WBD240 Audio Transcription

What Now for Bitcoin? With Nic Carter, Tuur Demeester, Robert Breedlove & Alex Leishman

Interview date: Tuesday 30th June 2020

Note: the following is a transcription of my interview with Nic Carter, Tuur Demeester, Robert Breedlove and Alex Leishman. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

This interview is from a panel I recently hosted for Real Vision’s The Crypto Gathering event, with Nic Carter, Tuur Demeester, Robert Breedlove & Alex Leishman. We discuss the current state of the economy, Bitcoin as a peaceful protest and what comes next.

“Nobody really knows what the endgame is, but we are definitely seeing it come apart at the seams.”

— Robert Breedlove

Interview Transcription

Peter McCormack: All right, we're live. Hello everyone! An amazing panel we've got here. We're joined by Nic Carter from Castle Island Ventures, someone I've interviewed a few times. We've got Tuur Demeester, also has been on my show a bunch of times. Robert Breedlove, who I've recently met, interviewed for the first time recently and Alex, we had dinner in San Francisco recently, but I've never actually interviewed you.

Alex Leishman: That's right.

Peter McCormack: When Real Vision approached me about the sessions to do, I came up with two ideas. One I did yesterday and then, based on this panel, I liked the idea of what now for Bitcoin. One of the things I've talked about quite regularly to people, especially as I travel quite a lot with my podcast, I very rarely meet anyone who's not heard of Bitcoin. We've hit a mass awareness stage. Whenever I meet somebody randomly, it can be in an airport or a bar, whatever and they say, "What do you do?" I say, "I have a Bitcoin podcast," I never get the question, "Oh, what's Bitcoin."

It never happens, but I do get a range of answers and some people skeptical, some people inquisitive. We've reached mass awareness, everyone has heard of Bitcoin now. I'm interested in what's next? I don't really want to use the term mass adoption because I think that's a loaded point, but I do want to see more adoption and more use cases. I want to work through that today. I've got a number of questions and I will direct them to each of you. I think I'll probably just start with Tuur because you're in the top left of my screen.

Tuur, a starting point for me is, I think there is a big gulf between someone like any of us who has a very deep understanding of Bitcoin and then maybe one of these people I randomly meet who has heard of Bitcoin, but they don't really understand it. There's a huge gulf there and I'm starting personally to think that perhaps in some ways Bitcoin has a reputation problem. Not even that it's just a negative reputation, but it has a problem in trying to explain to people what it is because it is so complicated. What are your thoughts on this?

Tuur Demeester: Yeah, of course there is a bit of a reputation problem and also, I think Bitcoin has been misunderstood. Bitcoin has stayed itself. It hasn't really changed in a long time, since inception basically, but I think the narratives around it and Nic has actually done some good work around that, the narratives around it have changed. Early on, Bitcoin was often promoted as this kind of eCash, some kind of currency to spend online. I think to some extent that was misguided. I think Bitcoin is much more of a digital gold.

Once you start looking at it that way, that the scarcity, it is censorship resistance, but that's really the highlights, then that's some of the speculative interest change and there's less short-term interests. I think that that's been an important part. Then in the short term, why hasn't there been more interest? I think the short answer is just that the price has been pretty much flat for two and a half years, but it has been very volatile also. That scares retail people.

Also, if you are a hedge fund and you are momentum driven, you might get scared as well because you see these 50% crashes happen. But yeah, I think that the appeal going forward is, I'm sure we'll talk about, but just massive. It's becoming more and more interesting as we see more and more money creation all around the world. It really shows Bitcoin is shining as a scarce asset and a liquid asset. That's really important and of course, censorship resistance is now more than ever going to be interesting for people to have.

Peter McCormack: Yeah, I think the change in narratives is something that PlanB actually highlighted within his model that we've all been looking at recently. Nic, Tuur has mentioned you there so I'll let you jump in next. Any thoughts on Bitcoin's reputation?

Nic Carter: Yeah, it's interesting. Tuur said it, Bitcoin is largely static and the world changes around it. The way that people perceive Bitcoin has changed. Initially, it wasn't really suitable for much aside from spending on alpaca socks and stuff and as time has gone on, its gained credibility, and it really has potentially staked out a claim as this new synthetic commodity, which people call digital gold for short. But yeah, it's difficult to define. I think Bitcoin just chugs along and it has certain qualities that make it an asset, which people really desire.

They try and get a piece of, but it resists classification. I think trying to narrow it down too much is an exercise and frustration. There are definitely people that have specific opinions of what it should be and how it should be used and those people tend to get frustrated and desert the project for alternatives. I think the important thing is staying consistent with the original values, the constitutional values that were embedded in it at inception and resisting political discretion, resisting lobbying arbitrary changes, which we see all over the place in the public blockchain space.

As long as it can do that and stay true to its supply schedule, keep its core properties intact, I think over time it's just going to undertake and continue to carry out this process of monetization, which it has been doing for a full decade now. It's just a function of staying static as the world gets more chaotic around it.

