WBD390 Audio Transcription
Bitcoin v the Banking Rails with Willy Woo
Interview date: Friday 27th August
Note: the following is a transcription of my interview with Willy Woo. 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 on-chain analyst and the co-founder of Hypersheet, Willy Woo. We discuss traditional payment rails, making Bitcoin content, the recent price run and the evolving bitcoin cycle.
“This cycle is not a 2013 double pump and a blow off top, this is completely different. This is the new 2020 onwards cycle which we’ve never seen before.”
— Willy Woo
Interview Transcription
Peter McCormack: Well, it is the morning for me, because I'm in Dallas.
Willy Woo: Are you?
Peter McCormack: Yeah, so usually it's about lunchtime when we speak, but I'm in Dallas, so it's 8.00am in the morning now.
Willy Woo: That's right, you've been on holiday. How was your vacation?
Peter McCormack: Dude, it was amazing. I don't normally take long vacations and when I do, usually it's just me and the kids. And because they're kids and they need constant attention, we just go on more adventures. So, we went to Cambodia and Vietnam once and so, every day you're doing something. Because usually, if you're just sat around with kids, you don't get a chance to relax, because they just need entertaining all day, which is fine; but because we were coming into the US, we had to go somewhere for two weeks. So, I just said, "Fuck it, let's go to the Caribbean!" So, we went to the Turks and Caicos Islands.
Willy Woo: Oh, nice!
Peter McCormack: Man, honestly, it's like paradise; it's actually paradise. It's the actual photos you see in magazines where it's clear water and white sand beaches. Yeah, so I had two weeks there. I've got a tan, I've actual colour in my skin for once, which is nice.
Willy Woo: That's awesome. I was meant to be there with my partner for two months, but didn't make it because of quarantine issues and baby. But, yeah, my friends sent me all the photos!
Peter McCormack: You know what the funny thing was; we flew into Miami afterwards. It's like a 1-hour-20-minute flight. I was thinking, if I lived in Miami, I'd be going all the time.
Willy Woo: Yeah, it's so close along the east coast. Yeah, it's brilliant.
Peter McCormack: Yeah, so we're recording this part of the show.
Willy Woo: Oh, are we? Okay.
Peter McCormack: So, you saw that I declared I might dump the Willy Woo show?
Willy Woo: Yeah, I was like, "Don't do that!" I understand you, though.
Peter McCormack: I'll tell you what it was; I'll tell you the funny story. So, it's more like me and my producer, Danny, we speak every week and we have an hour to two-hour conversations about where the show's going, what's happening with the show, what we're doing, and we're always looking forward, like where can we take it next? One of the things I've been saying to him is that sometimes, I feel if the mission is Bitcoin and the mission is how Bitcoin can help people, I think sometimes focussing too much on price can be a bit of a distraction, because one, I'm not a trader; and secondly I'm thinking, look, I want this podcast to be something that pushes humanity forward. I know that sounds hyperbolic and stuff, but I was thinking…
It was also this tweet, I don't know if you ever saw; every time Bitcoin went up $1,000, I retweeted the new price, and we just went up and up and up. So, I decided I'm not going to do that anymore. So, one of the things we were talking about is, we've been considering making this show not just a Bitcoin show. In the future, we'll be a wider set of guests, because we talk about the same stuff every week. So, I was thinking if we do that, one of the shows that might have to go might be the Willy Woo show, and it's quite a sacrifice, because it's my biggest show. I don't mind telling you this; you put out a Willy Woo show, you get over 100,000 downloads.
Two of my Willy Woo shows are in my top five of all time, and if you put the correct title in, if I typed all this, "Bitcoin $300k by end of year", it would do 150,000 to 200,000 downloads of the 1 million I do every month! So, yeah, we've discussed the ideas. If we do it, the only reason we're doing it is for the show. We're actually sacrificing downloads and revenue for it.
Willy Woo: Well, let me ask this question: going wider than Bitcoin, what's the thought behind that? My following is that you wanted to get down to the roots of Bitcoin, the change it can make in the world, that kind of thing. If you go wider than Bitcoin, what are you going to talk about; geopolitics, that type of thing?
Peter McCormack: Yeah, maybe. I think what it is, I've interviewed everyone in Bitcoin now. I've been really fortunate. There's a couple of people left: Liz Stark, I haven't, but we've got that planned, that's going to happen hopefully at some point; Jack Dorsey, I asked him if I could interview him in Miami and he said yes. So, if you do the tick-list of everyone, I've kind of done everyone. I've interviewed Szabo --
Willy Woo: Yeah, I've got you now.
Peter McCormack: Yeah, I've interviewed Bukele. So, when I say go wider, I've spoken to everyone, I've had every conversation, and unless you hate me, which there are a few people obviously that fucking hate me and want me to die; but if you don't hate me, then you've listened to my show, and if I get a big guest, you listen to it. We've got loads of good podcasters, Willy, out there doing great stuff for Bitcoin.
So I was like, if I want to level up, I've got 1 million downloads a month. If I want to get to 10 million, how do you get there? I think one of the things you can do is say, okay, it's no longer a Bitcoin show, it is a Pete McCormack show and a bit like, you know how Rogan does comedians, MMA and weirdos? I could be Bitcoin, macro and weirdos.
Willy Woo: I've been thinking about this, right, because I'm a numbers guy. I think it's a mistake. Myself excluded from this picture, it's a mistake in that you're basically underestimating Bitcoin's growth. I just put out a tweet, "In 2028, we're going to have 2 billion people on this network", so Bitcoin becomes part of the fabric of everybody's lives, and you're deciding here to branch out bigger than the small pond called Bitcoin because it's so early, and you'll branch elsewhere and you're not going to -- the show grows with Bitcoin and the topic of Bitcoin grows and encompasses the entire world, like geopolitics, governance, how nation states are run, how economies are run, how the poor in developing countries can get access. So, the topic of Bitcoin is huge.
It's not like this little pond and then I have to go bigger, because this pond's not growing. This pond is growing like a big fricking black hole sucking in the whole universe and you're going, "I'm thinking I want to jump ship, in a way, or go bigger and from this base, capture the world", when the thing you're covering is capturing the world.
Peter McCormack: I know!
