WBD604 Audio Transcription

Bitcoin: A Year in Review with Matt Odell

Release date: Wednesday 11th January

Note: the following is a transcription of my interview with Matt Odell. 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.

Matt Odell is host of the Citadel Dispatch, co-host of Rabbit Hole Recap, venture partner at Ten31 and co-founder of Bitcoin Park. In this interview, we review 2022: the attacks on privacy, the reaffirmation of self-custody, how people who were treated like gods rekted the market, and the responsibility of Bitcoin podcasters in doing right by the audience.

“I’m not trying to single out you. There are many, many content creators in the space, event planners in the space, that give rosier coverage to sponsors. And then when the sponsor rugs all of their audience they say ‘no one could have seen it coming, it wasn’t my responsibility.’ But meanwhile, there’s plenty of us that didn’t do that.”

— Matt Odell

Interview Transcription

Danny Knowles: I just heard some wheelspin out the back.  Do you want to go open the garage for him?

Peter McCormack: Odell?  

Matt Odell: I'm waiting outside the garage.

Peter McCormack: Okay, all right, see you in a sec.  Jez is going to come down and get you.  Yeah, Nodell, fucking finally here!  Is this the latest anyone's ever been?

Danny Knowles: I mean, I don't think anyone's even been late before!

Peter McCormack: Everyone's always on time.

Danny Knowles: People are chronically early.

Peter McCormack: You're finally here?

Matt Odell: I drove 20 minutes away from the Park and then 20 minutes right back.  We're right next to the Park!

Peter McCormack: All right, I'm going to confess, we're recording.  We just set the recording waiting for you!

Matt Odell: Am I just entering?

Peter McCormack: Yeah, everyone's going to know you're late.

Danny Knowles: Do you want an apple?

Peter McCormack: We can slice you an apple.  Do you want a sliced apple and a little bit of peanut butter to dip it in?  This is all part of the show.

Matt Odell: That's awesome.  I'll be there in a second.

Peter McCormack: All right.  Have you changed hats?  Oh no, you haven't.  Late Dell or Nodell?  Nodell Odell.

Matt Odell: Did you tell them why I'm late?

Peter McCormack: Yeah, it's your mistake, it's your fault.  You didn't say, "Pete, what's the address so I can come to the interview?"  Hi, Matthew.

Matt Odell: I asked Peter his address.

Danny Knowles: That was the mistake.

Matt Odell: And he said, "Westfield Drive".  It's an accurate address.  It's like 25 minutes away outside of Nashville.  And right when he had told me the address, I said, "Damn, why'd you decide to stay at a place so far away?" and you said it was bigger and better for shooting.  And I said, "Yeah, the other place is a way better location".  Then I proceeded to drive 20 minutes out there, only to drive 20 minutes back to here, because this is a couple blocks away from Bitcoin Park, where I had just recorded Citadel Dispatch, and then was driving to you!

Peter McCormack: I'm going to put this as a poll and check.  It's Saturday today, we get here on Wednesday and I get a text from you saying, "Looking forward to kick it, brother, where's your house at?"  I'm like, "I mean, I just got here", I'm like, "Oh, I'm on Westfield Drive", didn't realise it was Westwood Drive, just made a simple mistake.

Matt Odell: Personal responsibility, Peter.

Peter McCormack: Well, Danny sent you an invite.

Danny Knowles: That is true.

Peter McCormack: That is true.

Matt Odell: That is true.

Peter McCormack: I wouldn't have been so casual if I'd have known you were using this as your directions to get here.

Matt Odell: I literally asked you what your address was.

Peter McCormack: Yeah, I just thought like, "Where are you in the city?"

Matt Odell: Okay, well it's fine, I'm glad I made it.  Thank you again for having me.

Peter McCormack: You're 41 minutes late!

Matt Odell: It was literally the drive both ways!

Peter McCormack: I feel bad now.

Matt Odell: You should feel a little bit bad.

Peter McCormack: It's our annual show that people thought we weren't going to make.  You're not allowed to fuck around with the microphone all interview.

Matt Odell: Everyone said I do it too much.  I don't have any formal podcast training.

Peter McCormack: So, don't fuck around with the microphone.  

Matt Odell: Anything else?

Peter McCormack: All interview, you're like this.

Matt Odell: Yeah, but you couldn't hear it; it was just pissing people off on the video.

Peter McCormack: Yeah, it's the video people.  Fuck the video people anyway, we don't make money off them.  Danny, tell Matthew about Derek.

Danny Knowles: Have you heard about my fan?

[Audio cuts out]

Peter McCormack: Yeah, Danny's got a camera.

Matt Odell: You have a camera now?

Peter McCormack: Yeah.

Danny Knowles: That cut out when I was telling you about Derek S as well, the recording, the audio.

Peter McCormack: Oh, did it?

Danny Knowles: So Derek S will never know what we said about him.

Peter McCormack: Poor Derek.

Matt Odell: Oh, wow.

Peter McCormack: I think we know Derek and I just want to know who it is.

Danny Knowles: I don't know.

Peter McCormack: He must love the fact that he's getting his moment in the show.

Matt Odell: Shout out to Derek.

Peter McCormack: What's up, Derek.  Yeah, so people who don't know, me and Matt here normally make a -- look I'm fucking playing with it!

Matt Odell: Don't play with it, bro.

Peter McCormack: We normally make a show every Christmas --

Matt Odell: I like playing with it.

Peter McCormack: -- a year in review and talk about next year, and get drunk normally.  We normally get wasted.

Matt Odell: Yeah, we've gotten pretty drunk pretty much every one, right?

Peter McCormack: One, we got so drunk that we just yelled at each other!

Matt Odell: That was the best.  Oh, no, the one the year before that was my favourite, I think.

Danny Knowles: I had to edit all of it!

Matt Odell: The one that we did at my apartment was the best one.

Danny Knowles: Yeah, that was good.  I had to edit the one where you both got really drunk on Zoom, and that was not the best one!

Matt Odell: That was so bad!

Peter McCormack: Yeah, I don't remember finishing that!

Matt Odell: That was like, I don't know, it was a bit of a Thanksgiving Day table argument.  Oh, you don't have Thanksgiving.  A Christmas dinner?

Peter McCormack: Yeah, it's Christmas without presents.

Matt Odell: Yeah, that's what that one was though.  It was like me and my uncle getting into a drunken argument.

Peter McCormack: Because we weren't together, the remote ones don't work.  These work.  Your Citadel Dispatch ones, you do in person, right, if you can?

Matt Odell: Citadel Dispatch?

Peter McCormack: Yeah, you do those in person, don't you?

Matt Odell: I try my best.  We just recorded one in person at Bitcoin Park.

Peter McCormack: But they're better, right, you get it; they're better in person?

Matt Odell: It's always better.  These lights are really bright.  We have a more laid back approach at Citadel Dispatch.  There's no video, no lights, I can relax with the people.

Peter McCormack: Do you want the light off?

Matt Odell: Thank you, no, I mean you can leave it on.  I know it's best for your video but it takes you out of it a little bit.

Peter McCormack: People get a bit nervous in the environment.

Matt Odell: I mean, until last year, I never had this many cameras just pointed at me.

Peter McCormack: Yeah, well you have now.  We're doing this without drink for the first time ever.

Matt Odell: Oh, yeah, so you're sober now.  Is that just a January thing?

Peter McCormack: I'm not sure.  Definitely January, and then just see what happens.  I'm not like I'm feeling like -- I'm not like an alcoholic, but when we do these journeys, I drink on the plane and then there's a reason to drink every day, there's a dinner or a thing, so you end up for 15 days drinking in a row, and I just can't keep doing that; I'm 44.

Matt Odell: It catches up to you, yeah.

Peter McCormack: But the other thing is, it's bear market year, so this is going to be a hard year, got to work hard.

Matt Odell: Not just a bear market, it's also a recession, entering a global depression.

Peter McCormack: Global depression, getting old and just feeling like I've got to work hard, I just need a bit more focus.  So it's like, okay, I've spent the last four years getting fat and drinking; now I'm going to reverse course, drink less.

Matt Odell: That's good.

Peter McCormack: Yeah, so I'm not going to do January.  That's why we're not having seven bottles of whiskey now.  You can have your liquid death.

Matt Odell: I have my water.

Peter McCormack: And your apple.

Matt Odell: But anyway, that's great.  You've got to take care of your body, you only have one.

Peter McCormack: Yeah.  I'm too old though, I mean you're just a young pup.

Matt Odell: Starting to feel the age as well.

Peter McCormack: Matt, you've got some time to go.  Anyway, good to see you, man.  How has your 2023 been, all seven days?!

Matt Odell: 2023?  Oh, yeah, I mean we're supposed to be talking about 2022, but 2023 has been a good year.

Peter McCormack: Yeah, Bitcoin's up!

Matt Odell: Bitcoin's up!  I mean, Bitcoin's in an interesting place, I'm sure we'll talk about it.  But it's an interesting year, it's been good.  We're doing great things at Bitcoin Park, you were there earlier today.  The community's vibrant, it's strong, which is amazing in a bear market and a recession.  But you know, it's an optimistic year, but it's also a bit of an anxious year and we'll see what happens.

Peter McCormack: I mean, I think everyone feels like that.  It's a lot to be anxious about because it was a rough last six months of this year, and there's going to be less money circulating because of that and, like you say, it's a recession, there's a cost of living crisis, you're going to have to work harder for your dollars, your pounds, your sats.  But it was the same in 2019, you just have to grind and work --

Matt Odell: What, the bear market?

Peter McCormack: The fact that the mentality is, okay, got to grind and work hard.

Matt Odell: Well, what people don't realise, and I'll preface this with saying, I'm pretty much all in Bitcoin.  If anything, it goes past all in, because I've dedicated my life to Bitcoin education.  So that would be pretty horrible if Bitcoin failed.  So, I think people do not realise that usually in these bear markets, we're about to enter the period where essentially this becomes a long, slow grind, there's no quick recovery that happens, and you just stick in there.  That's why I just keep repeating, "Stay humble, stack sats", right, because you just keep one foot in front of the next and you just keep pushing forward.

They tend to be very long.  People tend in the beginning to say, "Oh, this is not bad", but it's that long, boring grind down that really hurts and a lot of people burn out during that period.  Now, this is the first time -- Bitcoin was born out of the last Great Recession, 2008; it was born right after that.  So, this is the first time -- Bitcoin's been in existence in the largest macro bull run in human history; we've never had that kind of situation before and Bitcoin's existed through that whole period.  Now it seems like we're going to start to pay the consequences of the cheap money that led that bull run that whole time, and it's yet to be seen how Bitcoin reacts in that environment.  

I think Bitcoin's the ideal safe haven, I think it's born for this environment.  If we see bank runs, which we probably will see; if we see more global trade issues, in terms of trust, you already see Russia, you already see China trying to do trade outside of the dollar system; these types of things is what Bitcoin was born for, and this is why I think Bitcoin has value in the first place.  But in the meantime, we're seeing cheap money policies, over two decades of cheap money policies get reversed, and all that money's drying up.  People are losing their jobs outside of Bitcoin, people are going to start spending less.

We kind of saw this with the COVID situation, where it seemed kind of obvious that COVID was going to sweep the world in early 2020, but anyone who was saying so was called crazy and you kind of just thought to yourself, "Well, how come not everyone else is freaking out about it?"  And then we slow rolled into people freaking out about it.  It took months for people to freak out about it.  I don't think this idea of the recession, the actual recession, maybe a depression, has really hit people yet, and so we haven't really seen the consequences of that yet by any means.  So I think we could be completely blown off guard by how this year plays out.

Hopefully I'm wrong; hopefully we don't continue a recession, if we're already in a recession; we don't enter depression; we recover; Bitcoin adoption goes crazy and everyone wins.  But there's a very good chance, in my opinion, that this is a longer drawn-out kind of situation than we're used to in previous Bitcoin bear markets.

Peter McCormack: Do you know what I think happens?  Just the same, four-year pattern.

Matt Odell: Just four-year pattern.

Peter McCormack: I just think the same thing's going to happen again.

Matt Odell: Yeah, we'll see.

Peter McCormack: Yeah, we'll see.  Okay, so we usually review the previous year; we can go month-by-month, we can go topic-by-topic, there's a lot to go through.  I was optimistic at the start of the year.  Price was good, companies were raising money, cool shit was being built, downloads were good, we were traveling and making good shows; everything felt good felt, it felt like a good start to the year.  Did you feel that?

Matt Odell: Yeah, definitely.  I mean on downloads, you've already seen activity across everything drop today.

Peter McCormack: Yes and no.  Have you got a download chart?

Danny Knowles: Yeah.

Peter McCormack: We can show you our downloads, because we don't hide anything.  We did, and then it came back.  But what we tend to find is in a bull market, we will 5X, whatever; and then during a bear market, we maybe lose 20%, 25%.  But our downloads look a Bitcoin chart normally.

Matt Odell: Yeah, that's what I see too.  I mean you can already feel that activity is down significantly on Twitter and mempools.

Peter McCormack: But we're seeing a recovery in downloads, which is kind of interesting.  Have you got it, Danny?

Danny Knowles: Yeah.

Peter McCormack: I'll show you this.

Matt Odell: Does it come up here?

Peter McCormack: Yeah.

Danny Knowles: It should do.

Peter McCormack: Now if you almost go 2020 so you have context, even 2019, go January 2019, and then if you do it by month.  So, you can see the run-up, right?

Matt Odell: The last month doesn't count, because it's just not added.

Peter McCormack: Yeah, and then, so what was that 2022 spike, Danny?  So that was March 2022, when the price first ran up; and then it dropped, but then it came back up.  It didn't for our downloads, but you can see, right?  So, you see those two spikes, yeah?

Matt Odell: Yeah.

Peter McCormack: And then obviously, after that second spike, it drops.  I mean this is just audio, but what was that; 1.1 million; 1.056; and then we've gone down to 775,000, so that's about a 25% drop.  But then we started to see a recovery.  I mean December was shit, but expected, because of the holiday period.  But we had our third biggest month ever in November.

Matt Odell: Well, you know what happened in November?  I mean we'll get to it in the year review, but that's when SBF went down.

Peter McCormack: Yeah, and we had some content around that.  But the other thing is, we were travelling, we were --

Matt Odell: But that's a classic; Twitter was banging in November, right, and then now it's become more of a ghost town.  This is classic bear market situation, right.  Now activity's going to grind down probably for a bit.

Peter McCormack: Yeah, I think we know the content people want for us to make, to go sideways, to maintain that.

Matt Odell: Yeah, well hopefully you can overcome that.  But the point is that we always see in bear markets, we see Bitcoin activity go down across the board, and this time will be no different in that regard.  Right now, we're kind of in the lull and then it's just going to lull for a bit.

Peter McCormack: Yeah.  Is it a year; is it two years?

Matt Odell: Only the ride-or-dies stay around during this period.  And those people, there's a meme, "Bear markets are for building", and every meme is based on reality, including that one.  But what the meme doesn't tell you is that most people get burnt out or rekt during that bear cycle.  The builders that build during the bear market and then emerge the other side, there's a survivorship bias because those are the only ones we see, they're usually very successful but the truth of the matter is, the majority of building gets just absolutely destroyed during that period.

Peter McCormack: It's also the other meme, "The bear markets are for surviving", it's survival.

