WBD312 Audio Transcription
$50k Bitcoin, What’s Next? With Bill Barhydt
Interview date: Friday 19th February
Note: the following is a transcription of my interview with Bill Barhydt. 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.
In this interview, I talk to Bill Barhydt, the CEO and Founder of Abra. We discuss what $50k bitcoin means, increasing corporate adoption and which nation-state will be the first to embrace Bitcoin.
“It’s like saying ‘I can’t handle the internet’ in 1995, and there were many people that couldn’t. Do you know what happened? The internet ploughed ahead, and eventually, you caught up… the world is going to catch up to this because there is going to be no alternative.”
— Bill Barhydt
Interview Transcription
Peter McCormack: Bill, how are you, man?
Bill Barhydt: I'm great, how are you?
Peter McCormack: I'm very good. Well, look, we're all good right now, aren't we?
Bill Barhydt: Sure.
Peter McCormack: It's crazy times.
Bill Barhydt: I mean, I'm good otherwise, but couldn't be happier.
Peter McCormack: Well listen, look, I wanted to make a show after we got through $50,000, just firstly because it's such a ludicrous number when you think about it, but also because whenever we hit one of these big milestones, I always get a text message and I pick up my phone and it's you sending me rockets! So I was like right, let's talk to Bill.
Bill Barhydt: Yell, well you're like me -- Elon has his, what does he call it; his meme God? I don't know. It's somebody who's responsible for his memes. For some reason, when the price of Bitcoin goes up, I think of you. I have no idea why, but I swear I do. It's not a creepy thing, I promise, but it's what I think of!
Peter McCormack: Maybe because of that thread I started that I can't stop now. Every time it breaks another thousand, I retweet.
Bill Barhydt: Oh, "Have fun being poor", right?
Peter McCormack: No, I've done this once. I think since $26,000 I put, "$26,000 done; next". And then, when we hit $27,000, I retweeted it same message. So, this goes -- if you click on it at $52,000, it works all the way down to $26,000. Shit, we've doubled, I didn't even realise; we've doubled in that time. So, maybe it's that; who knows, man.
Bill Barhydt: I don't know, but it's working. It's got me thinking about Peter McCormack on a 1% price increase of Bitcoin. There's something wrong with that, I don't know what it is. Maybe I need incremental Peter McCormack therapy now. But you know what, in the meantime I'll take it. I've got my juice, my caffeine, and I've got my $50,000 bottle right here, so we're all good.
Peter McCormack: What's that? Oh, God, I should have had Champagne. I've got a cup of coffee.
Bill Barhydt: Yeah, well I've got that too. It's like the Bill Cosby routine on chocolate cake and grapefruit juice; they go perfect together.
Peter McCormack: So listen, Bill, what does this mean, man? I've got a number of things I think it means, but what does this mean right now. And, not $50,000 just itself; generally speaking, where we're at, there's so much that's happened in this last, let's say, year. I mean, we're coming up to that March dip; we're coming up to that black swan event. We're just less than a month away and since them, it's just been Number Go Up and so much has happened.
But, what does this all mean to you now? Where's your head at with Bitcoin? I'll do mine afterwards. Where's your head at with Bitcoin; where do you think we are in this whole thing?
Bill Barhydt: So, I'm very focussed on my day job with Abra, right, and so what this means to me is that, as the price of Bitcoin goes up, it actually enables what I want to have happened which is, I want a new banking system to be created around Bitcoin. I want people to use Bitcoin as the collateral of their life.
So, what we're seeing with corporate balance sheets like Tesla, I want that to happen with your mum who can basically buy Bitcoin. That becomes her personal treasury. She can borrow against it in government shitcoins, pay her bills, and basically she's protected for life. And, as the value of the asset goes up, that scenario becomes more likely.
We've had 200 years of death by 1,000 cuts, where we've been sold this bill of goods that you can store productivity on dead trees. That's effectively the model. If I really simplify it, what the powers that be have taught us over 200 years is that you can cut down trees, have productivity in industrial society and store that productivity on dead trees. And then, they can simply cut down more trees. It makes no fucking sense.
So now, we finally have a vision where you can replace that with something that eventually everyone will understand, especially as part of my spiel is I'm a big believer in the singularity and where this technology's going. We're going to be living to 120, not me probably, but my grandkids will be living to 120, 140 years old. That death by 1,000 cuts is going to be very acute if it's not replaced by something else before then; and, thank God it will be.
Peter McCormack: Well, look, that's a really interesting topic to get into, this treasury thing, because I essentially operate with two treasuries now. I've got a company treasury and I've got a personal treasury; and, the really interesting thing about the company treasury is I've essentially tripled my capital the business has just by holding Bitcoin.
But, one of the things that does cross my mind, Bill, is that this all well and good now that I've built that buffer; it's all well and good in a bull market; but, what if a bear market hits? If we had slow and constant steady growth, this would really work for me; I get it. But, there comes a time where I'll be like, "Hm, perhaps I need to sell some of this. Rather than borrow against it, I'll need to sell against because, even if I borrow against it, I might get in a position whereby there's a black swan event, the price dumps and I don't have enough collateral. So, I either post more collateral or…"
Bill Barhydt: Yeah.
Peter McCormack: But, that's that whole strange scenario.
Bill Barhydt: But, you're gainfully self-employed. Sorry to interrupt you, but I have to get this out. There are three kinds of participants in this new game, right? There are the people that don't even know that the game is going on yet; there are the people that are helping to make it happen, and that's like my team that's basically doing incredible heavy lifting with picks and shovels behind the scenes to facilitate the transfer from the existing system into the new system, manage custody, facilitate loans, facilitate interest payments, whatever, and some of your sponsors as well; and then, there are the people in the middle that are in the first generation, some of us I would call almost like 0.1 generation and then first generation, that are helping to facilitate that transfer.
So, you have a unique role to play. Michael Saylor has a unique role to play because he's helping to facilitate the transition to a new world. The people that are going to come in later aren't facilitating that transition; they're simply going to be participants in it. So, you have upside and downside volatility risk during that transition.
It's like people say to me, "Well, Bitcoin can't be a store of wealth because it's too volatile". Well, how the fuck do you become a store of wealth without volatility in the first place? You can't go from zero on Monday to $10 trillion on Tuesday. The price has to go up. It's like saying, "How do you go from zero to 60 on the highway?" Well, you have to go to 5, you have to go to 10, you have to 15, you have to 20. It's physically impossible. The laws of physics prevent you from going zero to 60 without actually going to every other speed in between, okay?
So, that's volatility; that's volatility in speed, where we have volatility in price. So, we get the upside and the downside risks of being the early adopters of that transition, and it's going to be mostly upside; but don't do it if you can't tolerate the dips of downside in between, like the seven 30% pullbacks we had in the 2017 run-up. And, I fully expect five or six or seven on the way to $250,000, if not more. And so, that's the small price that we have to pay for being long Bitcoin as part of the transition.