Willy Woo: And, you've got the number one podcast and the number two podcast is Pomp, and that's exactly what he's doing. He's gone beyond Bitcoin to capture all interesting topics, yet you're still number one. Why is that? This thing is growing and you're capturing it. All you have to do is fill the facets of Bitcoin as it grows.
Peter McCormack: It feels like a bit of a telling off, Willy!
Willy Woo: No, it's just my very opinionated opinion! I was watching the interview with Parabolic Guy, Jason A Williams, and you guys are talking about how the community's just trolling and it's a cancel culture, and it's turned into some sort of train wreck. I thought you actually meant, "Well, we just don't want to cover price, because everyone's just looking at price and we're not looking at the important topics". If it was that, I would understand it. I would counterargue, because I don't do what I do because of price, I do it because if Bitcoin's going to make an impact, it needs to grow its market cap so it's large enough to swallow the world's economy.
The best thing I do is this thing I can do, and the skills I have and the reach I have so far is really just get that out to investors, so when they look at it they're like, "Oh, that's a legitimate investment. There's fundamentals behind it. It's not all Dogecoin memes and there's some data behind it". And that no, I'm not going to sell, because the latest FUD from whatever Bloomberg article comes around. So, that's what I think my role is, is to provide retail, not institutional but retail access to high-quality analysis that can understand the investment they're in, and then can help that market cap grow and more people will come in with confidence so that it's big enough to make some meaningful impact on the world economy.
Peter McCormack: Yeah, I know you're right, I know it's a mistake. I'm not saying I'm definitely going to do it, it's just one of those things I keep thinking about. Sometimes, there's people I want to interview and I don't get it because they're like, "Oh, it's a Bitcoin show. I don't want to talk about Bitcoin". I missed out on somebody recently that I really wanted to interview.
So, there's that as well. But, look, I know mathematically it's a mistake. But then there's the flipside where it's like, well, if Bitcoin can have this impact on the world, I know the small part I can play is onboarding people and be willing to deflect all the complications around it, and just be the idiot that says, "Explain that to me again, I don't understand it". And if you're right and we go to 2 billion users, then perhaps I serve my small part in that helping onboard some of those, so I know that as well.
I was with Parker Lewis yesterday actually in his hotel room; we recorded an interview. I even said to him, "I'm even thinking of selling all my Bitcoin", he's like, "What?!" I was thinking, if I didn't own Bitcoin, would I be more objective or not? I was questioning that, and he gave me a very good defence of that, so I'm not selling my Bitcoin. But it is something on my mind.
But the funny thing I wanted to tell you is the amount of emails I had come in say, "No, don't get rid of the Willy show; no, don't, I need that show!" I was like, "Shit, so basically I'm going to lose half my listeners now if I do"! If you're still doing it, I will be probably still here in a year or so.
Willy Woo: Yeah, I don't know. It's your call. I do think that this thing's going to grow and I don't know why you can't just do that anyway.
Peter McCormack: Well, I think the other way to do it -- well, you can't have two shows. I tried having two shows and that just doesn't work; you've got to focus on one. The other thing is just to change the show name, just take "Bitcoin" out of the title, which means you lose some SEO benefits. But when you reach out to someone to interview them…
It's a bit like Lex Friedman; he's the AI guy, but he talks to anyone he wants to talk to. You can be the Bitcoin guy, but just --
Willy Woo: So, you can do the Peter McCormack show, something like that.
Peter McCormack: Well, I'll tell you what, there was this guy who put out this tweet thread about what happened in Afghanistan and the economics of it, and I really wanted to talk to him and I'm still going to try and get him on, but I don't want to turn it into a Bitcoin conversation. I don't want to go, "Well, Bitcoin can fix Afghanistan", I just don't want to get into the conversation, but I do want to understand what happened with the central bank in Afghanistan; I want to understand what happened with the asset freezes, because the Taliban is sanctioned.
So, I do want to have those conversations and it's just, does the Bitcoin name put people off, because they'll go, "Oh, great, so basically this is just going to be a show about Bitcoin fixing Afghanistan", do you see what I mean? It becomes a bit of a complicated factor.
Willy Woo: Yeah, it's just a branding issue, isn't it? It's just whatever gets them on board. It's a tricky problem to solve.
Peter McCormack: I do want to tickle a little rant out of you, because I saw one of your tweets. I want to talk to you about what happened with Substack, and you've moved over to accepting Bitcoin, which is awesome. By the way, is that Substack have allowed it for everyone, or just for you?
Willy Woo: Currently for me, rolling out to others. I imagine Dan Held will be next. Yeah, so I contacted them really early and talked to their staff and they were like, "Yeah, it's on the roadmap sometime", wishy-washy, handwavy. And then, the relationship developed as the letter started to rise on the rankings. No, actually the letter blew them away, because it was not the profile of any of their Substack stuff, which was, "Deal with this free content and…", there's a standard content creation thing you do, and mine was completely different, because I was leveraging my Twitter following. And of course, what I write is not really what they do. So, it was really interesting to them.
Eventually, that culminated into talking with the founders and eventually, early into this year, they agreed to do Bitcoin for me and they just didn't have the resources at that point. They resourced it like, it was only maybe a month ago they resourced it, and they'd already selected OpenNode as the partner to do that, and they nailed it. They nailed it within exactly the rollout plan and time, so within schedule. Honestly, I was ready to move to Ghost and right from the get-go, I was ready to launch with Bitcoin, but I just didn't have the bandwidth to go into managing the development around it to build that.
So actually, it came in the nick of time, because I was in motions to migrate, so it's live now and it's awesome. I'm really hoping that there'll be a big response with that, because they're going to use it as a test case. They're really looking at how much reception there is, and I'm just really keen to see Bitcoin become super popular amongst at least the crypto publications for them to go, "Wow, this is something".
Mostly, the story of accepting Bitcoin is, "Yeah, this doesn't work", and then, "We'll cancel it". Stripe offered Bitcoin way back in 2015, 2016, and then they cancelled it because no one was using it. For me, I basically doubled the price if you're using fiat, because I don't want to deal with banks. You've had issues with your business with banks; I've had no end of issues.
Peter McCormack: Well, this is the rant I want to tease out of you.