Matt Odell: It's just straight survival.

Peter McCormack: Yeah, and we interviewed Danny Scott from CoinCorner recently; do you know Danny?

Matt Odell: Yeah, Danny's great.

Peter McCormack: Yeah, he's great.  And it was a really interesting conversation.  You can compare it to some of the companies who've raised lots of capital; they haven't raised any capital really, they've just gone for the slow grind and build up.  And in doing so, when you see other companies laying off a third of their staff, I mean he didn't really talk about laying off staff.

Danny Knowles: I think they've grown, if anything.

Peter McCormack: Yeah, and during the bull market they've built out products.  And they've built a company that they'll have to grind the year out, but they've not grown so quickly that they've got to cut back a huge amount.  And we're similar.  Where companies have really leveraged the bull market and rekt themselves, we've just conserved capital.  The money we've made, we put in the bank, and that's going to be what we use to survive this year.  We'll have some income, we'll diversify what we do, but I think not enough companies prepared like that.

It was Ledger, I learned the story about Ledger, what they did back in 2017, where everything went crazy, how they would prepare for the next kind of bull/bear cycle.  And the main impact on them was actually logistics.  It's like, how do you build a company that suddenly has to have a massive amount of supply of inventory, a massive amount of customer service, that they only need for a short period every year?

Matt Odell: Yeah, the key is you have to be able to scale during the bull in a responsible way that you can scale back down.

Peter McCormack: But it's also managing your cash flow.

Matt Odell: Yeah, managing risk, risk management.

Peter McCormack: I just think some people, every time it comes to a bull market they think, "There's not going to be another bear market this time.  This time is different.

Matt Odell: And we've heard so much of that supercycle.

Peter McCormack: Yeah, I talked about that on this show.  I think the supercycle was slightly different, it was going to be just a much bigger bull cycle, not that you wouldn't get to a bear cycle, but I kind of wish this whole bull/bear thing would end.  I know it's not going to, because it's human psychology, but I kind of wish it would.

Matt Odell: Well it should.  As adoption increases, it should.  The volatility of it should decrease.  It should stabilise as more people use it, as there's more adoption, as there's greater liquidity in the market.  We'll still see, because it's an actual free market, we'll still see hills and valleys, there'll still be pumps and dumps, but the severity should reduce in the scale of them, percentagewise.  That's my thought process when I think about it.

But it's just in an adoption phase, of course a ton of people are going to buy, it's a truly scarce asset, sellers all evaporate because the price is pumping, people get greedy, then it gets overleveraged, then it dumps, all the weak ends are washed out and then the cycle just kind of repeats itself.

Peter McCormack: I think at the moment, one of the things I've got a gut feel for is that it's a bigger problem now for the companies than the bitcoiners.  I'm not feeling when I talk to bitcoiners that they're feeling stressed or worried, or whatever.  But you can see a lot of companies are struggling.  I think one of the reasons that might be, I think we've got a lot more bitcoiners who come in who don't work for Bitcoin companies.  So they've got their jobs outside.

Like, when we were down at Bitcoin Park today, I met a bunch of people, they don't work for Bitcoin companies.  So they're bitcoiners, but the company they work for might be affected by the recession, but it's not affected by the Bitcoin price.  And I feel like when I'm surrounded by bitcoiners themselves, they're still fairly positive; companies, it's a different story.  There's not a lot of capital and there's not a lot of activity.

Matt Odell: Yeah, I mean I was a strong supporter and I've always been a strong supporter of people who say, "I want to do something to help Bitcoin" and I'm like, "Well, what do you do for a living?" and they're like, "I'm a doctor".  I was like, "Okay, just be a doctor that accepts Bitcoin, just keep being a doctor, that's what you are.  Stack sats, earn sats, learn how to use your own node, hold your own keys.  That makes complete sense and during bear cycles, it's fantastic, because your source of income is completely independent of Bitcoin".

I think we've seen a different phenomenon as well, which is first of all, we've seen the emergence of this almost Bitcoin-only industry.  There were early Bitcoin companies, they mostly went to shitcoinery; then there were a lot of shitcoin companies that got birthed; and then there was this push back to the fundamentals and to the basics, and there's all these brand-new, relatively new Bitcoin companies and they're staffed mostly by ideological bitcoiners, where people were actually deciding they wanted to work in Bitcoin, and we've never seen this many people work in Bitcoin.  That's almost the change.

So, we have all these new Bitcoin companies, we have all these new bitcoiners working at these companies, and I will say this the first bear cycle that I've ever had friends laid off, lose their jobs, and I think it's a combination of those two phenomena.  And it definitely makes it more difficult from a personal level when you have that kind of situation, but I would say because we're in a recession, this will be the first cycle where there's mass layoffs outside of Bitcoin too, so it doesn't necessarily insulate you from that.  I will say that from my experience at Ten31, which were a Bitcoin-only venture fund, which by the way is a relatively new concept as well; usually, you have the a16zs of the world, the Sequoias of the world, the Multicoin Capitals, Paradigm, and they're just investing in Worldcoin and all these dystopian shitcoins and token schemes, so they can dump on retail.  

This idea of a Bitcoin-only venture fund is that the Bitcoin companies that we support, and also the greater Bitcoin industry as a whole, it has been way, way more prudent about risk management and building their businesses on solid foundations than the greater "crypto ecosystem".  There's a lot of strength out there, even though we're in this kind of unknown situation in terms of capital markets.  A perfect example of that is the issues we're seeing happening with Digital Currency Group right now, which is this massive titan that's existed in the Bitcoin industry and the shitcoin industry for a long time, is that every other bear cycle, they had access to cheap capital to bail themselves out, whether that's borrowing and raising equity.  This the first cycle that's not the case.  

So at Ten31, we're going to still operate in this environment and we plan to operate in this environment as much as we possibly can, in terms of getting funding to Bitcoin companies; but we've also been talking to them a lot about making sure, and we've been talking about this with them for almost a whole year now, is making sure your business is in a situation where if you can't get any external capital, you can survive a three-year bear market, and ideally thrive in that situation.  The overwhelming majority of the companies that we talk to in the Bitcoin industry are able to do that, because they didn't play high-time-preference games, they didn't play these get-rich-quick games; they played these low-time-preference, long-term thinking games, and as a result they're sitting in relatively solid footing entering a potential global depression and a Bitcoin bear market, and they're able to build in that environment to ideally take advantage of the next bull.

Peter McCormack: Yeah, and that list of companies that have gone through a rough, say six to eight months, I can't think of a single Bitcoin company that's blown up, created news because they've blown up, because they've overleveraged themselves.

Matt Odell: Yeah, correct.

Peter McCormack: And, look, I think if it happens, if it's a Bitcoin company, they might just run out of runway, and they might burn out and you know it ends, but they'll run out of runway because there's just not enough activity in the market.  Hopefully when they do, it will just be a case of some people lose their jobs, and certain technology goes, but it's not a situation where they've fucked a whole bunch of other people, which is obviously what we've seen with other companies.  The collateral damage that's been done to other companies, individuals, bitcoiners, even crypto people, it's collateral damage from poor decision-making.

I feel like at least with these Bitcoin companies, if something ends for them, there's not this collateral damage.

Matt Odell: But I don't think -- Bitcoin-only doesn't necessarily make you immune to that.

Peter McCormack: No, but I just don't think it's happened.

Matt Odell: Basically, where you see the real bad collateral damage is when you have custodial accounts.  And most custodial accounts tend to be exchanges, which tend to support every shitcoin under the sun.  But the same risk is maintained with any business that operates on a custodial relationship.

Peter McCormack: Of course, but if someone like a River failed, I don't believe when River fails it's like, "Oh, by the way, we've lost all your funds".  I believe a company like River --

Matt Odell: But that just speaks to the integrity of Alex and his team.  It's not because they're Bitcoin-only though.

Peter McCormack: No, but I think there is a correlation between Bitcoin-only and the principles of which you operate the business and the risks you take; I think there's a correlation there.

Matt Odell: Yeah, I would probably agree with that, it's just part of our thesis in the first place.  It's part of why I've dedicated my life to Bitcoin education.

Peter McCormack: Yeah.  And one of the tricky things I think for these companies is also, there hasn't been a massive buildout of regular and consistent usage of Bitcoin that some of these companies may rely on as well.  Maybe they're a payment processing company, and there just isn't enough people constantly spending; or there isn't enough money yet being made off Lightning transactions.  So, some of these companies are waiting for the market to come to them, and they're going to have to have some patience and resiliency to get through.

Matt Odell: Yeah, I mean the biggest issue is twofold that I've seen, from my experience.  First of all, we're all bitcoiners.  If you're running a Bitcoin-only business, you're an ideological bitcoiner, because every VC and all the crypto VCs, all the regular VCs, whatever, any adviser, they'll all tell you, "Just add all the different coins.  You don't have Ethereum on it?  You have to do it".  So, the only people that don't do it are usually the ideological bitcoiners.  And what is one consistent thing with most ideological bitcoiners?  It's that we tend to keep a large portion, if not our entire net worth in Bitcoin.

The same goes true with the Bitcoin companies.  A lot of Bitcoin companies, and it makes sense to me, because it's the same way with the companies that I run, is their method for stacking sats.  You want to stack Bitcoin, and that company ends up holding more and more of their Bitcoin on their balance sheet.  So the question is actually, "What is their portfolio management?"  Are they all in Bitcoin in their reserves, and does that mean their reserves are down 80%?  And that is coupled with this idea that a lot of companies were built off the back of this idea that you could always raise money; it was just a question of valuation or interest rate, and that just doesn't exist right now.  Even Coinbase is having trouble borrowing money.

Peter McCormack: I know somebody who's not having trouble.

Matt Odell: Coinbase is having trouble borrowing money, and they're a multi-billion-dollar publicly traded company.  So, any company that was built off the back of this idea that, "We don't have to be profitable yet, we can be profitable in the future", this idea of growth at all costs that's fuelled by cheap money, those companies are in trouble.  It just tends to be that most of those types of companies aren't Bitcoin companies, and I think there is a correlation there.  There's this idea, this low time preference kind of long-term building real businesses with fundamental value, kind of mindset.

Peter McCormack: Well, if you refer back to CoinCorner and Danny Scott, I'm sure in the last two years if they wanted to raise money, they could have, and their valuation could have gone up, and they could have hired a bunch of people.  And they could have maybe avoided shitcoins, but maybe the pressure would have got to them.  It's like, "Shit, we've raised this money, we've got to hit this milestone, because we need to raise our next round", because I have no issue with people raising money.  But one of the pressures that comes with raising money is, they want you to deploy that capital quickly, so you raise your next round, and then deploy that, and so you raise your next round, because they know in each round, the valuation goes up.  And at some point, you hope, or they hope, that you're going to either sell, or you're going to IPO.

Matt Odell: I think they're both sales.  Exit liquidity.

Peter McCormack: Yeah, and I think that's the classic problem that happened with BlockFi, which I'm sure we're going to get into.  Whereas, someone like CoinCorner, they're like, "Well, we've got this much money in the bank, we're bringing in this much money in, this is what it costs to run us.  Okay, how long can we operate; what are our risks?  No one can tell us what to do, we haven't got somebody with a seat on our board pressuring us, telling us to raise more capital".  Danny and that team have said, "What is the core technology we should build; how do we stay independent; how do we grow our company?" and they're just doing it on their timeline.

Matt Odell: It's a good, old-fashioned, cash-flow-positive business.  It's amazing how novel that is nowadays.

Peter McCormack: Yeah, but look, you also need to consider coming into a bear market.  It's like, yeah, cash-flow-positive business, but cash flow can get hit hard during a year like this.  Have you got reserve capital; or what happens when things get difficult?  It's a situation we're facing with this podcast.  There isn't as much sponsorship money available, what do we do?  What do we do over the next year; how do we carry on doing what we're doing; how do we finance it now?  We've conserved capital from the last year, but there's still things we have to think about; we have to rethink our strategy for the next year.  I think that's what a lot of people are going through and it will be interesting to see.

Matt Odell: Yeah, I agree.  I think we are fortunate that there are a lot of Bitcoin businesses that were built with that mindset. 

Peter McCormack: Bring that in a bit, just so I can hear you.

Matt Odell: I don't want to touch it though!

Peter McCormack: You can touch it to bring it in.  When it's here, you sound different from when it's here.

Matt Odell: Okay.

Peter McCormack: You don't have to lean in, you can just bring it to you.

Matt Odell: I've done thousands of hours of podcasting, but thanks!

Peter McCormack: Just make sure the mic's in front of your mouth!

Matt Odell: No, I think there are a lot of Bitcoin businesses that have done that, and that's good for everybody involved.

Peter McCormack: Do you want to talk about Bitcoin Park before we get into this stuff, because I feel like what you guys are doing there is cool and I'd rather people hear about that as early as possible, and also you get that tail-off of listeners during the show.

Matt Odell: What do you think about Bitcoin Park?

Peter McCormack: I think it's bold, I think I wish I had something like that in Bedford, but there isn't a market for it.  I think it's cool coming into Nashville knowing that exists.  Basically, I think you've created something where a community could build around it, which is very cool.  I think eventually, there'll be something like a Bitcoin Park in every state, in every major city, whether that's you guys franchising it eventually, or other people just going, "That's fucking cool, we're going to do it".

Matt Odell: Hopefully the latter, to be honest.

Peter McCormack: We've managed in Bedford once a month to have a meetup and 50 to 60 people come, which for me is incredible.

Matt Odell: Yeah, that's really good.

Peter McCormack: In like fucking Bedford!  But there's no way we could build a Bitcoin Park yet, but eventually.  I just like this idea of things being built up around meetups and communities now.

Matt Odell: Physical spaces.

Peter McCormack: Yeah.

Matt Odell: So, I would say Bitcoin Park is me and Rod's Real Bedford.

Peter McCormack: Yes.

Matt Odell: It might be crazy enough that it just works.  It was a bold plan and it was this idea of having this proper centre for the community, a campus for the community in Nashville, focused on empowering the local community around us and also Bitcoin.  We have members, we do events, we have an event space, we have multiple podcasting studios, we have private offices, we have coworking space, we have a little coffee shop; that's where our meetups are held.  We do two meetups a month right now, hopefully expanding that.  We have this big mining event coming up. 

So, we had this idea of these topical meetups every month, and that topic is the same every year so you can plan around that, like these are the topics that I enjoy.  And then for some of the main topics, like mining, we will have a summit that follows that meetup that's open to the public.  So you have a full week basically of discussions and collaborations.  Then we take a lot of those live conversations and we strip them of the Q&A, because we also do Q&A at all of our events, I think Q&A is extremely empowering, and we strip them of the Q&A and then we post them to the Bitcoin Park podcast feed so you can just search Bitcoin Park in your favourite podcast app and listen to those conversations.

It's been amazing to build it, it's been about six months now, in a bear market and a recession.  Our community here is extremely vibrant, it's growing, it's stronger.  We've just recorded a Dispatch with a lovely couple that often come down from Louisville.

Peter McCormack: With the dog?

Matt Odell: That was a different couple that came down from Detroit with their dog.  They make the drive from Louisville three hours to come to Bitcoin Park pretty much monthly.  So, it's just this great space where we're all collaborating and meeting each other and shaking each other's hands and seeing each other in person and it's been extremely empowering. 

