WBD686 Audio Transcription

Will BlackRock Trigger Hyperbitcoinisation? With Alex Thorn

Release date: Monday 24th July

Note: the following is a transcription of my interview with Alex Thorn. 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.

Alex Thorn is Head of Firmwide Research at Galaxy. In this interview, we discuss Bitcoin Park and others' efforts to promote Bitcoin, the impact of BlackRock's involvement in Bitcoin, and the legal battle between Coinbase and the SEC. We also talk about the need for education and inclusivity for Bitcoin, the importance of maintaining decentralization, and the impact of Bitcoin on the future.

“This is the beginning of what hyperbitcoinisation looks like, people want bitcoin everywhere? That means it’s going to be everywhere…if bitcoin’s going to be global money it’s needs to be everywhere, it needs to be in every single system that uses money.”

— Alex Thorn

Interview Transcription

Peter McCormack: Well, you still smoke real cigarettes like a proper man. 

Alex Thorn: Well, I quit. 

Peter McCormack: Not very well!

Alex Thorn: I'm working on it, it's a work in progress. 

Peter McCormack: Don't go to these. 

Alex Thorn: Yeah, well those are just so addictive, that's the issue, and I was vaping for a long time and quit vape.  I quit for two months, perfectly, and then just drip, drip, drip, came back a little and I was like, well I'm not going to vape because then I'll be vaping everywhere immediately.  That was the idea, I'll smoke a cigarette here and there to help quit!

Peter McCormack: The vicious cycle.  I think it's a good strategy.  I think cigarettes are easier to give up than the vape.

Alex Thorn: That's what I'm thinking because this thing, you can just vape anywhere, and I did, and I'm sure you do too.  It's just so easy.

Peter McCormack: Do you vape on a plane?

Alex Thorn: No comment!

Peter McCormack: Well, you tell me, Mashinsky's been arrested.

Alex Thorn: Yeah, apparently Alex Mashinsky was arrested by the DOJ; Celsius founder, CEO guy, charged; SEC, CFTC, both brought cases against him.  And also the FTC, the Federal Trade Commission, has some kind of weird order against them, which is I think the first time I've heard about that agency involved in crypto. 

Peter McCormack: So, everyone's involved.

Alex Thorn: They're alleging a widespread, multi-year scheme to defraud users of Celsius.

Peter McCormack: Did they not know that he invented VoIP?

Alex Thorn: Did he?  Was that his prior life? 

Peter McCormack: That's what he starts every panel I ever moderated, or thing I ever did with him in the old days, that would always come up, "But I invented VoIP".

Alex Thorn: That's his credentialising to start the conversation?

Danny Knowles: I think even that was disputed. 

Peter McCormack: Yeah, he's definitely not listed on Wikipedia. 

Alex Thorn: It's weird because that guy, you would see him at conferences sometimes and I didn't know him or even really ever talk to him ever, but I would see him occasionally, and he's the kind of guy that just walked around and you looked at him and he just looked guilty and sad.  He just does.  So, it was one of the least surprising, I think, of the blowups, because he just looked -- and if you did hear him speak ever really, he was so overly hyperconfident.  There was the one that you moderated with Tone and Saifedean. 

Peter McCormack: Yeah, someone just put it up on Twitter. 

Alex Thorn: That's why I was just seeing it again, too.  I remember when you guys did that.

Peter McCormack: And they're like, "Oh, McCormack's trying to help him".  It's like, "No, I was moderating".  Someone said, "Can you moderate?"  And it's like, when you moderate, you've got to try and moderate moderately.

Alex Thorn: I know, I saw that criticism back then, it was silly.  But when he said that everyone on earth could earn 7% interest and Tone was like, "Dude, that's insane!" 

Peter McCormack: I haven't seen Tone for a while since he accused me of being a communist, but it was good to see him!  I like Tone.  I like historic Bitcoin Tone.  Yeah, Machinsky, fuck that guy.  I've hung out with him a few times at conferences moderating panels, New York I did one in, and Hong Kong, Token 2049 he was there.  Yeah, there was something always shady about Celsius.  But I guess he might end up in jail. 

Alex Thorn: Yeah, I mean, criminal charges for doing bad deeds in crypto are starting to become a thing. 

Peter McCormack: Yeah.  Are you going to rap for us? 

Alex Thorn: Yeah, I'm going to rap.  I've got a rap for you! 

Peter McCormack: I can't believe this, when Danny told me.  All right, I'm not rapping with you. 

Alex Thorn: Yeah, I mean, I've just been rapping since I was 14.  We had various friends of mine, various rap groups, and I played piano and the drums and started making beats.  So, from 2010 at 2018 or so, I probably made 300 or 400 rap instrumentals. 

Peter McCormack: Wow! 

Alex Thorn: So then, I just have all of these.  I mean, I was working at Fidelity, so I wasn't a rapper.  I was purely extracurricular!

Peter McCormack: I was in a hip-hop band once.

Alex Thorn: I know, you said that.

Peter McCormack: Yeah, the Mad Cowboyz.

Danny Knowles: With a Z.

Alex Thorn: Our first group was called the Uncouth Establishment.  It's a pretty good name for 15-year-olds.

Peter McCormack: That's kind of a Bitcoin name.

Alex Thorn: I know.  In fact, I mean, we didn't mean to resurrect that.

Peter McCormack: I was with my friend, Alex Farber, so we were at rival schools but we were the only two kids in each school that liked hip-hop, and they announced a band night at my school.  You know those bad nights, and we were like, "Let's do a hip-hop band".  And so we wrote three of our own songs, and then we did a cover of Danger by Blahzay Blahzay. 

Alex Thorn: Incredible. 

Peter McCormack: Do you remember Blahzay Blahzay?  We did a cover of that.  And then, two days before it, or the day before, I put my hand through a window.  See that scar?

Alex Thorn: Oh, man.

Peter McCormack: And I was in hospital and I was like, "I've got to play this gig" and they said, "You have to stay to have an operation", and I checked myself out, put on my Timberland sweater --

Alex Thorn: That's mental as F, dude!

Peter McCormack: -- went out and rapped in front of the school!

Alex Thorn: It's like a scene from Lose Yourself or from Eight Mile!

Peter McCormack: Tom played in a band that night. 

Danny Knowles: Did he? 

Peter McCormack: Yeah, with our friend, Tim and Dom.  You know the interview I did in --

Danny Knowles: I know what you're going to say; in Columbia?

Peter McCormack: In Columbia, that guy. 

Danny Knowles: Yeah, with the guy who was having drug problems. 

Peter McCormack: Yeah, so him, our friend Tim, who sadly died a couple of years ago.  It's really sad, a kid who got cancer at 18 and then beat it, but I think it ravished his system.  But I can't remember what the name of their band was, they all came on stage in dresses and rocked out Nirvana, then we came out and rapped! 

Alex Thorn: Those were the good old days! 

Peter McCormack: So, you're actually properly into hip-hop? 

Alex Thorn: Yeah, yeah properly.  I mean, I've been listening to rap music since I was maybe 12.  I mean, I pirated Slim Shady LP in 1999 and sold it on CDRs throughout my middle school.

Peter McCormack: Love it!  Can you agree with me then that modern hip-hop and rap is shit?

Alex Thorn: Yeah, I totally do agree.  I don't like the, I don't know what to call it now, but it was the trap-rap influence that really got excessive.  But I mean, there are a couple names that I like out there in that genre, like Polo G, and I like Juice WRLD, although RIP, but there is a whole other class of rappers that are pushing back on that, like Kendrick and Eminem and Logic and Joyner Lucas.  They literally actively talk shit about --

Danny Knowles: I think you're going to back me up here Alex.  Pete has one of the worst takes ever when he says, "There's been no classic albums since Back to Black".

Peter McCormack: I think the last great music album that was made, if in 50 years you do the top 100 albums, the last great album made was Back to Black by Amy Winehouse.

Alex Thorn: Wow!

Peter McCormack: I don't think there's been a legendary album since.  There's been good music; a legendary album since.  It's the last great album.

Alex Thorn: I've got some weird takes on this and I don't know why this is coming to mind, it's not rap at all, but 1989 by Taylor Swift I think is an absolute banger of an album.

Peter McCormack: I don't mind Taylor Swift.

Alex Thorn: "Welcome to New York…"

Danny Knowles: I literally don't think I know a Taylor Swift song.  I said, To Pimp a Butterfly, though.  It's not my favourite Kendrick album, but I think it's a classic album.

