WBD403 Audio Transcription
Is the Cycle Going to Break? With Willy Woo
Interview date: Tuesday 28th September
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 an on-chain analyst and the co-founder of Hypersheet, Willy Woo. We discuss whether Bitcoin is maturing, platforms vs protocols, decentralisation, and freedom.
“It’s not a cycle in my reckoning… I don’t think we’re going to top and have another four-year revolution, where we have a one-year bear market. It’s not looking like that at all.”
— Willy Woo
Interview Transcription
Peter McCormack: You should see how fancy it is when we do it in person; we have a studio. We've got to do one in person at one point.
Willy Woo: I know, I saw you do one in person and you were on a couch as Robo Peter!
Peter McCormack: Do you know what, I don't like those couch ones. I like a table and two people sat opposite each other, and then I can have a pen and a pad.
Willy Woo: Oh, Joe Rogan style.
Peter McCormack: Yeah, I just feel awkward on a couch.
Willy Woo: Right, yeah. Was that because you had a sore back? You shouldn't, right, you've fixed that?
Peter McCormack: No, just when I was in New York, I just booked a suite thinking we could use it, and the one I had for Michael Malice, they didn't have the same setup. So, the one I had with Michael Malice was a wide suite, and so we could have a table at the end to sit opposite each other. But the way this room was set up, it was a long one, so you couldn't do the same setup. So, it was annoying, so we just used a couch, and I didn't like it.
Willy Woo: Oh, right. Okay, fair enough.
Peter McCormack: Anyway, man, are you well?
Willy Woo: Yeah, pretty good, pretty good, yeah.
Peter McCormack: How's your month been?
Willy Woo: It's been, I don't know, this year it's like every day is very similar, but things change within the work, which is really interesting. But, you know, you're in a house, we kind of took a staycation, went to a hotel, booked a suite, took the baby along; test run for the travelling ahead. And, yeah, that was a change. But, yeah, same old, same old. The market's different.
Peter McCormack: Well, hopefully we're going to meet up. Let's talk about markets, man. So, I've no idea where we are, where we're going. It doesn't feel like 2013 and it doesn't feel like 2017, I just don't know where we are. Where the hell are we, Willy?
Willy Woo: Well, that's what I've been telling everybody; this is unique. This bull run, 2020, 2021, we've never seen anything like it before. Structurally, it's completely different, right. So, you can template all you like the price pattern from 2013, "Oh, we're going to do a double pump", but the underlying investor activity is very, very different. I mean, Bitcoin's maturing, it's getting very much larger players; we've had institutions coming along, we've had a lot of speculators that are trading correlations, which we saw last week.
For example, this last week, we've had nothing but buying by investors. They're buying on the exchanges, they're scooping it up, moving it off to cold storage, and you can look forensically at the blockchain and go, "Okay, they're buying". And actually, right now, which is really not very common is that you see the long-term investors. And when I say long term, I mean it's not really long term, you don't know how long they'll hold those coins for, but these are the guys that keep accumulating. They just buy; they seldom actually sell any of their coins.
Then you've got these guys that are what I call the "swing traders", the medium-term guys that buy and sell, and those guys are buying as well. So, everyone's buying right now, meanwhile the price is collapsing, because you've got this new kind of speculative risk-off trading. People are leverage trading and they're selling down. That's the only explanation for this price pullback, is that we have the Evergrande -- how do you pronounce that; Evergrade?
Peter McCormack: I think it's Evergrande.
Willy Woo: Okay, Evergrande scare and also we had the Fed tapering notice, and you can see the S&P 500 saying to test support. We went into this last weekend like that and on the weekend trading, it started to look very week and it sold off, and Bitcoin likewise started selling off. So, it was just selling off on a correlation to the S&P 500, where nothing but spot buying.
So, that's one of the things that's interesting this year, is that we've got different actors in the market and they're all doing different things. Obviously, I look on chain, so I look at what medium- and long-term investors are doing. To see what speculators are doing, you really have to use derivatives data, and that's not quite as reliable. But yeah, we've had this kind of mismatch and I think a few people got very, very bearish, but there's really no cause to be super bearish. I think there's even a few people that still think we're in a bear market. But again, structurally on chain, what the real investors are doing, we've never been in a bear market.
Arguably, May might have been tipped into a bear market, but more like a little bit of a bear market within the greater macro setup. So, yeah, that's the interesting thing. This cycle is not a cycle in my reckoning. It's like, this cycle is different; it's not even a cycle. I don't think we're going to top and we're going to have another four-year revolution where we have a one-year bear market; it's not looking like that at all.
Peter McCormack: I think that's healthy though, Willy.
Willy Woo: Well, it was eventually going to happen, right. Eventually, the halving will not be powerful enough, because what is it; 1.6% inflation rate is what the miners are adding to the Bitcoin supply? Whether it's right now, or whether it's 0.5% inflation rate, or whether it's 0.1% inflation rate, sooner or later that's not going to mean anything. It's going to go to zero. At a certain point, it's going to break loose from the halving cycle and there are going to be other effects that impact it, and I think it's already happened.
Even right now, the interesting thing is the mining has gotten so large and so corporate that we're starting to see numerous mining operations that are publicly traded. And those guys now, many of them aren't selling, because they really -- people are investing in them for their Bitcoin. So, they're not selling. They sell more equity to get more Bitcoin through their mining operations. So, that sell-down's gone from some of the larger operators, so yeah, I think we've broken loose already, so it's breaking…
There are a lot of people thinking, "Oh well, as the thing gets bigger and bigger and bigger, the cycles will lengthen"; I'm not saying that either. I think that we were binary. We hit this four-year lock-in from the halving and then once we break free, then we're on correlations to macro and macro cycles are around roughly ten years. I think because of that, this won't be a cycle. We're correlated to macro more than Bitcoin's internal halvings.
