← The Wolf Of All Streets
The Wolf Of All Streets
The REAL Reason Banks Are Secretly Terrified Of Bitcoin & Crypto | Alex Thorn
00:53:48
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- [00:00]
A
What if crypto's biggest breakthrough is also the thing making investors the most confused? In this conversation, Alex Thorne breaks down the strange moment we're in right now where the biggest banks in the world are quietly building on crypto rails while their lobbyists work overtime to slow down the entire industry.
- [00:18]
B
They face the innovators dilemma here where they have to innovate faster than the disruptors can dislodge them. They'd want to be working to incorporate the products and slowing down the disruption. So actually a smart strategy. If it is their strategy.
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A
We get into why the Clarity act may be in more trouble than most people realize. Why bitcoin in the 70,000 still feels like a bear market. Why retail has completely lost the plot while institutions keep leaning in.
- [00:41]
B
There is a huge delta between institutions and retail. Basically every big bank and brokerage is doing a bunch. Right. That's real money and work being put towards it. That's actually building stuff. So that obviously shows where they think the ball is going and they're putting real money behind their conviction in blockchains, tokenized assets, bitcoin, whatever it may be. Right. Meanwhile, like retail is hurting and, and disillusioned. And I think there's some reasons for that that are interesting as well and
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A
how crypto may be suffering from something no one expected, success. That looks boring.
- [01:15]
B
Maybe crypto's boring now. Basically, if it's just of back office tech upgrade for the traditional capital market system, like that's, you know, people aren't getting out of bed and like saying how interesting SQL databases are. Right.
- [01:26]
A
Alex also explains why Wall street still doesn't fully understand Bitcoin, why the next real catalysts may come from AI instead of politics. And why the collision between crypto, tradfi and autonomous agents could be one of the most important stories of the next decade. This one goes way deeper than price. Let's go.
- [01:46]
B
Let's dope.
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A
Alex, you wrote an incredible article on X Big bank monopoly under threat from innovators with one of the greater images I've seen which says banks crash out over Fed skinny master account and stablecoins.
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B
Yeah.
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A
Little tension right now between our industry and the banks.
- [02:19]
B
Yeah, there is. I mean, I think first of all, I mean, what a milestone, right? Like the mere fact that we're discussing this shows just how far crypto and blockchains have come. Right? Like that it actually matters this. I mean, you know, five years ago, like they just didn't care. The banks didn't care what was going on. Right. They claimed that none of their clients wanted to buy Bitcoin and like none of this mattered. Now they're crashing out. Right. That's an improvement. It's a representative of the fact that it is an improvement. But they are all building stuff now, genuinely like all the big banks and brokerages, but at the same time, their lobbyists are obstructing. It's two things happening at the same time. Right. It's very possible the Bank Policy Institute might sue the Fed over the Skinny Master account that they've given to Kraken. There was a report on Monday in the Guardian about the Bank Policy Institute thinking about suing the OCC over giving licenses. And of course, you know, it's well known they're obstructing on the Clarity act, you know, specifically related to the issue of stablecoin rewards. But it's starting to look to me like it's actually a more coherent strategy of delay block. Give them more time to build. Right. And because it's not. I mean, I don't think it's not. It's also not obvious that if stablecoin reward issue is resolved, then the rest of the bill will skate through. Right. This is sort of just the hill the parties are dying on now. So, yeah, I think that's a really fascinating tension between their efforts to build and adopt and integrate, while also their lobbyists are simultaneously obstructing.
- [03:50]
A
Yeah, I mean, I've been dangling way out on the smallest limb by my feet saying clarity has basically 0% chance of passing at this point, which is funny because I was in the 100%. Of course, we've got Trump camp the first few months and Genius passed and I thought we had all of the tailwinds we could possibly need. But once I saw the delays in the markup and the Brian Armstrong no bill is better than a bad bill language. I really turned completely on a dime and I've seen nothing to convince me otherwise. To your point, stablecoin yield is the big story, but it's not the story at all. That's the story in my mind of crypto versus the banks, but it's not the story of Republicans versus Democrats, which is what it actually takes to get a bill.
- [04:32]
B
Yeah, yeah. There are other issues where they're going
- [04:35]
A
to argue about ethics.
- [04:37]
B
Ethics. You could imagine, like some of the stuff in Title 3 of that bill, which is all the DEFI and AML KYC Bank Secrecy act stuff. It's not clear that there has been a compromise on those issues. Right. Like some reporting about. I saw Today from Frank Korva that it's possible that even the BRCA might have been offered by some party in some negotiation as part of a. Which is the blockchain Regulatory Clarity Act. It's the language that protects open source developers. I don't think that that would ever be given away. That would kill the bill. Crypto would walk if that's not in it. But I mean, like you can imagine there's a whole host of possible other things that could stop the bill from happening and they're running out of time. Like it's mid March, like this thing is the floor, you know, without getting too arcane, like the Senate doesn't have like unlimited time. Like there's other stuff they gotta work on. And I think you don't get a coherent deal, like by April, like it probably is dead in this Congress because then they gotta start working on other stuff. Exactly.
- [05:33]
A
Even the other bills that they need to pass, they gotta go get on the phone and start raising money.
- [05:37]
B
I mean, I'm still hopeful it can happen, but I don't think we should. You know, it's definitely not a guarantee.
- [05:44]
A
I had a conversation with Chris Giancarlo, the former CFTC chairman crypto dad, a couple weeks ago and we had just put it out and he made a lot of points that I hadn't really thought about at all. First of all, he views Genius act as much more sinister than most because it basically locked in bank Secrecy act policy into stablecoins. And now the government and private companies both have visibility into our stablecoin transaction, which was kind of the worst fears of cbdc. And then he pointed out all these kind of similar ideas about Clarity, that he actually is somewhat optimistic, but not sure it'll be a good bill. So we have this fear, I guess now that even if it does get passed, it will be a Trojan horse for the banking industry. Right. Which is the last thing we want. I'm old enough to remember when the Inflation Reduction act was gaslighting and didn't actually reduce inflation. So I have my doubts that the Clarity act will actually give us clarity.
