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THE Bitcoin Podcast
HOW TO ESCAPE HYPERINFLATION & SHORT FIAT WITH BITCOIN | Mauricio Di Bartolomeo
01:33:12
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- [00:00]
A
That's when hyperinflation really started. The inflation was really bad. Like right now, for example, Venezuela is running on average like 172inflation year over year. That's normal for us. Like we insane, we bathe in that. So that's normal. Now. At that point it went from like 175, 200% to thousands of percent, millions of percent. It was incalculable. If you think like fiat is bad in America, boy, let me tell you about other fiat. This idea of shadow shorting the dollar with bitcoin felt almost like a no brainer. But at the same time, this concept of shorting the dollar as a foreigner, it's like, whoa, like, are you really? Like, you know, but because you're like, oh my God. But hold on, that's the one that works. Like, wait. But then you start basically understanding more of it and you're like, wait a second. But it works just like all the others. Like, it's not different at all. It just has these other privileges, but it actually breaks just as easy. And then you see, you see bitcoin price the dollars, you see the price that it's doing. Immediately the graph tells you, why am I selling this thing when I can borrow the dollars from it. So I think in the context of how divisive everything is getting, I think we as bitcoiners need to keep a sort of centrist approach to things and understand that bitcoin is going to outlast this administration and the next administration and the next one and the next one and the next one. And so we should try to build this as antifragile, as a sort of administration proof as we possibly can. Our view is that if bitcoin does what we believe it's going to do, what else do you need?
- [01:30]
B
Greetings and salutations, my fellow plebs. My name is Walker and this is the bitcoin podcast. Bitcoin continues to create new blocks every 10 minutes. The value of one bitcoin is still one bitcoin. And if you're listening to this right now, remember you are still early. If you're not already, go ahead and subscribe to this show wherever you're watching or listening and you're watching if and share it with your friends, family and strangers on the Internet. If you want to follow me and the show on Nostr and X, just head to the Show Notes to grab the links. If you're enjoying the bitcoin podcast and want to support it by becoming a paid subscriber, you can download The Fountain app. Search for the Bitcoin podcast and subscribe. By paying with Bitcoin via Lightning or Fiat via Card, you'll get access to ad free episodes and early releases of select content. Plus you'll help support this show. Head to the Show Notes for product discount links. Go to Walker America substack.com to get episodes emailed to you and head to bitcoin podcast.net for everything else. Without further ado, let's get into this bitcoin talk. Marisa, welcome. We were, we were just talking backstage, let's say, and it was getting far too interesting and we needed to start recording, but so how are you again? Good to see you, man. Stoked to have you on the show.
- [02:54]
A
Thank you for having me, man. I'm a big fan of you and Carla. I've been following you guys for a long time and I love your content. I'm excited to be talking to Toximus Maximus and, and other characters. But no, man, I love what you guys do for the space. I think it's a, the mix of education and fun is very, very needed and I get a real kick out of your videos. So congrats.
- [03:17]
B
Much appreciated, man. I mean, we need more fun in the bitcoin space. We can't start taking ourselves too seriously. I think it would be a massive mistake. You need to be able to laugh, laugh at the Fiat world, but then also laugh at yourself in the bitcoin world. Like that's, that's one of the key things. Laugh at yourself before, before anyone else can take away their power.
- [03:37]
A
I completely agree and that's why I'm actually a big fan of guys like you and Tatum. Like people that do actual humor on bit. I think that's a, it's a very. I wish there was more and you know, hopefully you guys continue to grow and become the new Colbert's or the new, you know, the new smart slash funny people, the new Bill Mahers or whatever it is that we're going to have in our generation.
- [04:00]
B
But yeah, this ticking Colbert's without the vaccine propaganda.
- [04:04]
A
Yeah, yeah. Him and Stuart used to be actually really great until they went crazy. But I remember in the early days I was a Colbert fan and I was a Jon Stewart fan. Like I would, I would listen to them. I thought they were funny, clever. Then all of a sudden they went real political and then, you know, it started going off the rails.
- [04:26]
B
It's funny when you're willing to, to pick on both sides equally. It's not funny when all of a sudden it becomes clear that you're like a. You're a political operative, you know, that maybe you were the whole time and you were just better at hiding it. But I. I think, like, there were some weird, weird vibe shifts that happened. I feel like Trump really kind of broke a lot of people's brains in that. Especially that first election where it was like people felt like, well, I just, I have to, you know, be on this side because I'm fighting for, you know, for democracy and everyone else is evil. And like, it. It really messed people up, man. And then Covid just messed people up even more. Like, I don't know a lot of people. Yeah, I feel like we'll never recover from that.
- [05:05]
A
You know, it's funny because I find so many parallels to what I'm seeing in the west versus what we experience in Venezuela. Like, in Venezuela, when Chavez won, it started out as incredibly divisive, right? Like, he basically took one side of the country and said, those, your neighbors are your enemies. And basically the second you start pointing fingers at your neighbors and you start seeing them as the enemy or contenders rather than your partner, it basically creates. It breaks up society into two camps. Like, you're either, you know, you're red or you're blue, or you're red or you're white or whatever the two colors are. And then that starts priming so much more of your everyday. And it ends up that we end up picking people that are even more and more polarized on either side because everybody wants to get revenge from the previous term. And. And eventually that all goes well until the. Until the pendulum stops swinging at either end, right? Because then as long as the pendulum is swinging, it can be divisive, it can be, you know, uniting, but the pendulum is swinging and you're giving everyone their shot. Eventually, the pendulum stops swinging because the democratic entities get crippled by one or two, one or the other, and then that's when the country just goes away because one group completely takes over and chases the other group out. I mean, I'm not want that to be the end for everything or how everything plays out, but that's what I saw. And so I'm starting to see a lot more of that them versus us type of rhetoric. And it's not great for all the great that this administration is doing for Bitcoin. I wish it was not as pinned to one camp as it is today because, you know, the other guys aren't sitting there saying, oh, this is so great, right? Like they're. They're probably keeping tabs and so we don't. That's not good for us, that's not good for bitcoin. You know, we really want this to be, we don't want the next group to go take down the sandcastle, this group build and then so on, so forth. So I think in the context of how divisive everything is getting, I think we as bitcoiners need to keep a sort of centrist approach to things and understand that bitcoin is going to outlast this administration and the next administration and the next one and the next one and the next one. And so we should try to build this as anti fragile, as a sort of administration proof as we possibly can. And so I think it's important not to lose sight of that because it wasn't too long ago when we were under the foot of choke point, right? And a lot of us still remember what that felt like. And being in this it feels a bit of like a dream, right? Like everything is sort of, you know, we have all these tailwinds but, but we forget how quickly that changed and, and I don't want it to go back to where it was, right. Like I want this to continue being the, the, the win behind everyone's sales regardless of your color. So I think we have, you know, we have our work card out for us to, to keep that balance.
- [08:07]
B
The best part about Bitcoin is it doesn't care if you're Donald Trump, a humble pleb, a company or a country. We all get the same rules. And one of the rules is he who controls the private keys control. So keep your coins safe by going to Bitbox Swiss Walker and using the promo code walker for 5% off the fully open source Bitcoin only Bitbox 02 hardware wallet. Then get your bitcoin off the exchange and into your own self custody. Bitcoin is ripping. Companies are buying, nation states are buying, plebs are buying. And your stack will soon be worth a heck of a lot more in fiat value than it is today. So now is the perfect time to make sure you have your security locked down tight with Bitbox Plus. And I can't emphasize this enough, the Bitbox 02 is truly easy as hell to use. Whether you're brand new to bitcoin, it's your first time using a hardware wallet or you are a well seasoned psychopath. Again, it's bitcoin only and fully open source. Head to their GitHub and verify that for yourself. No need to trust me when you go to bitbox Swiss walker and use the promo code Walker. Not only do you get 5% off, but you also help support this podcast. So thank you. It's, it's true. And I, I think it's. My hope is that folks on like it, Bitcoin doesn't care about your politics, right? Bitcoin's Bitcoin's code, right? It doesn't care. You, you know, bitcoin cannot keep you from using it. You can only, you know, you can only cut yourself off from bitcoin or your constituents if you're a politician who, like Elizabeth Warren, who's consistently been so anti bitcoin that, you know, anybody who listens to her and listens to her honestly and thinks she's somehow actually, you know, a good faith actor, she's hurting them. She's hurting them by perhaps scaring people off of bitcoin that would otherwise be interested. And I think it would be such a mistake for the Democrats to make this into a Trump thing. And that's. We were talking before this, you know, we were both in DC for the bitcoin policy summit. And that was one of the things that I heard. I live in Illinois and basically Illinois is a very blue state. You know, it's a Pepsi Cola state, not a Coca Cola state, right? In our little, in our little duopoly. Democracy. Democracy. And every staffer and even the senators that we were lucky enough to talk to, they basically, it's like bitcoin is Trump, coin is crypto is Sam Bankman fried. And even though they took money from Sam Bankman Fried, forget about that. It's all lumped together. And so it's like education is such an important piece here. You know, this is why we always need more bitcoin podcasts, right? We've got to saturate the market, get to get the education out there. But it's, it's sad to see. I mean, I, it's sad because I've heard this, a similar story from like my in laws, for example, who were in communist Romania and say, look, we see some of the same markers here in the west that we saw in communism. You're, you know, you're saying this like, look, you know, I grew up in Venezuela. I'm seeing some of the same writing on the wall that we saw there. Like, that's such a sad thing for me. I was privileged enough to be born in the United States of America. I still think America is the greatest country in the world because of the ideas and the foundation that we have here and the People that it attracts. But man, it's sad to see that pendulum swings back hard and it's kind of a constant thing. I'm curious too. I would love to actually dig into a little bit because I think I told you this before we got on, but you have, I think, one of the most interesting kind of bitcoin origin stories that I've heard and it's really powerful. You've spoken about this at conferences multiple times about how you found bitcoin and what that really meant for you and your family. Not just in some theoretical way, but very real in terms of survival. Can you walk through that story a little bit? Because I think it's really important for people to hear stories like this.