Peter McCormack: How about you Alex? What are your thoughts on this?

Alex Leishman: Yeah, I really agree with Nic. I think that Bitcoin means a lot of different things to a lot of different people. Everyone knows about it and this year, I think, especially with the Fed's actions and the increasing political instability especially in the United States, Bitcoin is this weirdly stable thing that's just been chugging along for the last 10 years, one block at a time. People have been watching it for the last few years, are aware of it and have expected it to blow up and it hasn't.

Every block that gets added to the chain becomes one more sign that this thing isn't going away. I think as time goes on and as Bitcoin continues to live, more and more people are going to continue to take the plunge and actually allocate some of their assets to it. With our clients, we see people buying for a lot of different reasons, but the primary one right now has been because of all of the Fed money printing. But a few years ago, people were buying it for other reasons.

Peter McCormack: Robert yourself, the man who writes blogs, which could be books, how do you feel about Bitcoin's reputation?

Robert Breedlove: I would agree with everything that's been said. I think the concept of Bitcoin actually supersedes money in a lot of ways, but we could zero in on just the concept of money and say that people don't understand that in general. I think that's very connected to the curriculum that we've all come up under. You know that Austrian economics is not part of state run curriculum, Bitcoin really is a first principle's disruption to money. Money needs to do five things, is to be durable, divisible, portable, recognizable and scarce.

Not many people understand that and because Bitcoin is superior across all five properties, it's actually disruptive to gold. We're talking about disrupting a technology that's been with us for 5,000 years. It's a big, not to be cliché, but a really major paradigm shift. I agree that because it's agnostic to politics, the more chaos that's going on in the world, the more money is being printed, the neutral sediment layer will capture all of that value.

Clearly Bitcoin's far away the leader in that space. From just a reputational standpoint, Bitcoin's a peaceful protest wrapped in a get rich quick scheme, basically. The more people that are marginalized by the state, I think find their way into Bitcoin. That's just what's feeding its growth in the medium and long-term.

Peter McCormack: The reason I asked that is that as you know, I've got a show and I've pretty much interviewed everyone, and I'm trying to expand now into... I'm getting involved in conversations with people who aren't in the world. I'm almost avoiding mentioning it's a Bitcoin show because I'm fearful of the reactions that it brings out in people. One of the most interesting shows I heard recently, did you all hear Vijay Boyapati on Tom Woods?

The really interesting start of that point is Tom Woods being a libertarian, you would think naturally loves Bitcoin and he's covered Bitcoin, but he said, "You just lose me. Peer-to-peet what? Nodes, what? You just lose me." But what was really good is he asked Vijay to explain Bitcoin. It's actually something when I try and do myself, I really struggle to just instantly say how do you actually explain Bitcoin? There is simple ways, but we often get lost in it. I'll start with you Robert, because we talked about this over Telegram over the last few days. How would you explain what Bitcoin is?

Robert Breedlove: I always tell people so to speak, that it takes you down the rabbit hole, is that question, what is money? I think you really have to pursue that question assiduously to get a good answer. I think you land on that Austrian economic bedrock of why gold became money. People assign this a lot of characteristics. I narrow it down to five, which makes sense in my mind that I've already laid out. But I think once you answer that question and you understand why gold was selected on the free market, then that gives you the lens through which to evaluate Bitcoin properly.

Not to say to that that captures all of what Bitcoin is because it also adds a lot of other things, like it gives us a mechanism for monetizing surplus energy, it's the most securable money in history and it's more or less theft proof if properly secured. When you have government business models that are premise on theft via inflation and taxation, it's disruptive to that business model. I think this is a major force shifting us away from the monopolistic business practices in the market for money that we see with government, pushing us back toward a free market paradigm in the world.

Peter McCormack: I think you made an interesting point when you mentioned that we aren't taught Austrian economics at school and we don't really learn money. Money is like a language, it's like breathing and it's just something we naturally learn as a child, and we don't tend to really think about it. But perhaps maybe if you're living in Lebanon right now, you are thinking about it or Zimbabwe right now, you are thinking about it and you have to in Argentina.

Nic, how important do you think that is? As we see the natural flight to the dollar, we're going to see more currency collapses around the world, do you think it's going to be a more natural lead into Bitcoin for people?

Nic Carter: I always find it funny that people challenge Bitcoiners to point out examples of fiat currencies failing when you just have to look at the front page of the Financial Times to find recent examples of currency collapse. It's literally happening in Lebanon right now, Argentina just defaulted for the ninth time, places like Turkey and Iran are experiencing high inflation and Venezuela and Zimbabwe are in a complete state of currency collapse.

You don't have to look far and crucially you don't just have to look for the most desperate nations with terrible governance, you have to look at middle income nations, which because of the capriciousness of the state and mismanagement, their currencies collapse and the savings of regular middle-class folks get confiscated, savings have accumulated over decades. Lebanon is not a poor nation, it is firmly in the middle of the pack. Now regular folks in Lebanon have their savings completely obliterated because of the currency failure.

