you can still trade.
- [07:49]
Bryce Paul
Yeah, absolutely. And I also think I saw recently, I'm not sure if it was just momentary or if it was permanent. Now there's no fees to trade on Bitfinex, is that right?
- [08:00]
Paolo Ardoino
Yeah, that was a very interesting decision. So Bitfinex now that is few months that is running without fees, remains highly profitable. And so keep in mind we have probably the biggest peer to peer lending market. We have so many services. And so when I remember when Bitfinex started, maker and taker FEES were around 20 basis points each. And then after two years became like 2010 and then became like 200 and then basically start. It's basically fees, trading fees are raised to the bottom. And so the thing that is unfair about fees is that rich guys don't pay fees. So the market makers are paid by most of the exchanges. They are paid to trade there. And so instead the little guys are the ones that pay super high fees. Some of their retail exchanges, the I will not name them, but the most known probably exchange in the United States like you have super high fees for retail. And so I think I always felt like it's unfair, right. So it's like the inverse Robin Hood. And so we did some calculations on our side. We saw that the exchange would remain extremely profitable. You know, from once, I mean if you have an exchange, it was never the case. We never add, you know, negative fees for market makers. But if, if you still, if you need to pay some market makers and then you have to charge the retail so you have anyway net to zero. So we calculated that in our case we're not subsidizing market makers. We were not charging high fees to, to retail. And in the end fees like trading fees were, were negligible in the grand scheme of fees of, of Bitfinex profitability. And so we remove volume went up actually we acquired so much more user base and our peer to peer lending market grew it's like several, several billions in the peer to peer lending market. And so the efficiency of the system just grew incredibly well. So was the right decision. I believe that many changes will follow our path in the future.
- [10:15]
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- [11:46]
Bryce Paul
Yeah, and like you said, I mean the Products and services have expanded since day one. Day one it was, you know, pretty much spot trading. And then you guys, you know, had lending and then all sorts of new derivatives products are coming out now. And so I believe, you know, options are here maybe or options are coming to the platform. And so we just want to hear about sort of the roadmap for Bitfinex, what have you just recently launched and what's kind of near term expected.
- [12:19]
Paolo Ardoino
So options, we are servicing options through a partner platform, Talix. They are doing a very good job. And so we have, so our offering is of course spot trading with the highest efficiency possible, margin trading, where we have I think the deepest liquidity in the peer to peer lending book. We have perpetuals, we have options offered by Telex, but also we have Bitfinex securities. I'm in big love with Bitfinex securities because it's our, we were the pioneers also in the tokenized security space. I think every time we try to launch a feature we think like, okay, what would be the bitcoin way to launch a new feature like Bitfinex securities? And the way everyone now is thinking about tokenized securities, right? So Apple tokenized Apple shares and Tesla shares and I think is extremely boring. I think that, you know, the, the idea around Bitcoin was to create the highest level of, of inclusion possible for people that could not have a bank account and, and so create almost like an even playing field for everyone. And so if I have to think about the bitcoin way to offer securities in an overly crowded world would be focusing not on Tesla's and Apple's tokenized shares, but actually create a platform that would, is that outside the United States that would have otherwise a very hard time to have access to liquid markets for capital raises, to have a capital raise on Bitfinex equities. So we first built this capital raise platform that over the years actually kept increasing the liquidity. Now we are going through raises that are in the tens or fifty or hundreds of millions of dollars through Bitfinex capital raise. And on top of that we offer the secondary markets for these tokenized shares. And not only shares, but you can raise capital for bonds, tokenized bonds or even funds. And so that in my opinion, think about a beautiful great company that is maybe in Argentina. That company at imagine two companies, one in Argentina and one in the United States and one in Argentina offers the same exact product as a service of the one of the United States. The one in the United States was with a snap of a finger would raise probably 20, 30 times more capital than one in Argentina. That I think is a huge bottleneck for development in the merchant market. So that's how we wanted to position Miffinex securities. And I think that is the future of our platform. You could see over time we have reduced the number of altcoins on the platform. So at peak we probably had 400 and now we have I think less than 200. And we are decreasing those. We are removing all the ones that are not trading enough. They don't have good liquidity because the world anyway is shifting towards real world usage and real world assets. And again we have been pioneers in that. But I think everyone is focusing on the wrong thing apart Bitfinex. And Bitfinex is focusing on what matters the most. That is actually creating the, the right even playing field also on the real world assets landscape.
