WBD495 Audio Transcription
The Bitcoin Adoption Supercycle with Dan Held
Release date: Friday 29th April
Note: the following is a transcription of my interview with Dan Held. 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.
Dan Held is the Growth Lead at Kraken. In this interview, we discuss the splintering and factionalization of the Bitcoin community, trying to be honest in a toxic environment, update on the Bitcoin supercycle, and Bitcoin application (selling, hodling, lending, and collateralizing).
“We have a lot of things that make me extremely bullish on Bitcoin… did I wish this to happen on the world? Absolutely not, I wish we didn’t need to have Bitcoin because we could trust, but we can’t.”
— Dan Held
Interview Transcription
Peter McCormack: Do you know what it is; do you know what's really annoying me? Trying to have a rational conversation with people, trying to make rational points, making an attempt to ask valid questions, just saying, "Look, I've got questions, this is what I'm thinking", and for people to write you off for asking questions, or to insult you for asking questions. I mean, Danny's brilliant at this, he's like, "Pete, just do it on the podcast".
There's never a scenario where you're sat here having a long-form conversation and you're asking those questions does somebody insult you or call you a statist cuck; you work through it together. Every time you do it on Twitter, it just descends into bullshit.
Dan Held: We commonly disagree on things. I think you have a little bit more trust in the state than I do, I'm a pretty diehard libertarian. Despite that, I think we have good conversations on What Bitcoin Did and also on Twitter; it's not like we go attack each other. And I think that that nuance of just having a friendly debate keeps things civil and it keeps the argument tighter versus resorting to ad hominem attacks, which I notice is pretty frequent for both you and myself in terms of other people criticising our thoughts, or that resort to an ad hominem attack immediately, or that resort to other techniques that are like strawman, etc.
Peter McCormack: Well, even more extreme, like attempts to cancel me. I had somebody get in touch with me this week and she was like, "I've heard some accusations about you", I was like, "Please tell me". It was, "Yeah, you assaulted a woman", I was like, "Huh?" "Yeah, I've heard about this", I was like, "Pretty sure I haven't". She said, "Yeah, Laura Loomer in front of Jack Dorsey". I was like, "Hold on a second, I did not assault Laura Loomer. Laura Loomer was about to get dragged away by security, yelling at Jack Dorsey. I went and stood in front of her. I think I touched her arms and just tried to calm her down".
Dan Held: She was the one who yelled at Jack at Bitcoin 2021, right?
Peter McCormack: Yeah.
Dan Held: Oh, yeah.
Peter McCormack: But these people were saying, "You shouldn't talk to him, he's this, he's that, he was a drug addict, he got divorced, he assaulted a woman", they did this list. I'm like, "Hold of a second, yeah, I got divorced, okay. And yes, I was an addict, I recovered from that. Shouldn't we celebrate that?"
Dan Held: Of course.
Peter McCormack: But these attempts to cancel people within the Bitcoin world is really weird. And the bigger point on this all, Dan, for me is like, "Hold on a second, there's a splintering going on here when actually --" I had somebody talk to me about first principles this week. If you go back to first principles, we're all on the same team.
Dan Held: Of course.
Peter McCormack: We're all on the same team, but if we splinter and we attack each other, what are we actually doing? Are we holding back the growth of Bitcoin? Are we holding back education? Are we confusing new people coming in? Do we look like a deranged bunch of morons who are going to dogpile in on every criticism? By the way, I know everything I'm talking about here, I have some hypocrisies; we're all learning. But what are we doing here?
Dan Held: Yeah, I think the friendly fire, is how I call it. The friendly fire in the Bitcoin ecosystem has reached, I think, a really bad point, to where the toxicity in Bitcoin existed for a good reason, to preserve some of Bitcoin's cultural values, which those cultural values then enforced the preservation of more important things, like the 21 million hard cap and keeping the block size smaller, or reducing the amount of influence companies and powerful individuals have over the protocol.
So, that intense, or aka toxic community, had a purpose back in the Blocksize Wars, and for other things, that has turned to, I would say, an autoimmune issue, for starting to attack its own body, because there actually isn't that big of a threat to Bitcoin. There's no Bitcoin Cash, there is no, I would say, major threat externally. I mean, sure you've got other protocols, but none of them compete to be a sound money as well as Bitcoin does. And so, without having an attacker to fight against, the white blood cells start to attack the own body.
Peter McCormack: There's a couple of interesting points in that and again, I agree. But I was around during the Blocksize Wars. I was new, I didn't understand it, but I'm not even sure the word "toxic" is right. It wasn't a toxicity, it was a firm holding of the line, the likes of John Carvalho, Adam Back, people like that, they held the line, they held it firm. What we have now is, there's this new influx of people who probably weren't even there during the Blocksize Wars, they all seem to have a name like, DotHodl, they call themselves the Plebs, sorry, and as a group, they've almost become like the nanny state; it's outside of Bitcoin.
They say, "We're here to defend Bitcoin", but I actually don't care about shitcoins. I cared about Bitcoin Cash, I know we care about that; that's a direct attack on Bitcoin. All right, shitcoins, I don't even care. Actually, I want to be friends with them, because I want them coming into Bitcoin, right.
Dan Held: Totally.
Peter McCormack: But now, it's like every opinion you hold, they're coming at you if it's not the right opinion. And there's a really important point on this, based on the applications for people who want to be guests on the show, or the people I'm talking to, or the people that email me, there's been an influx of moderates and lefties coming into Bitcoin, and there are solid arguments for why people on the left should care about Bitcoin.
Dan Held: Totally, and I think that Bitcoin's original core values are very libertarian, and they're somewhat inherent, because it's about freedom to transact with whomever you want. So, whether you be left or right, Bitcoin is a very libertarian foundational ideology. It's very permissive, which libertarian ideology is the only most permissive ideology out there; you do what you want with your body and with your money. Now, when it comes to the left and the right, I certainly think that yeah, we have seen more lefts and moderates start to come into Bitcoin, which is encouraging. Bitcoin is for everyone, so that's fantastic.
