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- [00:00]
Scott
Good morning, everybody. Happy Monday. Welcome to Crypto Town hall every weekday, 10:15am Eastern Standard Time. Huge thank you. First to Dave Weisberger for holding down the hosting duties last week while I was abroad in Dubai for token 2049. 100% hit rate of coming home from said conferences. Sick. So struggling even today after basically missing it for the entirety of last week would be worth definitely doing a bit of a Dubai recap. Carlo, I see you in the audience. Would love to bring you up because I know you were there. Request if you. If you would like to come up. I found it to be a great week, obviously. Dave, we kind of discussed this last week as I was landing. Carlo, are you on stage? Because you show us listener to me.
- [00:54]
Carlo
Yes, I'm here.
- [00:54]
Scott
Do you hear me? Yeah. The glitch. Good morning, Carlo. Go ahead.
- [00:57]
Carlo
Good morning, Scott. I just sent you a recap I wrote up about token 2049. Dubai insanity. Got the opportunity to obviously visit with you and a lot of the Crypto Town hall team, and that was fun. I don't even know where to begin with it, other than to say that I'm extremely bullish on the future of crypto and Dubai is telling me that innovation forward is the path and that the US is on board and waking up to that. So I think we're going to see some exciting things coming.
- [01:34]
Scott
Most importantly, did you come home sick?
- [01:37]
Carlo
No, I had a rough flight. Someone had to be taken off of my plane due to a medical emergency. I had delays in Houston. It took me over 30 hours to get home, but I'm intact and back to the office.
- [01:50]
Scott
Congratulations. You did well. Yeah, I share the same sentiment about the conference. I thought it had the proper amount of FOMO and hype and it was not peak bull market insanity, which I'm glad, because you can pretty much judge exactly where the market's going by the level of excitement at these conferences. And I thought that it was relatively measured, probably because bitcoin has done well. The rest of the market has lagged. And so token 2049 is pretty much the rest of the market, right?
- [02:22]
Carlo
Yeah. I can't disagree. And I think my biggest takeaway is that I think we're going to see a massive stablecoin summer. All indications seem to be that stablecoins are going to be the meta of this cycle as far as I'm concerned. And I think everyone's going to want to build on stable coins and a lot of attention is going to go in that direction. If this bill can get through Congress and Signed into law.
- [02:44]
Scott
Agree, Mark.
- [02:46]
Mark
Hey, guys. Thanks. Yeah, I agree. I like the term the meta of the next cycle. You know, we had, what was it, ICO season. We had, you know, defy. And then this is going to be stable. Coin just feeds a lot of fishes in our tradfi and digital universe. But I. I don't know if I want to steal the theme, so Scott put me.
- [03:10]
Scott
You can steal it. Go. Go for it. Go for go. Run. Now. We kind of have recapped it and everybod seen the conference recaps. So. Yeah, yeah, don't need to be it to death.
- [03:20]
Mark
To me, it's a. It's the two cans of Coke in front of the old guy. I think Buffett's swan song, it. It is, you know, with US dollar down, bonds down, equities down, bull up 2 1/2%. It looks like everyone was watching Warren Buffett's farewell song. It was more strident than I would imagined. His focus on the dollar and debasement and the fact that he struggled to give it. It's kind of like the arc of the Queen dying, the Pope dying, and Buffett stepping down. I don't know if there and many more of the old guard left. So very constructive and a good segue into the whole stablecoin adoption. So that was my sort of 5 cents. Anyone wants to take, you know, provide their take on the, on the Buffett speech. I don't know if everyone heard it, but it was, it was pretty damning, I thought.
- [04:20]
Scott
Dave.
- [04:23]
Dave
Well, I'm of mixed, mixed opinions here. I mean, look, Buffett has been the probably single largest beneficiary of financialization on the planet. And so if you understand how Berkshire's made money in the derivatives markets, what they've done, it's been incredible. And yes, he's done an incredible job of seeing that Metatrend. And at the end, I find it a bit disingenuous. Sort of like when he talks about tax policy and he ignores the fact that it's all because of capital gains and et cetera, et cetera. So there's all sorts of stuff about Buffett, but the interesting thing in my mind is to have a conversation about dollar debasement and not even acknowledge Bitcoin, which he's called rat poison squared, considering what everyone else has said there. I mean, I think that it's just, you're in your 90s, you're not going to change. And he goes off into the sunset without seeing effectively the antidote to a lot of the financialization that made Berkshire an enormous amount of money. And so I find it an interesting juxtaposition, curious, as it were. But I kind of wanted to talk about stablecoins a bit because the news that some of the Democrat supporters are bailing because using Trump as an excuse and descending into more partisan politics, I think is fascinating. I think what happens now will be really important. I've said before I don't think that it makes sense to do it without yield, but I totally understand they're going to. I also don't think that that really matters. And I think that the real question, the real philosophical question is there are people in our space, we all kind of understand this, that know that the whole fractional reserve banking system, which is what. What is being defended by those who are trying, you know, by trying to slow down or stop the stablecoin bill, is under threat because it's no longer necessary. It increases risk, it requires government backstop, and frankly, capital formation doesn't really need it anymore. And the increased velocity of money that will come out of stablecoins, I think is. I mean, Carlo understands it, you understand it, but I think a lot of listeners don't really understand, well, why do we care about stablecoins? And the answer is because that's how you reshape the financial system. That's how investors can earn real interest, that the market determines and not their bank determines. That's how most capital raising is going to happen. It's going to change it. And so it's a very big deal. And you could go down that pathway. But that's why all this matters. That's why the mood in Dubai is what it was, which is we're building, our heads are down, and we see a green field ahead of us, but still, we'll see what happens.
- [07:25]
Scott
Yeah, the stablecoin situation is interesting, Dave. I didn't dig too deeply into that. I saw that obviously there was some opposition growing. Elizabeth Warren fired a few shots. But with the Republican majority, is there really a threat of legislation not getting done? I haven't dug deeply into this.