- [15:49]
Brendan Veeman
Yeah, it's interesting to watch all of this unfold. I mean the whole RWA tokenization revolution can lead to all these different global companies settling their trades on something like Bitfinex. Would you say that that's the end goal?
- [16:06]
Paolo Ardoino
I would love for. Our end goal would be all the companies in emerging markets, developing countries that would never had access to a liquid, a liquidity pool or a platform that would help them to raise capital and list their shares. They have now an opportunity.
- [16:29]
Bryce Paul
So if they can't list themselves on NASDAQ or New York Stock Exchange, Bitfinex opens their arms to them.
- [16:35]
Paolo Ardoino
Exactly. Because usually they would be too, too little for nasdaq. Right. And to it listing in the United States is extremely, extremely expensive. Like right, you know, you have to go through 16 different bankers and you know everyone will milk you.
- [16:50]
Bryce Paul
The lawyers, man, I can't imagine how expensive those lawyers are.
- [16:54]
Paolo Ardoino
And keep in mind that we are doing all that process with good regulations under the El Salvador regime. Very sensible piece of law, very, very conservative as well. And there is a good regulatory oversight and all of that. But it's much more accessible and on Bitfinex you have already huge liquidity. A lot of bitcoiners are. The bitcoiners never wanted to have much exposure to the altcoins. And so bitcoiners are definitely the ones more interested to have access to if they want. If bitcoiners seek for alternatives, they would seek out for alternatives in the real world, not in another separate token. So we are trying to build something that is reasoning with our current user base that would allow them to invest their profits, for example, into something different that would still make sense and would have an impact in the real world. Yeah.
- [17:50]
Brendan Veeman
And it makes sense, too. I like the idea that you can essentially get more people access to this stuff and you can open up exposure. So if more, like I was gonna say just more companies, but I think it can be so much more than that. You know, people who do music can open it up. People who put on shows can, like, open up getting ownership. Brands or images or whatever can give you essentially fractionalized ownership without you having to be a publicly traded company, which I think is cool. I mean, you peop. You see people that are on the up and up and you're like, man, like, I know that person's gonna be big, or I know that brand's gonna be big, or I know this fill in the blank is cool. Going to be big one day. I wish I could be a part of that. And it's really, really hard for investors in the current day to do that. Even if you are an accredited investor, even if you have that, that, that title, it doesn't make it that much easier. And, you know, when you do this again, what you have is you have more liquidity, more capital, and you have more money that can come into this. And I think it also gives people the more freedom to take part in the things that they know the best and the things that they're the most passionate about, which matters a lot. You know, circling back to what you were talking about a little bit earlier with the derivatives market, I had to chime in on this because I really like derivatives. I trade options a lot myself. I've always wondered, you know, why do we see an emphasis on futures in crypto, like the futures market or the perpetuals markets, and not necessarily options. Right. You hear, when it comes to crypto trading, you hear, oh, there's spot trading, there's futures, there's perps. But you rarely hear about options trading in crypto when it's such a gigantic part of traditional finance and in the stock market as a whole. For instance, I've seen you say that the total daily crypto derivatives volume off to exceed often exceeds around $100 billion, yet options only represent about 3% of that. Why is
- [19:49]
Paolo Ardoino
the problem that I see is not, of course, a rule, but most of the people in crypto that are trading crypto, they understand very well. I buy one Bitcoin, I get one Bitcoin, I sell one bitcoin, I sell one Bitcoin. The options are very complex instruments for the majority of the people, a lot of people that approach crypto is to have an alternative is to have exposure, to try to even speculate. Fine. But they don't have the culture or the deep financial knowledge that would allow them to leverage the options in the right way. And so it's. Any professional trader coming from the traditional market would use options to protect themselves, to hedge and so on. But unfortunately so for multiple reasons, either it's above the financial understanding of many crypto users in a good way. Right. So again, many people coming to crypto, they had bigger problems in their lives. They are maybe subject to very high devaluation their national currencies in their country. They never had time to understand the complexity of options. And so it's easier to trade derivatives because you are still subject. It's fairly easy now with perpetuals. And also perpetuals, think about this. Perpetuals exceeded the volume of standard futures because perpetuals is just you put up a position, you pay funding every few hours and that's it. Right. So you don't have the complexity of rolling futures in here and there and periodically. So most of the people didn't have the time to learn all the complexities. And so and also applies to options. So, and, and also the other part is actually, you know, or the other side is purely directional and they just gambling. So either way, it's, it's one of the two. But that maybe is the reason.