The people who get it later, once the transition is done, they won't care about what you and I went through along the way as early holders; it's just going to be their money; it's not going to matter to them. So, this narrative about, "Well, it's too late [or] it's too risky [or] I can't deal…", then put in less, wait, but eventually you're going to get it because eventually, everyone's going to get it. And so, we're paying a very small price, as far as I'm concerned, if any price at all, as being part of that early transition team.
We're like the advanced team in the military, right. We're basically getting this first and taking the brunt of all that comes with that inherent volatility on this massive run-up.
Peter McCormack: Well, look, I don't care about the 30% dips. I think they hurt more in your first cycle. When you're in your second cycle it's kind of --
Bill Barhydt: It's emotional.
Peter McCormack: Yeah. But, you're in the green on the second one on all your purchases. What I'm thinking about, what if there's like an 80% drawdown. Say we go $250,000 and we come back to $50,000. I guess what you're saying to me is, "Pete, don't worry, you're earning money, you can pay your bills, you can put food on the table. We're talking about a multi-decade play here. You're building generational wealth for you and your family, so you just need to hold onto that shit"?
Bill Barhydt: Yeah. You know, my favourite movie is Godfather II and this is the business we've chosen, right? We've chosen to be in the middle of this massive transition. We don't have to do this. We can all make probably more traditional cash doing something else; I know I can, but I love this. I can't imagine -- if I sold Abra tomorrow, you know what I would want to do? I'd want to run Abra, because I can't imagine anything else I'd rather do.
So, this is the business we've chosen. If you can't take the trials and tribulations of being front and centre in the transition, then don't do it; it's perfectly fine; you will catch up to where the world is going at some point. It's like saying, "I can't handle the internet" in 1995, and there were many people that couldn't. Do you know what happened? The internet ploughed ahead and eventually you caught up. This is going to be no different.
I don't say that just as a clickbait, whatever; the world is going to catch up to this because there's going to be no alternative.
Peter McCormack: Well listen, I love being on the front lines of this. And you say, "What would I be doing if I wasn't doing this?" Well, I'd just start another podcast. I love doing this.
Bill Barhydt: Exactly, and you'd work your way back to Bitcoin!
Peter McCormack: Dude, my job today is to phone up my friend, Bill, and talk about Bitcoin for an hour and drink a coffee. I mean, I'm very fortunate. I'd probably do some shows outside of Bitcoin as well.
I'll tell you another interesting thing that I see happening right now, where I think things might be different this year, and I could be wrong. But, there seems to be this growing movement of, "I'm not selling my Bitcoin". So, you've got companies putting in their treasury; I don't think Saylor is ever planning to sell his Bitcoin. And, there's a lot of talk about the fact that actually, what we need is just this maturing market of borrowing and lending, because as that matures, as that improves, people will realise Bitcoin's a pristine asset and they'll happily lend against it; so, you can live your life borrowing against it.
That potentially changes the scenario, pushes us into this kind of supercycle scenario that Dan Held talks about.
Bill Barhydt: Yeah, I totally agree. Look, Saylor's an extreme, but he and I discussed this a couple of weeks ago. His comment was, "Bill, your company's great, I don't care what your company is; every company right now, their sole focus should be, 'How do I get more cash to put into Bitcoin?'" Now, that's extreme. He has 1,000 people working on software products that aren't Bitcoin, and in his mind right now, their whole purpose for generating that cash flow is simply to buy Bitcoin.
Now, obviously the average treasurer in corporate planet earth is not thinking that way. There are 100 different perspectives for 100 different companies, and that's probably not one of one. I think he's very unique in this regard. Even Musk isn't thinking that way when he has the discussion with his CFO as to whether they should put $1 billion or $5 billion in Bitcoin. I think they consider that a long-term hedge on the purchasing power of their treasury.
If Bitcoin goes up 10X, their purchasing power is effectively protected if it's 1% or 5% of their treasury, and that's super smart. But, the extreme perspective that somebody like Saylor has helps everybody else understand the other side of the spectrum, which is what Chamath talks about in terms of schmuck insurance. I don't really think schmuck insurance is the right way to explain this, but I get it.
Apple's biggest risk, in my opinion, is not that people don't want the iPhone; it's that they generated all this cash flow that is eroding in value; their purchasing power is falling; they don't want to give it back to the shareholders because, in theory, they should be able to generate a higher return than just what dividends can generate; they can't produce new product fast enough; so, at a minimum, your purchasing power of that cash should be protected.
Apple has a problem that Bitcoin isn't even worth enough yet for Apple to put a meaningful percentage of their treasury in there to actually do the scenario I just described. If Apple wanted to put 5% of their treasury in Bitcoin, Bitcoin would have to be worth probably 10X what it is now, which is one of the reasons why they're not going to be the next one to do it; it's probably going to be Google that's going to do it in a smaller amount, because they're more tech-friendly.
But, my point is that we're all going to get there in our own way. You have the extreme of Saylor; you have the pessimist in Schiff; and everybody's going to get there in their own way. And, it's just going to seem logical in the end, just like all exponentially growing technologies seem intuitively obvious once it's happened; but you have to admit, if you were there at the beginning, it's not.
I mean, having a supercomputer in your hands is not intuitively obvious to the average consumer in 1969 when they put this massive computer with 8 bytes in it on a rocket ship. So, it's just the natural evolution that we have to go through.
Peter McCormack: That's interesting you said Google might be somebody who considers it next, because like everyone else, I've been kind of wondering who might be next. I was fully expecting Square/Twitter to do a much larger buy.
Bill Barhydt: So, a couple of things. When I say Google next, I'm talking really about the top six or seven big tech companies. We're onboarding mid-sized companies every day at Abra now, who are putting money in both Bitcoin, as well as our dollar interest accounts where they're earning 10%. So, you can earn 10% dollars; they're kind of neutral in terms of purchasing power protection. Obviously, I have a stronger feeling about the Bitcoin purchases.
So, literally every day, no exaggerations, every business day, but these are mostly small companies, right; mid-sized companies, some of them you've never heard of; some of them might be well-funded startups; some of them are even venture capital funds. Venture capital funds are now doing this, mostly with their dollars into stablecoins, but also some Bitcoin exposure.
What's happened in the last few months has really enabled what the techies have gotten all along, but can't go back to, if you're a venture fund, your LPs and say, "Yeah, we're just going to take your cash and put a bunch of it in Bitcoin while we're waiting to make our investments". Now, they probably don't even have to discuss it; they just do it".
Peter McCormack: You know what it probably is though, Bill, I've talked about this before. There's someone like me, who's a bitcoiner, and then I saw what Saylor was doing and I was like, "Yeah, shit, I should put my company money in, because all I ever need is six to eight weeks' cash flow; that's all I ever need".
Bill Barhydt: So, you weren't storing your company money in Bitcoin before?
Peter McCormack: No! It didn't even cross my mind! But look, in fairness, I was growing; there wasn't a lot of spare cash.