We're not talking about hypotheticals here, we're talking about something that affects tens of millions of people around the world. I would say having an unreliable currency is the default globally. Having a reliable currency, like the dollar, is the exception. Even the dollar itself is inflationary as we know and most people globally don't really have access to the dollar. When you're looking at it from the US perspective or from a British, or a Western European perspective, you're not experiencing the typical monetary state of affairs for human being on planet earth.

I think that's why you have a rejection of these chaos hedges or these inflation hedges like Bitcoin in the West. A lot of the time people don't understand. Sometimes you see a bit of an Anglo centrism in this rejection of Bitcoin. Why would people be afraid of their government? Why would they fear currency collapse? Well there's plenty of good reasons if you're willing to look abroad and that's not to say it can't happen in the US either. We're living in the twilight waning days of Pax Americana of the US empire. We've had a very peaceful a hundred years here.

That's not the historical norm. A fiat currency regime with effectively a single global reserve currency, that is not the historical norm by any means. For the most part, we've had gold as the reserve currency. We did not have a currency that was controlled by the state. This US empire, which has been a sprawling power since 1940, it certainly looks to be in decline. I don't think we're going to have the benefit of the stability in perpetuity. It's only reasonable to look to alternatives. I think Bitcoin is a pretty valid one.

Peter McCormack: When I was in Argentina and I was talking about Bitcoin to people there, it was actually a very easy conversation to have as they'd been through the Corralito, they understood that currency can collapse, and it can be seized by the government. You four are obviously based in the States.

Tuur, you are originally from Belgium, I'm from the UK, I really struggle despite the fact that we can see this happening around the world, in Lebanon, in Zimbabwe right now, struggled to explain to people the risks themselves. Tuur, do you believe in first world countries, do you believe in places, most of Europe, the US, the UK, we all believe we're immune from a currency collapse?

Tuur Demeester: Yeah. I don't... You could call it hubris like, "Oh, we're the West and we're fine," which has been proven to not be enough. Germany was considered to be a strong economic power and they did have a currency, even in the 1910s and then they did have the currency collapse in 1920 with the hyperinflation and the same with France. Before the French revolution, people thought France is credit worthy. All European nations were lending it money, and its currency still collapsed.

But I think there's also a deficit, a real shortage of knowledge because even if I look at my own backyard, like Operation Goods was a currency devaluation right after the Second World War. Nobody knows this! It's like this is recent history. Britain had a devaluation of over 30% after the Second World War. These things are not uncommon at all, but financial history is just not part of our curriculum growing up.

It's just sad. It's sad that there's only a small percentage of the population and people subscribing to things like Real Vision that are actually sufficiently educated in how these things go. Yeah, I would definitely, definitely add that as a... But there is a blindness in the West that we just assume we're going to keep chugging along, just like we have the past 40 years.

Peter McCormack: I also think that not a lot of people really understand the impact of money printing. That's why we're going through, these very strange lock downs. I know in the UK, our government is printing hundreds of billions of dollars and the US has printed trillions of dollars. I don't think people really understand the impact or what that really means. Are you finding similar Alex, when you talk to people about this, outside of our world?

Alex Leishman: Yeah, I would actually say that in my experience, the wealthiest people out there actually do understand this quite well, and they see what's happening. They've had the luxury of a lot of education and seeing history. People ask me about Executive Order 6102 and they want to know, "If I keep my Bitcoin in an institution, will the government be able to take it?" Because people are starting to see some of the writing on the wall. They're starting to get concerned, especially in the upper classes.

I think it's really more the mainstream people who haven't had the luxury of studying financial history and all of that stuff, that don't really see what's going on and they're angry, but they don't really know exactly how to frame that. Most of my family, they've never lived in a world where the US dollar wasn't as this thing that you just can rely on.

I think even most companies and most people in the professional world have just lived in a world where the dollar is king, the dollar will always be this unit of account, it's stable, it's there and they don't even want to start to think about questioning that. It's uncomfortable and I do think that there's a long way to go, but coming back to the original question of what resonates with people?

What is the single biggest thing about Bitcoin that could resonate with somebody who doesn't spend all day thinking about monetary economics? In my experience, it's been scarcity. There's only ever going to be 21 million of these things and people get that. Because now the human instinct goes, "Okay, well, I want something just in case." I've seen that to be the thing that resonates most with people who aren't deep in this world, is explaining that there's only ever going to be this amount and if you want any, you should get some now.

Peter McCormack: Tuur?

Tuur Demeester: Just very briefly as a way to visualize it because people talk sometimes about the Bitcoin Island and you claim your little stake on that Island. If you look at all urbanized land in the world, I think it's 3.6 million square kilometers and you divide that by 21 million, you end up with 41 acres. Just as a way to visualize it, it's like only one Bitcoin is the equivalent of only 41 acres of urbanized land somewhere in the world.