Peter McCormack: It means we're winning.
Dan Held: It means we're winning and also, I think, a lot of the bitcoiners that are more right-leaning, what they don't realise is that this may change how they think. Once they see Bitcoin's permissionless structure, they have to somewhat become libertarianesque, and the same with the conservatives. If the conservatives have certain values that want to restrict people's body or money, well cool, Bitcoin doesn't care about that. And I think that's what's kind of cool, is that Bitcoin's a forcing function on both sides to make them bend a little bit more towards, what I would call classic liberal values; liberty, if you will. I mean, that's what libertarian ideology is really based on.
So, I think Bitcoin is a forcing function to force both sides into its gravitas of freedom and that ethos. Now, I think with what recently has happened is, there's kind of a weird subset of bitcoiners who really lean in on the very, very conservative style of Bitcoin, one that leans into very conservative values, that's totally cool. If you want to have that as your narrative and that's what Bitcoin means to you, awesome. I'm not saying that's wrong or right, but you shouldn't also say that that's what everyone's value should be when they use Bitcoin.
It's funny too, because I was there ten years ago, I don't remember almost any of the people that are more of the right side, almost none of them were there; and Bitcoin was pretty libertarian. Bitcoin back in that era was, "Cool, man, do you want to go and buy drugs on Silk Road?" That was the mindset, you know, super-super-liberal, Burning Man meets buying drugs on Silk Road meets, "I've got an AR-15, stay off my property". To see them start to lean in with different conservative values is very interesting. And then to claim that that has always been Bitcoin's culture, I think is pretty incorrect. Bitcoin's culture has always been very libertarian.
Peter McCormack: Yeah, and look, I get some of it, Dan. The last two, three years has not been a great time for the state, they've not had a great run this last two or three years. For me, that doesn't mean burn everything down and start again, it just doesn’t. There are things that need fixing, there are things that are clearly wrong, but that's not where I am. But I would recommend anyone struggling with this, go and read The Righteous Mind by Jonathan Haidt.
There is a reason some people lean conservative and there's a reason some people lean liberal. Some of it's nature and some of it's nurture; but you are not going to convert somebody into your way of thinking by shouting at them or cancelling them. This whole idea that there's this world of left wokeism, it seems to me there is some right wokeism going on; there's anti-woke woke. And cancel culture exists on the right.
Dan Held: Totally.
Peter McCormack: Absolutely.
Dan Held: What's really bizarre about some of the pleb culture, which I respect a lot of it: don't trust authority figures, trust Bitcoin and the Bitcoin Network; those are awesome principles. I think some of the ones I don't agree with are these cancellations, like this cancellation mindset of a purity test. What is the most pure version of being a bitcoiner possible? This doesn't represent all of them, I'm certain, who knows which percentages believes in what, etc. But here's good examples.
One is, remember we both have lent out our Bitcoin, on BlockFi or Celsius or Nexo or Ledn? It's my Bitcoin, I can do whatever the hell I want with it. So, why would you care if I do that or not? It's such a bizarre mindset, to think that the Bitcoin standard would come into existence and lending would never exist again.
Peter McCormack: Also, there's these certain people who are completely crazy, who will make things up, actually make things up. I've had the spook accusation, which has gone --
Dan Held: That's a popular one now.
Peter McCormack: Yeah, "You're a spook", "Okay, why?" "Well, you must be", "Well, why, come and audit me, follow me, follow me around for a year, see if I'm a spook". But also, it's ludicrous even having to prove it; it's just fucking ludicrous. And then, what were the other ones?
Dan Held: You're a statist cuck.
Peter McCormack: Statist cuck, yeah. Well, that's language which tries to coerce you away from holding opinions. It works, self-censorship is censorship. And I know it works, because the emails I get from people saying, "I don't want to talk about this on Twitter, but I've got these questions" or, "Can you cover these subjects?" because they know they're going to get yelled at. What were the other ones?
Dan Held: Shitcoin apologist.
Peter McCormack: Yeah, shitcoin apologist; you're paid by Pfizer. I was like, "Do you know how much they're paying people?" It's $1,500. Come on, let's get in the real world. It's just lying, cancelling, coercing and abusing. But the look from the outside is terrible.
Dan Held: Agreed. I understand where they come from, by the way, of you see false information, you see an altcoiner comes in and says, "Bitcoin's too slow", the classic one, too slow or too expensive. So immediately, after answering this question for the last ten years, your blood starts to boil a little bit, because you're like, "I've answered this a thousand times". So, some of them resort to the more shouting, angry style. But I find, and I've pushed back on this a lot, as you have, that that's not that effective. I mean, Bitcoin's dominance percentage has never been lower. So, if it had been effective, then Bitcoin would have a 99% dominance.
A more effective way -- so, that's a quantitative way to look at this. Qualitatively, you don't go to -- and they go, "Well, Bitcoin's so useful that I don't have to be nice, because people should just get it", and I'm like, "I don't think that happened to you the first time you got it". Or, they shit on people because they speculate, or they day traded. No one's perfect; I did too when I first started. That's right, Dan Held wasn't a perfect hodler from the beginning, no one is. We all learn through pain and trial and error; but also, from the people that were kind to us and explained things to us. I didn't really have many people there to explain things in a simplistic manner, hence why I care about doing that. The positive outweighs negativity almost every time.
When we look at a scenario where, let's say someone made a lot of money on Doge. My narrative now, instead of being like, "Repent, repent! Sell your Dogecoin", which is what these people try to push, sort of the fire and brimstone version of Bitcoin, I tell them, "Cool, 99% of us are probably guilty of trading alts at one point, or day trading, and congratulations on making a bunch of money on Dogecoin. But you know what, I'm an old-timer, you probably want to role out those gains into Bitcoin". And that, I think, gets to reach more people than, "Repent, repent! You're a terrible person". They're not a bad person, they just didn't know. They might have been trading it for fun.
Peter McCormack: Or, they don't care.