Bill Barhydt: So for us, for Abra, it's a little bit different. We actually generate our margin contribution in Bitcoin because of the way our trading system and our interesting earning products work. Then the question is, do we convert it out of Bitcoin? So, when we weren't profitable, we had no choice because we needed cash flow. Now that we're actually very profitable, we keep the vast majority in Bitcoin and we take out what we need as we need it, and it fluctuates a little bit, because some months are more profitable than others; it's still volatile in that regard. But, we're also unique in that most companies aren't generating a profit in Bitcoin itself. And so, it's interesting to have the opposite problem.
Peter McCormack: Well, I was similar, I just didn't have the money because I was growing it and building my team. And, it got to about the middle of last year, yeah, maybe the middle of last year, and I started to build excess profits. So I started, from about $10k, I started putting in and scaled it in. I scaled in quite a bit.
But, I'll tell you this one; this one's really interesting. So, I had new sponsors sign up in January, and it's, you know, X price for the year. I offered them a 10% discount if they did it, but they had to pay upfront in Bitcoin. They did it straightaway. That is already up, I think, 78%.
Bill Barhydt: Right, and you could have also just bought the Bitcoin, but still.
Peter McCormack: Of course, yeah.
Bill Barhydt: That just saved you the hassle, right?
Peter McCormack: Yeah. But the point is, I did this because I am a bitcoiner, and then I saw Saylor do it and I was like, "Oh, I can do that". So, the point I was trying to get to is, the people coming to you, are these people already bitcoiners who are running businesses?
Bill Barhydt: So, okay, I have a strong feeling about this, because I talk to a lot of hedge funds. A lot of big asset managers that we all know, behind the scenes, we were talking to them. And I'm going to answer your question, and then I'm going to answer kind of a tangential question you didn't ask.
Let me answer the tangential question first, because I think it's just as interesting which is, I see boardrooms and management teams at all these large asset managers all already own Bitcoin themselves; all of them; or, they're getting into it now. But, there are none of them that either aren't thinking about it, doing it, or have already done it; and a large percentage of them have already done it, maybe in smaller amounts for them relative to their overall net worth, but they've done it.
So now they're saying, okay, what's happening in the real world is actually enabling me to do for my asset management company, my funds, what I've already done for myself, which before wasn't really an option, because they didn't want to have that discussion with their LPs.
So now, back to your other question, I think, again, what's happened with Saylor and Musk and Square and other companies is, this has enabled mid-sized companies to do this. We also have their individual accounts, but we have a lot of professionals at Abra that are doctors, lawyers, even plumbers, that are storing a significant amount of their net worth in Bitcoin and, sorry, but Ethereum as well, and they love it.
Those are businesses that are just individually-owned businesses, which is somewhere in between the companies and what you're doing, because you have employees, right? So, a lot of them don't necessarily have employees, or maybe they have one or two employees, right. So again, what's happened really is, everyone feels enabled to start to dig into this now and they won't be ridiculed, or won't be deemed insane for saying, "Oh, I'm going to put part of my treasury in Bitcoin because it's going to be protected".
If you had said, "My treasury's going to be protected" in 2015, "by putting in Bitcoin", people would say, "I think you've got your words backwards", because a lot of people would have said, "Hey, that's a scheme for getting poor quick", because either they didn't understand, or they didn't have that long-term view, or they didn't understand just what Bitcoin was all about.
Peter McCormack: You know what, it's really super interesting because the other thing is, once you start doing this, you start trying to chip in to the Bitcoin in other ways. I turned round to all my time and said, "Look, for next month, you can have part of your salary in Bitcoin; what do you want?" and I've got a range of 5% to 20%. I'm going to do probably 10%, 15% myself. I'm thinking about my BlockFi card when I can get that and I can actually buy things and get my cash back.
Everything else has become kind of meaningless, but I still haven't figured out in my head, am I just caught up in the FOMO of all of this; or, does it all make sense? I think it kind of makes sense. But, what I am then wondering, the more we do this with Bitcoin, are we compounding the destruction of fiat currency?
Bill Barhydt: I don't know, I mean the traditional economy's really big; it's really big. We have no problem paying people in Bitcoin. Our employees are actually, in some cases, working for more stock so, in some cases, they need the cash. So, it's not really that big a deal. We're happy to pay people in Bitcoin or dollars. We have a lot of international employees; we pay them however they want. It's not a problem for us, because we also have an infrastructure that allows us to move between fiat and crypto and stablecoins obviously very quickly, because it's what we do for a living.
But, I think that the bigger picture here is, when are we going to see the biggest Fortune 100 companies moving their treasuries into crypto; when are we going to see the first countries talk about how they're going to be storing their own either wealth in crypto; sovereign wealth funds moving to crypto; saying, "We're moving away from the dollar".
Now, in much the same way that China kind of leapfrogged our 1950s, 1960s, 1970s technology base in the 1990s and 2000s, I actually can foresee African countries leapfrogging out existing financial system and in some ways just saying, "Hey, screw the dollar. The petrodollar's dead anyway; we're just going to go right to a crypto Bitcoin-based economy and deal with the movement in and out of dollars when we need to. And, as the US Government is irresponsibly just printing more and more money, we're fully protected".
So, I wouldn't be surprised if we start to see African countries and maybe some Eastern European countries come into that discussion, just like as if they were a Fortune 100 company; because, a lot of these Fortune 100 companies are just as big as African countries now and so they have kind of the same problem. A lot of them do think in dollar terms because historically, they have no choice, because they've all experienced hyperinflation.
Bitcoin makes perfect sense to leapfrog, from a technology and monetary perspective, what the West is doing.
Peter McCormack: Well, they get to be the -- whoever goes first gets to be the MicroStrategy of nation states, right? I said this to somebody about a week ago in that, when Michael Saylor came into our lives like a fucking whirlwind and didn't just say, "I'm buying a bit of Bitcoin"; "I'm buying $450 million and then I'm buying another $650 million and then I'm putting another $10 million and then another $10 million and then another $900 million."
When he first came in, I think the average price was like $11,111, whatever; something around that. I think a lot of people were like, "What are you up to, mate? You've wasted half your treasury". Now he looks like an absolute genius. I think there is an opportunity for a nation state to do similar.
Bill Barhydt: Oh, absolutely.
Peter McCormack: I mean, maybe one's already doing it?
Bill Barhydt: If one country leader would step up and say, "We're going to create a crypto-friendly zone in Africa where we're going to create a tax-friendly regime; we're going to basically put all kinds of incentives for crypto entrepreneurs; we're going to put a very simple licensing system in place to get the equivalent of a bank licence, but for cryptos, so you could deal with the bank rails in and outs; and, it's going to be very startup-friendly; and we're going to put incentives in place for angel investors and venture capitalists and it's going to be like a crypto haven", can you imagine the number of people that would want to flock there, not only from existing African countries, but from all over the world?
Why are Americans moving to Wyoming, of all places? Wyoming was never discussed in my world for the first 25 years of my career in tech. All of a sudden, everybody's talking about Wyoming. The last few weeks, a lot of people have been talking about Miami. Now as a city, they're not city states, right; they're in the state of Florida; they're not Singapore; the Mayor can only do so much because he operates within the confines of the state law. Florida's pretty tax-friendly. They have pretty strict money transfer laws, so it's not like Wyoming yet, but it could become like Wyoming, right?
