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- [00:00]
Brian
I think that perception already existed broadly when you talk to the average person. They have, you know, even before Trump, a negative connotation around crypto and bitcoin to some extent just due to all the, you know, historical scams that occur in the space. But that went to another level once, you know, Trump got involved and basically his disclosures last week came out and he's made over a billion dollars in sort of all of his crypto dealings. So that includes all the world liberty fi stuff as well as his own meme coin. And actually the bulk of that 1 billion, around 600 million came from revenue or literally just transaction fees from the Trump meme coin. And that meme coin is, you know, like pretty much every meme coin down 97%. So, you know, the vast, vast majority of people who bought that meme coin are down horrendously. Meanwhile, Trump made a boatload of money from
- [00:58]
Liam
all comes down to computers.
- [01:00]
Brian
Communic.
- [01:02]
Mike
The information superhighway can be a confusing mix of on ramps and off ramps.
- [01:07]
Liam
Bitcoin is worthless.
- [01:09]
Mike
Artificial gold, is it still rat poison? Probably rat poison squared.
- [01:15]
Brian
We need to get into the world of.
- [01:16]
Liam
Okay, this is actually foundational technology.
- [01:20]
Mike
What the Internet of money does is it creates a single network which can
- [01:25]
Liam
do a micro transaction to a giga transaction.
- [01:32]
Mike
The Internet is going to be one of the major forces for reducing the roll of government.
- [01:38]
Liam
The one thing that's missing that will
- [01:40]
Mike
soon be developed is a reliable ecash. All righty.
- [01:48]
Brian
Welcome back to another episode of Final Settlement. Today is Tuesday, July 7th, 10:14am Eastern Standard Time. Gentlemen, how's it going? How's your July 4th? We've got a big list today. Massive list. Some are calling it the best list. But how are you guys doing?
- [02:07]
Mike
Huge, it's, it's huge list. It's so big. I thought that we didn't record last week. It's felt like two weeks at least. But I was just thinking about it. We recorded on Monday or Tuesday, so we're, we're, we're long overdue. And yeah, good. July 4th. Good American, good time to be an American.
- [02:28]
Brian
Yeah.
- [02:28]
Mike
I think this country and a lot of people, they say a lot of. But at the end of the day you actually truthfully, and everyone's probably seen it, whether it's first handed or through family members. There's nowhere else you can actually or very few places you can count on one hand where you can just like grow up and do whatever the you want. Like do whatever you want. You can start a business, you know, they talk about failing, failing up or rewarding failure in like Silicon Valley and other places instead of getting like ostracized or like exited from the tribe. Like, this is the one place you can legitimately do everything. Now, it's not perfect, but you can't say that about a lot of places. So anyway, like, I just think about that and if we have a chance at freedom in the Next, the next 250 years, it's going to come from, from this place.
- [03:10]
Brian
I think that's fair. Maybe the one thing you can't do here is become a world class soccer player. I got hoodwinked last week. I said you might be good at soccer. Turns out that is not true. We still stink. See you soccer fans in four years when we start hearing about that again.
- [03:28]
Mike
It's funny you said that because so, no, not a soccer man here. I tuned in for the first 10 minutes of soccer of maybe the past 10 years yesterday, and you kind of saw them just kind of flail and they were mentioning something about. And it's just obvious stuff, right? This isn't me coming up with anything novel is like, you play in these your whole life, but also in the equivalent of like, you know, playoff, Super Bowls across the world. That these games aren't as heavy as they are to somebody that plays every four years. Used to it. And so like, it makes complete sense. We're just not supposed to be good versus, like, you know, you want to go build a business, you come here, the things we're talking about. But soccer is just not our thing. And I was explaining to my, my son, like, what, you know, the sports are because he knows the bills, you know, because of whatever. And then, you know, spurs basketball. I was like, this is soccer. It's not football, it's soccer. Football.
- [04:27]
Brian
Yeah. That was an embarrassing, embarrassing loss.
- [04:30]
Mike
Are you a big soccer guy?
- [04:31]
Brian
No, not at all. But I got caught up, I got caught up in the, in the whirlwind of maybe we're good now. Yeah. Turns out we played Belgium, who I think Belgium's population is about the size of Ohio and they just kick the shit out of us. But we've got a big list. Like I said, let's get into it. We're gonna start with a little, little Trump family roundup.
- [04:55]
Mike
Real quick. I have a quick, a quick comment, a quick ask from the listeners. Please comment. If you dislike more us talking about sailor and stretch or the banter in the beginning, that'll be helpful because if it's more sailor stretch, we can include some Banter. But if it's actually the banter, then it's not to say we'll talk about Sailor Stre, but at least we know never to talk about sports again. Just keep it focused on, you know, Trump and whatever the hell else is going.
- [05:21]
Brian
Sound off. Sound off in the comments and like. And subscribe. Don't forget to do that. Rate five stars on your favorite app. Okay. Number of headlines around Trump. I think the biggest one that got a lot of, you know, mainstream attention last week was the, basically the numbers, the, you know, the hard numbers coming to light around what a lot of people, if you've been in the space and following bitcoin or crypto for years, you kind of knew this a year and a half ago when Trump launched his meme coin. Melania launched a meme coin. You knew that this was an all time sort of grift moment of Trump attaching himself to crypto in some way and really enriching himself. I think putting the actual hard numbers around what he earned sort of cements that perception. I think that perception already existed broadly when you talk to the average person. They have, you know, even before Trump, a negative connotation around bitcoin or, you know, crypto and bitcoin to some extent, just due to all the, you know, historical scams that occur in the space. But that went to another level once, you know, Trump got involved and basically his disclosures last week came out. Um, and he's made over a billion dollars in sort of all of his crypto dealings. So that includes all the world Liberty Fi stuff as well as his own meme coin. And, and actually the bulk, the bulk of that 1 billion, around 600 million, came from revenue or literally just transaction fees from the Trump meme coin. And that meme coin is, you know, like, pretty much every meme coin down 97%. So, you know, the vast, vast majority of people who bought that meme coin are down horrendously. Meanwhile, Trump made a boatload of money from it. So we'll start there. I'll open it up. We have some other links around Trump and the Trump family. But thoughts on this and just the general perception, I mean, we've talked about this, but I think this is one of the main reasons that the industry as a whole has sort of a sour taste for most people. And this is just another cog in that story.
- [07:35]
Mike
What do you got, Liam, or do you want me to go first?
- [07:38]
Liam
I can go first. Yeah, I mean, I know a few people who actually bought this too, so There are real people who bought this and I think that we're just so far behind on what the education in the industry actually looks like. There are some people who really understand what bitcoin actually is and stands for and, and why it's different than everything else. But there are so many folks who don't. It's. It looks like there were over 1 million people, lost a total of $3.8 billion on, on this and not great to see. And just in general, I think this is going to continue to keep some folks on the sideline as there's difference in perspective around just generally what bitcoin is, what crypto is, and associated only with Republicans and Trump in general, which obviously has a big political aspect to it. So I think that just because of how this will be spun in the headlines, we may not see Clarity act get passed. And although we've been seeing more and more odds that, you know, Clarity may get pushed out just because of the timeline that's associated with it, it's just we're going to see a lot more scams and what's it called Melee over in Argentina launched a similar meme coin or supported it too, until Bitcoin. And we, we see a lot more bitcoin adoption. We're just going to see continuous rug pulls even at larger and larger scales from even the President of the United States.