Alex Thorn: Well, people been talking about Taylor because of the whole SBF FTX thing with her, where she had supposedly turned down a sponsorship because she was asking incisive questions about whether FTX traded unregistered securities.  Did you see that whole story?

Peter McCormack: No, but I love it!

Alex Thorn: So apparently, she was so incisive.  Before she took Sam's money to rep FTX, she's asking about the Howey test and stuff.  Turned out that's not true.  Actually, they did sign it and Sam backed out of this deal, that was what recently came out.  So anyway, maybe that's why Taylor Swift is on my mind when we talk Bitcoin markets.

Peter McCormack: I don't mind her.  She's just announced a tour in the UK.  If my daughter wants to go, I'll go.  But I think Kendrick Lamar is massively overrated.

Alex Thorn: You think so?

Peter McCormack: Honestly.

Alex Thorn: Good Kid, m.A.A.d city, that double album is a banger, dude.

Peter McCormack: No, don't like it.

Alex Thorn: To pimple butterfly was fire.  I like him a lot. 

Danny Knowles: He recommended it, I checked it out.  I don't think Kanye's done anything decent for ages. 

Alex Thorn: Yeah, Kanye is a polarising figure.  Setting aside his personal life, but even in music right because he's evolved his music so much, but The College Dropout, the first album, is an absolute masterpiece. 

Peter McCormack: Yeah, and I love that track he did with Dilated Peoples.

Alex Thorn: Yeah, I used to love that.

Peter McCormack: Yeah, of course.  But I just think hip-hop's shit now.  The only stuff, my son's really into drill, do you listen to any of the UK drill stuff? 

Alex Thorn: No.

Peter McCormack: The one actually you will kind of know, kind of crosses over a little bit with that, is Central Cee.

Alex Thorn: Yeah, I can check them out. 

Peter McCormack: You don't know Central Cee?  So, some of the stuff my son plays me, I'm like, "It's okay", but I'm always -- I think the lyrics are shit.  I don't think people write any good lyrics any more and so I'm always playing him old stuff, and trying to get him into just the stuff I listen to.

Alex Thorn: I mean this is iconic, right?  Everything was always better, we're all going to think that.  I had this joke, I was thinking about this joke, I had this tweet which I haven't tweeted because it's a little incendiary, but it's like, we need all these old people to die so that we can take over and live forever. 

Peter McCormack: Right!

Alex Thorn: And that's, I feel, like every generation's attitude.

Peter McCormack: I've made a rapper friend through Bitcoin.

Alex Thorn: Oh yeah?

Peter McCormack: Yeah.  I've made friends with R.A. the Rugged Man.

Alex Thorn: Dude, R.A. is sic!  Dude, that song, Famous, "I'll make you famous".  You know that song?

Peter McCormack: His first album --

Alex Thorn: I love R.A., dude, he's crazy.

Peter McCormack: So, his first album, what was it called?  He did the track called Lessons.  I went to see -- he toured, he didn't play the UK, but he played Amsterdam, so me and my ex-wife went out to see him.  It was like 25 years ago.  I mean, I love the guy.  He ends up following me on Twitter, and then starts asking me about Bitcoin. 

Alex Thorn: Let's go!

Peter McCormack: Yeah, so we've been trying to set it up to get him on the pod.

Alex Thorn: Dude, I love R.A.  That is niche, quality rap right there.  The song, I'm not going to do the rap because it's a little vulgar too, he's a little bit of a vulgar rapper, but Famous, "I'll make you famous".  I forgot, I used to know it.

Peter McCormack: He got signed to Jive Records back when that was --

Alex Thorn: Yeah, like, big. 

Peter McCormack: Yeah, then he kind of had some kind of mental breakdown and then it didn't happen for him, and then he disappeared for a while and then he came back and did that.  I can't remember, was it called Lessons or…?

Danny Knowles: His first album. 

Peter McCormack: Die, Rugged Man, Die.  Yeah, Lessons, is that the first track? 

Danny Knowles: Yeah, it is, yeah.

Peter McCormack: I don't listen to that much.  The only time I tend to listen to hip-hop now is after my son puts some of his shit stuff on and I make him listen to good stuff.

Alex Thorn: What about Chronic 2001? 

Peter McCormack: Yeah that's a great album. 

Alex Thorn: Absolute fire, dude. 

Peter McCormack: But that's old school. 

Alex Thorn: Yeah, it's on the cusp. 

Peter McCormack: I'm digging out my old playlist. 

Alex Thorn: Dre was supposed to release his follow-up album for 15 years. 

Danny Knowles: It never came.

Alex Thorn: I think he did; he did actually finally release an album.

Danny Knowles: But that was into a different -- I think that was a whole new album.

Alex Thorn: I know, that's what I mean, because he was supposed to have -- he had that song, I Need a Doctor, with Eminem, but that was supposed to be, I think, a single on this mythical album that never got made.

Danny Knowles: Yeah.

Peter McCormack: So, I always put on this playlist for my son.  It's Mobb Deep, Lost Boyz, Big L, Rugged Man, Rakim.  Always put on 18th Letter by Rakim.  I like this, it's proper hip-hop.  He's like, "Dad, this is shit".

Alex Thorn: Capone-N-Noreaga.

Peter McCormack: The only one I've got them to love is Hit Em Up by Tupac.

Alex Thorn: That's a phenomenal song, "Get money", right?

Peter McCormack: Yeah, "Fuck you, bitch!"

Alex Thorn: I'm not going to do that one, yeah, I'm not going to do that one!  I mean, dude, Tupac though, awesome discography too.  The lyricism now though is terrible.

Peter McCormack: Terrible.

Alex Thorn: Like, en masse.  There are some rappers out here still trying to write actual poetry, but it's bad.

Peter McCormack: Yeah, it's terrible.

Alex Thorn: Yeah, the mainstream, it's rough.

Peter McCormack: Which is setting you up now to show them how to do it.

Alex Thorn: I'm going to come in and show these young kids --

Peter McCormack: Show these mother -- honestly, if I hadn't done a podcast for the last six years and my voice got a little bit more English and posh, I would have rapped with you, but I would sound like a fucking idiot!

Alex Thorn: Well, one day we'll do a live.

Peter McCormack: Yeah, we'll do a gig.

Alex Thorn: Fuck it, we'll do a live!

Peter McCormack: Yo, motherfuckers!  I'd do a covers one with you.

Alex Thorn: All right, I usually say Intangible Coins is my rap name.

[Alex raps]

Peter McCormack: Yo, let's go!  That was fucking wicked man, love that!

Alex Thorn: Oh, it's fun!

Peter McCormack: Yeah, I'm a bit too middle class in Bedford to write raps any more.

Alex Thorn: I get it. 

Peter McCormack: I did want to write one once about being that kind of person. 

Alex Thorn: Those types of satire raps are so good.  I was working on one about not being a bad man, because I've got anxiety and a pension plan!  Fucking brilliant, I love that.  So, you don't have a rap name?

Alex Thorn: Not really, just usually, right now, I'm using my -- well, I'm in Clearnet, dude, I'm doxxed, right?  So, just Alex Thorne I think at this point. 

Peter McCormack: Damn. 

Alex Thorn: Yeah, I mean or if anything Intangible Coins, which is my Twitter handle, right? 

Peter McCormack: I was MC Cormack. 

Alex Thorn: That's pretty good.

Peter McCormack: Yeah. 

Alex Thorn: I like that.

Peter McCormack: MC Cormack. 

Alex Thorn: That's good. 

Peter McCormack: From the rough streets of Kempston!

Alex Thorn: I mean, because keep in mind, right, I only started I think -- this doing rap publicly is something I do on my podcast which is the Galaxy Brains podcast for Galaxy; I'm the Head of Research at Galaxy.  I'm essentially on a corporate podcast, so there's no real reason at that point to have a pseudonym, you know.

Peter McCormack: You should ask to change your job title to Head of Rap at Galaxy.

Alex Thorn: I know.  I think Novo called me the Galaxy's Poet Laureate once.  I was like, that's pretty good, I should get that.

Peter McCormack: Do you have guests on your podcast? 

Alex Thorn: Yeah. 

Peter McCormack: I would maybe rap on yours first.

Alex Thorn: Just bring you on and you rap there.

Peter McCormack: Bring me on as a set up.  I'll have to practice with Danny first.

Alex Thorn: I think Rob Hamilton is the only guest I've had that brought their own rap also.  It was all about miniscript.