So, my point is, imagine if an African country with a reasonable leader, that wasn't so much of a dictatorship, actually did something like this, it would be a big boom to that country in my opinion.
Peter McCormack: Well, this was Balaji's argument about India. Did you read his article?
Bill Barhydt: Yeah, I did.
Peter McCormack: Fantastic.
Bill Barhydt: I've been railing about this for months. I just don't get it. It had the largest, in theory, the "largest" -- I'm using air quotes now for the listeners. How could you be a democracy and the US Supreme Court has come out clearly that software, which is ones and zeros, which at the end of the day is what Bitcoin is, is protected free speech? And, how can the largest democracy in the world now, for the fourth time, literally the fourth time, come out and say, "We're going to ban what effectively is free speech"? It's insane.
Peter McCormack: Yeah. Well, do you know what I think it is? I just think it's a lack of education about what it is and it's reading the headline stories, which we know are always the same kind of bullshit. So, they're probably being fed, this will be -- because, they have a big problem with people not paying tax in India.
Bill Barhydt: There's a false narrative around money laundering and tax evasion and all these things that are already happening via their banking system. So what I would say is, I would say, "Go look at what happened in the US with Silk Road". You had these nefarious FBI agents that got caught, because they actually were using Bitcoin; they shouldn't have been doing what they were doing in the first place!
I would actually posit, you probably have a better chance of figuring out how to put a fair tax system in place with Bitcoin than you do with corrupt banks. And, I know a lot of my banking friends listen to this and go, "Come on, Bill, that's ridiculous". And I'm sorry, but the biggest money launderers in the world by far are banks. There's no close second.
It used to be US banks; they're still in the top five. Now European banks and the euro has become easier for the criminals to access, as long as they shut out Americans, right, and so it's a little bit of a moving target, like Whack-a-mole, but it's still banks at the end of the day. And so, they're asking themselves the wrong question; it's this false narrative about money laundering and tax evasion.
We had the same problem in the US and in Europe as well; it's more in the US where these uneducated, ignorant politicians just assume that when they hear "internet" or hear "crypto", it's all money laundering and child porn and the same shit I've been talking about and hearing for 25 years.
Peter McCormack: The interesting thing about India is the country's done so well from open source software projects, and I think what Balaji's article points out is that, all they're going to do is they're going to push people out of India. For no beneficial gain, they're going to push the talent out, and ultimately it will probably be a decision they reverse, unless we end up with this kind of two different worlds where we have crypto-friendly and crypto-unfriendly; because, there is a chance that you have China, Russia, Brazil, India all unfriendly to crypto and the rest of the world is friendly, and I don't know how that plays out.
I don't know if it's just because of my own bias for being in Bitcoin, but when I read through Balaji's article I was like, this is such an obvious opportunity and game-changer for India as a country, just in terms of bringing capital into the country.
Bill Barhydt: I think India would be the single best opportunity. Take everything I said about the African example and pick it up and move it to India. You have some of the probably largest educated base of engineers and software developers in the world, people who are highly motivated. I mean, I've worked with Indian developers for 20 years. They work their arses off; they love software; they love engineering.
This is part of why I'm very surprised that we don't see a lot of protests and screaming about this topic because, in some ways, the average educated Indian should get this even more than the average educated American; and that surprises me a little bit. I think their democracy is a little bit more accepting and a little bit less sceptical of the powers that be, at least publicly.
In the United States, we're very public about our disdain and distrust for centralised power. I'm not an expert on Indian culture, but I get a feeling they're just more accepting of that. And, I think if they just basically said, "We're going to create this hub" -- they have the same problem with traditional banking too. The RBI has been horrible to the remittance space; horrible. And I used to work at a remittance company, and I can tell you it's completely backwards.
They've created a very small power base, like China has with Wepay, among a small number of payments companies, which has basically destroyed a lot of competition in the country. It's very difficult to break through in the payments space in India because of the way RBI set it up. And so, I think somebody with the guts to basically tackle this head on needs to come in and say, "Hey, we're going to create an innovation and technology hub in India centred around financial technology, remittances, cryptocurrencies, Bitcoin. We're going to basically create a tax haven for this and we're going to embrace it. And by the way, our government is going to invest in Bitcoin".
Can you imagine if the Indian Government came out and said, and I think Balaji wrote about this as well, that, "We're actually going to buy Bitcoin", which is obviously the opposite of their current perspective? It would be not only a game-changer for our business, which is fine; our business is going to be fine either way; but for the country and the amount of innovation and venture dollars that would start to flood the market, with the Peter Thiels of the world, the contrarians who look at these markets that everybody else is afraid of. They'll start to stand up and say, "Hey, we should be investing in this country".
Peter McCormack: Well, look, if they buy, I think Balaji suggested, $3 billion; if they buy $3 billion of Bitcoin today, they've probably got $30 billion within a year or two years, and it's only going up. They'd put themselves in such an advantageous position for everyone else; they've got the investor opportunities, as you said, because with crypto, we've got these new billionaires who've got to deploy capital somewhere; and it's the talent. So, look, it all makes sense to me.
Bill Barhydt: Well, keep in mind by the way, the US Government is one of the largest holders of Bitcoin, because they haven't disposed of all the Bitcoin they've confiscated via all of their other efforts, right; the treasury, and then a lot of that gets disposed via the Marshall service over time, like the Silk Road money and the FBI confiscated money.
Peter McCormack: Yeah, what's the deal with that? Do you think they're holding it on purpose as like a, "Hm, we should wait and see"?
Bill Barhydt: I don't know. I think a lot of it is just a disposition schedule. Maybe they have certain people who are on trials, or there are legal processes. Everything has to run its course, right, and maybe they're legally, depending upon how certain cases work out, people are entitled to get certain Bitcoin back; and, it may be cheaper for the government to hold it than have to buy it back later. I really don't know; I just made that up. So, there are many reasons.
Or, they could have like a disposition schedule that they're working through to get rid of Bitcoin on a multiyear basis; I have no idea. Or, they've figured out what we've figured out which is, "Hey, the price is going up. We may as well just hold onto it and sell it as we go and we look brilliant". I don't know.
Peter McCormack: I think, is it the Bulgarian Government, now their Bitcoin position is worth more than their gold position?
Bill Barhydt: How did they get them in the first place; was it confiscation?
Peter McCormack: Yeah, it was confiscation. I'll try and look it up. They got something, was it like 200,000 Bitcoins?
Bill Barhydt: Isn't that what happened in Iran via the miners that were confiscated as well? Maybe I have this story wrong, or maybe it was Venezuela. One of them, I thought, confiscated a whole bunch of miners that they kept running.
Peter McCormack: Yeah, so the Bulgarian Government seized more than 200,000 Bitcoin from the results of an organised crime crackdown in May 2017. The sting resulted in the arrest of 23 Bulgarians. The Bitcoin was valued at $3.3 billion at the time. I don't know what -- what's 200,000 Bitcoin now?
Bill Barhydt: What were the criminals doing with the wallets that the government was so easily able to access it?