- [12:11]
A
No, thanks man, I appreciate it. I'll try to keep it concise because I can wax poetic on this. So as I mentioned, I'm from Venezuela. That's where I was born and raised. And anyone that's kind of followed the Venezuela story or the journey 25 years ago we were this beautiful country with amazing beaches, most beautiful women in the world, statistically. Not because I'm not, because I'm from there.
- [12:36]
B
You're not biased?
- [12:37]
A
Yeah, no, I'm not. But we had, you know, ample resources, the biggest oil reserves in the world. Mind you, it's hard to refine crude, but on a numbers, just in a pure numbers, absolute terms, Venezuela has, has the biggest reserves of oil out there. And the country had, you know, the opportunity to become Latam's Dubai. You know, growing up, when my dad was sort of getting his, his start in professional life, you know, in the 70s etc, Venezuela was a booming country. In the 80s it was a booming country. Now the problem with commodity heavy countries like a Venezuela, like a Nigeria, like any other, is that you have this, your economy dances to the beat of that resource, right? And so it's. The success of your economy is very, in many ways disconnected from your political actions. And so it creates this noisy feedback loop where if a great administration was there, but it had a crappy time in the oil markets, that administration could have done a lot of great things, but it wouldn't be reflected in the economy because the prices of oil were depressed. And so Venezuela had these wild swings in the late 80s, mid to late 80s and even throughout the 90s in oil prices. Like oil would just boom and bust and boom and bust. And that created a lot of, I would say, economic instability in the country. People were frustrated, people were upset every time it boomed and it busted. And so there was some political discontent In Venezuela. And Venezuela for many years was a very similar structure to the US where there was like two parties, blue and orange, and they were all predominantly, you know, European background white males that just kind of handed the baton to each other. And that was all going well until the economy started. There started being economic frustration around the country, and then that started the first of a attempts of overthrowing the president. So many people don't know this, but Chavez. The way Chavez became famous is because he used to be a member of the Venezuelan military and he was the guy that led the first coup attempt. And he failed. And he was. And he was jailed, then released, tried to overthrow the government again a second time, failed, got put back in jail. But throughout this time, throughout these years, these, these, those two events were like two years from each other. And then basically as he was in jail, he was still getting a lot of support because the economy wasn't humming along. There was still a lot of discontent and people kept, kept. You know, there was this, this idea that we needed Chavez to actually succeed, right? Like we needed someone to overthrow the government. And so he struck a deal with the then president, Rafael Caldera, and basically said, you either I'm either going to give the green light and fly the planes and try to overthrow you again from in here, or you can release me and we can go toe to toe in the polls. And Caldera basically said, I'll release you. And so he released Chavez. Chavez gets on a plane. First thing he does is he goes to Cuba, goes to Havana to get his training from the Cuban G2. By the way, people don't really say this, but the Cuban intelligence service is actually pretty sophisticated. It's insanely sophisticated. And so Chavez comes back, runs this sort of centrist campaign, saying all the right things, wins the election, and, you know, immediately starts his thing to rewrite the constitution. Many families that kind of saw what he was and who he really was, basically saw the writing on the wall and, and said, okay, we're gonna go spend four years abroad while this wave passes, because he's just not going to last. We're just going to come back and it's going to be great. And that was part of my family. My family did that. I went, I spent two years in Florida. And I remember when I got to Florida and I met Cubans who were in Florida and we told them what was happening in Venezuela. We're like, oh, we're just here for a few years. I'm going to come back. And they would come and they would give Me this hug, this very somber hug. And they would say, yeah, we thought so too. You know, we, we thought we were going to go back, but I don't think you guys know what just happened in your country. It's like, you better be comfortable here. And we remember laughing it off, being like, no, you guys are an island, come on. Like, that's not going to happen to us. We're mainland, we got oil, don't worry about it. He's just gonna go away, we're gonna get it back. And very ominous, actually their view. They knew exactly what was happening. Anyway, long story short, Chavez basically rewrites the constitution, gives himself indefinite re election powers, extends the presidential term to a year, changes the name of the country, changes the flag, changes the court of arms, changes the time zone. Funny enough, as if that wasn't enough of a tell that this was, that this is what was coming, you know, my family, after a few years in Florida, we decided to go back because it was very difficult to spend dollars and earn boliores, right? Like my dad's businesses were still running back home and Internet wasn't as great as it is. There was no remote infrastructure. He was just getting hosed by the people he left. And so we had to go back. But after we went back, my parents sole mission was to get the kids back out of the country, right? Like graduate, get out, graduate, get out. So I graduated. I went to do my university in Canada. My brother, my middle brother did his university in Venezuela, but he actually left right after to go to Europe. But my youngest brother didn't want to leave and, and he graduated right after Chavez died. So chavez died in 2013 and that was the time we thought many, many Venezuelans, as authoritarianism progresses, you keep creating these hopes that this is what this is, it's going to end in this time. And no, no, no, that didn't have nobody just going to end. When this happens, it's for sure going to end, right? So we had about six or seven rigged elections, you know, under Chavez, but everybody had this idea that when Chavez died, you know, the head of the monster was going to be taken off and there was just going to be a disarray within the ranks and along comes freedom again and we rebuild. So many people invested in flying down and, and basically moving, preparing to move back to the country. I did that. I shipped the container with all my belongings from Canada to Venezuela. I got on the plane and went to vote with my wife and you know, the election was rigged. Obviously the, the results came out Late that night, Maduro wins. No, you didn't. Let's do a recon. We're not going to do a recount, you know, do a recount or what? And so they're basically. And then, you know, that, that triggered a series of protests to basically put down the protest. The government responded with real bullets and started actually shooting down protesters. And at that point, my family basically says, listen, we didn't win. Get out. I don't care that you shipped all your stuff here. I don't care that you have a house here. I don't care that you have things here. Just get out. And so I left and my middle brother left, but my youngest brother didn't want to leave, even with this happening. And keep in mind, when Chavez dies and this other guy steals the country, Maduro, that's when hyperinflation really started. Inflation was really bad. Like right now, for example, Venezuela is running on average like 172inflation year over year. That's normal for us.
- [20:22]
B
Like, we insane.