Dan Held: They don't care about the mission of crypto or Bitcoin, or whatever, they just care about the mission of making money. So, they come for the speculation and to make them stay for the sound money, you need to explain it to them, rather than making them feel bad.
Peter McCormack: You're not going to shout people into changing their opinions. People will turn inwards, they'll back away. It's like parenting 101. You learn very quickly as a parent, shouting at your kids doesn't make a difference, it just makes no difference. You have to talk to them, you have to teach them good skills, you have to help them, you have to guide them, there has to be rewards. They have to go out on their own sometimes and make mistakes. But this shouting…
Dan Held: It's super-strange. I mean, I would love to see a psychological breakdown of who these people are. I mean, I think you're taking the right approach. I've seen some of your comments where you say, "Look, it sounds like you have some things you need to work out in your own life; I recommend you do so". You're giving them basically free psychology!
Peter McCormack: I offered to pay for one of them's therapy!
Dan Held: Yeah, basically therapy, because I think you're right. I think they're using Bitcoin and the pleb shield as kind of an identity for just being an arsehole.
Peter McCormack: But that becomes a race to the bottom, like who can be the biggest arsehole.
Dan Held: Yeah, and I've noticed that as well. The biggest arsehole is the one -- they respect that because if you're an arsehole, you're irreverent, and it means that you don't give a fuck. And it's like, "Cool, anyone can do that". So, according to your own objective and mission, which is to convert more people to Bitcoin, if you look at your own standard of why you do this, then you realise that it's not even being effective, so why would you continue to do it, unless you just felt like you were being an arsehole and you liked it?
Peter McCormack: Yeah. Every single one of them, I'm like, "I'm always happy to answer questions". I went into a group the other day, like a Spaces, of a bunch of very angry people, and I sat there and I was willing to answer question after question; I did. And then you just get some dude come and go, "You fat maggot". I was like, "Listen, I'm happy to stay, I'll answer any question and admit when I'm wrong, but come on". Fucking fat maggot, it's like Jesus Christ!
Dan Held: What's so weird about you is I think you're one of the most transparent people I know. You've gone through a lot, we all do, we all have our own life struggles on our journey. But you've been very transparent with some of yours, for example your previous drug addiction and stuff.
Peter McCormack: Can I tell you why, though, a really interesting point on that? Because also they're like, "You're an attention seeker!" I've probably had, in the history of Bitcoin, maybe 200 people reach out to me who've got substance issues and they're like, "What did you do? I'm struggling. I've got this issue, I'm taking this drug, I'm drinking", like issues. All I can do is go, "Okay, I was in the same place, these are the three things that worked for me", which was always, as I said, I went running, I did yoga and I meditated. And if you need it, there's an app called Calm, which was really good for me, and this is how I got out of it. I also had a job to focus on.
Once you show your vulnerability and your mistakes, other people might approach you, and I don't see a single downside to saying, "Yeah, I've been through some shit. Yeah, I got divorced and it was awful. Yeah, after that, I was addicted to drugs, but this is how I got out of it and rebuilt my life". And there's people appreciating, and you can share that with them. And I say that, because somebody did it for me when I was in that bad place. Somebody gave me their time, made themselves available, somebody with a successful podcast, made themselves available, and that changed my life. So, I just think, "Why are you attacking someone for doing that? Do you want other people to suffer?"
Dan Held: It's incredibly cruel, and I was, to kind of wrap up what I wanted to say about that, I respect you even more because you say that. I've got all sorts of things, as we all do, but it takes a lot of courage to put that out there. So, I find that people that say that, when I see people say to you --
Peter McCormack: Bye!
Dan Held: -- I block them too, because I'm like, "Fuck this guy. Peter's a good person and the fact that he put himself out there is incredibly emotionally vulnerable. And the fuck that you're attacking him for recovering, which everyone has their own struggles, is just incredibly cold and just really douchey". So, when I see that, I just automatically block them as well.
Peter McCormack: This kind of conversation's been expanding. We did an interview with Jeff Booth and we talked about this. We were down, me and Danny, were down last night in a bar run by Galaxy who were doing an event. There was a pleb guy there saying, "We need to get away from some of this", and it was one of the reasons -- I mean, there was a thread last week from Saifedean, for example. Me and him have history, we're not friends, but I found his thread regarding climate change, I disagreed with it. And I disagreed with based on my own research.
I've interviewed climate scientists, I've spoken to people who are the other side of the discussion and maybe disagree and don't think there is an issue, and I've come to a set of beliefs, based on what I've read and who I've spoken to, and so I disagreed with it. I disagreed with the approach in his thread to insult people whilst giving his evidence. So I wrote what I thought was a very considered thread, "This is what I agree with, this is what I disagree with, this is what I don't know, this is what I'm going to do with the information".
Even after I wrote it, I actually sat Danny down and said, "Look, am I being honest here, am I being fair?" and Danny went through it and said, "No, you are", and I published it. And it just got loads of shit back. I was like, "The outside world is looking in. Whether you think you're right or wrong, or I'm right or wrong, the majority of people in the world believe there is a climate issue. If we have a bunch of people who look like crazy denialists, what message is that giving here? It's not saying you shouldn't hold that opinion; absolutely, hold that opinion. But why are you not allowing your opinion to be challenged; why are you not willing to discuss it, because you look fringe and you look crazy?"
Dan Held: It's Giacomo, right; what's his name?
Danny Knowles: Giacomo Zucco?
Dan Held: Giacomo, yeah, the Italian guy.
Peter McCormack: Yeah, he's good.
Dan Held: Yeah, I like him a lot, and he had a quote from one of the Baltic Honeybadger Conferences, which those are actually some of my favourite, by the way. I think we were there back in 2019?
Peter McCormack: We were, yeah.
Dan Held: I loved the town, it was really cool, loved the food, loved the people, I loved the environment of the bitcoiners out there. And he had something that he said which is, "You're free to become irrelevant". I'm not saying this about Saifedean, I respect Saifedean, love his books, like his thoughts on monetary policy and everything else.