Danny Knowles: Of course it was!

Peter McCormack: What would I rap about? 

Alex Thorn: Dude, you've got a lot to rap about.  You've got to talk shit about Ted Lasso --

Peter McCormack: Football.

Alex Thorn: -- who's not real.

Peter McCormack: Fuck Tottenham.  How about Zuby?  Tell Zuby, get him to write me some raps, man!  Dude, good to see you.  Big, big shoutout, big thanks to Galaxy for sponsoring Real Bedford Ladies.  That is so fucking cool.  When you guys got in touch -- to be honest, I've been pestering Fabiano, our mutual friend, for ages saying, "Support this".  And when she heard about the ladies, she said she was actually going to get involved, and then you guys got in touch and said, "What can we do?" and I was like, "Will you sponsor our ladies?" and they said, "Yes".  

So, big shoutout because we have something like, I think it's more than I thought, 270 girls aged 7 to 18 playing in our junior teams, then we've got three senior teams now and I think we've got a disability team, I think so, or a walking team, I can't remember, and every single player is getting all new kits.  I go along to their training sessions, they're all in -- they've got kits but they don't match.  Some have got sweaters, some haven't, depends if their parents have bought it.  Now, every kid's getting a full kit, they're getting a training top, they're getting a waterproof, and they're all going to look the same.  So firstly, that's super awesome. 

Secondly, we're going to pay our Ladies first team.  I think we will definitely have the best budget, and people will criticise us for that, but they shouldn't play for free.  They work for the brand, Real Bedford, and they have to travel and it's expensive.  And it makes us competitive, and also we can put more money into our hardship fund, which means any parent whose kid can't play because their parents have got no money because times are tough, we have a hardship fund which we can use for that.  So, no kid cannot play football because of money in Bedford, and that's because of Galaxy. 

So, thank you, thank you so fucking much.  Honestly, I get a bit emotional thinking about it.  It means so much.

Alex Thorn: Well, we're extremely proud and happy to partner with you guys, because I think just personally, there's a lot of us that are big fans of Real Bedford.  And look, we love sports.  We have a lot of athletes at Galaxy, we love football, we want to support women and we just love the idea, dude.  And separately, I've got the jersey.  We just love the team, dude, we love what you're doing over there.  It's one of the coolest things I've seen in Bitcoin.  We're starting to get a lot of these really cool things.  I mean, we're here in Nashville at the Park.  It's almost a surreal level of thing that you're building there with Real Bedford.  Similarly, how I'm shocked at the how effective the Park is too, but we're just really happy to be involved.

Peter McCormack: Yeah, I mean, I'm going on about it a lot at the moment, and I'm going to repeat something I've said in a different show in case they didn't hear it, but we get a pushback on the football a little bit.  Proper hardcore Bitcoiners are like, "I don't give a fuck about football", and I keep saying this again and again, forget this football, it's a Bitcoin project.  We're using the Bitcoin cheat code and because of that, a whole bunch of kids are going to get to play football that can't --

Alex Thorn: Amazing.

Peter McCormack: -- and a whole bunch of people going to learn about Bitcoin because of it.  So, forget it's football, it's a Bitcoin project like Bitcoin Park.  If you like Bitcoin Park, you should Real Bedford. 

Alex Thorn: I agree.

Peter McCormack: It's the same thing, different lens.  But thank you.  Honestly, having people like you and all the other sponsors means we're making a real difference to a small town, a deprived --

Alex Thorn: Love it.

Peter McCormack: Bedford is a deprived town, and we're taking on the big boys. 

Alex Thorn: I love it.  Well, you guys got promoted to the men's team, right?  You guys won the League.

Peter McCormack: Yeah, won the League and the Cup, so we won the double.

Alex Thorn: Yeah, so I mean this isn't just a marketing effort, you guys are the real deal. 

Peter McCormack: We work hard.  I mean, Danny, you've been there.  It's hard work.  Big shoutout to Emma, my assistant, who now basically runs the club; my son Connor, who's working hard; all the management; Will, who does all our social media; everyone involved works so hard.  Today, they've been arranging goalkeeper tops for the friendlies, the friendly tomorrow, sorting out the clubhouse.  There's endless stuff.  Everyone's working hard to make this happen, and no one gets paid for it.  It's all volunteer, it's all our extra time.

Alex Thorn: It's amazing.

Peter McCormack: But it is the bitcoiners' team, and I believe this is something, if bitcoiners get behind, we'll be super-successful.

Alex Thorn: Yeah, I love it.  We're just happy to be involved too, and also just I mean all the good that your guys are doing, I mean it's easy, it's not a pure marketing for us, it's just a way to get involved and help people and promote Bitcoin also. 

Peter McCormack: Let's give a shoutout to Sebastian as well from your team who's been really super-helpful and supportive.  Shout to Novo.  I reached out to him and thanked him and, you know, it is a Galaxy project.  So, thanks to them and just, yeah, hopefully we'll do you proud.  Our goal, it's an ambitious goal because the ladies finished bottom of the table last year.  The only reason they didn't get relegated is one team dropped out, so they stay in that division.  We're going to try and win the league from finishing bottom --

Alex Thorn: Love that.

Peter McCormack: -- and I think we've signed some cracking young players.  Women's football's growing so fast.  Actually, it grew here in the US first.

Alex Thorn: Yeah, it did. 

Peter McCormack: Yeah, the US actually led the way with women's football.

Alex Thorn: I mean, when I was growing up, Mia Hamm was a star, she was very famous.  And that, I remember, blew the doors off women's soccer in the US.  I have to call it soccer if we say US. 

Peter McCormack: All right, if you pre-empt it with US!  Who's the other player; Hope someone?

Alex Thorn: Well, and there's Rapinoe, right?  The last team had a bunch of stars too from the last World Cup. 

Peter McCormack: Well, the English Ladies just won the Euros, which is like the World Cup in Europe, and the World Cup's starting soon.  And it's been a really interesting thing supporting because there is this undertone of jokes and misogyny about women's football.  It's bullshit, but it happens.  But the way I look at it is different.  What I wrote about in our programme is that my dad played football when I was growing up, I played football.  My brother tried to play football.

Alex Thorn: Right, I played.

Peter McCormack: And my mum washed all our kits, took us to training, supported us.  And that's a case up and down the country.  And I think it's now time to give it back to the ladies and support the ladies now that football's growing.  Some of the senior teams have been brilliant.  What Arsenal have been doing for their ladies team's incredible; Barcelona, I mean, I think, didn't they fill out the Nou Camp one game? 

Danny Knowles: Did they? 

Peter McCormack: Yeah. 

Danny Knowles: Wow, that's amazing. 

Peter McCormack: Yeah.  Arsenal-Tottenham ladies sold out the Emirates Stadium, 50,000 people I think, or something.  I mean, it's grown so fast, and commercially it just makes so much sense.  But it's also they supported us, let's support back.  And yeah, so what Galaxy is doing is a step level change for a team us.  The money just enables to do so much, so thank you, I'm so humbled by it.

Alex Thorn: Absolutely.

Peter McCormack: Right, let's talk about Bitcoin.  We're going to talk about BlackRock.

Alex Thorn: Yeah, BlackRock.

Peter McCormack: Before we get into it, just tell people what you do, apart from rapping for Galaxy!

Alex Thorn: Yeah, so I'm the Head of Research at Galaxy, and Galaxy, big financial services company in Bitcoin and in the crypto markets, right?  We have a big Bitcoin mining business, which is, you referenced Amanda Fabiano, she runs that business; we have a big trading company; we have a big asset manager.  My guess is we're the second largest crypto asset manager behind Grayscale.  I think what we've, whatever our last public number is, $2.5 billion under management there, right?  So, I run research across this whole organisation, so that's generating insights for internal and external clients, as in publishing, public research, you can go and see all our research at galaxy.com/research, but also working with internal groups, strategy-type stuff like that, which is fun.

We had a good agreement when I joined from Fidelity that we would have our research team be semi-independent, so I have total editorial control over what we publish, it's not marketing content.  So, I think that's pretty unique, certainly for a corporate.  It's a little bit closer to the way the big banks and brokerages operate their research, which is that nobody takes the word of some analyst at a big bank that that is the corporate line for the bank, it's a smart person's view.  That's just what we try to do, share some interesting takes and always tell people why it matters, not just an ecosystem overview, but give you an incisive viewpoint.  And if you disagree, that's totally fine, but we generate a discussion that way.