- [20:24]
A
We bathe in that. And so that's normal now. At that point, it went from like 175, 200% to thousands of percent, millions of percent. It was incalculable because there was no, there was no official exchange. There were, there was the official exchange rate and then there was the real exchange rate. But every, every data aggregator that tried to show a history of the, of the, of the real exchange rate, not the government fixed, got taken down by the government. So there was no clear, like, history of how the, like, because they just wanted to shut down your ability to see. And by the way, the Venezuelan central bank stopped issuing data, I don't know, five years ago, six years ago, like, there's no, like this idea that America has where like your central bank comes out and it gives you these numbers and you're like, oh, great. Like, that doesn't exist in, in a lot of places. So if you think like, Fiat is bad in America, oh boy, let me tell you about other Fiat. So as this was happening, my parents were like, please, Mario, my youngest brother, please leave. Like, please, just, just get out. And he's like, I don't, I don't want to leave. I refuse. And he pitches my dad on all these ideas to start a business. And my family, I've told this story a few times. Like, my family is very entrepreneurial. My dad always wanted to support us out of school, to try something on our own. And so my brother's turn came up and everything was just terrible ideas because everything involved staying in Venezuela. And then eventually, a few months after this process started, he comes to my dad with an ultimatum. And he says, I'm doing this or I'm leaving the house. And my dad basically gets a little nervous. He's like, I think he's serious about this. He sends me his pitch, forwards me the email. It's basically the white paper and a link to Bitmain. He wanted to buy bitcoin miners to mine in Venezuela. So that was the first time I read the white paper and I've already heard about bitcoin. And all I understood from that pitch was that he wanted to buy computers that took in energy and took in Internet. Both were subsidized in Venezuela to a large extent, and the output was this asset that you could sell in an international market at fair prices, untouchable and uncontrollable from the Venezuelan regime. So I was like, oh, this. Out of everything he's proposed, this sounds like it's being sheltered from this message. And so he starts doing that. And this is 2015, early 2015. And so I went down later that year when all my friends were desperately leaving the country, selling their houses, selling their cars, trying to figure out where they could go live with their passports, where they were allowed to go live, get a work permit. And my brother greets me as I fly down. He's the only guy noticeably with a smile. Everyone else was just like. Faces were long. And my brother was like, happy. And he comes to me and he says, I heard your friends are leaving. And I'm like, yes, as are every. As is everyone else. And he's like, if they have any industrial sites that they're leaving behind that they would be liking, they would like to rent. I'm really looking for more space right now. And I'm like, that was the first sort of, what's this? This isn't. This isn't normal. And so he's like, come see my facility. I go see his facility. He had about twice the machines he had initially proposed to my dad. I didn't say anything. And then I go to my dad, I'm like, dad, I thought we said it was going to be five machines. I saw like more than 10. He's like, oh, no, no, those are his. He paid me back the initial five. And I go back to my brother and I'm like, what? How are you doing this? And he says, I'm mining Bitcoin. And I said, show me. So I gave him. He's like, give me your bank account. And he Basically said, this is what the dollar costs in the real market. This is what bitcoin costs in dollars. I'm gonna sell this much bitcoin, which is going to be a hundred dollars, and I'm gonna get the fair market value of dollars to boliores, and I'm gonna get your boliores into your bank account. And I was like, okay, go ahead, buddy. And so he does it. He basically, it was like $100 worth of bitcoin, converted it to the real black market or real market. Bolivar is right, the true value of a dollar. And then those dollars were sent to my bank account. And at that point is when all the light bulbs came off. Because what came after this is in hyperinflation. What it feels like, like what? Hyperinflation, really, the experience of hyperinflation for most humans. You get paid on Friday and that payment that you're getting is $100 at 4pm the day you got it. If you sell it at 5, you might get 80. You might get $80. If you sell it on Saturday, you might get 60. If you sell it on Sunday, you get 40. If you sell it on Monday, you probably get 20. And what happens in these environments is that nobody wants just get rid of their dollars or they don't want to get rid of their dollars in any way, shape or form. So it becomes really hard to convince somebody to trade you the dollars. Now let's just say you got there. Let's just say you got the bolivores. And now let's just say it's $150, like $150 worth. You have two options. You can either go to somebody and try to trade cash for cash. So you're giving them Bolivaras in cash, they'll give you $150. That cash, that U.S. cash that you get, is a liability in the sense that if you get pulled over any checkpoint and they see those dollars on you and they ask you for the official government receipt on how you got them and you can't provide it, it's gone, your dollars are gone. What happens is the wealthy who have been able to go to Florida and open a Wells Fargo bank account or a Bank of America bank account, they get to get dollars deposited into their Wells Fargo bank account and they just wirelessly dollars in a local bank account here. So that excludes 99% of the population from that trade. 99 of the population are forced to hold cash, which A, has the risk of getting confiscated, but B, has the risk of being fake and so in Venezuela, many people would walk around with their little pens and even lamps. Like, people whip out lamps from their pockets just to look at dollars as they were making transactions. Even stores, anywhere you wanted to go pay with a dollar, they would have, like, pens and the things. And if you want to, God forbid, you wanted to pay with a $100 bill, they would bring down the manager. Like, the manager would have to get involved to basically assess the realness of this $100 bill. So what ends up the way bitcoin started going viral in Venezuela, beyond the mining? Mining was like the side of the house that I was most exposed to. But on the other side of that mining activity was the demand from people trying to get rid of their bolivores. And so the way this would happen would be you get paid on a Friday, and there's no bank that you can go trade those bolivores for dollars. The bank has an order not to sell them to you. The central bank, no regulated financial entity, can sell you those dollars. So what happens is you start going P2P. So you start calling your buddy Miguel, Maria, whoever, who you know is in the sort of dollar buying and selling brokerage business. And so you say, Miguel, I need $150. You got him? And he goes, oh, I might have some on Wells Fargo. Do you have Wells Fargo? No, I don't have a Wells Fargo account. Okay, sorry, man. No dollars here. And so you could keep going down the list. Okay, I'll call Maria. Maria would tell you the same thing. No dollars. Sorry, sorry, Miguel. No dollars. And so you would say. And then by the fourth person, you'd be like, I need to get rid of these bolivores. Like, by now, I've already lost 20% of my week's work. And the guy. The guy on the other side of the phone would tell you something like, okay, so you don't have a Wells Fargo bank account, and I don't have cash. But there's this thing that I can sell you. It's called bitcoin. And you can hold it and trade it out for dollars in an exchange outside of Venezuela. And people were saying, what? Like, what is it? Like, what do I need to do? It's like, it's online money, man. You can buy it or you cannot buy it. Like, what do you want to do? You would say, what do I need? And they'll say, go to this website, give me an address, give me the money, and I'll send you the bitcoin. And people were like, Nervous to the nth degree, but the risk of not doing it is you lose your whole week's work. So you say, fine, I'll give you this thing, okay? I'll give you this address. I'll give you these dollars. Fine, here's $150. Send me $150 for this thing.
- [28:56]
B
Thing.
- [28:57]
A
So they would land in your exchange or whatever or your wallet, and at some point they would show you how much bitcoin and the dollar value of the bitcoin. You did that on Friday, Tuesday rolls around and you're like, okay, now I'm going to go from bitcoin to dollars, which is what I wanted in the first place. So you log into this thing and you see that the $150 you bought is now worth $160 instantly. You're like, what? Like Venezuelans. And many people outside of the OECD countries have never seen an investment go up in dollar terms. I know this sounds crazy to some people, but to most of the world, having a fixed dollar amount that just stays there, it doesn't change, just sits there. It's the panacea of their investment, right? Because to them, to most people, the dollar doesn't devalue, right? Like, it devalues so slowly compared to their currency that they feel like they're, you know, a dollar is Fort Knox, okay? And so they go into this exchange account and they see not 150, but 160. That is a day's worth of work for them. So they turn around and they go and they say, wait, wait a second. I thought you sent me 150. No, I did, but it's 160 on my screen. Yeah, I know. Bitcoin goes up in price, in dollar price. And then all of a sudden you realize that you don't just have a dollar, you have a thing that appreciates in dollars. Mind blowing. Just mind blowing. And so then you're like, this thing made more money in one day by not selling it than I did at my job. Why would I. Why would I sell it? Like, how can I get more of this? And they're like, well, you can buy it. But did you know that so. And so is mining it. Mining it? What do you mean, mining? Yeah, just use an old computer, connect it into Nicehash. Nicehash will turn your GPU proceeds into Bitcoin, and off you go, do it with every old computer you have. And so everybody starts going wild in mining and buying bitcoin and holding bitcoin because they've never Seen at this point, there's no stable coins, by the way. Stable coins are. Do not exist. They're not popular. No one talks about them. It's bitcoin, or dollars. And bitcoin just surfaces as the absolute best option. And so bitcoin starts going viral all along this time. This is 2015, 2016, early 2017, right? Throughout this time, our family's mines are growing. People are coming to us, asking us, how do you do this? We're helping basically dozens of people set up new mines and import the things from Bitmain and do the electrical upgrades. This is like the Venezuelan golden age of bitcoin. Like, I still get goosebumps when I think about it. It was epic. Everybody was like, you found it. You found freedom. Show me Mao. Show me. I was like, show me Elio. My dad has Elio, and my dad was like the bitcoin guy, okay. In the town. And so anyway, people like my family starts mining, my friends start mining. Everybody has basically got a rig and holds a little bit of bitcoin. Then the shitcoin era starts emerging, like ico boom. And that gives rise to ETH and a bunch of other new alternative assets. And, you know, I could go on for another half hour, but to keep it. To keep it super short.
- [32:20]
B
I love it, man.
- [32:22]
A
So then Maduro, Maduro, like after Chavez, Maduro is coming under a lot of heat because there's a lot of societal, like, upheaval. And to. To kind of keep this in check, he has to do some pretty nasty things. Like he has to actually go shoot people. Like his people have to go like, literally shoot people, jail innocent people, prosecute, make examples out of people. And obviously these cronies demand their pound of flesh, right? And so he has to keep them well paid. In the beginning, he was able to do that by. It's going to be incendiary, but basically rerouting the drug routes or the drug trades like the, The. The Venezuelan army is in many cases. And don't take it from me, go read this. But it's basically a drug distribution and production front, right? And so that kept them at bay for a bit because they were the kings of that domain. But eventually when 2017 rolled around, he needed something else to give them. Like in 2015, he did the dacaso. So he, He. He needed to give people free things. And most often they happened around Christmas because Christmas historically has been around. Most of the social upheaval happens because people want money for Christmas and they want to spend time with their kids and so anyway, Christmas 2017 rolls around, and after two years of taking private businesses and basically putting their inventory in a pinata for the country to get for free, most private businesses were very low on inventory in December. By design, they were. They knew what happened every December. So they're like, we're not bringing anything this year. And so he starts basically losing his mind because he's trying to get something to give to his cronies and to the people, but he can't. Nobody's importing anything. But all. But right around December 2017 is when Bitcoin is like peak hype. You know, it's like we're busting from 17 to 20. And he basically realizes two things. One, that the only people that have been importing throughout 2017 into the Venezuela economy inside is this company called Bitmain Imports from this company called Bitmain. He's like, what is that? It's like, these are these machines that you can use to mine bitcoin. And then they. You know, this isn't a factual conversation, but imagine this is basically how it went behind the scenes. It was like, okay, so these machines, they produce Bitcoin? Yes. And if somebody has them, if you take the machines, can you just. Do they generate bitcoin for you after you take them? They're like, yeah, you just change the address. They're like, so we have these machines in this country that generate this thing that no one can touch. It's like, yes, sir. It's like, we need them. Like, we need to get them. And so it's like, how do we get them? So he creates his idea. Idea number one is I'm going to create a minor registry. So he creates the Venezuelan sort of crypto regulator, Suna Crip. And he's like, the first task of this government entity is to make a list of everyone mining in the country, where they are, what machines they have, who runs them, who's responsible, all this stuff.