- [07:42]
Dave
I'm legitimately asking they need seven Democrats to avoid a filibuster or two or before they have to include it in the big beautiful bill, which can. And just so people understand that I'm being a little bit sarcastic, but the reason for the big beautiful bill is because the same way the infrastructure, you know, whatever, the Inflation Reduction act got passed, you know, that kind of nonsense is. This is stupid, but it's true. So in the US you can Avoid a filibuster on something that's called reconciliation so it's part of a budget, then you don't, then you can avoid it. I think the hope is, and it would be great if like you know, Ron Hammond or Perry Ann or someone were up here to comment on it. But the hope is, is that there would be more than seven Democrats who passed the filibuster level. And that's really what the, that's what a lot of the Washington policy advocates are trying to make happen.
- [08:39]
Scott
I also saw that this was specific to the Genius act, which is the one coming out of the House, right? Oh no, Genius is the Senate and.
- [08:47]
Dave
Stable, it's the Senate. The House are not going to be able to stop it. There's too many pro crypto Democrats in the House. And remember the difference just for those once again to understand why two years is that the House you have to go run free election every two years. So it's more likely that the Democrats in the House that there are those who know that they won't get reelected if they obstruct this. Whereas in the Senate there are lots of senators who have another four to six years. So they're like eh, whatever. And some of them are really old and probably won't run again. So you know, it is different.
- [09:26]
Scott
That makes, that makes perfect sense. Carla, we had a conversation about stablecoins literally at I think 1:00 in the morning at a crypto banter event somewhere in Dubai because that's what happens at crypto conferences. Maybe it was a bit earlier but you voiced some concerns.
- [09:46]
Carlo
You know I had some concerns and I actually talked with some people at aptos. The next day I went over to their booth and talked with one of their devs. My concern was are stable coins. And I've thought I've talked about this with you as well Dave. My concern was are stablecoins if successful going to be the death of L1s? And their dev had an interesting take on it. Given the throughput speed of stablecoins like usdc, not, not great, not huge. They still are going to have to rely on high throughput, high speed L1s and they're looking at it as an integration, almost like an API plugin to whatever stablecoin you're launching. So what concerns I had about that seem to seem to be addressed by the devs. And I think long term I have to agree with Dave. It's the future of commerce. I think there's so much traditional finance backing behind this that I Don't see any probability that this bill is going to die because it would essentially be shooting down the biggest hope the United States has for financial innovation, not only for the United States, but globally. Because one of the takeaways from talking with a lot of family offices and VCs over shisha bars and tobaccos and teas over there is that they also believe that the United States is open for business again. And I think we're going to see a rotation of capital back into the US And I think it'll be built on stable coins.
- [11:12]
Scott
And also I don't think it should be taken lightly that stablecoin issuers could be the buyer of last resort for U.S. treasuries, depending on how the world evolves.
- [11:22]
Carlo
Oh yeah, I think that's going to be some quantitative easing in a very stealth way.
- [11:27]
Scott
But yeah, go ahead, Mark.
- [11:29]
Mark
No, it's hard not to come back to these, you know, core parts of it. Stable coins are going to be dollar based, the majority of them. And if that's the case, I would think even if it's not a mandate by the Fed, you being a stablecoin user, would like to see Treasuries back in them, you know, tether notwithstanding. I don't know, you know, if you believe their audit, I guess they're 85%. So if that's the case, there are two things. You're right. There's an incentive to make it happen by the US Government, there's an incentive to use it by users because it still is the largest, most liquid asset. And then the banks, I think, and this is a part, Dave or Carla, you can help me with. I haven't done work on what the likely dynamic is. If the interest is not paid out to the holder, but the holder just benefits from the velocity, then obviously it's a boon for the issuer, I think.
- [12:25]
Carlo
Absolutely. The banks are going to win big here. And Dave, I know you're about to hit this and I'm going to give you the opening. This is a fee bonanza for them.
- [12:32]
Mark
Jesus.
- [12:33]
Dave
In the beginning, yes. In the beginning, yes. And in the medium to longer term, no, it's going to open them up to competition. But you know, look, having been at Citigroup during the entire, you know, changes in the equity markets and the Internet and all the stuff that went on, I mean, I kind of understand how they're going to approach it. But just think of it this way right now, when you send money to somebody else and it seems like it's immediate, although there's very strict limits on it. Try doing a zelle transfer of $50,000 and you'll see what I mean.
- [13:09]
Carlo
Well, incidentally, Zelle went down on Friday network wide. So yeah, you're right.
- [13:13]
Dave
Right. But the reason that they put strict limits on it is because they have to, because it is an instantaneous transfer. It's sort of like it's a network, but it's still relying upon the ACH network underneath it, which takes three days for the money to actually clear. And so this is going from three days to three seconds, actually not even to sub second in many cases. And so what does that enable? Well, that enables a much faster movement of capital. It means if you're right now you keep money in a checking account. The Internet banks are going to very quickly and, and that's by the way, why you see Coinbase applying for banking licenses. The Internet banks are going to very quickly say, listen, you don't need, you know, you can do all your payments, whatever, instead of overdraft, we're going to give you automatic whatever. We're going to have an account that's a savings account or we're going to have an account that's a money market fund and we'll automatically debit your money market fund from your checking account if you check this little box on your, on your form. And so now all of a sudden, instead of $5 trillion sitting in checking accounts and whatever is sitting in savings accounts at money banks paying half a percent interest, people are going to immediately start to figure out that that money could be deployed and you could be earning whatever the market interest rate is through a variety of places. Well, that opens up something very different. So yes, it will delay by. If the stable coins themselves paid interest, well then you wouldn't need to do any of that. But there is an adaptation coming and it is essentially the, I won't say the death of, I mean, Elizabeth Warren's right, I mean checking account balances are going to decrease rather dramatically over time. Why? Because you don't need to keep them there. The notion of free capital to banks is going to go away. But what is that actually doing? That's more, that's $5 trillion being placed into the real economy earning real interest rates that real people can do things with. And so you're taking money from a cartel and giving it to the economy. That's, that is stimulative. There's no new ways about it. It also means holding dollars is, is much less painful for people so there'll be more of them Therefore they'll buy more Treasuries. If you ask, you know, the treasury secretary, what would he want? Well, it's like they want that. They want more people to own Treasuries and less people to hold money in checking accounts. Right. You know, at the end of the day the backing is what they care about.