Peter McCormack: Wow, I didn't know that. I'll be stealing that one! Robert, so it's a big year for Bitcoin potentially and I think in our heads, we're seeing this massive increase in the deficits in most countries and we're seeing this massive increase in government spending, at the same time facing economic problems, potential recessions, even depressions.

It's a big year for Bitcoin, but there's never really consensus on what are the most important trends for Bitcoin. I think that's where some battles come, because I think they conflict with each other. But do you want to talk about what you see as the biggest trends for this year? I'll run this through everyone and I'll keep a note here and then we can work through them.

Robert Breedlove: Well, I think we we're just touching on one, is the rate of fiat currency production worldwide is clearly an accelerant for Bitcoin. In the US, M2 production I think has increased 12X in the past six months. We've basically expanded the M2 supply $3 trillion in the past four months. The last $3 trillion before that took four years and we're accelerating. I think it's important to remember that the entire economic order is basically a leverage-based system, it requires steadily more leverage to remain sustainable. It's really hard to contract the balance sheet for central banks.

I really think if you look at the 1980 graph, M2 is full on parabolic, where the parabolic possibly blow off top of some kind here. To me, that just indicates that we're towards the end of the game. No one really knows what the end game is, but we're definitely seeing it come apart of the seams. Like the Feds buying everything, it's become essentially a glorified hedge fund, fiscal and monetary policies have been pushed to the furthest reaches of its exotic forms.

There's clearly social upheaval as a result. All of these things that we know empirically happen when a currency breaks down, like trust, is eliminated, or trust is compromised and society starts to come apart. I think that's a major trend. Another one that is not talked about a lot, because Bitcoin provides a mechanism for converting underused or unused energy sources directly into a globally transactable commodity, there's going to be huge demand for that from over-leveraged energy producers and frankly, anyone that has access to these types of resources.

We're talking to one executive of a public traded utility in West Texas and I love the way he put this. He said the entire North American energy infrastructure energy grid was designed for a single hot afternoon in August. Basically, saying there's just tremendous amounts of slack and potential for excess energy production in the system. Something like their wind farms, sometimes peak production is at night, but peak demand is in the day and a lot of that energy is just getting curtailed. It's not getting used.

Now just by co-locating Bitcoin mining for these wind farms, you can directly increase the revenue, say 4% to 7% at basically no cost to them. Then for the Bitcoin miner, they get access to wholesale energy markets. It's a real win-win that I think it's going to contribute a lot of the demand. Again, I'm just focused on North America, but I'm sure this is the case worldwide, but that's going to be a big force to drive Bitcoin adoption.

Nic Carter: I can jump in here.

Peter McCormack: Yeah, I was just going to add another one you mentioned to me as well, is the gold disruption.

Nic Carter: The disruption in gold markets?

Peter McCormack: Yeah.

Nic Carter: Yeah, that was actually relevant to the point I was going to make. You have exogenous factors, like massive currency printing, which is most likely going to result in devaluation. That's external to Bitcoin, but that obviously affects the way that the world perceives Bitcoin. Then you have endogenous factors, so things that are contained to the Bitcoin markets or the kind of Bitcoin crypto financial infrastructure, which some of the folks on this panel are building or financing. 

That is something which I think is a little underappreciated, treating Bitcoin, not just as this base commodity, which like gold, sits in vaults, it doesn't do much. Bitcoin improves on that significantly in many dimensions and over several orders of magnitude. Gold is very difficult to audit, it's hard to prove to a third party that you own certain gold and indeed we've seen a massive scandal recently with all this counterfeit gold circulating global markets.

We've also seen this dislocation between the London and the New York gold markets, because it's hard to transport gold, it's expensive and they have different standards for what sorts of gold is suitable for each market. The gold itself is infungible. It sits in this little walled gardens and fundamentally that's because gold is costly to transmit and it's hard to verify some inbound gold. You have to re-verify if it's exiting a trusted supply chain. Now with Bitcoin, that's not really a problem.

Not only can I easily prove to you that I own some Bitcoin, you can prove to me cryptographically, I can also verify and audit the entire supply of all the Bitcoin that exists in the entire world. Now that is something radically different compared to gold. With gold, we just have these vague estimates, maybe we think there's $9 trillion worth of gold circulating. With Bitcoin, we can verify down to the last satoshi how many Bitcoins exist. This matters I think because now we have entities which are custodial entities, which are taking advantage of these properties.

They're starting to prove to depositors that they have the Bitcoin they claim they own. It's also easier as a depositor to withdraw your coins, to take final settlement. That is what holds some of these custodial entities accountable. We have them, we have custodians, banks, exchanges and brokers in Bitcoin. I'm sure Alex can chime in here, but it's also easier as an individual to hold those trusted middlemen accountable to withdraw your coins from them or demand that they prove their solvency on a constant basis. That's an incremental shift, I think is coming to treat Bitcoin as this high power collateral, where it really shines in that context, relative to something like gold.

Alex Leishman: Just to jump back in and add one specific example.