- [35:32]
B
And I'll just say lists of people always turn out really well. That's always great.
- [35:40]
A
It's absolutely. And then his second great idea is I'm going to take the miners, but I'm not going to stop there. I'm also going to create this other coin called the petro. And I'm going to make a. And I'm going to try to sell people this shit and trade it for bitcoin. Maybe people will be dumb enough that they will give me bitcoin in exchange for this thing. And so to create hype around the two things, he creates these Roadshows, the Petro Roadshows, he calls them. And by the way, just for context, the petrol was a proof of stake coin. It was never meant to be mined. There were no asics to it. There was no proof of work anywhere. But then when he started these road shows, which is like a series of events across the country, he's parading asics in these shows. So the shows are basically like asics everywhere and there's people there telling you what they sound like, how much they make, what the energy footprint is, what the heat footprint is, basically like a blueprint on how to find these things and, and basically, and why you should go and find these things. And basically how lucrative it can be if you just get one right. And so this happens throughout the country. And then two things happened after that. That was December, around January, late December, actually. A lot of my friends start reporting these surprise visitors to their facilities. And at the beginning they were utility people, municipality people. Then, you know, two days later they would just come back with guns, being like, yeah, we need the machines. And so extortions, the extortions start happening to the miners. I have a few friends call me, freaking out, like, what's happening? I got, you know, this guy took 25 machines. I had to give it to him, you know, I'm going to shut down my rest of my facilities, blah, blah, blah. And we were like, oh, my God, what's going on? And then eventually the inevitable happened. They got to my brother's facility, that was January 17th, I think 2018. And my brother wasn't there luckily. But they raid his facility, they take out his machines, and they very quickly start getting in touch with him to say, you either we're going to keep the machines, we need you to send us $25,000, or we're going to make up some charges and throw you in jail. And my brother's like, jail for what? He's like, we'll make it up, man, don't worry about it. And my brother's like, this, this isn't, this can't be happening. So this is like, this is, I think, 3 or 4pm and so we start calling our friends to see who can help us. Like, people we knew that were connected to parts of, you know, had had relatives in the government and such. And we're like, you know, can you help us try to figure out where this is coming from? Like, why is this happening? Everybody's, I can't help you. Can't help you, can help you. Meanwhile, the phone calls keep coming, the the threats and the extortion threats keep coming. And then one, and then I think it was around 7 or 8pm the conversation starts, real considering, like, like making a run for the border. And, and so my brother had two kids and he was alone in the country. There was no fuel in Venezuela because Venezuela had fuel shortages because of course it was free. So everything that's free disappears. There was no fuel in the country at all. And he had to drive nine hours from our town to the border. So we called up our family members who lived along the way thankfully, and they set up these refueling stations for him along the way. It's a nine hour journey. And, and then around, I think it was 9pm he says, We gotta go. And so he puts his kids in the, in the car, packs up his suitcases, takes his ledger and basically, you know, with the little bitcoin we had, or not little we had, he had enough bitcoin to leave because they couldn't touch the bitcoin. They took the ASICs, but the Bitcoin was safe. So he makes a run for the border. He leaves at 8 or, I think it was 8:30 or 9, and then at around 8 or 9 that time, the extortionist called my dad again and they say, I know you're going to make a run for it. He's like, so we're going to radio and make sure you don't get out. And my brother very smart, my dad very smartly was like, no, no, no, we're not making a run for it, don't worry. Just give me two more hours. Give me two more hours. Going to get you the money, we're going to get you the money and to give him to buy time, basically. And so my brother gets to the border early next, early the morning of the next day. And then he calls me before he has to go through and he was like crying. And I said, listen dude, you got this far, you're going to get through, it's going to be fine. And you're going to call me from the other side and we're going to be super happy. And he hangs up. About a half an hour goes by, fucking excruciating half an hour. And, and then he calls me back on the other side. And so he made it out. And largely the reason he was able to even consider leaving is because of bitcoin. And because if he had had his savings in a local bank account, those assets would be gone. His businesses were a write off, his house was a write off, his cars were A write off. The only thing that wasn't written off was, was his bitcoin. But he. Thankfully we had transitioned enough of our businesses and wealth to bitcoin that he had enough of a base to start from again. And so by this point I was in Canada and my parents were actually traveling on vacation. So none of us went back after that event. But thankfully through that, I was already a bitcoiner by then. But that just made my conviction just even stronger. And so for me it was, it was, for me it was always obvious that this is what I wanted to do for the rest of my life. And once that happened to him, I remember going to him because at the beginning it was, it was pretty nerve wracking for my family to have gone through all this. And we were, you know, we were a target back home. And even something as me telling you this story, right, like I'm only able to tell you these things now and so comfortably because all my stuff in Venezuela is gone. And so, but, but a lot of people that are going through these situations can't even speak, Speak out about it. And, and so that's why I, you know, my family, you know, I remember at the beginning I started writing a lot about bitcoin and this is before this whole thing happened. But I remember in the early days I would try to write blogs and stuff just to. I had no following. I was, I was just wanted to get, you know, just wanted to be part of it. And my parents, I remember after they read my first two blogs, they're like Maori, please take those down. Because they were still back home. They were getting, they were, you know, they were getting the mining started. I'm like, why? He's like, well, we, it's, it's not doing us any favors down here. Like things here aren't as, you know, you're up there and like where there's rule of law and stuff, but down here we're out, we're just like sitting ducks, right? Like you, you and I. And I remember it's always been a dance. Even after the story happened. You know, my brother did a few like anonymous interviews and stuff because he, he didn't want like, you know, all that stuff out there in a way that could compromise people that were still there or his businesses or anything else. But eventually it came to a point where him and I both sat down and I was like, are you cool if I just start sharing this? Because I think people need to hear about this. And he was like, yeah, let's do it. And so this is his story, by the way. And thank you, Danny, always, for allowing me to share this as if it was ours. But it sounds cool. It is. Listen, I'm very happy about where I am today, but during that moment, like, the fear is very real and I don't fault anybody that's going through that right now and can't be as open about things like, as I can be today because I think people don't necessarily connect the dots, that even by speaking out against the regime, you're taking a massive, massive risk and you don't have to say much. You don't have to say much. You know, I've seen people popped and done wrong for a lot less. And so, yeah, man, that was my, that was my story.
- [43:40]
B
It's such an incredible story and thank you for sharing it because again, there's so many different things to talk about here. One of the things that always jumps out at me is that people, I think most people, whether they want to admit it or not, they get smart by force, not by choice. This is what my father in law, who escaped communism told me as well. He's like, like, I'm a smart guy, but I, I got smart because I had to get smart because I had to figure it out. Because, you know, this is what you have to do. Same situation over there, you know, couldn't hold, couldn't hold any foreign currencies or, you know, the security. Tate would pay a visit to you. So, you know, you slice a soap bar in half and hollow it out and put some foreign currency inside and cover it back up and put your pubes all over it. Like this is what, what he, what he did to, you know, be able to, to keep some foreign currency for, for when he was eventually going to get out. And hearing the story about, you know, your family and your brother, it's, it's just incredible because, like, it's kind of amazing. Like, imagine if your dad would have funded one of his other business ideas, you know, like, we wouldn't be sitting here having this conversation today. Like, it's, it's, it's amazing. But, but some anonymous developer creates a magic Internet money that becomes a lifeline for, I mean, not just, not just Venezuela, but so many people in so many different countries around the world that are living under these punishing authoritarian regimes that are living under hyperinflation. It, it's just insane. And it's, I mean, is your, does your brother, can I ask, does he, if you can say, does he still mine? Bitcoin at all today or did he kind of like leave it totally behind him?
- [45:19]
A
No, left. They took him. They took.
- [45:21]
B
No, but I mean, like, even now, today, like, has he, has he gotten back into it at all?
- [45:24]
A
Okay. No. My brother is my right hand on sales. Danny works okay at Leaden. And so most people hearing this email, like most people hearing the show, if you have a lead in account and you've exchanged emails with Danny, that's Danny, that's the Daniel from this story. And he comes with me to a lot of these conferences. We, you know, a lot of, A lot of my best clients. I, you know, he's my right hand guy. When Leden was growing leaps and bounds in the early days, we needed someone we could trust. I needed someone I could trust to help me because I was dealing with all the clients, even the CS tickets, the whole thing. And I was like, I need some help. And the only person I could think of that I would trust to have a conversation with people like Bitcoiners. And my clients that knew this stuff as well as we did was him. Because actually, kudos to him. He was actually one of Leden's first power users. So when Leden came out, he was one of the biggest users of our product because he, he had to rebuild his life with Bitcoin and he didn't want to sell it. So he actually became one of my.