So, yeah, it's not like other cycles because (a) we're not in a cycle; and (b) underneath the structure of what investors are doing, it's completely different from what we've ever seen before.
Peter McCormack: Well, I think breaking the cycles is actually bullish for Bitcoin. I would exchange a smaller top this year for not having a large drawdown that starts next year. I don't like the structure of a four-year cycle. Look, if I knew it, understood it, could trade it, yeah, obviously it's great for gains. But if we want the market to mature and we want Bitcoin to be an asset that more people come in and use and don't feel the volatility, I would much rather have a more stable price than these four-year cycles. So, I think it's actually bullish for Bitcoin.
Also, if the cycle is broken, there isn't going to be that big incentive for a massive selloff come January, unless people have got to pay their taxes.
Willy Woo: Yeah, I don't know, because we've got other impacts, right, like the fourth quarter. Well, that's when we're all expecting ETFs to start coming in in America, and fourth quarter's where we expect much more institutional, in terms of corporate treasuries coming in. So these kinds of demand and supply things meet, and maybe the buying is going to overwhelm it. Certainly, it's setting up that way structurally on chain.
But I agree. It's good to not have those 80% pullbacks over a year, because it wreaks havoc on all of Bitcoin's metrics: volatility, Sharpe Ratio, the risk undertaken and all that stuff. It all just means that you can allocate more if the risk is less. So, yeah, that's the great thing about this industry is it keeps changing and everything we've learnt in the past does not necessarily apply into the future, particularly these kinds of factors of the cycles, I think. It's not going to work; shorter timeframes maybe, but not the larger ones, because I think we're in a different era.
All the metrics are broken as well. On chain, all those metrics that I used to use a year, even ones two years ago, I don't even look at them now. I think they're just so archaic, they're like stone age tools, compared to the stuff we need to look at today. That's advancing as well. So, yeah, it's a whole new ballgame right now with these markets.
Peter McCormack: Has it made trading harder for you?
Willy Woo: No, I think it's become better. Well, it's harder, because I'm not the same person I was two years ago; I'm learning as well. So, I really feel like I wasn't consistently profitable until the last maybe 18 months, maybe even 12 months, and on-chain analysis has been a big part of that. I mean, my size of trade is probably, I don't know, it's probably about 50 times bigger than it used to be a year ago. So, that gives you an idea of the confidence I have now than I used to.
Yeah, so I think I'm getting better, it's getting better. I'm getting better, I think it is harder to trade these markets, but an interesting thing that I've -- I mean, I'm coming around to Bitcoin is not -- if you're going to trade Bitcoin really properly, you don't want to be trading just Bitcoin. You really want to take a look at the greater crypto ecosystem and trading all of it. You might hate this, because --
Peter McCormack: No, it's funny, I've got it in my notes here, because I've been trying to be as objective as I possibly can about the broader crypto market, for a couple of reasons. I don't want to just be a maxi because every other bitcoiner I know is a maxi, and therefore I feel pressured to be one. And I also want to recognise the wider role I'm doing with the podcast. Now listen, I'm not going to start covering altcoins; it's not a thing.
I've made an Ethereum show with Lane Rettig, because he quit the Ethereum Foundation, and I think that's a super interesting conversation about governance. You can compare what he says are the failures in Ethereum governance to what's been successful governance in Bitcoin. Some people say there's no Bitcoin governance, but there clearly is.
Willy Woo: There totally is.
Peter McCormack: Yeah. I'm not going to suddenly make What Ethereum Did, whilst I could probably double my annual revenue, I'm not going to do What Solana Did, and I'm not going to cover those projects. But what I am going to do is try and get a broader understanding of where the crypto market is going, what it means for Bitcoin; and another reason I'm doing this as well is that, I'm not sure how effective arguing with people over crypto versus Bitcoin is, and I'm not sure if actually it's a net negative (1) for me personally, in terms of my podcast; (2) wider for Bitcoin. We're jumping way ahead of something I wanted to discuss in this.
So, there is this kind of overlying threat, as a bitcoiner, that if you consider any other crypto, that you can have your reputation destroyed and cancelled. We saw that when Breedlove took a look at, what was it called?
Willy Woo: BitClout.
Peter McCormack: BitClout, yeah. Now, don't get me wrong, I --
Willy Woo: It was BitClout that put a social network-y thing, yeah, BitClout, wasn't it?
Peter McCormack: Yeah, and I've got no interest at BitClout. But I've been at two -- I was at three conferences in the last week in New York and they were crypto conferences, and I went there to talk about Bitcoin; but I kind of want to understand that wider crypto thing. I'm halfway through Allen Farrington's document, I'm following Udi's tweeting at the moment with interest, and I'm happy to discuss it, but I'm perfectly aware that there is this overlying threat that if you go a little bit too into crypto that you risk being cancelled.
Now, listen, I don't give a fuck; if people want to cancel me, they can. But I'm trying to understand people, I'm trying to understand motivations, I'm just trying to understand where technology's going. Now, listen, my conclusion's quite simple, in that I'm basically agreeing with Udi and Allen. I don't think these things are all scams. Yes, there are scams; I don't think these things are scams. I think some of them are -- basically, my comparison is, Bitcoin is my vault, crypto is Vegas. I keep my money in my vault, some people go to Vegas. And I'm watching these people in Vegas have loads of fun.
My explanation on Twitter the other day is, I feel like I'm in a conference room in Las Vegas discussing human rights and financial freedom, watching people on the roulette wheel through the window; that's what I feel like's going on!