You mentioned earlier it would be great to see Bitcoin Parks in all these different cities around the world.  One thing that I noticed was during COVID and the response to COVID during the lockdowns, we were encouraged not to be in physical spaces together.  But the Bitcoin meetup scene around the world, this grassroots Bitcoin scene around the world was growing and growing, and it completely bucked the trend.  Instead, meetups were growing bigger than ever; you had 60 people in Bedford.  In Nashville, we were going up.  It was like 100 people, then 150 people, then 200 people, and this grassroots Bitcoin adoption was just accelerating, just people, neighbours helping neighbours. 

So, in September, the first event we held at Bitcoin Park we called Grassroots Bitcoin, and that's an annual event.  We had over a hundred meetup organisers come to Bitcoin Park completely free of charge.  We collaborated, we had conversations, we discussed, we just had fun, drinks, food and then they all went back to their cities into their meetups.  And the cool part about all of this is that it's truly grassroots, that it really embodies the ethos of Bitcoin, this idea that it's not centrally controlled, there's all these different local communities that are slightly different and they have different priorities and they're built a little bit different way, but at the same time we're all kind of connected on the same mission to have just an independent money that is not corporate or state controlled; and also just this greater free and open-source movement.  

We had SeedSigner, the two men who are the maintainers of SeedSigner, came down to Bitcoin Park and we had people as young as 13, as old as 55 building their own hardware wallets.

Peter McCormack: As old as 55!  Fuck, man.

Matt Odell: That's pretty cool.

Peter McCormack: That's like 11 years for me!

Matt Odell: Would you say as old as 42, 44?!

Peter McCormack: I think you missed a part of it as well.  What I've noticed with going to some of these meetups now is the amount of conversation that isn't about Bitcoin, which I think is really important, in that it's become all these asymmetric topics.  My first one I went, it was Texas Slim talking about the Beef Initiative.

Matt Odell: Yeah, so we just had the Beef Initiative there, which is all about supporting local farmers, understanding where your food comes, eating better food.  Yeah, all these tangential but important topics about empowering individuals and empowering communities.  That's the glue that holds it all together.

Peter McCormack: I mean, the one conversation I had today there was with a guy about homeschooling.

Matt Odell: Yeah, that's what we just did the Dispatch on.

Peter McCormack: Oh, it's that couple?

Matt Odell: Yeah.

Peter McCormack: They were great.

Danny Knowles: Were they the ones making the board game?

Matt Odell: Best board game I've ever played.

Danny Knowles: They said they were going to take it to the conference.

Matt Odell: Best Bitcoin board game I've ever played.

Danny Knowles: What's it called, Hodl Up, or something?

Matt Odell: HODL UP, freemarketkids.com, there.

Peter McCormack: Yeah, love it.  Is it available?

Matt Odell: Yes, it is.  You can pay for it in Bitcoin or credit card.  And I don't say that lightly.  I've played a lot of Bitcoin games that people have asked me for feedback for.  This one is a fantastic game, it's a really good game --

Peter McCormack: All right, we'll check that out.

Matt Odell: -- without the Bitcoin component.  But with the Bitcoin component, it adds this whole educational element.  It's great.  Also, I just did an episode with them on Citadel Dispatch, so check it out.

Peter McCormack: Okay, but where I'm going with this, I think the great thing about Bitcoin Park and the thing that will make it even more successful, or help with its growth, is that I don't think you have to be someone who cares about Bitcoin as money to come there and get some value from it.  You might come there for a Beef Initiative event with Texas Slim, or you might come there for another thing and then learn about Bitcoin and get into it.  But for me, it's so much better that we turn up at these events and we're not just talking about 21 million and UTXOs, we're talking about other subjects.  There's this whole group of other subjects outside of Bitcoin and I think that is important for it to grow.  That's one of the things I've got out of it, especially today down at yours.

Matt Odell: Yeah, 100%, couldn't agree more.  I would love to have all these different types of events.  One of the things we're trying to do, so it's a member-supported initiative.  So, we have this idea of 100 in-state members that pay annual dues, and then 100 out-of-state members that pay annual dues, and together we call can cover the cost of it, because it's an expensive endeavour.  Part of that concept is empowering the individual members to have their own events there, where they have the support of Bitcoin Park, but they handle the programming themselves, it goes up on the meetup page, everything like that, but they own it.

I could see Scott and Tali, I could see them doing -- right now, we're already planning on doing game nights, but I could see them doing homeschooling things there.  And the idea is from there, it can expand organically of all the different topics and conversations that are happening; and amid those members, they're not just all these stereotypical, ideological bitcoiners, it's lawyers, real estate brokers, and just people from all different walks of life.  And some of them are just Bitcoin curious, but if they spend enough time there, I have a feeling that they're going to end up loving Bitcoin.

Peter McCormack: Have you noticed people coming in who aren't really bitcoiners, who are intrigued by what's going on; have you managed to tap into the non-Bitcoin locals?

Matt Odell: Yeah, physical location's powerful, that people can just walk in and talk to people and just have conversations.  It's just extremely empowering.  It can't be overstated how important that physical aspect is, and that's why I would love to see -- I mean, I joke around all the time.  The ideal situation is not that I'm building Bitcoin Park; the ideal situation would be that someone else was building Bitcoin Park and I could just go to Bitcoin Park.  I want as many of these physical spaces as possible all around the world, so that no matter where you are, you can go there, you can work, you can collaborate, you can just have a good time.  That would be great.

Peter McCormack: Yeah, I mean I obviously want to do something similar in Bedford, but based around football.  I want to build a ground with training pitches and a gym and people can come in there and look after their fitness, and kids can come and train and our ladies' team could come and train.  We'd love to have a disability team, but it's all based around football for me.  But in doing so, we have our Bitcoin events, and people can come and learn about Bitcoin, or learn about diet.  I think in some ways, it is similar to what you're doing, it's similar to Bitcoin Beach.  But having these different edges that relate to the person running it, I think that's what makes the difference.

Okay, so this is meant to be at the end of the show but we'll do it now.  Where do you want people to go, or how can people help support it?

Matt Odell: Bitcoinpark.co, if you want more information; you can support us with Bitcoin there, if you want to donate; you can apply to become a member there; if you want to support us annually and get all the member benefits that come with it, just search Bitcoin Park in your favourite podcast app, a lot of our content gets posted there after our events.  And then, just come and check it out, just come down to Nashville, have a good time.

Peter McCormack: Nashville's fucking great, man, I like it here.  I think if we were to ever base ourselves in one place, this is up there.

Matt Odell: There you go.  Well, it sounds like you're going to use us as one of your bases of operation here in the US.

Peter McCormack: I mean, it's become New York, Nashville, Austin, Miami, LA.  But the two places that we can go to regularly, know we get the right people…  The other interesting thing is people want to come in.  So, if we go to New York, we'll get a few people, we'll maybe get some people in.  But if we go to Nashville, they can make a whole thing about it.  They can fly in, they can do the show, they can come to Bitcoin Park, there might be a meetup on.  There's more of a reason in Nashville, same in Austin.  So, those locations we do might become smaller.  I don't know about you, Danny, I could see New York dropping off for us.

Danny Knowles: Yeah, LA too.  But one of the good things about Nashville is it's not a very far flight from anywhere.  So, if you are flying in, it's pretty easy no matter where you are.

Matt Odell: Yeah, centrally located.

Danny Knowles: It's Nashville and Austin really, isn't it?

Peter McCormack: Yeah, they're the main two, and Miami really.  Miami's pretty good.

Danny Knowles: Although that's getting less too.

Peter McCormack: You think?

Danny Knowles: Yeah, I think so.  Or maybe we've just tapped the audience a lot.

Peter McCormack: Also, if you're coming from California, it's a long way to fly.  Also, one of the things we've been trying to do is realise actually, we need to support the UK.  We come here to make the show, but we did our first sprint in the UK recently, got people from Europe in.

Matt Odell: That's awesome.

Peter McCormack: Yeah, it's like, "How do we build that up?  How do we promote what people are doing there?"  I mean, Danny Scott and Molly from CoinCorner have done so much, they've worked so hard, and we're off here supporting the Americans; that's wrong.  How do we help them and support them?

Danny Knowles: People like Ben Arc as well.  

Peter McCormack: Yeah, Ben Arc.

Matt Odell: I love Ben, Ben's amazing.

Peter McCormack: I actually think that Jim Duffy, who did the Bitcoin event up in Edinburgh, he's starting to build some things, he's starting to do some things.  They did a great job with that event, for a first ever event, and it's like, "Okay, we should probably be supporting that a bit more".  If it means twice a year, it's like two less journeys a year".  Well, it's the same for you, you've still got to fly!

Danny Knowles: It's even further for me!

Peter McCormack: That's good for us.  I mean, I can't travel like this for the rest of my life, it's too much, man.

Matt Odell: Well anyway, before we finish up the Bitcoin Park segment, for your listeners, February is Open Source, we're going to have Open-Source Week.  So, we have a great number of awesome devs coming in for it and just people that are curious about Bitcoin, so it will be one of the better ones of the year, if people are interested.

Peter McCormack: All right, we'll put that all in the show notes and anything you need, you tell us, we'll help you.

Matt Odell: Don't touch the mic!

Peter McCormack: I did, I went, "Don't touch the mic!"

Matt Odell: I've been pretty good about it.

Peter McCormack: It's because you're here, you're making me want to touch the mic.  I never used to touch the mic until you touched the mic!  All right, okay, 2022.

Matt Odell: We're in January 2022, everything's going great.

Peter McCormack: IMF urged El Salvador to drop Bitcoin.

Matt Odell: Makes sense, to be expected.  Was that a big thing?

Peter McCormack: I mean, that's all that happened in January.

Matt Odell: Okay, fair enough.

Peter McCormack: The interesting side of that is, you probably don't listen to my show any more, but I made a show with Alex Gladstein about the IMF and the World Bank; I don't know if you read his article?

Matt Odell: Yes.

Peter McCormack: Yeah, I mean a fascinating explanation of how western nations have managed to support their economies and live these great lives based on economic imperialism.  You know some fuckery is going on, but the way he spelled it out, how they would indebt these nations to steal their resources.

Matt Odell: Basically loan sharks.

Peter McCormack: Yeah, loan sharks.

Matt Odell: On a global scale, entire nations.

Peter McCormack: Yeah, so that kind of makes sense from the IMF.

Matt Odell: Yeah, of course.  Bitcoin stands against everything that the IMF is.  The crazy thing is that it took them -- this is what put it on their radar, it took them so long to say something.

Peter McCormack: Okay.  Big thing in February was the Canada Truckers.

Matt Odell: Yeah, everyone forgot that already.

Peter McCormack: I'm not sure, man, that comes up a lot with us.  Like yesterday, what's that guy, Vivek?

Danny Knowles: Yeah, Ramaswamy.

Peter McCormack: Yeah, even he brought it up.

Matt Odell: He brought it up?

Peter McCormack: Yeah, do you know him?

Matt Odell: No.

Peter McCormack: He brought it up.  It comes up a lot.  We had BTC Sessions on recently, we talked about the whole thing.

Matt Odell: Well, I mean he was central to it.

Peter McCormack: But we weren't going to make that show.  We were going to make a show with him about educating people on Bitcoin, and then we mentioned that and then we made a whole show on that, I still get emails about it.  I think a lot of people have forgotten, but I think a lot of important people haven't forgotten, and they're using that and saying, "Just remember what happened there, what happened to people who were trying to protest".

Matt Odell: The Canadian Trucker protest was a hard one for me, because it first of all represented everything, all the reasons why Bitcoin needs to exist in the first place, why you need a freedom money, why you need a money that cannot be stopped, that cannot be seized.  We saw a western government be angry against its people that were protesting, they were doing peaceful protests, and they weaponised the financial system against them.  They closed their bank accounts, they forced companies that were accepting dollar donations to seize the money and to close the fundraisers.  They even went after people who donated's bank accounts. 

So, it was a massive wakeup call, I would say, to a large portion of society why Bitcoin is needed in the first place.  We heard many, many times, this kind of thing happens in Venezuela or Iran or Russia or China and everyone's like, "Not in my country, it won't happen in my country".  And for it to happen in Canada, adjacent to the United States, I think it was a massive wakeup call for people.

Now, it hit me extra hard because it should be the moment that is ideal for Bitcoin, where Bitcoin really excels; this idea of people being able to raise money globally, secure it, spend it and use it as necessary.  And to be frank, it was a complete clusterfuck.  There was a Bitcoin fundraiser that was raised; the government went after the known people that were using it; the Bitcoin address that was being used was reused, so it was very easy to track it on-chain, privacy-wise; the Canadian Government came out and said that no exchanges could interact with that Bitcoin; when it got distributed, every trucker that received Bitcoin was put on camera so their identity was known.  It was a bit of a mess.

At the end of the day, the protests were squashed, these people weren't able to use the Bitcoin to actually help them in their protest, for the most part, and a terrific opportunity for Bitcoin to empower individuals was missed.  It hurt because that should be one of the easiest use cases for Bitcoin, this idea that if you are a protester, if you are an activist in a country and you want to raise funds, you should be able to easily do so in a private and secure fashion, without having heavy technical expertise.  In this case, some of the people involved were diehard bitcoiners that educate others, that know most of the best practices, and even they had difficulty doing it.

So, that was disappointing.  I don't want to be a complete doomer on it.  In the follow-up of that, we recorded a Citadel Dispatch which was completely focused on how you raise donations in that environment, and it's relatively accessible for people to do that, but that's not what happened.  Yeah, for me it was the moment, and you can go back -- the crazy thing about Rabbit Hole Recap, it's like a time capsule.  That's my weekly news show.  We've done that every week for four-and-a-half years, me and Marty, and you can go back to any week in time and see how we were feeling at that time.

I was crushed, I was deflated and on top of that, for a moment there it seemed like the US might jump in and be involved with it as well, and it kind of seemed like the moment where the state goes against Bitcoin very hard in America and Canada, and they didn't.  But they came close and it just felt like we were not prepared.  The Bitcoin Network would be fine, it's built to handle this kind of thing, it's extremely resistant to change by design, but individual bitcoiners would have felt significant pain in that situation, I think.

Peter McCormack: What if the fundraising had been successful, mistakes hadn't been made and money had got to the protesters, they were able to use it and it lengthened the protest to the point where Bitcoin was so on the radar of the Trudeau Government that they actually went fully against Bitcoin and banned it?  Are we ready yet for that scenario?

Matt Odell: Like I said, I think the Bitcoin Network is.  I think the vulnerability is on individual bitcoiners, in a type of ban situation.

Peter McCormack: Because, sometimes I think maybe you need a people revolution first, and I think we're kind of heading towards that.  That was a people revolution, we're seeing serious threats to the Trudeau Government; what's that guy's name, Poilivere?

Matt Odell: Yeah, something like that.

Peter McCormack: He's a bitcoiner, he's gaining ground, there's a good chance he might become the next Prime Minister.  Maybe it needs to come from the people first and Bitcoin just continues to grow in adoption and resiliency.

Matt Odell: Well, my point is not the specific Canadian situation; my point is, this has already been happening around the world, and it was just very visible of the failure of Bitcoin to be very empowering in that situation.  It was very visible to a lot more people than it was in other situations.  So, I do a lot of work helping activists use and raise Bitcoin in adversarial, hostile environments; this concept of using Bitcoin in an environment where your government doesn't want you to use Bitcoin, it doesn't want you to use the banking system.  And the major vulnerability that those people have is on the privacy side.