But when it comes to marketing Bitcoin or prophesising Bitcoin, if your narrative is what the audience wants to hear about Bitcoin, then you will continue to accrue an audience and grow larger and larger. If the narrative you have about Bitcoin is one that people don't want to hear about, your audience will stay the same or stagnate or grow slower. So, for example, if I said, "I believe in the alien theory of Bitcoin. Aliens created Bitcoin and there's no other competing theory. That's it, that's exactly what happened", I'm sure I will find a subset of people that believe in that with me. It won't be a large audience, because that's a very niche sort of group.
Now, I am not at all saying anymore in Bitcoin right now is at that sort of level; I'm just saying, if they choose their own version of Bitcoin, whether it be the super-conservative version of Bitcoin, or the super-liberal version of Bitcoin, those appeal to certain target segments. People who can find a narrative that can bridge the gap between both will tap into both segments and grow faster and build a bigger audience in both of those.
What I'm trying to say is, you can have any flavour of Bitcoin you want, but if that's not the flavour that people want to hear, then your audience isn't going to grow and your voice is going to stay the same or grow smaller. We see that happening with some, I don't want to call out individuals, but we see that with some sorts of narratives. So, where you look at audience growth on YouTube or Twitter, and you look at it on, for example, Social Blade, it's pretty distinctive of who's growing a lot faster and what narratives are propagating; I would say a less fire and brimstone narrative and a more, "Hey, come to Bitcoin, here are all the positive things about Bitcoin".
Yeah, sure, if you want to go and explore that stuff, cool, but here's my narrative now too, "Cool, you're excited about these other things, that's great. But you need to learn the basics, so learn about Bitcoin first". When you start with that sort of approach, you're not saying they're a bad person for wanting to learn about the other stuff; but when they learn about Bitcoin in-depth, it will be hard for them to want to go like other things, because they'll realise different design parameters with Bitcoin, or why Bitcoin's valuable versus just calling it a shitcoin or just saying, "That sucks". That doesn't really give a newbie the right context in which to make a decision. But going, "Hey, start with the basics. Bitcoin is the first, but understand it completely and that way, you can evaluate every other crypto asset you look at".
Peter McCormack: It's probably a net bad, even for myself. Even if I think I'm right, when I sling a bit of mud back, there's a few people you put off. And actually, my own delivery method can be equally criticised.
Dan Held: What's even worse is that you produce good content, and this erodes from your self-confidence, even if you may not admit it; little, tiny bits --
Peter McCormack: No, it does.
Dan Held: -- chips away, and it's not emotionally healthy, is what I've noticed for myself as well. All these little chips that chip away at it.
Peter McCormack: I can see Danny nodding in the background!
Dan Held: You have all these little chips, it's like little, tiny chips though; it's not a big chunk. Like, let's say your mental health is a statue of your face, it's like little, tiny chips, tiny, tiny chips, but enough of them, it starts to really erode who you are.
Peter McCormack: Yeah, we just need to get back to the mission, that's what it needs to be.
Dan Held: Exactly, and getting into the weeds with pleb559 is not going to really be a good use of your time.
Peter McCormack: All right, man, well listen, let's talk about Bitcoin.
Dan Held: Let's talk about Bitcoin.
Peter McCormack: Let's talk about Bitcoin. The last couple of times, or two of the more recent shows you've done; well actually, they probably go back a bit now, we talked about supercycle, and that's an interesting concept, because I know you're either the first, or one of the first, to definitely talk about it. I think you would say, "I'm the first". You're the first person I heard talk about it.
Dan Held: Well, thank you. I'm not sure if I'm the first, there's always, "Who's the first to say anything?" But I did mention in 2019, which was one of the first mentions.
Peter McCormack: Yeah. We talked about it a lot, and we talked about it again, and I think it's right to talk about it again, because it's an interesting concept, because the Bitcoin chart reflects cycles. A lot of people believed this year was going to be the same. Bitcoin was going to go to $150,000 to $200,000; it didn't. It's done a lot of weird stuff and the cycle might be breaking. Now, if the cycle breaks into a supercycle, or if the cycle just breaks into something a little more irregular, I personally think it's good for Bitcoin.
Having some kind of mapped-out vision of where it was going to go and everyone following that, I don't think is good. I think we need the asset to mature and its pricing model to mature. So, I'm super-interested in the super cycle. Now, I've got a lot of new listeners, they might not have heard the previous two shows. I would recommend, go onto the website, look up Dan Held, look up the supercycle. But just for the sake of those people, remind what the supercycle thesis is.
Dan Held: So, the supercycle thesis, as I phrased it in 2019, and this was before 2020 when we had COVID, was we have a sort of perfect storm, where we have governments with reckless monetary policy, we have Bitcoin adoption that has never been higher, and the infrastructure to support mainstream Bitcoin adoption in terms of billions of people getting in. We have trust in governments and institutions at all-time lows, including universities, military, and journalists, and politics.
So, all of that combined, and we were at a bear market then. I was like, "If a bull market coincides with a huge jump in loss of faith with institutions, or another financial crisis, we could have a supercycle". So, that was the original supercycle thesis, as I mentioned in 2019, on Anita Posch's podcast.
So basically, what that describes at the outcome of that, well what does that mean? That means that this cycle would be different, different than the other cycles. So, I described it as being an either more intense bull run, or like a muted bear market and there be another immediate bull run, kind of like 2013. So, at first we thought we were mimicking 2013. We hit the top, went down, we hit up to $69,000 really fast, then down a little bit, then started to run back up.
Peter McCormack: Little bit; 55%, not a little bit!
Dan Held: It's Bitcoin, so 55%, you know; versus an 85% drawdown, which is a typical bear market drawdown. So, I would still consider that muted versus another Bitcoin cycle, because 40%, 50% drops are so uncommon. So, we all thought it might look like 2013. We haven't seen that happen, but if we are in a bear market, or we are still maybe in an elongated bull market, we are definitely seeing that the cycle is far different.