- [21:57]
Bryce Paul
Yeah, that makes a ton of sense. It seems like, you know, crypto trading emulate, you know, crypto spot trading originated first and emulates a little bit more close to perpetuals trading as opposed to the, the options. So I think that makes sense. But and I also wanted to circle back a little bit to some of the discussion that we touched on with the institutional adoption. And there's many different kinds of institutions, I'm sure you guys deal with, you know, many different kinds. I'm curious, what kind of institution you think is the most impactful to the crypto space? Meaning what is crypto benefit the most from in terms of an institution coming? Is it the asset managers like BlackRock and Fidelity who are, you know, launching these ETFs and you know, their clients are buying it? Or is it the big banks? Is it some other, you know, more cloaked part of the market that's more impactful? Where do you stand on that?
- [22:54]
Paolo Ardoino
So I think it's tricky because I think ETFs are not necessarily positive for crypto as an ecosystem. I mean, definitely there is this paradox like if 99.99% of the Bitcoin will be in all the ETFs how we would feel about it. Right. And that speaks to the maturity of the. Yeah, I would say funds like hedge funds have been the most positive contributors to the space where they would have an allocation and so they have the expertise, the built expertise in house to trade on crypto platforms. They were the ones that were ambitious. They explored the crypto world before anyone else. And so they built prop trading desks inside themselves that would understand the quirks of the different API systems of the different exchanges. And so that speaks very highly of these institutions banks. And it's almost funny because many exchanges now are trying to offer these tokenized securities like Teslas and Apples. So trying to go to capture some of the banking industry and the banks are trying to list some of the tokenized. Well they list ETFs on Bitcoin or Ethereum or Solana. So it's almost like there is a convergence among the two words. And so probably crypto changes will become more like banks and banks will become a bit more like crypto exchanges over time. But I think we need to be aware of the fact that not everything that is coming is going to be a positive result. Will not have a positive result on the crypto space. And I think ETFs are know one of those examples. Although you cannot stop them. Right. So they did. It's a great tool, is a great thing. It just needs to make people people think about Bitcoin. Right. Again, as, as Bitfinex we also want to educate and promote on the self custodial aspects. I think that if we lose the ability to self custody and eventually all the bitcoins will be in. In segregated custody. You know, it's going to be a shame even if Bitfinex has probably one of the top three or top two cold wallets for Bitcoin every single day. I'm like people are treating us as a bank. It of course is like flattering great. We have the best security in the world. Yes, I'm very confident about Bitfinex security but I wish people would take more ownership of the bitcoin they have. It's like that is the role of Bitfinex although makes more money to us to custody stuff on behalf of people. Not necessarily is the right thing. And I believe that Bitfinex should always do the right thing for the ecosystem and try to continue to do cate. Again we feel very confident in our infrastructure, we feel very confident in our security. We proved in the last 10 years how seriously we take this stuff. But also being serious means that you Know, we are, we are, we shouldn't be trying to force people and push people to deposits that the assets they don't need to trade. We want the assets that people want to trade. But it's, you know, supporting and we invested in things like rgb. We built, we are helping building protocols that will move a lot of activity on second layers on top of Bitcoin because. Exactly that.