I was talking to Navalny's people, and Navalny is the major opposition leader to Putin.  They've been completely cut out of the banking system, but they've been raising Bitcoin for years.  But they reuse the exact same address.  So, every donation that goes to their address is connected on the blockchain.  I said to someone on their team, "If you want me to sit down with you for an hour, I can show you how to do this".  I was going to basically switch them to BTCPay Server, which we go over in the Citadel Dispatch episode, which is why I recorded the Dispatch episode in addition to it, so I had somewhere to send people instead of saying, "Let's have an hour-long conversation".  I was like, "I can set it up for you so your donors' privacy is good, or better, much better".  They said, "No, it's unnecessary, we've been doing it this way for years, Putin can't stop it", because he can't, he literally cannot block the transition.

Now, where does that privacy shortfall hurt?  Putin goes to Binance and goes, "This is Navalny's address.  Tell me everyone who gave you their ID, their KYC information and sent money from Binance to this address".  Binance just handed over all that information, so Putin now knows exactly who donated to his opposition candidate.  And then, he can go after them, through all the different means at his disposal, whether it's throwing you in jail, work camp, closing your bank accounts, seizing your house, seizing your car; all these different things are at his disposal, even though he can't seize your Bitcoin by breaking your kneecaps, and can't block you from sending to Navalny, that privacy shortcoming, that privacy failure put real people at risk in hostile environments. 

That happens all over the world almost every day, because Bitcoin is useful for those situations, but it's harder to use privately, and that's what happened in Canada.  So, all these people that donated -- and a lot of people probably donated from Strike and Cash App and all this other stuff, and that's not even very technical privacy.  That's just, "Okay, this is the address for the donations, who's sent here?"  If the US Government wanted to go after it, they could have found out probably 60%, 70% of the people who donated, but it just never went to that step; they just went for the people who received and were managing the funds.  It's really sad.

Peter McCormack: Yeah, but privacy is also another thing under attack.  I mean, we saw that with the Tornado Cash dev get arrested.  I think the privacy of Bitcoin is what governments fear the most, not knowing.  They just want to know everything.

Matt Odell: 100%.

Peter McCormack: They want to scoop up every piece of information about you, which is why I've thought and discussed the idea that I think you win the war for the 21 million first, and then you win the war for privacy.  I think they're the two major wars in Bitcoin.  What I mean by that is, you win adoption by 21 million, you win adoption through good money first.

Matt Odell: Right, scarce money.

Peter McCormack: Yeah, scarce money.  Maybe the meme will be, "Came for the gains, stayed for the privacy".  And once Bitcoin is so ubiquitous that it can't be banned, stopped, everyone's using it, everyone appreciates it, or a large majority, then it's hard to prevent people having privacy on it.

Matt Odell: Yeah, we talked about this at length the last time.

Peter McCormack: Did we?

Matt Odell: It was literally all we talked about?

Peter McCormack: Did we go 21 million then privacy?

Danny Knowles: Yeah, that was pretty much the whole show!

Matt Odell: People loved it, it was a great conversation.  I enjoyed it, now I'm holding the mic!  They should just go back to that.  What episode was that?

Danny Knowles: We'll put it in the show notes.

Peter McCormack: Do you know what we should have done?  If we had the whiskey --

Matt Odell: Just go back to that episode if you want to hear the privacy conversation.  Let's move on to the next…

Peter McCormack: If you had a shot every time you touched the mic, that's what we should have done.  We'd have been drinking, we'd have been fucked!

Matt Odell: Yeah, I mean now it's closer to home.  I can't believe I drove 20 minutes out and 20 minutes back!

Peter McCormack: Well, that's because you didn't use the diary entry.

Matt Odell: I literally have receipts.  Okay, anyway, continue.

Peter McCormack: You had two receipts, you just picked the wrong one.

Matt Odell: What's the next thing?

Peter McCormack: I mean, the next thing is probably where we're going to jump around a bit, because we can't really go month-by-month, because we've got the LUNA Foundation raising $1 billion, but we're going to go from LUNA to LUNA crash to everything crashing.

Matt Odell: Fucking LUNA, man.

Peter McCormack: I know.  But to me, that was the first.

Matt Odell: Did you get pie in your face on that one?  Did you have podcasts where you were like, "LUNA's good for Bitcoin".

Peter McCormack: I've got receipts.

Danny Knowles: You have got receipts.  We don't do podcasts like that!

Matt Odell: That shit stunk, people were really into it.  They were like, "This is great, it's Bitcoin buy pressure, he's buying Bitcoin, he's saying it's going to back his 'stablecoin' with Bitcoin".  It got a lot of people.

Peter McCormack: Dude, I've talked about two things positively that aren't Bitcoin.  I've talked about Monero, which I will stand by; and I've talked about the fact that it's very difficult to argue against the usefulness of stablecoins on platforms that we might not like, on Ethereum, on TRON, whatever, when there are people in countries using it because it's the best money they can get.  It's very hard to argue against that.

Matt Odell: But people want dollars.

Peter McCormack: Yeah, people want dollars and that's easy access to dollars.  That's the only thing I've done.  The only time I talked about LUNA, I was on Pomp's show and he asked me about it, and by the way, I'd barely heard of it.  I'd seen people talking about it on Twitter, but because it's a shitcoin I just don't pay attention to it.

Matt Odell: So, you had LUNA, the shitcoin, and then Terra was the "stablecoin" pegged to the dollar backed by LUNA?

Peter McCormack: Yeah, whatever it was.  Again, I've still not actually looked at it that much.  Then he asked me about it and I said, "It sounds like a scam".

Matt Odell: Yeah, it just reeked of scam.

Peter McCormack: Yeah, "It just sounds like a Ponzi or scam".  Have you got the video?

Danny Knowles: I mean, I can find it.

Matt Odell: The argument I remember people saying at the time that caught out a lot of people was, "How is this different than MicroStrategy buying Bitcoin?" because he was buying Bitcoin.  Like, "How is this different than a company buying Bitcoin?" because he bought billions of dollars of Bitcoin at the time.

Peter McCormack: Yeah, look, if he wants to buy a bunch of Bitcoin, fine.

Matt Odell: No, I agree, the whole thing reeked of scam, but I'm saying the argument wasn't even the stablecoin or the shitcoin; there were a lot of bitcoiners that otherwise consider themselves Bitcoin maximalists, that were suggesting that it was exactly the same as MicroStrategy buying Bitcoin.  And I remember because I was having these conversations and I was like, "Do not --" I was advising someone who was thinking about making content about LUNA, and they were making the argument that it was similar to MicroStrategy and I was like, "No, dude, it's a fucking shitcoin scam", and they dodged a bullet on that one.  But a lot of people got caught up in that; there's probably so many receipts out there.

Peter McCormack: Yeah, listen, during the bull run I got caught up in the excitement.  I thought Tesla buying loads of Bitcoin was exciting, I thought MicroStrategy --

Matt Odell: Yeah, AltCaps tweets about it.

Peter McCormack: The one thing I've realised is that I think the biggest hodlers are the people with the smallest amount of Bitcoin.  If you've got a small amount, there's no point selling it.  Sorry, the smallest holders are the hardest hodlers.  I think outside of Michael Saylor, I think anyone with a big density of Bitcoin, if something goes wrong, they're going to maybe have to sell that Bitcoin.  The saddest thing about that guy, he sold all that Bitcoin to defend the price, but it made no difference; he might as well have not sold the Bitcoin.  He wasted that Bitcoin.

Matt Odell: Yeah, but we don't know if he sold it all.  He probably kept a bunch of it.  He said he sold it all.

Peter McCormack: I mean, wasn't it tracked?

Matt Odell: I don't think so.  I don't think we ever had receipts on that.  Or maybe we did, maybe I'm wrong.

Peter McCormack: Well, the Bitcoin price was dumping at the time -- did you find it?

Danny Knowles: No, it's not there, I can't find it.

Matt Odell: Because it never happened!

Peter McCormack: No, it did.  Where did you go on; Twitter, because I think I put it as a tweet?

Danny Knowles: Oh, did you?  No, I was looking on YouTube.

Peter McCormack: If you go onto my Twitter and you do the advanced search --

Matt Odell: We believe you, Peter.

Danny Knowles: It happened, I was there! 

Matt Odell: We believe Danny, okay!

Peter McCormack: I'd be interested to see what I say, though.

Matt Odell: But the point is, the Bitcoin wasn't actually backing it.  He was saying he was buying, I think LUNA with it, and then LUNA was backing…  But it's the same thing we ended up seeing with FTX, which was this leverage Ponzi over this centrally held shitcoin.  And then as sell pressure goes, you just can't defend it, and you're just cascading liquidations all the way down, absolutely.  And this is one of the risks that we've talked about in stablecoins in general, is that I understand that there's a value that people want dollars in countries where dollars are hard to get, and they're willing to take risks and trade-offs for that.  But I don't think they understand the risks that they're taking, I don't think they're properly educated on the trade-offs they're making.

Every stablecoin, or any kind of token that's backed by a real-world physical asset, whether that's dollars or gold or oil, or whatever, requires a centralised trusted third party that is essentially managing the whole system, and you have to trust them that they are going to keep that peg real, and you're able to actually use that for goods and services, and not blacklist you and not rug you.  So the problem is, yes, they can maintain a peg to a dollar on any given day; but also, on any given day, they can just go to zero and they can be completely worthless to you. 

We saw that happen with Terra, his stablecoin, and one of the things that was really sad to hear is that I was talking to some buddies in Argentina and the Argentinians love stablecoins, because they're going through hyperinflation, it's really hard to get dollars.  And a lot of them moved from Tether, because of the Tether FUD, to the "decentralised stablecoin" that was Terra, and they all got rugged, they all got absolutely crushed.

To me, the bright side of that, it's not a bright side, but my optimistic take is that people will go through these learning experiences and a lot of people will get burned, and that becomes better education than all the podcasts, YouTube videos, books combined, is actually education by touching the stove.  And as a result, a lot of them most likely now understand what the value prop of Bitcoin is.  Yes, it's a free market; yes, the purchasing power can go down 70%; but ultimately, you're not trusting any entity with custody of your wealth, you're able to hold that yourself, it's a native bearer token that can't be rugged like that.

Peter McCormack: This is pretty much the first time I'd heard of it.

[Pomp's podcast clip played]

Peter McCormack: Yeah, I mean it was the first time I'd heard about it and I just thought it sounded sketchy, sketchy as fuck, and I never really paid much attention afterwards.

Matt Odell: Yeah, I can't believe it grew so big.

Peter McCormack: If I was going to use a stablecoin, it would be Tether, or maybe even Circle.  Is that USDC?

Matt Odell: Yeah, we'll see.  All these stablecoins are going to fail eventually.

Peter McCormack: But if I was going to use one, I would want the most centralised, corporate, registered stablecoin there is.

Matt Odell: But USDC has a different problem, right, which is that as soon as Tornado Cash got sanctioned, any USDC that had touched Tornado Cash all got blacklisted at the same time, and you just got completely rugged in that regard.

Peter McCormack: It didn't matter how many hops?

Matt Odell: I don't think it really mattered.  And they said, "You can apply and submit your licence", or whatever, to get it.  And I assume people in the developing world aren't able to go through that process.

Peter McCormack: Possibly not.

Matt Odell: So, you have that risk.  Then Tether is like a shadow bank basically.  They do blacklist sometimes but even with Tornado Cash, they delayed their blacklisting.  They made the government basically reach out to them and specifically ask to do it, so there was a delay period there.  But yeah, because Tether's essentially a shadow bank, the US Government financial regulatory juggernaut has had its crosshairs on Tether for years, and it's been impressive that they've survived this long.  But those crosshairs remain.

Peter McCormack: But those crosshairs are important, because I don't think somebody should be arrested for writing code.  But if you've written code which the North Korean Government is using to mix the coins and use them, you're in the crosshairs, you're taking a risk.  I don't think they should be arrested, but would I do that?

Matt Odell: Wait, rephrase that?

Peter McCormack: So what I'm saying is, I don't think a developer should be arrested for writing code, I don't think you should.  I think that is a constitutionally protected thing in the US; I feel like it should be.  But at the same time, if you've created something which is heavily used by the North Korean Government, you're putting yourself at a lot of risk.

Matt Odell: Yeah, I don't know the specific stats of Tornado Cash, but my understanding is that the volume that was indicated that was North Korean's was rather minimal over the total volume.

Peter McCormack: Yeah, I don't know. 

Matt Odell: But I think that's tangential anyway.  The point here is 2022 to me, there was a lot of pain for a lot of people.  But as a result, what we saw was basically learning experience after learning experience, because people were getting burned.  So, with the Canadian Truckers, we saw the importance of censorship resistance, the importance of privacy, financial privacy, digital privacy.  With the LUNA collapse, we saw the importance of a native bearer token that doesn't have a centralised third party, the inherent risks of stablecoins.  That is the largest so-called stablecoin we've ever seen blow up, and it was quite large at the time.  All the other ones that have blown up in the past were relatively small.  More of that will happen until people realise that Bitcoin is the only long-term stablecoin.

Peter McCormack: The other thing from the LUNA situation, it exposed all the problems across all the different funds that blew up and all the different lending services, because that started a chain reaction.

Matt Odell: Right, they all had the same counterparties.

Peter McCormack: So, 3AC were heavily exposed to LUNA, as I understand; is that correct, Danny?

Danny Knowles: I think so, yeah.

Peter McCormack: And so, they blew up.  When they blew up, they couldn't pay back their debts to whoever, whether it was Genesis, BlockFi --

Matt Odell: DCG.

Peter McCormack: Yeah.

Matt Odell: DCG was exposed to Three Arrows and exposed to LUNA.  FTX, there's some talk that FTX blew up LUNA in the first place, and Alameda blew up; that's what Three Arrows' guys are claiming and that wouldn't surprise me; but that also hurt Alameda, who were also a counterparty of DCG; and Celsius is in the mix there.

The thing is, everyone was pretending that they were only lending money to very respectable institutions and counterparties.  But what was happening was, those counterparties were then going and just being absolute degens.  They were doing the most reckless trading schemes and staking schemes and yield-farming schemes, and they were essentially laundering that risk away from the big guys, who were just pretending that they were only using responsible counterparties.  But at the end of the day, it was four or five major players that were just borrowing against each other and lending to each other, and they just created this whole fucking mess.  They created this whole mess that inevitably blew up.

Peter McCormack: I think you missed a part of it as well, in that they said they were only lending to responsible institutions.  But they also were claiming that they were fully-collateralised, or over-collateralised loans, and we knew that wasn't true; or some of the collateral was some shit fucking shitcoin.

Matt Odell: Right, garbage collateral.

Peter McCormack: Yeah, like FTT.  Or, people were taking out massive loans collateralised by miners.  But when the price dropped, the miners --

Matt Odell: The whole mining industry was dominated by ASIC-collateralised loans.  And ASICs, they lose value significantly in downturns, right when you need to call them, and they're not easy to run necessarily.  So, you can't just immediately seize a bunch of ASICs and run them, so that was definitely a massive…  And this is the first cycle where we've really seen that kind of leverage.