- [06:40]
B
Yeah, I mean, I think there are some valid fears about that. I think. Look, I'm more positive on Genius, I think, than it sounds like that former chair Giancarlo is. But it is true. And we wrote a report like in mid January after the Senate draft came out of Clarity saying that, you know, not that it's necessarily malicious or bad, but Clarity includes like the single greatest expansion of the Patriot Act's financial surveillance power. Since 2001, just to be aware. People should be aware of that. That's a fact. So yeah, I mean, there's stuff in here that is problematic and might help established institutions better than startups. And there's plenty of stuff. I mean, I think the bull case for Clarity, generally speaking, is that like, crypto's probably fine for the next couple years at least during this administration. It's likely to get a lot of what Clarity has in the language of the legislation through administrative guidance and exemptive relief from the agencies. Right. But like, and who knows, maybe Fair Shake and crypto can, you know, help keep pro bitcoin and crypto politicians in office in future elections. But two and a half years, pretty good. But you know, the capital markets industry is still based on a foundation of laws written in the 1930s, right? The securities and Exchange act, the 34 act, these. Getting something like clarity codified in federal statute is better than two and a half years. It's the kind of thing that 100 year industry could be built upon. And so like, it is important to codify that you can sell and trade digital commodities like Bitcoin, right. That you can, if it's a security, then there's a license for that and like get rid of all the gray area that is definitely positive. But again, like, you know, you're dealing with the political reality of the current Senate breakdown. I mean, Republicans probably need like nine Democrats to vote yes on this to even advance it to the floor. Right? Like, so you're constrained by the politics. You've got timing issues and, and of course you've got the big banks. Really, their lobbyists are on the other side of this table right now. They are not even though they're building. I mean, it's like, right. Citadel is sponsoring papers that say tokenized securities are bad, but they also did a strategic investment of $200 million into Kraken. Right. Like the Bank Policy Institute is threatening to sue the occ. Meanwhile, like Morgan Stanley is building crypto custody and stuff, right? So it's like this incongruent, like, tension is super interesting. I think it's. I don't know if that by the way, is a un. Explicit strategy on behalf of the banks to build while delaying to give themselves time to build. But if it was, you could imagine that's a pretty good strategy because they face the innovators dilemma here where they have to innovate faster than the disruptors can dislodge them. Right? And like, so they'd want to be working to Incorporate the products and slowing down the disruption. Like that's actually a smart strategy. If it is their strategy. It's not, you know, I don't know that like they've chosen that as a strategy, but that's empirically what they're doing. It's very, very interesting.
- [09:45]
A
J.P. morgan doesn't want their new logo to be blockbuster. Right. And also in that same conversation, I hate to keep referencing it, but I think it aligns very much with what you're saying about them slowing it down so they can catch up. Giancarlo told me in his opinion that the banks need the Clarity act more than the crypto industry does because they're banks and they literally need the clarity on how they can use this technology and custody of these assets and move forward, even for building their own businesses on the blockchain side. So I think you're probably right. They want favorable Clarity act, but they do need something as well.
- [10:23]
B
I think that is right. I think that's like I said, crypto's never been in a better regulatory position. So it's not like urgent that crypto get this clarity. I think for crypto it's more about preventing rollback in the case of a hostile administration. Right. Getting that last final leg of clarity that can bring in the final holdout of institutional investment or something. Right. But otherwise, like it's doing pretty well. And the banks, it's. Yeah, I mean, look, they could, they can also get guidance from their regulators that let them do stuff. But yeah, I mean, I think there's truth to that that they, they reality is everyone wants this codified and federal statute. Everybody, like the crypto industry generally wants it. The banks need it and brokerages need and want it. And it's. But again, I think it's, it's really, you know, the politics are hard. I mean, you've got at least one Republican who will vote against it, I think in Josh Hawley. Rand Paul probably also votes against it. He voted against Genius. So now you're down to. Now you need 9. I think you're down to 51 then of Republicans. And that's if every single Republican votes. Yes. And of course they may not like. So it's just, I mean that's, that's obviously where this, we just didn't, you know, the crypto industry didn't quite win hard enough in Congress basically to make this easy. But you know, that's also okay. This has already been a multi Congress effort. Right. They passed fit 21 under Biden's presidency. Right. So like, you know, sometimes big laws take a couple years, you know, so
- [11:53]
A
it turns out maybe we're not the most important people in the whole room.
- [11:56]
B
Well, that's right. They got other stuff to work.
- [11:58]
A
Kind of blows my mind, actually, as you said it in passing before. But there's a bigger idea there. Which is, well, the crypto industry and the banks, neither of them would ever agree to that. And like, I'm also old enough to remember when politicians made policy and not lobbyists. It's funny that we are saying all the quiet parts out loud about whose interests are being represented and how, and it's in plain sight and nobody cares. Like, neither Brian Armstrong or Jamie Dimon should have any say in the Clarity Act.
- [12:24]
B
In reality, I don't know if that's true, but I understand your point.
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A
Being able to give input that we should not have the narrative that, oh, he killed it.