- [09:19]
Mike
Yeah, I think you got the numbers. I wanted to pull up this chart because I thought it was pretty interesting from. I think it was Bloomberg showing Trump outearned the biggest. I don't even necessarily know if they used any particular methodology because it says the chart reflects a selection of publicly traded U.S. crypto companies. This is from Bloomberg and it's just showing Trump earnings in millions of dollars over the course of 25. As it relates to Coinbase, CleanSpark, iron and a bunch of other firms. I have a difficult time reconciling if this is just what Trump does or like I just have a hard time believing this. The level of how egregious this is is, is not like, not to say by design, but it's meant to be in the sense of we saw what happened with the UAE and whatever that coin is, the W USD one or whatever for World Liberty. And that came out publicly that I think they banked like 50% of those that, that profit or revenue from the way that that was constructed. And there's this understanding of, you know, backwards and forwards between the parties on like you do one thing and then you come in and fix it. And like, I can't help but feel like there's something happening here where this level of insanity of how they profited is going to like, bite the industry back on the back end of this. And where, to Liam's point, maybe it's clarity, maybe there's some other provisions, maybe it's other privacy requirements or things that get stripped in clarity in the, in the future because this just feels so egregious. Like, of course it would come out and how you. You launch the coin. You know, I think it was like that one evening they did it. That was also the crypto ball. It was like, right at the same time. And I'm not saying I fall into this, but, like, there are people out there without naming names that have pretty decent mental model of the, the what's happening here post Trump coming in place and where he's meant to be switching up this, you know, multipolar world and how he makes his money. And this would actually align with that, that he is doing certain things and his camp is benefiting from that independent of how they affect anything else. So either way, it's crazy to see, but I don't necessarily know if it's just pure accidental or this is just part of the. Part of the whole charade.
- [11:59]
Brian
Yeah, I mean, I think there's also something to be said for, you know, the, the notion that Trump was going to attend the bitcoin conference and come out super pro bitcoin and crypto and not have anything on the back end for himself. Like, in hindsight, obviously he was going to try to personally enrich himself from sort of that public support for the industry. And I think that, that unfortunately, the meme coin thing was just a perfect sort of microcosm of what people perceive crypto to be like. It was like you said, a classic pump and dump rug where the crypto ball was happening right as the coin launched and, you know, pumped for a bit, all the insiders sold, and then it just rugged 97% over the, you know, course of the next 12 months.
- [12:49]
Mike
That's actually a great point around. Without naming names, people have come up with them is like, there's a, there's a handful on one hand you could fit who would be behind setting up this, like, $1.2 billion, you know, scheme. And you have to imagine that was the real benefit, whether it's like the packs or whatever that we're, you know, setting up for the 2024 win, or if it was the second and third order profiteering that they were going to be able to do because of, we've seen this with Silicon Valley, like A6 and Z as an example. Everyone knows the way you can get that fast liquidity is via these tokens. It's like, look, we're going to use the momentum. And so when I, when I saw this I immediately thought, yeah, like there were some folks next to that camp, they're like, look, we can figure this out. And Trump maybe doesn't even necessarily know like the whole mechanics, which he doesn't know the whole mechanics of most things he talks about except for like he's just gonna make a billion dollars and it's going to be fine.
- [13:45]
Brian
Right? Yeah. Someone asked him about it I guess over the weekend and he's like, yeah, that, that might be true. Like I have no knowledge of it. Which is just a classic. If there's one thing he's good at, it's, it's deflecting blame for things.
- [13:57]
Mike
The one positive I will say and we'll transition. There's a lot of stuff we're going to try to hit on with Trump is there's a lot happening in his camp. Whether it's like the American stuff and other things, we'll talk about that. I do think like there are catalysts to show that we are, you know, there's some, there's some hopium built into this. But it also doesn't help that the President's grifty.
- [14:18]
Brian
Yeah but as you mentioned, this is not just Trump but the Trump family. So this is a headline around American Bitcoin, which is the Trump family backed mining company. Slash Treasury Company added 500 BTC last week, becomes the 16th largest public corporate bitcoin holder. Just take a look at that stock chart. I think they did a reverse stock split a week or two ago, but it's been pretty much down only like most other treasury companies. And then the other big sort of Trump related headline from last week was that the Trump accounts are going live. I believe they are live now. So we'll just kind of read through the website here. TrumpAccounts.gov, the American Dream starts now with the Trump Accounts app. Long term financial security for millions of kids is here. Get tax Advantage Investment accounts for U.S. citizens under the age of 18 by downloading the app. And I think you can contribute up to 5k to this per year to maximize growth as it says here. Now maybe you guys have more information on this but is my understanding is like these accounts will be mostly invested in equities and so before we hit record. You know, we were kind of talking about this, is this just another version of sort of centralizing wealth and assets and creating this persistent bid and passive accounts? And my inkling was like, well, at least it's better than sort of centralizing that in government bonds and government debt. That is negative real yields. If this is actually in the equity market, maybe it's a touch better than that. But what do you guys think about this generally? Go ahead.
- [16:09]
Sponsor/Ad Host
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- [16:56]
Mike
Well, I mean I think on the other side of understanding the Ponzi that and I, I think we're all confirmed like Social Security and 401ks, there's different derivatives of long duration capital that's being inflated away and they incentivize you to park it versus do things productive with it. Employer employment matches are a great example. Fine print, real quick. Estimates are for illustration only, are based on account opening at birth with a thousand dollar opening deposit and derived from historical S and P averages. So I think as you go to that progression, it shows. I didn't necessarily know that there was this like. And it makes sense, this huge incentive here to add capital from your own. If you look at the bottom, they show the model of if you add your own personal. Yeah, right there. If you contribute nothing at 55, it's 243. If you contribute 5,000 a year, it's 13 million. So it's like please give us your $5,000 a year and we'll turn into 13 by, you know, age 55. So what is that, 38 years or 37?
- [17:59]
Brian
Well, if you're starting at birth, I guess it's 55 years.
- [18:02]
Liam
Yeah.
- [18:02]
Mike
So 55 years. I mean there's a decent amount of listeners here and us that not necessarily sure the dollar will exist in 55 years, but the point is that you're taking that capital, you're sucking it out of the system, you're putting it into an over concentrated equity market. Like that seems a little rough. The other side of it, which is probably the thing that gets less talked about than people would think about, is where does this money come from? It's not all from Dell because I remember this came on the radar with Dell, Michael Dell, Brad Gerstner and I think Bill Gurley and they were just talking about this was the most amazing thing. But it's like we have to remember those are our dollars and we should be able to put our dollars and our kids accounts in whatever form or fashion we want. And theoretically a lot of people here would put them in bitcoin. So just give us our money instead of taking it via the different onerous taxes that are taken and then we can just have our own Trump accounts. We don't need the government to issue accounts. I think that's the thing that gets lost on most people.
- [19:03]
Brian
Yeah, I mean the devil's advocate to that would be this is kind of an easy button for people that don't want to think through the process of, you know, setting up accounts, whether it be various trusts that are tax advantaged or actually allocating those dollars and deciding what to allocate them towards. This is a much easier path for the person that doesn't want to or can't think about those things.
- [19:31]
Mike
Yeah, but, but that, that, that's. Tell me where my logic is wrong here is why would it make sense? Like if I have to give the thousand dollars to the government so it can set up that account when I could buy a thousand dollars versus OpenAI credits or whatever and have my kid learn something that he can go make a hundred thousand or ten million dollars. Like it's just a fallacy built into the.
- [19:57]
Brian
I don't disagree with you. I was just, I was, I was playing devil's advocate of why maybe this should exist.
- [20:03]
Mike
Yeah. And I think the main idea here is that we just have to go back to the. It's like the broken window fallacy. Like you know, break the window doesn't create economic activity. That window wasn't broken. Somebody's money would have gone somewhere and we should not give the government the money to give it back to us. That's very inefficient at face value.
