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- [00:00]
Host
This is an iHeart podcast. Guaranteed Human
- [00:05]
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- [00:35]
Sam (River Director of Marketing)
I turned off news altogether. I hate to say it, but I
- [00:39]
Host
don't trust much of anything. It's the rage bait. It feels like it's trying to divide people.
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Advertisement Announcer
We got clear facts.
- [00:51]
Host
Maybe we could calm down a little.
- [00:55]
Sam (River Director of Marketing)
NBC News brings you clear reporting.
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Host
Let's meet at the facts.
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Sam (River Director of Marketing)
Let's move forward from there. NBC News reporting for America.
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- [01:05]
Sam (River Director of Marketing)
All?
- [01:06]
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Sam (River Director of Marketing)
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Sam (River Director of Marketing)
toward, what's at stake, and what success looks like for you.
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- [02:07]
Sam (River Director of Marketing)
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- [02:23]
Host
What do you think the biggest roadblocks are for normies now, today, getting into bitcoin, probably themselves.
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Sam (River Director of Marketing)
And of course you have like the unit bias. You know, I don't want to have 0.003 bitcoin. I want to have 20.
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Host
What are the nation states doing?
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Sam (River Director of Marketing)
Sell the bitcoin that they would confiscate because confiscation is obviously the biggest driver there of the bitcoin that they.
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Host
What does the state do better than confiscation?
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Sam (River Director of Marketing)
I don't know. You ask me. So I was like, wait, we now have money that's scarce, that can just be printed and created. Super interesting technology. But if it's going to take everyone months to understand, I don't think it's ever going to take off.
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Host
Okay. The richest people are going to have the most power and that will compound as they stake their tokens is if you were designing it to make the rich richer and the poor poorer.
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Sam (River Director of Marketing)
There are still exchanges that do not have proof of reserves. You just cannot get past not having that level of transparency.
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Host
Is it possible for strategy to buy too much Bitcoin?
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Sam (River Director of Marketing)
What concerns me there is if it were to continue at the pace that the buying happened by institutions and businesses, then by 2035.
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Host
Hello, everybody. Welcome back to Market Disruptors. I'm joined today by Sam of River, one of the really one of the most, in my view, one of the most important bitcoin companies in the space. You guys are a bitcoin only exchange, I think one of the fastest growing as well. You're the director of marketing there. And so we're going to get into a lot of the river conversation in a bit. But first I want to hear about your personal path getting into bitcoin. Right. Like where did this come onto your radar? Why is it important to you? You've dedicated your career to focusing on it. Yeah, walk me through that path and then how that brought you to working on river today.
- [04:05]
Sam (River Director of Marketing)
Yeah, awesome. Well, happy to be on the show. It's a bit of an unusual story. So I used to play a video game in which you could trade virtual goods. And one of the things that people struggled with is like, if you trade that for real life money, how do you facilitate the payments? Like how does that happen? It's kind of tricky with like sharing banking details with people online or using something like PayPal where you could be charged back. So bitcoin started emerging as a method to facilitate those payments. And I was looking into it and it very quickly clicked for me because the game itself also had scarce digital items. So I was like, wait, we now have money that's scarce, that can just be printed and created. So you know, because of my circumstances, I just very quickly understood why bitcoin made sense. But it took me quite a bit of time to actually understand like how it worked and why it was secure and why it would potentially have a future. And, and this was like in like 2013, 2014 or so. And there wasn't too much non technical information back then. Everything was very like, like, you know, white paper is like the most accessible thing at the time. And everything else was just discussions around tech and stuff. And I'm not technical by background. I have learned a lot about technology ever since I, like, gone into it a lot. But it was like Andreas Antonopoulos was the first person to, like, really properly articulate in accessible terms why bitcoin is interesting and why it has so much potential. And I think, like, that entire wave of bitcoiners from around that period got very excited about it, partially because of him, of course. And, yeah, like, I just discovered it. I was a student at a time, so, you know, it's not like I had a lot of money, but at least I learned about it and realized, like, okay, super interesting technology, but if it's going to take everyone months to understand, I don't think it's ever going to take off. And there's only one Andreas, you know, he's got his hands full. So what if I also just start making this more accessible to people now that I understand it? So that's what I've been doing ever since. It's just like through presentations, through, like, workshops, trainings, writing, just all kinds of content, research as well. Just started producing as much as I could there to help more people get into bitcoin in accessible ways. And then as of four years ago, I'm with River, which we already covered.
- [06:15]
Host
You put out some reports with River, I believe, talking about a few different ones that are interesting. The first one I want to talk about is your bitcoin adoption reports that have come out recently. What are the main things that you're tracking? What are you seeing? Yeah. What types of adoption are you seeing and.
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Sam (River Director of Marketing)
Yeah.
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Host
What stands out to you from those?
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Sam (River Director of Marketing)
Yeah, yeah. We always take like, the kind of, like the bird's eye view of, like, what is. What is happening and what's interesting because you can. There's so much stuff to cover. You can go in every possible direction. The main focus is really on, like, if you look at the 21 million bitcoin, how are those distributed and how is that changing? Like, who's getting involved more, who's getting involved less? Like, how does that ownership shift change over time? So we map out a lot of that in the report and what we've been seeing over the past few years, a really strong trend has been that institutions and businesses have been buying far more bitcoin than they were in the previous years. A lot of that comes off the wave of, you know, Michael Saylor pushing, like, business adoption a lot also, just the services getting better. At river, we now have over 3,000 businesses on the platform because the tools are just there to make it all really easy. There's, like, clarity from a tax perspective as well, which was very unclear just a couple of years ago, which. That had a really big impact from the start of 2024. And, yeah, like, we just map out everything we see there in terms of business adoption. Of course, ETFs have made a really big impact there, too. And then we go into all kinds of directions of like, okay, what about, you know, like, what are the nation states doing? How does payments adoption look like? You know, what do regulatory changes, like, what kind of impact do they have? How is that evolving over time?
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Host
What. What are the nation states doing?
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Sam (River Director of Marketing)
So nation states, like, they used to, for the most part, like, either just sell the bitcoin that they would confiscate, because confiscation is obviously the biggest driver there of the bitcoin that they.
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Host
What does the state do better than confiscation?
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Sam (River Director of Marketing)
Yeah, yeah, yeah. I don't know. You ask me. But yeah, we've seen that trend where they used to sell the bitcoin. I think Germany was a recent case where they sold at a pretty bad time.
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Host
Bitcoin, I believe they sold. Yeah. Right before the last run up.
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Sam (River Director of Marketing)
Yeah, I feel for them, the German people, that is. But, yeah, you used to see that trend. And then now they actually just hold onto the bitcoin because they're increasingly beginning to realize, like, wait, maybe we should hold some of this stuff.
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Host
Might want to have some just in case.
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Sam (River Director of Marketing)
Exactly. So that's been a big trend. There's now like 23 countries that hold bitcoin in one way or another, like, either directly or indirectly.
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Host
Do you know much about Iran? I've heard. I've been hearing a lot about, you know, taking bitcoin as payment across the Strait of Hormuz. And they were involved in mining for a while before that as well. Is there anything specific you've seen related to that?
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Sam (River Director of Marketing)
That's like, that's as much as is generally known. I haven't really gone deeper into that. You know, like, almost like, you know, you're not going to go on the ground now, obviously, to go figure anything out. And the question for a lot of people is also like, okay, that announcement came. Did any actual payments there happen? Like, there's not a lot of clarity there.
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Host
Yeah, that's interesting.
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Sam (River Director of Marketing)
But it's like, more powerful, I think, than whether it happened or not is the message of a nation state saying, like, this is what we think is the most Credible way to transact with
- [09:20]
Host
adversaries just knowing they can't be stopped.
- [09:23]
Sam (River Director of Marketing)
Exactly. Yeah. And that's going to be a big, like you've just noticed in the market, like a big shift with stablecoins where people suddenly realize, like, wait, we thought this was the future, but actually if we're going towards a world where you've got all these big nations opposing each other and trying to make each other's lives difficult, they're probably not going to want to use a currency that one of them controls. They're going to want something neutral. And that's really like the powerful message there in the Iran case. And we've just seen like over the past years with like legalization in different countries. Like there have been like 50 countries since 2020 that have become more open to Bitcoin, like approving ETFs. Some of them were previously banning it and have now unbanned it. Or they're like approving like the right to self custody and all of these kinds of things. So lots of progress is being made there. Even if it feels slow or it's not as impactful, it adds a lot of credibility and then makes more people want to get involved. And that's just been a massive wave that we've been mapping out.