- [26:57]
Bryce Paul
Yeah, I was just going to bring that up. I know RGB is one protocol. I believe you guys are pretty also involved in the Lightning network. And are these initiatives. Well, they're supposed to speed up the transaction time and make crypto or particularly bitcoin more easy to store, more usable. Could you tell us a little bit about sort of the, the user experience with Lightning and with rgb and you know, how has this improved things and, and how are you really integrating it and encouraging folks to get off the exchange and go to cold storage or go to a hot wallet where they can spend easy.
- [27:37]
Paolo Ardoino
So Lightning Safari is the most successful. Layer 2 on top of Bitcoin allows only to move sats. I think lightning is still a bit immature in its form. I don't think Lightning reached its final form. Technically Lightning side channels would be the best way to scale payments. Coming towards a future where you have AI agents sending transactions to each other. I believe AI agents will make trillions of transactions per day or anyway tens of billions of transactions per day because the AI agents will negotiate among each other without intermediaries, collaborations among themselves. And they will negotiate and will use a crypto asset. Likely they will use Bitcoin. It's quite interesting to me and I'd like to think more about it, but you have, on one side you have AI agents where they price their energy in tokens, the generic tokens. And basically there is a clear relationship between the cost of energy and the token. And on the other side you have Bitcoin that has a relationship also with energy because it cost energy to mine Bitcoin. So technically there could be a mathematical formula that would express the conversion rate between an AI and an LLM token generated and basically a satoshi that has been mined. Right. So I see that correlation on the other side. Every Single Blockchain Layer 1 has one issue that is called single share state. So a person in Tokyo needs to see what another person is doing in Switzerland to avoid double spending and indexing. Privatization is basically very complex, require global consensus and it's very slow. So Lightning instead tried to solve that problem where two parties can speed up a channel and commit some Bitcoin on main chain. But then all the other subsequent transactions will happen blazing fast and only the two parties would have knowledge of those transactions until the channel is settled. So you can send a gazillion transactions in that peer to peer channel until you decide to sample. So that is the only way physically, I mean talk about pure physics. That is the only way physically to scale payments for the I agent economy. So on the other side, I mean that overall technology in an abstract form is the right way to do so to build super scalable payments. But I think still Lightning is not in its final form needs more development, more thinking, more, more maturity. That has definitely some downsides and that needs to be solved in my opinion when it comes to routing and the complexity of routing and so on. So that's the. We are on the right path. But I think we need to spend more time in research, probably with researcher paid a bit more than what I was paid at the beginning. But we need to invest a lot of research. And the reasoning around RGB is to learn from Lightning Channels and Lightning Network and actually expand that to other assets that are have an important dispute like stable coins. So people might want to have. The reality is that what we see is people want to spend in stable coins and want to hold Bitcoin. So almost like stable coins are their checking account and Bitcoin is their savings account. And so I think having the ability to move both at high speed through lightning style channels. And that's the purpose of RGB and that's basically why Bitfinex is so interested into that.
- [31:39]
Bryce Paul
Yeah, I love it. And so how else are you guys, you know, working on the AI ecosystem? I know you're really focused on basically giving the, the foundation for these AI agents to pay people to pay each other to scour different wallets and stuff. Are is Bitfinex going to have like a front end where people can build and deploy crypto related AI agents? Are you guys just going to be in the background licensing technology to other companies? How do you see yourselves positioned for the AI race?