Willy Woo: Yeah, I'm looking at it very similar but not similar. I call it a casino, because a casino, you can't beat the house; whereas, I think of it more like venture investment. Bitcoin is money, so I'm a maximalist on Bitcoin as money, I think it's won. People often think I'm a maximalist, but I'm not. I think there'll be a lot of interest technologies that are going to come out of this space. And this is one of the problems if you're in Bitcoin. If you start talking about stuff that's outside of Bitcoin, you're considered promoting scams, which I don't think is the case in 2021.
In 2017, a lot of it was scams and there were a lot of Ponzis and still is now, but there are some really interesting technologies out there. And the due diligence is fully available if you want to be the VC type. So, let's face it, Bitcoin is not going to do a 10,000X from here. Other than fiat going to infinity in terms of money printing, in terms of real returns of things you can buy, maybe in a gold-based return, it's not going to do another 10,000X. You might get 100X, maybe 1,000X, until saturation. So, if this is your money, then some of these technologies are going to be pretty interesting.
So, I do think there's value if you want to invest in some of this stuff, but you really have to be like an angel investor in a set level start-up, which I've done, because I've done start-ups in the past. Man, it's a 98% failure rate, right, and you would call that a scam. You would go, "Oh, you raised money, you sold a pitch, and then you tried to build something, and then you kept raising money and tried to build something, and you hadn't got any customers yet", but no one does; you're just trying to get critical mass. Then eventually, you run out of money and it collapses.
Then, as a seed investor, you don't call that person a scammer, you just say that was a failed high-risk investment, because only 2% of the 100% get through to being a liquidity event. And, these are very similar. They're very untested technology, no one's figured out the stuff before, and you will totally lose money on this if you make the wrong bets. The only difference is that you've got a live traded price, which is open to manipulation. I think that bit is debatable. I mean, I don't even think it's debatable; I think it's really open to a lot of scamming.
But behind a lot of this are some of the really good projects; and actually, luckily, the top 20, many of them actually are doing some interesting things, right? So, it's not like if you looked at 2017, the top 10, top 20 were fully of crappy projects. So, I think I wasn't going to go down this path, but there is that --
Peter McCormack: Now we're here.
Willy Woo: Yeah. Bitcoin is money, and then you can try your hand at venture investing into this stuff that retail can now do, because you can't do this on equities, because the SEC have shut all that down since the dotcom crash. Sarbanes-Oxley has made the requirement for a growing venture to be too high, so you get the likes of Uber becoming a $100 billion, or whatever, valuation, before it even looks at getting listed. And no one wants to invest in something that's had the first 10,000X taken by the VCs and the rich guys.
So here, we've got this round where we can, retail can do their own research, which some of them are very sophisticated. So, there's that part of it that I think is valid. The other part, I was just going to talk about the markets itself, if you were to trade it.
Peter McCormack: Well, we'll come back to that, the markets itself, because I think actually discussing what this stuff is, is actually super important. I'm trying to evolve my ideas around it in a way which explains exactly where I am with people, because I want to avoid -- I'm happy to talk about this stuff; I'll never stop talking about what I want to talk about. But I want to avoid people saying, the accusation will come that Pete's now a shitcoiner, he's going to turn this show into a shitcoin show. That's not going to happen. I am entirely focussed on Bitcoin, because I am entirely focussed on Bitcoin as money, and I consider crypto fintech.
I think crypto, outside of Bitcoin, has largely failed to be decentralised enough, but I do think it's succeeded on the permissionless layer. I do though long term think that most of these protocols are screwed, whereas Bitcoin is here for perhaps a century or centuries. I struggle to think that something better will come along.
Willy Woo: Yeah, and that's totally valid, right. I think Bitcoin has won on the monetary war and all these other ones are screwed, which is what you expect. 98% failure in the traditional start-up round; you expect the majority of these things will fail. That doesn't mean they're scams and, hell, let's allow retail to invest in this stuff, because you can also get the upside of that. And, I'm really in favour of not a nanny state. I'm in favour of people being fully exposed to the volatility, which we haven't had in, God knows, maybe 100 years, since central bank-type policies have come in and controlled the stability.
So, we've had really stable money, where people are happy to earn what used to be 2% and be rock solid, whereas the real world is volatile. It's ridiculously volatile and we've got multiple generations that are oblivious to it and they're so scared of taking risk, which does not pushy humanity forward. And this is why probably a lot of people are depressed at home, because they don't get to live.
We were evolved into a life that was full of risk and we were totally alive, and now we're dumbed down with every risk taken off the table and it's a nanny state, and I think it's totally good, even on that alone, I think it's totally good that people can invest in these volatile, very crazy ups and totally lose all of your money on it if you do it badly in an instrument. And, we're in an internet age and all the information is out there for people to study. It's not like it's predatory.
Peter McCormack: I'm not sure; I'll tell you why. I am reticent to compare investing in crypto protocols to investing in companies for a couple of reasons. Firstly, you have no legal claim to a company with these tokens; you just have the token itself sometimes which have little value beyond being something to pay for gas within the protocol. Whereas, if you are investing in a company, if you own shares, you have a legal claim to part of that company. You also have, hopefully at some point, access to dividends and such with it. Whereas, I think ultimately, all these crypto projects fail.
Probably my major concern is that what happens during this period, what I've noticed with the newer protocols that are coming on, is that the hedge funds are largely the ones that are getting in very early and buying up a substantial amount of the tokens, and what happens when it goes to market, it becomes available to everyone else, but the little guy can still get absolutely crushed in these markets.
So, I'm reticent to compare the two, but I also, at the same time, support open and free markets. I'm not going to be buying them myself. So, I'm reticent to compare the two, let's just say.