Peter McCormack: Well, I read your thread about BlackRock, and I'm going to refer to it a lot, because I think there were some good insights to it there, but just let people know who BlackRock are, if they don't know, and what they're up to, and why this means so much.

Alex Thorn: Yeah, so I mean it's a big deal because BlackRock is the largest asset manager in the world.  So, they're a mutual fund and an ETF company primarily.  iShares is their ETF complex and it's massive.  I think they've got over $8 trillion or $9 trillion under management, I forget the exact number.  So, they're the biggest.  I believe Vanguard is the second biggest and then Fidelity is the third.  So, those are the top three asset managers.  Obviously, Fidelity has been deep involved in Bitcoin for a long time; Vanguard, I haven't seen really anything from those guys; but now BlackRock hadn't been doing much, but having them put their stamp of approval, again through the iShares complex, which has literally hundreds, 500-plus ETFs, they're like the ETF king, they probably are the cornerstone of most people's portfolios.  If you have an investment portfolio, you probably have something that BlackRock manages in there.  So, it's a huge signal, I think. 

Fidelity was a signal, but that signal was five years ago when they started doing it.  At this point, it's just a drip.  You hear Fidelity doing something, you're not remotely surprised.  This is an asset manager that really sort of started the ESG movement in investing and has been negative on Bitcoin.  Larry Fink, the CEO, has said it was for illicit uses.  Now he's on TV explaining how it is digital gold and it can help protect you from the debasement of your national currency.

Peter McCormack: And it's hope!

Alex Thorn: Yeah, exactly.  I don't know where he heard that one!  So, I think it's the change, it's the pivot that is so remarkable.  And then obviously, it's just the stature of the firm, It's the biggest, right?  Fidelity brings a lot of stature, but it's the third biggest.  Number one biggest in the world saying that they think there's an opportunity for a Bitcoin ETF, especially given all the negativity in the US regulatory complex over the last long time, but let's say over the last six months, people were shocked that they came out with it right now too.  So then, it sort of feels a dam might be breaking.  In 2021, you had all the other asset managers all filed, you had WisdomTree and Invesco and Fidelity, they all did the last round of the ETFs and they were wrong, I guess, or they didn't get approved.  And so you just kind of wonder, is that going to be the same; or BlackRock are they reading the tea leaves better than the others?  They are the biggest ETF provider, so maybe they know something, or they sense that now is the moment.

Peter McCormack: Yeah, it's a good question.  Danny was saying it earlier, why now?

Alex Thorn: Yeah, that is the question.

Peter McCormack: Yeah, and there's the conspiratorial view, but it could be that just their clients are asking for it.  It could be that Michael Saylor got on the phone to Larry Fink and said, "What the fuck are you doing, man?"

Alex Thorn: I don't think there's anything nefarious or conspiratorial.  I think the question is, I definitely am sure there's client demand, I'm sure.  And it's also, I mean Bitcoin has matured a lot, markets are much more liquid, I mean right now, they're less liquid than they were in 2022 and 2021, but it's more transparent.  There's many more of the markets infrastructure that you need if you're an institution.  In 2017, there was no custody at all, there was no prime brokerage, there was barely any surveillance tools, there just wasn't anything.  And so now, there's a lot more.  They have tons of New York trust companies they can custody with, it's much more conducive to institutional involvement, I think, than it ever has been. 

But literally on a micro question, why literally right now?  I mean, I think it surprised a lot of people with the SEC out here suing everyone in crypto under the sun.  But maybe that's also part of it, right?  The SEC is not suing anyone over Bitcoin, right?  No Bitcoin-only companies are being sued; Bitcoin is safe here from the regulatory, you know, the Eye of Sauron of the US regulatory complex.  And I think that's probably never been more clear, that the other ones may not be safe but Bitcoin definitely is.  So, is it a digital commodity, right?  I mean, you know, in the current onslaught.

Peter McCormack: But Larry Fink is rich, his friends are rich, he has a lot of rich people parking their money with him; he too and his clients also suffer the effects of inflation; he too will have to be thinking about, "Well, how do I protect myself from inflation?"  He will have seen other people talking about Bitcoin as a potential, he will have possibly done the work and realised he needs it himself, "This is a good asset for me too.  If it's a good asset for me, it's a good asset for everyone".  Everyone comes to Bitcoin eventually.

Alex Thorn: Yeah.  And he said that, "BlackRock's goal has been democratising access to investing", and that's what ETFs are, right?  They make it incredibly cheap and easy to own stocks, for example, and that's what he said he wants to do with Bitcoin.  And I get this.  It's not easy for an average person to buy and hold Bitcoin.  But if you have an investment advisor, they can just put that ETF right in your portfolio and you've got exposure.  Now, we all know it's not the same as holding your own keys, but it's a way to bring Bitcoin exposure to the masses, and that's what they're experts in, they pioneered that at BlackRock in other assets with their ETFs. 

Peter McCormack: Do we know much about the structure and how they will avoid getting themselves into a Grayscale situation, where there's both a premium and a negative, and that people end up being stuck paying 2% or really 4% in perpetuity to Larry like they are to Barry, and therefore actually the whole thing really ended up stinking?

Alex Thorn: Yeah, so there shouldn't be any discount or premium to the net asset value of that coin because they have active creates and redeems, right?  So, any time there's any dislocation, the market, these authorised participants, the market makers will come in and create or destroy shares.   They'll either deliver Bitcoin or remove Bitcoin and remove shares, and that's an active, ongoing process for the ETF, or all ETF structures.  And this is one, this is a trust that operates an ETF, which is like many of them are.  This is one of these Bitcoin Twitter, erroneous rabbit holes that people went down.  They're like, "That's not an ETF, it's a trust".  And it's literally what GLD is, it's exactly the same as other commodity-based ETF trusts.

Peter McCormack: Allen Farrington won't agree.

Alex Thorn: Yeah, but there shouldn't be anything that, any kind of premium or discount issue.  I mean, this is what David Bailey and those guys want, the various activists on GBTC, that's why they say like, "Redeem GBTC".  If redemptions were to be allowed from that vehicle, the discount would evaporate, right?  It's an arb that can get closed.

Danny Knowles: So, that arb's available to the authorised participants, but I think it's important to know that we couldn't do that.  You have to be worth, is it 1,000 Bitcoin minimum?

Alex Thorn: I don't even know actually.  Usually these vehicles specify specific authorised parties that can do the creating or redeeming. 

Danny Knowles: So, if it drifts from the actual price of Bitcoin, then they get the arb between the two. 

Peter McCormack: So, do those authorised participants exist for the purpose of insuring? 

Danny Knowles: I think that's one reason, yeah.

Alex Thorn: They're the only people that can redeem, the market makers, and it won't drift.  The second there's a bit of drift, they'll close it, and that's why they stay real tight.

Peter McCormack: Is there that six-month hold period as well, where you cannot trade the shares, you know with Grayscale?

Alex Thorn: I don't think so, no. 

Peter McCormack: Okay. 

Alex Thorn: No, there shouldn't be.  This should be mega-clean, like an S&P index fund.  You can just buy it and sell it, intraday all the time, it should be.  That's why people want it, because it would be so much easier, particularly in size.  I mean, I've no problem going on River and buying Bitcoin, at my size.  But if you're a sovereign wealth fund, even Bitcoin's pretty liquid globally, but it's not like move $100 million in and out of it liquid without impacting the market.  We need more Bitcoin access vehicles, will drive a lot more liquidity, and so something an ETF should increase the liquidity profile significantly of Bitcoin, which by the way lets way more people get involved.  You can't get into a tiny asset if you're a giant asset manager, no matter how good a bet you think it might be, it's impossible.

Danny Knowles: This might be a naïve question, but how does this change that?  Because even if you want to get into the ETF, they still have to buy the underlying Bitcoin.

Alex Thorn: The idea is that it's just so easy that it'll be big.

Danny Knowles: But how do Blackrock get the Bitcoin if it's its size? 

Alex Thorn: Yeah, so when somebody comes in to buy the shares, essentially an imbalance is created because they maybe buy the Bitcoin to feed the fund every morning or something, and at night a bunch of shares.  So then the very next day, the market makers will create those shares and buy it and deliver the Bitcoin.  It's not inherently going to be liquid.  I'm saying the Bitcoin ETF is going to be massive and that will create an enormous amount of additional liquidity in the market, right?  I'm just very confident that with a vehicle this simple and this accessible, you're going to see huge inflows into at least one of them, maybe several, depending on how it works, and that just helps grow the size of Bitcoin's liquidity profile overall, which then makes it possible for much bigger investors, regardless of how they invest in it, to get involved.