- [15:34]
Scott
Arc Jeff, comment?
- [15:36]
Mark
Yeah, yeah, I think that's well said, Dave. And when you're talking about your time at Citibank and about maybe, you know, how all the banks will, will adapt or get involved. I go back to Jane Frazier's statement in March of 23 when she said, you know, when we saw the deposits flee those banks so quickly, you know, we were, she said the word surprise. We were surprised. We didn't know that the money could leave that quickly. But now as if it was a revelation and you know, I think the criticism is deserved. In her statement, I'm not a fan or a detractor of Jane Frazier, but the statement is very telling. She said we were surprised that now with mobile banking the deposits aren't as sticky. So this is, I, I just don't know how, how on top of things these banks are. If anyone has a window because I haven't been in a bank in, in years but to able to adapt and foster this or will it be neo banks, will it be other, faster adjacent fintech companies running this?
- [16:50]
Dave
I mean personally my thought process is you'd be surprised how fast banks can mobilize themselves. But yeah, it's going to be driven. It's the old innovators dilemma problem. Right. But the fact is that it will become obvious business models and obvious business models sweep the industry pretty quickly. So yeah, it'll probably take a few years for everything that I'm talking about to happen and will start with Coinbase's bank and Kraken's bank and Revolut and you know, in, in the, you know, and whatever, you know what those things. It's, it's not remotely surprising that Morgan Stanley said they're going to offer crypto by E Trade first. Remember E Trade, somewhere in their, their charter they had a bank as well. And you know, it's, it's, of course it's all part of, you know, corporate PAC man now but there's a lot of changes that are coming. But why does this matter for the cryptoverse? Well, I mean it unleashes global capital is what it does and that is not a trivial thing. Right. You know, and so when you, when Carlo, you go back to layer ones. I mean you're talking the development side. Yeah, okay, it's not a problem, but what does it do? Well, when you can trade autonomously via stablecoins and not have to go out into the fiat world, it's essentially, I mean it's dramatically improves the quality and the ability for the crypto software for things to operate. I mean think of it this way. Anyone who traded US dollar versus Bitcoin or Ether or whatever, it doesn't matter. In the United States when Silicon Valley went down and then Signature and Silvergate were paused, the spreads widened, the weekends became more volatile, things really were problematic because those dollar rails were gone, whereas tether trading has never been a problem. And tether now trades more crypto trades against tether. Well, what happens with stablecoins are fully legal in the US and everybody has them integrated into their payment rails. It means that DeFi to CEFI movements can become dramatically easier. There's lots of things that are opened up by that and those second order effects are where a lot of wealth.
- [18:57]
Scott
Is going to get made banned and then. Tumor.
- [19:02]
Dan
Yeah. Morning guys. Wanted to chip in with my kind of experience with stablecoins. I'm a British guy that lives in Singapore, so nothing to do with the US whatsoever. But I've only been paid in stablecoins for the last five years. I've never done any work that have paid me in fiat and paid the money into my account. Currently I get paid in stable coins and then I put them onto my Cast card. So I'm working with a company called Cast. They're really good, can spend it on my card. So I live entirely on Stable coins. I even pay my rent on my card in stable coins. When I have excess stable coins I can move them across to coinbase. Currently paying 12 on USDC. So it's very, very common that I'll have like maybe less than a hundred dollars in my bank account.
- [19:47]
Scott
Coinbase is paying 12 on USDC right now.
- [19:50]
Dan
Coinbase is currently paying 12 on USDC if you put it in your perpetuals account. So it's probably not available to you Americans, but yeah, 12%. One of my buddies in Singapore told me that he has $2 million in there earning 20 grand a month.
- [20:04]
Tomer
Incredible to Wow. I guess I want, I want to ask a question and like it's not a loaded question. It's just genuine curiosity. It's. The more we the enthusiasm I'm hearing about stablecoins is, is leading me down a bunch of questions including does this accelerate the debasement of the dollar. There's more sources of capital that can be fractionally reserved where proof of reserves don't necessarily exist, or where there's more potential for inflation. And this whole cryptocurrency thing started with, hey, let's have a currency that everyone can verify the supply of and everyone can monitor and verify every single thing with respect to. And now it's like the attention is wandering off of that core principle into hey, let's get velocity of money going so that more Treasuries can be bought and more government debt can be issued. It seems like it's a really, it's a shifted focus. And I appreciate what Dave was just saying, which anticipated some of my question, but I'm still kind of left with my jaw hanging open and saying, where's the excitement and what's the excitement about? Is it a hyper fiat world that we're headed to and suddenly everyone from the crypto space is excited about that or is there something really fundamental that's an improvement for transparency, auditability, rationality?
- [21:33]
Scott
Yeah, Tomer, there's always been some irony to, but perhaps outside of bitcoin, the next killer app in crypto being dollars, digital dollars. Right. Which is why bitcoin was created obviously, because as an alternative. So I don't think what you're saying is, is a surprise at all to many. So go ahead, Dave.