Willy Woo: Well, I think there are real problems that haven't been fixed, but that can be fixed; I'll get into that later. I'm not talking about ownership and the next Heinz factory, well, The Heinz factory. I'm talking about the next thing, right. You have a legal claim onto a start-up venture; actually, you don't even have a legal claim. Let's face it, if you're going to invest in start-ups, you don't have a legal claim. What you have is a safe note, which used to be a convertible debt instrument, but now it's an agreement for future equity. You have no legal claim whatsoever. That's standard. If you're at the seed level start-up, you have no legal claim. And even if it goes bust and if you had a legal claim, what are you going to do; sue them for having a shot at it? So, it's not much different.
The only difference that's really screwed up in crypto is that you can totally exit scam, because you get your money before you've delivered anything.
Peter McCormack: Well, yeah. I can go back to a very old interview I did with Jill Carlson. She said, "The problem with these crypto protocols is you're doing your seed round and your IPO at the same time, and you haven't found product market fit, and you haven't delivered something which is potentially scalable and will last for years". Now listen, there are different categories within that. You have the outright scams within there and you have the ones that will appear for a few months and then disappear.
Then you have something like Ethereum or Solana or, I think what was it, AVEX now? I can't remember, but they appear that they might have some more longevity. But what I think will happen is, where Ethereum made a trade-off with centralisation and security versus Bitcoin, I think Solana's made a bigger trade-off; and I think what will happen is, at some point other ones will make a bigger and bigger trade-off.
I really feel like there's a massive incentive for hedge funds like Multicoin Capital to support these protocols, get in early, invest their $20 million which, if it's successful, then turns into hundreds of millions, if not billions. But the problem is with these people, to realise their gains, they have to get liquidity to exit, and their liquidity's going to come from maybe some other hedge funds coming in later.
Willy Woo: Or retail.
Peter McCormack: Yeah, but they're going to need a lot of support from retail at some point or another. Reading in depth of the Allen Farrington report, ultimately these systems are screwed, because they are kind of Ponzi in design.
But what was really interesting, bear with me on this, because I've got Allen's document open with me; and what I like that he's done, he's been very fair and I'm going to quote him. He's very fair about what, for example, Ethereum is. So he says, "The permissionless nature of Ethereum-based applications collapses barrier to entry for entrepreneurs down to zero. End consumers are the primary beneficiaries of this innovative environment, because all applications share the same database; the Ethereum blockchain. Moving capital between platforms is trivial. This forces projects to ruthlessly compete on fees and user experience".
When people are out there saying, "Ethereum's a scam", I think it's a silly argument, because it doesn't explain what the scam is. People here have built actually quite an interesting technology. The idea that I can own an asset and I have a wallet and you have a wallet and we don't have to create an account on every different website and we can transfer assets between us is super cool. I think that's super interesting.
He even said this. He said, "This is an admirable achievement. It is easy to see why the combination of features enormously benefits consumers. Referring back to our initial characterisation of the concept of decentralised finance in the introduction, no individual or entity can maliciously or politically affect the market activity, be this in the form of agitating to advantage themselves, or disadvantage others".
So, that to me was a very super interesting look at Ethereum as the technology; not whether it's delivered, not whether it has future scaling issues, what it's trying to achieve. I struggle to call that a scam, because they're trying to deliver something that doesn't exist within the market, and that's interesting.
Willy Woo: Ethereum gets called a scam just as a reflex, because maximalists call any presale a scam, because we saw so many scams with presales. And, Ethereum had a presale; what was it, $50 million presale? So, it was instantly labelled as a scam by bitcoiners. Never mind that Vitalik never exited and never banned an approach and keeps pushing it on, and no one lost any money. So effectively, it was exactly like a start-up venture, where they took money, they delivered some technology and it got traction and everybody won.
But we don't call these start-ups, like Airbnb or Uber or Facebook or Google or whatever, we don't call them scams, because everybody -- well, people who took the risks knew what they were up for.
Peter McCormack: It depends on the start-up. We would call a Theranos a scam.
Willy Woo: Yeah, okay. But ultimately, it was whether or not the founder pushed the team, and the founder pushed it forward and delivered something. And I was going to get to this thing. Ethereum itself, we've got our first smart contracts platform. People could do an ICO and solve the exit scam problem by saying, "We won't get our premine tokens until we get these milestones" and you couldn't co-bet within these smart contracts networks. Cover your one, because your one isn't live yet, but it's solvable and I think if we moved voluntarily into this, it would put a lot more trust from the community and it might even accelerate their success.
So, I think we can move into a space where this stuff, the potential for scamminess of it can be mitigated. But yeah, I see now some more and more very legitimate projects and good innovation coming in that, to be honest, many die-hard maximalists turn a blind eye to; they just think it's scammy.
Peter McCormack: What I think the best way to approach it, Willy, is that I think ultimately, Bitcoin is money and we think Bitcoin is the best form of money and it supports freedom. I think you and I fundamentally agree on that, maximalists agree on that; even a number of people who are saying Ethereum would agree on that. I mean, Lane, who I was with the other day, he's an Ethereum guy, but he agrees with that.
What I've noticed is that shouting at somebody about Ethereum does not change their opinion on Ethereum; but educating them maybe on why Bitcoin is different or what it offers them, it might, like Dan Held said the other day, "Look, you've made a load of money on dogcoin; maybe you can put a little bit of that in Bitcoin".
So, what I would rather do from the approach now on is, rather than be toxic and yelling at people about why Bitcoin is better, despite the fact that I did a little triggering tweetstorm yesterday, is actually I'm probably just going to talk about what potential problems exist with Ethereum and say to people, "Look, you might make some money, but you definitely want to consider holding some in Bitcoin". And this is why Allen's approach is really good. He recognises what the achievement is with Ethereum, but then he critiques what its problem is.