Peter McCormack: I don't know. Let's see what this is worth. Bitcoin/dollar exchange rate; right, 200,000…
Bill Barhydt: What did you say; what is it worth? So, that's worth $8 million, right? Oh, 200,000, no; that's worth $8 billion.
Peter McCormack: $10.3 billion, I've got it.
Bill Barhydt: Yeah.
Peter McCormack: $10.3 billion. So, they've got $10.3 billion. They could have $100 billion in a year!
Bill Barhydt: Yeah. And so, in this way, many governments are holding Bitcoin. It's just not a proactive investment. What I'm saying is, India should simply bite the bullet and make the proactive investment, and it would be a complete game-changer, not only for their India and their standing in the world, not just buying Bitcoin, but creating a Fintech, cryptocurrency, Bitcoin-friendly ecosystem around it that included taxes.
They're so paranoid about tax evasion that it's given them the opposite perspective than what they really should have. I think their tax receipts will go up tremendously if they change their attitude and change their mindset. And so, maybe the perception, and Balaji didn't really write about this as much; I think there's a psychology amongst the poor that says, "Well, the rich just evade taxes and so should I". And so, I don't know how you break that cycle, but somebody has to have the guts and the balls to basically be the first one to step up and say, "We're doing this backwards".
Peter McCormack: Well, there are a couple already in Africa of situations. So, there's this thing that's been floating with Kenya. Now, investing.com has got the article, but I still haven't seen it widely confirmed but, "Kenya turns to Bitcoin to fight depreciating shilling", and we saw that Nigerian, I think he's a senator, so that's certainly a politician who talked about the naira; is it the naira, the Nigerian currency? He said it's essentially worthless, the naira; it's essentially worthless.
Bill Barhydt: Yeah, so what was really impressive about what happened in Nigeria was that, whoever transcribes their official Twitter feed from the Senate was pretty much verbatim providing commentary from the Senate on Bitcoin, both pro and con, as it relates to their economy. And one senator in particular was basically saying, "Hey, Bitcoin lays bare the fact that our money is worthless", and wow! Who has the guts to stand up and say that?
So, I was pleasantly surprised that anybody was willing to say that publicly. I think that there was one US Senator who stood up when David Marcus was testifying about Libra, who basically talked about how crypto basically is a danger to the military industrial complex, because it basically puts our status as a global reserve currency at risk, and basically lays bare the fact that this is effectively a propagated scheme that we created from nothing that the world is buying into and therefore, Bitcoin is bad for the United States. And he actually just came out and said it.
Every once in a while, we get people who are willing to make these obvious statements, that shock everyone else, because we just don't talk about it. And this guy in Nigeria said the same thing. I'll just say the same thing; they should do exactly what we're talking about, which is just the naira has to go. And, their economy's small enough where if they said, "We're going to make a ten-year transition", or…
Remember the transition to the euro? We're old enough where we lived through that and we remember acutely that there were problems in the early days with price fixing, when people couldn't mentally get their arms around the value of a Deutsche mark or the European currencies versus the euro, and we worked it out within a couple of years. If Nigeria did that, their economy is small enough where they would be able to make the transition.
Peter McCormack: Yeah. The only thing is, I still think they will need some form of sovereign currency, or some form of --
Bill Barhydt: For federal payments.
Peter McCormack: Yeah, because you still can't, even if it's Number Go Up, you still can't have that kind of volatility.
Bill Barhydt: Right. So, the way you do that is you create a government-issued shitcoin that is backed in Bitcoin reserves, but only a fraction of your reserves ideally, and you circulate that through the banking system and it's used via the banking system for payments, and it can be denominated in naira, or whatever.
But, the public is now being trained that they should keep their personal treasury in Bitcoin and come in and out of this kind of ephemeral naira; and I say ephemeral because, when you make a payment, the payment is instant and the other party can actually go back to Bitcoin if they want to, and they don't have to worry about the cost of moving what amounts to 25 cents around via a Bitcoin blockchain.
So maybe in ten years, Lightning will be so simple and so pervasive in every nook and cranny of society that you don't need that sovereign money; but for now, that's probably the easiest way to solve the problem. And I find it hard to believe that with everything happening, and the momentum now that we have in small business in particular, but a few examples of large businesses moving part treasury to Bitcoin, that we're not going to see a developing country, or a third-world country, do the same thing.
Peter McCormack: Yeah, I agree; I'm just waiting to see who it is. Also, in some ways, it depends on the strategy. It kind of makes sense not to declare it, if you've got an ongoing accumulation strategy. If you've got a one-off, let's boost the price thing, then it's different.
Just a side point: you mentioned Libra there. Last time I saw you in person was actually in your office. We made a show when I was doing a show about Libra, I think. Was that the last time I saw you?
Bill Barhydt: I think that was 30 years wasn't it?!
Peter McCormack: Yeah, God knows, man! Do we know what's going on with that, because I know it's changed a name? Because, I think Facebook's another interesting one where I would be surprised if they're not looking at Bitcoin; certainly crypto broadly.
Bill Barhydt: Yeah, this is kind of a refresher on how all of that transpired and how it relates to Bitcoin. So first of all, the scuttlebutt is that David Marcus went into it a little bit, he's here in the Valley with me, that he's a very large holder of Bitcoin and has been for years. So, we can just put aside the question of whether or not he's into Bitcoin or gets it; I think it's fait accompli that he gets it and has gotten it probably longer than some of our shared listeners for our own audiences get it, okay. So, let's put that aside for a second.
I think originally, the question for them was, "We want to create a system where WhatsApp users and Instagram Messenger users and Facebook Messenger users can basically send money globally", originally thinking about remittances; again the India example, Philippines, Mexico, Middle East to India; places where remittances can still cost up to, on the high end, 15% but on the low end, even 7% of funds, and that's a very noble goal.
And Morgan and others who started the project realised, "Hey, we can't do this right now with Bitcoin, because there's not enough Bitcoin to go around, our system would break, the fees would be too high"; pretty much the same discussion we had as if a Nigeria or a Kenya basically adopted Bitcoin. They would have the same problem. And that's fair. Bitcoin is basically moving towards digital gold; it's moved away from the original concept of the other headline in the whitepaper, which was peer-to-peer payments, and that's fine. That's what the market has evolved into. So, they said, "We can't do it that way".
Now, in my opinion, the logical interim step would have been, build a better PayPal, right, because your advantage here is not better technology; it's the fact that you've got 2 billion people running these messenger apps. So, who gives a shit what the technology platform is; just build it and give it away. And they would have been live if they'd done that a year and a half ago, getting happy payment users, making money, taking on Western Union. And then in parallel, you basically start looking at what's happening with the crypto world, right.
So, in my opinion, this whole DM Libra currency side project that they've spun out is a massive unnecessary distraction. The worst case, you develop a stablecoin, like Circle has; you put the cash in the bank; and you make it a, I know you don't want to hear it, but you make it an Ethereum smart contract for now. And then later on, you can migrate it to Lightning or Bitcoin if you want to, but you operate -- and Marcus obviously knows how to do this because he ran PayPal.