- [12:32]
B
Yeah. Or. Right. Or that, like, you know, they have to go behind closed doors and hammer out a deal before the bill can be moved. I agree. It's, it's, it's interesting. You're right, it is interesting. And a lot of people who haven't been, you know, a lot of people in crypto this last couple years has been their sort of first real in depth, you know, look behind the scenes of how politics works in Washington. I tend to think it's fine. It sometimes doesn't look the way you're taught in like, you know, sixth grade civics class. But it is what democracy looks like, right? I mean, you have the ability to, you know, press your, your interests to your, you know, representatives. And it's, it's. Yeah, it's just like the thing about the bank's position. Right. It's so much about like, they keep claiming that there's fears of like, destabilizing the banking system. Right. Poses a risk to the financial system. They think Kraken, if they have a payments account at the Fed, poses a risk to the banking system. They think OCC giving trust charters to crypto firms and fintech firms poses a risk of the banking system. They think stablecoin rewards pose a risk. And it's just not, it's just not credible. Like, it's like. And there's been an industry that has consistently posed a risk to the banking system. It's called the banking banking system. The banking industry. Right. Like repeatedly over decades has blown up the banking system. It's been the bank. That's what I'm saying, though. So, like, it's so much more to Me, I think it's pretty transparently about like moat protection and maintaining a monopoly. The skinny master counts a great example. Like people don't realize this but like you can't move dollars in America without using a bank that has a fed master account, PayPal. They're using a correspondent bank with the Fed Master.
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A
They're not able to offer loans, they're not doing yield. Like they're getting none of the like beloved fractional reserve banking system services. Yeah, it's able to move money.
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B
Right, Exactly. But I think that's why, that's why the fears of it destabilize. You know this language. They've been deeply concerned that poses a threat to the. And it's like guys like just, you know, I mean I wish they would but you know, I get that they wouldn't even if they believe this. But like come out and say what you really mean guys, right. You don't want a class of new highly technological competitors disrupting your multi decade monopoly on payments, which is what they've had. It's not, it hasn't always been like that in the US and it's not like that in the UK or in Europe where both of those central banks give such payment only accounts to firms like Revolut and Stripe. So like it's not like a crazy idea that you'd let someone other than a highly levered lender operate payments. Like why, why is it that Americans have to choose in order to send a payment, basically have to use a lending institution that has a zero percent reserve ratio. Like why is that? Shouldn't you, like you shouldn't have to do that. Right. That's a whole other, it's a strain, it's just a strange like regulatory artifact in America that doesn't quite like make sense from first principles and that's why they're opposed to it.
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A
I think it doesn't make sense from first principles because it doesn't make sense because it's in their own self interest
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B
which again from their perspective I think it's totally fine like that's reasonable for them to view it that way. It's just not, you know, they can't, they're not making that argument publicly.
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A
Yeah. So I want to pivot a bit to market and cycle or actually more specifically about sentiment. I think everybody's trying to mentally unpack what's been happening with the market over the past year, if not years. You know, the four year cycle argument of whether it's debt or in existence, probably not worth rehashing. But I think what's become exceptionally clear is that there's a massive divide between retail and institutional sentiment and involvement. I'm assuming you've done quite a bit of research on that.
- [16:23]
B
Yeah, and I think that's absolutely right. There is a huge delta between institutions and retail. I think we've talked, I mean, I mostly have been complaining about the banking lobby, but at the top, I mean the sheer number of announcements, just year date and launches of tradfi crypto products is astounding. It's basically every big bank and brokerage is doing a bunch. Right? That's real money and work being put towards it. That's not just saying they like blockchains, it's actually building stuff. So that obviously shows where they think the, you know, the ball is going and they're putting real money behind their conviction in blockchains, tokenized assets, bitcoin, whatever it may be. Right. Meanwhile, like retail is, you know, hurting and disillusioned and I think there's some reasons for that that are interesting as well. But also like one of the ones I've come around to that's related to the institutional is that maybe crypto, crypto's boring now. Basically if it's just sort of back office tech upgrade for the traditional capital market system, like that's, you know, people aren't getting out of bed and like saying how interesting SQL databases are. Right. Like, and it. And it. There's a, there's a malaise that emanates from that realization that it may be getting boring because Satoshi said the root problem with fiat money is all the trust that's required to make it work and the central bank can't be trusted because it constantly debases. Right. He didn't say the root problem with fiat money is that like we don't have a good enough settlement system at the New York Stock Exchange. Right. And it seems like that's. But I think it's inevitable that that is what was always going to happen. But it contributes to like you have this long term, highly philosophical cypherpunk ideal that you're striving towards that everything's going to be decentralized and instead you're sort of getting. The big banks are adopting it. I think, you know, people shouldn't feel malaise about that and sad about that. That's kind of what winning was always going to look like. But I do think that is contributing like the delta itself is part of the thing that's causing it, the delta between retail and institutional, because people Are like, well, wait a sec, I thought this was about empowering individuals and now it looks like it's empowering the traditional capital markets more than individuals. That's one of the aspects, not the only one.
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A
I think if we're really intellectually honest about it as well. Nobody actually in retail cared about the adoption of the technology. They cared about their bags going up.
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B
Yeah.
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A
The more adoption we get of the technology without their bags going up, the more questionable it becomes as an investable asset class for people looking to YOLO in and make 10x gains.
- [19:05]
B
Especially with like mega hot investing trends like AI and Quantum and gold. Right. That are crowding out the energy for bitcoin.
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A
Right. Oil and silver. Yes.
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B
Yeah. I mean like it's, you know, when you look at something like the volatility of bitcoin, you're like, well, I could have doubled in two years by owning low volatility gold, but I have to. Right. It's a harder case to make. And attention and the sort of the boring nature of blockchain tech adoption, like the fact that it's becoming integrated also means it's not like it doesn't feel as cutting edge as it used to. Right. So it's not, it's just sort of lost some investor mind share for the moment. I mean, I think it, I'm very confident it will come back. It's just that like, you know, and here we are talking about the malaise of a bear market and Bitcoin's at $71,000 as we record this. What a trip. But like, you know, there is, there is a malaise. And also I think another huge part for the negative sentiment is both among institutional investors and retail investors. It's hard for people to envision what the next catalyst look like. Right. Because you got so many shockingly, previously unthinkably bullish exogenous catalyst last year with the strategic bitcoin reserve and these, you know, appointees at all the agencies that love crypto and like the president talking and launching his own meme coin. Like it's kind of like how can we. Like, surely that, like that feels like the top that can't be surpassed. Like you're not going to get a president who's even more pro crypto than President Trump. Right. So like people feel like we've exhausted those catalyst categories and where are we going to get the next event driven catalyst that rockets us higher? And I think that's a big source of the despair as well, is the feeling that we already got everything that we could ever have imagined. And still we only got to 126.