- [20:23]
Liam
Yeah, 100%. It's just, I think one of the big issues right now is most Americans do not have any assets. And then every, you know, few decades or so there is a bailout of the financial system or when there is too much leverage and stocks go down a certain amount, there will be more and more folks who don't have assets because inflation is running too hot and there generally won't be enough so they won't have money to put away into stocks. But giving pretty much any child a stake in the financial system in equities will make it more politically palatable in order to continue to pump equities in order to one, maximize just capital gains and then two, make sure that there is no change in the kind of outstanding equity system so that there can continue to be like more political stability. And I think that that's going to happen just through the continued pumping in of dollars into the system and just getting everybody more on the same page in general too.
- [21:34]
Mike
Yeah, it feels like really perverse to be honest, and maybe I'm just like overly cynical, but it, it goes back to the 401k matching and it just feels good that, okay, my employer's doing this, I do this. But when we think about inflation and what we talk about in real versus nominal terms, it gets mass so much on like what do I make year over year and what is it going up with the S and P versus what does it cost for like ground beef or the vacation? And then it's that same angle but it amplified because everybody wants something better for their children. And you know, you have these great pictures here and it's like, look, the government's going to give you this, open up the account and then we, and then you should add more to it when you really understand as we know Bitcoin being this best savings technology, the investment in the huge opportunity is for the individual to learn about that and then park more and more of the capital and have ultimate autonomy on how they can spend it, what they can do know penalties if they decide to. The last thing is that they're sending a wallet to everyone, which I can't help again but think of second and third order effects. Well now all these people are another angle to just have a wallet for any form of UBI or whatever is going to come. And this is like directly from the U.S. government Department of Treasury, 100%.
- [22:46]
Liam
And just one thing to call out too is like, great move by Dell and Gerstner to very generously donate this. But I don't know necessarily why is, is Involved in it too. Like they could just do it from a private, like, completely privatized angle as well.
- [23:05]
Mike
Well, because I bet if you went deep that they make more money from this than they spent via tax situation, public private partnership. They probably benefit so greatly from this. And not only the awareness. I mean, didn't they pump 10% when Trump said go by Dell yesterday? I don't know if you saw that.
- [23:22]
Brian
Yeah. Yes. Yeah, that reminds me, the other thing that was in Trump's disclosures was just an ungodly number of trades that he's made since becoming president, which we thought we were getting. The golden age. Golden age of grift might be what we actually got. One other just devil's advocate on this is like you don't have to contribute to it. Just take your thousand dollars, like you might as well. And then maybe one day they open up the ability to, you know, transfer it out of the S and P and into bitcoin.
- [23:57]
Mike
Yeah, I agree. I wonder what the. There's a few folks that have children here. Go, go set it up, Ryan, and let us know what, what it asks you for once you, once you download the app.
- [24:09]
Brian
They already know most of the things that they would want to know. Okay, we're going to move on. Another Trump headline. I mean, this is somewhat Trump related, but more the government apparatus. And the idea of the bitcoin strategic reserve is, I guess you could say it's back on the table. What this article in Bloomberg is talking about is that Trump basically tasked multiple different agencies on setting this up. And the two main ones that are basically vying to structure and control it are the Treasury Department and the Commerce Department. And just quick aside, I thought this image here was very funny because the caption says a cutout of US President Donald Trump holding a Bitcoin during the 2025 Bitcoin conference. That's not what this picture is. This picture is Trump when he got shot and a physical bitcoin superimposed on his hand. But that aside, what do you guys think about the sbr? I feel like there's been a lot of talk, not a lot of action on this. We still haven't gotten the audit of how much bitcoin we have. Apparently it's spread out all the. Around all these different agencies. And so we don't even know how much bitcoin we have, and we don't know who is going to actually control this proverbial SBR if and when it does get put into law.
- [25:28]
Liam
Yeah, I mean, I think that at the bitcoin conference this year. Patrick DeWitt, the. I forgot what his exact title is now, but he said that there was an announcement coming soon. I think that we're just continuing to see more of the, you know, government apparatus at work where they can't get anything organized. And honestly, if they did really care, they would get this done. Like, they've invested into quantum stocks. They've done other aspects. I just don't think this is necessarily the largest priority for them at the moment because if they really did, like, they'd find a way to do it. So they're trying to figure out if it's the Commerce Department or Treasury that can ultimately have control. It sounds to me like the only way to really hold it for a period of time without actually making sure that the next company or president can come in and sell it is to put it in the Commerce Department's bucket and put it in the US Sovereign wealth fund. I don't necessarily see why it should be taking this long if it really was a priority. It seems like cope to me in order to just kind of say why there hasn't been anything going on.
- [26:42]
Mike
Yeah, I don't, I don't know what to make of it. Outside of the Overton window, completely moving. When you think about Bloomberg's reported on these different sections of the administration competing or talking about where does it sit. That's pretty, feels pretty crazy from, you know, even if the SBIR was going to happen, that they're still in discussions about it. So I think it's like directionally, cautiously bullish that, that it's something that they deem as strategic importance. I think when you look at some of the other headlines just to jumble them all. So people with that don't necessarily like Trump at all, don't turn off the show that there was his American mining firm that I think his son's run that had added bitcoin to it like 500 and then. But it was part of those like reports that he's holding like 50 million in cold storage of wallets. And there might have been one other thing that I do think, like, you know, part Coke, part squinting and seeing that they're laying the groundwork, that they're bullish on the sector. And so it's not. Even though we're sitting at these like, you know, 50% off of all time highs, there's a lot still happening in the background directly related to bitcoin.
- [27:58]
Brian
Yeah, I would say that's fair. I mean, that was my read of this report. As well was that there's argument and debate about how to get it done, but there's maybe not as much argument and debate about whether to do it. So from that perspective, you could view it as as a positive. But Liam, I also agree with your point. Like it shouldn't be that difficult to set this up. It really shouldn't be that difficult to give us the audit, which was part of the original executive order. And that still hasn't come. So. All right, that's enough Trump talk. We're going to move on. I think the other, probably the biggest announcement from last week in sort of the digital asset space was the launch of this initiative called the Open Standard. And so this is a tweet from us at early riders on the initiative. I'll just read part of it here. On June 30, more than 140 companies including Visa, Mastercard, Stripe, BlackRock, BNY and Coinbase unveiled Open USD a dollar stablecoin run by a new independent company called Open Standard. Circle, Tether and PayPal are not on the partner list. Circle stock fell 16% on that day. And maybe, Liam, I'll open this up to you to just give sort of a primer and what you think about it. I mean, my initial gut reaction is the naming convention is just funny to me. Like it reminds me of OpenAI, which is, you know, not open at all. It's very closed. This consortium which, you know, we've seen attempts at things like this in the crypto and digital asset space many times over the past several years of these consortiums, of all these enterprises and tradfi companies coming together to do something, typically not much comes of it. Maybe this is different 140 different companies that are going to basically build this stablecoin standard. Thoughts?
- [29:50]
Liam
Yeah. So the most interesting part is it seems while it says Open Standard, it's mostly backed by Stripe, to my understanding. Just given Zach Abrams, who is the person behind Bridge, who essentially allows companies to launch their own stable coins, is the one who's going to be managing Open Standard and taking a fee for doing so. It came out after this that there are actually a number of companies that didn't actually sign up to be in the consortium that found their name on the list. And I think some of the takeaways are that it's it's fairly easy to put a your name on something that is saying you're in the consortium in order to have your name out there. But there are so many instances or details that are yet to be worked out and so how this is different than existing stable coins like Tether and Circle that essentially keep most of the yield from holding U.S. treasuries and sometimes Circle share some with Coinbase. This will actually be where the open standard does not keep any of the treasury yield spread, but they actually distribute it to their partners who are getting the most volume based off of it. So if you have Stripe or whatever, Venmo, any other company out there that has a ton of volume that goes through it, they will be the one who keeps some of the spread. So they don't actually share that much about what the economics look like. There is some management fee that's going to be paid to Open Standard. I imagine that some of the folks who are on this end up kind of bailing out and maybe they prioritize Tempo and the Stripe internal blockchain a little bit too much to make other folks happy off of this. But I do think that this will have extreme success just because of how many massive names are on here and that do have distribution. So that's kind of my initial takeaway. I was curious, what do you have, Mike?