Willy Woo: It's literally weeks lost. I mean, for example, because most people think that banking works fine if you're a normie. But once you're on international rails and money is coming in from one jurisdiction to another and it's in a foreign currency and there's significant fund movements between the two, it starts to become problematic.
So, first off, from going through Stripe on the credit cards, and then that gets accepted, this is what actually happens. It gets accepted by Stripe; Stripe then converts the US dollar into Hong Kong dollars, because my bank is in Hong Kong. Then, they then wire the money across to me in Hong Kong. So, that process costs me, what is it, 4% plus another 1% because of the Forex. By the time it gets to me, it's 5% taken and clipped off the ticket. Then, I have to convert it back into US dollars and the bank then clips it again. If I ever want to stack sats with that, I've gone to US dollars again, then I'm moving it into an exchange, then that's another wire transfer. So, it's very slow.
But then, on top of that, we just had no end of issues with the bank. This is with DBS Bank and Hong Kong, they had a two-day, "You can start a business and we'll open up your business account in two days and it's an online expedited process". So, we did that, we filled in the forms and then nothing came back. And it was maybe three weeks until we got to talk to somebody and they just said, "What is your business?" and this and that, etc. And it took two-and-a-half months before they enabled the account.
So, I was using my personal account up to then. Two-and-a-half months into it, they enabled it. Then, we had issues with Stripe sending the money into that bank account, because there were issues with the name, because initially the name was under my name, and then they wired into the company name. All the documents said that if I'm the shareholder of this and I'm the Director and the only owner of it, then there are no problems; there are problems. So, you've got all this paperwork to work through.
It took our operations guy I think about three weeks of calls with Stripe and the banks to figure out how to get this all done. So now, we're three-and-a-half months into it, and the wired money is no longer being rejected and being bounced back, and it's being deposited. But the US dollar account's not showing up online banking. So, now I'm going, "Can you load up the click and point?" No, I've got to go back into the city, it takes an hour's drive, whole day spent filling in forms, wait another few weeks and it's still not working. I call them and they say, "There's issues with the form; you didn't fill it in right". I said, "What do you mean? I went to the teller and I signed everything that they filled in, so your bank filled in the forms for yourself and I just signed it and it failed".
Then, it's another three weeks and we're into four-and-a-half months before this whole system's up and running, and it's just been ongoing. That's one case with it, and this is the better bank than the bank I was working with before. So, when the crypto rails went online, Bitcoin went online, I was like, "One less thing". Yeah, so I just don't think people realise how painful banking rails are, and I'm not even talking about the delays and wiring and all that sort of stuff that most people talk about.
Peter McCormack: Yeah, it's bullshit. I mean, I used to have a business account with, who was it; one of the neobanks, and they closed my account. We changed the structure of the company, just my accountant, the amazing Laura, she wanted to change the structure of the company to have a holding company and a subsidiary, just for certain tax purposes. So, they ended up closing my account, because they don't allow subsidiaries to hold accounts.
So, I was like, "Is there any way of having an account with you?" and they said no, so we were done with them. Every neobank I applied had the same rule, so I went to the traditional banks like NatWest, etc, and I applied. NatWest and Barclays both rejected me and they didn't give me any reason; they just said, "We're not willing to give you a business account". Even though I was, "This is an operational business. It's been operational for three years. I've got six figures in the account, I just want to transfer over", and no, they both rejected me.
So, I ended up using my personal account, like you did, to run it, my Lloyds personal account. Then I had that review, that call where they phoned me up and said, "Look, we want to do an account review. We want to know what this money going from here to here is". I said, "It's none of your business. I'm a grown adult with two children. I don't need a parent". So, then they just wrote to me and closed my accounts down. So, I had six weeks to get an account.
I ended up with Revolut, who came on as a sponsor in the end, but I ended up with Revolut personal and I went with TransferWise as my business bank. But TransferWise is great, but I worry about holding too much money in a TransferWise account. I would worry about having, say, $0.5 million in it, because if anything happened to them, I don't know where to go to get that resolved. And I don't trust them anyway. It's not that I don't trust them; I don't trust any banks. I also know that they're not particular fans of crypto. So, if I want to buy Bitcoin, I have to transfer from them to Revolut and then, you know, I have to go through all these complicated factors.
Willy Woo: Yeah, you've got to really tiptoe. I mean, I don't like TransferWise. I loved it until I didn't love it, and my little cousin, 19 years of age, sends me $600. I didn't know about it until I said, "Where's that money you were sending?" secretly to buy Bitcoin for him! He said, "I sent it". As it turned out, TransferWise had blocked it, because his name resembled a very common name, and any common name is usually red-flagged, because someone's money laundered under that name.
So, for a NZ$600 transaction, so whatever; $400, my whole TransferWise account got locked up and frozen. Then later on, some other thing happened, and the whole account froze up. I didn't even know about it, because I thought I was using it at the time, but it was just not working. A month later, "Oh, we've reactivated it", so there's no way I'd ever run anything mission-critical on it.
I had a whole business eventually that used TransferWise for billing, and that did get shut down because of some glitch, and that had nothing to do with crypto; but it got shut down and all the systems failed, the APIs failed, our billing system failed and the thing is, we can't blame these operators, because they are just doing their best to comply and not be shut down, right.
Peter McCormack: Well, they are operating surveillance on behalf of the government; they're an extension of law enforcement.
Willy Woo: Exactly. So, this is the thing. The transmission of money has now become weaponised and it's a kind of thing that if you think about money, the properties of money, which let's face it, very little of the volume is me moving paper notes around. It is really just electronic transfer between banks. And, if you call this a medium of exchange, it is no longer a very good medium of exchange as a definition of money, because it's so hard to move money without it being stopped, locked, and it's not a medium anymore; it's being blocked.
People don't understand that it's being blocked until they see these issues, and I'm seeing businesses that have had to draw on like $0.25 million of line of credit from the bank, because the bank blocked an incoming payment, for whatever reason, it's held for weeks. So, the friction is impacting the economy, and I'm thinking of Jack Dorsey when he founded Square. He was saying in his research that they found that as humans, we traded with each other before we actually talked to each other.