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A
Yeah. I've long made the argument not for bitcoin, but for crypto, if we're separating the two, that you don't get a more firm ceiling than the most famous person on the planet launching a token.
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B
Right.
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A
We were never going higher in the crypto market than a Donald Trump bitcoin.
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B
I think that's right. I think there's a lot of truth to that. I think there is. And, but on the other hand, there are catalysts coming to be clear. Like, but they just don't feel as like, like event driven, spontaneous, you know, exorc, exorbitant or like incredible as the President on the steps of the White House or in the White House saying bitcoin strateg for the government. Right. Like, you know, you've got like institutional adoption, tons of things that are, that are genuinely happening. The inclusion of bitcoin and model portfolios and this and that, etc. Right. Like, and that is important. That's actually going, those are going to be big catalysts for us. But again, it just doesn't top like the president, you know. Yeah.
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A
I think we generally tend to look for these easy to like handicap or very well projected catalysts and they're never the ones that send the market. Nobody knew that Saylor was going to come in with microstrategy, which seems like a huge story now, but it was just microstrategy at the time. But that was sort of the catalyst for that bull market to some degree. And then of course Tesla followed and square. And so we did see that. But nobody thought that Silicon Valley bank failing, nobody was projecting that forward that bitcoin would kind of pop off that bottom from 19 and back up.
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B
It did. It went like up 30% or something a few days.
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A
And that was kind of like put in the bottom there, you know, to some degree. So I just, I think there's unexpected catalysts that are potentially there as well. And it's never the glaring ones that you expect.
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B
Yeah. And I think I totally agree. And Wall street also, you know, another thing that institutional investors are, you know, upset about is that gold and bitcoin hadn't traded together since like September. And there's, you know, people have said like, is the digital gold thesis dead? And I was like, just explain this because I know Wall street got like a little ahead of itself here. Like they, the, the digital gold thesis was not explicitly that bitcoin and gold would trade with high beta to each other you know what I mean? Like, it's like it emanates from a Satoshi Nakamoto post, right? Like it's fundamentally similar and gold, like in certain ways. And Satoshi was the first, maybe not the first, but he pointed this out in a 2010 blog post on Bitcoin talk. Remember he has a thought experiment. He says, like, imagine if there was a base metal, but it was odorless and not physical, but you could move it anywhere. Like, would that be valuable? Like, it didn't look like it wasn't shiny. Right. Like it's pourable, durable, verifiable, scarce. Like all of those things gold is as well, to some extent. Right. Like that's. The thesis is that it's fundamentally useful in a way that is similar to the way gold is useful. It's not issued by a sovereign. Right. And I think we got to get back to telling that fundamental story better and more loudly. Right. That also, you know what, if you're in a trade based on the debasement of fiat currencies or the never ending debt spiral of sovereigns, which is true everywhere, not just in the U.S. right. Like, and you're fleeing to gold. Like, if your thesis is geopolitical and economic unrest related to debt and a shifting multipolar world, like bitcoin's way more useful to you than gold. You can't send a billion dollars of your GLD ETF shares across world in 10 minutes. You can't store large amounts of wealth in physical gold because it's too bulky, like. Right. But you can have a billion dollars on a, on a flash drive if it's bitcoin or in your head. And I think people don't really realize that. And I believe just on when I describe that tool and I don't tell myself that it's bitcoin that we know about just objectively. That tool sounds very useful to me and would be very valuable to the world to have. And that is why bitcoin is valuable, to be clear. But I mean like that those features become fundamentally more useful in the future. That's currently playing out with a more multipolar world. And you know, debt that is, you know, money that has to basically inflate forever. Right? Like it's, it's more useful, not less useful now. So I think that's more of like a trader. Like the traders are upset that like they thought it was digital gold, that they thought that meant XAU USD. Right? Yeah.
- [25:26]
A
It drives me nuts. It drives me nuts that people think you should be Able to lay one chart on top of the other. Because the beauty of bitcoin price, if we're not talking about the fundamental properties or even value, is its lack of correlation to everything. Right. I mean, the holy grail for an investor's portfolio is something with idiosyncratic properties. Right. And so that's right. Now people are very upset that bitcoin didn't follow gold. But if you actually zoom out and think about it rationally, it also didn't participate in the stock market boom, which means that it actually improves a Sharpe ratio over your portfolio because it's truly uncorrelated. Sometimes that just means your thing doesn't go up when everything else goes up.
- [26:05]
B
Yeah, that's right.
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A
Go up when everything else doesn't. So it's like you have to just zoom out and not look at it. Right. Now I kind of love the fact that my pounding, whether I'm right or not, pounding on the desk. This is uncorrelated. Looks kind of good even when the price looks kind of bad.
- [26:23]
B
Yeah. I mean, I guess theoretically what everybody want, they want uncorrelated to the upside and then perfect. Want it to go up when there are other things go down, but also go up when they go up. That's what they actually want when they say uncorrelated. But I, I agree. I think that's a great point. And, and keep in mind, also like gold, what like doubled from like the 2000 range to 5000 range, 2500 over the last couple years, Bitcoin was up what, 6 and a half X or something like from 23 to, to present or 23 to the top. So it's like, okay, you're looking at six months since September where it happened to go down while gold continued to go up. But like gold doubled, Bitcoin did more than 5x, right. It just rallied first and more and it's smaller and so it's a lot of cherry picking. This is the type of stuff though that happens in a bear market. Right. Where it's just like everyone's looking for a reason to blame and stuff. But that's one that I've also heard they're mad about gold performing and not bitcoin. But it seems very short sighted to me.