Peter McCormack: I was going to say Alex. If you are going to jump in there because Nic referred to your business, not everyone listening will know that you run River Financial and what that is. Perhaps just explain what River Financial is, and also just, I think what Nic has alluded to there is that whole proof of reserves. Is this something you're doing or considering?

Alex Leishman: Yeah, at River Financial, we service a lot of individual clients. People come to us to buy Bitcoin and we provide Bitcoin financial services to people all over the United States. I have a behind the scenes view of what's happening in the markets. For me, the most interesting trend here is the individual and people who you never would have thought making allocations into Bitcoin. I think that that trend is going to continue and accelerate over the coming years.

Everyone from 65-year-old women in the Midwest, putting a large chunk of their savings into Bitcoin, to the sophisticated East Coast investor and making really large allocations, we're seeing that all across the board and I think that's going to continue. That's a very interesting story that I think is starting to be told, but is just starting to materialize. Then on the proof of reserves thing, in my experience, what a lot of people find very intriguing about Bitcoin is that even though it's this very intimidating thing that they're just...

For people new to Bitcoin, it's very intimidating, but they're interested in getting started and they've been waiting for somebody who can make it easy for them. Then they learn, "Oh, I can store this thing myself if I really want to. If I don't want to trust this company to hold my Bitcoin for me, I can hold it myself or I can have some sort of proof that this company has my Bitcoin." They are starting to see that there's this world that could exist where there's a lot more guarantees around their money, that they could work with the financial institution that they're choosing to trust but they don't have to trust them. We see a lot of interest there.

We see interest in not necessarily self custodying today from our clients, we have our sophisticated clients who do self-custody, but then the clients who are new to Bitcoin and really like that they can self-custody at some point, once they get more comfortable with this stuff. Then with proof of reserves, this is something that we are very interested in providing someday. There's a lot of operational challenges with proof of reserves. There's a lot of pros and cons, and I'd be happy to talk about those. But yeah, but being able to prove to somebody just cryptographically that you have their assets under management is very interesting to people.

Peter McCormack: Tuur, before I start diving into this, is there anything with regards to trends this year that we've not mentioned that you think may be an important trend over the next say 12 months?

Tuur Demeester: Yeah, sure. But as a preface, I want to say for anybody listening who's new to Bitcoin, it's totally fine to not be aware of any of the trends that are going on. Bitcoin is Bitcoin. It has been the same for 10 years and ultimately, what you can do with Bitcoin is a self-directed insurance policy. You can buy a little bit and that's going to ensure basically your entire asset portfolio against very particular risks. But that being said, I see as a trend, based on what Alex is saying, and I agree with that, the auditability, but multisig storage, the idea that you can have multiple parties signing together to then make a transaction happen is really, really appealing.

Also, if you're thinking about inheritance strategies and things like that, but it's not theoretically, you can really build a wallet that is stored on multiple continents. That's where it's going to go, is that ultimately... And this is basically the new offshore banking, that's really where we're heading to. I think that's a major trend and we're seeing significant adoption of this multisig technology so I haven't heard that.

Derivatives markets are exploding, which I think is an important part of the institutionalization of Bitcoin, because it means that people who want, or institutions who want to get involved can get very sophisticated exposure, they can choose what type of exposure they get to these assets because for example, if you just hold Bitcoin, you're facing that volatility and so there's ways to deal with that. Very conservative companies who may want to get involved in the Bitcoin space, but don't want the volatility, well, they can use features and options to hedge themselves.

Think about utility companies or mining companies or energy companies that want to get involved, they can, similar to how airlines when they get involved, in a way they have to be exposed to the oil market so they can buy oil, but then be hedged against the volatility. Anyway, I think derivatives are an important trend. Then what we'll also start seeing in 2020, 2021, is asset issuance on top of the Bitcoin network. We'll see Bitcoin come into its own as more of an ecosystem as almost like a financial internet. 

The idea that for issuing a new asset that you need a new token, that's going to go away. You're going to be able to do that within the Bitcoin ecosystem. These ICOs are going to basically become just securities issuances in the same secure environment. I'm talking about the Liquid side chain and there may be some other things in the works, but I think that's the contender for becoming the main platform where assets will be issued.

Peter McCormack: Nic, I'm going to point the next question at you. I don't know why I'm picking you, but well, I think I do. But one of the biggest trends here, which Robert mentioned is that Bitcoin is a great hedge, hopefully against a lot of the government printing at the moment. I saw it on Twitter today, it's essentially your chaos insurance. There is an imperative right now for potentially a lot of people to consider Bitcoin, or there's going to become an imperative over the next 12 months where maybe there's going to be an urgency around people coming to Bitcoin and perhaps with that, there's going to have to be an acceptance.

Do you think there's going to have to be acceptance that we might have to compromise some of our principles perhaps around custody, perhaps around privacy, perhaps about people operating those because some people are just going to want to get exposure into Bitcoin and maybe won't have the time to become fully hardcore Bitcoiners who operate Tor and operate a node?