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Host
You guys recently launched banking with Bitcoin over at River. There's been a lot of talk of when does the time come where you can officially live on a bitcoin standard where you can cancel your Chase account, cancel all the rest of your accounts, you know, and run off that. Do you think we're there right now with River? Do you feel like you guys have the groundwork laid for people to be like, all right, it's time you can, you can fully exit. We can run everything for you. And if so, yeah, what would that look like?
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Sam (River Director of Marketing)
Yeah, it depends a little bit on like the level of convenience that you want in the sense that. So we now have, we have direct deposits where you can put your paycheck into river and automatically convert whatever percentage you want to Bitcoin. And then the part that you hold in cash on river, it earns an interest rate of 3.3%, which gets paid out in Bitcoin. And that also, like, the cash is held by our partner bank that we work with and has FDIC insurance there. Like river itself is not a bank, but we have kind of like banking services. And then the third piece is that you can pay your bills from river using Bitcoin or cash, and there's no fees on doing that either, like whether you want to pay from your bitcoin balance or not. But then the next step that a lot of people ask about is obviously like, okay, but what about a card? Because I want to be able to do my day to day payments and stuff. We currently don't have that yet.
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Host
Okay.
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Sam (River Director of Marketing)
But what you could do is if you have a credit card elsewhere, you can pay that off using bill pay with like the integration.
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Host
Sure. Just charge on your credit card.
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Sam (River Director of Marketing)
So it's like transfer that. In theory, it works. You could ditch your chase if you're someone who like wants to have guard at the same place that you know you're doing everything with. Like, you just want to have one account that we're not perfectly there yet and still have some work to do there. But overall, like, we're seeing a lot of excitement because people can like, you know, can switch over for the most part and just keep like the little things they need elsewhere.
- [11:59]
Host
Yeah, you talked about here at the conference, a lot of people that you're meeting with, they're having a lot of interest in that. Simply being able to hold a balance and get paid out in bitcoin. Just the simplicity of that, having that coming in.
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Sam (River Director of Marketing)
It's actually, it's really interesting as well for like not even the people at the conference, but more like just broadly anyone who's skeptical about bitcoin, there's now like a way where you don't need to buy it, where you don't feel like you are speculating because that's what they think they are. But you can just hold cash and then earn interest on that. And that's paid in bitcoin. So it's like, it's very. We've seen it be very friendly for total newcomers who are like very hesitant to get in, or people who think like, well, the price is a bit too high right now. I don't know if I want to do it. And then they just wait a bit and earn some interest and get more familiar with it, start learning, start listening to podcasts. And as they learn more about bitcoin, that's when they start buying and getting into it.
- [12:50]
Host
Why did you guys make transparency so important? Maybe first tell people about what river does for transparency. I know proof of reserves. You guys also publish. I don't know if it's your. The financial data exactly, but it shows like, hey, here's exactly what's going on behind the scenes. Here's how we're spending our money. Here's what we're focused On. Yeah. Can you tell me a little about that decision making process and why you guys do that?
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Sam (River Director of Marketing)
Yeah. So to like, if we're talking about sort of like bitcoin banking as a concept, the most important thing with a bank is always trust. And you know, a lot of people have burned their hands or struggled with exchanges in the past. There have been a lot of breaches and issues and all kinds of things. So from like the early years, we focused very strongly on security. Our CEO and founder is, is our CTO as well. So an engineer, like, very focused on security in general and trying to build everything right. Building the custody from scratch and sort of like leveling everything up, building block by building block from there. But then what you also need to do is show to your clients, like not just through reputation by not having breaches and being very secure. Like, you want to show to your clients, like the funds are actually there that, you know, if they hold any on river, like, if we're increasingly becoming a bitcoin bank, then some people will be like, all right, I need to hold some funds there so they're able to pay my bills. But then I need to know that I can trust you guys. That you're not going to go out of business or that you're not doing anything funny with the money.
- [14:09]
Host
You can just print infinite more money when people withdraw and you don't have it.
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Sam (River Director of Marketing)
Yeah, exactly.
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Host
It's a different setup.
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Sam (River Director of Marketing)
So that's like, that's why it's so important. You cannot be. And this is why, like, it surprises me that there are still like 20, 26 now. There are still exchanges that do not have proof of reserves, but there are companies in the space that are like building towards banking service, but you need to have it. Like, you just cannot get past not having that level of transparency. And that's one of the cool things actually about bitcoin in general is like, it's, it's got that built into the blockchain.
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Host
Sort of what.
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Sam (River Director of Marketing)
Why not use sort of the point?
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Host
Yeah.
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Sam (River Director of Marketing)
And then there's like, yeah, but it's complex and security and whatnot. Like people are actually really.
- [14:47]
Host
Yeah. Why, why do people. What are the reasons where they're like, we don't want to do this.
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Sam (River Director of Marketing)
It's like there would be more eyes on, like, where does the exact balance live. But from my perspective, like someone who's smart enough to be able to take those funds in one way or another, like, they can already find it on the blockchain.
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Host
Sure.
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Sam (River Director of Marketing)
Like, you know, they'll like Send a transaction to your exchange and go look at like, what addresses does that land in? Okay, what addresses do those interact with? And just like, map it out. So anyone who, like, spends a little bit of time can actually just piece all of this together. And that's been done for a lot of those exchanges. But it's not the same as the exchange themselves saying, okay, we'll do proof of reserves and you can verify that your piece of Bitcoin that you hold with us or multiple Bitcoin, whatever you have, are actually your unique balance on this exchange. Like, we're not just saying, like, oh, the balance shows we have 15,000 Bitcoin on the exchange or something, but we actually have liabilities of 25,000 or whatever. You can verify both, basically. That's so important about it. But yeah, reasons why they don't do is sometimes it's priorities for a company. It's often more interesting to build products and features that directly make them revenue rather than like, let's do something that is technically somewhat complex, like, it's not that bad and that, you know, won't directly drive revenue for us and just like, puts more scrutiny and eyeballs and questions on us. That's why it's just easy to push off and say like, well, just do it at some point later on. But yeah, for us it's like, no, we need to start there. Because if we first build all the fancy banking features and then people go like, okay, but I just do not fundamentally trust you, then you need to tell them later on, oh, okay, now we built a thing so that you can trust us. It's the reverse order. So what you'll probably see is a lot of exchanges will. And banks are also seeing, like, traditional banks are starting to build bitcoin products. Like, we're seeing this big convergence from both sides where they're eventually, you know, all kind of going to look pretty similar in some ways. And then it's a matter of, like, who has the best client service, who has the best experience in the app or on the platform, and who has some of the most interesting features. Innovation becomes a bit of a challenge there, as everyone's looking into each other's stuff. But all of those factors start playing.
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Host
Maybe there's something good about that too. Innovation is difficult. It's like, yeah, that's because it doesn't need to be that complicated. You can keep it pretty simple, really. Kind of the point you're talking about. Cash App, they recently announced their proof of reserves, which is great to see. They seem to be one of the more solid companies in the space and you know, their connection with Square and everything in their terminals. You put out a believer, a report on Lightning specifically and the development on the medium of exchange front. What are you seeing there in terms of increase in usage of medium of exchange?
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Sam (River Director of Marketing)
Yeah, so it's been a. It's been a really interesting trend. Like, when I first joined River, I actually started the earliest Lightning reports that we did. And we've sort of since like made it part of the bitcoin adoption report because we figured like, well, you know, it is just using bitcoin. That's sort of like part of the same exercise that we're doing where we're looking at all of the different pieces. And in the early years when I was doing the report, like, you know, people look at that and go like, well, how can you know what's happening on the Lightning network? Because it's. It's by default, it's private.
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Host
Yeah, right.