- [21:55]
Dave
So we were talking about this this morning on Macro Monday. I think that bitcoin is the antidote to fiat and is growing in adoption. And stablecoins ironically, are going to help that happen. The rest of crypto is a are technology platforms that will automate and create more basically more efficient, more inclusive, better versions of a variety of different verticals. And we don't have time to go through all those verticals now. Stablecoins, weirdly, will accelerate Fiat World's velocity. It will help because it will automatically, assuming we do it right, effectively accelerate the dollar's dominance in the fiat system because it'll be the one that's most used. That's because of network effects and critical mass. And so from a US centric perspective, they're an incredible help to kicking the can down the road in Fiat World, if you're smart and you're invested in bitcoin, then you like that because it gives you more opportunity to accumulate and you have your out already. And so it really is a question the divergence is crypto as an alternative to Fiat? I don't like that. I think bitcoin is an alternative to Fiat and I know I Sound like a maxi when I say that, but I am a Bitcoin maxi when it comes to that use case which is opting out of fiat. But I'm not a bitcoin maxi in the sense of I don't think every other token is worthless. I think there are lots of other value propositions that will ultimately rely upon Bitcoin as a store of value in the distant future, but in the interim is going to rely on the dollar more than other than other fiat currencies because the US is going to pioneer these stable coins. And Tether has already done an enormous favor for the not just by owning Treasuries, but by popularizing the US dollar as the currency of trading and the currency of being paid. I mean you just mentioned yourself. I mean you didn't, but Dan did. But when we were at coin routes we paid contractors in USDC or USDT all the time when they wanted to outside of the country, but only outside the U.S. now it's going to happen inside the U.S. yeah.
- [24:10]
Scott
I operate primarily in stablecoins as well within my business, but then do convert to the actual bank account. I'm curious more Dan and utilization of the card and how you actually manage that. That's interesting. Dan is not going to break that down for us. You there Dan?
- [24:30]
Dan
Hey, sorry. You speaking to me?
- [24:32]
Scott
Sorry, yeah, I'm actually interested in a bit more detail on how you basically operate your life using the card. How do you pay your rent using the card? Is it effectively a credit card?
- [24:42]
Dan
No. So it's a company called Cast. They're a client of mine that I work with. You can deposit stable coins. The card technically is flagged as a credit card, so it has no limit. You can spend whatever you want on there. It immediately works with Apple Pay and Google Play. So that was great for me. Everywhere I go I just double tap my phone and pay. As for my rent, there's a platform in Singapore you can use called iPaymy where it's designed for people to pay their rent on their credit cards to get air miles and things like that. So you pay a small fee? I think I pay about 1 or 2% on top of my rent. But then yeah, it's just automated. It just comes straight off of my card. So as long as I make sure I have enough money on my card comes off, I get my 10 cash back on the card and spend everything on my card.
- [25:30]
Scott
10%? Yeah, that's.
- [25:32]
Dan
Yeah, it used to be 12. Now it's dropped down to 10. And is it paid in point strictly.
- [25:36]
Scott
For stable coins or is it for.
- [25:38]
Dan
Yeah, at the moment it's just. Just stable coins. You can deposit USDT or USDC immediately gets credited into your account, just shows up as a dollar balance and you spend on your card and wherever you go currently, the cashback accumulates as points. They're doing a token drop in Q3, Q4, I think this year. Yeah, I've referred a bunch of my friends onto it. So when they spend, I get cash back as well. It's really great. I was an early user of crypto.com and I lived entirely on Stablecoin. Well, entirely on that card during COVID 2020 or whatever in Bali and staying in Airbnbs most of the time. So I spend everything on my card. That way you can go to atm, take money out. Piece of cake. I. I don't use my bank account. I really don't use my bank account or I had to use it the other day for something and it's just so archaic and backwards. But I had to. I had not enough money in my bank account because I keep like a couple hundred dollars in there only. So I had to in this bar, transfer some Bitcoin from my coinbase.com, some from my crypto.com account to my coinbase, then sell it and then sell the USD for SGD and then move it. But I did all of that and got it into my bank account in about 10 minutes. So yeah, that's how little I use my bank account.
- [26:54]
Scott
I wonder how if that's usable in the United States.
- [27:00]
Dan
The cast card is entirely available in the us. Yeah, absolutely. There's no foreign exchange fee if you spend stuff in USD. So. Yeah, completely works.
- [27:09]
Scott
Yeah. More curious about that link or whatever. Yeah, I would love that. Yeah, that. That for sure. But more curious also then because I mean. Yeah.
- [27:17]
Dan
About whether it's probably some service you can use. Yeah, you probably have to Google it. But I'm sure that there would be.
- [27:22]
Scott
One because normally you wouldn't pay a 1 to 2% premium with the structures we have here for points because usually it's like 1% points are worth. Right. So. But if you're getting 10%, it's interesting 10 catchback.
- [27:33]
Dan
And for me it's easier because then I don't have to worry about moving the money into my Singapore bank account and manually doing a transfer. I just set it up, it just comes off my card. Piece of cake. So even just for the peace of mind, paying a couple of percent for the peace of mind is like. Yeah, Whatever. I used to do that before I had the. The crypto card. I would do it on my regular credit card just because then I have one bill to pay at the end of the month. So I'd have a credit card and everything the whole month, and I just pay the credit card bill at the end. So I would just sell some bitcoin or whatever and then pay off the credit card. Now I don't even need to. Now it's just all my stable coin. So it works great. You know, I'm in Bangkok right now. Take it wherever I go, whenever I go traveling, spend it anywhere. Perfect.
- [28:10]
Carlo
You know, Scott, Dan is. Is doing this on a high level and it's incredible. But you think about what this opens up for the world as far as the unbanked emerging nations. It's the death of Western Union. I mean, what is the point? If people at Western Union are not looking at this as an existential threat and adapting, then they are on the verge of extinction. I just can't see any way they pivot on this.
- [28:35]
Scott
Yeah, that's always been the promise of crypto, except for that it was supposed to be with Bitcoin. And stable coins have sort of stolen that thunder. I think it's.
- [28:47]
Dave
But Scott, but think of all of a sudden, Dan said it, you know, it allows you to save in Bitcoin seamlessly. Just think about that. So now you can save in Bitcoin seamlessly. So Bitcoin becomes your savings account, your checking account pays some interest so you can keep some stuff there. So what have you done? Well, when this is all done, what we've done is we've dramatically decreased the friction for every single person in the world, banked or otherwise, to be able to participate in the economy at the same time dramatically increasing how much easier it will be to use Bitcoin as a savings vehicle. It's actually quite bullish. I mean, I know Carlo is probably sitting there saying, yeah, that's what I've been saying. And that's exactly right. But the net of it is better for Bitcoin for saving, better for the economy for spending, and better for autonomous, more automated financial, you know, market, you know, evolution using crypto. So it really is a very big deal. And I don't think most people have thought beyond just, oh, am I getting interest on my stable coin? Okay, that's cool. You know, there's a lot there, Mark.