But you start to wonder, essentially what happened here is, so much leverage was in the system and there was so much Bitcoin rehypothecation, where the same Bitcoin was being lent over and over again, that you had this result of just immense paper Bitcoin markets.  And part of the reason why this past bull market was as soft as it was and it peaked where it peaked, is probably because a lot of that demand was absorbed by essentially these paper Bitcoin markets, and it's something that people have speculated on for a while, that people expected to happen. 

The thesis has always been that those people get blown up, self-custody Bitcoin increases, we're at an all-time high self-custody Bitcoin right now, we've never had more people hold actual Bitcoin and not IOUs, anytime in human history.  And then we have a solid base where you start to find the real market price again, rather than the bullshit that was happening.  But at the end of the day, people are just greedy, people just always want more.

Peter McCormack: The surprise in it though for me, Matt, I think I was discussing it with somebody yesterday, is that someone like Barry is a good example.  Barry Silbert, whatever you think of him, he's made a lot of money, built some successful companies, depending on your measure of success; but in terms of revenue, he's built some successful companies.  And then for some unknown reason, as somebody who I've assumed, or has been noted as a billionaire, perhaps multibillionaire, has literally gone into this bull market and gone, "I'm going to put it all on red", essentially gambled and said, "Let's just take these massive risks, let's do this", and I'm wondering what the mentality is.  Is it like, "$2 billion's not enough, I want $10 billion".

Matt Odell: He didn't stay humble.

Peter McCormack: But it takes such massive risks, not only to get rekt, but there's people who are risking serious jail time.  I've taken some risks in my life, financial risks, career risks, but I've not taken risks where I've been like, "Hey, Danny, if we do this with the podcast, we could 10X our money; we get it wrong, we might end up in jail", we haven't taken those kinds of stupid risks, and I don't understand why you would risk, when you're already a billionaire, do something where you risk reputation death, financially rekt and jail.  What the fuck's going on in your mind?

Matt Odell: When are we airing this episode?

Danny Knowles: The 11th.

Matt Odell: What is today; the 7th?  So, four days.  When this airs, it will be 56 days from when Barry Silbert stopped withdrawals at Genesis and he still has not paid Gemini users $900 million, Gemini Earn users $900 million, and owes over $1 billion in addition to that to other counterparties that we know of.

Peter McCormack: Is that a daily tweet now?

Matt Odell: More or less, yeah, because no one else is really talking about it, so I keep calling it out.  Also, because Barry should know better and Barry should do the responsible thing and clean up the mess he had, instead of stalling for time and trying to fuck over as many people as possible to save his own ass.

Peter McCormack: What do you think his strategy is here?

Matt Odell: Stall, stall, stall.  The question you brought up is, why would he be so risky now, in this bull market?  Why would he play all these leveraged, ridiculously reckless games?  I mean, I think it came out that they did a loan where they were paid in that Terra stablecoin, because they were going to market-make on the Terra stablecoin, or some shit like that.  I think it was over $1 billion that they took in that horrible stablecoin that ended up collapsing.

Peter McCormack: But Genesis were respected.

Matt Odell: But my point is, where I was going with this is, I think he was always taking ridiculous leveraged bets and risks, but they increased over time, he got more and more greedy, they increased over time, they increased in scale.  He started doing this GBTC trade, where it was essentially increasing the assets under management for GBTC, which was this cash cow that he had, that he was collecting 2% management fees on the entire assets under management.  And he was basically facilitating loans so that people could try and arbitrage the spread between -- because at that time, GBTC was trading significantly higher than Bitcoin; now it's trading significantly lower. 

He got very greedy on that play, including holding a lot of GBTC themselves, both as collateral for loans, and on their balance sheet.  So, they became very dominant on that one trade as well, which increased risk furthermore, and is very similar to the LUNA collapse and the FTT collapse, where they had their own essentially centralised shitcoin that's spiralling down in value and they can't get out of it.

But the point I was trying to make is, he's probably been taking these risks all this time.  We saw him attack Bitcoin with SegWit2x back in 2017 and failed, where he thought there could be a proper corporate takeover of Bitcoin, because his money was circulating through the space like crazy, he had investments in so many Bitcoin companies, including buying out CoinDesk and basically using it as his own kind of mouthpiece at the time.  And so, he was taking increasingly risky bets, but he never banked on the fact that cheap, easy, external capital would evaporate, that the Fed would start raising rates, and that he wouldn't be able to borrow himself out of a hole, or that he wouldn't be able to at least raise equity out of a hole.

We saw that, because he was still in denial.  Remember when the first stories started coming out, "DCG's trying to raise $1 billion", in probably the worst macro climate to raise any kind of money at the time, and you just saw it and you're like, "That is straight desperation", also they're completely out of their fucking mind, they just don't even realise the severity of the situation they're in, and they ultimately couldn't raise that money.  And I bet you, at this point right now, he still probably thinks, "I can borrow money out of this hole or I can raise money out of this hole.  Maybe Bitcoin will turn around if I stall long enough, maybe the Fed will pivot if I stall long enough", and it's that mentality of cheap money.

DCG is like a movie set.  The cheap money allowed it to have this veneer of legitimacy in this massive juggernaut, but behind the whole scenes was just a house of cards holding the whole thing up.

Peter McCormack: But you believe he can clean it up?

Matt Odell: SBF can go fuck himself.  He was essentially running a massive Ponzi scheme and scammed a ton of investors, a ton of users, a ton of people, just a huge amount of people.  But one thing that happened with SBF and FTX is that he declared bankruptcy right away.  He said, "I fucked up, we fucked up", whatever, and declared bankruptcy right away.

Danny Knowles: I'm pretty sure he said he regretted declaring bankruptcy as quickly as he did.

Matt Odell: He did, because every good scammer knows that you extend it for as long as possible and you try and wriggle your way out of it as much as possible.  And that is what Barry's doing right now.  If Barry, 55 days ago, I'm trying to think of what day we're on right now when we're airing!  If Barry, 55 days ago, was like, "We fucked up" -- and even in his press releases, he's like, "Ordinary market behaviour".  Ordinary market behaviour isn't comingling DCG in your subsidiaries with interconnected loans; that's just straight-up reckless behaviour.  If he had taken responsibility for it at that time --

Peter McCormack: Actually, I think it's potentially more than just reckless behaviour?

Matt Odell: Yeah, it could be just straight-up fraud, and they're being investigated right now for it.  Instead of taking responsibility for it there and being like, "We're insolvent" and, "Let's figure it out to the best of our abilities", he's trying to extend it longer and longer, and it will be more painful for everyone involved as a result, I think.  That FTX situation, where billions of dollars were withdrawn and then he just declared bankruptcy, that's very rare.  Usually what you see is just this long, extended period, denial, denial, and just try and wriggle yourself out.

Peter McCormack: So, we think they owe $1.9 billion?

Matt Odell: I think it might be more than that, right?

Peter McCormack: I don't know.

Matt Odell: Danny, do you want to look it up?  I think it might be $2-something billion.

Peter McCormack: Okay, even say it's $2.5 billion and DCG, what we don't know with Genesis is what assets they do have still; they still have a trading business that they're carrying on.

Danny Knowles: I think it's about $2 billion.

Peter McCormack: They've still got the trading business.  I mean, I think they put out a press release recently saying, "Genesis Trading is operational; carry on".

Matt Odell: My understanding is it's completely operational right now.

Peter McCormack: So, that's an asset that could be sold.

Matt Odell: At Genesis?

Peter McCormack: Yeah, that's an asset that could be sold, so someone could buy that trading business.  My assumption is that Genesis had something; they have some assets.

Matt Odell: Well, DCG, the parent company, I believe owes Genesis $1.6 billion.  So, when we're talking about who Genesis owes, it's really DCG that owes them.  And it's important to realise that the most profitable subsidiary of DCG is Grayscale, and Grayscale is the provider of the GBTC exchange trader product and all the different shitcoin ones he has.  He has Ethereum, Eth Classic, there's a bunch of them.

Peter McCormack: So, they could all be sold as well?

Matt Odell: Those are the golden goose.  It's the only thing of value really that DCG has.  So, everything he's doing to try and extend it is to basically still be able to have those management fees that are coming out of GBTC and the other trust, but it's mostly GBTC.

Peter McCormack: Do we know the size of those management fees; you say it's 2%?

Matt Odell: The crazy thing is, it's 2% of the total assets under management.

Peter McCormack: Do you know what the NAV is?

Matt Odell: So, he's collecting 2% on all that, so he doesn't want it to get wound up or sold.

Danny Knowles: $10.5 billion.

Peter McCormack: So, 2% of that is basically $200 million a year.  So, someone would buy that.

Matt Odell: I think, if you add the other trusts, I think someone said $500 million.

Danny Knowles: Yeah, that's GBTC alone.

Peter McCormack: Yeah, but Bitcoin's got to be the majority of that.

Danny Knowles: The Ethereum one would be quite big as well though, I imagine; they'll make a lot of money from that.

Peter McCormack: I mean, whatever, it might be something that's worth $1 billion, it might be something that's worth $1.5 billion.  Someone might want to buy that.  You can go, "Okay, you can take that", you could return the loan to Genesis, you could sell --

Matt Odell: He also has a bunch of GBTC that he could sell.

Peter McCormack: There may be enough assets in the total thing to get close to clearing the Genesis debts, which means that people get their assets back.  Sadly, he loses his entire company stack.

Matt Odell: Yeah, but he's not trying to make sure that happens.

Peter McCormack: But what we're saying is, there's all these little people over here and a few big people who are waiting for their money back; he might have the assets to do that, but he's choosing not to do that.  To protect himself, he's essentially fucking all these people about.

Matt Odell: Correct, that's the fucked-up part.  That's why I tweet about it all the time.  And he should have known better.

Peter McCormack: Of course.  I wonder what pressure will come on him.  I mean, we've just seen the New York AG --

Matt Odell: Well supposedly, they're trying to get SBF to flip on him too.  That's what I heard, and Caroline and Gary Wang, the FTX trio.

Peter McCormack: I mean, look, it's not fair on all these people, that's what we know.  There's a bunch of people I know, because obviously I've received emails from people telling me the situation they're in, etc, and I'm sure you've had it as well.  And there'll be people, that might be their entire, or a large part of their Bitcoin net worth.

Matt Odell: Their GBTC, yeah.

Peter McCormack: But the pressure might come on him, because we see Mashinsky's now being sued by the New York AG.

Matt Odell: Well, as the operator of Grayscale GBTC, they could redeem the GBTC at full value.  Now, the normal process for them doing that would be to sell it all for dollars and then distribute the dollars.  If they did that, you would imagine there's going to be some kind of price drop and haircut on that.  So, as soon as that announcement comes out, before they even sell, Bitcoin price will tank.  So, they will take a haircut on that.

Peter McCormack: I mean, absorbing $10 billion?

Matt Odell: It's like 600,000 Bitcoin, or something like that.

Peter McCormack: I mean, is there enough liquidity in the market?

Matt Odell: Oh, there's 100% enough liquidity.

Danny Knowles: And presumably, they'd do it over a matter of months?

Matt Odell: But it would be the news would price it in.  But the news would knock the price down, and so they would take a haircut on that situation.  Now, there is something called a Reg M Redemption, where they would apply to the SEC and say, "For the sake of our shareholders, let them withdraw in kind", and them everyone would receive an equivalent amount of Bitcoin.

Peter McCormack: Which would make the GBTC trade quite good right now.

Matt Odell: Because you would go from, whatever, like -90% or something --

Peter McCormack: It's -47%.

Matt Odell: A lot of them are probably betting on that, -47%, and so then you'd get double.  Wow, it should be lower than that; that's crazy.  But Barry would lose his golden goose, so he hasn't done that.  Right at the beginning -- he could have filed this a year ago on the discount, once it flipped, because it went from premium and he was basically pushing everyone into this crowded trade of arbitraging the premium, and then it just flipped negative and never recovered; it just kept going down, down, lower, lower.  But he just loves that 2%.

Danny Knowles: It was at 90% premium at one time.

Matt Odell: That's crazy.  So for some people, it's not just -47% for them, because they probably bought at the higher premium and it flipped on them.

Peter McCormack: That six-month delay, what is that about; why does that exist?

Matt Odell: It has something to do with financial regulations.

Danny Knowles: I think it's SEC rules.

Matt Odell: It's not an ETF, right, it's like a holding company or something like that, so there's no mechanism for the opposite side, you can only buy more shares.  You can deposit Bitcoin to create more shares.

Peter McCormack: Yeah, well we'll just have to wait and see.

Matt Odell: That's why a lot of people say, "It's the SEC's fault for not having an ETF", but I would say this is squarely on Barry and his team.  He should have known there wasn't going to be an ETF.

Danny Knowles: This is the reason we don't have an ETF, because of all the fuckery.

Matt Odell: Exactly.

Peter McCormack: Well, we'll just have to wait and see what he does, or what he's forced to do.  We've missed a step, we haven't talked about BlockFi, we should because they were one of my sponsors.  Also blew up. 

Matt Odell: Yeah, they blew up in the LUNA collapse.

Peter McCormack: No, they blew up in the FTX collapse.

Matt Odell: Well, they first blew up in the LUNA collapse and then FTX came in to "save" them.

Peter McCormack: Yeah, but at that time, they had multiple offers on the table.  That's one of the sad things about their one, is that they had multiple offers on the table and they took the FTX one.

Matt Odell: But they were already not solvent at that point; they needed to be rescued, which is why they took a ridiculous deal from FTX.

Peter McCormack: But what I'm saying is, they had multiple deals on the table.  It turns out in hindsight, they just took the worse one, because I think if they'd have taken, say the Morgan Creek deal, they'd probably still be operational now.

Matt Odell: There's got to be a level of responsibility taken here.  I think it's a cop-out to blame it on FTX.  They made reckless bets in the first place with customer money.  BlockFi was often marketed in a way that was, I think predatory, in terms of convincing people to deposit their Bitcoin and their other coins into BlockFi, when that money was then just immediately getting lent out to essentially degen traders doing the most reckless trading strategies possible.  And BlockFi often claimed that they were only using responsibly counterparties that were taking realistic risks.

I think a lot of it is a product of what we were talking about earlier, which is this idea of growth at all costs, cheap money, "We can always raise again, we can always borrow money, we don't have to have a profitable business".  They were losing money, they never made money and, "We don't need to have a profitable business and we can just keep raising and we'll figure out the profit later, and just keep hoovering up more and more people's Bitcoin".  A lot of people got absolutely rekt on that.

So, just to show, I hear often, "This couldn't have been avoided, it was out of BlockFi's control, no one would have known this massive LUNA collapse would happen, no one would know that Celsius would go down and Three Arrows would go down, all these counterparties would go down".  But meanwhile, while BlockFi was raising record valuation after record valuation, more and more money, you had Unchained Capital sitting there refusing to do customer yield products, only doing Bitcoin collateral back loans, which was one subset of BlockFi's business, not the more popular part of their business, not rehypothecating those loans; all those loans were over-collateralised in multisig, completely clear on-chain that it wasn't being lent out, highly liquid collateral that can be sold if Bitcoin started to fall, and did everything in the most responsible, Bitcoin-focused way possible.