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Sam (River Director of Marketing)
So a lot of questions come up about that. And it's actually, it's really quite simple. You just go around the network talking to the biggest node operators that have the most bitcoin on there and, you know, you present them the story like, hey, I want to provide more visibility into what is happening on the Lightning network. And because by default it's so hard, people are skeptical about it. Investors don't know, like, should we back lightning companies? Because we can't see whether there is activity there, whether there's interest, whether that's growing or not a good problem. In some ways that makes innovation really difficult for people because they just need to bootstrap everything. They can just build a lightning business if nobody wants to invest in them. So we were like, okay, we can play a role here. Because river runs one of the bigger nodes on the Lightning network. We've got reputation as a company. So went out there and talked to all these node operators to try and reach them and, and see, like, would you be willing to share some data with us that only I will look at, like, we don't share this internally to figure out, like, how can we be smarter than all of them? And then just started publishing that. And in the early years, you know, people are a bit more skeptical. But then we've now done this for like the third year in a row and people look at the data and it's just like, it's. The growth has been tremendous in terms of volume. It's not like over a billion dollars in volume per month is going over lightning and A lot of that is obviously flowing between exchanges where people go like, but then it's too centralized. But I mean like it's kind of obvious if you think about the average bitcoiner. Like most bitcoin is held in self custody, but most bitcoiners have their bitcoin on an exchange. Like a lot of the people who came in, in the. More like recent years or you know, open a coinbase, smaller quantities of bitcoin
- [19:37]
Host
that they hold on exchange.
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Sam (River Director of Marketing)
Yeah, exactly. And that makes up like a good portion of the bitcoin as well. But that's like quantity wise, that's where most of the people are. So naturally, if that's where the people gravitate, then that's where most of the transactions will come out of. So people say this is some kind of gotcha of like, oh, but it's not really lightning because it's just between exchanges. But even then, like, I mean it's an interesting use case being able to move your money from one exchange to the other, specifically your bitcoin for like a fraction of a cent in like immediately. Like it opens up arbitrage opportunities and things as well. So you get more even pricing between exchanges, which is always interesting. Yeah, more trading volume for the exchanges themselves as well. So yeah, there's like, you know, there's upsides, there's downsides to it, but in general we've seen a lot of growth there and obviously with, we touched on them earlier, Square with their announcement of so many places now accepting it, like we don't have that data yet because that's just been a couple of months ago and they're slowly rolling that out. But I was just talking to someone on their team yesterday, like they'd be interested in potentially collaborating and just like trying to map out more what is going on with payments, what is going on in the bitcoin world. Which is really exciting because we just put these out as tools for content creators, for bitcoiners to go talk to their networks and platforms and friends to make the case for why this thing is growing and why it's looking so interesting. That's incredibly hard to do if you just don't have any data. If your best pitch is like someone goes up to you and says, yeah, but I can't pay in a grocery store with bitcoin. You're like, oh, but Square accepts it everywhere. And it's like, oh yeah, how many people do that? We don't know.
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Host
Somebody somewhere, maybe we know it's been
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Sam (River Director of Marketing)
rolled out, but nobody knows that's not a strong argument. Whereas if you have a data point or a graph that shows that it's going up, people start looking at it differently. It makes such a big impact, which
- [21:22]
Host
that's something for bitcoiners to be able to do, to be involved. It's like, I think that I saw this stat. I think there's 4 million square terminals either in the US or globally. I forget what it was. I think I saw a stat that said like 800,000 about recently have them enabled. Yeah. So that's, you know, there's opportunity anywhere you go. You go to a coffee shop, you go to any small business that runs a square terminal, just be like, hey, do you guys know how to use your Bitcoin side of this yet? I want to pay in Bitcoin. And then I know of a coffee shop near me that has a square terminal that I've been to before. And I want to get in there and be like, hey, can I check out? And then they just. And then they go, we don't know how. It's like, okay, can we figure it out? Let me see. Just encouraging that. And then people getting familiar, getting used to it. That's like one of the main things where people say, okay, well, where can I spend my Bitcoin? I know that it is going up in value over time or whatever, but when can I go to the grocery store and check out? And now the infrastructure is there and we're able to cash. App Square is one of the first people to do it, but there's a lot of other people who would just be able to flick a switch. And it's just creating that demand for people and rewarding the people who are on the cutting edge. Last year we came out to the conference here in Vegas. We're driving back, we saw two hours in the middle. There's a steak and shake somewhere. We found it. We come out. You know, we. I think last year that was one of the first transaction that. That they'd done, you know, was like, okay, we actually don't really know. Okay, let's see. We pulled it up. One lady had to go grab someone else, and I was like, how do I do this? And then as soon as they set it up, it's done in three seconds. It's just as fast as your card.
- [22:59]
Sam (River Director of Marketing)
From my understanding, they're just also rolling it out in a way now where the operator doesn't even really need to know.
- [23:03]
Host
Sure, sure.
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Sam (River Director of Marketing)
That's like, it's automatically in the interface.
- [23:07]
Host
Yes.
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Sam (River Director of Marketing)
That makes It a lot easier. Like all they need to do is like okay, clients wants to pay with this and kind of it. So that's, that really makes it accessible because then they don't even need to understand. And what's interesting is it makes them think about like wait, why are these people coming in here paying with this thing? Like why is that so interesting? So it's kind of like a reverse Trojan horse in a way.
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Host
You, when we were hitting all time highs last year, you posted something about how you saw retail enthusiasm was not like it's been before. How it feels muted that people don't seem to share the same level of interest that they did in previous runs like that. I imagine probably some of that is people being jaded after the FTX collapse, Celsius collapse, all that sort of stuff too. But what do you think the biggest roadblocks are for normies now today, getting into bitcoin and being from making that
- [24:02]
Sam (River Director of Marketing)
leap essentially probably themselves is like a good one I think because a lot of people kind of have the attitude of like I need to invest in the new hottest thing. They'll be like, you know, gold's going up. And they're like, okay, I need to get involved in that. Like all the AI stocks are really interesting. I want to be on that because that's what all my buddies are talking about and kind of like where the discourse is and what's interesting. And a lot of people have kind of like they've heard about bitcoin at some point. They've taken that idea and put it in a box in their mind that says like don't bother for whatever outdated reason that you know, their perception of bitcoin is like, oh, this is like it's not the fastest coin because I heard something that some other coin is faster or whatever. So disregard it or it's bad for the environment. So you know the one do anything with it.
- [24:45]
Host
Yeah.
- [24:46]
Sam (River Director of Marketing)
Or you know, like what are the odds that this thing is still going to go to a million? Because I want to 50x my money over the next two years. It's probably not going to do that. So you know, put it in a box and people kind of move on. And then you just have a lot of people who are like, they don't know where to start. There's no like there's for them like the link between why would I even want to get into this and what is my own situation or what are my own struggles. Like they don't see that path unless they're willing to have the patience to, like, look into this. Or they have someone in their friend group or network who actually knows about this and talks to them about it. That often needs to be the catalyst for someone to say, like, all right, I'll. I'll take a look. I'll look into it. But otherwise, it feels like it's like doing homework on your health or something. Like, a lot of people also don't like to do that kind of stuff, like figuring out, like, why do I have those headaches? Let me go dig into the research and see if there's other stuff I can do, rather than just taking medication and, you know, shoving the problem under the rug. Like, I look at it very similar to that. People just aren't intrinsically motivated to go dig into it. And they don't understand how, if they were to get this, it would impact their life in very positive ways. So I think that's probably a really big obstacle. It's just, like, the shiny things that are distracting them, but then also, like, digging into it, like, feels like this big, complex roadblock where they're like, oh, but it's going to take so much time, or, how will I know what's right? Or, what if I lose my money? And that's like, a big difference with sort of, like, the way the Internet emerges as well, where, you know, on the Internet, what's the worst thing that's going to happen is, like, someone's going to, like, say bad things to you when you first got on there, or you come across a website with some shady stuff. But with Bitcoin, it's like, way better. I would lose my money if something goes wrong. And that's a much scarier concept to a lot of people. So they're immediately much more hands off than you see with the Internet. So the growth pattern is very similar, but it's slower in bitcoin's case than it was for the Internet, just because of that extra sort of perceived risk. And of course, you have the unit bias. People are like, yeah, but I want to, you know, I don't want to have 0.003 bitcoin. I want to have 20. And it's like, yeah, but, you know, you can't at this point, if, you know, if that's the question you're asking, you probably can't.