- [31:57]
Mike
Yeah, I think, I think that is the key component is the names. If you go to the list, Brian, like where the logos. I don't know if there was a better full partner list maybe, but just calling out some of the big ones, you know, a number of banks, I mean look at that. Abu Dhabi Islamic Bank. But if you go down Brex, Coinbase is obviously here, which is interesting. It was a lot of tradfi, I think Visa, who else was in there?
- [32:33]
Sponsor/Ad Host
Master.
- [32:33]
Mike
I don't know if MasterCard was also. But I think at face value, a lot of individuals are not bullish. This from different levels of the consortium not working to. This has been tried before. I think I would take the other side for the reasons of the amount of people involved. But also Libra was the closest back in 2018-19 to set something like this up. But it did not have the political, regulatory and momentum that we see today. And to your point, like Stripe operates at an insane scale and it, it hasn't been said explicitly, but it's implied that it's strike back, you know, with Zach Abrams, who Bridge Stripe had bought. Bridge is moving over to lead this consortium. And I think this all goes back to. There was a chart I had posted, it came out earlier where, let me just get the exact numbers. So effectively 2015, roughly, governments own 36% of US treasuries and right now, today it's 12.9 or 12.5% and at that same time the debt's quadrupled four times.
- [33:58]
Brian
Right.
- [33:58]
Mike
So it's 38 trillion and there needs to be a demand for dollars to keep this going and there's going to be multiple levels leverage for this. And the main point is that when you take that geopolitical need of demand coupled with there's a, there's a notion of the consortiums that have all their liquidity and all of their like clients and their frameworks for how they move dollars invested in making something like this work, you start to see where you can get the flywheel. Because if you guys think about it like we've been talking about the stablecoin stuff, but we talk to banks, we talk to other firms and the big question that you can really feel being in the middle of it is how is consumer adoption going to happen? Because the tech is almost there or the tech is there. It's how do you actually get mom and pop and us to be to start using these things that add real value? And this seems like a directional way you would do that, which would suck more demand for liquidity, build more businesses external to the us, push dollar dominance outside of the US
- [35:09]
Liam
and so I
- [35:10]
Mike
feel like this is just a natural order of where things are going. And so yeah, I think that this has real legs. There was something else I was going to say, but I don't know. Brian, did you have anything before I come back?
- [35:21]
Brian
Yeah, I mean to me I would also fall in the camp of this is more likely to work out and be successful to some extent than most people think. I think there is that notion or that perception that these consortiums don't usually work out, which is true. However, I think this is a bit different in that the way I would read it is like this is the only way that all of these other companies are going to be able to compete with Tether effectively. Like Tether has such a stranglehold and early head start on the stablecoin world that in order to compete there, like you actually just need to get everyone else on board with something else to try and compete with that. So from that perspective it makes total sense to me that this type of consortium is being formed that is basically everyone x Tether, like every tradfi, every crypto, every enterprise is getting on board with this. And Liam, to your point, like we'll see where this goes and who drops out and whatnot. But that's how I kind of read it is like this is the, this is the only way that you are going to be able to try to un. Unseat Tether's dominance? Basically, yeah.
- [36:37]
Mike
There's another layer to this. I won't go all the way through it because I didn't read the full article, but it's really worth putting in a guild channel. It's a publication I've been sharing with you guys and I never subbed and I need to because I want to read the full thing. But it's called Currency of Power and it's effectively like deep experts on the banking side and tradfi side but also on the digital finance. And it effectively likens this to open sourcing the dollar and referencing like Linux and just ultimately like once you commoditize certain layers of a stack that maybe weren't necessarily commoditized before and there were closed loops like circle and Tether, you can effectively push people to other parts of the stack to generate their fees, their revenue. And this feels like what that might actually be where circle, tether, they'll have their dominance, other liquidity. I don't think they'll go away but their percentage of total flow that runs through digital dollars will diminish. And it'll be because every financial institution, almost every tech company and we'll talk about some other things that are happening on the stablecoin front. We'll have to naturally embed this. And why would you not embed this if you're getting more value, sending more value to your clients and you can maintain a lot of those unit economics because this is effectively open source and I think there'll be multiple but there's a recognition that we can't have a thousand digital dollars. And so you need to open that up and then have everyone kind of chase the value that they accrue or derive based on their own economic incentives of their business model. And so I think that's a mental model. Look at this for this may succeed because it's a. If they can succeed at open sourcing, quote unquote, open sourcing the notion of anybody can participate, spin this up and then we know at scale. Be careful saying this because I think like at scale you can make the case. I'm not saying it's a strong case, but it's arguable that Stripe and Bridge have the best models of how to scale an open source dollar. Right. Because Tether has scale. But it's at the front, like emerging markets, it's at smaller, especially international. And then you have circle. But circle's played on very heavily in the Crypto world.
- [39:06]
Brian
Right.
- [39:06]
Mike
When you think about Defi, that Bridge and specifically Stripe definitely know payments, they know infrastructure online. And so if you're going to do this, they probably sat for a year on this, if not longer and looked at because they're not doing this as an altruistic version, they're going to make money from this. And it's like, well, do we want to own. Can we feasibly own the dollar era of digital dollars or does it make more sense for us to do something like this? So I think those are a lot of the things just embedded in here that we maybe don't necessarily talk about or don't have that lens into that. There's not actually a tradfi player coming in that has the scale of Stripe to be able to have the foresight to understand what needs to be done.
- [39:48]
Liam
Yeah, there's a lot there that I think is accurate though. One, I do think that they play in completely different angles than the tethers and the circles. They probably are more so focused on the payments angle. And using stablecoins is just kind of almost the invisible rail. And the other aspect is like yeah, I think that they'll 100% make it pretty much as open as possible and allow for anybody to. Anybody can join open standard or at least apply to join at the moment. But I think at the end game, once they get to sufficient scale they try to almost like turn it from open into closed where they will then implement additional fees for minting and redeeming which they don't have now. It just make it harder to shift from stablecoins to whatever dollars or outside of the system in Rails. But I think that that's kind of likely where the end game is if they get to sufficient scale which I think that they will try to go to.
- [40:51]
Mike
Sorry, yeah, this, it reminds me a little of back in the day Google.
- [40:57]
Brian
It's not exact but it's a, it's
- [40:58]
Mike
a mental model like for the incentives is Google, this was only like 10, 15 years ago. There was two dominant players. It was Comcast and Spectrum. I believe it was Comcast, Spectrum and you had like fios and Verizon was up in the northeast and so they were incentivized to provide, you know, high throughput. And then everyone else just got this 235 megabytes download and the top line number was like 2 to 3% in CAPEX invested annually in any infrastructure from Congress because they had a monopoly. And what was understood from the large tech firms, it was really Amazon, Google And Facebook. Google had the most capital and also the most reason to do this is they understood if their models were going, their valuations and their businesses were going to grow over the course of the next couple decades. You needed more throughput when you think about YouTube, YouTube TV ads that you're servicing. So you needed to spark the network to grow those pipes, to put more data through them. And that's what Google Fiber was. I was on that team that was part of the deal. And so they didn't even, I think it was understood they never planned to actually turn into a business model. It was to get the rest of the market online doing that. And then now everyone can get effectively like 100 megabytes all the way to gigs for like $70 or whatever. And this reminds me a little bit of that of like you need to get people into that digital throughput because then that's when you start thinking about the cloudfare stuff will pull like how much economic value starts to move online and move through these native rails that I think we all know it was supposed to be the ability for micropayments online, but because we were relying on the Amex and Visa aspects of it that never really proliferated. So we have this kind of weird broken Internet that I don't necessarily know this is the full reason, but I think that's a mental model to think about why it would make sense to pass all those economics because they'll make much more money once values being the volume increases on the Internet.