Keep in mind that being a Bitcoin-only company isn't just ideological.  They built their whole business on native Bitcoin multisig properties.  So, if you're trying to do Tether-backed loans and USDC-backed loans and yield products and all this stuff, it's hard for you to also manage a native Bitcoin multisig product.  But they stuck to basic fundamentals, long-term good risk management, and their valuations were tiny in comparison to BlockFi.  And all the investors were telling them, obviously Ten31 was not, but a lot of their investors were telling them, "Add shitcoins, add the yield product, everyone has the yield product, customers love it, throw a credit card on top of it, give them back rewards, give them all this stuff", and they said, "No, no".

Meanwhile, BlockFi lost their users' money.  They're now bankrupt and Unchained is there and they never had any of those issues.  Unchained operated on over 100% reserves, all provable on-chain, and independent multisigs held by each user, and they did not have that issue.  But the market didn't properly value that at the time, and they were giving BlockFi 10X multiples, if not higher than they were giving Unchained.

Peter McCormack: I think it also goes back to that conversation we were having regarding CoinCorner and the speed at which you grow.

Matt Odell: That's what I'm saying, yeah.

Peter McCormack: I think whatever you think of BlockFi, those first couple of years it was small growth, it was 16 people in an office, it was then 30 people, and they were growing fast, they got a lot of new customers.  I don't have an issue with credit card products, I think they're useful.  I mean, I need one, I use one, I don't know if you do.  I think when they got to their last round, the valuation was so high it was like, "How do you justify that?"  Because, I think the next step after that is probably ICO.  Like, how do you get to that next stage?  The market isn't big enough, so you've got to make those loans, and that's when they were making the loans that weren't, as they said, it wasn't perhaps institutions, or responsible institutions, and it wasn't over-collateralised loans, it wasn't the things that people perhaps believed it was.

Bear in mind, they were a sponsor of mine.  I worked with them for four years.  I had no idea this was going on, there was no evidence of this.

Matt Odell: Yeah, but there was a lot of us that saw the writing on the wall very early on, on the BlockFi risk management scheme and how they built their business, and rightfully sounded alarms way, way before this stuff happened.  I think there's a couple of things here to unpack.  First of all, I think there is a responsibility for people that have corporate sponsors to hold those sponsors as critical as possible, more critical than other companies, and to ultimately put their audience first and their users first.  I think that is ultimately at the core.  I think a lot of people have learned that this cycle unfortunately the hard way, but I think there is a responsibility there and I take that responsibility very seriously.

The second part is incentives, incentives, incentives.  We talk about incentives a lot in Bitcoin.  Broken incentives are at the core of almost everything that's wrong with our society, all different elements of broken incentives, and this yield concept, this idea of "yield" earning interest on your Bitcoin or your shitcoins, or the opposite of loaning against your Bitcoin, has this perverse incentive, where if you were searching for interest to receive, you want the highest rate possible.  As a result, the services that offer that trade, lend money out to the most risky counterparties, get the highest interest rates, because the more risky your loan, the higher interest rate that demands and you're able to pass that on to your user, cut a portion for your margin, for yourself.  So, you're naturally inclined to seek the most risky loans.

Then, on the opposite side, when it comes to Bitcoin collateralised loans, the user wants the lowest possible interest rate, and you're able to offer the lowest possible interest rate if you take their money and then lend it out to the riskiest fucking people.  So, as a result, you saw on Unchained, people would go and be like, "Why would I borrow money from Unchained when their interest rate is significantly higher than a BlockFi or a Celsius or a Nexo?"  It was because they're not lending out your Bitcoin.  Your Bitcoin is just sitting there in a multisig and not being rehypothecated and lent out.  So obviously, you're going to have to pay a higher interest rate than the companies that are doing the opposite.

So, we saw two broken incentives there that when taken to their extreme, results in catastrophic failure and all these users losing money.

Peter McCormack: I do take my position responsibly.

Matt Odell: I appreciate you bringing up BlockFi.

Peter McCormack: Well, listen, I'm not going to hide from it.  As somebody who had them previously as a sponsor, it's not an easy thing to go through, knowing that you've advertised a product, you've sold a sponsorship, you know people have used it because they've listened to your advert and currently they have no access to their Bitcoin, or part of their Bitcoin.  I have to read the emails that come in, where people explain their current situation.

Matt Odell: You know BlockFi was one of the first sponsors of Rabbit Hole Recap?

Peter McCormack: I did not know that.

Matt Odell: And, in 2019 when the added the yield product, we cut them as a sponsor.  We could have made a lot more money if we'd kept them, but we cut them as a sponsor.

Peter McCormack: Yeah, look, I wouldn't have a sponsor on the show if I didn't believe the product would be successful, the business would be successful; I wouldn't do that.  We do turn down sponsors, despite what people believe, we turn down a lot of sponsors.  I had a quite close and direct relationship with the people who ran the company.  I could phone them up and say, "Listen, I've heard this, come on the show, explain it, people are concerned".  I also spoke to the people investing money into them.  People invested tens of millions, like, "Tell me about this". 

There's lots of information from a lot of different directions.  You get information coming from hardened bitcoiners like, "No, you shouldn't be doing this".  You get other information from people putting tens of millions in that say, "No, it's fine".  It's hard, it's a hard thing to take, but we've reflected on this a lot, we think about this a lot.  It's rough to see people lose their Bitcoin.

Matt Odell: Would you take some personal responsibility for that?

Peter McCormack: I mean, I'm part responsible if somebody listens to my ad, but I don't run the company day-to-day, I'm not there running the company.

Matt Odell: Look, I don't expect perfection in assessing risks, I know I'm not perfect.  What bothers me is when people just don't take responsibility for missing it, publicly apologise, those kind of things.  And I didn't come on your show to do a witch-hunt, or whatever.  I can be self-reflective as well.  We had Compass as a sponsor for three months for Rabbit Hole Recap, Compass Mining.  They told a great vision.  I had some alarm bells that were ringing when we started to do it, but I was like, "This vision makes sense, it's no KYC, it's Bitcoin only", and we started to see issues that were happening.

I straight-up told people, "We fucked up", and it's one of the biggest regrets that I've ever had in my life, was taking on Compass as a sponsor, even though it was only for those three months in time.  And what pisses me off the most about the DCG situation is Barry saying, "Oh well, no one could have seen it coming, it wasn't my fault".  What pisses me off the most about the FTX situation is that SBF is like, "Oh, if I hadn't declared bankruptcy, you'd have all been paid out by now; it wasn't my fault, it was unexpected, I couldn't have seen it coming". 

What pisses me off most about the BlockFi situation is that Zac, who I've known for a long time, refused to take any responsibility, "It was FTX's fault, we should never had made the FTX --", "You were already insolvent from your bad decisions that you made and had never made a profit up until that point, and had done all this other stuff when you took the FTX money to begin with, in a desperate move to save the company that you had built in the first place".

Then, when the whole thing collapses, I think it's fantastic that people are having children and stronger families are happening and seeing new bitcoiners born in the world; but to have his paternity autoresponder on while his company is fucking bankrupt and withdrawals are frozen and people are being told that if they don't pay their credit card bills of $300, they're going to send them to a debt collector, and meanwhile they can't even get the rewards on their credit card to withdraw because they're not there, they don't even fucking exist, is just fucking insane. 

This movement is supposed to be one of personal responsibility and this idea that people are just, "I couldn't have seen it coming, it wasn't my fault", is the most infuriating thing, because you just witness it happen; if you're in the space for any period of time, you just witness it happening over and over again.

Peter McCormack: Yeah, but I'm going to say, I didn't see it coming.  I held Bitcoin in BlockFi up until the day I ended the sponsorship.  Up until that day ended, I had Bitcoin in them.

Matt Odell: But you didn't have Bitcoin in them when it collapsed.

Peter McCormack: No, because the sponsorship ended.  When they had the difficulty with LUNA and they said, "Look, we've done the deal with FTX", they'd moved on and I gave Zac a call and made the decision that it's probably time to move on, he was okay with it, I was okay with it and I moved out of it.  I wasn't running away from them, I had no inside information.  I thought the deal was good for them.

Matt Odell: But you agree you made a mistake having them as a sponsor?  Do you regret having them as a sponsor?

Peter McCormack: That's a different question.

Matt Odell: Do you regret having them as a sponsor?

Peter McCormack: Yes, I regret, but --

Matt Odell: Okay, so do you think you made a mistake having them as a sponsor?

Peter McCormack: No, because I couldn't foresee it.  They're two different things and I think it's really important to get this right.  What do you think I regret?  The only reason I have a regret is, people I don't know, whether they listen to my podcast or not, but I regret that people who listen to my podcast used the product and then lost their Bitcoin.  That's why I regret it.  But that's why I regret it, but if I think I was making a mistake, I wouldn't do it.  I don't look at something and go, "That's a mistake, but I'm going to make it anyway".

Matt Odell: But you can realise you made mistakes after the fact.

Peter McCormack: But you have the information afterwards, right?  So, it's a weird thing; it's hindsight.  Okay, I made a mistake because, yeah, I couldn't see something in the future.  But I think you make a mistake if you have the information and you do it.  I think if I knew that they were fucked, if Zac gives me a call and says, "Look, Pete, we're fucked", and I'm like, "Okay, well look, carry on your sponsorship, we'll try and get you some new customers", I've made a mistake there because I've known.

Matt Odell: You mean, you've committed fraud in that situation.

Peter McCormack: No, I don't think that's fraud.  If he said, "Look, the business in trouble, we're trying to turn it round --"

Matt Odell: "We're insolvent".

Peter McCormack: Well, that's different if he's insolvent.  But what I'm saying is, if you know the information, if you've got the information or you've got the doubts, I had zero doubts about the company, zero doubts.  So, how can it be a mistake, because I thought it was the right thing to do?

Matt Odell: So, after they were insolvent from LUNA, you had zero doubts about them?

Peter McCormack: No, but that's at the point the sponsorship ended.

Matt Odell: Right.

Peter McCormack: I'm saying up until that point, the only thing is, I knew they had a bad GBTC trade and they had the SEC fine, which I disagree with, by the way.

Matt Odell: I disagree with the SEC fine.  I just don't think -- whatever, securities law, it doesn't matter, they're not really there to protect people.

Peter McCormack: But if I had information that I thought that it was a risk, then it's a mistake.  It's like, what information do you trust; you've got all this different information coming in?

Matt Odell: Just accept some responsibility.

Peter McCormack: I'm accepting -- I told you, I regret it.  That's responsibility.

Matt Odell: When you dropped them, and I don't know, I'm just trying to get to the core of this; when you dropped them, did you explain to your audience why you dropped them, that you had concerns about them, or did you just quietly drop it?

Peter McCormack: I just moved to another sponsor.

Matt Odell: Do you wish, in hindsight, that you had an episode explaining concerns over BlockFi, because you obviously had concerns at that point, right?

Peter McCormack: Yeah, but if you're going to ask me this, I've got to give you the full information.  I didn't just end the relationship because of concerns over them; it's not that.  If I'd have had concerns over them, I would have expressed them, I would have said to Danny.  When the LUNA situation happened, they did the deal with FTX, money was tight for them and they'd come to me and said, "Listen, we've got a new deal, we're fine, we're liquid, the money's going to be tight, what can we do on the sponsorship?" and I just at the time said, "Well, why don't we just end the sponsorship?  I'll move to somebody else, you don't need it, you've been with me for years".  I thought it was a good deal for them.

Matt Odell: Interesting.

Peter McCormack: Yeah, if it had been a situation where it was like, "Yeah, we're fucked", and I'd been concerned about them, then I would have felt some obligation to come out and tell people, but I had no concerns.

Matt Odell: Do you think that sponsors of the podcast have a rosier image of them in the content you produce, by inherently being sponsors?  Is there a lack of critical discussion on sponsors on the podcast, internal content of the podcast?

Peter McCormack: It depends, because we're not that kind of show.  You make the kind of show where you're looking right at sponsors and you're discussing their operations.  We don't do that that often.  If you go back and look at the history of our shows, most of the stuff we're talking about, governance or macro, we very rarely talk about companies.  We do in a scenario like this, end of year review, this is the shit that's happened, let's talk about it; something's blown up, let's talk about it.  But we don't really make shows like that.

Matt Odell: Well, the reason I bring it up is just because I feel like that's where the responsibility stems from.  It's not just that they're an advertiser, it's this idea that the critical discussion that people expect to hear of these different companies doesn't happen because of a financial relationship in the first place, and that's where the responsibility lies.  I mean, we saw it with Compass.  There were employees from Compass, there was internal discussion as well, but there were employees from Compass that actively were talking publicly about how nobody should sponsor Rabbit Hole Recap, because this is not how you should treat sponsors.

My answer to them was very clear, "You don't buy my fucking opinion, you're a sponsor of the show.  You support the show and the production of the show, but at the end of the day, if we're talking critical of you, we're talking critical of you because you're fucking up your product and you're fucking over your users.  Why don't you clean up your act and then that won't happen.  Take some responsibility for that".  It's very common in this space, and we see it, and I'm not trying to single out you; there are many, many content creators in this space, event planners in this space, that give rosier coverage to sponsors.  And then, when the sponsor rugs all of their audience they say, "No one could have seen it coming, it wasn't my responsibility".

Meanwhile, there were plenty of us that didn't do that, that realised that risk was not worth the risk to our audience, right, and there's plenty of us that did that.  So obviously, there was another option.

Peter McCormack: Yeah, but what I'm saying is, you've said do I regret it?  Yes, of course I regret it, I've admitted that.  You've asked me, have I made a mistake with the information I had?

Matt Odell: I mean, you obviously made a mistake having BlockFi as a sponsor, because a ton of your audience listened to it and then ended up in BlockFi.

Peter McCormack: Now you're getting into the situation where it's like, anyone who's selling advertising is responsible for every advertiser that advertises with them, and that's just a tricky position to be in, because we don't have access to all the information.

Matt Odell: I think in a specific industry that is as small as Bitcoin, it gets more -- I think it's at the core of the advertising, and we've had debates on your show about advertising model versus value for value, but I think that is one of the core darknesses of the advertising model.  But in Bitcoin specifically, it gets way, way more insidious, it feels like, because like if Delta was your sponsor and there was a bunch of Delta plane crashes or something, I wouldn't consider you as responsible for that.

Peter McCormack: I don't think that's a good analogy; I'll give you a better one.  Tesla, say there's concerns about Tesla's autopilot and Tesla are a sponsor of mine, and then two Teslas, the autopilot fails and the cars crash; am I responsible?

Matt Odell: Okay, my point there is, this is a show about Bitcoin where people are educating themselves on Bitcoin.  So, when you interact with Bitcoin companies, and adjacent, when you interact with those companies, there is a stronger level of responsibility that happens in the due diligence process in what discussions happen on your show, in the sphere of Bitcoin knowledge.  Obviously, What Bitcoin Did is expanding to more, not just Bitcoin, there are tangential topics that are being discussed as well, but at the core it's a Bitcoin show learning about Bitcoin and you have Bitcoin sponsors.  As a result, there needs to be, I think, a higher level of due diligence and a higher level of responsibility with those kind of companies.

Peter McCormack: But how do you know what level of due diligence we have?  The only way the due diligence would have found that out is to give me access to information they would never have given me, because they were doing things that were sketchy.  So, how do I get that level of due diligence?  I get what you're saying, and don't think it doesn't weigh heavily on me, it does.  Every one of those emails that comes in, it fucking weighs heavily on me, it really does; it's shit to read, and I do struggle with it, I wrestle with it. 