So, I would be surprised, if they had it to do over again, they would do it the same way they've already done it, but I think they're too far down the path. And, maybe they'll surprise us with a value proposition of what they're developing, and something turns out to be like Solana or Polkadot. I know you don't spend a lot of time on those technologies, but they are interesting versus Ethereum. But, it was not necessary in my opinion.
Anyway, sorry for the diatribe; it's just disappointing to me that you have all this brainpower that's somewhat misfocused, in my opinion.
Peter McCormack: Well, I'm really interested to see what them and Twitter does, because they do have these platforms, they do have these people, they have the opportunity for people to be able to move currency between them, whatever the currency is. I was always interested with what Libra was going to do, but the problem is, I'm starting to not care anymore. It's been so long and I think everything's moved beyond them; I just wonder what it will be. But, I think they probably should have done what you said.
I do have two other topics I want to get into, and I'm just going to be conscious of time. And, I know you'll be able to answer both these really, really well. Okay --
Bill Barhydt: Who's going to win the next Formula 1 season?
Peter McCormack: Well, it will be probably Lewis Hamilton. Do you like the Formula 1?
Bill Barhydt: I'm kind of a fanatic, are you kidding me? I watch the races over and over again.
Peter McCormack: Who are the Red Bull drivers?
Bill Barhydt: Well this changed, because it's now, isn't it Albon who's now joined, what's his name, the Dutch guy?
Peter McCormack: Max Verstappen?
Bill Barhydt: Verstappen, yeah.
Peter McCormack: So, one of my mates from school was Max Verstappen's race engineer.
Bill Barhydt: Oh, nice.
Peter McCormack: So, if you, you know, you hear them on the headphones, and he's always saying to me, "Come to a race". So, I'll tell you what; with the US Grand Prix in Austin, if it happens and we're flying, we'll go.
Bill Barhydt: I go every year, so please come. I want to do a crypto party. I've always wanted to and then, with COVID, it didn't happen. And so, that would be awesome.
Peter McCormack: Well, it always happens around my birthday, because my birthday's Halloween, so it's always like the end of October, start of November. So, we'll do that and I'll speak to him and see what we can do.
All right, well obviously Lewis Hamilton's going to win until he retires, right?
Bill Barhydt: We'll see. I hope not. He needs more competition.
Peter McCormack: Well listen, no, there are two things I did want to ask you.
Bill Barhydt: All right, let's get into it.
Peter McCormack: How the fuck can Michael Saylor borrow $900 million at 0%? I don't understand! I mean, my assumption is because they would rather get 0%, because they're getting nothing elsewhere; they're getting less than 0% elsewhere.
Bill Barhydt: Okay, so the question is twofold. My understanding is they're convertible notes, which means either, you know, effectively they're diluting the existing shareholders at some point; or, they basically pay back the money. And, he doesn't want to sell the cash or sell Bitcoin, or anything else, to pay back the shareholders.
So, the shareholders are basically betting that, okay, if he's going to buy Bitcoin with this, which is 100% likelihood, and that's driving up the share price, is this a better store of value for us than just putting it in treasuries or putting in the bank, or putting it in S&P ETF. So, there's enough diversification in those markets where the existing people who've leant money who've seen the share price go up say, "Yeah, this guy's a good bet. He's kind of insane, but the Bitcoin price is going up. It's becoming a quasi-Bitcoin ETF in some ways, on some premium probably. It's fine, let's just do it".
So, I don't think it's a question of, is a negative interest-yielding bond market a better bet versus something else; it's more like, okay, he's created a Bitcoin ETF-like structure and that seems like a good bet for us and so, $900 million seems like a shit ton of money but at the end of the day, relative to the corporate bond markets, it's really not. So, given his track record, he's going to get it done.
Peter McCormack: So, is this essentially a competitive product for bonds?
Bill Barhydt: Of course. I mean, look, anything that basically in a negative-yielding market can generate a return via equities markets, especially with Bitcoin attached right now, is going to be very attractive in the fixed income world because the bond market is collapsing, as far as I'm concerned, and it's worthless. So, here's a way to basically leverage what amounts to a worthless market to get an asset that's worth something.
Peter McCormack: Is there anything here that the SEC would be looking at to be suspicious about or concerned?
Bill Barhydt: Is he being very clear on what he's doing with the money? I don't think he can be more clear than what he's been. His message to me every time we talk is, "Stop what you're doing and buy Bitcoin"!
Peter McCormack: Well, are you not tempted to do the same for Abra, raise $400 million?
Bill Barhydt: Well, we take our profits in Bitcoin already and it's a question of whether or not we sell, and by and large we don't. As a private company, I'm totally focussed on growing our user base, which results in more free cash flow, which results in more Bitcoin. We don't have access to debt markets the way a large public company does. He's actually a mid-sized public company; he's not even a large company. And so, we talk about Saylor like he's a God in crypto and most people have never heard of him. And so, that makes this story even more incredible.
So, as a small private company, or a growing small private company, I don't really see how that's possible. But eventually, I can see us being a public company and doing that; but in the meantime, we're just hodling as fast as we can.
Peter McCormack: Hodling, man! Well, listen, the last thing I want to get into with you is, look, you know my show; at the start of each episode I say, "Email me if you've got any questions. I'll get back to everyone", and most of the time it's basics and then sometimes, it's like, "Oh, I want you to make a show about…". What do you think I'm being asked about the most right now?
Bill Barhydt: Oh, God, I can't even imagine. I mean, price is an obvious thing. Which service do you use; how do I get started?
Peter McCormack: No. Borrowing and lending. Honestly, I reckon I'm getting five emails a day just on that subject. As you know, you've got that product, one of my sponsors, BlockFi, has. Firstly, it's like, "Do you trust them?" and secondly it's like, "How much would you leave with them?" But after that it's like, "How is this sustainable; how does this work? How are they making their yield?" and there's a lot of suspicion around it.
Bill Barhydt: Yeah, there should be.
Peter McCormack: There should be? Okay. But, you offer a similar product, right?
Bill Barhydt: Yeah, we compete directly with BlockFi and I like Zac and Rene. We talk every once in a while and the reality is, it's like saying, there's thousands of banks in the world; I think there's going to be dozens of crypto banks eventually. I think there will be a few big winners, like Abra and BlockFi, and I think people owe it to themselves in the earliest days, when we're talking about less than $20 billion in assets under management.
Now keep in mind, there's less than $20 billion in assets under management in the crypto banking space, but this is a space that didn't exist four years ago. It's come from nothing and the fact that it's basically managing 10, 11 figures of capital is astounding. So, let's get into the facts.
Peter McCormack: Yeah, I want to get into the details, because it's not BlockFi versus Abra; I like both businesses and I trust them both.
Bill Barhydt: Sure, and the model is the same for both of us and we have nuances to how we do things a little bit differently, but it's mostly the same. And so, we take deposits as Bitcoin, as Ethereum, dollars. Dollars are converted to, in our system, either TrueUSD or USDC. You can earn 10% on the dollars and up to 5% on the crypto deposits. What happens is, two things happen with those deposits if you're earning interest, and it's similar if you're borrowing, so I'll describe both scenarios.