So, I've got this here, "The underlying backend infrastructure for DeFi Ethereum must continue to scale in order to support higher bandwidth demands. Processing approximately 1.5 million unique transactions per day, Ethereum is already at its current max capacity and transaction fees have spiked as a result. But notice, transaction fees spiking is good for security, so we have somewhat a perverse situation in which the more secure the protocol becomes, the more its value proposition suffers. In order to become more usable, it has to become less secure".
So, it's kind of interesting that you can -- I think it's more interesting to critique it like you would critique Bitcoin and say, "Look, if you're going to invest, this is the risk and this is where to put the money", but I just think yelling at each other's not got us anywhere, and actually I just think it's PTSD from 2017, where people think they need to yell at somebody, because of what happened with the fork wars. But I just think we have to mature beyond that.
We've got hedge funds and crypto investors and Wall Street guys and retail; there are lots of people looking at the crypto space, and I think it's potentially losing a war on narrative to shout about the wrong things. Does that make sense?
Willy Woo: Yeah, I really think bitcoiners are -- and maybe Michael Saylor thinks this is like the hornets that defend it. I actually think they're doing Bitcoin a disservice. Sometimes I look at Crypto Twitter and I look at the Bitcoin conversations and it's almost like boomers yelling at the cloud, type thing. There's nothing new, it's like, "Bitcoin fixes this", all these memes, laser eyes, "Have fun staying poor"; it's just meme after meme after meme, but not a lot of --
Remember back in the day, only five years ago, there was really smart conversation going on about the tech. That's all gone now, it's all just memes. The interesting conversations tend to be in these newer protocols, because they're trying new stuff. I don't know if it's arrogance, but I don't know why bitcoiners need to be so insecure. It's already won the monetary network and in a way, I think it's beneficial people stack Bitcoin and they then move into these other investments and then bring it back, right. You get velocity, you get Bitcoin being used as…
Actually, in 2017, as much as it was a bubble, that's what we used to do. We'd stack it into Bitcoin, then we might buy some might have been a scam, might have been interesting, or might have been totally, you know, you lose your shirt on it. But if you made some money, you bring it back into Bitcoin, and Bitcoin was being used. That's your store of value, that's your safe spot, that's your money.
I think it's much more healthy to have that than have everyone saying, "Don't invest in all of this other stuff", which is actually new innovations, "Let's just hoard it into Bitcoin and not do this stuff so that we don't actually have the decentralised web", you don't actually have all this innovation. How are we going to digitise traditional finance and then go beyond that if we just hoard our Bitcoin and hodl it and then shit on any project that wants to try something new?
What that ends up is, you get a whole bunch on one side which are Bitcoin hodlers, and on the other side you have traditional finance, providing all the services the world needs: insurance products, options, you just name it, all the stuff we need, mortgages, whatever you can think of. Who's got a mortgage here? Who's taken a line of credit out? We'd be in this world where we have Bitcoin on one side and traditional finance providing all the services that people need.
I would much rather have Bitcoin as a monetary base and a really nice bunch of crypto networks that are providing these services, and they don't necessarily need to be the ultimate in decentralisation like Bitcoin; they can be decentralised enough to give people access.
Peter McCormack: What I would say is that I would be careful too, because I've come up against this before as a mistake, to group all bitcoiners together. I think there's a spectrum, right? We've got the super hardcore maxis, then we've got people who are a little bit more happy to discuss projects; some people want to invest in multiple ones. There's certainly a group who are absolutely firm in their defence, what they believe is their defence of the protocol, especially because of what happened in 2017.
I think if you're someone like President Bukele, who's literally put your 95% approval rating on the line to become a Bitcoin-based country, I think it's healthy to know there's a group of people like that who are going to defend any kind of potential attacks on the protocol, and I think that's really super interesting. Then within there, there's a bunch of people who just recognise that some of these protocols really are most likely to fail, and that's fine. But I just think it's a losing war fighting that all the time. But like I say, we have a range of people doing different things, so it doesn't really matter.
I did an interview with this guy; do you know Greg Carson from XBTO?
Willy Woo: No.
Peter McCormack: I did an interview with him the other day, and I felt like his thesis was really interesting. He said to me, "Bitcoin is sound money and it's moved slow; it's a glacier". He said, "It has to, because everything it builds has to be right and has to work, and it has to do one job, which is be the best money in the world, therefore maximally decentralised and work". He said, "NFTs, security tokens, ICOs, all those smart contract platforms really are a test bed for what works", because it's in a move fast, break things environment. Once you find out what there's market demand for, that ultimately could get built on a Bitcoin layer, because you would want to have that on a sound money layer.
He was similar to you. He said, "The shitcoins, they're venture capital for Gen X", is it Gen X or zoomers? He said it's venture capital for those, people that can't get into venture investing elsewhere and can go out and have a bit of fun. I felt like that was a pretty interesting thesis, and something I'm happy to discuss. I'm still going to be all in Bitcoin.
Willy Woo: Yeah, I think it's valid. I don't think it will all be built on Bitcoin and I don't think it's feasibly possible. And knowing how technology has evolved online and within computers, there's not ever going to be one. People keep thinking Ethereum's a competitor, but Bitcoin's very simple; it's a protocol. You define protocols as things that message, and the message we're sending is, "I'm sending you money". Whereas, Ethereum's not a protocol, it's a platform. A platform gives you a whole development environment and a language to create things with.