- [26:52]
Host
Yeah, the unit bias thing is interesting. I think there will be a time where it's like, all right, we got to move to sats. There was a time, I think, cash app. I think maybe they've Come off this a little bit. But they were talking, like, kind of like, we want to rebrand on all our terminals. You're checking out with 20,437 bitcoins, you know, to rename SAT sort of thing. I think that that's. Some people view that as kind of silly, and maybe it is a little bit silly, but I also think it's important, you know, to. To cover that hurdle just for a while.
- [27:19]
Sam (River Director of Marketing)
I think it's a very interesting discussion. Like, I totally see where people are coming from that with that. There's a lot of people are very much in favor of SATs, and they want everything to be like SATS or satoshi. It's kind of classic, and I totally get why. But at the same time, like, bitcoin has, like, a phenomenal brand, and you completely throw that out the window when you switch to sats, because people have no idea what that is. They think it's a different currency. And I've heard, obviously heard all the arguments of, like, yeah, but it's like cents to a dollar and stuff. Like, people don't think that way. And the thing you have to keep in mind is, like, most things you buy in a store, they'll name a dollar amount. They do not name a cents amount. And if you were to pay with bitcoin, most of the things you'll buy in a store, they're not going to be for a whole bitcoin or more. They're going to be in sets. So then you actually never use the bitcoin name. You would be saying, in a store, I want to pay in sets. And people are just like, what?
- [28:11]
Host
Like that throw out 17 years of branding.
- [28:13]
Sam (River Director of Marketing)
Exactly. And that's just like, from a. From a branding perspective, that would be a colossal mistake, I think. And so that's like, what is then the alternative? Indeed, like, yeah, doing something like. Like they've done moving to just having, like, more bitcoins in terms of terminology. And I think there's merit to that. The way we've kind of solved it at river is instead of saying you can switch between a bitcoin and a SATS balance, which is kind of a little bit clunky, it's confusing for people who are new to bitcoin and have never heard of SATs before, they're like, oh, do I have two balances? Are these different things in the app? You need to start adding explainers and stuff. All of that adds a lot of, like, ugly things to the interface. So instead, we've kind of like you have the balance with all the digits of a bitcoin and then we just like the sets are in white. So if you have like less than a bitcoin, so you have like 10,000 sats or something, so the last five digits are in white and then the first ones are in gray. So you can just like very easily read, oh, this is 10,000 sats. But it's also like 0.0001 Bitcoin. So that's kind of like, just like a visual way to please both people who prefer to easily read sets, but also people want to realize like what amount do I have of a full bitcoin? So yeah, that's like, that's kind of our, our solution for now. But obviously this will keep developing I think, and people will see like, do we prefer that way where you just like you, you move the comma and you just make it easier to pronounce and to talk about it? Or is there some other solution? But I'm pretty open minded about it because you just see how many people struggle with that idea of like, wait, can I have $10 worth of Bitcoin? Like that's weird because a bitcoin is just so expensive right now in their head and they don't really get that. So I think we should absolutely keep looking into this because it's just such a big roadblock for a lot of people.
- [30:01]
Host
Yeah. And I think just like the feel of it matters, you know, when people that, that when they glance at it, you know, understanding it, not need to understand all of the complicated stuff behind it. It's like make it simple and clear and make me not have to think at all.
- [30:14]
Sam (River Director of Marketing)
You know, and one of the, one of the really interesting things there is like before I worked at river as a bitcoiner, you have your own views on everything and you think like, oh, like everyone should self custody and like everyone should learn what sats are and how the blockchain works and all these things. Because then you're like, you're most empowered and you really understand what you're using. And then as you start seeing what kind of people come into bitcoin later on and you realize like, wait, a lot of these people, like they can't even secure a password or like have, have a secure password in the first place. Like the idea that like yes, in theory they could learn to self custody, but the odds of them doing that so early into their journey where they don't even really know if they want to do anything with this thing are actually really low. So it brings a lot of nuance. When you start seeing the kinds of questions that people have, they'll go like, hey, you know, I have a stupid question. It's like, no, there are no stupid question. Ask everything. Like, you know, be open about that. But it's very interesting to see how many people sort of like struggle to go through that journey. And you have bitcoiners who are jumping on that and telling them like, no, you absolutely need to pull it from the exchange. Because they're like, it's like guys, your friend or your family member is probably buying like $10 worth of Bitcoin or something. That's not going to be life changing for them. If anything were to go wrong with that exchange. If you can immediately overwhelm them with all of the technicals, all of the baggage, all the complexities, that's how you turn people off. Because they're just like, this is not for me. This is an entire world. It's complicated. I actually just want a safe place that I can trust for now. And then as they start feeling more secure, gradually they build up that understanding and then they'll start looking into something like this. So it's like you just learn so much nuance by having the conversation, seeing how different people prefer stuff. And if people self custody, like if they get there, I kind of look at this like the marathon versus the sprint. If they get to that point where they all do it, fantastic. Amazing. We've like massively succeeded as a space, but it is not for everyone. And that's also okay as long as people like, they think about like, where am I storing it? Like is that, you know, with river, like we, we literally have like a PDF on our website somewhere with like 11 questions to ask your bitcoin exchange. We're like trying to educate people on like, what should you be asking your exchange? And if they don't have answers or the answers are very vague or you just don't get a good feeling about it, don't use that exchange. Like look around for other options because there are plenty of good ones that do. Explain like, this is how we secure stuff. That's, you know, these are the trade offs with soaring with us and whatnot. Do they use a third party provider or not? Like there's, there's all these kinds of things, but the average person doesn't think about that or really wants to think about that. But yeah, that's how you get situations like FDX where a lot of people just stepped into that. Oh, everything Looks great. And then they don't realize that it can blow up.
- [32:52]
Host
Yeah. A lot of people will go UI first over everything. You know, if it feels good. Yeah, yeah. Which I think too. Like, I think a lot of the work we need to do now in the bitcoin space, we. I'm just doing interviews. Guys like you, smart, smarter guys than me, you know, but, you know, it
- [33:10]
Sam (River Director of Marketing)
helps people get started in their journey. Yeah, yeah.
- [33:12]
Host
I think. I think we need to, like. Right, right. I think a lot of the solutions we need now are simplifying the important things. Right. So simplifying self custody, I think Cash app is making some good progress on that. Simplifying privacy solutions, I think is an important thing. People don't need to know. Okay, this coin join, this address. We're all gonna. They don't need to understand how it works, but simplifying, like, if you want privacy, show up here. We'll give this to you. We just had Fong in before. Fong Li is CEO of Strategy. I think he was explaining some of the things around Stretch. And I think one of the most important things about that is how beautifully simple it is. It's like they have all this complex financial engineering on the back end to keep your principal stable. The rate is variable and they can move that, but it's, here's your bank account that pays you 11%. We also were talking about how retail adoption was muted in this last cycle, but institutional adoption was not. Institutional adoption was through the roof. Charles Schwab is making announcements recently, obviously, Blackrock, all of the ETFs there. I play in a band at my church. And one of the guys there, he's working on Goldman Sachs. And Bitcoin's in the conversation there now. And he was saying for a long time it was this fringe thing. And now they're having serious conversations about, hey, are we falling behind? You know, like everybody else is, you know, you know that the big names are starting to be like, hey, hold on. Like, we're losing share to Robinhood because we don't offer spot, you know, and so they're making progress there.
- [34:40]
Sam (River Director of Marketing)
Well, somewhere out there, one day there will be a conversation in the boardroom where the guys are like, wait, everyone else adopted Bitcoin. We're the last to not do it. Like the. That's going to happen.
- [34:50]
Host
Yeah.
- [34:51]
Sam (River Director of Marketing)
You know, like, at least they're realizing it now. I think something like 16 of the. We published a stat around this. Like 16 of the top 25 banks in the US now either offer or are building bitcoin products, sometimes only to high net worth clients, sometimes only institutional. But they're all getting on this. It's becoming like the sensible thing to do. And not doing it, it's just becoming a huge liability. Like Right. So with, with Vanguard I think is one of the prime examples where the
- [35:14]
Host
CEO, we will not offer it. You cannot buy ETFs here. And a lot of people are like, okay, bottom bye, see ya.
- [35:20]
Sam (River Director of Marketing)
Yeah, it's just becoming super unpopular. And we're going to see a very similar thing happen with politics too where if you get like an outspoken country leader who's like against it, like you are not in a good spot because you're just.