- [46:19]
B
Talk to me. How, how did, how did you actually transition from like, what was that journey of starting Leden? And then you're like, I mean, that's got to be kind of surreal. Your brother is one of your own, like, first customers. That's kind of a beautiful thing. Like, it's, it's, it's all full circle, right?
- [46:32]
A
No, totally. And so it is a very funny story. So at the beginning, all I knew what to do was mine Bitcoin because that's what my family was doing back home. But they had free energy. I didn't have free energy. Right. And so when you have to start running the numbers at like $0.13 per kilowatt hour, you know, $0.20 per kilowatt hour, mining becomes a lot less exciting. Nonetheless, it was what I knew what to do or how to do. And that was my sort of the thing. I could feel like I could add value in that. I had set up facilities before. I knew how to order the rigs, I knew how to set them up. I knew how to set up the mining pools. Like, I was good at it. And so I was like, I'm going to go try to do this in Canada because, you know. And now actually one other funny story is when I was trying to help my brother relocate and myself kind of find space to do some mining in Canada, I reached out to the Canadian Bitcoin embassy and that was a Montreal based shop. And I got an email from none other than Francis Pulio. And Francis basically was, was the one that told me, come to Quebec. This is the best place to set up a mine. Will help you open arms, man. And I'm still grateful to him to this day. And he was the one that basically gave me comfort or planted the idea that I could mine in Canada, that you could do something. Canada wasn't priced out of this activity. And I convinced my best friend from university, Adam, who's co founder of Leaden Today, to set up a mine in Canada. And I had already become very used to this concept of borrowing a weak currency and holding a hard currency. Because in Venezuela I did very well shorting the Bolivar. It was actually my best trade before being long. Bitcoin was going short the Bolivar via dollars. And the way you do that is you take a bolivar loan and you buy dollars with it. It's really that simple. And so this idea of holding the currency that is not getting debased or getting debased less aggressively and then borrowing the thing that is getting debased to the nth degree does very well financially. So for me, this idea of shorting the dollar with bitcoin felt almost like a no brainer. But at the same time, this concept of shorting the dollar as a foreigner, it's like, whoa, like, are you really like, you know, but because you're like, oh my God. But hold on, that's the one that works. Like, wait. But then you start basically understanding more of it and you're like, wait a second. But it works just like all the others. Like, it's, it's not different at all. It's just, it's just has these other privileges, but it actually breaks just as easy. And so, and then you see, you see bitcoin priced in dollars, you see the price that it's doing, immediately the graph tells you, why am I selling this thing when I can borrow the dollars from it. So in Venezuela, I, I was already used to and kind of curious to see if anybody would lend dollars against bitcoin or l against bitcoin. But in Venezuela no one did. And I thought that was normal. Like, of course no one would do that. But I figured in Canada somebody must have had this idea, who am I To be the first guy to like, I'm surely not the first person to think about this, but we set up the mine in Canada with Adam. And then very quickly, we had the same issue that everyone else. We had. Bitcoin revenues, fiat expenses, don't want to sell the bitcoin. And so we said, well, I'm like, hey, let's go try to get a loan. And so we went to a few financial entities, we got laughed out of the room. We got told, bitcoin's not an asset. That one. That one. We got told a lot. I remember that one. Who would do that? It's not an asset. It's not an asset. And so I kind of looked at Adam, and we were getting squeezed by the data center that we were in. They just kept wanting to raise our hydro. And then the price of the rigs kept going up. And we're just sitting there in the middle, like, right. Like, we don't. We don't control the price of the power. We don't control the price of the rigs. It's not really something where you can just. What can you do other than scale? Right? Like, it's. But then. But then we realized that nobody was servicing the demand for loans. Like, nobody, no one serious, was actually considering to do these bitcoin back loans. And so I looked at him, we looked at each other, and we said, we. Why not? Why not us? Like, why can't we be the ones that bring this product to life? Like, why don't we do Canada's first bitcoin back loan? And so we said, okay. Like, we started running summers. Like, how would we do this? We would have to lend. Not the full pop. It'd have to be at 50%. So we start putting, like, the idea of what a bitcoin back loan would look like. And right around the time, there was these other companies that were trying to offer these types of loans, but they had these tokens. You have to buy the token and the loans. You know, they took all sorts of these new things as collateral. They issued their own token. They used that as collateral, too. And we just felt the whole thing was like, no, no, no, no. Like, we want none of that. Like, we want to be able to, like, know where the bitcoin is. I want nothing else around it. I want no other asset around it. I want no token. I just want a very simple and understandable place or service where I can just give you bitcoin to keep it safe. You give me dollars, keep that bitcoin in Custody, like don't, I don't want you to do anything fancy with it. I just, I just want it to be safe. And so we said, let's do big. No one's done. Canada's first bitcoin back loan. This was a middle of early 2018, like we're going to be the ones to do it. And so we pitched this idea to a few angels or people that we knew from the past and one of them decided to basically fund us and give us our first, first $500,000 Canadian check to build a business and a million dollars to lend. And so we basically got to work and we did Canada's first bitcoin back loan in November 2018 to Francis actually. And so we did an event in Montreal. We basically said, you know, Leden's here, now Canadians can borrow against their bitcoin. And then that started this journey of what now has become Latin. And I mean there's obviously a lot of chapters in there because we didn't start out as the biggest. Today, you know, I say thankfully we are the biggest lender, consumer bitcoin back lender in the space today. Which is still kind of surreal to say and fills me with pride.
- [52:45]
B
It's amazing.
- [52:46]
A
But when we got started we were the tiny boring Canadians is what they called us. But we never chased the shiny light and we always just stay true to our view is that if bitcoin does what we believe it's going to do, what else do you need? Right? Like just, just be the best at that. Like that's it. If you, if you're just the best at bitcoin backlones and bitcoin becomes what we all think it's going to become. We and our clients all stand to do very well. And there's no real need to take, you know, to juice it up or put a turbocharger here or put NOS in there to make it go faster. Like the other guys tried to do that it broke. And so I wanted to talk to.
- [53:31]
B
You about that too because you guys, I think a lot of people, we were talking about this before we started recording, but a lot of people have some, like, some PTSD from when, whenever they hear about, you know, like bitcoin backed loans and, and yield and all of these things because so many of the, you know, Blockfi, Celsius Voyager, like all these things that blew up as a part of that larger like SBF capital, you know, contagion and all of that, all the shenanigans that were happening there, now you guys obviously weathered that storm. You're now the biggest, you know, provider of these consumer bitcoin backed loans. What, what was it that allowed you guys to make it through? What did these other, maybe you know, what did these other guys do differently where they all just blew up in such spectacular fashion and yet you guys were just unaffected by this?
- [54:19]
A
It's a great question and it's, it's a nuanced answer, but I'll try to put it in buckets and keep it as, as, you know, as simple and concise as I can. So the concept of collateralized loans is as old as time, right? Like in Babylonian times, we were borrowing seeds backed by gold and gold backed by goats. And you know, it's just, it's all types of iterations of this asset backing this loan. This is a collateral, a security, a guarantee that you're going to pay me back. It's a very natural part of commerce. So, and bitcoin and say gold backed loans or mortgages, property backed loans or even securities or equity backed loans, those things have been going on for hundreds of years. You know, we are secured collateralized lending by the way makes up 80% of all loans in the US are backed by something and backed by an asset. And unsecured credit is actually only 20% of of US debt in aggregate. So in our view, the activity of taking bitcoin, keeping it safe in a custodian and then lending you dollars is a very simple business. It's very, it's. If you do it responsibly and you do it correctly, it's a very safe activity. Right? It wasn't the bitcoin backed loans, it wasn't collateralized lending that brought down these firms. It was a combination of things. So number one was recklessness and just poor internal risk management decisions. None of the companies that went under had proof of reserves, not one. So that tells you already a lot, right? Like not one of these firms ever bothered to do a proof of reserves attestation report. Nothing at Lennon, we were the first lender to ever do proof of reserves and we still do them today. We have the longest running proof reserves program in the lending industry. And that's something we take a lot of pride in. We were doing proof of reserves in 2020 when others were adding defi tokens and you know, talking about NFTs and we were adding proof of reserves. Funny enough, today still some legacy companies and some of the newer lenders are coming to market without proof of reserves, which to me is, I just, I can't comprehend why you would do that, right? Like, why would you.
- [56:50]
B
But that seems insane. Like, how can you possibly build up any sort of confidence?