So, once you're a platform, things come into fashion, out of fashion. The internet is based on TCP/IP, right; that's a protocol. All you do is you send bits of data to each other, you do handshakes. That's like Bitcoin. Ethereum's a platform and if anyone's been in computers long enough, you would notice that you can look at any website on the web and it's a website. That's sent to you through a protocol, but the platform it's built on changes all the time. It can be built on Python, it can be built on JavaScript, PHP, whatever. Facebook was built on PHP and then they moved to their own version.
Now, anything at scale uses probably five or ten different platforms to build their individual bits and I think that's what's going to happen with these crypto platforms, is that we'll use a whole bunch of them. They're come into and out of fashion. You'll see Tether jump from Omni Layer to Ethereum ERC-20s, then they're on Tron, I think, and Solana. So, you'll see some of these applications start to spread across different networks. So, yeah, that's completely different things and I don't think that Bitcoin should be worried about it.
Ethereum should be in a knife fight with other, well, maybe not even that. It's got to find its niche of why people are going to choose that versus Solana or the next thing or the next thing, because each one of them will do a job, if they're done right, designed to do a job very, very well in a particular niche and they'll grab that, because that's a particular need. And then, things will change and there'll be another need and another platform will come along, and I think that is what we'll see, because we've seen it before.
Peter McCormack: Yeah, well that was my debate with Knut Svanholm, when I discussed with him. He said, "Ethereum has no utility", and I was like, "Well, the people using it are finding utility, so it has utility, it's just you disagree with it".
Willy Woo: Oh, my God! I mean, I use Bitcoin as a store of value, sure, so it's stuck in a cold storage. I use Ethereum as part of my private banking, because private banking's so shitty, because sending US dollars anywhere is crap; it gets blocked. I think I'm going to end with these rants, so I'm not going to talk about why they get blocked, they always get blocked, so eventually I just go --
Peter McCormack: But everyone loved your rant last month!
Willy Woo: Every dollar I get, I move it onto the exchange and I convert it to USDC, so now I can move that stuff, whether I'm going to invest in something, or whether I'm want to get yield from it, this is all running on Ethereum. The finance, I'm using private banking, in part powered by Ethereum, because USDC is on it. Maybe it will run on a Solana if I was to use their version of it. So, day-to-day I use it a lot.
So, Bitcoin's nice, it's a great store of value and it's also great at putting up the fight in the geopolitical sense, and that's really important. I think Jack Mallers would say that's much more important than me getting my banking done, because I can get my stuff done, whereas there's a whole part of the world that is completely screwed. So, that Bitcoin sort of fight is very important geopolitically for the world.
Peter McCormack: Well, I notice you've been tweeting a bit more about those kinds of issues, and maybe you have all the time and I've not really noticed it, but I notice recently you've been part of the fight, part of the argument for Bitcoin, part of the argument for freedom. I think it's a really interesting time for that as well. I put out this tweet that I'm so embarrassed about at the start of the lockdown.
When the lockdown first happened and we were seeing bodies in China falling on the floor and dying and major issues in Wuhan and Italy, I was like, "Look, I support these lockdowns, I support the --", I can't remember exactly what I said. I think I said, "I support draconian laws to protect us". Honestly, I'm so embarrassed about it now. I think I'm become more orange pilled in the last six months than at any time previously in Bitcoin, but I'm almost too embarrassed to admit it, because it's like, "Oh, yeah, you're flipflopping".
Following everything that's happened in Melbourne, Australia now, I think it's a real lens as to how scary a Western, supposedly civilised democracy can get. Have you been following what's happening in Melbourne?
Willy Woo: Yeah, it's crazy. It's real clear to me that, you know, the funny thing is, every time we get to the end of an epoch or of an era of money, it happens every 100 years, there's something like 70% chance of a war happening, like a World War. And I'm beginning to think that the World War that's going to happen is not like others; it's pretty much the people against their governments. It's like a revolution war.
It kind of makes sense, because the world's very well-travelled now. We've been to different places and we like people from the other walks of life. It's really, the disconnect -- you only go to war because of this kind of alien culture that you don't understand or don't like at all, and that's like the common people and the elite right now. It seems like that's going to be the war that's going to happen. So, yeah, and this is front and centre, you know; our own money is front and centre in something like this.
Peter McCormack: Well, I mean really, Marx would have called them, was it the proletariat, in Melbourne? I think it was a real attack on working class to mandate vaccine for construction workers. And, listen, I've said it before, I'm vaccinated. I think the stats clearly show that in most scenarios, that vaccines make sense, but I absolutely support the idea that they should be optional, because people have taken the vaccine and died, or people have taken the vaccine and had heart issues. Now, you can't force something on somebody that has a risk of killing them; I just don't believe you can do that.
Willy Woo: It's not even that, right. You can't force someone to take something into their own sovereign body. But if you can, what's to say that, let's assume that the government is out for our best interests. They haven't shown that of late, for the last few decades, but let's assume that's the case that they're out for our own benefit, and then we take this vaccine and we say, "Okay, you now have jurisdiction over what I put into my body"; that's just a 1984 scenario. What's the next thing we're going to contend with?
Peter McCormack: It's a slippery slope.
Willy Woo: Yeah, totally. So, I think this is about pro-freedom and yeah, I think that there's this growing anger, and that's very dangerous.
Peter McCormack: Well, if you look at this thing in Melbourne now, the slippery slope is really interesting, because I've been following it daily. A couple of days ago, aerial footage is now banned. Helicopters have to get approval to go up and take aerial footage, so they don't want aerial footage of the protests, because they didn't want to show the size of the protests. Some of the violence, if you just go onto Twitter and you search on "Melbourne" and you go onto videos, some of the violence that's being dished out by the police, the riot police, whoever they are; I mean, there's one shot of a guy in a train station, he's face-slammed into the floor. They're shooting people with rubber bullets, which I think is a very dangerous step.