Nic Carter: Yeah, I don't think people do have those lists of requirements for being like dyed in the wool card-carrying Bitcoiner. I think that's frankly irrelevant for most people that have exposure to Bitcoin. There's a lot of ways to engage with the asset in a fully concerted way and a collaborative custody or you can take full custody and run your own node. It's not going to be suitable for everybody to have the most trustless, trust minimized experience where you're broadcasting your own transactions.

The important thing is that option exists for sure. If the network becomes too difficult to run and too much data is being pushed to the network, and it's basically impossible to run a node as a normal individual, then there's a failure that's occurred there. But as long as that optionality exists, I think it's absolutely fine for a certain set of people to engage with the network in a fully custodian manner even through the lens of financial products, true intermediation, that's fine. In fact, that's how probably a good fraction of the world will want to engage with the asset. It's unrealistic to expect everybody to run a node. As I said, I think the important thing is that the option remains to do that.

Peter McCormack: How do you feel about this Robert? Do you feel there's some conflicts there? Another one I would put out there is that there is desire to take down central banks with Bitcoin. That requires this horrible term, the mass adoption, it requires a lot more people to be exposed to Bitcoin, but in doing so, maybe we have to compromise some of our internal Bitcoin desires to have everybody transacting privately.

Robert Breedlove: Well to Nic's point, I think as long as the option is there, the ethos remains sound. Just to touch on... We talked about gold a little bit as being a driver for Bitcoin adoption. This story just broke yesterday, that Wuhan Kingold had actually borrowed like $3 billion US over the past five years, and then when their creditors went to liquidate the collateral, they found that a lot of the gold was just gilded copper basically. I think more stories like that are just going to push demand of the Bitcoin. Actually, I've said this before, I view the market cap for gold as a pent-up demand for Bitcoin.

Again, the free market tends to zero in on truth, and we know that Bitcoin is objectively better than gold. That's what makes it so interesting because gold, it's at the foundation of central banks. Even though our dollar is not necessarily redeemable for gold, the entire power structure is premised on controlling the gold supply. That's where you get, I guess, a bit more into the radical aspects of Bitcoin, like how it's disruptive to our concept of the nation state, how it's disruptive to central banking. I think it's just where people's money goes, their mind tends to follow.

I've found that speculators become holders over time, holders become crazy guys like us and it's interesting to see that aspect of the world playing out, because I think when you really start to look at history a little more deeply, and I think it was Nietzsche who said that, "He who has a why, can bear anyhow." It's unbelievable to think that the state might actually lose it's monopoly on money! It's never had that throughout all of history, but for the first time there's a technology that can possibly drive that change. It's a really interesting time to be alive.

Peter McCormack: Do we have any gold bugs here? Anyone here interested in gold? It's an interesting point on that...

Alex Leishman: Yeah, I like gold.

Nic Carter: Yeah, it's weird to me that Bitcoins are always considered or put forth as being opposed to gold. I think Bitcoin and gold are mutual technologies, people tend to have affection for both.

Peter McCormack: On a long enough timeframe, only one wins.

Nic Carter: No, I think people are always going to want physical gold. There's 5,000 years of accumulated cultural affinity for it, so I think they'll both exist.

Tuur Demeester: Maybe one way to think about it, going back to the definition of Bitcoin, my shortest definition that I've been able to come up with for Bitcoin is that it's a mechanism for converting energy into financial reliability. I agree with Robert, it is a more efficient mechanism than gold is. In gold, you'd dig it out of the ground and then you have to refine it and cast it into bars and then it goes into the vault and then you issue certificates. That's how it goes.

But still, gold is more financially reliable than the political system that we have because basically they've been trying to shortcut all that work and they've been saying like, "Oh, if we just put some bearded guys in a room they can produce this stability", which is what a lot of the alt coins have been arguing as well. It's like, "We don't need this cost prohibitive proof of work, we can do it in another way with voting and things like that." So that's how I look at it, is that yes, gold has value because it produces this stability and once you verify the gold, it's actually really scarce.

It's just a bit challenging to layer societal functions on top of it because the most efficient way is to put it in a vault. Like Fort Knox, I think, has not been audited since 1953. Nobody really knows what's in there. But whereas with Bitcoin, anyone who has a full node can verify any Bitcoin balance at any time. That's just incredible, from anywhere in the world! That is just unprecedented.

Alex Leishman: Yeah, I do want to add something and this might sound a little bit heretical, but Bitcoin and gold have very different guarantees. If you look at the history of cryptography and history of mathematics, it's very clear that there is no guarantee that the cryptography that we use in Bitcoin is not going to be broken someday. There are problems that we can't prove are hard, which is this underlying assumption in cryptography and the primitives that make up Bitcoin. 

If I had to bet money is, what's called ECDSA is the digital signature algorithm used in Bitcoin, when we're switching to another algorithm called Schnorr Signatures, but it's all based on this mathematical assumption that the elliptic curve discrete log problem is hard, it's irrelevant how the math works, but that's an assumption that it's protecting Bitcoin. If that assumption is ever broken through a mathematical breakthrough or a computational breakthrough, we're going to have some problems. 