So, he then looked at the internet and how the internet had really made talking to each other efficient, messaging across social media networks. He obviously had Twitter at that point and he said, "Wow, we have really made that free and open and decentralised", and it's really impacted the world, really radically changed the world. Yet, intrinsic human behaviour to trade is the worst, it's the pits. If I want to accept money, it's ridiculous, weeks. Look at what I did; four-and-a-half months before I could accept money as a business properly.
Peter McCormack: It's fucking ridiculous.
Willy Woo: That's what his mission at Square is. This is exactly what it was like. Our medium of exchange as money, which is one of the core intrinsic behaviours of our society, is being impeded, untold friction. That is, in a nutshell, why Dorsey is headlong into Bitcoin, because it's an opportunity to restore that normality to our species. If you see what the internet did to the world, imagine free flows of money. So, entrepreneurs can interact with each other instantly. We're getting a bit of that in crypto, so yeah, it's a big topic.
Peter McCormack: Yeah, I mean, look. I think money works for you, it can work for most people in very simple scenarios, especially if you go back a decade, two decades, and a lot of money is in cash and cheques and basic card swipes. And if you live in one country, and perhaps you're a service provider to people in your community, they pay you in cash or they do a bank transfer. It kind of works on a domestic level okay.
As soon as you start adding the international component, it is completely fucked. I've seen it everywhere I travel; everywhere. I always talk about El Salvador, of course I do, because it's our big project at the moment.
Willy Woo: Well, yeah, remittances.
Peter McCormack: But when I was there with Mallers, we were there recording the film about what's happening down there, and they're providing a service, their remittance service, but they have to also provide the ability to offboard when you're out there. He was trying to just do simple transfers of dollars from the US into El Salvador and it was an absolute nightmare. There were these guys in Guatemala and they were saying, you basically can't withdraw thousands of dollars from a bank account; it's impossible, you just can't do it.
So, we're talking about our banks being screwed, but even in these smaller countries it's a lot worse. If we didn't have Bitcoin, I wonder if we would just be, "Oh, this is how it is". I wonder if it's because we have Bitcoin, we realise how easy Bitcoin is, that none of this makes sense. Mallers always talks about final instant and final settlement with Bitcoin pretty much, and I always think of that. It's like, if I want to do business with you, Willy, and you want to pay me or I want to pay you, we send each other a Bitcoin address and within an hour, the money's going to be with us, and we're holding it; we physically have it. And if it's Lightning, it's instant. We've realised that's possible. It's possible to build a system that allows for instant and final settlement.
I think one of the reasons is that because it's also an international currency. Currency conversion's a pain, surveillance is a pain, banking infrastructure's a pain. One open, permissionless, free network clearly works so much better.
Willy Woo: Yeah, it's existing everywhere. It's metaverse money.
Peter McCormack: Well, one of the things that Parker brought up to me yesterday, he said, "Rather than sell your Bitcoin, what you should do is go Bitcoin only", and I did think about it. I'm genuinely thinking about that, that it's not that difficult to do. I think I would still need to hold probably something like a TransferWise account, which allows for dollars and pounds, just for things I have to pay for; my mortgage, or whatever. I can get a credit card now, which converts Bitcoin to cash.
Willy Woo: Yeah, a credit card does most.
Peter McCormack: It does most, but there are certain things I might need an account for. But the only thing that ever stops me doing it, the only thing that stops me doing it, Willy, is that idea that maybe, over the space of a year, I get a 50%, 60%, 70% haircut of my net wealth. That does worry me.
Willy Woo: Yeah, okay. It depends if you want to be Bitcoin only, or whether or not, shock horror, be crypto only. Because, if you're going to do this right, in my opinion, you have Bitcoin. You may not need to dabble in any of the altcoin, all of that sort of stuff, but you can use stablecoins. And then, it's worth thinking about that.
Peter McCormack: Well, this is one of the things where I've been defending Ethereum recently, and I've got a little bit, not too much shit for it, but I've just been saying, I find it very hard to binary dismiss Ethereum when there's clearly a use case for digital dollars that exist on that network. And I know they exist on Tron and other things, but I'm just saying --
Willy Woo: Yeah, it's more the -- sorry!
Peter McCormack: It's fine, you go! Well, the only thing I was going to add to that is that I was chatting to somebody last night, and they were saying that there's a dollar stablecoin coming to Liquid, which I feel a little bit more reassured about. But I don't want to get into that, "Because there's some Bitcoin, it's better".
Willy Woo: It's just a matter of where -- stablecoins are stablecoins. They can run on any network, and they will. The network's, "Do you want to build this in Python, JavaScript?", or whatever the hell the platform is; that's all these platforms are. And it's the app that runs on it, and stablecoin is one of the apps, like USDC runs on Solana, Tron, whatever, Ethereum, all sorts. It can run on the Lightning Network if you want. The things is -- now I've lost the original interrupting thought!
Peter McCormack: I was saying, I struggle to binary dismiss Ethereum. I don't like Ethereum, I would never hold ETH, I don't really want it. But I do, at the same time, want to have stablecoins.
Willy Woo: It's been a great experimentation platform and some really cool apps been built, and I was going to get back to this thing of volatility with Bitcoin. You can be Bitcoin only, but you can have a portfolio here of Bitcoin and stablecoin. Then secondly, you can generate yield. Your stablecoin can generate 10% or more yield from it, and you can actually put that into a DeFi Network and get that kind of yield.
So, you're now deeply inside the decentralised digital finance world natively, and maximalists might call DeFi Networks a Ponzi scheme, well lots of Ponzis have been built on it, but there's some really cool shit you can do. You can put stablecoins into these networks and generate yield, because people do want to borrow those coins, so they can go long or short the market on margin.
So, we're seeing essentially traditional finance slowly built out on DeFi Networks. I can trade on Uniswap, I can trade on all manner of DEXs that are coming. The next thing is margin, which is happening, and then they need to borrow, so we can lend, and then we get yield. And then, you can do derivatives, you can create insurance products. So, there's a whole thing being built here, and it's already ready to be used, and you don't really need to be Bitcoin only and be exposed to that volatility.