Peter McCormack: Well, so I was told a long time ago, I can't remember who, but there's certain people who want to get into Bitcoin.  But being a $500 billion, $700 billion asset, it's not a big enough market, it's too risky.  They need it to be, you know, $2 trillion, $3 trillion, $4 trillion, or whatever it is. 

Alex Thorn: Exactly.  And when volatility comes down too, it makes it a lot easier to take a position, because you can size bigger, because if you have a high-vol asset, typically you're going to size it smaller to account for that volatility.  So, if it's more liquid, much more widely held, likely volatility will come down.  It has been coming down historically on a long timeframe.  That also will allow bigger capital to enter right because they can enter in bigger size.

Peter McCormack: The Canadian ETF you mentioned, did you say there was $400 million of trading on the first day?

Danny Knowles: The first couple of days.

Peter McCormack: The first couple of days. 

Alex Thorn: Yeah, this is a purpose.

Danny Knowles: Yeah, $400 million.

Peter McCormack: So, this could be billions.

Alex Thorn: I think it could be massive.  Canada has, what, 25 million people?  So, the US is more than ten times bigger than that.

Peter McCormack: So, if it is billions, is there the liquidity even to support that; and where would they be sourcing their Bitcoin from?

Alex Thorn: Yeah, I think they've said, BlackRock specifically, that they're going to use Coinbase.  I don't know if that will be how it happens, I think they can change that.  But the surveillance-sharing agreement question that all of them are answering, they've all picked Coinbase as the spot market that they have the surveillance-sharing agreement with.  Yeah, I mean you've seen those charts, Bitcoin on exchanges.  I mean, there's going to be a really interesting moment where a ton of demand is coming from BlackRock and they have to buy the Bitcoin from somewhere, but in a market, that price moves up.  People will show up and sell Bitcoin to BlackRock. 

Peter McCormack: Of course, yeah. 

Alex Thorn: They will. 

Peter McCormack: But it's something I don't even know; where does Coinbase source their liquidity from?  And does it get to the point where people are having to go into lots of different places to try and get it? 

Alex Thorn: Yeah, I mean I think Coinbase mostly is using their exchange.  I think they have an OTC desk, or maybe they have other whales out there they know, or whatever.  But yeah, I mean liquidity is extremely fragmented in Bitcoin.  It's a global asset, so it's not like when you buy Apple stock, it only trades on the New York Stock Exchange, it's the only place on earth it trades, right, so it's one nice, central pool of liquidity for Apple stock.  That's not at all how Bitcoin works, so I don't know.  I mean, we don't run an exchange at Galaxy, but we have a trading business that's an OTC trading business, and we source from ourselves, from exchanges, from other OTC counterparties.  I mean, it's a web.

Peter McCormack: And there will be a gap between the approval and the ETF going live.

Alex Thorn: Yeah, I'm not sure on the specifics on that; likely.

Peter McCormack: We know what'll happen in that gap, though.

Alex Thorn: A lot of movement in Bitcoin, yeah.  People are going to go wild.

Peter McCormack: They're going to front-run the fuck out of that.  And BlackRock, as I understand it, have only ever had one ETF rejected.

Alex Thorn: Supposedly, yeah, 1 out of 500, or something or other.  And I'm actually upset that somebody, I haven't done it either, but there's the guys, the Bloomberg guys, like Eric Balchunas and the other guy, Jeff, that they haven't gone and, "Would you please look at the one that was rejected and tell us why?"  It's probably something that's totally not applicable to the situation, I would bet. 

Peter McCormack: But a lot of ETFs have been rejected, a lot of spot Bitcoin ETFs have been rejected over years.  And I know it's upset Hester Peirce a lot.  She's regularly, regularly dissented based on that.  Who was the previous prior to Gensler? 

Alex Thorn: Jay Clayton.

Peter McCormack: Yeah, it was Jay Clayton.  I think I even heard him come out recently and was critical. 

Alex Thorn: He was a little bit critical, yeah.  He's been pretty measured overall in his criticism of the SEC.  I think it's sort of a collegial, you know, "That was your agency", he respects the agency.  But yes, I heard much more critical commentary from him too.  I mean, Hester Peirce has been saying that they're using a completely different standard to reject this ETF compared to all others.  And it is absurd.  They want the regulated market of sufficient size with surveillance-sharing agreement, that's the main ask.  But gold, oil, those have ETFs.  Gold doesn't trade in one regulated market, even remotely.  You can buy gold on the street in India, anywhere, right?  Pawn shops could affect the price of gold.  Oil is literally run by a cartel, literally, right? 

So, it's just the standard just seems off to me.  But I don't know.  I mean, the SEC has bitten off a lot.  I mean, they're also rolling the dice in court cases all around the country right now, and they may have strong cases in one or another, but I mean, anything can happen in court. 

Peter McCormack: Well, they just lost to Coinbase. 

Alex Thorn: Yeah, that was a pretty narrow -- no, this was on -- 

Peter McCormack: Didn't Coinbase force them to have to provide -- I can't remember what it was. 

Alex Thorn: No, so they have the thing on their writ of mandamus, so they didn't really lose.  This is them suing the SEC, Coinbase suing them saying, "You have to respond to our rulemaking petition from last year".  And they did respond to the suit, they didn't actually do the rulemaking and respond to that.  They actually said basically, "We need another 180 days"! 

Peter McCormack: But there's a lot of pressure coming.  I mean, I think Warren Davison, Congressman for Ohio, has been putting a lot of pressure on them, especially Gensler.  There's a lot of calls to have Gensler fired. 

Alex Thorn: I think it's just incredible that they haven't done formal rulemaking for the cryptocurrency markets in four years.  So, it's true that we have a lot more clarity.  I don't think we can say as an industry that it lacks clarity.  It did lack a lot of clarity.  I think now, it's pretty clear what the SEC's position is, it's just extremely stifling.  And I would have to say there aren't reasonable asks in some cases what they want.  Protecting consumers makes a ton of sense.  And there's certainly been a lack of it across a lot of the crypto complex, no doubt. 

But again, what you would do is you would bring in the industry, you'd sit down, you'd have the industry and the regulators sit together, bring in some consumer advocates and some academics and you have a process, a roundtable, and you'd hammer this thing out so that you can fulfil the mission of the SEC, which is to promote capital formation and protect consumers.  And they're protecting consumers by just suing people everywhere, rather than conduct a much more thoughtful process.  Rishi Sunak and the FCA and His Majesty's Treasury in the UK have been much more thoughtful on this, actually doing work and thinking about, "How would a Bitcoin market fit into our existing structures?" etc. 

The thing is, with the court cases, you can win a court case and not win the way you want and not get the precedent you want; or you can lose it but have it not really be a loss.  There's such a range of outcomes that can happen.  The SEC, in a worst-case scenario for them, could lose big ones, all of them, and find all of their power curtailed.  That's totally possible.  Or, they could win them all and the entire cryptocurrency industry in the United States could be obliterated basically, including the Bitcoin companies.  That's also a possibility.  It's a really risky, high-octane strategy of just ploughing all this through the courts.

Peter McCormack: What do you think is happening, though?  Do you think this is all politically motivated; do you think it's the power of people like Elizabeth Warren?  I think that there were a lot of lack of disclosures in crypto that deserved to be looked at.  I'm not totally against the SEC's view here that something needs to be done, I just hate the way they're doing it.  I think there -- I mean, Bitcoin has become a little bit of a partisan issue, and I wish it weren't.  I don't think it is a partisan technology.

Peter McCormack: No.

Alex Thorn: And I think having money that nobody can mess with is not partisan, right?  Everybody wants that, I think.  But there is clearly, I mean, you've got a big partisan divide here, and so I mean I think there is some politics involved.

Peter McCormack: Right, okay, okay.  Well, listen, look, it's an interesting signal to the market.  At our event the other night, everyone was talking about BlackRock, we were talking about BlackRock.  Harry Sudock gave one of the most insightful comments when he said, "Just look at the signal that this gives".  This is Larry Fink telling the world that Bitcoin is okay.  And so, you start to think, like we can discuss and we will discuss the risks and the fears that bitcoiners have, but you could see, or you are, it's almost like I'm feeling this shift in narrative, you could see some of the mainstream press report on Bitcoin in a different way.  You could see them sending journalists out to actually properly report on mining, properly report on what's happened in Texas, in ERCOT. 