Now, today, there's an internet blackout in Melbourne; there's an actual internet blackout because they don't want people sharing the material.
Willy Woo: It's like you're describing China, really? It's like Australia's turning into China, right, "We're going to ban this, because that footage will leak". The Great Wall of Australia.
Peter McCormack: The irony that Australia is kind of in a semi-cold war with China at the moment anyway is an interesting lens to see Australia become the same. But then you compare it to the US and you say, look what's happening in New York. I've just been there and I had to, in almost every scenario, show my ID and my proof of vaccine to get into any restaurant or bar. Now, luckily, US has the federal system, so you can choose to opt out of that and go and live in, I don't know, Texas or Florida, or Wyoming, the free states. In the UK, we don't have that and I feel like if you had a spectrum of this kind of new wave of authoritarianism, the UK isn't hugely behind Australia. We're not there yet, but you can see this slippery slope.
Willy Woo: The only thing that saves us is decentralisation. The reason why you can move to a different state in the federal system in the US is because it's decentralised. Ultimately, this is the only thing that beats totalitarianism, is decentralisation.
Peter McCormack: But you say that; even in the US, what's kind of interesting at the moment is that Biden has mandated all companies with more than 100 employees, everyone has to be vaccinated. Now, I don't know what the status of that is and I've mentioned this on the show before, I was listening to Jack Murphy on a podcast with Tim Pool, talking about something like, I hope I've got this correct; there's a $14,000 fine if one of your employees is not vaccinated and comes to work, and they can just go straight into your bank account and take that money. So, that's what they were talking about. Your AR-15s can't stop that happening; they just steal your private property.
So, they're coercing the owners of companies into who they can and can't employ, which is squeezing people. I don't know what they can do on a state level.
Willy Woo: Well, I don't even think the federal government has that jurisdiction.
Peter McCormack: I thought it didn't.
Willy Woo: It's like over the last two decades, the federal government's been doing a power grab and disassembling a lot of the structure that was put in place in the US. And I think ultimately, it's almost a cliché, democracy is only there on the strength of the citizen that defends it. And, I mean even that, it's getting weaker and weaker. It's nothing like the 1960s, when people really went out on the streets and totally pushed, say, the US against war, etc.
Peter McCormack: So, the problem is, Willy, so many people actually support a lot of the government decisions, so you can easily follow it; just go on Twitter. There's a lot of people in New York who absolutely support the idea of vaccine passports. One guy I replied to on Twitter the other day talked about, "The system doesn't work currently as a passport, because you show the card, which you can lose, or you have different versions from different locations. You really need some kind of coordinated app", which I made a joke about.
But yeah, it's really interesting, not just because of Bitcoin, but because of watching what's happened. I think the last six months, I've been more orange pilled than ever and started to realise, I am pro-vaccine choice and I'm vaccinated myself, but I feel like I really need to stand up and support those who don't want to be vaccinated, their free choice; I absolutely have to support that.
Willy Woo: Yeah, I agree. Meanwhile, in New Zealand, I see everyone's very pro the government there. And what's interesting to me is, there's a government that's led by Jacinda Ardern, who's shown an immense amount of empathy for people and she never goes on air to tell people what to do. She always says, "Good on ya!", like mama, "Good on ya!". She encourages you and goes, "And we have to dig in. I'm really asking you to stay at home".
You do that and then you see what happens is, you have huge amounts of support and trust and people can work together as a country. I mean, New Zealand's eliminated the virus on two occasions now, I think. I think right now, there's another spate of the new delta variant, but everyone's locking down and they're doing their bit. And they're doing it almost like a World War II kind of spirit of digging in, because that's a government that they trust, because it's shown empathy and it's asked and never told.
And on the other side of the ditch, in Australia, you've got the exact opposite; you know, we call it "the other side of the ditch". You've got the exact opposite: rubber bullets, banning this, banning drones, banning the internet, for all we know. So, yeah, it's a real eye-opener. It's like, how stupid can you get? I mean, we're adults, right. We kind of figured that kind of behaviour doesn't work, yet we see this at a political level.
Peter McCormack: Well, yeah. The problem is that they've managed to split the people. I would say that the majority of people would get vaccinated. I think it's not a 50/50; maybe it's a 60/40, 70/30, and they've managed to convince enough of the maybe 70, who would or are vaccinated, that the unvaccinated are the enemy.
Actually now, I've even changed my language, because I don't like to use "anti-vax" in terms of the COVID vaccine anymore. I think anti-vax is a term that has relevance to certain vaccines. I think if you weren't to take a polio vaccine for a child, that would be moronic, and I also think the MMR is sensible for people to have for their children; I think it statistically makes sense. And I think if you're against those, then perhaps you could be considered an anti-vaxxer. But I actually think the term, anti-vaxxer, is actually insulting now, because really what it is is either "vaccine-hesitate", or just opting out of a specific vaccine.
Willy Woo: It's polarising, right, the term "polarising", and that's the problem with the world right now is it's very polarised. The world needs something else, right, that's the other direction where we're not polarised and we think freely, we're not in one camp or the other. Like crypto, maximalists versus shitcoiner, though that doesn't really help. The world's never black and white. You can have two people that get along until they talk about politics, and then they'll be at each other's throats, because it's so polarising.
Peter McCormack: Well, polarising people is effective.
Willy Woo: Yeah, it is. I think that's what we need to do right now, as a mass population, is to be less polarised. And if anything, that's what the media portrays. Anyway, that's that. How was that for this month's on-chain analysis?!