Talk to Danny, talk afterwards, we've talked about this a lot.  It's a hard thing to deal with, especially when someone like you or John Carvalho said to me a long time, "BlockFi's sketchy, you need to be careful here" or, "You shouldn't be having them".  We go away and we think about that and then we take advice from other places I know, "The company's in a great position, the company's got this many customers, they're great".  I don't know, but I don't ever make a decision where I think, "Do you know what, fuck the listener, I'll take a gamble here, it's okay, we're getting paid".  I never do that, I never would.

Matt Odell: Okay, I mean I think we're talking in circles a little bit.

Peter McCormack: Yeah, a little bit.

Matt Odell: I've said my piece.

Peter McCormack: We take this forward, we consider the future of what we're doing and we're like, "Okay, maybe we need to have less reliance on sponsors, maybe the model needs to be different, maybe it does need to be value for value, or subscriptions.  Maybe we need to get away from having that reliance on sponsorship".  That is weighing on us.  It might be like, "Do you know what, Danny, the next two years are going to be tight because we need to change the model of what we're doing, because there is too much risk here".  That weighs on us.

Matt Odell: Yeah, because you have that option available to you.  It's obviously not a financially prudent option, it's a more difficult path to take.

Peter McCormack: Yeah, but we have to consider that.

Matt Odell: Because you have a responsibility.

Peter McCormack: Yeah, we have a responsibility and our listeners have got burned on, I can think of two, three sponsors.

Matt Odell: Yeah, which ones?

Peter McCormack: DropBit was the first one.  Who was to know in the background the guy running that company historically made all his Bitcoin running a mixer?

Matt Odell: But it was a custodial Lightning wallet.

Peter McCormack: Yeah, but BlueWallet's a custodial Lightning wallet, people recommended that.

Matt Odell: The only people that got rugged were the people that were using the custodial Lightning wallet.  The on-chain self-custodied didn't get rugged.

Peter McCormack: Yeah, but there are other custodial wallets that people are using.  I use Blue and I think Blue's great.

Matt Odell: Do not use Blue, it's a custodial wallet, you're going to get rugged.

Peter McCormack: Yeah, but I'm saying I use it for me.  I spent some money from my BlueWallet at Bitcoin Park today.

Matt Odell: There you go.

Peter McCormack: That's the first one.  BlockFi we've talked about, and that weighs on me a lot.

Matt Odell: And keep in mind to the listeners, BlueWallet's only custodial on the Lightning side, not the on-chain.  Okay, BlockFi, DropBit.

Peter McCormack: And Compass.

Matt Odell: Compass.  And then Gemini.

Peter McCormack: I mean, we have never promoted the Earn product, never been involved in it.  We promote the exchange.

Matt Odell: Right.  But that was the insidious part about Gemini Earn, was people were getting emails and stuff saying, "Oh, you're keeping money with Gemini?  Why don't you get another 7%?"

Peter McCormack: Look, that's there, that's whatever their marketing is.  But again, Compass was another tricky one, because at first I thought it was great.  We also have contracts; you might not have these, it might be a situation that's not what you do.  But every one of our sponsors, we have contracts.

Matt Odell: Yeah, we have contracts.

Peter McCormack: And the contracts have certain things about terms and things and reasons to end a contract, and whatever.  On the Compass one, that one got tricky about six months in, right?

Matt Odell: I don't know when you started your sponsorship.

Peter McCormack: I mean, they haven't sponsored us for a while now.

Danny Knowles: Yeah, it would have been something like that.

Matt Odell: It was like a year-and-a-half ago.

Danny Knowles: When we had them on the show in the UK.

Peter McCormack: Again, when they got into the difficult position they were in, we spoke to the people who run them or invest in them like, "What's going on here?  Is this turning around?  Can you fix this?" and again, that was inside information we didn't know about.  But we could go round and round on these sponsors.  I think anyone listening is going to know, some of my sponsors have had some situations; and there's going to be people listening going, "Go on, Matt, well done, call Pete out", and they're going to enjoy this, they're going to enjoy that you're putting pressure on me, and they're going to say, "Look, Pete's squirming", or whatever. 

I know people are going to enjoy this and I could have easily not made this show, or I could have veered this conversation elsewhere.  But we are listening, this is an experience we've gone through as well.  It isn't fun, it sucks and it's like -- I mean, we've seen Pomp's announced he's going away from sponsors.

Matt Odell: Because all the sponsors are bankrupt.

Peter McCormack: Maybe, but he could still get more sponsors.  We still believe we make a really good show that's been really good for Bitcoin, we work super-hard for it, we spend time away from our families, we come out, we work hard.  And none of us do this with any -- there's no intention or carelessness of us thinking, "Oh, fuck people".

Matt Odell: If I thought that was the case, I wouldn't --

Peter McCormack: We do work really fucking hard on this.  And when we make money, we support projects.  This week, we've sent money to the Bitcoin Policy Institute and Tor; we've made donations to those guys, helping their projects.  We supported Peter Todd with his Open Timestamps, we sponsored that.  There's loads of things that we do.  We are conscientious bitcoiners.  We're just maybe, I don't know, maybe we just -- I say "we" and it's not really fair to say we, because it's "I", I make these decisions.  I bounce them off Danny, but I make the decisions.

So, maybe it's just taken me a bit longer to realise some of this, which usually it does with most things anyway.  It took me four years to learn an xPub.

Matt Odell: Yeah, people can go back to the value-for-value episode we had together, I don't know what episode that was.

Peter McCormack: Yeah, but that model's never going to work in the short term.

Matt Odell: So, what's your plan going forward to not have audience members get rugged by your sponsors?

Peter McCormack: I mean, there's multiple angles to that.  You've got to look at the companies themselves.  This show is made as an in-person show, because we want the high quality.

Matt Odell: Right, it's way better in person.  That's why I have a podcast studio at Bitcoin Park.

Peter McCormack: And the production quality's better and we want people coming into Bitcoin to find a show that maybe fits alongside nicely some of the other shows in terms of production.  And we also try and make a show that is apolitical as possible; it's hard not to show your biases, but speaks to a broad spectrum of people and brings out all the different ideas.  We want to do that, but it's an expensive thing to make.  It costs $120,000 a month to make this show.  If we can't make that without sponsors, what are the options?

We could do a subscription model on Patreon.  Can the show bring in $1.4 million a year through subscribers?  Possibly.  Or, maybe it's a hybrid mix, that's possibly the mix.  And if we can't make that work, well we conserve capital from last year.  If the runway's there, we see the runway and think, "Maybe we'll do that", then great, we carry on.  And if it doesn't, it's like, "Okay, we tried, we failed.  We'll be a remote show, we'll cut back", and that's the way it is.

Matt Odell: Well, I think there's a middle ground that is convenient to ignore, which is be more selective with who you choose, and as a result you take a hit on the revenue side.

Peter McCormack: Yeah, but that's under the assumptions of what I said.  If we can't rely on sponsors -- the show bought in enough on sponsors to cover that.  What we're saying is, if we now can't do that, if (1) the sponsors aren't there, because it's a tight market; or (2) we have to be even more selective about who we work with, or we just want to get away from sponsors eventually, we have to find a new model.  I don't think value-for-value is going to provide that, for what we do, for years.

So, the only other options -- or, you go into other things, you go into events and stuff.  But we make podcasts.  So I think it's an active conversation, we will try some things over this year and see what happens, see where we get with it.

Matt Odell: Okay, but there is a middle ground.  I agree that value-for-value's early.  Obviously, I built Citadel Dispatch as purely a value-for-value show with no sponsors or ads, no pay walls, no subscriptions.  The content's available freely; pay what value you think it provides to you.  Dispatch is one of the most popular Podcasting 2.0 shows, and still I've noticed that the support is increasing, that we see across the board the amount of shows that are getting supported and the level they're getting supported.  I've seen your show up on the chart sometimes, it has been increasing, but it is a fraction of the revenue that comes in on Rabbit Hole Recap; that's a hybrid model, it's ad-supported plus value-for-value, where people can contribute; an incredible fraction of the Rabbit Hold Recap venue.

But at the same time, Rabbit Hole Recap's been going on for four-and-a-half years.  And besides the three months of Compass, we have been able to avoid situations with outright audience harm.  And throughout that whole process, we were also critical of our sponsors and we held them to a higher standard than other companies, and we were very transparent when we dropped Compass.  In the lead-up to dropping Compass, we were very transparent about why we were doing it, the risks to doing it, and very outspoken to people trying to get out of that kind of situation as best they possibly could.

That's the core of this whole discussion which is, if you are going to run an ad model, and I see this also not just with Rabbit Hole Recap, we see this building at Bitcoin Park.  Bitcoin Park has incredible burn; you saw it.  It's very expensive to maintain that thing.  And part of our strategy is, yes, member-supported initiative.  But the memberships only get us so far, and especially in the beginning, we need solid company supporters, Bitcoin company supporters and adjacent stuff, like real estate brokerage or something, or there's a mining insurance company for the Mining Summit.

But the point is that we are leaving a lot of so-called money on the table by making sure that the supporters we do choose are supporters that we feel 100% certain on.  And I don't think I'm telling you -- this is not you learning this for the first time; I think you're aware of this.

Peter McCormack: It's an active conversation we're having now.

Matt Odell: Right, which is where the responsibility comes in with who your partners are and why you have to hold them to a higher standard.

Peter McCormack: I'm not disagreeing with you, I'm telling you we're there; we're there, Matt.

Matt Odell: Okay.

Peter McCormack: This isn't a thing where we've just gone through and said, whatever like, "What are we going to get next; who are we going to replace it with?"  We're like, "Okay, how do we get away from the inherent risks that come with sponsors?"  I think there are good sponsors out there, there are companies I would work with, or want to work with.  But me and Danny said, if it has to go back to being a remote show, we stop all the travel, then fine. 

I live in Bedford, United Kingdom.  I don't live in Nashville, I don't live in Austin.  I don't have 20 bitcoiners that are great to interview who live near me who would come in all the time.  I live in Bedford, England.  Barely people come to London.  So, if we have to do it, it would be a remote show, me in my lounge or my kitchen recording, back like it used to be during COVID, and then we rebuild it like that.  I accept that.  I would like it to stay as an in-person show.  I think the quality of what we produce is importantly good, and so we're trying to figure out that model.

We've gone through that burning exercise, and I think it is a hybrid.  But we are working on that.

Matt Odell: Yeah, I mean we're talking in circles.  I think it's good that you feel there's a responsibility to make sure you pick solid partners.

Peter McCormack: I've always felt that though.  Again, I'll take the zingers on the chin, I'll take the negatives.  I think it's also to weigh in other things that people don't recognise I bring in.  I think the whole thing sometimes --

Matt Odell: Look, I completely --

Peter McCormack: I'm not just some piece of shit who just takes people's money and goes, "Great, give me your money.  Fuck that sponsor, fuck my listeners".  I take this role in Bitcoin responsibly, and I've had to take --

Matt Odell: If I thought that was the case, I wouldn't keep coming on your show.

Peter McCormack: I know, but I've had to take a lot of personal stress.  I ended up in a hospital during my lawsuit.

Matt Odell: Yeah, I remember that.

Peter McCormack: Yeah, I ended up in hospital.  I've taken abuse and shit for years, relentless shit.  I've taken people trying to cancel me, I've taken false accusations.  I take as much abuse -- I probably take more abuse than most people in Bitcoin, right?

Matt Odell: But you've self-admitted that some of that abuse, you like fanning flames.

Peter McCormack: That's an old thing that I said four years ago.  People bring that up.  I don't fan the flames now.  Any opinion I give out is an honest opinion, and I think a lot of people like the fact that I don't sit in this tight little box of Bitcoin opinions.  We've created a movement for progressive bitcoiners this year, we've done that, we've introduced all these people.  And by the way, that's the most important thing for conservative bitcoiners because they have that defence, that it doesn't become partisan.  We've done that, we're constantly working hard.  But people just want to go, "Where are the dunks?"

Matt Odell: I'm well aware of what happens when you're a public figure and people are very critical of everything you're doing out in the open, it happens to me as well.  People quickly forget the good things, they always look back at the bad things.  That is not the point I'm trying to make, and I think it is irrelevant to this situation, which is there's a responsibility on who the partners are; anyone who worked with those partners is partially responsible.  The ethical and moral thing to do for your audience is to admit fault to a degree in that situation; that's all I'm saying. 

Nobody's perfect, admit the mistakes, move forward better; that's the ideal situation.  And there'll always be haters, no matter what, and people will always forget the good things, I'm well aware of that, I see it first-hand every day.  It's just frustrating as someone who's been a public figure in this space for probably way too long, that's tried to do things the good way, and you just see it repeat over and over again, and then people just brush it under the rug, they just completely brush it under the rug.

Peter McCormack: Well, we're not brushing it under the rug here because we're talking about it, and I could have easily avoided it.  We're not brushing it under the rug.

Matt Odell: That's good, I appreciate that.

Peter McCormack: No, I want to have this conversation.  And if people are listening and commenting and giving shit; fair.  It's that kind of response that you learn for.  Again, we read the comments, we listen to the feedback, we listen to what listeners say; and that's always an important part, to listen to what the listeners say as well.  But I'm not therefore then going to just take on a sponsor because I think, "Oh, they're going to fuck people, they might rug them".  I didn't see there was an issue.

Matt Odell: Okay.

Peter McCormack: Good.

Matt Odell: What month are we in?

Peter McCormack: How long are we in, Danny?

Danny Knowles: Two hours and 15 minutes.

Peter McCormack: Have we really done that long?  Jesus Christ.  I don't think this was a year in review.

Matt Odell: No, I mean we got to like March or something?!

Peter McCormack: Well, we covered a lot of stuff.  I don't think this was a year in review, I never thought it was going to be.  I think this was going to be what we just discussed now, and I know you wanted to do it.

Matt Odell: Yeah, it's an important conversation.

Peter McCormack: Yeah.

Matt Odell: Got to own your mistakes, all of us do.

Peter McCormack: Yeah, yeah.  Well, listen, from this we will…

Matt Odell: I mean, people can go back to our past episodes, I talk about it on my shows a lot too.  My optimistic take, just to brighten the mood here a little bit in this room, even though we have these massive lights, my optimistic take has always been almost like a doomer optimistic take, which is that there's just going to be a lot of times where people are going to touch the stove, they're going to learn very expensive lessons and then they improve from it. 

So, this year has been one massive carnage-fuelled educational experience, where a lot of people have learned lessons that will stay with them for the rest of their life, that they realise the importance of self-custody Bitcoin, of holding your own keys, of not trusting these custodial services, of being careful who sponsors are, of realising that the people that in a bull market look like the smartest people in the room are usually the biggest degens and taking the most risk, and that's why they look good in those situations.

I remember not too long ago, people treated the Three Arrows Capital guys like they were Gods, they treated Barry Silbert like he was a God, they treated SBF like he was a God, they treated all the investors that were valuing BlockFi at $4 billion as Gods.

Peter McCormack: Now they treat you like a God!