- [35:32]
Host
We saw that a bit anti crypto army. Elizabeth Warren. That was not very popular.
- [35:37]
Sam (River Director of Marketing)
Phenomenal self goal.
- [35:40]
Host
We'll probably see an increase in the political Griffs as well. I imagine a lot of people riding on the bitcoin, talking a lot about bitcoin, not exactly delivering on some of that or even worse. You know, I'm not trying to call out anybody specific. We got a lot of friends of the show from a lot of different places, you know, but you look at the Trump administration running on the bitcoin platform and then you know, kind of the deviation from some of that into a lot of other altcoin sorts of things that left a lot of people feeling pretty jaded towards crypto, crypto as a whole, you know, towards.
- [36:16]
Sam (River Director of Marketing)
Okay, well, which has already been struggling a lot.
- [36:19]
Host
Yeah, right, right, right. And so I think there's been an unfortunate conflation of the bitcoin crypto and
- [36:27]
Sam (River Director of Marketing)
a lot of people can distinguish it because they unfortunately, due to heavy branding efforts to call it all crypto so that it could all be sold as like the same level of credibility. Like that's been a massively damaging thing for the space in my opinion, like ever since like 2017 where this started getting pushed. Yeah, that just confuses so many people because they talk about, oh yeah, I have bitcoin, like which one is that again? They don't know exactly. And then it means like they have some cryptocurrency. Sure.
- [36:52]
Host
Or like which bitcoin do you own? And it's like, wait, wait, wait, hold on. And also to give credit where credit is due, Chairman of the cftc, Selig was here talking with Mark yesterday and he has done a great job of making it very clear. They put out a joint briefing with the sec, the CFTC and the SEC saying, okay, here are the lines between securities and commodities Gensler is someone who got a lot of flack from bitcoiners in the crypto space as a whole. But I think another place where he deserves some credibility is from the get, he was like, this is a commodity. It's way different from all these other Bitcoin itself as a commodity, it's way different from everything else. The difference between proof of work and proof of stake, securing the network. You had some really great podcast appearances from a couple years ago. I was listening to, talking about the. The bitcoin mining, explaining some of that simply for people. Maybe an interesting place to start getting into this too is from the regulatory perspective, the delineation of that SEC briefing between all the other securities. Bitcoin fell into the digital commodity section. A lot of that has to do with proof of work versus proof of stake, proof of history, all these other ways of securing different blockchains. For people who don't know, what is the primary difference between proof of work and proof of stake? How does that play into mining? And why does that make bitcoin different than the rest of the cryptos?
- [38:15]
Sam (River Director of Marketing)
Yeah, so the interesting thing about like. Like when. When Satoshi invented bitcoin, he put together a couple different building blocks that. That made it work where predecessors had not worked. And one of the important ones was proof of work, which is basically a consensus algorithm. So a way for all the participants in a network to agree without having to trust each other. And in order to do that, they do it by spending energy. Hence the work part. Like, you need to actually put in work to be able to show to all the other participants in a network. This is what I think happens next. And what happens next with bitcoin is like a new block of transactions that people just try to send out gets added to the blockchain.
- [38:57]
Host
And what do you mean when you say spending energy too? Like, when you're saying proof of work?
- [39:01]
Sam (River Director of Marketing)
Definitely getting into that.
- [39:02]
Host
Yeah, yeah.
- [39:03]
Sam (River Director of Marketing)
So the way that works, the way the energy is spent, is there are bitcoin miners, and anyone can be a bitcoin miner. And that has obviously evolved a lot over time. In the early days, everyone was a bitcoin miner because it was the only way to access bitcoin. But now you can just be a participant in a network who has no clue about any of this stuff, who just has a wallet or an exchange where they hold some bitcoin. And that is kind of like your view from the outside. For those who are interested in understanding more about mining, it's interesting to dive into, like, why Is proof of work relevant? What's behind that and how is it different? And what those miners do, kind of like by choice, help secure the network and help ensure that the transactions can be sent around between different participants. Is they have specified hardware, they have computers that are purpose built to help add blocks to the blockchain. So the blockchain is Bitcoin's ledger in which all of the transactions are written. And every 10 minutes roughly there is a new block being added of transactions that people just tried to send out. And there is a reward if you are the miner adding that block to the blockchain. So then all kinds of questions arise. Like, okay, how do we decide who gets to say like this is the new block of transactions? Like, how do, how do we decide what the, like, which the person is that's getting that reward? Because everyone would obviously say, well, like, well it's me, I was first. Or kind of like, how do you, how do you determine that? And that's to your point, like there are different consensus algorithms and in which that you can use to decide between all the different nodes in the network. And every node has that entire history of Bitcoin transactions. They all hold the current, like, they all say, like, what are the current balances, which address owns how much you know, who has sent Bitcoin to who, and what is now the final list of all the Bitcoin owners. Like they go through that entire history. But then you need to figure out a way where you can coordinate, okay, how do we build upon that history? And that's where proof of work is so interesting and where the other consensus algorithms have sort of like not been popular or have failed in a variety of ways over time. Because with Bitcoin, if you want to add a new block to the blockchain, you first need to spend energy through your purpose built computer, your Bitcoin miner. Like you have an electricity bill there to, to be able to do the calculations. And what those calculations are is essentially like the, the Bitcoin algorithm says, like, I want you to guess like a specific number, basically like to give an example there. And then your computer is going to try and guess that number, your Bitcoin miner and it's going to keep trying to do that. So the more computers you have, the quicker you might guess the number and the higher the odds that you get the next block to be added to the blockchain and thus the reward. But the more computers you have, the more your energy costs. And at some point, you know, if you don't Sort of like, win enough bitcoin blocks, you don't earn enough rewards. You need to figure out, okay, I've got to turn some of these off, or I can't keep expanding my business unless I start getting more of them. So it becomes this competition between different miners who are trying to figure out how can I run the most successful business possible, where, yes, I have my costs, I have the miners that I need to pay for, I have my electricity costs, but the bitcoin that I earn is worth slightly more or the same or much more than what I'm spending. So what do these miners do? They start looking for every possible advantage around the world. And so you have a lot of, like, a lot of criticism in the past. Like, fortunately, most of that is in the past now. But from people are like, yeah, but it uses up so much electricity because it's such a popular network, and that is bad for the environment. But what those people don't realize is, like, the miners don't set up shop in the middle of a city where the electricity prices are really high because their competition would mine at a fraction of their costs and would set, like, set up far more miners and outcompete them. So they can't do that. What they have to go and do is search all around the world to try to figure out where is the lowest cost of electricity. Where can I figure out, could I make a deal somewhere where I help pay off some hydro dam that only just got built, but there actually aren't really enough takers around there? There's a lot of those kinds of cases in the mountains where you might have a village with 1,000 people. How are those 1,000 people going to pull enough electricity out of that dam to help pay it off? And then people will say, yeah, but surely we can do useful things with electricity so that it doesn't go to waste? Well, like, A.I. you know, those guys don't want to set up a data center, but then every like, 12 hours or so, they have to shut it off because they're using too much electricity. And then the town doesn't have any. Like, there's all of these complexities around it. And bitcoin miners are very flexible. They could just set up shop. They can move very quickly again because a lot of it is, like, in containers and whatnot. So they go all around the world to figure out where is the electricity the cheapest and where is it currently just literally going to waste? Like, they just have to throw it away, essentially. And that is making renewable projects. More expensive and just causes all kinds of issues to be able to build out our electricity grid fast enough. So bitcoin's like this phenomenal. Bitcoin mining is this phenomenal tool there to help work out the energy grid.
- [44:00]
Host
And as we know, the incentive for people to build the infrastructure as well. And then an interesting dynamic there too is that as block rewards decrease, you'll have to. You'll have to search for lower and lower costs of energy, but you'll also incentivize people going out building that energy infrastructure. You might have a period of time where they build that infrastructure to mine bitcoin. And then eventually, if it becomes no longer profitable, you still have that infrastructure there to allocate to. Maybe it's AI data centers. I know that Ella Huff. Huff. She's someone I spoke. She works at Strategy now. But I remember I was talking with her about a year ago, and she was spending some time in Africa where they were building out this energy infrastructure for where people didn't have it. So they had a reason to fund the build out of the energy infrastructure. Then they could ship that energy when there was demand for it elsewhere. And when there wasn't, they're mining bitcoin and people who didn't have the infrastructure already now have access to it there. And so you give that monetary incentive for people to go and build out that baseline infrastructure, and then there may come a time where you're able to allocate it to another need elsewhere.