- [32:13]
Paolo Ardoino
I think there is a huge opportunity in, in creating skills that could be used by agents to trade. I mean agents will anyway deal with the global economy and the real world and so they will need to pay, they will need to even land. Right. So you might have an AI agents that accrue money for an agent, offers services, accrues money and wants to earn a yield out of that money. And you could earn a yield on for example USDT or Bitcoin through the Bitfinex peer to peer lending market. And so you might want to deposit it. And so if you have capital that is sitting doing nothing, you might want to deposit on Bitfinex and then withdraw it when you need it. So I think there is a lot of orchestration that AI agents can do with the right skills developed with the connectivity to an exchange like BitFnex. So we are thinking a lot about that and we believe that there will be important developments in the next few months.
- [33:13]
Bryce Paul
Yeah, no, that makes a ton of sense. And on the topic of AI and all of this complicated technology, we, we would be remiss if we didn't touch on Quantum in Q day as people are starting to refer to it. And I just, you know, you're the CTO of one of the oldest and largest exchanges. I know all the banks are working on quantum resistance. Very quickly I saw other exchanges start to come out with their own plans to rally the industry. I guess the question's two part. First like is all of this just FUD or is there, is it real and how are you dealing with it at Bitfinex?
- [33:52]
Paolo Ardoino
So I think is the, the issue is out there, right? So I don't think we should take it lightly but at the same time is overstate. I mean I think that people are too panicky. So it's not like next year the, you know, satoshi wallet will be hacked. So first of all I think that, I mean banks might work on it, but the problem is the entire Internet is going to be having bigger issues before Bitcoin. Also not many people realize that. Let's say that you have a man in the middle that can record a lot of. Imagine you stored all your private conversations and your private emails and your private documents in encrypted form somewhere on an hard drive or somewhere else. And you thought they were protected. Yes, they are protected for now. But if someone in the history over the last 50 years. So imagine if you had an intelligence agency or an institution or whatever that had access or like a malicious actor that had access to documents encrypted, stored on any hard drive and they had a copy with quantum computing, they would be able to decrypt all the information that was not to be able to, was not able to be decrypted in the past. So imagine like people could go back 50 years and say oh I got that document from like was encrypted 50 years ago. Now I can decrypt it and like or 20 years ago, 10 years ago. Imagine how many Leaks there will be on things that the people thought were encrypted, they were encrypted. But an encrypted copy leaked and now can be decrypted. And so all the communication channels that we have and think are secure, even the in flight communications, if they were recorded, could be decrypted. So the amount of craziness that will happen will be far superior than the issue of bitcoin. You know why? Because I believe that bitcoiners are not stupid people. They would come, you could add a new signature scheme that is quantum resistant. The people that are alive and have access to the wallet will have two, three years to move assets away. And also on top of that, it's not like a random guy in the street will have access to a quantum computer. What will happen is that Google or IBM or the US government or the Chinese government will have access to these. They will be the only ones to have access to this technology probably five years before anyone else. And so will the US government hack the satoshi wallet? Will Chinese government to hack this Satoshi wallet? Everything is possible but then will be a state hack. So there are so many implications also from legal point of view. So I would really not be too panicky about it. It's good that we are thinking about it, it's good that we are tracking it. But I think the world will have bigger problems before Bitcoin because bitcoin is actually Bitcoin does not need to be completely changed. Like instead Internet needs to have a serious upgrade and in many forms bitcoin has an easier path to be fixed.
- [37:15]
Bryce Paul
It's an interesting point because I totally agree. But I've also heard in the media, which is probably the tell that it's not true. But I've heard in the media that oh, bitcoin is the most vulnerable because it's decentralized. And so all of these upgrades take so many people all around the world to coordinate and the miners and the validators. Whereas JP Morgan just has Jamie Dimon give a top down initiative, say hey, we're going to all become quantum resistant go. And within I don't know, a year or two it's done. And so I like to hear your, your perspective because you're saying it's actually the opposite. You know, bitcoiners have been coordinating and coming to consensus on very important things for 16 years and they're able to do it pretty quickly and get things done. So of course there's forks here and there and you get some very. How do I say bombastic characters that persuade people to do Satoshi's vision or bitcoin cash. But in, in, in all, in all, you know, bitcoin core has existed and has thrived for 16 years. And so I think that quantum when it comes, because it's not an if, it's a kind of a when the community has been hardened throughout all this adversarial stuff over the years and will come, come towards a, a nice solution. So it's encouraging to hear that from you.