- [56:56]
A
I don't know. But the truth is we. We try not to look at what others are doing. We try to look at how our ship is doing and are we doing, like, are we doing where we going, where we want to be going? So we pour proof of reserves at the foundation level of leadn. Because 1 comment that I will make is that the companies that aren't doing proof of reserves today, most of them is not because they don't want to, it's because they cannot. It's because once you have operated a business for six years and you've added God knows how many products and services and God knows how many assets, gathering your numbers and getting a snapshot, a precise snapshot of all your assets and all your liabilities at any one point in time becomes an. An insurmountable task. It becomes incredibly difficult for a company to then have to retroactively build prefer servers. At Leadin, we poured it at the foundation because everything we want, we built on top of it had to comply. Whenever we're discussing a product, an initiative, a feature, anything at LEN is how does it interact with proof of reserves? That's like number one, right? Can we show it? Can we? Can we? And then, and then, if not, then doesn't work. It's not what we need. So at Leaden, everything is. The backbone of it is transparency. And does it fit into our program? Does it fit into the transparency that we have today? Can we build our existing program? Can we add it and keep. Keep doing it? So number one was that lack of. A lack of proof of reserves. I would say that's number one commonality among all of these other guys. The second one I would say was just poor risk management at the underwriting level. What do I mean by that? A lot of these companies, the biggest risk that they were taking was there were two huge risks that they were taking. Number one, they were rehypothecating the bitcoin collateral or any other collateral asset that they would post that they were given as collateral. They were taking that asset and trading it, or relending it or taking additional risk with the collateral. That in itself is an additional risk because the person who borrowed the dollars and posted that collateral to you can do everything right, can come back and repay you. But you, out of your own will may not have that Bitcoin because the person you lent it to may not be able to give it back to you because many times those loans were issued unsecured, like the collateral was lent unsecured. And it was done that way because the companies that were doing this many times also offered yield in Bitcoin, in eth, in all these other crazy coins that nobody wanted. So what they ended up having to do was taking these like dogecoin deposits, convert them into something people wanted, so dollars or Bitcoin and then earn the yield. But then you would have an asset liability mismatch because you owe these people dogecoin, you don't owe them dollars. And so then if you didn't hedge that properly, you have a gap between what you owe and what you have. And so a unsecured lending for yield was in many cases what brought down these guys because they made loans to guys like Three Arrows, they made loans to guys like Genesis, they made loans to guys like Alameda, et cetera and many so and in the context of finance, this isn't a new thing, right? In finance there are these concepts of unsecured loans and all these things, but there's also very well time tested risk management best practices. One such of this, like one of the cardinal ones is concentration risk. You don't lend out to one person more than you could ever absorb. If that person didn't return the assets, that's the concentration risk 101. You would be shocked to see how many companies managed this like didn't exist. So 3 arrows Voyager had 67% of the book out to 3 arrows when 3 arrows went under. No, there is no equity buffer that can absorb that. That was just wildly irresponsible. Then if you look at blockfi, they ended up taking the deal with FTX and that required them to basically use Alameda for everything. And so when Alameda went down it was just impossible for them to recover from that. And so poor underwriting, unsecured loans on the yield side, rehypothecation of the collateral, lack of proof of reserves, their own token like Celsius and others were caught playing games with their own tokens. So any platform that has its own tokens, massive red flag.
- [61:40]
B
Just shockingly, they were playing games with their own shitcoin. Who could have seen that coming?
- [61:46]
A
Massive. And so there was just a lot of the things, a lot of there was a cocktail of bad actors, or not bad actors, but bad things that were coming together. And all that needed was a little spark. And we got that spark with Terra Luna. That lit up Three Arrows. Three Arrows lit up Celsius, Celsius lit up Genesis, Genesis lit up SBF and Alameda. And so all the dominoes just. And the way we navigated that was we had a very simple business. You know, we had pretty strong risk management. Like, that's. That's the moment that Leden is built to withstand the downside more so than it is to rip on the highs, because we. The highs will take care of themselves. Our job is to protect the ship and our clients on the way down, the way up. Bitcoin will take us there. We need to be the best at when things go south. And that's the other thing I'll say to people, is you've seen a lot of these new companies come out and offer bitcoin back loans, and they all sound exciting, and there's a new one popping up, like, every two weeks, it seems, because things are going up and to the right. Everyone can be a lender when the market's up and to the right. Literally, everyone can be a lender when the market's up and to the right. You don't define the quality of a lender by how they perform when things are up and to the right. We're not here because of how we did when things were up and to the right. People know us as the people who survived all the downturns. That's Leden's name. And that's. I'm hugely proud of that, because all the bitcoiners know that we are going to go where this thing takes us. In the words of my dad, don't fuck it up. Right? Like, that's what he told me when I called him. Actually, I remember because he's like my mentor, right? And I remember I called him when all these things were happening, like all these companies were collapsing. And I had clients calling me. You know, some people were nervously drawing because they thought we were going to get contained, like we were going to be part of the contagion. And I was just like, listen, don't take it from me, withdraw. We'll be here when you're. When you're ready. Like, we're not going anywhere. Take your bitcoin. I would much rather you take it out. If you. If you're calling me to, you know, if you. If you feel. If your gut's telling you something could be wrong, take it out. Come back to us when you. You're good. Like, we. I'm no rush. And so I was calling my dad and I was kind of laying out what was happening, and he goes. He goes, so. So wait a second. The, the five guys that were all bigger than you are gone. Like, they're gone. And I'm like, yeah, yeah, dad. It was like, it was like a nuclear bomb. It wiped out everyone. He's like, and you're the only one that's still standing. And I was like, yeah, I mean, I think there's one or two more, but like, we're the only. Like, yeah. And he goes, son, you've been given the biggest gift. He's like, get back on the horse and don't fuck this up. And, and I still remember that because at the time, you know, looking like, how long I never thought that we were going to be back here just three years after. I thought it was going to be decades to, to rebuild the trust. Because it was really hard, like for 2023, 2022 were tough years because people were coming to us. And it's very hard trying to understand the same question you just asked me. How did you survive? Right? Because when you see there was a basket of 12 apples and 11 of them were rotten and one of them was good, you don't think, oh, that apple must have done something right? You think something's wrong with apples just in general, just stay away from apples, right? And so we would explain, no, like it wasn't actually that they were doing the same thing we were doing. We weren't. We're doing completely different things. They were lending things without taking collateral, they were underwriting, they were taking tokens that had no market. Like, it was a very different, it just looked similar. But they were. We were very different. We still are very different. And yes, it took time. Like people, you know, it took time to rebuild trust. It took time for people to understand that people like let in did have a sound business model, that we are built to survive these types of volatile events and that we can help you and be there when market goes up. And, and so that, that trust has come, you know, slowly, sudden, like gradually, then suddenly, right? And, and the funny thing is, is like none of these new bitcoin back lenders came in the gradually part. They, they all showed up when we broke 100. And so everybody came out trying to land. And I'm like, listen, this product isn't new, man. Like if you, if you wanted to lend backed by bitcoin, you know, you could have seen the light. 2019-2020-2021-2223, 24, you saw it here, now 2025, great. But I would be cautious of companies that are launching products, trying to time the market and seem to be tinkering the product on the fly versus companies that are just not trying to time the market. Right. Like you, you've, you, you, you know, like I said, if you're coming to market today with a, with a bitcoin back loan product that has no proof of reserves, you're probably trying to rush that thing into the market and those things don't generally end well. So, so yeah, let me ask you too.
- [67:00]
B
I mean, as we look like, obviously things are very different in terms of where the conversation is at now in 2025 versus when you guys started. Like, bitcoin is, you know, quote mainstream now. You've got a much friendlier regulatory regime than we had even, you know, a year ago, as well as in the US and, and the vibe seems to have kind of shifted. So I'm curious too. I mean, do you, do you foresee, I mean, it seems that it's only a matter of time before a lot of the big banks, now that, you know, SAB121 has been been repealed, they're, you know, Obviously like the SAB1 2022 will come out. That'll, you know, make clarify all of that, that nonsense. But I mean, do you think some of your biggest competitors going forward here are just going to be some of these like big existing fiat banks that kind of are wanting a piece of that pie? Is, I mean, is, are they going to like, look to gobble you guys up? Like, have you been thinking about that at all? Where, where's your head at with that?