Now, some folks would say, this does look like an obvious pattern, that this isn't a supercycle at all, that it's actually mimicking the cycles in elongating, which is another theory as well; that if we look at the cycles over time, they have been elongating in terms of peak to trough. So, their prediction is that late 2022 is when we see that big bull run. Also it could be, in the supercycle thesis, we do have a perfect storm, even a more perfect storm than 2019; I mean, so much has happened.
COVID, I think, has given us good reason to doubt our governments' capability of handling various parts of our economy and our lives. And with all the money printing that went down too, Bitcoin's utility has never shined brighter. We also have Canada and geopolitical struggles all across the world, that I think highlight exactly why Bitcoin is valuable right now.
Peter McCormack: Dan, every major incident or news event has a Bitcoin angle now.
Dan Held: It's crazy, yeah.
Peter McCormack: Because everything seems to be tied to money, naturally; it's how we coordinate. But there's a Bitcoin angle to everything. A hedge against massive inflation, which has a nuance to it, because I think the inflation hedge isn't exactly as people say. I saw a great tweet where this guy was like, "I bought Bitcoin at $69,000 to hedge inflation and I'm down 55%!" But it's a long-term hedge, I think.
But yeah, the Canadian truckers having their funds stolen from them; the Ukrainian Army fundraising; Russian citizens being essentially cancelled and having the rouble destroyed. Two sides of a war, both sides of that, both of the people outside of the psychopaths making the decisions, have a Bitcoin angle to protect themselves; every major news story.
Dan Held: Right. And so, if we look at -- different events, where we start to distrust our government, don't happen very often; they're major events. We've had a lot of them happen in a very short time span. In marketing, what we call this is "awareness and consideration level of the marketing funnel". So, before you go try a new product or service, you go through different stages. You become aware of the product, you consider the product, and then there are different stages further down the funnel of eventually getting acquired by the product, in terms of using the product or signing up for the product, and you get activated which is, "I've tried out the product and I get why it's valuable".
We have a lot of people entering the awareness and consideration stage for Bitcoin right now, which how marketing works typically between a brand and growth marketing org, is that you have brand marketing and growth marketing work together. So, growth marketing tries to get them from the awareness level to acquisition, to signing up or to sometimes they go all the way to activation.
Peter McCormack: I know the funnel from my days.
Dan Held: You know the funnel from back in your days. So, this might sound boring, but this is actually how professional marketers think about getting people to try something for the first time. So, when it comes to Bitcoin, we have a very large amount of people entering that top of the funnel awareness. Almost everyone's aware of Bitcoin now.
Peter McCormack: Everyone.
Dan Held: Everyone.
Peter McCormack: There's nobody ever they go, "What do you do?" "I run a Bitcoin podcast". "What's Bitcoin?" They're like, "I've got questions".
Dan Held: Yeah, we don't hear that anymore. So, we've got almost everyone in the awareness level of the funnel, which is awesome. That's the first step; they have to be aware of it before they can consider it. Now, they're starting to trickle into the consideration phase of going, "Wait a second, my money could be seized in Canada or in Ukraine or in Russia? What if that happens in my own country? Maybe this Bitcoin thing is for me".
So, I think we're seeing, en masse, a lot of people entering that awareness stage and maybe more catalyst moments, or shocks in the economy, or a war shakes them down into the acquisition sort of level where they start to go, "Okay, I've considered it, I'm ready now, I'm ready to sign up, I'm ready to go and try out Bitcoin". So, it takes them entering those stages before they can start to buy Bitcoin and Bitcoin's price starts to move up.
I think we have a large amount of people ready there, and there are certain sorts of events, and I don't know exactly what those events might be, or narratives, but those could push all those people into the lower stages of the funnel, and that means direct price action and the price going up.
Peter McCormack: Well, this is why the earlier part of our conversation's important, because during that consideration, activation, retention phase, this is where I feel like we're much better if we're unified. We can disagree, but we're unified on the mission, the first principles of Bitcoin, rather than them coming into the consideration, activation phase and it's like a warzone of bullshit. But you're right, we're there. Anyway, sorry, back to the supercycle.
Dan Held: Yeah, so I think all the elements are here for the supercycle thesis to be. I think, when I laid it out in 2019, it's certainly become more apparent that it could be a supercycle, in terms of it breaking the normal cycle. Supercycle TL;DR is it breaks the normal cycle, and we have a lot of things that make me extremely bullish on Bitcoin. I mean, I've waited ten years to see moments like this. Did I wish this to happen on the world? Absolutely not. I wish we didn't need to have Bitcoin, because we could trust, but we can't.
Peter McCormack: Well, you would rather Bitcoin was the offence than the defence?
Dan Held: I'd rather the world be such a good place that we don't need something like that, where everyone could have that trust, but we don't and that's just how the world is. So, with that, I think with Bitcoin, we have such a prime moment for people to realise why it's valuable. I bring that up because a lot of people are like, "Wait, so you wanted the world to fall apart?" and I'm like, "No, I don't want the world to fall apart". That's why I caveat with that. I wish I didn't have to want Bitcoin, because I wish the world was a better place, but it is what it is and that's why we need it.
So, yeah, we shouldn't blame Bitcoin. People are like, "You're profiting off the success of the world collapsing", I'm like, "No, I bought an ark and I knew the flood was coming, and you didn't plan right" or, "I knew we might have a bad harvest season, so I set aside some grain to survive", so there's nothing wrong with that, there's nothing evil about that, there's no profiteering. That's just proper planning.
Peter McCormack: If anything, you've been out there trying to help people prepare for this.
Dan Held: Precisely, we've been both doing this. Thousands of us, tens of thousands of us have been going out telling people, "Hey, you might want to consider Bitcoin if this happens.
Peter McCormack: What would invalidate the thesis; what do you think? Because, it's still possible; there's weird things happening right now. We've seen it in some forecourts in London, diesel's hit £2 a litre, which works out just shy of $10 a gallon. It's when somebody's posting images of $6 a gallon, I'm like, "Hold my beer!"