- [45:11]
Sam (River Director of Marketing)
Gridless is doing phenomenal work there. That's one of the companies that's building that out in a variety of countries.
- [45:17]
Host
Interesting.
- [45:18]
Sam (River Director of Marketing)
Very cool. But then the interesting thing with proof of work versus proof of stake is sometimes bitcoin gets a criticism of like, yeah, but I can't hold it in my hands. It's not backed by anything, not backed by the government. And people feel hesitant about that. But actually, because of proof of work, it is deeply anchored in the physical world. There's a lot of energy that's spent to. And people think of this as like, oh, you know, they look at these like, it's kind of like fake metrics of like. But the average bitcoin transaction uses up this much energy. And it's like, no, that's not the same thing. Every single time a block gets added to the blockchain, that is like security for the entire history of all the transactions. Because every block that gets added makes it harder to go back in time and change more stuff because you've got more work to do as A bitcoin miner, which costs more money, and that security is constantly being added on. And it's kind of. It's kind of like equating it to, like, I'm in a store and every time I swipe my card, I get this vision of, like, armored trucks driving around with cash, or, like, all the bank employees that are driving every gold
- [46:17]
Host
vault protected by the shipping the gold across the country.
- [46:21]
Sam (River Director of Marketing)
Right, exactly. And with bitcoin mining, it's like totally different model from that, but it makes it all very visible and transparent. And because it's so transparent, it's so easy to criticize. And for people to say, oh, this must be bad, for a variety of reasons, when actually it's incredibly powerful. But then the difference with proof of stake is those guys were basically saying, like, well, bitcoin uses too much energy, and that's a bad thing because we need to use that energy for other reasons. So what if we just like, instead of using miners, which is like a physical device that needs to be built and it's competitive and all that hardware needs to be created, like, what if we just do away with that and anyone who holds the token gets a say in the network, basically, they get a chance proportionately to how much they are staking, as it is called there, like, how much they're putting at stake to earn more bitcoin. And if they would be lying, then the risk for them is if they would be lying about which transactions were valid or what's the correct block in the blockchain, then their risk is that the amount of bitcoin that they own would get punished, like, get slashed. Whereas with bitcoin, if a bitcoin miner lies, produces a false block, or tries to steal someone's money, then the rest of the network is going to say, like, hold up. Every single one of us has the exact same new block in the blockchain, but yours is different. You're probably trying to cheat the system. And we can see that. Indeed, like, in the code, it's not a matter of opinion in the code. It just shows, like, wait, your block has a different hash, which is like a fingerprint of the block. Think of, like, every line in your fingerprint is like a bitcoin transaction. And all those bitcoin transactions together make up a unique fingerprint for every single block. So every 10 minutes with proof of work, all the bitcoin miners, they hold up their thumbs to each other, like, okay, we're matching all the nodes. Check the same, like, we're all matching. Okay, Great, we could just move on. But with proof of stake, it's like, well, we don't have that system. Instead, like I said, you put your token to work. But what that means is that over time, people with the most money, they keep exponentially earning more of the money. They have a bigger and bigger share.
- [48:18]
Host
The theoretical problem being solved. Interestingly enough, even from like the a lot of criticisms, many bitcoiners are Austrian economics basis. Right. And one of the main criticisms, I think this was actually Mark, something Mark said in the Communist Manifesto. Following it, I think one of the only things he got right was that one of the problems with capitalist systems is the rich get richer, poor get poorer problem. Right. And that's as we know as bitcoiners largely exacerbated. There's, there's a natural element of that. There's a free market element of that parade of distribution that goes through the laws of nature. It spreads far. But when we create something that's supposed to be a solution to that and then people are like, oh yeah, just like bitcoin, we're trying to create a solution to that. We've created this system that not only doesn't solve that problem, but exacerbates it possibly further than the fiat problem. It comes up in different ways. But instead of saying we have this centralized institution that gets to print a bunch of money and use however they see fit, you say, okay, the richest people are going to have the most power. And that will compound the richest people as they stake their tokens they get. Yeah, it's like almost as if you were designing it to make the rich richer and the poor poorer. And Vitalik is like, because it uses so much energy, we've decided to not go the proof of work route to save the energy and instead we've decided to create our own laws of physics digitally that govern this. And it's like, I don't know if you can do that. I don't know if you can just create your own laws of physics. And that would translate from the physical world to the digital world. It's kind of the whole point that it doesn't, you know, it's like I
- [49:51]
Sam (River Director of Marketing)
look at it as like good for you that you're experimenting with it. Absolutely would not want it in bitcoin. And that's, you know, that's kind of what the market has said as well. Like ever since they introduced that, like it has not made like a new all time high against bitcoin.
- [50:03]
Host
Yeah, interesting.
- [50:04]
Sam (River Director of Marketing)
And I think just like generally like personally I Think it's like, it's crazy how overvalued it still is in my opinion. But there's purely like. There's also a lot of like sunk cost into like building all of that out. And people are still very hopeful that it will turn into something. I have a very open mind about it in a sense of like I'm, you know, like if it turns into something useful that people like, that actually helps people, great. I'm all for like making things easier for people. But if it's just primarily a hotbed for like, like things getting drained and impossible constructions and layers that people can't follow anymore, where you get like cascading liquidations and like smart contract hacks and like, which is getting very prominent now because of like the anthropic models that are, you know, getting very good at this. It's just like it's such a mess and it gives it all such a bad name. It's like experimentation is cool, but it's like it's on a very live network and you're just seeing the effects of that with the centralization that it has. I don't really spend too much time on it. I've like when I first learned about proof of stake when Ethereum first launched, I saw it, I was looking into it and I was like, well, for me a. That model sounds like does not sound sustainable to me in the long run. Because with bitcoin it's like we're seeing in practice that bitcoin miners leave when they are no longer competitive and other ones come in. There will always be that rotation of people who want to mine. And even if in the future transaction fees need to pay for all of the security budget, like you will still just get like people who are willing to mine at that cost. Like no matter kind of like how high bitcoin's hash rate is. Like how many computers are running at the same time. There's always someone willing to mine and with proof of stake, like those guys will definitely always want to be staking because there is no penalty for them, There is no cost. They can just keep earning. So it's like very weird to have a system in which you have, you know, like you're expecting people to use it. But then you also have these like digital oligarchs essentially because they equate it to like digital oil. But you have these oligarchs who just like keep amassing more and more wealth
- [52:03]
Host
over time, many of which were in the pre mine before the.
- [52:07]
Sam (River Director of Marketing)
It's just like that as well for me, just such a big red flag. And then the big question for me
- [52:12]
Host
as well, 80 pre mine, I don't
- [52:14]
Sam (River Director of Marketing)
know, I think 70.
- [52:15]
Host
70.
- [52:15]
Sam (River Director of Marketing)
Pretty sure it was 70. Yeah.
- [52:17]
Host
Right, right, right.
- [52:18]
Sam (River Director of Marketing)
And like, I looked at that and I was like, okay, like, it sounds like, you know, they're trying to do something different. Interesting. But would I actually use that? Like, what they were talking a lot about, okay, we can build decentralized apps on there. And I was thinking to myself, like, what apps would I want to be decentralized? Like, where am I struggling today with a centralized provider? And where a lot of that comes up is like, oh, people get deplatformed or something, or like, for a variety of political reasons, which is they're like, those are valid use cases. And I'm thinking to myself, yeah, there might be something there. Or, like, directly rewarding artists for their creations rather than going through middleman. Like, I see the potential cases, but I'm like, I wouldn't use that. Or it's such a minority of my activity that it's just like, not compelling or interesting enough to really do much with.
- [53:04]
Host
And there's a lot of utility to centralization a lot of places too, where, like, okay, decentralization. The application of decentralization to money. Yeah, very, very important. I remember something that was big for a bit was like, we're going to put real estate on the blockchain and
- [53:17]
Sam (River Director of Marketing)
like, nft and we're going to see a big wave now that BlackRock really wants tokenization of everything.
- [53:22]
Host
Yeah.