- [30:04]
Mark
Yeah, and so Dave, is. Are you saying that I, I agree with you on that and I want to make sure or test why if, if the friction drops and there's more fiat in the digital realm on Rails that can, then people get more familiar with. Again, what I think was it Dan talking about his system, which I took some notes on, I'll get back to you later on that, is that if it's in the system, then people may get more familiar and have more velocity. Even in Bitcoin where maybe there's a savings technology in Bitcoin that they use, but then they maybe even draw from it to make certain payments where maybe your stack of Bitcoin, there's 10% of it that's more used for quarterly or annual payments and savings. Is that what you're saying, that there's just more in the system and Bitcoin gets adopted quicker?
- [30:58]
Dave
I'm saying if it's easier to transact between fiat. Between what? If it's easier to transact between your daily life at a lower fee to Bitcoin, at higher confidence, it will make it easier to save in Bitcoin. It will remove frictional costs. Now, yes, there's, right now it's still relatively expensive for individuals to trade small amounts of Bitcoin. The spreads that are taken out are too large, et cetera. A large part of the reason for that is because there's limited numbers of providers and all of this is going to dramatically increase competition. And so yeah, you're going to get that. That will become much easier. The other big shoe to drop, the big one in terms of just raw numbers of dollars, is Bitcoin as good collateral. So if you, if you couple bitcoin becoming good collateral with the ability to move Fiat and Bitcoin on these rails, instantly it becomes a very different world.
- [31:58]
Scott
Right?
- [31:59]
Dave
Yeah, that's really my point. It's both.
- [32:01]
Mark
Yeah, I, I agree with that. And you brought in the collateral of Bitcoin, you know, that folks like Leaden and others are, are doing on the, on the borrowing against where you still have the upside in, in your, in your stack, but you have some, you know, introduce maybe some counterparty risk, depending how you do it. But yeah, I, I, and then on the other side of it is the resistance. You can kind of see why the trading world doesn't want that to happen, you know, because once you see the big city, it's going to be tough to keep, you know, the, the stacks on the old farm, the slower animals. So yeah. So who, who was it? Was it you, Dave, saying people embracing or was. Oh, Tomer you were saying that is. It's like Buffett taking a Shot at, at the dollar after making money on it for 50 years. Is it? Bitcoiners celebrating stablecoins earn on stable on. On bitcoin's, you know, promise. And, and I don't think so either. I think that they are complementary. And yeah, for reasons that Mark, I.
- [33:07]
Scott
Think structurally exactly what Dave said and what you're alluded to is that most bitcoin bitcoiners, I think, can get on board with spend dollars and save bitcoin. And if that's frictionless, as Dave said, I think that works. I don't think there's many bitcoiners left who think that right now you're going to live your life entirely in bitcoin or that they actually want to spend it. Right. So if it's a better way to do dollars in the meantime, it makes a lot of sense, I think. Bill Barheit, I see you in the audience. If you want, if you do want to jump up. I sent your request because obviously Abra is at the forefront of this exact conversation. The structurally obviously lending, borrowing against your bitcoin in stable coins and, and doing that, something I've actually done, done myself with them. It's, it's pretty remarkable how frictionless and easy that is to do. Steve, you haven't really had a chance to, to jump in. Would love your thoughts here on the conversation.
- [34:02]
Steve
Yeah, I'd love to just get everybody's take on, you know, if stable coins, we use it at our company to pay, you know, probably 90% of employees. But the one thing the issue is I found that like in Asia, it's a lot more like USDT on Tron. Same with Africa and then the US in the US In Europe, it's mostly USDT on eth. And it's like there's sort of any cross chain there you think it's always going to be. You can see that the market cap of stablecoins on Tron has been growing very consistently. And just curious what everybody thinks.
- [34:30]
Scott
Yeah, I haven't looked lately, but I often quote, it's over 50%. I think people are surprised how much Tron is used, but I think it's just, it's fast, it's cheap, and people say, hey, I'm going to send you dollars on this wallet. And that's the one they tell their friend to download because that's where it is. And it's had this snowball effect. But I think people underestimate how much of this is happening on Tron. Steve, it's really pretty remarkable I've also.
- [34:57]
Steve
Seen some of the banking providers that we use, like the Neobanks, like the Dakotas or like Mercury or something like that. They don't switch chains between Tron and Eth. So in the US it's sort of difficult to get Tron stable coins.
- [35:13]
Scott
Yeah. Bill, thanks for, thanks for joining. Sorry I missed you yesterday at the race. Although now I'm really sick, so you're probably lucky that you missed me at the race yesterday. We're just talking about obviously this sort of perfect world where you're able to never sell your bitcoin and you can use it as your savings account and take loans. You guys have finally solved that in the United States. Bill's here, but not here, it would seem.
- [35:42]
Bill
Yeah, I'm here. No, it's, it's, it's been a long time coming and you know, we're, we're certainly seeing the uptake, but Yeah, I mean very few of our clients ever want to sell bitcoin. We do see pro. I think the April is probably the month where we see the most bitcoin sales from. Exactly. Existing clients. And that's just. Yeah. And you know, some of that is around our yield products even. But, but yeah, I mean the uptake on, on the loan side has been clearly the fastest growing business for us. Even faster growing than the yield products and staking products. And it's across the board. You know, people are both borrowing in, in tether and in usdc, straight to dollars via bank wire. Across the board. Yeah. It's been super interesting to see the, the, the lack of pattern emerging.
- [36:37]
Scott
That was on my next question. I, you know your clients are American, right? So.
- [36:41]
Bill
No, no, we have international as well.
- [36:43]
Dave
Yeah.