- [67:56]
A
Yeah, I mean, listen, I, I, I think about our industry a lot and, and the, the possible paths of evolution. We've, I've always believed, at least speaking personally, that led in is, is going to be a close ally and a competitor of banks, of traditional banks. We are a regulated lender and our, our, you know, there's a reason why we chose to go the regulated route and it's because we believe that once bitcoin gets fully ingrained into the system, you're going to want to, in, in the game of lending or in the business of lending, you need to have the lowest cost of capital. Right? That, that is one of the biggest drivers of how if you win or not, is can you deliver the best product at the best price. And to get the best cost of capital, you need to be able to talk to pensions, endowment funds, banks. You know, these are the people that have trillions of dollars at net negative rates in treasury bonds, right? And so you can get them over to the line and that's big, big money, like big clips. And that is what's going to give you the fuel to drop the cost of bitcoin Mac loans, which is going to make them exponentially more accessible and usable. Because as the cost drops, you can do more things with it, right? It's, it's almost like it's nonlinear, right? Like as the rates drop, the things you can do with them go exponentially higher. And so I believe I almost, it's almost for me a certainty, it's an inevitability that banks are going to try to get into this. And I think today, I'll say it, you know, some of our biggest and best partners are banks today. And that was not the case two years ago. So banks are not coming, they're here. Like they're already here. And so a couple of things there, like will some of them try to bring these, these products to market themselves? Probably, I think, I think a few of them will. If you look at the bank landscape in the US there's thousands of banks, right? And so there, there will be, I think that the, the, the way I like to think of this is the, the size of the opportunity that is bitcoin backed loans and that I think it's going to be a multi trillion dollar asset class in 10 years from now. And so how many banks, you know, can the US fiat system support thousands of banks? You know how many banks offer mortgages? All of them. Right. And so it's going to become a ubiquitous product. Right. And that, that said, it's a ubiquitous product that runs on net new rails. Banks are not set up to be there on the weekend for you. Banks are not set up for overnight transactions. Banks are not set up for international cross border settlements and sending things like they are in the fiat world, but not in the bitcoin world. So my North Star is to continue delivering the best bitcoin backed loan experience and the best bitcoin financial services experience that you can't get at a bank. Right. And the other thing to say is Lennon is a global company. We service over 100 countries. Banks are coming in the US that's not helping people in 97 or 99 of the other countries we operate in. And so we see this as a game changer for the world because bitcoin is the first time the Americans, not the Americans, not to me like Americans are great. You guys have all these financing options. Like do you guys. A bitcoin back loan is like I put the 17th club in your golf in your Golf pack, right? Like you're, you're, you're like, oh, sure, one more thing I can leverage. Amazing, right? But if you look at a place like, I'll just give you the landscape of asset backed lending. A person that wants to borrow money against their house in Medellin, Colombia is going to get hosed on terms relative to an American trying to get a loan on a Manhattan property. Asset backed lending has been unfair and uneven since the creation of Fiat. There was, there hasn't been an asset up until today that I can take from you, Walker in America, and from Miguel in Medellin and offer you the same terms, the same financing. And to me it's the same underwriting that didn't exist until Bitcoin. So now I can give Miguel and Medellin the same terms. I'm giving Carlos in Madrid and I'm giving Peter and Lisboa. That to me is the game changer because all those guys are going to be borrowing at the same rates as you, Walker, and that they could not say that. None of those people could have ever said that if it wasn't for now they can use the same asset and now they can access the same company. And so I'm excited about banks coming into the space. I actually think, to me, the most exciting part is I'm going to take, hopefully Leden is going to be a vehicle through which institutional OECD market money can go to fund bitcoin backed loans and entrepreneurial projects everywhere in the world at a fair cost of capital to everyone with the best collateral in between. And so I see this as a game changer globally. You know, how this impacts the US landscape and which banks become incrementally bigger or incrementally smaller. I'm not, I don't think we're playing just for the US market here. I think we're playing for the mortgage vehicle equivalent of the world, a safe asset that you can use to get world class financing from. Because let's face it, like most of the value of a US property is just how much leverage you can get for it and the terms you can get on that leverage. And it's not just, it's not the house. And so I think Bitcoin will do something similar.
- [73:54]
B
Do you think that Bitcoin, I mean, it's like, again, we, you and I know, and many more people are waking up to the fact that bitcoin is the best money, right? And obviously that takes some time. So, you know, you mentioned the cost of capital and whatnot. Obviously Excuse me. Right now, I assume, you know it's still a little more expensive to get a, a bitcoin backed loan than it is to get some other types of loans. Right. Do you see? To me it seems logical that that would. The more adoption Bitcoin has, the more that paradigm will shift to where it's like, oh, you're putting up the most in, you know, the hardest money that's ever existed is your collateral. Well, you're going to get the best terms that have ever existed relative to any other collateral you would provide. Is that where you think and like how long does that process take?
- [74:41]
A
Yes, I agree with that. The issue I have with that is that it's the goalposts, it's not the thesis. The thesis checks out. Bitcoin will be the best, most efficient way to get the cheapest free market cost of capital. Why do I qualify that as a free market cost of capital? Because sometimes people like to compare the interest rate on a bitcoin backed loan to the interest rate on a mortgage and that those are very different markets and mortgages are not the free market. I'll give you some examples. Michael Saylor just offered his STRC issuance. It's a dollar denominated liquidity vehicle, almost like a US Treasury. How much did Michael, what's the coupon on that? 9%. Right. Michael pays 9%. His cost of capital is 9%. Okay. The interest rates that I pay on my USDC growth accounts today, which is deposits that people deposit, USDC stablecoin deposits people can make and tether and I pay them interest, I pay eight and a half on the highest tier on that. Why are those numbers so closely together? And why are most private financing options outside of mortgages in the 9 to 10% ballpark? Because the true breakeven interest rate for the US dollar is not. The Fed overnight fund is the US projected deficit over the US M2 money supply. And if you look at that projected number for 2025, that sits at around 8%, 8.5%. And if you look at the projected one for 2025, 2026, 8.5%. And so the, the truest, cheapest cost of dollars today, non subsidized and not. And in the free market should be between 8 and a half percent or 9 plus a slight risk premium. Right. And so that is where I think the rubber meets the road. A follow on from that would be to call out or rather mention that in some places in decentralized finance where there is no KYC or no type of controls. There seems to be people happy to take 4 to 5 to 6% on stablecoins. And some of these defi protocols are touting these rates of, you know, 8 and 7 and this. So, so they're. The end user is borrowing below the rate of debasement. I don't think that that is a completely free and untainted market. In the same way I don't think the mortgage rates are a completely free and untainted market. So what I look at to compare are my rates fair, high or low is look at the debasement of the US dollar, the true debasement of the US Dollar vis a vis your rate. And you should be within few points of that should be okay if, if it's on the other side, you're picking up, you know, a dollars for 80 cent. Right. And who's paying the rest of the 20 and why? I don't know, but someone is, right? And you better be sure someone is because there's no free lunch.
- [78:04]
B
Yeah, no, I think that's a really great explanation of that. And you mentioned the, the mortgage market. I think it's, it's interesting. Obviously there's been a lot of, we mentioned the regulatory changes and just kind of this, this vibe shift that we've seen around this, at least in the US and hopefully starting in some, you know, other places, I don't know, Europe seems to be maybe shifting the opposite direction. Who knows? But you know, bitcoin now being acknowledged as like, they've said, okay, Pulte, Bill Pulte, right? Yep. Said like this, this happened like as we were in D.C. i think I remember it was like, forget who was that announced it on stage. But it was kind of cool to see that. But basically saying, okay, Freddie Fannie Mae and Freddie Mac need to consider, consider Bitcoin as an asset when it comes to, you know, these loans. And like, how, how do you see this, like landscape shifting? Are there other, are there other changes that you would like to see at the regulatory level that like, really make a difference to you? Do you think that there's enough of a framework in place where you guys can do business comfortably, or are you, are there certain things that you're pushing for that you're advocating for, that you want to see from this administration or from subsequent administrations, assuming the pendulum doesn't swing back and hit us in the face?
- [79:16]
A
No. Great question. And so I'll break that up into two. So number one, I can touch on what I think the real impact of the new guidance is for Fannie and Freddie as it comes to mortgages. So the guidance for anyone's benefit is that the Fannie and Freddie are basically being asked to consider Bitcoin or crypto as part of the asset base of the applicant. And this is a very important distinction because a mortgage goes through what's called traditional credit underwriting. So they will issue your loan not based on the assets you own. They will issue your loan based on your after tax income and your capacity to service the debt. It is not. The amount you can borrow is not determined by how much Bitcoin you have or how much stock you have. It's determined by how much after tax income you can get predictably. And any self employed person or entrepreneur that's tried to get a mortgage will know exactly what I'm saying. If you go to the bank and you say you have a business that generates this much, they'll say that sorry, that's not income, man. I want your T4 fully muzzled up, paid every single cent in taxes. And I want to see a big tax bill that means I can give you some of this sweet juice and it's not based on Bitcoin. So you can show up right now to bank of America and tell them you have a million dollars worth of Bitcoin that you're looking to buy a half a million dollar house. And you tell them that you're retired and they'll laugh you out of the room. And so it's not true asset backed lending in the sense that it is income based lending and then they just take an asset to be super, super safe that they're going to get their money back. Bitcoin backed loans are entirely different in that it is only determined by the value of the collateral you're posting. I do not look at your credit history, I do not go on your credit records or any of that stuff. Your Bitcoin is your credit worthiness at Lennon. I can lend you dollars based on the value of that bitcoin. It's two very different things. So while I think it's a good step forward, it doesn't solve this pickle of somebody that is now bitcoin, wealthy, self employed, wants to start a business, they still can't get a mortgage. So the other piece that you mentioned around regulation, so one of the ones that I'm actually one of the ones that I've kind of like peeked my eyes on, I was like, well that's exciting. Was Atkins SEC chair, I think it was last week or the week before, did this big speech around, you know, it was the one where people got all excited about tokenizing securities, tokenizing stocks and bringing the stock market on chain and all this stuff. Most people got excited at that headline. But what caught my attention was he said in his speech that he wants to put forward a framework or guidance so that there could be these super apps. And the super app section of the guidance basically says, why are we forcing a lending company? I'll give you the example of leaden Lending is done state by state. So Latin has to go and look at every single state and figure out, do we need a license for this one? If not, then what are the rules? And then this state and that state and that's it. So we have to do that 50 sometimes and then we have to do that. You know, for any country. Like some Canada is similar. Canada's like province by province. So like you, you. And then if that's for lending, but then if you want to do buy and sell, you have to get a money transmitter license. And so it's like these, it's this smorgasbord of licenses based on states and activities. And it creates this unnecessary burden on a company. If you're already following the rules in one state, you have to like tweak it and fit the box of this other one and then tweak it. And they're all pretty similar, but not the same. And so the, the, the. What I found super interesting is he said, why are we making life so hard for these companies? Let's make one framework three fit into this. And you get the whole market and you get more than one product. So I think that if and when that comes through, that's going to materially improve the speed at which companies can bring products to market, compliant products to market. And I think that'll bode well for, you know, the U.S. like, if you look back not too long ago, it was, it was. This is available Everywhere except the U.S. everywhere except the U.S. u.S. Client is excluded UX. So it was like completely went the other side when we were under the previous administration. And so probably the first time Americans.