Peter McCormack: Well, there's just risk everywhere, and I think it's risk planning. I hold the majority of my wealth in Bitcoin, but I want to hold some pounds in cash; I still hold some pounds in cash in a secret, hidden place. I probably will hold some stablecoins. I am still thinking about just getting a small amount of gold as well, just when you're thinking about every single scenario; say £100,000 of gold, which isn't a huge part of my net wealth, but it's enough to say, if there's a scenario where, for whatever reason I need gold, at least I've got it. And, a bit in property. I know some bitcoiners are, "Don't hold property; it's a scam", but I actually think it's wise to hold a bit of property, just a range of things that you can sell if you need to in certain scenarios to protect yourself.
I've just got back into mining with Compass.
Willy Woo: Yeah, I see that.
Peter McCormack: I'll tell you why I did it. Well, firstly I did it because they're coming on as a sponsor, and I always want to try the services of sponsors, but I had excess cash in the bank, and I don't want to put all of my excess cash in Bitcoin mid-bull market. But I also don't want to hold all that cash in a bank account. So, in my head, I was, "Well, I can buy the ASICs", which essentially I'm buying a capital asset, "and I can sell those at any point". And at the moment, they're worth more than what I bought them for. But the prices of ASICs are a lot less volatile than Bitcoin, but they're earning me a yield.
Basically, I'm parking cash in mining equipment, which is earning yield by mining Bitcoin. So, in seven days, I mined $1,100, so over the space of a month, it's going to be $4,000 or $5,000 that I've mined. And, I could sell those ASICs at the end of the month probably for more than I bought them for, and I've generated $5,000 of Bitcoin. Now, that's something that I can monitor slowly.
My worry about putting it all in Bitcoin, say Bitcoin did another 50% haircut, in the short term I don't think the ASICs take a 50% haircut. I think the ASICs take their haircut at the end of a bull market.
Willy Woo: Oh, I see. Yeah, you're probably right, because that last pullback, they'll be in demand, right, because everyone wants to click them in.
Yeah, I mean this is all about diversifying risk, and I thought about it, because I just really want to get off banking. When you're planning your life, you really want to plan it around what gives you energy and joy, because that gives you oomph to do the stuff in the world that you want to do. If you've got this thing that's constantly…
I live quite an international life, and it's constantly this thorn in my side. It's like, "How can I de-bank as much as I can so everything is easy and engaging?" So, the thought was, crypto is actually at that point where I can use it. I can have my Bitcoin stash; I can put my cash -- I have a lot of cash, and if everyone crashes, there's runway for years for the family. I was like, "Okay, but I don't want it to be diluted", and then I was like, okay, I sold my main house in New Zealand, mainly because it's a pain, the thorn in my side. Admin; houses are a pain in the butt. Constant maintenance, constant issues, tenants, property management, tax compliance, all this sort of stuff. So, it was taking too much of my time, so I sold the house.
I was like, "Well, there goes my safe haven thing if all shit happens, shit hits the fan, where do I put it?" I thought I'll be cash, but then in crypto, we have this cash-and-carry trade and there's a very newly developing capital market, it's very inefficient. So, you can actually put money into funds that run basically miniature versions of Alameda, and that will generate for you 30% to 60% per annum.
Peter McCormack: Wow!
Willy Woo: That is how inefficient the Bitcoin market is and how much long demand there is for the volatility of this asset. You can sell the future, hedge yourself by holding the Bitcoin, and you can get an easy 20% over the course of the bull market per annum. But if you add to that all sorts of smart models, you can arbitrage funding, you can do all this sort of stuff and these funds don't lose money. They might go zero, but they hardly ever deliver a negative week; and it's 1% this week, 1% the next week.
So, that's where I've started to look into and started deploying capital into. That's the rainy-day money. I can pull it out within a month's notice, I'm generating, market dependent, 40%+ yields, and that's better than the capital gains I get from the house; it's just beating the monetary inflation, the money printing of the US dollar, which is around 30%, so I'm still winning against that. The house is not winning against that, unless I've got a mortgage and leveraging it. The house might be going up 20% per year. Unless I'm borrowing half the house, I'm losing ground on that, so that's what I did, and that's the crypto world; that's all fluid and no need to deal with banks.
Peter McCormack: Let me ask you another couple of questions about Substack, and I'm sure people listening will be, "When are you going to talk about the market?" but I think this stuff's quite interesting. You might not know this or might not be able to say, but do you know if Substack are taking their cut in Bitcoin and holding in Bitcoin?
Willy Woo: I don't think they'll mind if I say, at the moment there's no cap. They're just giving it out, being very kind, giving it out for free and they're figuring out how they're going to monetise it. It's an experiment for them right now and they'll figure it out.
Peter McCormack: Because, if they took -- because what is it, are they generally 10%?
Willy Woo: Yeah, 10% is their margin. Is that still current? Yeah, I think so, yeah.
Peter McCormack: Because it would be interesting if they took that 10% in Bitcoin and held Bitcoin themselves.
Willy Woo: Yeah, that would be really interesting if they had a Bitcoin treasury like that. I should talk to them. They're so busy building out their immense growth in that start-up. That would be really cool if they did. I think they'd get a lot of good, interesting exposure from being one of those companies. They'd get the Bitcoin publicity. I think they were really rapt with just the reception they got from the Bitcoin community in the media. People were saying, "This is big. Writers from anywhere can now write and be de-banked, and yet get paid", and stuff like that.
Peter McCormack: Well, it would be great for dissident writers and people who are writing --
Willy Woo: Yeah, I'm not sure if it's quite true yet. Because, OpenNode does have KYC AML compliance, so I'm not completely sure about that; you'd have to talk to OpenNode.
Peter McCormack: I'm sure someone could build it though, like a Silk Road version of Substack, where anyone could write and get paid in Bitcoin.
Willy Woo: Oh, yeah, BTCPay Server, but that's not integrated into Substack.
Peter McCormack: The other thing is, how do recurring revenues work? Do I have to pay for the year and then you send out an email?
Willy Woo: Yeah. Because Bitcoin's not pull, it's push, and the user has to push it in. Yeah, we just switched the billing cycle to quarterly, so every quarter you have to pay, or you lose the newsletter. To some people, that might not work very well as a writer, because you might lose a lot of subscribers.