- [36:44]
Scott
I was going to ask if the behavior. Because we obviously just had this incredible conversation with Dan about how he lives his life in stable coins basically. But you, you, most of your clients are taking out the stable coins and putting them into dollars.
- [36:59]
Bill
I, I believe that's correct. Yeah. Yeah. I don't think we have many clients that, with the exception of clients that are actually using the loans to buy more bitcoin, we have some of those as well. Right. So some folks might say, oh, I Wanna, I wanna 20 lever on my Bitcoin to buy more bitcoin.
- [37:16]
Scott
Right.
- [37:16]
Bill
That's, that's growing in popularity and those, those folks are just holding in either tether or USDC to convert that to bitcoin on some DCA model. Most likely.
- [37:31]
Scott
Yeah, that, that makes sense. Do you think, Bill, just curious, are there any, if the tax code in some way meaningfully changed around Bitcoin or crypto in general. Could that meaningfully affect people's urge to take loans? Like, you know, we've seen it floated sort of by the administration or at least we've heard rumors, you know. No, no capital gains taxes on American based crypto. And big.
- [37:57]
Bill
I mean, I don't even know what that means, to be honest. And I don't think anybody here can explain it either, you know, so, yeah, I mean, give me an example of what that means and I guess I could answer. I've been trying to figure it out myself.
- [38:17]
Scott
Yeah, I don't have one. It's a good talking point though.
- [38:20]
Dan
Exactly.
- [38:20]
Scott
For them.
- [38:21]
Dan
Yeah.
- [38:22]
Bill
I mean, you know, who knows? No, I don't think there's going to be any special tax treatment for crypto anytime soon, especially given the budget gap they're going to have to fill with all the, you know, all the tax cuts they're about to propose.
- [38:40]
Scott
And quickly, just to circle back something, you may not have been here at the beginning, we were talking about how Democrats now kind of shifting gears and maybe coming out against stablecoins, at least in small numbers in the Senate and there could be a risk to the stablecoin legislation. Is that on your radar at all?
- [38:54]
Bill
It is. And I think it's clearly Warren re. Exerting herself into the narrative, kind of waiting silently on the sidelines to see how the first hundred days or so plays out, see how she can re. Rally her army against Trump. And this is clearly one of her nits. You know, I think she's going to lose the CFPB battle to some degree. The agency might not go away, but it's, it's, it's strength or, or punch is going to be greatly diminished. And I think she's going to do whatever she can to, to exert herself or re. Exert herself in these crypto because she believes that at some point Trump, you know, the midterms could go their way.
- [39:40]
Scott
It's a gotcha.
- [39:41]
Dave
Yeah.
- [39:41]
Bill
It, not only is it a gotcha, it's, it's a future election narrative for her. Right. Say, okay, well what happens in 28 when it's, you know, Vance versus AOC? Well, they can re exert themselves and say, see gotcha. You know, Trump is making money on World Liberty. Well, by the way, if Trump's not allowed to make money in World Liberty, why is he allowed to make money in real estate? You know, I mean, so it doesn't really make any, the whole narrative is obviously silly, but you know, it's a narrative. And so I don't think they really have anything else right now since they've clearly lost the plot. And so that's. That actually is the biggest problem. I actually think they don't know what to stand for that differentiates themselves at this point when it comes.
- [40:32]
Scott
Yeah, I had high hopes, Bill. Yeah, sorry to interrupt. I had, I had high hopes that like the anti crypto army had been so unpalatable and was so clearly the loser on that side of the election. I mean, you could argue literally that the election was won by pushback against the anti crypto army, that she would have just given up, you know, like so to think that she's still going to push that because maybe Democrats will take one of the, you know, the House or the Senate, most likely guess the House in two years. That's scary.
- [41:00]
Bill
It's. I. Well, that's correct, but here we are, so. And they haven't learned their lesson because all that's going to happen is, is the proverbial hat's going to get passed around again and you know, the world is just going to line up against these morons who, who think that, you know, the crypto, you know, the crypto companies have forgotten what happened the last time around. And trust me, we'll never go to forget because of what it cost us both personally and professionally. And so he's gearing up to make exactly the same mistakes again. The one thing I will say is this whole provision around yield payments still really bothers me, but that having been said, take the win, fix it later and you know, move on, all things considered, you know.
- [41:50]
Scott
Yeah, totally great. Stasha, is that you on the Elastos account?
- [41:55]
Sasha
Hey, Scott. Yeah, that's me.
- [41:57]
Scott
Yeah, just I. Listen, I want to talk about Elastos a bit, but just your thoughts on this entire conversation since you've obviously kind of been building in this space for so long.
- [42:06]
Sasha
Yeah, no, it's very interesting. I mean the stablecoin, we can see the narrative emerging and we can see how fundamentally our belief is that Bitcoin has to be the settlement layer beneath this new economy. So it's the cornerstone of this new financial economy. And then what we need to enable is I don't think bitcoin was made to be like a stable day to day currency as much so as it was a store of value. But what the new Bretton woods agreement originally tried to, to create with the dollar was, you know, bitcoin gold backed system where we had Then something liquid we could use in day to day expenses. So something that Elastos is incredibly excited about is its Bell 2 protocol, which is the Bitcoin Elastos layer 2 protocol. And really that's enabling Bitcoin to talk to smart contracts without, without locking up Bitcoin with custodians. So what you can do is you can actually collateralize Bitcoin in a decentralized wallet, send a message to a smart contract on any network and then you can have perform a function like taking out a loan in stablecoins. But actually a recent Harvard alumni led team are building a native Bitcoin backed Stablecoin using the Elastos technology. So I think this is really exciting because Bitcoin should stay on the settlement layer, we should collateralize it in a non custodial way and then we should unlock its value by minting new stablecoins in this new smart contract led economy. And blockchain fundamentally is about bringing trust into a trustless environment. So when we start to move away from old systems and we have creative destruction taking place, we actually, we move into Bitcoin as a store of value, our life raft. And then we open up that value without selling it by unlocking it into all of these smart contracts in this new economy. So definitely I think stablecoins is the next narrative as we start to establish Bitcoin as the store of value. And everything's going to be backed by Bitcoin ultimately in my opinion.