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- [43:35]
Brian
Totally. I think that's a great analogy. You alluded to the Cloudflare announcement from last week. Liam, maybe I'll hand this to you. What's going on here and what are the implications?
- [43:46]
Liam
Yeah, I think that just looking at the backdrop, the Cloudflare I think showed about a month or two ago that more volume goes through AI agents accessing the Internet than actual people. And so the entire Internet was just set up with an advertising model essentially where folks will just, you know, look at ads in order to actually monetize having Internet entertainment or whatever else out there. And so fundamentally, if no humans are looking at it, they need to necessarily change that. So Cloudflare has integrated with X402, which is open protocol that Coinbase specifically is supporting right now and using a bunch of stablecoins in order to allow for micro payments on the Internet. They've created a essentially wait list so that anybody can use an API or MCP in order to pay for specific information on the Internet. And it's pretty simple to use for anything from micropayments. It's, you know, not necessarily out there in full at the moment, but obviously, you know, this is very US centric just using stable coins. And while there is no necessarily way to KYC or need for it at the moment, I think that we all know that it's going to shift from, you know, us controlled money to open protocols like Bitcoin over a longer time horizon. But I did think this was really interesting just because AI is probably going to change the way that the Internet is run and then we just need native money on the Internet.
- [45:26]
Mike
Yeah, if you leave this off, I'd be curious. I'm going to throw a couple things out and curious Brian, and then your thoughts on one is if anybody's played around specifically Fire Crawl, there's no shortage of. And we've actually already seen this like how all these models were trained was the web crawlers and Google and all the data that you're able to reference. And so now because of AI effectively being commoditized and then everything on the Internet you can, you can scrape and take anything off of anybody's webpage and I don't necessarily know the architecture stack on if this could be implemented, but you can imagine if you work with cloudflare via your web hosting and if anybody's hitting that site, they effectively have to. You're loading up stable coins into your balance and then you effectively have to pay them to take whatever the number of calls are to pull any of that data. That's just an example. There's no shortage of others. But the other one I wanted to throw out is the notion of the amount of slop. Right. Because I think we all know how much slop. I think it was. I mean to your point, it was the number of crawlers that are on the Internet. The. What was the exact stat about? It was like 58% of all Internet traffic was like agents or something like that. Was that what the stat was?
- [46:39]
Liam
It's something like that, yeah. It passed 50% a few months ago. Yeah.
- [46:43]
Mike
So if you think about the amount of slop on, on Twitter, the amount of posts that are bots, amount of stuff getting thrown online and it's only going to increase as people and this technology AI diffuses through the economy that this had already been kind of played out or at least the theorized on the Noster side, which was around like micropayments valuing in like tweets or likes via Lightning's apps to discern where more value or signal was. There was stuff they tried a few years ago. I think it was like lighter or highlighter where you could find places on the Internet and you found value and then you could effectively attribute value to them, monetary value and then via however it crawled, you'd be able to pull up via indexing what's the most valuable insight. Think about like Reddit, that you probably see something like that before you ever see the Bitcoin side. It'll be on the dollar side because if we talked about right before this that they're incentivized to get more throughput and economic value via stablecoins online. If everyone has these wallets via your Chrome browser, your DIA browser, whatever browser you're using, which by the way DIA and Comet or fantastic browser, that's a different story. They'll probably be the most native to put this embedded as well because they basically live between like traditional Chrome browsers or Chromium based browsers. But also like AI, you can see a world where you can attribute this like micropayments to it and then you can naturally fix some of the slop. And I think that's part of maybe even what X will do when it comes to their embedding more digital assets into the platform.
- [48:25]
Brian
Yeah, I totally agree with that. I think, I think that's the only construct or framework to avoid the sort of avalanche of like. I think we're scratching the surface of what the amount of information, the amount of AI generated information that we're going to see on the Internet in the coming years. I think the only way to combat against sort of that avalanche is to have some sort of value system attached to the information itself. So whether it's it's via this web scraping idea or it's like on the social side, like you said, with zaps and attributing value to people's thoughts and content, I think that's where we need to go in order to be able to Sift through the, you know, infinitely expanding universe of information that is inevitable at this point. So I totally agree with everything you described there. Anything else on this?
- [49:21]
Liam
100%. I was just going to say, yeah, if there isn't something figured out just because of the volume of, you know, agents and things that you can publish on the Internet pretty much autonomously at this point and with recursive loops just nobody's going to use the Internet if it's not gated in the right way within like even a few years or a decade.
- [49:42]
Mike
Yeah, that's exactly right. I think it's just going to be the monetary and like economic incentives if you want people online and you can actually get. It gets back to that whole version of like creators, the words escaping me but like you can actually provide value online and generate real revenue not tied to the centralized third party IE X or whatever. If you're delivering that and then people are deeming it and same way with like blogs and other stuff, which also changes the dynamic around the subscriptions, which that'll be also interesting. I think that's been rumored and talked about for decades at this point is like the whole Wall Street Journal Bloomberg model. And do you really need to sign up for, you know, a month long or annual subscription versus paywall and pay for it?
- [50:33]
Sponsor/Ad Host
Yeah.
- [50:35]
Brian
All right, we're gonna get back to the list because like I said, big list, we're not even halfway through it. We don't even need to talk about this. But it's on the list. So I'm bringing it up. Strategy sold a little over 3,500 bitcoin last week. They sold this bitcoin for less than they bought pretty much the same amount a few weeks ago. So strategy is doing strategy things. Any thoughts on that or we can move on?
- [51:05]
Liam
You have anything, Mike?
- [51:07]
Mike
I mean, I find it interesting that they buy the tops and sell the bottoms. That's kind of an interesting model. Yeah, I think, I think we're in a place where strategy is going to be a part of this narrative for a long time no matter what. And I think Fong openly said it. They're more of an active manager manager now. It's more of a hedge fund style. They're going to be doing other things with the underlying asset. And yeah, I think like we were talking about this before, the call is like, realistically people are going to always want securities and so if they feel like risk adjusted, they can potentially end up with more bitcoin Audi Net, then that's what they're going to do. They may end up with more than they end up with less. But this kind of changes the dynamic I think what they initially started on. So everyone just going to have to make their decisions on holding that equity and then specifically when bitcoin rips, we'll see what that equity does in the future.
- [52:13]
Liam
Yeah, I mean we've talked a lot about this and why especially as we just want to do with everything that's going to go on with the Internet and the value of owning the real money versus securities. But people like it. I thought it was interesting that they sold the bitcoin and while they said that they would buy stretch at like low levels, they didn't actually buy at this time. I think that there is a lot of people who still value just the positioning and what they can do in the future too. So interesting to see. We'll probably have to keep on talking about it for a bit, but at least seems like the markets reacted pretty favorably so far.