Bitcoin's going to have to evolve and change, and there's an assumption there that it will be able to. Whereas with gold, there are physical realities and physical guarantees and chemical properties. The assumption there is that we're not going to find some cheap inexpensive way to convert other elements into gold. Each of these have different assumptions in their scarcity and in the security of the asset. I think it's important to keep that in mind when comparing these.

Peter McCormack: Bitcoin's also changed my thoughts and relationship with gold. I looked to buy some gold recently, and the first step was people made me very fearful of the fact that I might buy something that isn't real gold, but actually trying to source physical gold, not some representation of gold in a vault somewhere, because I hold my Bitcoin, I wanted to hold gold and actually trying to source physical gold itself is very difficult.

That was quite an interesting thing to go through. Okay, look, there's a lot of different things going on and I think different people are pulling in different directions based on what their priorities are, what they think the priorities are for their line of business. I'd be interested to hear from you all, and I'll start with you Tuur, what are the priorities or the things that you think you're going to be focused on with regards to Bitcoin?

Where do you think you'll be spending your time? I'll just throw one in myself. Personally, I'm trying to expand myself into having conversations with people who are discussing societal issues, global issues, monetary issues who maybe wouldn't normally talk about Bitcoin. That's where I'm going to be focused in time. How about yourself?

Tuur Demeester: Yeah, I'll be focusing basically more on just my personal life and family, and then the things that I'm working on is, I'm trying to project 5 or 10 years into the future, because I think things are just going to get ugly and it's frustrating to just look at everyday news and just see things deteriorate. In a way it is necessary, we have to wipe away all this debt and start from scratch. It'll have some silver linings, I think. I do want to take the opportunity, because I think it's rare to be able to talk to an audience where maybe a lot of people have not had Bitcoin exposure, just briefly to reiterate that, I think Bitcoin is a self-directed insurance policy.

There's a unique opportunity to get some exposure to that, and there's so much said about crypto. To me the essence is just buy a little bit, start with that and then make a plan about storage. How are you going to store it? Also, think ahead, are you going to then diversify that storage? Of course, first time you buy it, you store it in one place, but then I think it's a good idea to think about storing it in different places because there is no FDIC. It's not insured, if you lose your keys or if this company goes bust, it's over, it's game over, and you have to re-buy your Bitcoin.

Think about that. Also, make a plan for the price. Bitcoin rallies are nothing like you've ever seen. Prices go up 10X, 100X in short periods of time, and so you want to think beforehand, what are you going to do when that happens? Also, think about tax consequences. If you have a plan about selling, make sure you know the tax consequences of what you're doing because a lot of people got burned in 2017.

I know this maybe doesn't sound likely because Bitcoin has been moving sideways for two years, but I have a lot of conviction that we will see another massive rally that's going to set our hair on fire, and it's not about that, it's the insurance policies that's going to start paying out. That's all that it is once we see that 10 or a 100X rally. That's just something I wanted to get out there.

Peter McCormack: All right, I'll pass over to you next Nic.

Nic Carter: Yeah, as Tuur says, it's easy to look at the headlines and read some media and get very discouraged about the trajectory of Western civilization. It certainly looks like we're going to potentially have a stag-flationary decade, maybe a lost decade like Japan suffered in the '90s and potentially very chaotic decade characterized by a lot of political violence, which is already emerging. I try not to focus on that. I think the important thing is, we have a very small mandate here. This is a small little niche asset, but the important thing is to render it as sound and reliable as possible so that when the world needs it, it can be ready to serve.

Bitcoin is a young asset, it's still monetizing, it's unreliable in certain ways, the custody is difficult, it's challenging, but it's our job as Bitcoin enthusiasts, entrepreneurs, financiers and content producers to help safeguard its essential properties, such that it can be a truly apolitical neutral asset for the entire world, regardless of who they are, regardless of their political affiliation or race or anything like that. It's important that it is truly neutral and that it protects the individual against the government and against any kind of domineering financial power. That's what I see as my mandate, is helping finances, entrepreneurs that are building for that world.

Peter McCormack: Robert yourself, you sent me a few key points in preparation for this about what you think people should be spending time on, what about yourself?

Robert Breedlove: Well I really think collaborative custody is super interesting and we're going to move to this world where you will have different key quorums maybe for your business, for your personal, and then that spins directly into inheritance planning, which I think is another very important aspect of Bitcoin. I'm spending time for myself trying to figure that aspect out. Then two, on the investment side, really looking at financial services firms that most closely emulate the trust and minimization of the protocol.

Because again, everything's built on top of gold. Basically paper and institutional promises built on top of gold, that we now think a lot of that will collapse to the software. The mantra in Bitcoin is, don't trust, verify. We'll move away from this need for the consumer to trust TD Ameritrade or JP Morgan because they've been around for a hundred years to a model that they can just verify things cryptographically. I think the financial services firms that provide that function will actually out compete a lot of the legacy institutions in the space.