Dan Held: It's hard for me to middle-earth calculations between your pounds and dollars, but I get the idea.
Peter McCormack: Yeah. But that's happening, food prices are going up. Nic Carter talked about this, he talked about when commodities are -- humans flourish when commodities are cheap and commodities are expensive, but we are headed into weird times and Bitcoin has proven to be a risk-off asset in these times, so there are still risks to this.
Dan Held: Yeah, and I think the supercycle thesis would be invalidated if my hypothesis, that people would find value in Bitcoin or learn about it, given the background that we have here, if people just don't care; and maybe they don't. Maybe it's too complicated to tell people about how sound money works. Maybe there is a limit to how many people actually want to learn.
Now, I think some of the core principles that would disagree with that, in terms of saying, "I don't think there's a limited TAM here; I think the TAM is the whole population", I think everyone wants to preserve their wealth. I don't think there's anyone on Earth who doesn't, and so I find it very hard to believe that the whole world wouldn't want Bitcoin, but I could be wrong. I could be wrong where there may be certain groups that will always trust the government, no matter what. And they would always prefer to hold something more stable, even if it loses purchasing power every year versus something with some volatility.
Some people have, and this is actually a good thought experiment and I would be curious to hear what you think; gold's TAM was only $10 trillion, and not many people own gold today. So, why do we believe that more people would own Bitcoin?
Peter McCormack: It's easier to buy and hold Bitcoin, in fairness.
Dan Held: Way easier.
Peter McCormack: Way easier. It's a bit more fun to buy and hold Bitcoin.
Dan Held: Yeah, it's a bit more irreverent, it's less old too.
Peter McCormack: It's more usable. I mean, it's just a better product.
Dan Held: Totally, but it is still a derivative sort of -- not a derivative, but a version 2.0 to whereby the TAM is $20 trillion, but it's still not like the whole world's wealth flows into Bitcoin.
Peter McCormack: Yeah, I think -- the TAM is Total Addressable Market -- I think the total addressable market of Bitcoin is magnitudes higher than gold.
Dan Held: I agree too. We both talked about being openminded and allowing criticism for our own ideas. If the supercycle doesn't play out, I think it would lead me to believe that there isn't as big as a want or need for sound money as I thought.
Peter McCormack: Yeah, it's a tricky one, because there are two angles to wanting sound money. There is the personal protection of your wealth, but there's also the wider macro impact on society, where you have a belief that an economy backed by Bitcoin, getting away from cheap credit, wealth disparity is a better world, but it's always hard to sell people on the ethical side of things.
Number Go Up is a far easier conversation, although we do have situations now, like people fleeing warzones, who have lost everything; there are stories out there of people who have fled with Bitcoin. That's been the only money they've been able to take with them. But a lot of us, I don't think, are planning for that scenario, we don't believe it will happen to us.
Dan Held: Yeah, especially in western developed countries like the United States and Canada, where we have democracy and we have these checks and balances in place. I think when we look at civilisation, it's a thin veneer; I forget who had that quote originally. But civilisation can go away in a matter of weeks. Take away electricity and water and see what happens. So, when we look at governments as well, those democratic, or those rights that you have can be taken away almost immediately.
That's what's so cool about Bitcoin. Just through Bitcoin's technology and how it's been built and the social consensus around it, it preserves your rights without the government giving you those rights. Similarly, and I know you disagree, similarly guns for that mechanism.
Peter McCormack: No, I don't, I don't disagree on guns. My view on guns is very simple. I don't want them in the UK, we don't have a gun culture. I think a transition from a non-gun culture to a gun culture comes with a lot of risks, it's dangerous. But I fully understand the thesis of why people want guns here. I look at net risk and net benefit, and I don't believe it exists in the UK. And look, I could be wrong.
Dan Held: That's where I think what's cool about both of those, Bitcoin and guns, is they're both self-sovereign tools. You have that gun, you can defend yourself against any attacker, even a state-level attacker; and with Bitcoin, the same thing. Bitcoin's obviously a little bit more achievable versus a solo AR-15 and a government! But those principles are, I think, human rights' issues, that you should deserve to defend your body with military-level equipment, and defend your money with military-level equipment.
Peter McCormack: If I lived here in Texas, I'd own a gun. I'd probably have a couple, because it's a different culture.
Dan Held: Yeah. It just depends on your culture, and I don't want to get into a gun debate of whether they're good or not, it's just what purposes they serve for state-level protection.
Peter McCormack: Yeah. I'm also somebody who supports democracy, despite its criticisms, and I know it's completely flawed in many ways. But in the UK, there is no appetite for a gun culture, there's just zero, so why even -- for me, it's a discussion you can have, but if that group of people doesn't want it, then we don't have it.
Dan Held: Yeah, of course, and every group of people can govern themselves any way they like. What's funny is a lot of people want to learn more socialist and I'm like, "So actually, what you mean is you want a libertarian sort of culture, because in libertarian societies, you're free to create any sort of socialist group you want, it's cool. You want to have a commune and you guys all split your income equally, have at it". It's automatically inclusive versus the other one, which isn't, because in a socialist society, they're like, "You have to share your wealth, you're not allowed to have your own income, to a certain extent".
So, I think that any society's free to choose what they like and people can opt in or out. That's the whole point of being able to join different states or join different countries. So, yeah, Texas might pride itself in guns and ownership, but other countries don't; that's really cool. Naturally, as a Texan, I like having a couple of guns!
Peter McCormack: So, what's it like for you, man? You've done ten years, you're on your third tour of duty.
Dan Held: Well, I've probably mentioned this before, but you see the grey hairs in my beard?
Peter McCormack: No, I can't see any, man.
Dan Held: I shaved it so you can't see it.
Peter McCormack: Not like mine, dude.
Dan Held: It's a long time to be in the space, a really long time. In fact, you almost don't see many people last that long, because they either made a lot of money, or most of them didn't make a lot of money, they sold. That's what I think is a funny thing about OGs, because everyone assumes they're billionaires. It's like, "Dude, most sold and I did not". But most sold when Bitcoin hit $1,000, because they had, and this is a true story of a friend of mine, he had 1,000 Bitcoin, he never really believed, he's from the 2013 era; he never really believed he's kind of into it, not really though. So, when it hit $1,000, he sold it all, because he was a millionaire.