- [38:38]
Paolo Ardoino
Yeah, I mean for sure. But yeah, JP Morgan is one bank, but there are six gazillion banks. Will all the banks operate at the same time? And also not only banks, all the shops. Will all the shops upgrade? Will every single mail provider will upgrade in time? So you have Internet is still distributed. So it's not like sure, maybe the JP Morgan customers will be fine, but there will be other gazillion people that might not be fine if their decision makers are not good enough or smart enough or fast enough. And so we had I think user activated soft forks with you know, you had the taproot changes. So we proved that we could add the new signature schemes without HAL breaking loose on earth. So I think again, I don't think bitcoiners will let bitcoin die. I mean that is the only thing we learned in the last 16 years is exactly that.
- [39:32]
Bryce Paul
So true. Speaking of not letting bitcoin die, I think a lot of people over Q4 and Q1 either did get liquidated and knocked out of the market or lost faith in bitcoin because they bought high at 120k and things fell all the way down on February 6th to a low of $60,000. And so there's been this big, you know, bull market correction, maybe a bear market, you know, middle innings, you know, not financial advice of course or anything of that nature. But I just want to get your sense of as to where we're at in the market today. You know, the stage is set here. We're, we're now kind of crawling up off that 60000 lows breaking above $80,000 as we speak. So where are we in the cycle? Is there still a four year cycle or you know, is the, the having kind of diminishing in its power and the institutions are kind of coming and propping up price so we're not going to have a 80, 90%, you know, draw down every four years?
- [40:33]
Paolo Ardoino
Well, I think, I mean I'm always bullish on bitcoin, so that's a problem but you know I, no matter low high I buy because it's, it's my, I think it's the best exposure I can have. And the so on the under ass I think hard to say. If we have four year cycles I believe that we mined 95% of the Bitcoin that can ever be mined. And so the inflation that you would have had through mining will not justify huge price bumps. But I think still there is. I mean I'm very bullish on bitcoin because I believe that it's not, is not anymore about the halving. It's like actual global adoption and I think we'll continue relentlessly. We keep adding more and more use cases to bitcoin. We add more interest, we do more education. People are seeing that fiat currency currencies anyway are inherently and inevitably going down. So it will take time. I don't know if it will take two months, six months, one year. But I think halving is becoming less exciting as a, as an event is a good reminder. I think I like it as a reminder of the move stability of bitcoin. It will continue. It's like a clock, right. You know that it's there, it will continue to tick for a long time. But otherwise bitcoin is, Bitcoin is unique. Has been. They tried to copy so many times, they're trying to make so many forks. I remember you know, the old days, you have bitcoin, diamond, bitcoin, gold, bitcoins, you know, all the kind of crazy. Yeah, you know that that's it. Right. So it's, it's going through cycles or enforcement and but I'm very positive for 2026.
- [42:37]
Bryce Paul
Nice.
- [42:37]
Brendan Veeman
Well, I mean there's clearly a lot going on. There's a lot to digest. We've, listen, we've talked about AI, we've talked about derivatives, we've talked about, about institutional adoption. You're in the weeds on all of these. What else do people need to be paying attention towards that can either make our lives better or potentially make us more money
- [42:59]
Paolo Ardoino
either way.
- [43:01]
Brendan Veeman
Right?