- [52:51]
Brian
Yep. All right, moving on. This is another I, I, I kind of think fairly important headline from the past week or so is that we've seen some of the largest outflows from the Bitcoin ETFs since their inception. And you know, that tracks. I think we talked about this a bit on maybe last trade last week that the predominant people exposed via spot ETFs are not really institutional allocators. They are retail participants in their brokerage accounts. And so it's not entirely surprising that you're seeing a good amount of outflows from these products just given the downturn, the sentiment and typically, you know, not fully understanding what you own, particularly if you own it via an etf, you likely don't have a super deep understanding of the underlying and so you may have weaker hands when there is volatility and downward pressure. And so, you know, I think this is probably not what a lot of people expected to see. I think earlier in the year when there was a bit of a downturn, we sort of noted that, you know, the ETFs were holding strong, there wasn't a ton of outflows despite the, the downward price movement. But now we're kind of seeing the opposite. So not many more thoughts in that. But if you guys have anything on
- [54:11]
Mike
this, I think the only thing to add is it was reported somewhere else that from the whale perspective they had increased their holdings. I think they, the methodology was like over 250,000 BTC. I didn't dig into it deep, but it was effectively like surmising that like this marks bottoms when you see well start to accumulate again. So I thought that was interesting that you're seeing retail leave while accumulators because I think that's effectively what's happened over the 17, 18 years of Bitcoin's history is there are certain sophisticated large holders that will sell when they feel things are frothy and then they'll pick it back up and accumulate as the market does this. And, and it's almost like this reflexive loop that they cause. Right. Because if they're dumping into that weakness and then picking up when you form a base, you, you can really increase your long term holdings if you do it right. So it feels like that's another component to this kind of like bottoming out.
- [55:10]
Liam
Yeah. I would just say the one other aspect too is it seems like while the ETFs have, while Bitcoin was cut in half, ETF net flows only declined like 11ish percent from the top. Which shows that some of this definitely is a lot of long term holders and new base that's come into the asset class. And I think that the other aspect too is just the carry trade being unwound as people are pricing in weaker bitcoin prices at the end of the year. So while over the past two to three years people have generally thought that bitcoin price would be a lot higher later this year. And so with the unwind of that, a lot of hedge funds are just exiting ETFs in general. And so I always think that when the hedge funds in general market doesn't think that Bitcoin's going to be significantly higher in a year, it's probably the time that you want to be, you know, actually allocating and at least TCA a little bit harder rather than when people think that bitcoin's gonna be 40% higher later this year too.
- [56:15]
Brian
Well said. Moving on, headline from late last week, Russia's largest bank Sberbank targets December crypto wallet launch. This says here they plan to launch a cryptocurrency wallet in its Spur and Spur Investments apps by early December alongside a digital asset depository. Planned rollout depends on Russia's digital asset law taking effect. To be honest, I haven't been super close to Russia's regulatory stance on digital assets and crypto, but this to me would signal that it's headed in a positive direction. Sberbank is Russia's largest bank. I used to cover this company actually back in my private banking days it was always one of the largest holdings in this emerging markets manager that we had a pretty large investment in. So this is a, this company is a real deal. Like this is a large enterprise that is, you know, following suit with, you know, a lot of US TradFi firms and globally to, you know, get their head around digital assets and launch products around it.
- [57:18]
Mike
Yeah, I think this, we can maybe tie in a few from the global aspect. There was this Russian Russia announcement but also and then a spur bank had come out like a year or two ago about structured products around Bitcoin, but then Germany as well and some of the banks and financial institutions turning on buying and selling. And I think this just ties into the bigger tailwinds of like globally this asset classes becoming something that's going to be long standing. We'll talk about, you know, we talked about ets, we'll talk about the vanguard stuff that it is bullish. I think part of not getting that blow off top and the, the high that we thought were. I'm hoping that we don't get the lows that you'd also expect and that that also helps tremendously from a tradfi perspective in executing on these plans because when a market blows up 80 to 90% like we saw with FTX in 21 and 22, it shelves a lot of these initiatives that we're getting to actually see which I think are going to be long term. Very bullish.
- [58:19]
Brian
Yeah. This was the German headline at a Bloomberg local lender set to supercharge crypto trading in Germany. So two banking groups which collectively have tens of millions of customers believe crypto trading is now reaching a broader audience. I guess this is most interesting to me in the context of the German government, if you remember, sold all their bitcoin. I guess it was, was that a year ago or two years ago, I forget. But they sold it roughly around these levels. So I guess it was a year ago for the run up into the election. So I guess that was two years ago. But yeah, now, now there's sort of the enterprise world or the tradfi element of Germany is taking the opposite stance of the government and saying there's actually real demand for these things. We need to build the infrastructure, enable to support these products. Another headline we had was EDX Markets closes $76 million Series C funding led by SBI holdings to enhance institutional digital asset infrastructure. Mike Orliam, did you have anything on this?
- [59:24]
Mike
I mean I think maybe we tie this into the tradfi version in the sense of. So EDX was. It's not really a Consortium, but it was backed and founded by Citadel, Charles Schwab and Fidelity. And I believe it was Citadel COO that went over to be CEO of this firm. They sit really at the institutional plumbing around settlement. But I think that close to $100 million raise. You see this on the backs of Vanguard coming out looking for head of digital assets to work across lending, crypto, some other structural products. I think we're just seeing a heavy amount of where this market's going. We saw MICA and the regulation get turned on this past week. At the same time, you have firms globally turning on within their traffi teams like the ability to buy, sell. I think this is kind of like where if you had to directionally say clarity may actually pass because it's always been that mental model of you're going to need the regulatory apparatus launched active before you could really see this thing take off. And that's kind of in the base case, at least on my side for. For how to evaluate like where we're at in whatever cycle we're currently in.
- [60:36]
Liam
A hundred percent. Yeah. I think on the SBI holding side that invested into EDX markets, I think they just acquired BitBank prior to this for over $200 million. So. And that was just right on the heels of the Japanese regulation changes. And so, you know, we're going to see that more and more, I think. Mika, while there have been a big exodus of European firms from the region, I think Binance, USDT etc. Have exited the region. It will. While the regulation isn't perfect, the German lenders who are coming into this space now and there will likely be more acquisitions in the space. It's just legacy firms want to offer these products that they've been waiting to offer to their clients for a while. So I wouldn't be surprised if they have more moves that are kind of coming under the surface and now that the regulation is ready, they make their moves kind of to the public.
- [61:33]
Brian
Yeah, you mentioned Mika going live last week. We touched on that. And this headline is, you know, sort of downstream of that of Revolut the European fintech delisting USDT as a result of Tether's non compliance with mica. And then alternatively you have Coinbase announcing this morning that they have obtained their MIFID license in the United Kingdom. So it means UK users will soon be able to trade derivatives and equities alongside crypto on one platform under one login. Any thoughts on this one, guys?
- [62:10]
Mike
Yeah, I mean, my initial thoughts are this ties into what we've been talking about. Well, there's two aspects. There's one is you have to be regulated. You're going to have to play by the rules and be very close to the government and everything they require if you're going to be allowed to exist in this new future world. It ties into the vertically integrated nature of putting traditional financial assets next to digital assets and then increasingly tokenized assets which Coinbase has been working on. And then also the Revolut stuff I think super interesting because I believe they're the largest fintech in Europe and kind of kicking out Tether and then also Mika. I don't think Tether actually decided to operate in Mika and then Binance hasn't been able to get it yet. They said they are, but I believe they're not allowed to operate right now because they failed to get their license. That it goes back to kissing the ring. What are the firms that are going to play and that I think it's almost like Tether has a role in all of this.
- [63:08]
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That's.
- [63:09]
Mike
But it's been understood as almost like this like offshore dollar like you know, euro dollar market where it sits outside of the traditional rails. It's allowed to sit there and operate at its scale but it won't be necessarily into the traditional firms like the Coinbases and Revoluts.
- [63:28]
Liam
Yeah, Paolo specifically said he didn't want to pursue mica licenses because I believe that they need to keep 60% of their cash deposits with European banks. And he was too concerned about bank runs or at least that's what he politically or postured publicly. And so yeah, he's kind of bowed out there. But yeah, they're kind of playing a completely different game than the rest of those folks who are trying to get regulated at the moment.
- [63:57]
Brian
Similarly, we had to the Coinbase news Robinhood chain goes live on Mainnet alongside 24. 7 tokenized stocks, perps and planned crypto agentic trading. So this was I guess the extension or solidification of some announcements that Robinhood made at this was their investor day. Feels like roughly a year ago that they were launching their own chain. This layer two built on Arbitrum that was going to allow for stock token trading, decentralized lending out of Robinhood, earn a revamped wallet. So sort of the next steps in the build towards the Everything app, the Everything financial app that allows me to gamble on prediction markets, trade stocks, cryptos, perps, et cetera. Anything on it.