If you're earning interest, what happens is that they go into our interest-earning account. That amounts to about 25% reserves, which is way more than any one person's deposits, obviously, so you have near real time access to be able to withdraw your money in our system. So, we've never seen a withdrawal, even for $10 million for example, take more than 24 hours; it just doesn't happen. So, the average withdrawal takes a couple of hours.
Then, what happens with the rest is it basically goes into a collateralised lending pool. So, let's say you're depositing Bitcoin, how do I earn -- I think Abra's paying right now 4.5% of the Bitcoin. How do I earn 4.5%; what's physically happening? Well, we're lending out that Bitcoin but in exchange for the loan, we're taking collateral, and the collateral is usually in dollars. Sometimes it's in Ether, but usually it's in dollars, and dollars as a stablecoin; so, now we're sitting on that stablecoin. So, you're basically getting the majority of that interest payment back to you, but you're also protected on the principal, because we're holding that collateral.
The inverse happens if you're borrowing against your Bitcoin position. So, let's say I'm holding, make the maths really simple, I'm holding $100,000; I want to borrow $25,000. So, I would put that Bitcoin into an interest-earning account and Abra would say, "Okay, here's $25,000 at a 4% interest rate". That's a product that we're actually in beta testing now. I'll give it away; that's launching in a couple of weeks, okay?
Peter McCormack: Okay.
Bill Barhydt: So now, I can basically see, "All right. Well, 4% I pay to Abra and I borrow the dollars. I'm paying the loan back in dollars, because that's what Abra has leant me, and I'm still getting the benefit of my Bitcoin value going up. And, I'm also not paying taxes on the fact that I've drawn money against the Bitcoin, because it's a loan; it's not a sale of Bitcoin". At least in the West, that's the way the model works. I'm not aware of any countries where I'd have a taxable event on a loan, and that's a big advantage, right, especially as people are becoming crypto wealthy, which I think is going to be a big phenomenon in the coming years as well.
So, all you're doing at that point is you're making your loan payment against the collateral. If the price of Bitcoin, for example, were to fall like, let's say, 60%, you would probably get a collateral call, which basically says you have 72 hours or 48 hours, whatever the terms are, to put additional collateral into the wallets. If you don't, we'll simply sell enough collateral to put you in compliance with the loan. Or, if you don't make your loan payment, we'll simply sell enough collateral to put you in compliance with the loan. And, that's it!
Peter McCormack: Yeah, I mean, I'm kind of okay with all of that bit. I guess I've got a couple of interesting questions. First one: do you ever panic with all these large amounts of Bitcoin going around, being moved around, into different pools, that one little line of code here fucks everything up; like, do you sleep at night?!
Bill Barhydt: Well, if you were a guy who panics easily, you should not be running Abra, or any company in the crypto space! It's definitely a game of attrition and I think that Abra's been at this for a few years. We've been patient, we've been smart in terms of how we've built our rails; we've focussed on compliance, but we also focus on consumer protection; not because the government tells us to, because it's prudent.
When we design our own interest-bearing products, we use Bill Barhydt as the kind of core user, because what I said is, "Okay, you guys have 18 months. After 18 months, I want all my bank accounts shut off. I want to be done with the banking system. First, I need to manage my deposits; second step is let me borrow; third step is let me pay my bills; and then, I want to be done, but I want it to be in a way where I trust what's going on, so that I can go out on Peter McCormack's show and say, 'I trust this for my own money and so therefore, here's why, and the by the way here's why I trust it and therefore, in my opinion, it's okay for you to trust it too'. If I can't do that, I don't want to sell it".
Peter McCormack: Hold on, do you not have a bank account?
Bill Barhydt: I do, but my goal is to have it shut off by the end of 2021. I have two left; I've shut most of them off; and my goal is by the end of this year, all of the features that we need at Abra to enable me not to have those accounts will allow me to shut those accounts off for good.
Peter McCormack: I haven't been able to get a business account for my business in over a year; it's crazy and always different reasons. I've ended up moving to TransferWise. I don't know if you know TransferWise?
Bill Barhydt: Of course I know TransferWise. I mean, they're a great company.
Peter McCormack: Yeah. So, I've kind of got a pseudo bank account with them and the brilliant thing is, because I get paid by some companies in dollars and some in pounds, they just stay in separate accounts, so I don't even have to lose my exchange rate amount now.
Bill Barhydt: Yeah, they're very clever with their IBAN system, yeah.
Peter McCormack: They're so clever. I've got a card, I can do direct debits. The only thing they need is to add a Bitcoin account to it.
Bill Barhydt: So now imagine, take that model, Peter, and make it Bitcoin-centric. That's effectively our direction; and global.
Peter McCormack: And you bring in direct debits; because, the one thing that's missing from all of these crypto things is someone allowing you to do direct debits.
Bill Barhydt: So, I want to do two things, and again, this is what I need, because I can't shut off my accounts until I have this. I want two things. I want the ability to spend my dollars that I've converted out of Bitcoin, if I've converted them, or if it's just salary, or whatever, directly. Or, I want the equivalent of what I get -- I use the Amazon Prime card right now, because I get credits on it and I get purchase protection and I get 30 days to pay, so it's effectively free money for me. I want that drawdown capability against my deposits as well; so, I need both.
My goal this year, my team is going to be pissed when they hear this, but they know that this is what we're doing, is that I want both. So, if I get that by the end of the year, which is our goal, then I can shut off my remaining bank accounts, because then I can also pay all my bills that way now, which is what I do anyway. I just basically collect Amazon Prime rewards when I pay my bills.
Peter McCormack: You see, it's so interesting because one of the things was, each time I applied for one of these business bank accounts, it's a good hour's work I have to fill in. And the stuff they ask, "What's your line of business; what do you do; how do you make money; who do you invoice; what countries are they in; how do they pay?" I'm like, "Why do you need to know all this fucking information?" And in the end, I can't get a bank account.
So, I'm operating in this weird combination of Bitcoin, PayPal and a personal business account, for a company that's turning over nearly $2 million; that's what I'm having to do. It's absolutely ludicrous.
Bill Barhydt: So, what should happen in the future is, you open an Abra corporate account via Peter McCormack Media Empire, you know, LLC, and basically you can manage your money in pounds or dollar stablecoins; you can faster pay money out from those accounts immediately, and all that's happening in the background is you're converting either crypto or stablecoins back to pounds; you can spend off of a card; you can send crypto where you want; and you can manage treasury.
Basically, there should be no difference from what you're doing with McCormack Empire LLC versus what I just described for what I want for myself. And the reason that I said I want this is not because I'm a greedy SOB who wants to have a 100-person engineering team developing the banking system I want --
Peter McCormack: You're solving a problem, Bill.
Bill Barhydt: -- my core belief is everybody else wants it! So, if they get it right for me, I'm out there evangelising it because I love it, then a lot of other people are going to want it too. I could be wrong, but I don't think I am. And so, that's why we're doing it this way.