Peter McCormack: Yeah! But the thing is, Willy, this is why trying to unite people around Bitcoin is actually an important thing, because one thing that I've noticed is quite consistent with bitcoiners is a lot of them aren't political. They're not left or right. Some are, obviously, but you start to realise, you give that lens over government and you realise they're not really working for you, they're working for themselves. So, perhaps that's why Bitcoin is so important; it is that weapon.
I think it's very tough to argue Ethereum can do the same as Bitcoin, in terms of decentralisation and usurping the state. But please go and create your permissionless tools, but I think Bitcoin does offer that one bit of hope that actually, we have this effective tool where we can route around the state, and I think that's a really important message that I think, whether you're a bitcoiner, whether you're a shitcoiner, whether you're a no-coiner, that you should care about; because ultimately, whether you think you need it or not now, you might need it in the future.
Willy Woo: Yeah, I totally agree, and that's exactly the framing I think about, that it's the only game in town for a hard money, which is really -- the only game in town behind a hard money is decentralisation and everything else is a permissionless network, which is useful. It will enable everyday lives, but right now, the thing that's really important, geopolitically, is a hard money that is owned by the people.
Peter McCormack: Well, it makes El Salvador super interesting to see how that actually works for a state that has it as a legal currency, because that might be a good test bed.
Willy Woo: I've been thinking about the statement I made about, everything that Bitcoin touches, it decentralises, and I've seen so many ways that that's played out, like Bitcoin was banned in China, because Bitcoin touched China and China didn't like this thing that they couldn't control, so they banned it. So then Bitcoin became more decentralised.
Now the fight, right now, is the regulatory war that's happening, that they want to shut Bitcoin in, and a lot of the permissionless networks down. And, if they succeed in America in putting through these regulations that mute Bitcoin and altcoins, then what's going to happen is that there's going to be a lot of the entrepreneurial class that will move their companies out of the US and into these tiny little jurisdictions who are going to give it a shot. El Salvador's one in a spectrum. You've got Singapore, you've got Malta, you've got Switzerland, Zug, and there are a lot of countries that are open to say, "Entrepreneurs, come here".
So, on the one hand, you've got the EU shutting this down for their central bank, you've got the US fighting off regulations, you've got China banning it. The three major powers are saying, "Shoo, go away, the future", and it's going to flock to all these emerging states. And it's essentially tipping the power from the central superpowers into a whole bunch of distribution of power to the smaller regimes. So, yeah, Bitcoin touches that geopolitically.
So, yeah, it's interesting. It's funny how this works, "Bitcoin fixes this", these memes coming up again!
Peter McCormack: Well, so when I interviewed Harry Sudock the other day he said, "Everything is good for Bitcoin"!
Willy Woo: Yeah, everything's good for Bitcoin, practically. I have to think about what isn't good for Bitcoin. Everything is so far that I've thought about.
Peter McCormack: Maybe a meteor hitting the earth.
Willy Woo: 100X leverage on futures markets; that's bad for Bitcoin. No, that's definitely bad for Bitcoin.
Peter McCormack: Well, this is going to be the least trade-y chat of all of our chats and probably the one I've enjoyed the most!
Willy Woo: The last chat was very untrade-y and I had to say, "Don't listen to this, because it's got nothing that my followers follow me for", and I think people listened to it because it was very psychology.
Peter McCormack: It was popular. We had the pep talk as well, which was very popular, and now we're going to have this. I think this is going to popular, Willy; I think we've talked about some interesting things.
Willy Woo: Well, let me know. I just think people are more into overseeing how their bank balance is, or how their Bitcoin balance is, and what the market's going to do.
Peter McCormack: Of course they are, but there's not much to say this month.
Willy Woo: That's what you're trying to get away from, right?
Peter McCormack: Well, yes and no. What, you think this is my manipulation, to keep you on the show but not talk about trading?!
Willy Woo: Perhaps. I think you're just bored of markets!
Peter McCormack: Well, no. It's just, look, when markets are going up, it's super interesting, and when they drop, they're interesting. When they go sideways, what can you say? There's not too much you can say.
Willy Woo: The market's going up, it's just the price hasn't figured it out yet!
Peter McCormack: But let's reinforce the reason why you should have some Bitcoin and hold it, and if the market's going sideways, you want to be stacking. Or if the market's dropping, you want to be stacking. And if the market's going up, you want to be stacking. Everything's good for Bitcoin. Always stack!
Willy Woo: Correct, yeah, okay.
Peter McCormack: Well, I loved it anyway, Willy, I think this was awesome. Hopefully, soon enough, we're going to have a beer in person at some point.
Willy Woo: Yeah, sounds good. It will have to be -- I don't know when!
Peter McCormack: At some point.
Willy Woo: I kind of think we're not going to have free travel until central bank digital currencies are out!
Peter McCormack: Oh, God!
Willy Woo: I really think there's some sort of bullshit mandate that's like they're going to have all these ways to stop people from spending money. We've got to keep inflation under control. We're in an era where monetary policy and fiscal policy are together in cahoots. And I was like, "Shit, if we unlocked the world and travelled, we're going to see a real runaway inflation, because people are going to start spending money and that velocity's going to just go through the economy". That's probably the reason why I think that, like why are we locked down for so long when the risks aren't actually that high anymore? It just doesn't make sense.
Peter McCormack: It's control, man, control.
Willy Woo: Control and control over the economy. Yeah, so anyway.
Peter McCormack: All right, man. Well, listen, I loved this one and I think people will love it too. And hopefully, I think by next month, maybe we'll be back into crazy bull times and we can talk about trading.
Willy Woo: Okay, sounds good. It is crazy bull times; people haven't figured it out yet!
Peter McCormack: Peace out, my man.
Willy Woo: Okay, man, catch you later.