Because we've had it with Forbes, we've had some great works, great journalists doing some great work, properly rewarding Bitcoin.  And so, that narrative shift could come off the back of this.  Also, every institutional investor who looks to Larry Fink, who a few years ago said, "We need to be ESG compliant", now we'll be thinking, "We need some Bitcoin in our portfolio".  It's huge.

Alex Thorn: It's a big signal and again, because of who Larry Fink and BlackRock are, it's a huge, huge signal.  I think that's undeniable.  I also think this is the beginning of what hyperbitcoinisation looks like.  You know, people want Bitcoin everywhere.  That means it's going to be everywhere.  It's not going to be like, we're not going to take over the world with whichever of the lofty goals a bitcoiner has for Bitcoin, whether it's to replace gold or to be the world's reserve currency or to demonetise these monetary premiums like real estate and stuff, that's not going to happen on the back of Raspberry Pi nodes alone.  Those are going to be there, it's going to be an important backbone of the network, but you're going to need market access vehicles.  You want it, you don't just need it, you want it.  If Bitcoin's going to be global money, it needs to be everywhere.  It needs to be in every single system that uses money.

Think about how many forms of fiat money there are.  You get the credit cards, the debit cards, the in-flight, the ACH, the wires; we need all that for Bitcoin If it's going to reach the mountaintop of its loftiest ambitions.  And so the ETF, I mean I think is a very clear positive thing for Bitcoin adoption. 

Peter McCormack: It's the inevitable institutionalisation of Bitcoin, which you did write in your thread.  So, let's talk about the risks and the fears.  So, in an ideal world, everyone buys their Bitcoin and self-custodies.  When you're buying the BlackRock ETF, you don't hold or own the asset.  And look, if you're going to trust anyone, trust in BlackRock partnered with Coinbase to custody is a pretty good starting place.  Coinbase have an almost unblemished record in custody.  I say almost because I can't 100% say for their entire history if there's been any issues without having a look right now.  I don't think they've ever been victim of a hack.

Alex Thorn: I'm not aware.

Peter McCormack: No.  So, and whatever you think of Coinbase, by the way, a lot of people are saying, "Why the fuck Coinbase?  Fuck Brian Armstrong", but they are the kind of company that a company like BlackRock can work with. 

Alex Thorn: Right. 

Peter McCormack: And so, you've got that exposure, but you don't have the asset.  And we don't know if something funky might happen later on, something regulatory funky might happen later on, we just don't know.  And now I know you think that's less of a risk, what you worry less about, you said to me last night.

Alex Thorn: Yeah.  I mean, no, you absolutely don't own the underlying asset.  If you buy GLD, you don't own the gold, you don't have gold coins.  If you own an ETF, you don't even have the underlying stocks if it's an index, you have shares in a vehicle that owns something else.  So, I totally agree with that.  And aside from, I'll talk about the risk of you being rugged, but separately even from that, one of my main reasons I don't want to use these vehicles is because if we are right and Bitcoin becomes global money, you don't have Bitcoin, "You have ownership stake in some Bitcoin"; you'd want the actual coins, even if you don't want them now, you just want financial exposure to that growth.  Well, if it wins, you're going to want it to not be an ETF, you're going to want it to be your bank account where you can spend the Bitcoin or use it.  And an ETF is not going to allow you to do that.  You're going to have to sell the shares.

Peter McCormack: And then buy Bitcoin. 

Alex Thorn: Yeah, so that is undeniably true.  It is not a replacement for holding your own keys and holding your own coins at all.  And it is only financial exposure to the asset, it is not possessing the asset.  So, all the risks that come with that are clear, like you said, the custody risk.  You're saying, "What if something crazy happens regulatorily with the government?  Executive Order 6103. 

Peter McCormack: Yeah. 

Alex Thorn: So, you had gold at 6102, and then some President comes out with the successor and they say, "Any Bitcoin that's not --"  So, first of all, let's say they say Bitcoin's illegal.  Okay, well you can't get it from me if I'm self-custodying, but I guess you've turned me into a criminal overnight.  But they say, "Any Bitcoin that's held in a custodian, that's fine, but it can never leave.  It's stuck here forever now, and we'll only let you trade paper IOUs of it or pass them around".  That's a real fear.  I don't think it's imminent in any way, but that's something to be protected against and cognisant of.  I think that's why self-custody is always something that you should be trying to teach people. 

I think if Bitcoin does become global money, people are going to be using it in a self-custodial way a lot more than today.  Maybe it will not be a majority of the use, I don't know.  But there are red lines.  When I'm supportive of institutionalising Bitcoin, meaning bringing in these big capital allocators and asset managers and stuff, I don't want to jettison some important red lines, the freedom to hold your own keys, which is sacrosanct and inviolable, the right to transact, the right to route transactions, the right to build and route blocks and submit blocks.  These things should be permanently available and protected.  It's more that you need the ability, we want the ability, we need to preserve the ability to operate in a self-sovereign way, but it doesn't mean everyone will.  I think it's okay if other people don't so long as you can.

Peter McCormack: Yeah, and it came up the other night.  It was a good point, I think Preston might have said it, is that if you do buy this exposure and then you experience your 5X, 10X, you're going to want to learn about this thing, and you will go down the rabbit hole, you will listen to What Bitcoin Did or read a Bitcoin Magazine article or check out Marty Bent.  You'll do that and you'll start to learn.  You'll be like, "Hmm, I don't own this actual asset".

Alex Thorn: There's nothing that makes people want to learn more than having skin in the game, having money in the game.  And a widely available US Bitcoin spot ETF will make that unbelievably possible for so many more investors than ever today.  I can't tell you how many people.  I mean, I'm having to tell some smart, wealthy, older friend or whatever, they're like, "How do I get this in my investment portfolio?"  And I'm like, "Buy it on Cash App".  And they will, and I mean I love cash app, but that's not the same of like, these are people with money that have investment accounts, they want it all there.  They don't want it all over in some apps and let alone on a seed plate stored in their backyard.

I mean, I think that there's just many pieces to the Bitcoin stack and the foundation is clearly self-sovereign everything, but there's going to be productisation and I mean honestly, this is why I'm even in favour of Wrapped Bitcoin.  I want Bitcoin literally everywhere that people do money. 

Peter McCormack: I'm not a fan of Wrapped Bitcoin.

Alex Thorn: I mean, I don't have to pick it specifically.  Again, I think as long as there's -- there's going to be trade-offs for every way that you use Bitcoin, and I'd want there to be more ways to use Bitcoin.  So, we just have to embrace those more ways.  The risk, to your point about people learning, is that if Bitcoin becomes so wildly adopted that now the Bitcoin diehards that are carrying and promoting these core messages are now a minority of the bitcoiners, then if the memes and narratives that convey the fundamental values of Bitcoin aren't widely propagated to the new entrants, then the features that express those values might not stay in the protocol.

Peter McCormack: And this is the really important one, this is the crux of the issue.  And by the way, I wrote a tweet this morning stealing from your thread, that Greg Maxwell --

Alex Thorn: Yeah, it's a phenomenal -- 

Peter McCormack: Yeah, can you bring it up?

Danny Knowles: Yeah.

Alex Thorn: What was it, like in maybe November 2019 or so, or October 2019, there was a post on the Bitcoin subreddit, so we said, "What's the biggest threat to Bitcoin's survival?"  Everyone was like, "Oh, 51% attacks", or a lot of people.

Peter McCormack: No, if you actually -- no, I just stole that --

Alex Thorn: I see the pinned tweet now!

Peter McCormack: Yeah, "The biggest threats to Bitcoin --"

Alex Thorn: Yeah, "Ignorance and apathy", exactly.

Peter McCormack: But if you go to Alex's…

Danny Knowles: Okay.

Peter McCormack: Right, yeah.  So, "Maxwell wrote, 'A far bigger risk to Bitcoin than 51% attacks is that the public using it won't understand, won't care and won't protect the decentralisation properties that make it valuable over centralised alternatives in the first place; a risk we can see playing out constantly in the billion-dollar market caps of totally centralised blockchain systems.  The ability demonstrated by systems with fake decentralisation to arbitrarily change the rules from under users is far more concerning than the risk that an expensive attack could allow some theft in the case of overly-eager finalised transactions'".  It's brilliant.  It's putting that onus onto us like, okay, fine, this is great.  We have to sit down with Larry -- Larry, how are you doing, man?  If you're listening, you want to come on What Bitcoin Did? -- but more importantly, the asset managers.