Peter McCormack: That's the downside that I estimate. Subscription businesses are great, like the gyms. People join the gym in January; February, they stop going, but their membership lasts all year. You're going to lose people, just because they don't get round to it. You always feel a little bit bad unsubscribing to a newsletter, or getting round to it, but I expect you'll have a high drop-off rate because of this.
Willy Woo: Yeah, I think so. I don't mind too much. I think that's just a really good signal that the letter's not the right content. There's this other side that you're getting very high signal that you're not producing content, people aren't reading it and they're not reviewing it, so you can adapt the product. It's like short-term loss to long-term gain, because you're learning about what you really need to do.
So, I poo poo this idea of, "They're paying you. They don't even know they're paying you, because you're writing crap and no one gives a shit", but you're just siphoning money. I think that's stupid and short-sighted; you want to be producing value. I like it when I lose subscribers because I'm not providing the value they want, because then I know; that's good. Then, the ones that are staying with me are the die-hard fans that love what you do, and that just adds joy to my life. You don't want this whole cruft of people paying you money and it's not a reciprocal agreement.
Peter McCormack: You're totally right, man. Listen, I've been having some people think a minor meltdown recently, where I've just been ranting about various things and having a bit of disillusionment with things. And, I have my quite open views on COVID vaccinations and I've had so many people messaging me going, "You should stop talking about this. You're losing listeners and losing followers", and I was like, "Well, I don't really care". If I lose somebody for saying something I believe in, then fine; that's fine. If I gain people, that's fine. But I don't want to have this fake audience, because I'm pretending I think something that isn't true.
It's like, I'm not an anarcho-capitalist; I'm not really a libertarian; I am a reluctant statist, and I'm willing to have the debates and the arguments and if I lose listeners, fine, so be it. But at least I've got the listeners who are listening to me because they think I'm authentic. I'm totally with you on that, Willy.
Willy Woo: It's totally key, right, it's that contact of trust. That's how it's built. And I think actually that's why this is the top podcast, because even down to the finances of this podcast, it's public and people trust you.
Peter McCormack: Yeah, some. That does flip the other way though in that I have considered stopping doing the public finances, just because you get shit for it, and there's that envy thing that comes with that. Also, I think being completely transparent fucks with some people's heads; they don't understand it. They're like, "Well, he must be lying. He must be a spook", or the latest round of accusations is that I'm a paid shill by the UK Government or the pharma companies, because they can't handle the fact that someone has a different opinion.
They're like, if you believe something they're, "Well, there's got to be something behind this", and I've always tried to be transparent. Of course I'm not working for MI6, you fucking moron!
Willy Woo: It's a great defence, you know, because it's public.
Peter McCormack: Well, I'm like, "Find the hole". One of the other things is, somebody said to me early on, "You have to be very careful with being a public face, because people will try and cancel you". I was like, "Well, I'm just going to put everything out there". (1) I was a drug addict, (2) my marriage failed… So, I can never have this, "Got you!" It's like, "Here, here's all my shit, cancel me!"
Some guy tweeted out the other day about me being terrible for the Bitcoin community and we should end him and get rid of him, etc. I was like, "Fucking bring it on, cancel me!" I've had five attempts at people trying to cancel me in the last two years, five actual attempts; two completely coordinated. I'm like, "Bring it on". If I deserve to be cancelled, cancel me. Let's go for it. Let's fucking have it. Bring it on and if you can't, then let's get on and produce content, but it does my head in!
Anyone, listen, we're 45 minutes in, we haven't even talked about the market. We should talk about it, because people will be, "This is what we're here for".
Willy Woo: Yeah, "This is the worst show ever"!
Peter McCormack: Yeah, "Shut the fuck up"!
Willy Woo: You should cancel this show!
Peter McCormack: Yeah, cancel Pete, cancel Willy! I probably won't get the downloads now; I'll just get rid of you for the downloads. We've already done 30,000 this month.
Willy Woo: Well, undermining this show right now, giving me 45 minutes and not talking about the maths!
Peter McCormack: Do you know what, shall we just not talk about it at all, just really piss people off?! No, we should. Listen firstly, also, tell me if this is new or not. There was an important note within your forecast this month that all forecasts were probabilistic, etc. Has that note always been there?
Willy Woo: It's been going on for a few months now.
Peter McCormack: I didn't notice that was new.
Willy Woo: I put on a disclaimer, but no one reads disclaimers. Then I was like -- and actually, one of the things was, when I did the forecast, I think I was on a decent number of rows of forecast that were correct, and I think I made a mistake of not saying, "This is probabilistic. I am going to be wrong, and eventually it's going to sting you". Because, a lot of people are just clockwork.
Peter McCormack: A crystal ball.
Willy Woo: Nothing's like clockwork; it's not a crystal ball. So, the first wrong one, I got massive backlash. Oh, no, the first wrong one was not too bad, because it was a sideways band and I went sideways one way, and it went sideways the other and not too bad. But there was another. I called bullish on an absolute top, and people were very scathing. So, eventually I was like, "No, I've got to get this across", and I think I'll have to reword it in a way it's more catchy like, "You're going to get rekt!" and then put in why this is probabilistic.
The thing is, the accuracy of this stuff, I believe, is going to get worse over time.
Peter McCormack: It should do.
Willy Woo: Yeah, it should do. It's just on chain is a known thing now. What we're really working with is data asymmetry, weird information. You can analyse it and the market wasn't digesting that into their pricing of the asset. Now that they are, it's closed the gap, and so you can be wrong more often, because the market already knows that information; it's whether or not they can dissect it to the same degree of accuracy, or reliability. So, it's going to get worse, so that needs to be clear.
Peter McCormack: Well, listen, I'm quite bullish at the moment, Willy. I think this move up from $29,000 to $45,000-ish, it felt quite steady. It didn't feel as aggressive as the move up at the start of the bull market, and I'm feeling quite bullish about it. There are a lot of signals pointing in good directions for Bitcoin right now.
I saw a thing about potential futures ETF coming, maybe in October; there's so much weird stuff going on in the world; there's a lot of people asking about Bitcoin. I'm feeling quite bullish right now. I know you see there's a bearish divergence at the moment, but I feel like we might stabilise above $50,000 pretty soon.