Peter McCormack: All of it?
Dan Held: Well, he was a millionaire for the first time, and his family's not from wealth. So, they don't understand that $1 million isn't like retirement. They're a millionaire now and they're maybe the wealthiest person that they know. Because, Bitcoin didn't attract the super-wealthy, or the high-income folks; it just attracted a wide variety of people. A lot of them were kind of tinkerers, Torrenters, buying stuff on Silk Road, engineers. So, it wasn't necessarily a white-collar, high-income group, and a lot of them sold because they (1) never truly believed in it; and (2) they had made money that they thought was life-changing.
For me, it was like, the only time I'd ever even consider it is, Bitcoin has to hit trillions in market cap, where it starts to touch my investment thesis of gold, that you would even want to consider that. I still want to hodl for forever. But if you're someone who wanted to take money off the table, that's what you would do. It's like, you enter an investment thesis, and why would you sell at any point between now and when Bitcoin becomes digital gold? It doesn't make any sense.
Peter McCormack: Yeah, maybe it's my age, but my goals have changed as well. Of course, like anyone younger in my 20s, I wanted to be rich, I wanted to be a millionaire. And now, it's like actually no; like an old man, I want longer-term security and control of my time. Buying stuff never really makes you happy; things. I mean, some do, but it's more about longer-term security and control of time.
Dan Held: Yeah, I think this is a good journey into long-term hodling, the mindset. What's kind of funny is that I don't really consider any of my Bitcoin money! My Bitcoin and I'm not selling it, so that's where people have criticised me for lending. But if I never want to sell them, what am I supposed to do? I can't have a time preference of zero and then just die; I need to utilise them at some point, but I don't ever want to sell them. So, that's my method of taking some risk and taking that and living a lifestyle.
But it's funny, because I don't really consider it my money. I've hodled so long that it's just there, but I don't touch it. I'm never going to sell it. It's not like I think of it as an active pool of wealth that I can go use for anything else. Dollars in my bank account, sure. I'm like, "Okay, cool, I can go do this with that, or that with that. I can go buy this investment or that investment, or buy this home, or something like that". But with Bitcoin, I don't think about it like that at all. I'm just never touching this. It's a sizeable amount, but I'm never going to touch it.
Peter McCormack: Fair play, man.
Dan Held: Yeah, I mean the long-term hodling though, it just kind of changes -- a lot of bitcoiners have talked about time preference, like long-term hodling and time preference. It does change that to some extent. And a lot of people when they were younger never really saved any money. So, Bitcoin may be their first time saving and investing in general. I think hodl is a bigger philosophy than just Bitcoin; it's a lifestyle, it's an investing lifestyle that everyone should have.
All the great investors have a hodl mindset. Active day-trading is almost impossible to win, unless you are one of the great hedge funds or something and you have information no one else has. But being a small investor, your best chance is to buy and hodl. You reduce fees, you reduce your time preference and sometimes you can look in on the asset and it compounds. So, I think that sort of mindset has bled over into other investments, because Bitcoin isn't my only investment. I haven't sold any, but I still make money doing other things, and I need to have something else outside of Bitcoin, otherwise, you know, it's been ten years that I've followed Bitcoin!
I need to own some other stuff, like a home someday. I've only rented my entire life. These are, I think, reasonable things to own as other investments.
Peter McCormack: Now, you can get yourself a Bitcoin mortgage, which is super-interesting.
Dan Held: Yeah, the Bitcoin mortgage stuff is super-cool. And in terms of the long-term hodler financial toolkit, you've got all these different ways where you've hodled for a long time, what do you do? You can lend it out, you can write covered calls, you can borrow against it, like Unchained Capital or Ledn, and then there's also Bitcoin mortgages, which Ledn came out with one, and who are the other ones?
Peter McCormack: I know Abra have got one coming, because we spoke to Bill about it.
Dan Held: There's a couple now. So, the Bitcoin mortgages are really cool, and I actually went through this process very recently about trying to get a mortgage. So, mortgage companies don't care about how much assets you have, at all. They want to see income and they want to see stable income. They want to see income over the last two years, and also you need two years' worth of business income. So, they take somewhat of an average of that, then they take your monthly mortgage payment, and divide your income to have that as the numerator, income as the denominator, and it gives them a debt-to-income ratio.
They don't care if you have $100 million in the bank, that will not help you qualify for a mortgage. It was the most bizarre process I've ever gone through where I'm like, "In these couple of accounts --", I'll identify one Bitcoin one, the ones I use to earn a yield, those are public, I publicly talk about those. I'm like, "There's this many BTC there" and I'm like, "Here's also my brokerage account", and that cumulative value is greater than the mortgage's value, and they're like --
Peter McCormack: Don't care.
Dan Held: -- "We don't care". I'm like, "I could literally pay off the mortgage tomorrow", and they're like, "We don't care".
Peter McCormack: But if you have a letter from an employer that says you earn X thousand a month, even though you could lose that job --
Dan Held: You could lose that job tomorrow, of course.
Peter McCormack: It's ludicrous.
Dan Held: It's ludicrous, so hence the Bitcoin mortgage product, for bitcoiners like myself, who have really struggled to get a mortgage in general. I did qualify; I found one place that would qualify my Bitcoin as income.
Peter McCormack: Interesting.
Dan Held: They'll divide it by 84. So, they'll take your total sum of Bitcoin, you have to have it on a custodial exchange. They don't touch it, they just verify it once and you can move it back off. So, it's a no-custody asset, which is really cool.
Peter McCormack: Interesting. Why 84? Is that the maximum drawdown --
Dan Held: Seven years. It's some of the risk calculations of some -- I forget what the term is called, but they actually do it with traditional mortgages too, but they normally divide by 360, which is the total number of months for the mortgage, which basically makes any investment worthless, because you divide it by 360 and how much is that per month?