Peter McCormack: Well, like I say, TransferWise solves half of the problem for me. I signed up without all the big, long forms; I can hold my dollar and pound separate accounts and I don't have to lose money in exchange rate; I can pay my guy in Australia or my guy in America from the different accounts. Like I say, the only thing it misses is Bitcoin. But, they're a big company, so I kind of trust them.
I guess, one of the things I like about having a bank account, the only thing, I know I'm insured up to a certain level. Do you think you'll be bringing insurance in, or do you think this is just this self-sovereign thing; you get over it?
Bill Barhydt: -- insurance on the rails in and out, because we work with those via our bank trust partner. But, I actually laugh when I hear this question, because if you go back to the explanation I just gave you as to what's happening when you earn interest, our positions are way more collateralised than a bank.
In the US, the insurance only applies up to $250,000 and we have people with way more than that in Abra accounts, and they're way better protected at Abra than they are via a traditional bank; because, if you look at fractional-reserve lending at a bank, it's way more overleveraged -- actually, we're not overleveraged at all. They're way overleveraged versus what we do, which is basically we aim for one-to-one collateral with 25% reserves. It fluctuates from day to day, but that's the target.
On the retail side, you can't even borrow one-to-one; it's usually anywhere from 25% loan-to-value ratio to a 50% loan-to-value ratio, which precludes us from having to basically go out and do all kinds of due diligence on you. So, if you want to get a loan at Abra, we don't have to ask you all kinds of weird questions about source of funds in terms of like, are you a good quality borrower, because everybody has the same requirement. Here's the collateral requirement; take it or leave it.
I think that as people become crypto wealthy versus the falling value of their fiat, that's going to become a very big deal for people, because they can leave their crypto in place, borrow their fiat, go about their day and later on, if they want to spend that via our card or if they want to spend it via debit, that's perfectly fine.
Peter McCormack: Do you know what, you're quite sneaky; you and BlockFi are quite sneaky. You're sneaking in these new banks without us realising, but you are providing --
Bill Barhydt: I'm telling you I'm doing it!
Peter McCormack: Yeah, I know, but what I'm saying is, you've seen ahead of us. I don't mean sneaky in a bad way, but I need this!
Bill Barhydt: Insofar that it's the product I wanted for myself, as somebody who's been in crypto from day one, for sure.
Peter McCormack: Dude, all I want is a wallet which I can go into and it has Bitcoin, pound, dollar, debit card that works with it and the ability to set up regular payments like direct debits. That's all I need; that's all I need. And I need, at the end of the month, to be able to download a PDF.
Bill Barhydt: Okay, so here's my vow. When I can basically shut off my bank account, we'll sign up even as a sponsor, and we'll basically make sure that everybody knows that we have that product that allows you, in the crypto world, to finally shut off your bank account, at least in the countries where it's live.
Peter McCormack: Look, I'm ready. When you've got it, I'm ready. All right, man, well listen, look, we've done an hour and my kids need feeding soon, so I am going to -- God, I could have talked to you about this subject for hours! We're going to have to come back and do this again, like the perfect crypto bank.
Bill Barhydt: Yeah!
Peter McCormack: All right, so let's finish on, we're at $50,000. How do you see this year playing out? I'm kind of interested in people's price targets, even though I'm kind of in that space I'm not going to sell. I think we broke $50,000 pretty easily. I'm expecting resistance at $100,000 and then, I'm seeing these ranges of prices from $100,000 to $400,000; I'm seeing supercycle stuff; what's your feeling, or are you just going to come at me and say, "Pete, it doesn't matter. Whatever happens, we're good"?
Bill Barhydt: Well I mean, it matters. Come on, we can all be coy about it, price doesn't matter; it's a lot of what drives the interest and so that's good. But I would say, if I look at the tea leaves, we haven't had a 30% pullback since we went back down to $30,000 when we first got up to, I think it was $44,000 or $43,000 or whatever it was, so we're due for that.
If I had to guess, I would say, if you look at the upward slope that we've been on since December, depending upon how fast we get there, if it's in February, we could top out just below $60,000 and easily fall 30%. And then, that would actually wind up the rubber band to probably go to $85,000 to $90,000. And so, that would take us probably through August, which if you look at stock-to-flow, it's basically said that's around the time it should happen. And it's uncanny; I mean it really is uncanny how accurate that model has been.
Now, what's interesting is once you get to that August timeframe, when you start to approach $100,000, PlanB's two models diverge because he's got the one model, the original stock-to-flow, which says, "We're $100,000 for 24 months basically". And then, he's got his cross asset model, which basically talks about the next phase, which says, "Hey, we get up to $250,000 this year".
Now, when you ask, he's real cagey about it, because it doesn't really help him to put a stake in the ground when he's got both of these plans, which either one could be right and he's marketing himself. But, he does kind of say, "Yeah, I'd probably put more credence in the cross asset model, which has us at $250,000 this year".
Now, last December, when I went on your show and I talked to Pomp and others, I basically said I think Bitcoin's going to be at $100,000 by the end of 2021. I still think that's right, but I think that if we get a bunch of other Fortune 500 companies making announcements like Tesla, that is going to push this up to $250,000 very quickly.
If you think about it, right, what happened with the price of Tesla shares last year? If the same thing happened in 2021 as happened with Tesla in 2020, I think we would be at $250,000 at the end of the year. Some people are saying Tesla's overvalued, but it's crystal clear that that could happen. And so, now when you go up 5X in a few months, you can easily see where, hey, another 5X, it's certainly possible.
So, my current prediction is $100,000 and I'm still kind of sticking with that, but I can now see a scenario where, certainly in the next 10/11 months, we get up to $250,000 via these melt-ups driven by these corporate events.
Peter McCormack: Well listen, look, I have no idea myself. I feel like $100,000 isn't high enough because we've gone from, what was it, $20,000 at the start of the year? I can't even remember; $25,000 at the start of the year? We've doubled already. I don't see it taking the rest of the year to get $100,000 and I think we've got a bull market for the whole year, but I don't know; who knows, man? It's all exciting, anyway.
Listen, Bill, I love talking to you about this bank stuff. I'd like to do another one on that in future. When it gets nearer to getting ready, we should cover that and I'm interested obviously in becoming a customer and seeing more about it. But, look, if people want to find out more about Abra or follow you, tell them where to do that.
Bill Barhydt: So, abra.com is the first place you should go and you can download the Abra app. Just link up to the top of the page at abra.com. I'm on Twitter @billbarhydt. My DMs are always open. I spend about an hour a day just responding to all kinds of interesting questions from the crypto sphere. So, @billbarhydt on Twitter and then @AbraGlobal is Abra on Twitter, and we're active on both channels and my team is active on the Abra channel as well.
Peter McCormack: Awesome, man. Well listen, always good to see you. I keep saying this to everyone now; I can't wait to get on the planes and get back to The States, because it's been too long, so hopefully I'll see you in person at some point. Keep crushing it, man. Appreciate you coming on the show, love what you're doing and yeah, keep doing it, dude.
Bill Barhydt: Thanks, amigo, always a pleasure; really appreciate it.