Willy Woo: Yeah, I feel the same way. It was locally bearish in the last letter. I thought I worded it correctly; people just thought it was hugely bearish. I said it was medium-sized bearish in the short term, but I didn't talk about the outer bullish environment that's in, because I just said it's unchanged from the last letter. So, maybe people don't see the bullish note on it, because there was a very fast put out letter, because it was very timely data. It only happened within 24 hours and we've since seen it pull back. But I wanted to get it out there, because the data was there and I didn't have time to cover the normal macro and all that stuff, "This is a fast alert. If you want the bigger macro, then go to the last letter".
It is bullish, it's obscenely bullish, so this was just to document what's already somewhat played out, so it's no secret, this pullback. We've yet to see how deep it pulls back, but I don't think it's going to be that major; it's kind of medium. But the greater environment's amazing. We've never seen this structure before.
Peter McCormack: What are you seeing?
Willy Woo: Gosh, every bottom of a bear market, there's an accumulation band. The latest research that I've been doing is riffing off some of the stuff that Will Clemente created, which is a ratio of a bunch of coins that people -- it's a ratio of Rick Astley, who doesn't ever sell --
Peter McCormack: "Never gonna give you up".
Willy Woo: -- to degens trader. Degens trader and Rick Astley, who's got more coins? You run the ratio and you get this, what I call, a supply shock. It's a ratio of the coins that you're not going to get, bro, versus are the coins that you might be able to get! So, the more coins you cannot get, as that grows, the price usually goes up. So, you run that ratio, and it tracks price very closely. This is where you can go, "Wow, it's going down, price is going up". Then price has got to come back down, because the demand and supply between Rick Astley and degens trader has moved the other way to degens, who are going to buy and sell and short the market.
Peter McCormack: So, the entire market is dictated by Rick Astley versus the degens?
Willy Woo: Yeah, exactly.
Peter McCormack: I love it!
Willy Woo: It's interesting, one of Rick Astley's cousins wrote into the newsletter; it was so funny!
Peter McCormack: No way!
Willy Woo: Yeah.
Peter McCormack: He's a national treasure.
Willy Woo: He said something like, "I don't think he'd mind at all, I think he'd love that, etc". I'm like, "Oh, good, he's not going to sue me using his brand"!
Peter McCormack: He is a national treasure. I think his song, that song, is one of the ones that's done over 1 billion views on YouTube or something.
Willy Woo: Someone did a long piece on this meme, this whole Rickrolling, and now it's done X billion views on YouTube. That's significant revenue, right! So, anyway, you can run that ratio and it's actually just a method of demand and supply, because you have to figure out what are the coins you cannot buy versus the coins you can buy; and you can do different things like, what's in cold storage that's not on exchanges versus on exchange, because you can probably buy the coins that are sitting on exchanges. You're not ever going to buy the coins sitting in cold storage. So, that could be another view.
But there's an interesting view that the Glassnode guys do, which is they look at the coins that date beyond 155 days, five months. If they've been sitting in wallets five months, we call those long-term holders, because they haven't moved those coins in five months. The short-term holders, they're moving back and forth, back and forth. But once they graduate into five months, we consider them long term. So, you can do that ratio of long-term holders, you can't buy their coins, versus short term, which is below that threshold.
That's a really slow-moving graph, because the other stuff is reactive. You can trade over the weekly cycle, but this stuff as a macro takes five months for us to figure out that's long term. So, it's very smooth charts and every single bottom of the bear market, you see that peak. The long-term holders are maximum accumulation; they've got most of the coins. Then, as the market runs up, they start to divest and they take the profits and the short-term guys start to buy in, because they're the new guys in there.
So, when the long-term holders start to lose their supply of the coins, that starts to approach a top. But this is a macro cycle thing, so you saw it at the 2015, 2014 bottom; you saw it at the 2019 bottom; and actually, you saw it over the 2020, where we came back down. There was the COVID crisis, there was Michael Saylor scooping up all the coins, and that was another peak of long-term holders accumulating. And we're moving into a peak and we'll be at a peak at current rates by next month. That means peak accumulation, right.
Peak accumulation means, that's defining this kind of sideways band, and then after that we do a runup. The last runup was $10,000 to $60,000, starting from October last year. The runup before that was from $4,000 to $14,000 over a matter of months. So, if October we start to peak, and we don't know how long that accumulation band is, we're starting to look into November onwards to go, "That's when the runup happens". That's like all the coins have been scooped up by these long-term guys, and November's when the ETF launches, which is what the SEC's making comments about. It will probably allow an ETF around November timeframe.
Peter McCormack: That will be bullish as fuck.
Willy Woo: Right. Then you take a look at that and you go, "Well, even if that doesn't happen, whatever the policy is, but just the structure of the market, this thing is going to go nuts". We're now going to approach into November/December with all these coins locked up by the long-term guys, and we know that when that happens, price is going to do a runup, like the 2017 runup, the first part of this year runup. I'm going, "Woah, we're under-pricing this bull market into 2022", because everyone is thinking four-year cycles. It's like, we're breaking the four-year cycle potentially.
Peter McCormack: Yeah, and I want us to break the four-year cycle, Willy, I really want us to break the four-year cycle. Because, a predictable four-year cycle is really good for an individual who understands how to play and plays it; it is. But I just want it over with, because I want to take that volatility out. Just selfishly, I want Bitcoin to be more usable as a unit of account for me.
Willy Woo: Yeah, exactly. The four-year cycles, it's like one year and it's just horrific, right. The way I look at it, people thought, "Is it a four-year cycle? Is it a lengthening cycle?" I'm going, "No, it's either a four-year cycle, because we're locked into the gravity of Bitcoin's miners and the halving cycle, and then there's the macro cycle". These are gravitational pulls and we're either going to go four years, or we're going to get pulled into the macroeconomics, which is roughly ten years, and we're going to go binary to being correlated to any other world asset; it will be like that.
If we break this, and let's say it doesn't start caving in 2022 and it just falls back into another four-year thing, the demand and supply is sufficient for that escape velocity, and all these complications and interactions of the new Bitcoin ecosystem; really, it was very simple before. It was just miners halve the amount they're dumping onto the market, and that's the impulse. Now, we've got volatility impacts, how much volume is traded. Those kinds of impacts impact how much is selling on the market, because those infrastructure guys dump, right, because they dump their collected Bitcoin revenues and fees into the market. ETFs are the same. They click their fees, they dump it on the market, so there's this very complex interaction now.