- [43:01]
Paolo Ardoino
Yes, I think, I think that there is, I think there is should be a goal. I mean it's a very difficult goal and appreciate not everyone can achieve that. But I think having one bitcoin, one single bitcoin could be an amazing achievement. I, I know many friends that, that started, they were a bit skeptical in the past and you know with hard work, very hard work, you know they kept saving, they kept saving. Now they have one bitcoin, one full bitcoin they are super excited. This. They think, oh, I'm. I'm sad. I'm sad. That is, you know, I will leave it to my children. I don't care. But I will never sell it. I want to keep it. That is some. That is my parachute. That is my parachute for, you know, whatever will happen in the world. And I see more people actually have that ambition. I think it's a health ambition to have one single bitcoin. And this again might be too hard for many people, right? So there are people that earn like $120per month is very hard. But it doesn't have to be one bitcoin. But I think people should have a goal in accruing value in bitcoin because I think world is not going the right direction. We see all the chaos that is happening in macro. We see geopolitical instability. And so bitcoin is the true hedge. I, I think people rightfully see bitcoin still too correlated to the traditional financial markets, to NASDAQ maybe, and that's normal. Bitcoin is one tenth of the market cap of gold, and so probably a bit less even. And so it's still too volatile. The liquidity is so low. That moves a lot. And also is the only asset can be traded over weekends. And so if there are some announcements, and suddenly most of these announcements on geopolitical side happen on Friday. And so the only thing that you can sell on Friday is bitcoin. So actually it was affected by certain of these actions, but there will be a coupling. I don't know when, but you might want to have exposure to bitcoin and have all your own bitcoin when that happens.
- [45:29]
Bryce Paul
Yeah, I love that phraseology of parachute. You know, if your money goes to crap, if your, your country goes to crap, no matter where you are in the world, if you remember those 24 words in sequence or if you have your 24 words written down in a safe, safe area, you know, you could bring that with you anywhere in the world at any time with virtually no cost. And so it's something that is just so unique. And when people ask me like, oh, Bryce, should I just buy the bitcoin etf? I'm like, well, if your only desire is to get bitcoin price exposure, sure, that's one thing. But if your desire is to get the, you know, censorship, resistance and the permissionless nature of spending your money anywhere and the ability to use it and travel, you know, across the world and all that kind of stuff and have that parachute, then the ETF does not capture any of that. You have to have spot bitcoin on a wallet and they're like, oh, wow, it really is different. And so there could be one, you know, world eventually maybe where even the price of the ETF diverges from spot bitcoin, maybe, I don't know, even though it's spot backed. But there could be a premium placed on spot bitcoin. Like I remember back in the day there was, you know, discounts on certain bitcoin that was mined by certain actors because it was, you know, not really able to be used many places. And so there's, there's a lot of different dynamics here. But Paolo, I mean, man, we could go on and on and we really do hope that we get a chance to bring you back to have a great conversation again in the future with all the developments that you guys are working on. But we want to let you go. Last question is just, you know, what's one person in the crypto space that you really admire that maybe you've learned from that? You would say, you know what, you know, that's one of the, the best that we have here in crypto. Just one quick shout out. Sometimes we like to, to get inside people's head.
- [47:24]
Paolo Ardoino
One person, I mean, I don't know, there's a million. Yes. One person that I admire, one person is very private is of course my, my co founder partner, Giancarlo Di Vizini. And the other person that, that I think is very public is Jack Mallers. I think he's doing a fantastic job in, in standing the ground for all the bitcoiners.
- [47:48]
Bryce Paul
Love it. Yeah, I know he's got a new, a new is it publicly traded company that Jack Mers is working on?
- [47:55]
Paolo Ardoino
21.
- [47:56]
Bryce Paul
Yeah, 21. Yes. 21. I was gonna say Cantor Equity Partners, but yeah, 21 is, is the official name of the company. So yeah, we're, we're hopeful that we can interview Jack Mullers one day. I know he's got a great podcast and he's busy on CNBC it seems like all the time, but if he'll make time for us, we'll have be
- [48:11]
Paolo Ardoino
happy to have you.
- [48:12]
Bryce Paul
Jack, if you're listening. But with that being said, Paulo, we appreciate your time and all of the knowledge you shared with us. We hope you have a great rest of your day and everybody at home watching. Hope you listened and we'll see you back same time, same place next week with some more great guests. Take care.
- [48:38]
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