- [27:23]
A
Yeah. Because it also isn't following tech as they thought it would. So it's very confusing when none of your narratives play out in real time. You're obviously, you know, head of firm wide research at Galaxy, so you're probably looking at everything. Did you ever think two Three, I don't know, four years ago that we would all have to become like macro economists and that we'd have to be experts in monetary policy and gold oil war politics.
- [27:51]
B
Yeah, maybe a little. But it's been, it's been, it's been fascinating to watch and watch the crypto industry have to evolve, right. To learn about this. I think it's because bitcoin is a macro asset. Like bitcoin is literally on dashboards all over Wall street that have like equity indices, commodities, debt and bitcoin. On CNBC they show the price of bitcoin about every 30 seconds. Right. Like so. And on Bloomberg. Right. So it just, it's that because of that like people, some people trade it like that, right. And trade it as in their bucket. And remember like this is really interesting. Like two years ago or so on a weekend it was, there was an Iran, I think it was the time when Iran sent a bunch of drones to Israel and Israel shot them down or something. It was on a Saturday, only bitcoin trading really was available and it dumped from like 62 to like 45 or something during that long period of chop in 2024, this time with the Iran conflict, bitcoin was held up well and kind of rallied a bit after. And it looked like people instead were selling like gold, gold and oil futures on hyper liquid. Right. So it's like. And I think the reason for that is not because bitcoin isn't still a 24 7, 365 macro asset, it is. But I think most of the people that like to trade it like that had already sold basically like the macro weekend Warrior Taurus, they're the ones that sold us down from 100 to 70ish, you know, not necessarily only them, but. Right. Like you're looking at a pretty firm base now I think of long term holders, which is pretty remarkable when you think about that because like, you know, we can go lower too. Like I'm not saying the bottom is definitely in, but like this is looking like a pretty sturdy area at this point. Been down here for a month and a half, two full months or something more since the start of the year even. Right. And like if the floor is 60 or even, you know, even if it's 50, the floor last time was 15 5. Right. Like you're materially growing. Right. Like people that are willing to hold through a 50% decline are long term investors.
- [29:58]
A
Yeah, I completely agree with that. When you zoom out, you're just excited to buy more at 50 if it goes There. Yeah, I am like it might go down.
- [30:08]
B
Please.
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A
I know where it's going. Or at least I have a very strong conviction in where it's eventually going. I'm certainly not selling it anytime soon.
- [30:16]
B
Yeah, me neither. I haven't.
- [30:17]
A
I mean I'd rather be buying at 50 than 150.
- [30:20]
B
It's literally that Hodl, the original Hodl post where he's like, he's like some of you traders, like you can sell every top and buy every dip. But like I think Pat Piffy, Wing Wang Wong I think is what the guy wrote in that famous Hodl I'm Hodling post. Right? And it's like, sure. Would I technically have loved to have sold my Bitcoin at 126 and then rebought it here? Of course I would have. But I've been through this game too many times. Times. I've been in bitcoin for a long time. I know that trying to do that when you have long term conviction, it's really like you're unlikely to succeed. You're likely to screw up and end up having to buy back higher sometimes and better to just dca if you have a long term view, no matter what it is, whether it's bitcoin or anything else, have your thesis and stick to your plan and reevaluate if the plan or thesis needs to change. But I can tell you bitcoin's temporary inability to trade with high beta to XAU USD, that ain't causing me to reevaluate my plan. I can tell you that.
- [31:15]
A
I think people are just out of money.
- [31:17]
B
Yeah, I mean, look, crypto too. I mean crypto has been a ride of spectacular failures and not even just like the really explosive ones, but like, you know, narratives that didn't play out. You think about the NFT like boom in 21 and 2 or you think about like blockchain gaming and meme coins. All of these ultimately. Not again, I don't even. I think they're empirically down significantly. But like, you know, maybe NFTs still become a thing. Maybe there's some great companies that are going to be building blockchain games.
- [31:49]
A
You're down bad, there's no question. Yeah.
- [31:50]
B
So like just repeated narrative. Yeah, repeated themes and narratives in the market that just like ultimately hosed retail if they didn't get out.
- [31:59]
A
Right.
- [31:59]
B
So like that's, I mean the meme coin frenzy last year I think was really damaging in terms of capital to a lot of retail capital. Right. And that's hard. That's hard. And even their growth, I feel like, was part of a global despair among the youth that their lives may not be better than their parents and it's hard to get a job. And the wealth inequality and crony capitalism has led them to things like gambling that they have a better. They think they have a better shot at at 1000x ing a meme coin or a prediction market or sports gambling, when they really should be learning about the hard money savings technology that is bitcoin or other more productive investments and themes. Right. But they're rolling the dice and pretty much everybody who rolled the dice on meme coins lost.
- [32:49]
A
Historically, the wide proliferation of gambling on everything has ended badly and has been a sign of end times. I'm not saying that because I. Yeah,
- [32:58]
B
like in the Weimar Republic. Right.
- [33:01]
A
But that's very Weimar Republic type stuff that now you can like, well, my bank account's not going up and I'm not earning any money, so I might as well yolo into a bet on, you know, curling in the Olympics, which I know nothing about, but I'm going to watch it.
- [33:17]
B
So, yeah, curling was pretty good this year.
- [33:19]
A
I feel like we're kind of there and maybe the quiet part, out loud, I've been saying it out loud, is that that's why people were using altcoins and meme coins was because they were desperate and were speculating and they've moved to greener pastures now that. But you get those same moves from, like you said, gold and silver or in prediction markets. So if we lose all the speculators, who's left to buy these bags?