- [53:22]
Sam (River Director of Marketing)
Because it's good for all the trading and whatnot. And I look at that and I'm like, I get why they're doing it, but also, like, I'm not as interested. Personally, I very much love bitcoin for the freedom that it provides for just having, like, a better foundation for society and just doing more of the same on some blockchain where you can, like, quickly pass tokens around. But it still has, like, all of the security challenges. The question of, like, how is this network governed and who is, like, maintaining that and who is getting richer from that? Like, to me, none of it feels right. And, like, if people want to do that, like, good for them. But for me, it's like, I love what we're building as a bitcoin space, what that stands for and all the people within it. Like, it's just awesome to see how many, like, smart, motivated, like, eager people you see who want to have hope for the future and build up something beautiful. Yeah, it's Just a fantastic space to be in. Whereas when I look at that, you see a lot of people quickly bounce around to the next hottest thing. A lot of people losing money, all kinds of schemes happening. It's a totally different vibe from bitcoin. And it's interesting how you have proof of work versus proof of stake there and how that foundation comes all the way up and you just see it in everything. Fascinating differences, I think.
- [54:36]
Host
Couple more questions for you. Coming back to some of the. I know included in one of your reports was some of the institutional adoption metrics as well. So we're talking about retail was muted. Institutional, institutional adoption was not muted. What are. First, what are the biggest things that you're seeing around institutional adoptions in recent years? Let's say the last like six months or so.
- [54:57]
Sam (River Director of Marketing)
So we put out some stats there. If I recall them off the top of my head, it's like there's now like 3,000 institutions that have like either bitcoin directly or a lot of them indirectly through ETFs and whatnot. So that's been a really big wave. On the note of individual adoption, by the way, there was obviously also a lot of rotation from people who were only holding bitcoin and then moved some of that over to an ETF for like, tax purposes or whatever. Like, that's part of that sort of like rotation out of individuals and into ETFs and sort of like institutional holdings as well. So that's a driving factor that it's like, harder to map out because.
- [55:36]
Host
Right. Is it in the blockchain?
- [55:38]
Sam (River Director of Marketing)
Yeah, the blockchain doesn't tell you like, this transaction was because someone wanted to move their bitcoin over or something. Like that's not really how it happens. But then in terms of institutions, like, we see it's like 16 of the. Of the top 25 hedge funds or. No, sorry, that's 13 of the top 25 hedge funds now hold Bitcoin. Wow. I think like 90% of the top 50 RIAs, or might even like 49 of the top 50 now have Bitcoin exposure as well. Wow. So just like they're all getting in. They're all like, okay, now is the time. It's like legitimized enough.
- [56:10]
Host
It's just the risk of like not having it. It kind of makes you look silly.
- [56:14]
Sam (River Director of Marketing)
And even like a lot of like, the interesting thing there is, we looked at some of those stats too, is like they have an average allocation, the registered investment advisors, of like 0.0008% something like that. And what you actually see when you listen to the big institutions that talk about, like, oh, what allocation do we recommend to our clients or to our partners that we work with and whatnot, that typically ranges between like 1 and 5%.
- [56:39]
Host
So if Register said 8, I think black 5 a while ago. Yeah, yeah. Some of their advisors or their lead advisors, something along those lines.
- [56:47]
Sam (River Director of Marketing)
Yeah. So, like, if you were to say, like, okay, Register investment advisor, they follow that advice and they move from the 0.008 to, you know, let's do like 3% or 5% or whatever. Like, that is literally trillions of dollars flowing into bitcoin. It's got a 1.5, like, plus, you know, I don't know how much exactly, but a trillion dollar market cap.
- [57:06]
Host
Yeah. Quadrillion in assets out there. Yeah, yeah.
- [57:11]
Sam (River Director of Marketing)
And then if you look at like the last cycle, basically, like, for people who still talk about cycles or whatnot, Like, I don't as much, but we did map out kind of like the different bear and bull markets, and in the last one, I think it was like $800 billion in inflows. So if you like, just directly flowing in and then obviously raising the overall price is like, well, if those institutions realize, like, okay, let's start holding a bigger percentage here, that's. That would have a massive impact, of course. And then obviously, you know, kind of the only people they can buy from are the individuals who hold today. Like seven still, like, I think it's like 66% of all the suppliers owned by individuals today. As far as we can, like, roughly tell through our estimations and our research, that is still a massive amount. But they're like the most likely to sell because there's just more of them. They've been holding for a longer time. And as mentioned, like, we have over 3,000 businesses on the platform. We, we surveyed a bunch of them as well, and almost all of them are saying, like, we are not selling over the next few years. A lot of our clients say the same. Like, 70% of river clients have never sold bitcoin. So it's like, okay, where do we go source all of this bitcoin? Well, it's from the people who have been holding a ton in the long term who are looking to offload some of it now that they can, since the price is higher and there's more liquidity. So the pattern makes a lot of sense. Like, where else are you going to get it if there are so many players who do not want to sell? And it's Weird to say that given that the price has gone down a lot over the last while. So people look at that and like, that doesn't track or like, how does that work? But I mean like someone had, like someone wanted to sell given the price run up and they just previously weren't able to. There's been a lot of talk too there of like in the previous regime in the us like it was very unfriendly towards this stuff, like moving so much capital out of bitcoin to, for like, for their own variety of reasons, like probably felt pretty sketchy. Whereas now people feel like, okay, I can do this, like it's okay to do it. So of course you have that big moment. There's. But we're already starting to see just like the market turn around relatively quickly as people realize like this is a steal their personal opinion.
- [59:11]
Host
But yeah, when it comes to the institution, strategy is the biggest one out there. Right. I think they're in the 800-850-000 bitcoin range right now. There's talks of them targeting the million range. Is there anything that concerns you about institutional involvement, about is it possible for strategy to buy too much bitcoin? Does that exist? Do you spend much time thinking about those sorts of things?
- [59:40]
Sam (River Director of Marketing)
You naturally start thinking about it when you look at the numbers. And we kind of did a projection over the next 10 years, sort of like, where does the distribution of the 21 million bitcoin end up? And if it were to continue at the pace that the buying happened by institutions and businesses in 2020. So last year, then by 2035, roughly half of the bitcoin would be in the hands of bitcoin, of businesses and of ETFs, institutions, etc. And that's a really big shift. And what concerns me there is kind of like what we've seen in the past during the block size wars. A very interesting trend was businesses had this idea that they had far more to say about the network than they actually did because they had so much bitcoin under custody for clients. They're like, well, we hold, you know, like 5 or 10% of the supply or whatever. So we represent all those clients that we have. We are their voice and we are going to meddle here and decide like how bitcoin should work. And that's where things get tricky when institutions get involved. They have not gone through how does consensus emerge within bitcoin?
- [60:41]
Host
How do we decide on node runners that control that? Right. For the most part, it's, it's.
- [60:45]
Sam (River Director of Marketing)
And and obviously the technical development is also a big deal there because if the institutions start being like, well, you know, we want, you know, like, like less privacy on the blockchain or like, you know, like more tracking of individuals or like, reporting of purposes of transactions or all kinds of crazy things. Like, if they start thinking, you know, we can just employ 100 developers and start pushing that onto the network and offering people incentives to switch over to our thing and whatnot. Like, you don't know how crazy it gets, but, you know, there's like, a lot of money and power involved for them. And then it's a question of, like, are they going to be somewhat humble and realize, like, okay, we should be smart about not like, burning our hands here and like, pushing ourselves to the table too much. It's like, let's just try to maintain some sense of stability. Like, yes, open to innovation. Like, that's like the happy path where they're not getting involved too much, but are also not getting in the way. And the bad path is they just imagine like, oh, we are going to start changing and shaping the way bitcoin works because then you get a clash and that leads to, like, potential forks and all kinds of issues. That's my only concern. I, like, no idea how likely it is. It's just something I think about because I'm like, well, you know, people have egos and as institutions and companies grow, they start feeling entitled to having something to say about the network. And again, it's not a proof of stake network. It's not like you own most of the coins. So thus you have mostly to say it's. That's not how it works and not how it should work. So definitely keeping an eye on that, but not particularly concerned at the moment.