So, one thing that I can see is highly probable is that -- tell me, Dan Held's supercycle, is he saying we skip a cycle, or is he saying this is the full-on thing and we no longer…?
Peter McCormack: He's saying, well, he doesn't know. It's a theory, a bit like Plan₿'s S2F model is a model. And, S2F model is a model until it breaks, right. So, the model will either continue through and we will see $150,000, $200,000 Bitcoin and then we'll drop, whatever, and the model will continue; or, it breaks.
Dan's is similar; it's a theory. He has a theory that we might go into a supercycle, and I'm trying to remember it, because I covered it in the show with him. I asked him what would cause it to be a supercycle, and I think he said it would be less, I'm trying to remember; less than a 50% drop from the top. Because, we've been used to 80%, 70%; it would be less than 50% from the top and then continue back up.
Willy Woo: Okay.
Peter McCormack: I think that was his theory on the supercycle. There are a lot of things pointing at a supercycle, because I think the four-year cycle makes sense when you look at it through the lens of retail investors, and you look at the lens through miners and the halving cycle, and you also look through the greed and fear index; it kind of makes sense.
But I think so much stuff is ploughing into Bitcoin, if you have an ETF or multiple ETFs, you have a nation adopting Bitcoin, you have massive amounts of inflation coming in and people realising about Bitcoin, I think they are the things that point at the fact that you won't have that four-year cycle, you won't have that 80% drawdown.
We could go up to $150,000 at the end of the year and early next year, drop to $100,000, but then go up to $200,000 by the end of next year. I think the cycle will get broken by there being a much bigger market of Bitcoin buyers and sellers.
Willy Woo: Yeah, so when I think of cycles, I think about the X-axis, the time component, which is four years. And I was interested to see if with these supercycles, we skip a cycle and we come back and it's an eight-year bull run, and then we come back. But I think what's happening is that we break the four-year and once we break it, it's essentially like this thing that's reached escape velocity and we're no longer pulled into the four-year mining cycle.
You can see it already. The price is doing this drunken wander of price discovery, and it's not these nice parabolics we saw before. I think we just wander, we keep wandering up and down, up and down as Bitcoin adopts and gets to saturation. 50% was the last pullback, which we just had, and that was the last one; that's a good barometer of what we can expect in the future and it will get less and less and less. Then, we have these correlations to macroeconomics.
So, that's it, that's the big revelation, is it's the first solid bit of on-chain data-driven suggestion that we've reached escape velocity, and that's getting me pretty excited and I'm going, "Woah". I looked at the options market and I was seeing what these call options were, making a bet out into 2022 of what Bitcoin price will be. And I'm going, "This seems pretty undervalued based on these new models", and I'm going, "The market's not pricing this in yet; I don't think they are".
Peter McCormack: I don't think so.
Willy Woo: I think it's a very interesting opportunity, because everyone's thinking one thing, and the latest stuff we can see in the data between the investors is that it's not going to repeat, and this cycle is not a 2013 double-pump and a blowoff top. This is completely different. This is the new 2020-onwards cycle, which we've never seen before.
Even at the start of this year, I see the structure as completely different from 2013. You can look at price and go, "Oh, yeah, it's going to be a 2013", but if you look on chain, it's a completely different structure; never seen it before. So, yeah. And even at the start of the year, they were going, "What do you think's going to happen at the top, etc?" and I was going, "I'll tell you when we get there. The third or fourth quarter, I'll have more information". Now, it's starting to come in and it's really interesting. It's like, "Wow, this is very promising". We're going to have another run and forget December selloff, which has happened every other top. Yeah, it's good news.
Peter McCormack: Well, like I say, I'm bullish as fuck, mate. I'm more bullish now than I think I have been at any point during this bull market. I've been accumulating Bitcoin again. I don't like buying Bitcoin mid-bull market; I don't, just in case I'm wrong, but I am accumulating again and, yeah, I'm bullish. I'm getting into the mining and I hold more Bitcoin now than at any other point during this bull market, and I did sell off a little bit for my little venture into buying a few cars earlier this year! But, yeah, I'm really bullish, so we'll see how it plays out, man.
Cool. I'm wondering what to title this show. I could call it, "Bullish as fuck", and I'm telling you, we'll get 150,000 downloads. Or I could go do a rant with the banking infrastructure, "The banking rant", and it will be like 50,000. I might trick people, fuck them!
Well, listen, always good to talk to you, Willy, loved this. When am I going to see you in person?
Willy Woo: I think never at this stage, hey. The world's not opening up.
Peter McCormack: Oh, man. Are you not thinking of getting out?
Willy Woo: Well, I've got a baby, a newborn baby and travelling's not easy like that. If I'm going to come home, it's three-week quarantine. Try doing that from a hotel room with a newborn, if you're going to take the newborn, or not seeing your newborn for a month or more; it's not going to happen.
Peter McCormack: Well, at some point, man, we'll make it work at some point. Look, good to talk to you, appreciate you giving me a little bit of a pep talk and I'll see you in a month, man!
Willy Woo: All right, I'll catch you next month, I hope, fingers crossed!
Peter McCormack: No, we will continue. I need to update my Substack as well. Actually, I don't want to give you my Bitcoin! I like the incentive though of the -- oh, it's only for new people; you're not going to double my rate?
Willy Woo: No, everyone's just grandfathered in the old stuff. What we will do is we'll stop the annual subscriptions, just because I want the ability to pivot the letter and change formats and stuff, and if you're committed for a year, then it makes it pretty difficult.
Peter McCormack: Yeah, that's fair. All right, man, well listen, I will see you in a month, bullish as fuck and we'll see where we are. Do you know what, I've got a feeling by the time we speak next, we might have had a new all-time high.
Willy Woo: Not out of the question. Definitely, it's not out of the question. You've got good instinct, I think, for the most part.
Peter McCormack: That's because I read your letter that I pay for that everyone else should subscribe to. Anyway, look, I've got to go to Dallas. Good to see you, man.
Willy Woo: Enjoy, catch you later.