- [33:43]
B
Yeah, and I think the story is pretty bleak for a lot of those long tail bags because of that. Right. Like, I mean, maybe not, you know, crypto majors. I think bitcoin's a different story. But yeah, I mean, we did an estimate once. I asked my team how many tokens have been invented in crypto. Like last year, something. The best number we could come up with is somewhere around 30 million. Obviously you can't even fully know, but
- [34:04]
A
like, I mean, pumpkin looks really.
- [34:06]
B
Yeah, I think it looks. Yeah, it was a fun exercise because like, that's a lot of data across a lot of chains. But I feel like, you know, if it is 30 million, probably 29.99 of them will never come back. Right. Like, maybe. I don't know. How many coins you think have viable futures? No one really knows, but I say it's at least less than 100. It could. It could be as few as 10. I mean, who knows? But like, at this moment, yeah, you need those speculative use cases. And it's not just like prediction markets or even just like the rise of sports gambling over the last five years in the US it's massive industry. When they got the court ruling, that then allowed them to break out into all the states. And that's destructive behavior. Gambling on things you can't control. Right. Is straight up dice rolling. That's why, like, people prefer, like, to play Texas hold' Em sometimes rather than like roulette, you know, like, at least there's some skill.
- [35:06]
A
Yeah. And you talk. I mean, even sports gambling, it's one thing that it's become so popular, but it's also down to the point where you can gamble on the yardage and the player on the next play. Yeah.
- [35:18]
B
Like, who's gonna catch the first pass,
- [35:20]
A
have an evolving bet, or who catches right the next pass or the coin toss. This isn't just betting this spread where you could probably actually have an edge. Right. You know, like, you could. I've done those big pools where you bet on the entire season and the winner does, like 54%, you know, like betting every game against a spread over the season, you, like win a league of 2,000 people by being at 55, 56% really hard. But that 5% edge maybe is real. Like poker. But, like, who's catching the next pass? Unless you have some inside information, you're just.
- [35:52]
B
Yeah. Or what. How long will the national anthem be in seconds? I mean, stuff like that. You're right. It's. It's frankly, like degenerate. Like, it's. And I don't even mean that like their degens. The people. I mean, it has degenerated down to like the most minuscule granular gambling. It's rough. I agree. I think it's a, you know, it is a symptom of, like, societal decline in some ways. Like, it is because people had more productive things to do if they felt like they could do something and get rewarded for it where the incentives were correct, then I believe incentives work. But it's the inflation, wealth inequality. These things are real and they've been getting worse. I think that pushes people towards those things. And if crypto broadly isn't the vehicle for that to manifest itself, the way it certainly was with meme coins and even NFTs to an extent, had a pretty. I mean, that was a pretty wild bubble in NFTs. Like. Right. That was a lot of like.
- [36:55]
A
Remember on Saturday Night Live, it was Bieber and Fallon and I don't have any.
- [37:00]
B
I don't have any problem if you want to own an nft. I actually think the generative stuff is pretty cool. But, like, I mean, $100,000 for an entry on the blockchain that is a picture of a monkey. Like, that's crazy, right?
- [37:12]
A
Like, and not as crazy as 2 million bucks for a plot of land next to Snoop's house in the sandbox or whatever.
- [37:20]
B
Oh, yeah, the digital. Yeah, the sandbox.
- [37:23]
A
I was there at the time. I was pretty critical of the whole NFT craze. Not that I didn't believe it in it technologically. And like you said, cool, great. Some of it is art. But I kept saying they can just create another continent over there to the right of your land and sell more of it. People are like, it's land in the Metaverse. It's not land.
- [37:47]
B
I mean, even Meta changed their whole name, basically because of Metaverse. It was crazy. I mean, again, these things still could happen. Actually, I'm an optimist, right. Maybe NFTs find a whole second wave and some of the speculative nature declines and there's more utility or reason is decided to the market ascribes to it. Or same thing with Metaverse. It's possible. I mean, look at Enterprise Blockchain. It's on like, its fifth resurrection now with like, some of these federated networks where the nodes are run by like, big banks and stuff. I'm not trying to cast any specific shade at the moment, but that stuff has been dead so many times. And now even tokenization. There was a whole thing about tokenization in 17, 18 and 19. And remember, there's the Gaspin St. Regis. A tiny portion of its shares were tokenized. We used to joke that there were more token issuance platforms at the time than token issuances. But then here again, it is back and kind of back with a. An avengance at this point. And so, like, they could come back, you know, and I don't want. I certainly wouldn't advise people to hold their breath for some of those. For like, you know, Decentraland and the Sandbox and blockchain gaming and. Was that Axie Infinity? I mean, you know, nft, like, I'm not saying that they're likely necessarily, but
- [39:03]
A
so much promise that people were willing to go wildly out of their way to earn money playing a game. And we just never really.
- [39:11]
B
I just think we've got it. The industry's got to get back to telling the core stories better. The core stories, right. That it's about self sovereignty and efficiency and transparency and transacting and atomic settlement and access to the unbanked or the underbanked and the movement of money and dollars in a safe and sovereign way and stuff like that. That is verifiably true. Right. And those are big enough. We don't also have to, I don't know, I say we but like there is really no we. I mean that's one of the beauties of open blockchains is anyone can build anything. So I, you know, I don't know who I'm kind of yelling into the void on this but like that's where I, I've been trying to focus more is when we take bitcoin as the primary example is telling that fundamental story better. Right. And saying it's not, it isn't about number go up, it will number will go up if we're right about the fundamental features. Like I think those are bullish for bitcoin its features. Right. But like the number go up should be subsequent to your understanding of the fundamental features.