Alex Thorn: Yeah, and the people who work there.  I mean, this is one of the things I wrote later.  This is from our newsletter basically, this thread, and I was saying there are good bitcoiners at these places.  Institutions are people, they're made of people.  And so, we've got to empower those bitcoiners, we've got to support them, literally in some cases, give them material.  I mean, I've worked with a lot of people, right?  Our clients and counterparties are institutions; I've gone through this.  You've got someone from a big asset allocator, like a pension or an endowment, and you've got an insurgent bitcoiner trying to get that asset manager to do something with Bitcoin, right?  And maybe oftentimes, it's a middle management.  It's very rare you get a Fidelity where it comes right from the top of the house.  Usually there's some bitcoiners, they're trying to agitate to do something in Bitcoin, and they will reach out. 

I will work with these people and help and give them the information, help them sell it and help provide educational material about what Bitcoin is and why it matters and why it's interesting.  So again, rather than reject out of fear, or because it's not cypherpunk, the BlackRocks of the world, we need to be embracing them and teaching them and showing them the way; because if we don't, there is a risk that the masses will, I can imagine, it could be like an election issue.  It's like, "The year is 2052 and such-and-such is running for President campaigning on hard-forking Bitcoin", but that's possible.

Peter McCormack: No, you're totally right.

Alex Thorn: So, we've got to make sure that those narratives and the truth, the values of Bitcoin are understood and widely propagated.  We need to be more inclusive about it.  The very online toxicity just simply won't do.

Peter McCormack: It might.  Well, hold on.  So, look, these people want access to the underlying asset or an appreciation in the value of the asset.  They understand at least that if I own this, my money might be worth more in the future, right?

Alex Thorn: Right.

Peter McCormack: Cool.  But there's a reason why the underlying asset has value.  And so we have to educate them that you could be destroying the value of the thing that you want, and it's that whole, "I'm new to Bitcoin.  I'm here to fix it".  We've got to avoid all of that, we have to educate.  And someone like Matt Odell, Matt Odell represents to me the best frontline defence of Bitcoin.  Matt Odell is the shield of Bitcoin.  He's my flag bearer.  Matt, I love you, you're a dick to me sometimes, but he's the flag bearer of every issue.  He's always on about the same things, self-custody, self-custody, self-custody.  And so we have to communicate these things across. 

Alex Thorn: I know.

Peter McCormack: Now, I've loved and hated the toxicity all at the same time.  I love the toxic bitcoiners when they are referring and protecting Bitcoin.  They're saying, "Move slowly, don't change things, don't fuck around with it", I love all that.  I detest the whole where it spreads out to non-Bitcoin things.  But I absolutely love them for that and I think they're important.  They're great; I think we need some of those toxic people who are, I don't know, asset manager friendly!

Alex Thorn: Right, no, I totally agree.  I think a better way to correct the way I was saying it was like, we just need some more inclusive attitudes.  So, we shouldn't be changing the passionate defences that we do for Bitcoin, whether that's, like you said, at the protocol level about being very sceptical of changes and proposals and moving very slowly, but we've got to take that content and package it for this new growing group of people, which is going to be traditional asset managers, registered investment advisors.  First of all, they're not going to be on Twitter.  They might find the podcasts eventually, I think they will, a lot of people listen to podcasts as you know.  But we've got to put the content where they are, and it's not on subreddits and it's not on Twitter, and it's certainly not on Threads.

Peter McCormack: Threads!  Have you been on Threads?

Alex Thorn: It's just terrible.

Peter McCormack: I spent about 35 seconds.  I went, "Fuck this".

Alex Thorn: It's like a corporate prison in there.  And there's only the algo feed, right?  So, you're just literally being shown what Instagram wants you to read.

Peter McCormack: Yeah, it's basically all the dumb people on Instagram who look pretty in their pictures, it's them telling you the dumb shit.  It's like, I don't mind seeing your pictures, but I don't want to hear your dumb shit!

Alex Thorn: I mean, that's where Twitter's always had an edge, which is like, there's just interesting thoughts, right?  But yeah, the toxic, which we're using the word toxic here as just a term, I don't mean that it's always toxic, but the extremely passionate Bitcoin defences absolutely have to continue. 

Peter McCormack: Yes. 

Alex Thorn: What I want is for bitcoiners to think about, and not everyone has to do it, someone like me can try to do it, it's what I try to do, is package that up for this new audience so that when the masses join, and Greg Maxwell's quote, they do care, they do understand the decentralisation properties, they don't support waves of hard forks.  To be even more specific, what a lot of bitcoiners are worried about is that if you own the asset, the ETF asset, that you're essentially outsourcing your governance of the network to a big asset manager.  So, then when a new BIP is proposed, you're going to have all the Core devs are going to talk about it and ACK or NACK it.  And then you're going to have BlackRock come in and be like, "We're against it, on behalf of our 20 million Bitcoin owners".  And that is perhaps a risk, it almost certainly will happen at some point.  There'll be an issue that the ETF asset managers will weigh in on.

Peter McCormack: Well, look, the Blocksize Wars were a disagreement between -- would you say it's fair to say the Blocksize Wars was a disagreement between devs and those who had a business interest in how people would use Bitcoin? 

Alex Thorn: I think that's fair, yeah. 

Peter McCormack: And the New York agreement, which the devs didn't go to, was essentially those people who were building out the commercial services.  And you could then see, well, what is the equivalent of that?  It's the asset managers versus the devs. 

Alex Thorn: Totally possible. 

Peter McCormack: And that social consensus with the business interested people, the Erik Voorhees, I'm a fan of Erik, but the Erik Voorhees, the Roger Vers, the various other people involved with that, they had a lot of influence.  And they couldn't get momentum, so they said, "We're going to fork Bitcoin".  Ultimately failed, thank God, but you could see that happen, it could totally happen.

Alex Thorn: Absolutely.  And to be honest, it almost certainly will happen at some point.  That's why we're saying we've got to get our Bitcoin message to these people so that, like Fidelity, which is quite unique in this, I mean having worked there for a lot of that period I can tell you, and you can see it in their content, right?  There are bitcoiners there, there is a Bitcoin culture, It's driven from the top.  Abby Johnson loves Bitcoin.

Peter McCormack: She's amazing.

Alex Thorn: She just loves Bitcoin, right? 

Peter McCormack: Bitcoin and tennis!

Alex Thorn: Yeah, it's amazing.  But not everywhere, obviously, has that culture of a Bitcoin backstory that Fidelity has.  I mean, it's literally built into the culture, right?  It was bitcoiners, not blockchain people, that started the Bitcoin work there.  But we've got to help those people at the BlackRocks and the others be empowered, understand how to take the values and talk about it in a way that resonates with their clients and their leadership and whomever else. 

But a couple of mitigations here, too.  It's probably inevitable that something this will happen, and I hope Bitcoin developers and node runners and miners, I'm pretty confident in the game theory still working and I don't think -- the game theory can't only work between the New York agreement businesses and the devs and miners in the 2016/17 incarnation of Bitcoin, it's going to have to work when the node runners are like Fidelities and BlackRocks, and the game theory is going to have to work at that level too, or it simply won't work well.

Peter McCormack: The game theory was close, man.  There was a time. 

Alex Thorn: I remember, that was dicey, that was a dicey summer. 

Peter McCormack: Yeah, and when you talk to some of the people, the backdoor chats, the threats that people went through, I'm not going to name people, people were telling me they were getting threatened.  They were dicey times.

Alex Thorn: Luckily, it's global.  So, yeah, BlackRock's huge, but there's still a whole other big world out there that probably wouldn't, may not support their proposal, whatever it is.  I don't know that all asset managers would necessarily band together the way most of those businesses did in the New York agreement. 

Peter McCormack: But it's the changing of the guard.  Ten years' time, who are the big voices in Bitcoin who will lead narrative?  Will Jimmy Song be replaced by a CNN financial reporter? 

Alex Thorn: Right, or a BlackRock analyst or something, a Zoltan Pozsar? 

Peter McCormack: Yeah, will this podcast be replaced by Joe Rogan as the voice for it?  Who are those voices who have the influence? 

Alex Thorn: It's a fascinating question because again, if you believe in hyperbitcoinisation, some version of Bitcoin being much more widely adopted, whether it's for digital gold or spending, or whatever it is, there's going to be a ton of other people.  Like, who's the big thought leader in the US dollar, you know what I mean?