- [83:43]
B
Have ever like, had that. Like, usually we, you know, like, it was a real shock, you know, it.
- [83:48]
A
Must have been so trivial for you.
- [83:50]
B
Guys and really hard here in America.
- [83:54]
A
And so, and so I think that's gonna make things move a lot faster. And I think that actually is going to put a lot more pressure on the banks, right? Because I actually, I think actually the banks are in this awkward spot because right now they're sort of like in the General Motors position when Tesla started coming up, you know, there's this like, it's, there's this assumption they're just going to spin up your EV and it's going to be great and it's going to be better than Tesla. But all of a sudden your EV goes out and nobody likes it and it's crappier and the mileage is not so good and you don't get it. You don't, you can't really nail the messaging. And so I think banks are in this quirky spot in that like people want bitcoin native companies, bitcoiners want to work with other bitcoiners. They don't want to work with the sellouts or the guys that are coming in to be like, okay kids, great, great job here. Now we're here and you know we're gonna come take over. I don't think none other OG like people that have been in this space for years are gonna go and be like, oh my God, thank God Wells Fargo got here. I'm just gonna go drop all my stack to Wells Fargo. Like they might get some other legacy clients that have been with them for years. But by and large I look at this almost like an Uber versus a taxi analogy where like a lot of the big taxi companies also launch apps but no one really cared to use those apps, right? Because one app is now global, right? So now I can use Leaden anywhere I am. I can recommend it to my friends, I can recommend it to my partners. Like I can relate to the content. It's not like, oh, I work with bank of so and so here. Maybe you, Stephen, maybe you can use this one. I heard they're pretty good too. It's, it's, I don't know how this plays out.
- [85:31]
B
I think that's a great analogy. Like it makes sense because you're absolutely right. Like bitcoiners, especially if they've been around for a while like and they've seen these various cycles and seen the blow ups that have happened. It's like, you know, it's, there's a don't trust verify ethos obviously and you're, you're not going to want, you know, it's like, oh, you know, you know, JP Morgan comes out with it and it's like, yeah, okay, well, kind kindly off, you know, like, no, no, no, thank you Jamie Dimon. You know, you can, you can go suck one. Like you've been anti bitcoin for years. But here, let me give you my Bitcoin? Like no, no, absolutely not. Not in a million years.
- [86:06]
A
No, I, I saw 100% and like, you know, how does that come at odds with like this idea that most of us should have our own stuff in self custody, right? Like I'm only going to go to these places if I need to use loan, right? I'll give you the bitcoin while I need my loan and stuff like that. But there's, there's not this. Most a lot of people use banks as a sort of like offloading their self sovereignty from a financial perspective. They're like oh, it's just warm and fuzzy and it's insured and. But we bitcoiners are built different. We, we build not to trust the banks. I joke that I grew up in Venezuela. It was every Venezuelan the Latin banking system is like the World Cup. Every four years a banking system collapses in latam. And we all look at it, we're like oh, what happened to you? Like oh well it was this guy. And so we've been bred not to trust our banks. And so for us this whole idea of FDIC like okay, we've seen what happens when the money actually goes missing and you get the reprinted replacement. It's like it's not that great. And so for us it's like yeah, like listen, I'll keep your bitcoin safe during a loan but even when you don't need a loan, I'll tell you like take it to self custody. That's the best thing you can do with it. Like why would you keep it here if you don't have to manage a loan? And so I think the, the, the, the role even that banks fulfill today is, is just slowly shifting because some of that accountability is not coming back to the individual. And, and now you're really using them almost like on demand as people would use something like Leden, which I think is the more sovereign individual way of taking it there. Right. Because there is no safety net that covers everything from you. Like there is no alternative to having some accountability and the more you try to deny that the more in trouble you can get. So I actually, I'm really excited a about the competition and about the banks because I think it actually in one it just continues to beam the spotlight on this bit, on this idea that bitcoin backed loans are great. Right? Like it's amazing. And so what ends up happening, we've actually seen this in our numbers. So like say a new lender comes out that has a big megaphone and they're like, yay, no Bitco back loans now available. And so, and so, and so people are like, oh, bigger Mac loans. I'm like, who, who are the best places to go get a bigger loans, Boom. Let in, like, be the number one because it's been there for seven years. And so you're like, oh, oh, these guys have been doing amazing. And so our numbers actually grow because we get a lot of the coattails off of some of these announcements and little free marketing. It's freak in some ways. Yeah. And so I, you know, like I said, I think this is going to be a very big table with a lot of food, and as long as we have a really nice comfortable seat, we're going to do very, very well. And there is no world where Leden does well and our clients don't do well. We do well because our clients do well. And so I think that there's going to be enough abundance so that more than one lender can do very well. And, and we can do this thing right. Like, what I don't want, frankly, is another 20, 22. Right. Like, I would hate to see a bunch of these other people do this, make the same mistakes, and then us have to go out again for another two, three years telling people, no, I wasn't lending. It was too just these people. And, and so hopefully we're, you know, that that's not gonna happen. It's gonna be much more contained. But, man, it's a fun ride. Like, I, I, I enjoy the game, right? Like, I, I, I get to, you know, before bitcoin started and I was looking at all these, these podcasts and following people on Twitter and I felt like I was following, you know, like LeBron James and Dwyane Wade and you know, every day they get up and they jobs to talk about bitcoin. Now this, this is my job. And so every day I get to put it on. Right? Like, I'm out for team Bitcoin. I'm out for team Let in. And you know, for me, this is a huge privilege. And so I'll just, I just want to keep doing this for as long as I can.
- [90:04]
B
I love it, man.
- [90:05]
A
And.
- [90:05]
B
All right, so this was such, I'm so glad we finally got a chance to do this. I'd love to do this in person with you at some point as well. We're, we're have to, we're going to make it happen. Maybe we, maybe we have time in Lugano. Who can say, hell yeah. Well, that, that, that could be really fun. But seriously, like, love what you guys are building. Love just like your general vibe about these things and the way that you guys approach it. And I hope this was helpful for people in terms of kind of separating like these, you know, the others from the bitcoin companies that are doing things correctly, because I think that is still, that's a, you know, I told you before this, like, that was a lingering kind of worry that I had. But it's like, these are products that you want to exist. Like, lending is not inherently a bad thing. It's just bad when it's done really irresponsibly and when people get out, like, you know, yeah, that's, you know, that's, that's when things get bad. But I want to be conscious of your time here. Where do you want, where can people go if they want to find out more? If they're like, I need a, I don't want a loan from Jamie, you know, or a bitcoin backed loan from Jamie Dimon. He's not touching my bitcoin. Where do you want to send people?
- [91:04]
A
So you can go to Leden IO and it's pretty easy. Signing up takes a second. KYC takes a second. We're regulated, so yes, we have to do kyc, but it's, it's a pretty smooth process. The loan application takes two minutes. You get the loan proceeds typically within the same day if it's fiat. If it's a weekend, we can push it out on a Saturday because of banks. But basically most people get their loans same day, assuming you applied during the weekday. And yeah, it's pretty simple to follow me. It's at Cryptonomist with an A at the end on X, Twitter and primal. I'm mauriciorimal.net and my DMs are open and every of those. So anybody has any questions, feel free to come to me. And yeah, we're always happy to help. Don't go to Jamie.
- [91:52]
B
Yeah, perfect. Note to end on. Thanks so much for your time. Appreciate it. Look forward to seeing you in the flesh in Lugano.
- [92:01]
A
Same brother. Great to do this. Thanks so much.
- [92:12]
B
And that's a wrap on this bitcoin talk episode of the Bitcoin podcast. Remember to subscribe to this podcast wherever you're watching or listening and share it with your friends, family and strangers on the Internet. Find me on noster@primal.net Walker and this podcast@primal.net Titcoin on X, YouTube and Rumble. Just search at Walker America and find this podcast on X and Instagram @tcoin podcast. Head to the Show Notes to grab sponsor links, head to substack.com walker America to get episodes emailed to you. And head to bitcoin podcast.net for everything else. Bitcoin is scarce, but podcasts are abundant. So thank you for spending your scarce time listening to the Bitcoin Podcast Podcast. Until next time, stay free.