- [62:13]
Host
Yeah, yeah, yeah. In some ways it was like, this is how it was always destined to be, sort of, you know, like, as we saw the adoption, we were going to see nation states buying. We're going to see large corporations getting involved. It's. It's what we want to see in a lot of ways. But there are, I think there are important places for the individual bitcoiners, for node runners, people involved in the consensus, securing, the, maintaining the decentralization and security of the network, to be like, don't get complacent, Pay attention. Stay up to date, pay attention to those things. Last question for you. We'll get back out to the river booth and the lovely bitcoin conference around here. This was something you talked about on a panel here with Alex. Your CEO, cto about how we didn't fix the money to build more casinos. And it's interesting too, because I think because of bitcoin's volatility, you see a lot of people who have been like, oh, it's kind of like gambling, you know. And then more recently, we've seen bitcoin, the shitcoin casino approach from a lot of other exchanges. Not only that, seeing Robinhood and other exchanges getting into the prediction market, sports betting, it's side by side, Robinhood, crypto, bet on the game tonight, who's going to be president. You know, it's kind of all been grouped together and you guys at river have made a clear stand against that sort of thing, saying we shouldn't be pushing gambling next to where people are, like, managing their nest egg for retirement, where they're approaching it, you know, from that perspective. Why is that important to you guys? And what, what is the vision you guys have for that moving forward?
- [63:45]
Sam (River Director of Marketing)
Yeah, it's like. It's like calling something out that probably a lot of people feel or see. It's like, it's not that we are against gambling. I mean, we're in Vegas. Like, people gamble. Like, it's. They've gambled for thousands of years. Nothing's changed in that regard. But to your point, like, what's changed now is like, it's becoming so accessible for people because essentially their bank is encouraging them to gamble and they're kind of like preying on the desperation that a lot of people have or the struggles that they have to, like, sort of like get towards the American dream. A lot of young people now are like, well, I'm not. To our point earlier, I'm not going to buy bitcoin because I don't think it's going to 10x or 50x as fast as I want it to be. And I have almost no starting money. So, like, you know, there's also that people aspect, like people want. There's like a part of society that wants to gamble. But in the long run, if you start like, kind of like looking at the people who want to save, and there's just constantly institutions pushing them to get into gambling to like, put some of those precious savings out into the playing field to try to magically make more of it, you know, that just leads to all kinds of issues in society where gambling just like proliferates because it becomes so accessible and so simple and it's just right next to your bank balance. And that's kind of what we take issue with because some of the companies will go like, oh, you know, we're like, we're building financial freedom, we're making everything fair access. And then behind the scenes they're like selling your trades to Jane street and other exchanges who have like quants from MIT and Stanford and whatnot. Like trading against the average retail user who's just trying to get by. Like, that is not a healthy model. And it's just like the branding around that. There's a lot of like dishonesty there and that like should be talked about more. It's not like we're saying, oh, this needs to be regulated away or whatever because that's like a whole other discussion. But like, there should be more awareness and honesty about it. And like, you know, it's very logical to see these, some of these exchanges do it because they previously did the same with, to your point, like the whole chitcoin wave that happened, like all the altcoins that started being pushed onto people as like being positioned as, oh, you should have a basket of currencies. And like, people don't know these things. They have no idea, you know, that they're actually up against a bunch of incredibly smart people who are just completely gaming them. Yeah. That leads to all kinds of issues in society. And if you look at like, like why are people in Bitcoin, like, what are, what are they so interested in? And they want to build wealth for the long run. They don't want to have a currency that gets the base and kind of like for, for the average person, if your best choices are going to go with a traditional bank that keeps all the interest on your savings, so actually you earn nothing. Like, that's not a viable path to be on towards the future. Especially if you're young, like you just don't have a method to save. That's gone. And then the alternative is you go with some exchange that tries to get you to gamble on crazy things. Like, that's also not a viable path. So what's interesting about Bitcoin is it offers this third path, but the whole like prediction market spiel is kind of like undermining that in a way. Because to your point earlier, like it conflates like crypto and prediction markets. It all just becomes one mix. And people don't remember all the things you exactly said as a company, but they will remember. Like, that's a place where I lost money, you know, where I lost my savings, where I got told these interesting stories and that my buddies were all using. But at the end I've Just lost a whole bunch of money and it all sucks and I don't want anything to do with it. So it burns a lot of people. And if they keep burning people this way, and it's like they've essentially used like a legal loophole to say, well, like, well, a prediction market, like, kind of like put sports betting into that, even though there are sports betting laws. And then it's like all legal, we don't have to get the licenses or there's no restrictions or whatnot. And if they keep playing that game, at some point the regulars are going to say, this is not sustainable, guys, you are causing mass bankruptcies, which the data is already showing. Like, the bankruptcies are just massively increasing in states where like, the sports betting is getting so much more accessible and there's like more children gambling. Like, if you look at some of the Google trends, like, for anything related to like children and gambling, they're all hockey stick graphs. Or like the calls to national gambling helplines are like going way up in all the states and places where this stuff is legalized. So you're seeing the effects on society just because they find like a nice legal loophole to pitch this to people and push it onto them. And that just undoes a lot of the progress that we're doing with Bitcoin. So that's why it's important to call out and make more people aware of what's happening there.
- [68:07]
Host
Yeah, it's sort of like, I don't know, analogous in some ways at least to like a drug dealer providing product to people where it's like, oh, well, these are people free to choose whatever they want to do. And it's like, well, sure, in one sense, but also it's like you do have a moral obligation to people and how you're interacting with them in the world. And yeah, I think it's important to be thinking about. And I like that, you guys, even if you say, okay, it's fine for other people to do that if they want to do that, but that's not what we're up to. We're providing something different here, I think a cool angle to take. What are you most excited about in the next epoch? Let's say, you know, I was talking with my buddy Mike over here. We're like, we're closer to the next having than we were to the last one already, you know, we're already heading into that, you know, like this next, let's say couple years, 20, 30, 20, 31 coming up. What are you most excited about? Looking forward to that.
- [68:56]
Sam (River Director of Marketing)
I think like this whole like this bitcoin banking angle, like I think it's going to be a very interesting wave between sort of like the existing banks that are starting to get into bitcoin. And I'm realizing like, wait, this is not the same as what we're doing and our UX is kind of clunky. It's not quite the same as what some of the other players in the space are doing, but it's still going to bring in a ton of people. Like that's I think going to be very interesting then versus like exchanges sort of like getting better at what they're doing and realizing like we can become a bitcoin bank and help a lot of people sort of like move off the traditional financial system. Like that's going to be a very interesting wave I think to see. And the continued payments adoption that we were touching on. Very interested in that to see like you know, like the infrastructure is there. How does that start evolving? But then obviously we need that de minimis exemption so that people can just easily transact.
- [69:43]
Host
Like it's such a, it's a nightmare right now tax wise. Okay, I just bought a coffee. Let me. When did I buy these sats and what was the average price? Yeah, right.
- [69:51]
Sam (River Director of Marketing)
Yeah, that's just such a regulatory roadblock. And then you know, I really look forward to that being removed. Hopefully we can get or like being introduced exemption.
- [69:59]
Host
Yeah.
- [70:00]
Sam (River Director of Marketing)
Because it's just like such an unnecessary roadblock and I think if, if that were to go like the US is just going to be like undisputed. Like it's already like we made a report about this as well. Like America is like market leader in bitcoin adoption. But if that thing flies then like it's just going to go crazy. I think that's going to be fantastic for everyone.
- [70:18]
Host
So yeah, call your senator, call your congressman. It was in the Clarity act, out of the Clarity Act, I think for a bit they were talking about that. But yeah, that's got to be one of the most important things legislation wise for them. So yeah. Thanks so much for coming Sam.
- [70:30]
Sam (River Director of Marketing)
Yeah. You're happy to be on one of
- [70:32]
Host
the guys doing some of the most important work in the space I think
- [70:35]
Sam (River Director of Marketing)
and so appreciate it.
- [70:36]
Host
Yeah.
- [70:36]
Sam (River Director of Marketing)
Keep up the good you guys. Keep it up in the show too.
- [70:38]
Host
Where can people find you?
- [70:40]
Sam (River Director of Marketing)
You can follow me on Twitter @SD Waters. I also run the river account as well. So like follow river. You can check us out@river.com. yeah. Thank you.
- [70:50]
Host
Beautiful. Thank you sir.
- [70:57]
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