- [64:49]
Mike
Yeah, there was a few things that I wanted to throw out to you specifically Brian, but I mean also you Liam. It's my understanding there's a few things happening here where Robinhood for the first time or directionally is going opposite of what the trend historically had been in crypto where you launched a chain and then you try to go out to the market and get other people to use it. Where Robinhood has its distribution and they basically embedded or kind of like co opted certain chains and it's, it's I think being understood by a lot of these like ghost crypto platforms that they're now seeing M and A from large banks and firms to say like well let's bring this in house to launch our infrastructure initiatives. And so they did a few things here. I think it was like lidar some perp stuff. They did morpho. Morpho's on this list because they raise capital and it ties into the AAVE stuff where there is I think like at the meta directionally it makes complete sense. The objective signal is individuals want a singular financial institution to do the standard things that you would need for quote unquote wealth preservation, which is okay, I need to manage my dollar general, I'm denominated liabilities, I may need access to buy investment products, whether it's bitcoin equities, et cetera and then I may want to earn some nominal yield on those dollars. How you do that is where the devil's in the details on. You know, we have our stance on very conservative dollars sitting in treasuries, you know, Bitcoin, bitcoin, non rehypothecated loans, Bitcoin as that core product. But then you're going to go out and you're seeing this with these other firms. We talked about Kraken last week and you know, investing in aave. And then what does it look like for those lending products? Morpho raises capital. They're also embedded in Robinhood's product. And so whether we like it or not, there is going to be a lot of value to be delivered and also invested and created on these different products. Collapsing all these different disparate services into one native application. And then long term it's like who builds the best brand, who stays alive, who delivers credible yield year over year in the most conservative way that builds that brand and then also will play in different segments of the market because some products will be naturally highly more speculative. Like think of the Robin Hoods of the world versus something like an on ramp would opt to be more education conservative, Bitcoin centric with the notion of long Term wealth preservation, accumulation via like singular assets. And so I think you can just see this playing out. And then what's interesting is you have on the incumbent side real money, real capital sitting there, but realizing that like they need, if they want to keep that capital within their, their, you know, walls and their construct, they're gonna have to embed some of these things or the early adopters or innovative clients will leave or their family members will leave. Because that's the thing everyone's trying to chase and to, is to keep that perpetual loop of when somebody passes their family members not leaving the, the firm. And that's where I think Vanguard is. It's, I mean we'll see how they play out. But they were so antagonistic to Bitcoin. They were the last holdout and now they're looking for people to, to bring this lens into their, their, their own.
- [68:07]
Brian
Yeah, I'm glad you we, I had the Vanguard thing pulled up earlier but I'm glad you mentioned that again because that is sort of a nice signal of, you know, you can be antagonistic or anti this industry and these Rails for only so long until you have to basically capitulate. Because I think a big component as you described there is sort of the intergenerational wealth that gets passed down. And if the financial system is moving towards digital assets and these new Rails and these new product offerings, you either have to build them yourselves or you're going to lose client assets. And we've already seen the inkling of that. I think Charles Schwab pivoted for a very similar reason as they saw flows leaving the platform to get exposure via, you know, other crypto native platforms like a coinbase. So yeah, totally agree with all that. Maybe a couple other deals to just run through and you guys can pick through which ones you find most interesting. But Venice AI raises 65 million at a billion dollar valuation. This is Eric Voorhees AI company that basically allows you to plug into various LLMs but in a privacy focused way. They also have a crypto token attached to this project. Another one here was crypto payments company Mesh raises round valuing up to 2 billion. And then Palmer Lucky's Erebor, which we've talked about in the past, his sort of startup focused bank that is digital assets focused stablecoins, Bitcoin et cetera, is eyeing a valuation of at least 8 billion. Any of those you guys want to talk through?
- [69:41]
Mike
I'll throw a few things out because I'm curious Liam's response more to the other Two I mean the Palmer lucky error stuff I feel like just reeks of close ties to the Trump admin teal and that was always going to get its juice no matter what. And its flows. The mesh stuff's interesting because it goes back to stablecoin dominance. And then it's interesting that Binance I believe is leading this round. I'd really be curious to dig into mesh and just where there flows and I believe a lot of it is just external B2B. So anybody that doesn't have access to US dollars or easy access, the, the Venice one I think is important to call out simply because from a pure like capitalist perspective and not saying I would do this but there probably is going to be money to be made here. And Vorhees made money in multiple fashions in the year Ethereum pipeline, most notably in Shapeshift. Um, and there's a real quote unquote model narrative around AI sovereignty compute tokens in the same way that Shilbert, Barry Silbert and I forgot what his token was called and how, you know, bit tensor or whatever. Yeah. And I, I think that there's, there's real angles there. The problem isn't similar with like most things in crypto. It just misses the mark on the incentive model. I think there's multiple tokens. Like there's this one token here and then you can stake it to get the stable coin. And I think the net net which is important as folks listen and follow along in this build out is you're going to see more of this in the same way. I forgot the other angle. It was more of like they came up with these different acronyms around like real world physical assets and then you need a token. And we saw this with helium back in 21 where you're like trying to build out Internet framework in these like mesh networks. And the point is that you don't need a token for it. Like I do think the world will go more decentralized. You're going to want to have COMPUTE hosted. That's private and you'll have to incentivize people to run it. Now you're always going to run into the buzzsaw of all this stuff and then what does it look like from a compliant regulatory perspective and privacy. But if you're operating in the US you're operating as a commercial business. It doesn't matter if it's Bitcoin or this token, you still have a problem which is there's a throat to choke and you're running that business. So that Viability is always the issue, but you don't need a token. And you've also seen that as you embed tokens, it actually works against the viability of the business model long term because you just create all these misaligned incentives. So anyway, I thought that was the most interesting is like there is an angle we had Mark Yusko on, he referenced that he invested in it. It was before this because Morgan Creek was in here and this is the first thing they brought on capital. And I don't, I even question like Voorhees and those guys if they really meaningfully like do this to Rug or they, you know, don't necessarily understand money and they believe you need a token to run the business.
- [72:45]
Liam
I think these guys are. Go ahead, Brian.
- [72:48]
Brian
Actually, I was going to say I think Voorhees is an interesting character because he, you know, the first money he made was selling his website called Satoshi Dice and then he moved on to the Ethereum sort of ecosystem and founded and sold Shapeshift. And I would say he does have a very deep understanding of Bitcoin. He just also believes in crypto protocols and the value of orchestrating different types of incentives with tokens like this. But when I look at Venice and I've actually used Venice, I think it's actually a great platform. But to your point, it doesn't need a token. I think the token, the way it works, I'm not an expert on this, but basically if you hold a certain amount of the token, you can get discounts on your like credit usage or your token usage using these different models. And there's because you can access all different models, there's different costs to them to plug into them basically. So if you're holding the token, you get some amount of discount versus just paying with dollars or you know, via a subscription. But when I look at that it's like, well, you could have constructed something similar that still had this privacy focus because that's really the pitch around why you would use Venice as opposed to these other LLMs is because they don't store or track your data. But you could build something very similar using Bitcoin as that sort of base layer or discount token effectively. So I guess it's somewhat surprising to me that Voorhees went in this direction, but also not because he's been in the crypto landscape for a very long time. And I think he does genuinely believe in these things having value and working. But go ahead, Liam.