- [40:14]
A
Yeah. So all that said, I don't want to be all doomy and gloomy and about the things that failed in the past. What are you excited about?
- [40:22]
B
Super excited about AI on a number of fronts including the overlap with crypto. And I know that when you say that to crypto people they mostly think of market decentralized marketplaces for compute and things like Bittensor and whatnot, which I think are interesting. I think the agents are going to use crypto a lot. And I know this because I'm myself personally building an agent that uses crypto. And I saw there was a bank Policy Institute, the other bpi, the good bpi, the Bitcoin Policy Institute, they put out a great report recently where they did a big empirical study of something like 9,000 queries across all the frontier models. And they found that pretty overwhelmingly the autonomous AI it chooses stablecoins for payments, but bitcoin for savings explicitly. And I think it is if you have a view that agents are going to be acting autonomously, running their own businesses or whatever, I think they're going to choose something to own that is self sovereign. I think it's pretty easy case to make to a logical machine that why would you store your money in something that can be taken and they are digital. So I think they're going to use Bitcoin and they're going to store in bitcoin. Think the fundamental case is incredibly strong for a non sovereign decentralized self custodial. Immutable store of wealth and it is getting stronger.
- [41:46]
A
Do you think that agents will participate in the Bitcoin economy and not just send stablecoins?
- [41:51]
B
I think that they will, yes. I think they will store value in Bitcoin or ethanol probably too, but something that's truly digitally native. And in this study they picked Bitcoin overwhelmingly. And I think that makes a lot of sense. And I think by the way, people are, they're going to learn from the robots a bit here too. Like, I mean, when you go in with a fresh Claude account, you ask it, what's the most secure digital money to store in your wealth? It puts Bitcoin very high on the list. So like, I think through the AI's interaction with crypto, humans themselves will also sort of relearn why Bitcoin is useful. And that's a little bit more of a philosophical argument about the interaction between AI and, and Bitcoin. But I think AGENC AI is going to scale and demand for digital native money and infrastructure will grow with it. And if you think about it too, think just more broadly about blockchains. It's not just they want to pay, it's not just about paying. If you're going to have all these assets of different types, increasingly traditional and institutional assets, the agents need data structures they can operate on. Open, permissionless blockchains are a lot better than forcing it to look through a SQL database with an API key or something, right? Like it is inherent that they are going to want to operate on open permissionless networks that look and feel like the Internet to them. And that's what public blockchains are. And so I also think there'll be an interesting sort of like wave or theme or moment in crypto where people start specifically releasing either new L1s or L2s that are designed to be easy for agents to operate on. And you're starting to see a little bit of that. But for example, people don't realize, like the structure in Ethereum is actually not that good because all the data isn't actually on the blockchain. Like you have to go and query the smart contract to have it spit out the data for a lot of events. Other L1s that say, have like enshrined applications, the data is sitting there ready on the blockchain. And so there are data companies, of course, who help serve indexed and parsed Ethereum data and Solana data and whatever. But you could imagine AIs might choose something different solely because of the structure of the data. On the blockchain. But again, if stocks are on the blockchain, if assets are on the blockchain, fixed income, gold, commodities, the native assets like bitcoin and ether and stuff, the agents can access that they can't open a bank account. Right. It's not just they need. Everyone's so focused on that they're going to use stablecoins for payment. Sure. They almost certainly will because it's tech that they can access. Right. But that tech also has all the other stuff on it. Right. So I think that's very clear. And then just at the highest level, back to Bitcoin briefly. And AI, like, you're in this age of digital abundance. Right. We've got slop money being inflated forever. You got slop debt that's only going up. You've got slop content from AIs, generate 10 million pictures in like a minute. Right. Like. Like the digital world and the physical world are increasingly overrun with slop and abundance right now. We can have one cursor and Claude Code do what 10 software developers had in that world of digital abundance. Something that has a good counterweight to something that has verifiable digital scarcity. And I think almost as two literary themes in society, you'll see both grow together.
- [45:19]
A
Maybe the digital gold narrative is more powerful in an agentic economy. I think it is narrative for us as humans. Like, maybe we missed the forest of the trees there, or we just. It wasn't there yet. But it's really interesting when you circle back to the way we talked about the properties of Bitcoin as a digital gold rather than the price. That should be, as you said, glaringly obvious in this world of slop.
- [45:41]
B
That's right. I think it is. I think it's becoming more obvious. And I think people are going to look for chatter and discussion about, like, maybe IRL meetups will become bigger because we're all so overwhelmed with the AI slop in social media. Yeah. And I think they are. Well, I think similarly, like, people are gonna choose this. I mean, there's even this phone, I forget what it was called that my wife found. That's like an old landline phone, but, like new like that you buy now. It's like, for like millennials who are like, nostalgic and like, apparently it's doing really well because people are like, you know what? I don't need all this stuff all the time on these things. You know, like, I just want to call my friend. I think Bitcoin could honestly benefit from some of that as well. The simplicity of it is so delightful when you compare to the social. I mean X dude is like, it's literally all AI written slop now. It's pretty annoying.
- [46:30]
A
Not a single human commenting on anything.
- [46:33]
B
It's bad. And I'm not saying that bitcoin scarcity is the solution to social media bloat,
- [46:38]
A
but like, because then we'd be on Nostr and nobody.
- [46:40]
B
Yeah, exactly. And I, and I like nostr, but I am on X. But I think, yes, just sort of as broad trend, that counterweight is significant. It is a significant counterweight to the never ending abundance. But it's also, I think will be recognized as one.
- [46:57]
A
Can you imagine the price of Bitcoin if agents start, to your point, behave like humans more than just, oh, I need to pay for something, but actually start managing portfolios and trying to save their wealth and you know, do all the things that investors do.
- [47:13]
B
Yeah, I think they will.
- [47:15]
A
A million seems like a very conservative estimate in a world like that.