Then I spend a lot of time reading and writing about Bitcoin as well, I think that's very important. I think it is a complex domain, the analogy of six blind guys encountering an elephant, all describing it differently. That's how we are with Bitcoin, but it's important for, as Nic said it, it needs to be there when people need it. I think the educational aspect of that is informing them of what they're dealing with and informing people of the historical circumstances we're living in.

It's very easy when we're living through it to not understand how significant of an era we're in or how quickly things are changing. But often in retrospect, I forget who it was said that, "There's decades where nothing happens and then years where decades happen." It feels like we might be going into one of those times, and I think Bitcoin is a fulcrum to a lot of that change.

Peter McCormack: Yeah, I think that was Raoul who said that potentially. Yourself, Alex?

Alex Leishman: Yeah, I completely agree with Robert and we're building that financial institution at river.com. So my focus is making it as easy as possible for people, individuals, to accumulate Bitcoin and store it with us, self-custody it, provide them the full suite of services so that they can... And hold their hands from the very beginning and bringing all these new people into Bitcoin from day one buying Bitcoin all the way to someday down the road choosing to self-custody or providing them more advanced services.

I think there's a huge opportunity there to build this financial institution that people can trust, but don't have to trust. I think the companies and the financial institutions that move in that direction are going to be the ones that last for the long term.

Peter McCormack: All right, we've got five minutes to go and we've potentially got audiences as Tuur said, that is maybe not exposed to Bitcoin right now. You've got about a minute left each to talk about this, but just throw out one prediction, one thing you think might happen over the next 12, 24 months and one thing you'd like to see happen. I'll start with you, Robert.

Robert Breedlove: I agree with Tuur's sentiment earlier that we are moving into a massive bull market. There are a lot of people that thought that 2017 was a one off, that we'll never see a move like that again, but if we look at Bitcoin's short history and the macroeconomic conditions it's designed to ensure against, we're in a perfect storm, frankly.

Political uncertainties are at a peak, monetary expansions are also at a peak and I really think the next Bitcoin, because it does go through psychological layers and I know it sounds radical today, but as we know, Bitcoin does move geometrically quickly. I think when it breaks a $100,000, the world's going to really have a sharp wake up call. I think we haven't seen anything yet, so to speak. 2017 was a warmup for what's to come. If that's in 12, 24, 36 months, 5 years, who knows, but the pressures supporting its value proposition are at an all-time high.

Peter McCormack: You've got about a minute, Nic.

Nic Carter: What I think is likely to happen in the next 24 months is a wave of sovereign currency failures, similar to the Asian financial crisis in late '90s, similar to in the post-Soviet Union, a lot of sovereign currencies fail. You see it at times of dollar strength, you see it at times of global dislocation, it's regional and it's contagious. We've begun to see some distress in lots of sovereign currencies when there's a lot of debt.

The world is very indebted in emerging markets. Unfortunately, I think it's going to immiserate tens or hundreds of millions of people and for some of those people, they will be able to use crypto financial rails to exit their sovereign local currency. They can go to Bitcoin, they can go to the US dollar, those stable coins on these rails. I think this is going to be a big story for the next year.

Peter McCormack: Alex, over to you.

Alex Leishman: Yeah, honestly I have no idea what's going to happen macroeconomically over the next year. I don't, but I do know or I'm very confident that more and more new people to Bitcoin are going to be buying it because it serves the purpose that they see for it and they realize that. Everyone, as we discussed, has a different story for Bitcoin and more and more people are going to come to it and that's what I know.

Peter McCormack: All right Tuur, you get to close us out on this.

Tuur Demeester: Yeah. To me, yes, inflation is the big theme the next 12 to 24 months. The reason why is that, the narrative is changing, there's a step change. In 2008 the question was like, "Should we even have these bailouts?" Right now, that's off the table. It's only about how much, how fast and that scares me and that's exactly what happened the late '70s and '80s in France, where they ended up with hyperinflation and the revolution.

One way to look at the markets is to look at the lens of gold. Put that on, put your gold glasses on and look at the markets. Denominate your charts in gold, and really have a look at what's going on. That's very enlightening to me, at least. For measures of inflation, look at The Chapwood Index, which measures cost of living in the United States, look at shadowstats.com and that will show you that it's actually already 10% for the past five years.

2017 was a greed driven rally in Bitcoin. 2020 and 2021 I think is going to be driven by fear and that is just very, very explosive. Just like when we saw people stand in line to buy toilet paper and beef, I think they're going to stand in line to buy Bitcoin and gold. The time to get insurance is before your house is on fire, and I think that's now. Our house is not yet on fire. We have some time to get insurance.

Peter McCormack: I think that's a perfect close and thanks Tuur. Listen, I appreciate you all. I've got to know you all over the last a year, two years and I appreciate you all coming on joining this panel. I think it's a very interesting time for Bitcoin. I share a lot of your sentiments, especially Nic, with regards to sovereign currencies and I have my fears, but I think it was a great panel. I appreciate you all and good luck with everything you do!