Matt Odell: They're all fucking rekt; that is not the point.  I have made many mistakes, I have fucked up many times, I am very conscious of that.  And it's important to be conscious of that because hypocrisy rules everything around us and we're all a little bit hypocrites, and it's important to try and be the least amount of hypocrite as possible.  But the point is that all these things happened, a lot of people got hurt, a lot of people lost money, a lot of people continue to lose money as this DCG stuff unwinds.  I mean, I promise you that the Winklevoss twins massively regret ever working with Genesis and launching that Earn product.

Peter McCormack: Of course.

Matt Odell: And they realise that now.  And unfortunately, a lot of people will lose money on that.  But hopefully, we'll have a whole new set of people that understand the fundamentals, that understand proper risk management, that stay humble over the next couple of cycles, that start to care about digital privacy, that start to care about supporting open-source tools and learning how to use them.  This happens over time and unfortunately, it seems like it can only really happen as people lose.

I mean, there's tweets out there where I'm telling people to withdraw money from BlockFi a year ago, a year-and-a-half ago, and people underneath are like, "No, that was like the Mt. Gox era, Bitcoin has matured past that, that will never happen again, it's not going to happen.  Matt, you're so heartless, I need this 6% interest to feed my family".  I swear, there's tweets that say that, and those people now realise what I was saying, they realise the risk, they realise why they were getting a percentage in the first place; it was because they were taking an insane amount of risk to get paid their percentage.

Peter McCormack: Maybe you're right.

Matt Odell: Live and learn from that.

Peter McCormack: Yeah, maybe you're right in that I can think of one mistake I made this year that I'm not proud of.  When the Celsius files came out and there was somebody in there called John Carvalho, and John had been giving me a hard time on some bullshit as well.  But I saw this John Carvalho thing and I called it out.  And that's a mistake, because I jumped to a conclusion and I attacked somebody.  I had to go back and apologise to John and do you know what, in fairness to him, he was fucking decent about it.

Matt Odell: You found the real John Carvalho that got rugged on Celsius.

Peter McCormack: I know, I ended up sending him money as well because I felt so sorry for him.  And also, just because of the guilt of John, I felt bad.  I was like, "Right, I'll help this guy out".  But I apologised to John.  He could have been a total dick to me and he wasn't.  Then I saw him in Amsterdam and he was cool and he's kind of forgotten about it.  I'm sure he hasn't forgotten about it, but he was good about it.  And that was a mistake, that was a genuine, "Okay, I've fucked up here", because like you say, we all do.

Then you think, in that context, what was the mistake?  Well, maybe I hadn't done enough to realise what I was about to do.  Yeah, so in that same context, maybe you're right, maybe they are mistakes.  Maybe you're right.  I need to think about this one.  It will probably all come out in my intro!

Matt Odell: Well, I appreciate it, I appreciate you coming around, Peter; it takes a lot.

Peter McCormack: No, look, they're tough, man, owning situations or owning mistakes; it's really hard.

Matt Odell: Can we just cut the tape right where he says, "You were right", and just fade to black; can we do that?!

Peter McCormack: No, it's hard, owning mistakes is hard.  When you don't think you've done something wrong and then something bad happens; when you think you're a conscientious person and something bad happens, it's hard to come back from that and figure it out.  I'm just going to need some time to work it through and think it through, but you're probably right.  Yeah, Matt's right.  Leave it with me.  Let me have a think about that one and, yeah, okay.  All right?  Matt Odell, thank you for our annual "telling Pete Off"!

Matt Odell: I mean, this was a very productive conversation.

Peter McCormack: Yeah, I think it was.

Matt Odell: It was a little bit solemn, but that's the kind of year it was.

Peter McCormack: Yeah.  I mean, look, sometimes you've had to accept that I'm right, that a lot of this Bitcoin stuff's too hard, too difficult to use; and sometimes I have to accept you're right about --

Matt Odell: Did you name a bar at the stadium in Bedford --

Peter McCormack: It's called The xPub!

Matt Odell: The xPub?  There you go.  But you know xPubs now, you've figured it out.

Peter McCormack: I've known what xPubs are a lot longer than I've admitted.  Sometimes it's helpful to --

Matt Odell: Exactly, fan the flames.

Peter McCormack: No, that's not fanning the flames.  I think there are some people who don't realise how far away they are in their depth of knowledge to other people.

Matt Odell: No, I appreciate that.

Peter McCormack: I've taken that on the chin a few times, but that's one area I stood by.

Matt Odell: No, I appreciate that.  I mean, that is something that I've been --

Peter McCormack: I think that's a blind spot of yours.

Matt Odell: No, bullshit!  I'm innately conscious of that, and a lot of the work that I do offline, and online, is focused on an education point of view, trying to make education accessible to people.  So, I see the pain points first-hand, we see it at Bitcoin Park, we run workshops there, I've worked with activists, ranchers, NFL players, teaching them how to use Bitcoin, seeing all these different perspectives and roadblocks where they get confused, and there's definitely a big disconnect between the Bitcoin diehard community, especially in the dev side, and the actual average user using things.

I mean, I had Sergej from Bitrefill on Citadel Dispatch, and we were talking about the average user of Bitrefill versus the average Bitcoin Twitter person, and there was a massive disconnect there.  People can go check the tapes.  I mean, the xPub one specifically was our really drunk Zoom one that was a little bit brutal and you might not want to listen to it, because time is scarce.

Peter McCormack: Brutal, why?

Matt Odell: My issue was that I think as an educator, you have more responsibility to understand those things.  And so, forget the COVID mask requirement on planes; I realise this metaphor broke a little bit because of the COVID response, but when you're on a plane and those oxygen masks come down from the plane, you're supposed to put yours on before you put the children's on, right?

Peter McCormack: Yeah.

Matt Odell: And I think if you're doing an educational show, which I think What Bitcoin Did is --

Peter McCormack: I disagree.

Matt Odell: -- I think ultimately people listen to it to expand their knowledge and understanding of things, which means it's an educational show, there is a greater burden on the host to try and understand and learn these things so that they can better serve their audience. 

A perfect example I think recently is, and a lot of people thought I was talking about you when I was talking about this, but I know for a fact you actually do know how to self-custody your own coins and self-custody your own coins; how many Bitcoin podcasters that have done hundreds of hours of education, thousands of hours of education, that weren't self-custodying their coins when FTX and all this shit blew up, and had never done it before, never had learned the most basic kind of Bitcoin skills?

They just get up there and portray themselves as someone who is an educator, maybe even an expert, some of them will call themselves experts on this matter, and they've never even educated themselves and learned the basic Bitcoin skills.  I think there's a responsibility there for those types of people to learn that before they go out and try and proclaim and recommend things to others.

Peter McCormack: I'm going to give you a different answer.  I think you misunderstood what I said by "blind spot".  I don't mean you don't understand what it is and go and educate people; I think your blind spot is the propensity for people to be able to learn it and retain that knowledge and use it in the future.  The xPub thing, I have zero regrets.  I reckon one of my big wins in Bitcoin is making xPubs publicly discussed to the level they have been, absolutely publicly discussed.  It's a thing, it became a meme because of that, and that's a great thing.  More people now know about xPubs because of me doing that.  It was the same as I did with nodes, two years into running the podcast.  I was like, "Yeah, by the way, I've never run a node".  All these people lost their shit!  Because of that, now more people run nodes because it became a topic; we made a show about running nodes. 

I've always said, my role in Bitcoin is not to be an expert, it's to represent the normie.  I see the emails and the people come and talk to me and they're like, "You ask the questions I'm too scared to ask, because I get damned for it.  You're the shield in front of me for asking the simple questions", and I'm never going to change, Matt, ever on that, never going to change.  Because for me, a lot of Bitcoin usage is like using Linux.  The only people who use Linux are people who know computers; everyone else wants shit done for them.  And you might not like this, Matt, but that's just the reality of the world.  People want a Mac or they want an iPhone because they want the simplicity.

Matt Odell: Okay, then, don't be a Linux influencer!

Peter McCormack: No, let me finish, because I'm right on this.  They don't have their time in the evening to learn and programme and code a lot of this shit, they just want it easy.

Matt Odell: Not the point.

Peter McCormack: No, it is the point.  Having the empathy for how difficult this is…  The difficulty some people have on the most basic things --

Matt Odell: I'm well aware of this.

Peter McCormack: Yeah, so if they're advanced and they're expert, they can go listen to Stephan Livera, because he's got them; and if they're privacy-conscious, they're going to come and listen to you.  If they're nervous and they don't understand this stuff and technical stuff worries them, I'm going to be the guy for them and I'm never going to change from that.  The reason I'm not going to change is because I know it helps people.  You might not like it, but I know it helps people.  The best thing for me is afterwards, they search for a Matt Odell video on YouTube and they learn to do something.

Matt Odell: Well, the good thing is you've admitted that you knew what an xPub was, and that was just bullshit.

Peter McCormack: Not at the time it happened; I didn't.  I didn't know what the fuck an xPub was.

Matt Odell: Okay.

Peter McCormack: Somebody sent me this long article and I was like, "I don't get this shit".  It just doesn't work for me.  I'm a storyteller, I'm not a technical person.

Matt Odell: Okay, look, I mean I'm extremely empathetic to the average person, I battle with that all the time.  It's one of the things that consumes the majority of my time, is helping average people expand their skills and expand their knowledge and see all the questions they have, and all this.  So, I'm well aware of that and I think you do provide a service in that regard as an educational show, and it's important to take that responsibility seriously.

Peter McCormack: Fuck off!  You're not having two!  I mean, if my show's an educational show, all shows are educational shows.

Matt Odell: You're either entertainment or education; those are the two.  Is it an entertainment show?

Peter McCormack: It's a talk show.

Matt Odell: It's an education show.

Peter McCormack: It's a talk show, I don't consider this an education show.  I think this is a talk show.  This is a show to make people think about different topics.

Matt Odell: Well, good talk shows are educational shows.

Peter McCormack: Yeah, most of them are.  It's a grey area between talk show and entertainment.  We don't make shows about how to do UTXOs --

Matt Odell: You just went through a whole long thing about how you're empathetic to people who are trying to learn.

Peter McCormack: Yeah, I am.

Matt Odell: Because it's education, but yeah.

Peter McCormack: All right, all right!

Matt Odell: But you understand my point?  You understand the basics, you've learned the basics as you've gone through this space.

Peter McCormack: And this is where I think your empathy has a blind spot.  You expect people can learn this stuff.  There are things that I can't learn.  I can read it and it can be explained to me, but like I cannot learn to code, it's not possible for my brain to be able to do that work.

Matt Odell: Yeah, but now you're just moving the --

Peter McCormack: No, but my point I'm trying to make is that, and an exercise we'll do after this, I'll get up an explanation of what an xPub is, and then I'll talk you through, when I'm reading it, what my brain is saying to me and where I'm struggling.  Your blind spot is thinking everyone can just get this.  Some people just cannot get it.  They don't have the ability, or it's going to take so long, they're not going to do it; it just doesn't work for them.  That is a blind spot a lot of people have.

I could do the same.  I could turn round to a lot of people in Bitcoin and go, "Do you not see what's wrong with your brand; do you not see what's wrong with the colour scheme on your website?  No one's going to listen to that shit and click on that.  The branding's shit".  I see it like that.  People have different brains and different skills.  But I think my approach, I mean Wasabi Wallet, didn't they do the McCormack version?

Matt Odell: Yeah.

Peter McCormack: I helped them understand the mistakes they were making in some of their design, or some of their UX.

Matt Odell: To everyone listening right now, open your favourite podcasting app, search Citadel Dispatch and go to episode 43.  It's the Bitcoin for Beginners episode.  You can do it.

Peter McCormack: Not everyone can.

Matt Odell: You can do it.

Peter McCormack: All right.  I'm telling you, I'll get you over to the UK, I'll sit you down with my dad and say, "Go on", and you'll experience somebody who cannot do technical things.

Matt Odell: Citadel Dispatch, episode 43, you can do it.

Peter McCormack: Have a go, I hope you can do it, I'm not telling anyone not to do it, but the expectation some people have of others is a blind spot.

Matt Odell: I'm aware.  I'm aware of the UX challenges with Bitcoin.  They're improving.

Peter McCormack: Have you ever bought furniture and bought out the --

Matt Odell: The Ikea combination thing?

Peter McCormack: Yeah, and then you get out the instructions and you're like, "I can't fucking figure out how to put that together from this".  That is like what some of the explanations of stuff is in Bitcoin, "XPub, it's your extended public key, it does this, it's derivation --" it's like, "What the fuck?  I'm reading a foreign language".  Sometimes people just cannot get it from the explanations that are given; it's a reality.

Matt Odell: Well, if anyone out there is listening and goes and does listen to the Citadel Dispatch episode 43, definitely reach out and tell me where you hit your roadblock and how I can improve there.  You can find my contact information at mattodell.com.

Peter McCormack: I actually used one of your videos, remember.

Matt Odell: The Wasabi video?  COLDCARD?

Peter McCormack: No, it was the Green wallet, how I could sweep my --

Matt Odell: Opendime.

Peter McCormack: -- Opendime.

Matt Odell: Yeah, that guide's at WeRunBTC.com.  I have a bunch of guides there.

Peter McCormack: There was something that got lost in that one though as well; I told you about it.  Anyway, listen, we're going round in circles.

Matt Odell: You can do it, you did it!

Peter McCormack: Eventually!

Matt Odell: I've updated that guide, Green Wallet, changed entirely, so I use BlueWallet now, different colour.

Peter McCormack: Matt Odell, I look forward to sitting down with you again at some point this year, and I look forward to sitting down with you at the end of the year.

Matt Odell: Likewise.

Peter McCormack: Do you know what, it's probably good we didn't drink, because we'd have been fucking throwing shit --

Matt Odell: Thank you for having me!

Peter McCormack: Matt, you're always on this show.

Matt Odell: I've drank two tallboys of water.  It's my most sober What Bitcoin Did ever!  I've had two bites of this fucking apple.  Has this apple just been in frame this whole time?

Danny Knowles: The whole time!

Peter McCormack: The whole time!  Matt, I love you.

Matt Odell: Those are the only two bites of food I've ever taken on camera, I'm just super-self-conscious, I don't like it.

Peter McCormack: Really?  Okay.  Do I eat?  We don't eat on camera.

Matt Odell: So, there's a half-eaten apple.  But I haven't eaten lunch today.

Peter McCormack: Are you hungry?  We've got some steaks.

Matt Odell: We were at Bitcoin Park, we hosted that event.  I did Dispatch then I drove 20 minutes out of the way, then I came 20 minutes back.

Peter McCormack: Well, that was your fault.  Have you got to go?

Matt Odell: And then I ate two bites of apple.

Peter McCormack: Answer my question, have you got to go now?

Matt Odell: Yeah, let's wrap.

Peter McCormack: I mean, have you got to leave though, because if you're hungry, we bought you a steak?

Matt Odell: You have steaks?

Peter McCormack: Yeah.

Matt Odell: Yeah, let's do it.

Peter McCormack: Danny cooks a mean steak.

Matt Odell: I could eat a steak, I can always eat a steak.

Peter McCormack: All right.  Go check out Bitcoin Park, go check out Citadel Dispatch.  I'm sounding like I am pissed!  Go and check out Citadel Dispatch, we'll put everything in the show gnats; show gnats?  I can't fucking talk!

Danny Knowles: Just wrap!

Peter McCormack: Yeah, wrap, we're done, see you later, love you, Matt, ciao.

Matt Odell: Cheers.