- [74:32]
Liam
Yeah, I was just going to say it's not Quite as privacy focused by default if you're not paying up to specific tiers. So something to just keep in mind but I think that you know, Voorhees and CZ and those types of folks are come from an era where you know, Binance never really raised outside capital until MGX somewhat recently. I think that was last year or two years ago they just launched the BNB token. And so I think that they're from the era where you know, they're just, they're bitcoiners in terms of how they want to spend their money but they are open to shitcoining in order to get more bitcoin. And so I think that's kind of the real reason why they would launch the token.
- [75:14]
Brian
Yep. One other deal we had on here was Crusoe, reportedly in talks to raise 3 billion at a $30 billion valuation. Crusoe, if you're not familiar, is one of the early pioneers of natural gas flare bitcoin mining. But like many other miners, they pivoted to the AI side of things and that is what is really the source of appetite for this latest funding round. You guys have anything on that?
- [75:42]
Mike
Yeah, I think we'll naturally from our intellectually like curiosity talk more about this because we'll just go down the rabbit hole. I don't necessarily know if any of us are strong here specifically in energy compute. I'll personally I'm not but as individuals start learning and you start thinking about all the constraints that are coming. They're all physical in nature and it's kind of like inverting historically where value had accrued. Specifically in the US if you look at like software that's being commoditized now with AI and everything downstream of that. And this was an article around the AI data center. Power crunch and electricity, not chips is a real bottleneck now chips in manufacturing there is but the electricity and the build out is what's understood because of the lead times and also just a lot of the regulatory apparatus. It's actually interesting there was a article, it was a podcast and article super fascinating to look and Brian, you find it interesting. It was a guy that BPI just brought on. He was worked at the treasury and then I think he worked. I forgot who as a writer but it was effectively looking into CCP back propaganda around the socialist stuff that's happening right now. But going into also the investing in these groups that would, That would go out and I don't know why the word's escaping is but they would effectively go out and go to these different city councils and get them to not approve certain build outs because there's this idea that like China's trying to slow down the US and so a lot of the propaganda and these firms are behind like Greenpeace, which we saw, which like Ripple was there. But this guy had first hand knowledge because he worked for Riot in Riot, had got the approval in Corsicana, in the, in Texas. And then overnight they had all this backlash from the community and then they were able to back trace and funnel, find out where the capital was coming from. And it was like the CCP version. But anyway, long story short is that I think a lot of value accrual and mental models are going to have to be rethought or rethought through. When you think about memory, we've seen a lot of the DRAM and just in general across the board, Apple delaying when they're shipping certain products. We're seeing it was part of like this new iPad and just this I bought before this like random because I just had this. Once people caught on to the open call and like store in a lot of this data, it was going to naturally cause a constraint. And we're seeing this right now. And I do think that because of that it's going to not mean that everyone has to go and become a physical production expert or invest there, but there's going to be different layers in between, whether it's electricity, the, the chips, the memory that starts to move into where value can accrue. And the reason why Crusoe is the most interesting is because I've seen firsthand where a lot of these AI companies were, I don't want to say thought for dead, but their models were completely crushed like Crusoe was in. I think they didn't formally restructure, but they did a lot of things in the deep bear market of 22 and 24 if you just Google. And now they're raising at a $30 billion valuation. It's just insane to see. And so I think it's just something that we're going to have to be able to get smarter on and talk
- [79:04]
Brian
about 100%, maybe a few AI related headlines before we close. This was a big one from last week that OpenAI proposes 5% stake to Trump Admin to ease Washington pressure. This was sort of floated I guess maybe a month or two ago, but now OpenAI and Altman seem pretty in favor of it. But there was another tweet from early writers here around moonshot AI crossing 300 million in ARR this what we talked about a bit last week around sort of open versus closed source and then this Bridgewater model that they've been training and it's beating Frontier models on accuracy and cost. Maybe Liam, whichever or all of these that you want to chat about.
- [79:50]
Liam
Yeah, there's so much here. And then there was also one other angle that apparently Beijing is looking to close off access to a lot of their models over there too. So I think that there is a lot. And I don't know if you caught the Alex Karp rant about using open source versus closed source models. I think that one OpenAI is probably almost certainly stealing data and the only way that they're going to be able to reconcile having that much IP stolen from the average American is by, you know, offering 5% of their shares into the Trump accounts. And so that's probably going to be an angle that they're going to need later on. I think open source as a business model is going to be more and more prevalent. Folks are going to switch to, you know, these types of moonshot Kimi models that are purposefully built to be very large. And so the average person can't necessarily store them on their own Mac, Mini or something like that in their house. And so they will necessarily need to kind of create the infrastructure around it, whether it's the chips, power and deployment that has to be specialized on a whole vertical stack rather than just, you know, using standard out of the box efficiencies. And so I think that. And then the last one was the Bridgewater one that I thought was really fascinating, that was essentially forking open models in order to have, you know, lower costs and higher accuracy for specialized tasks. And this one was specifically sifting through all of the noise of headlines that came out of Reuters, Bloomberg, in order to know what analysts would specifically care about as it relates to central bank policy, new IPOs, et cetera. And in a world where there's just increasingly noise out there, having your own data that you can train open source models on will allow enterprises to become more and more valuable over time. And giving away that IP to anthropic OpenAI and not necessarily controlling your own weights and controlling your own data is going to be almost a non starter within a few months from now.
- [82:09]
Mike
Yeah, there's a lot here I would highly suggest. I don't know if you guys listened to the first 45 minutes of last week's all in podcast, went very deep here. There's the understanding and they reference, you know, Claude or Anthropic specifically the number of firms that they've just like basically undercut. And the one that's the they call out, the easiest to go is Figma. I believe one of the guys that was on the product team, sat on the board of Figma, renounced that or recused himself three days before they launched their design. And there's just no shortage of other examples of that. I think the two things that would be interesting just to share or call out is that I feel like that are absolutely certain are one is these firms, everyone's racing for AGI. And I think that is like first and foremost of AGI asi. Like what is this? I think that the smart people know the recursive nature that once these things and I think we're probably already there, compound and accelerate and so they cannot slow down. And if you take that first version then it means that everything else is downstream of that. So the impact that we get as individuals, how we can leverage is like figure it out. It's almost like bitcoin. Like bitcoin be money long term and then people that decide to hold it figure it out. That'll be on them. But there's going to be a race for that. But the other side is I'm starting to believe China's open sourcing their tools is also on that same lens because most people are not hosting those Chinese open source models, they're just sending that data over back to China because there's a bunch of platforms that are providing the inference and hosting these large models and then they're taking that data because it's effectively a way to shortcut to get more of the data, not have to distill back the models that the Frontier labs in the US are doing. And so it's just going to be the two things are everyone's racing for AGI ASI and so they don't necessarily care what everyone else has to figure
- [84:03]
Brian
out how to do.
- [84:03]
Mike
There's a lot of value in sovereignty that individuals will get if they go down these rabbit holes and figuring it out for themselves. And then two, that I don't know what two was. It was effectively something related to if everyone's racing there, the same component of like it's going to shift at a certain point where the scarcity and demand for intelligence will go back to like that value that we talked about. And I don't, I think that's the play with. It's hard to say at 64,000 but where Bitcoin sits that the other side of the demand for compute and intelligence will be like and how you manage your value.
- [84:42]
Brian
It's well said, gents. Well, we are overtime but we did make it through our list. So good. Good job, guys. Anything else before we sign off here?
- [84:55]
Liam
There's a lot happening despite Bitcoin being 50% off the highs. Super exciting time. Staying bullish America. Bullish Bitcoin. Great time.
- [85:09]
Mike
Yeah, good rip. We'll, we'll get this out. Actually, this is coming out and this will be the quickest, quickest turnaround. So if you're listening, today we just recorded. We, we. We didn't record yesterday. So everyone have a good week. We'll be back with the last trade later this week.
- [85:23]
Brian
Thanks, everybody.
- [85:24]
Mike
Later. Thanks, guys.
- [85:26]
Brian
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