- [47:18]
B
I mean they would. We just mined the 20 millionth Bitcoin, right? Like we've only got, we got less than a million coins left. The thing is scarce, if any, meaningful. I mean, that's also been the story, by the way, of all the bull runs that we've had. It's like waves of adoption. It's like new interest, new money, new people come in. And that's what happens when you're in an innovative early stage thing. Right? It's very intention driven. And so, yeah, if agents represent a new wave of adopters of bitcoin, like that's an extremely bullish catalyst and I think you're starting to see early indications.
- [47:47]
A
Okay, well maybe that's it. Maybe it's not the human retail, it's the agentic retail that comes in and starts.
- [47:55]
B
The other thing is society is just like so not ready for the AI stuff. You saw probably there was a study that said that like only 0.1% of the world is using Pro AI tools. Like when I talk about some of the stuff that like me and my team are building here at Galaxy or that I'm building personally with AI, like the average person is nowhere close to doing that. The vast majority are using the free ones, if any at all. But even take it a step further, imagine like you have a human, let's say, Scott, you get one of the first humanoid robots. And you know, of course, probably one of the first things we have it do is mostly be a house made to like clean up clothes and fold laundry. Right. But eventually you send it out front to get your mail, your neighbor sees it and they're like, what in the world is that? And then you're like, well can you go down the street to Target and get some paper towels? And then it walks into Target and like is it allowed to enter a retail store and buy something like people would call 91 1? Basically like, they're not. We are, we have not prepared ourselves for what an agent. And of course like humanoid is an easier heuristic but like virtual agents as well, we have not. They don't have legal personhood. There's no laws and rules. Like nobody has any idea. And it's really not even on anyone's agend agendas. As far as I can tell, the only political stuff so far is like a very small, far left wing effort to just oppose data centers. But like they haven't started thinking through like the actual implications of agentic future. And so that has to come too to be clear. Like, and it's probably going to be big pushback politically and they're going to want to tax AI and all that type of stuff and it's going to be a fascinating story of the next five to ten years. I mean think about all the jobs that could be displaced and those people are voters and they're going to pressure so you could see universal basic income or other limitations. And all of this stuff is, can
- [49:37]
A
I send my robot in to vote for me?
- [49:39]
B
Yeah, right, exactly. Well, if, let's say that we get like legal, you know, Daos can kind of have legal personhood in certain jurisdictions like Delaware and Wyoming. Like what if agents get legal personhood? Can then they, can they then sue and be sued? Can they, can they vote? Like, I mean, I don't. They're not a natural person. I don't know. There's a lot of stuff to figure out there. And that shows you how early we are because I mean it's like two years ago Will Smith eating a spaghetti looked terrible. The video now it's photorealistic. Just open like agents are now so many people are building agents like just at home. That's like a phenomenon of the last two and a half months. Like openclock came out like in January. Right.
- [50:21]
A
We're doing it over here, you know.
- [50:22]
B
Right.
- [50:23]
A
To do it myself. I have somebody who actually has a brain.
- [50:26]
B
Yeah. But it's also not even that hard.
- [50:29]
A
I'm open clawing my face off over here.
- [50:31]
B
Right, me too.
- [50:34]
A
Amazing.
- [50:35]
B
We're just really early in that story.
- [50:37]
A
But it Feels good.
- [50:38]
B
It's pretty fun. I mean, to be clear, there's a totally true joke about people spending a lot of money on new computers and stuff and then only getting like $40 of optimizations out of it. And most of the people I know mostly are just sort of tinkering with it. It. Which. But that's sort of the first stage, you know, just like fooling around with it, seeing what it can do.
- [50:55]
A
Yeah. I mean, like the notion that you were just gonna, like, which some people have been dumb enough to do, but just like throw everything you got at it and assume it's operating at its best form. It's just stupidity. Yeah. Well, you should be playing with it for months before you try being serious. And that's what any pragmatic person is going to do.
- [51:13]
B
And it's super early, right? Like, it's just so early. So. So, yeah, it's not ready for plenty of stuff. I've seen people say, like, oh, I'm going to have a trade for me and get all that, make all this money. And it's like, I don't know if it's probably. That's not a good idea.
- [51:25]
A
Oh, go great for them. Highly confident.
- [51:29]
B
Yeah, but that's the.
- [51:31]
A
I think, before I let you go.
- [51:33]
B
What's that?
- [51:34]
A
Is there anything else I might have missed before I let you go that you were, like, dying to talk about?
- [51:38]
B
I mean, this is what I've been. This is sort of this broad conversation about the institutions building while simultaneously opposing and how crypto might be boring now and. And running through all the bad things that caused us to be at 70k and not 150k. That's sort of what I've been coalescing around. We talked about clarity as well and stuff like that, so I think we covered it. I do think. I mean, everyone knows AI is a huge story in humanity. I don't think enough people quite yet are understanding the inevitable overlap between AI and crypto. They're counterbalancing forces. So I think that's going to be very interesting and we'll see more from it.
- [52:19]
A
Well, if our AI overlords are listening. Alex and I are very friendly.
- [52:24]
B
Big fans of you guys. Thank you.
- [52:26]
A
Totally fans. We'll vote for you in the next election. Happily. Plug us in.
- [52:33]
B
Yes, exactly.
- [52:34]
A
Goo pods in the Matrix. We're fine.
- [52:38]
B
All right, man.
- [52:39]
A
That was an awesome conversation. I'm glad I got to finally have you on. I deeply appreciate it. Where can everybody give you a follow after show the. For this? Yeah.
- [52:46]
B
Thanks, Scott, for having me follow me on X. I'm at Intangible Coins and read our content. Galaxy. Com research.
- [52:54]
A
Awesome, man. It's been a pleasure. Thank you.
- [53:02]
B
That's dope.