- [44:10]
Scott
You and I had a conversation what, three weeks ago on YouTube? Three weeks, something like that. A few weeks ago. And we didn't even talk about the bitcoin side of this. I literally, in all our conversations, I don't think I realized that you were merged mind with Bitcoin. What does that mean? And maybe you could just give us kind of the TLDR on Elastos.
- [44:28]
Sasha
Yeah, sure, sure. So I think with what we talked about, Scott, was the monetization layer. So I'm founder of Velocity and we're building a data marketplace. So Scott, you uploaded a video and within three minutes, within a couple days you've made $300 selling that directly with the world. So we tokenized your access rights and we made them available with every payment. It was streamed out to every royalty holder, but in this case it's you. But we can fractionalize and tokenize royalties too. So we can create this whole new tokenized global marketplace. But then when we look at what we want to transact in this new digital economy with, it makes so Much sense that it's going to be stable currencies that are on top of a blockchain. And so, yeah, Elastos, which is the, the infrastructure we've been building all of this on, it's been merged mined with Bitcoin since 2017. So what that really means is in return for the bitcoin miners, they get ELA rewards in return for providing the same answer they give to securing bitcoin to the Elastos network. Satoshi actually advocated for merge mining back in 2010. There's these great bitcoin firms forum posts where he talks about why compete against bitcoin, but instead tap into it. So right Now Elastos has 50% of Bitcoin's hash power, which is about 400 EHS securing it. And again, that is an insane amount of security. That's roughly like $7 billion worth of security that's securing this sidechain network, Elastos. And given that ela, the token that secures this new digital economy. And it's an incredible showcase of how you can leverage bitcoin to actually create new networks which provide unique functions that are secured in bitcoin's hash rate. But then what we enable then is the ability to stake this ELA token and we then open up this new stablecoin economy, which we can talk about a little bit more after. But merge mining is an incredible property. I encourage everyone to explore it because it's something that Satoshi I advocated for, but very few actually implement today. Something which Elastos does.
- [46:47]
Scott
Yeah, obviously I. It was interesting. I do this occasionally when I see that I'm gonna have a guest and you know, we speak to the producers. I actually go try it. And as you said, I literally went. Took me, you know, 30 seconds. I uploaded a video, my thoughts on Bitcoin for the day, uploaded it and actually made a bunch of money. Right. Which I didn't necessarily anticipate or expect after our conversation. But incredibly cool and incredibly important. Sort of as you talked about the way to actually monetize your own content and royalties instead of it going to a platform. Maybe talk a bit more about that side.
- [47:25]
Sasha
Yeah, yeah. It's insane considering, because I think we forget the value of our data. Like in the real economy, we're a liability all the time. We're increasingly going to get replaced by AI, robotics and automation. But in the digital economy, we're actually an asset all the time. Like right now we're creating an asset in this podcast, but generally speaking, we're creating data Day to day and everything we do. The issue is that the, I guess the evolution of the Internet required in order to have business models like buy now, subscribe or monetization with advertisers, we had to use gatekeepers to help make that happen. So we had middlemen who supported it. Now this is a fundamental need for the Internet. So that's okay. We got to where we are today, which is really exciting. And we've seen the birth of Bitcoin and all these new innovations. So it's inevitable that as technology allows us to become more and more independent over time, that we're going to rely less and less on these gatekeepers anymore because the Internet, Internet's maturing beyond that. So elasticity again, which is my, my project that we've built on Elastos, it's a digital marketplace. But what we're trying to Showcase is that Web3 has focused so heavily on ownership and it's done a great job that it's kind of forgotten about actual business models and revenue. We have speculations, we have memes, and we have the, you know, buying and selling tokens on the hope to make profit, which again is opens capital markets and are extremely important. But what we don't have is sustainable business models where you can actually license out value. So, you know, Scott, you, you encrypted using Elastia video, you then released a number of access tokens which were traded and that income poured directly through smart contracts to your decentralized wallet.
- [49:17]
Scott
And I didn't know any of that was happening, by the way.
- [49:18]
Sasha
Yeah, yeah, and it's, and it's, it's now on autopilot, but you also put it inside a smart contract which has a subscription mod model so you can add more assets to that contract. And not only can you individually buy and sell the individual assets, but you can actually collect subscription revenue, which for the buyer, they get to unlock a library of assets. So it's almost like it's an even nicer user experience. But the point being is like there's kind of like a digital gold rush that's going to emerge, which is tokenizing assets. And it can be physical assets or it can be digital assets. But when we claim ownership of assets by minting them onto a blockchain or minting the rights, we can now begin to think about how we can attach business models to those assets as well and start generating revenue from them. And when you're collecting 95 to 100% of the revenue, and you might not even be a creator yourself, you might go to a global marketplace and buy royalty rights to all types of assets that you love. And every time someone purchases to use that asset, you get your fractional percent immediately sent to your decentralized wallet. This is what drives new economies. And just to quickly circle back with the stablecoin narrative emerging, these are the kinds of tool sets we're building and offering are the kinds of tool sets which just feed into these stable economies. We have discussions with these stablecoin entities on the goal of why not use. Let's, let's build this all together because it's going to be what fuels new revenue in this new economy.
- [50:54]
Scott
Yeah, what you were speaking to there was what sort of was the spark for me why I actually decided to try it. I obviously, obviously many people know at least I had basically a 20 year music career and I tried all of the Band Camp and SoundCloud and every way to sort of find ways to monetize music and nobody really perfected it in any way, shape or form. And this is really a further step on that path with the promise of Web3. And then you talk about being able to actually buy those royalty catalogs. I mean we've seen people make insane amounts of money buying the catalogs of famous musicians. You know, I'm not Talking about the Web3 market like historically in normal markets and the, and the creator obviously ends up getting screwed in those situations and some larger entity or investor makes a ton of money on their entire catalog and this really democratizes that and allows the amount individual to participate.