Peter McCormack: Well, the really interesting thing about the Ledn product, because I saw it the other day, is that I imagined when the first mortgage products would come out it would be, all right, you want to buy, I don't know, say a $1 million house, you're going to require $2 million of Bitcoin locked up, having their 50% LTV, right, and that's what I assumed. But they're not, they're taking the value of the home and then part of the Bitcoin.
So, you can get a much larger home with a smaller amount of Bitcoin if you've got the deposit. The great, well, the good thing about that you can use your asset to get a larger property. The interesting thing is, they're essentially going to have to get into the world of foreclosures potentially.
Dan Held: Yeah, so some of these details are still being worked out. I don't believe the Ledn product is live yet.
Peter McCormack: It's on their website.
Dan Held: It's on their website, but I think it's more request to try it out. And I believe it's coming out first in Canada, and it's not available in the US yet, because I hit them up and asked. They're a sponsor of mine, by the way, full disclosure. They're a sponsor of mine and I've tried out their product and I've looked at some other ones as well.
So, with these Bitcoin mortgages, there's a couple of types. The one you talked about I think is really cool, where you have the mortgage component, so they have to work with an underwriter for that, and then basically, the loan is for your down payment. Down payments can range from 4% to 20%; it depends on the property, it depends on your risk. So, let's say it's 20%, they'll have you post Bitcoin as collateral, and then they'll essentially pay the down payment, and then they'll also bundle that with their mortgage, which is really cool.
Some of these companies are also claiming that when you borrow against your Bitcoin to pay the down payment, that it is not margin and you will get margin called, which is a little bit mind-blowing, because I'm like, "Well, how would you do that?" I don't think Ledn's product, I don't believe there is a margin call. So, what they do is they also own the title to the home, where if they own the title to the home too, essentially they're part of the mortgage underwriting process as well. So, instead of outsourcing the mortgage underwriting process, they somehow have a lien or ownership over the home as well.
So, they have your home and your Bitcoin as collateral. So they're like, "Well, even if the Bitcoin value went to zero, the home value we hypothesise might not", so you wouldn't get margin called on your Bitcoin, which is kind of cool.
Peter McCormack: Well, it does make sense.
Dan Held: Yeah. Now typically when I dug into how these work, Ledn doesn't do that; Ledn, you can still get margin called. When I realised how some of these work though, I mean they're taking your Bitcoin and they're doing stuff with it, of course, to earn a yield on it. They gave dollars to this other company and they had to borrow those dollars at a certain cost. So, they have to have some sort of way to plug that gap.
Bitcoin mortgages, I think, are a huge financial innovation in the space, really powerful for bitcoiners. It does mean locking up your Bitcoin with someone and somewhere, where you're going to have to trust them for a very long time. That's a big if, that's a big risk. Some of them might try to configure a customer arrangement where I'm like, "How about I go do it at Anchorage, and then we have a tri-party agreement, where they can liquidate it at a certain level, because I don't trust you, frankly?" Over 30 years, that's a long time, and that's a normal mortgage term.
So, yeah, that's the tricky part. You've got them holding your Bitcoin for a very long time. It depends on how they're constructed. If there are margin calls, well you'd better make sure that you don't hit that, because if you get margin called, you could not only lose your Bitcoin, but you could lose your home too, which is like a double whammy.
Peter McCormack: But these products are going to mature, they're going to figure them out.
Dan Held: They're going to figure them out. I think it's a huge innovation. It's needed, because a lot of bitcoiners don't want to sell. They don't want to sell their Bitcoin and buy a home, but they want a home. I'm like the perfect, ideal candidate, so for me it's just figuring out which one's the right one for me. Unfortunately, Ledn's not available in the US. I know those guys well enough to where I'd feel somewhat comfortable. 30 years is still a long time though. I'd prefer something where there's a custodian that holds onto it. Even a custodian though, better hope they don't get 6102d, having the state ask them to seize your assets.
So, there's a lot of risk with this. I think, if you're listening to this, it does solve a problem, but it has inherent risks with how you do it.
Peter McCormack: It's just a different risk model.
Dan Held: Of course.
Peter McCormack: You've got to be fully aware of it, understand what you're signing up to; but maturity in the market for financial products from around Bitcoin is certainly something which is going to help take it forward.
Dan Held: Absolutely. I think the maturation of Bitcoin financial products has been fantastic. We've got Bitcoin mortgages, we have lending out your Bitcoin, borrowing against your Bitcoin. These didn't even exist before 2018; that was a whole different era back then. You remember this. I mean, these were new, innovative products. You've also got some that are selling puts or selling calls as a yield-generation strategy and doing that in an automated way, like Atomic.Finance. Those are really cool too.
Of course, people should know the risk that they're getting into when they do this, but with every investment, including hodling, which is going long, it comes with risks. It's just understanding those risks and which ones you think are worth it.
Peter McCormack: All right, man. Well listen, Dan, always good to talk to you, and glad we get to do it in the free state of Texas.
Dan Held: You mean, not the state, the country of Texas!
Peter McCormack: The country of Texas?
Dan Held: The country of Texas, yeah.
Peter McCormack: Wow, bold statement!
Dan Held: It is, yeah. Peter, great talking to you. Glad to have you here and we're definitely going to do some barbecue.
Peter McCormack: Yeah, and tell people where to go. I mean, look, is it danheld.com?
Dan Held: Yeah, danheld.com if you want to check out my background and some of my blog posts. The Held Report is where I write my fresh ideas every, single week, so theheldreport.com, that's where I'll post my most recent weekly thoughts there around various Bitcoin topics. Then of course, if you want my quick hits, if you want to have my quick-hit takes on Bitcoin, it's on Twitter @danheld.
Peter McCormack: All right, man. Well, listen, keep going. You're one of my best friends in Bitcoin, I've known you for a long time. I appreciate everything you've done for me. Keep stacking, keep cool, man.
Dan Held: Thanks for having me, Peter, cheers.