- [51:51]
Sasha
Yeah, it's fundamentally, it's about having control and capturing the value in which you offer the world in the AI agent economies is as relevant to this as possible because for your smart contract that you've uploaded some content to, you can just continue uploading into that contract and then the goal next is why not give an AI agent access to your contract and then it can learn everything about your content and then you can sell that AI agent to the world as well. And then we can have AI agents talking with each other, doing deals and buying and selling access to data and understanding it. And everyone who's participating in this economy is actually getting paid. I think the biggest fear people have actually is we're both loving all these new technologies, but there's also the fear that we get left behind. So we need to be, we need to have business models and ways to tap into tokenized revenue and access and all these kinds of things. And yeah, that's what we're really focused on with Elastos and actually I encourage everyone just to go to Elastos and learn a bit about Bell 2, which is how we enable a bitcoin backed stablecoin economy and also loans, because that's just a whole new avenue with which is opening up now, which we're really excited to be developing.
- [53:07]
Scott
Yeah, it's incredibly cool. So in that instance, your AI agents, basically you would own them, they'd be for sale on the marketplace and you would earn a royalty when people utilized or bought those AI agents. And would those AI agents then be transacting in Bitcoin, Stablecoins, ela, how would that work?
- [53:27]
Sasha
Yeah, so the whole system for us is underpinned in ela and so ELA is the merge mind asset. The gas is paid in it. Right now it's the only currency that can be used. And for the, for the Stablecoin issuance on Bell 2 that's being worked on, it's basically creating what are called zero knowledge proofs. So when you collateralize Bitcoin in your decentralized wallet, you generate a zero knowledge proof which is then passed into a smart contract to release either to mint a stablecoin or to release a loan. As a node you can join this network, you stake ELA and you will earn a small percentage in Bitcoin for supporting that transaction. So everything fundamentally underneath the hood is being powered by ELA and that has 50% of Bitcoin security as well. So we love holding Bitcoin in our wallet because we know it's secured by the miners, we know it's the most secure system in the world. I mean there's even quantum computing that's becoming a big topic. And so why would you hold ELA in the same context? It's because it has 50% of that hash rate securing it so you feel safe with it. When it comes to AI agents, I just think, you know, we're going to, everything is going to become an AI agent in my opinion. You know, all products, individuals, you know, myself. We're going to be all, not necessarily tokenizing ourselves, but digitizing our value into some kind of agent which can replicate, represent us and go do things. So, you know, with elastity, where I really want to take this project is where, you know, Scott, you set up a channel, but think of that channel as an AI agent and you're actually dropping, you're dropping assets into your AI agent which are being tokenized and people can pay to access that. But actually you're training up your personal AI agent which can then support you in day to day interactions. And then we can imagine AI agent agents with liquid market caps where anyone can invest in those AI agents and it actually uses revenue or uses investment to go buy access to assets all around the world and to gain unique intelligence and then offer that intelligence as a service with a business model behind it to the world. So again, everyone can get paid and be a part of this economy. But we have to have blockchain underpinning it. And that blockchain, blockchain has to be underpinned by Bitcoin security. And that's really what Elastos is here to provide.
- [55:49]
Scott
How far are you along or are we along on that trajectory of what you just described becoming a reality?
- [55:56]
Sasha
So for the, for Bell 2, the whole of last year we built all the infrastructure for Bitcoin, Bitcoin backed finance. So really it's, you know, we've done a demo for lending and that next we're doing the stablecoin, the stable coins. The first demo is going to be ready in the next month or two max. But again within the next four to six months there's going to be a Bitcoin backed stablecoin that Elastos will offer for elastity. You know Scott, that it's a working product now so anyone can go try it out. It's on Elastos today. But you can mint a video. We do audio and video markets but we're going to continue to open this up towards an operating system environment. So this is where you basically have to build a system that checks against the blockchain. Do you own the access rights to decrypt the content? So it's like a playback machine. Right now we have a playback machine for audio and video. But when we open up to an operating system we can open up gaming markets, we can open up software markets, we can open up the AI economy markets like we can do every single asset. So we released a very basic, minimal viable product for the OS only last week. It can be seen on the Elastos Twitter. But again we're going to be in the next six months you're going to see this develop and become extremely interesting be it that the elasticity marketplace technology will be installed on this. So yeah, I really think first fundamentally we need a new economy backed by Bitcoin and I think we're seeing creative destruction in financial markets. Old monetary systems are being replaced by new ones. And I do believe the flight to safety will be into Bitcoin. And then we open the doors to say you can, without selling your bitcoin, leverage its value to enter into this new smart contract world where everything is automated, it's much more efficient and we're in an economy where everyone actually can participate and we've got got markets for every type of asset. That to me is a very exciting future we should all be a part of.
- [58:03]
Scott
Really perfect that you were here for this conversation today because we segu sort of perfectly into that. So people, you can follow Elastos info obviously that's Sasha Mitchell behind the town today talking to where else can people find out more and any final thoughts, anything I might.
- [58:21]
Sasha
Sure, sure. And yeah, again stablecoins is the topic and I see it being a huge, you know, the next coming months are going to be huge. So head over to Elastos, go to Elastity, that's Ela City and check out that's the project I'm a founder of. And if you want to find me at Sash Sash underscore, underscore mit. But yeah, if anyone's interested in what we're building, feel free to drop me a message. Otherwise check out Ela, which is mergemind with bitcoin and I think a really interesting investing asset class.
- [58:53]
Scott
Incredible man. Thanks so much for your insight. Thank you to everybody else obviously on the panel for the great conversation today. As usual, it's great to be back for me after, after letting Dave take my job for a week, he might just take it permanently it feels like but you know, for, for a week at least. And we'll be back Obviously tomorrow at 10:15am Eastern Standard Time for another crypto town hall. Give everybody on stage a follow, especially Elastos info. That was a really great conversation. Glad Sasha that you showed up. Today was perfect. All right everybody, we will see you guys tomorrow. Thanks so much. Bye.