Peter McCormack: Paul Krugman!

Alex Thorn: But I mean it's not niche people that helped construct the technology behind it.  When it becomes so much more mainstream, mainstream people are going to be big in Bitcoin.  That is at the core of what Maxwell, I think, is worrying about in 2019 in that post.  And it's inevitable.  Bitcoin can't be successful without facing that problem.  There's a wall of worry Bitcoin must climb.  So, I mean that's why things like What Bitcoin Did, Bitcoin Park, The Bitcoin Commons, PlebLab, the on-the-ground stuff that is explaining, teaching, educating new Bitcoin entrants, that is the army of advocates.  But they've got to go out and understand, in my view, that that institute, that wall of worry must be climbed; there will be institutions in Bitcoin, they're already here, and you're not going to be able to get to that point with Bitcoin just sitting back saying like, "Oh, Bitcoin doesn't care.  It's going to work out".  No, dude, we've got to help them understand why Bitcoin is valuable.

Peter McCormack: And you've got to scale the culture.  This is a really tricky area.  So, one of the things we've struggled with, with this podcast, is that I'm a British guy from Europe, primarily dealing with an American audience.  We speak the same language, but we're culturally very different, okay, we see the world very different.  And every time I'm making something, there is a coercive pressure to perhaps think a little bit more like a conservative or a libertarian in America, whereas we're a little bit more liberal over in Europe. 

Alex Thorn: This is audience capture, right, the concept of, you end up echoing back what your audience wants to hear, not you specifically, but any speaker, influencer, podcaster, yeah.

Peter McCormack: Dude, you feel it, it drags you in.  It's like a gravity and we fight against it.  Me and Danny talk about it regularly.  It's like, "What is our honest, authentic position on this?"  Because Tim Pool is a great example for me.  Tim Pool is somebody who I believe fundamentally gave up all his principles and is completely captured by his audience.  He loves blowing that dog whistle for his audience.  Fine, you go ahead and do that, monetise that.  We constantly find that and say no.  Me and Danny, when he's in Australia, we speak every day for an hour, and we talk these through these things and say, "Are we being authentic; are we being real?"

What I know is the people who are coming to Bitcoin next or now are not people who are sitting there thinking, "Let's bring down the government, we don't need government, all we need is border forces.  We can live in a perfectly voluntary society of free exchange, of free markets".  I totally respect people's positions on that.  Personally I think it's naïve and childish, but I totally respect their position and I think it's a great influence on society.  But that doesn't scale, and we've got to scale --

Alex Thorn: I totally agree.

Peter McCormack: -- the message of Bitcoin's principles and properties and the key pillars, without wrapping it around these kind of far-out, libertarian ideas, because it's not going to wash.

Alex Thorn: I totally agree with that.  And I think it is a neutral, pretty mainstream technology.  It's very capable of being part of a much more scaled mainstream culture, because it's neutral and clean.  Now, some people say it's inherent, like Stephan Livera, who I was a friend to.

Peter McCormack: Yeah, love him.

Alex Thorn: He believes that it is inherently a libertarian technology, that you almost can't be into Bitcoin and not go down that political viewpoint.  I don't know, I think he's not wrong, that is a well-worn path, a lot of people go down that route.  But I don't think it is, I think it's a pretty neutral protocol, and it absolutely has to be for everyone.  Otherwise, we're going to end up with a niche, useful but niche monetary asset and technology that's mainly used by techno-libertarian nerds.  And that's not good enough.  To me Bitcoin is so much more than that.  It'd be a huge shame if it's relegated only to that niche user base. 

Peter McCormack: I like Stefan.  Stefan more than anyone else has introduced me to libertarian ideas.  I think he struggles with my world view, but he's introduced me to these ideas, and I've read a lot of things he's recommended to me.  I can totally see how you paint Bitcoin as a libertarian idea.  But Jason Maier's just written a book called A Progressive's Case for Bitcoin. 

Alex Thorn: I haven't read it yet, but I've heard it's really good. 

Peter McCormack: Fantastic.  And he has explained how Bitcoin is a progressive idea.  And you could write a conservative case for Bitcoin, and what I'm saying is you can see Bitcoin through any lens you want.  But libertarian ideas are principled and brilliant.  I would love more Libertarian influence in government, but it doesn't scale.  By the way there's some people listening now who are fucking furious, they are so angry.  On YouTube they're going, "Fuck you, Pete McCormack, fucking cuck!"  But the truth is that I go out there and talk to these people and I talk to people about libertarian ideas, I talk to them about Bitcoin, I talk to them about CBDCs, I talked about all these ideas.  I know what people are buying or what they're not buying and what they're interested in, and it's baby steps.

Alex Thorn: Yeah, there's this crazy utopianism where some people think that when Bitcoin wins, magically we'll all become farmers and there'll be an agrarian, Jeffersonian-style society where everything is fixed.  And it's just like, that's absolutely insane that you would think that.  And it's weird cult-propaganda to think that.  The reality is that humanity is exceptionally diverse, incredibly urban.  There's never going to be one ideology, I don't believe, that takes over the entire world, okay, so you're not going to win.  So, if you want something to be used by a lot of people because you know it can help them, you've got to make it accessible to a diverse group of people, whether for backgrounds, experiences, geographies and ideologies.

Peter McCormack: The comments of this are going to be hilarious.  I am NOT reading the comments on this one!  I'll be in there fucking replying to people and Danny will message me in the morning like, "Pete, get out the comments, get out the comments!"

Danny Knowles: The amount of times I have to tell him off for shouting in the comments.

Peter McCormack: It's like, "You fucking idiot, don't fucking listen to my show".  Scaling the culture is an important thing. 

Alex Thorn: And this is hard, because it's a global decentralised culture, so it's not like, "Let's get the culture on the phone and get everyone on the same page".

Peter McCormack: Well, that's why the principles are important.  So, you've got it in -- can you bring up Alex's thread again? 

Danny Knowles: Yeah. 

Peter McCormack: You nailed it perfectly.  Honestly, it's a brilliant thread.  We'll put it in the show notes, "What happens when these market access vehicles are successful and bring in millions of new owners with no knowledge of Satoshi, self-custody, decentralisation, or the other attributes that make Bitcoin what it is? Boiling it down further: mainstream adoption, do we want it?"  So, this is actually already happening.  I can give anecdotal evidence, right?  If we were making this show in 2019, and I have Jimmy Song on the podcast, I love Jimmy, it's one of our biggest shows of the month, right?  Now, right now, if we make a bunch of shows this month, if I have Lyn Alden, it's going to be the biggest show of the month, or Michael Saylor is going to be the biggest show of the month, or Luke Gromen is going to be the biggest show of the month. 

But I can get in some random economist and make a show about the macro economy and bitcoiners don't even know them and that's going to do more numbers than Adam Back, who was cited in the whitepaper.  And I'm not discrediting anyone here.  Adam Back is a fucking legend of Bitcoin, I love him.  But the point is, these people coming in now, they don't know who Adam Back is.  When Bitcoin was a small community, everyone knew who Jimmy was, Adam, Saifedean.  When new people come in, they've got no context.  So, they go on Twitter or they go on a podcast and they find who resonates with them and they listen to them. 

It's a really important issue because when this jumps out of being What Bitcoin Did, and Rogan's talking about it every week, and Logan Paul's talking about it every week, who are they going to have on talking about Bitcoin?  Are they going to have Kanye on talking about Bitcoin?  Are they going to have, I don't know, some fucking idiot who we've all rejected?  And where do those conversations go; and what do people learn?  So, this scaling of the cultures is so damn important, but it's got to be done in a way that's, like you said, it's got to be accessible. 

Alex Thorn: Yeah, it's got to be inclusive too.  It's got to be something that everyone feels they can find a piece of to get, and get through that introduction to those core values.  I don't know, you're going to see people talking about Bitcoin you've never heard of, it's going to happen.  And what I worry about a lot too, is we go through these cultural shifts in Bitcoin, right?  We talk about the Blocksize Wars.  We all went through a very online period during COVID with Clubhouse.  I started the Bitcoin Clubhouse, which has 500,000 members.  I think that's more monthly active users than the entire app has now.  But we were all just like, you couldn't go out, right?  And then so the podcasting got huge.  I bet you guys did huge numbers during COVID, right? 

Peter McCormack: Crushed it, man.

Alex Thorn: I've been a fan of Marty and Matt, but I went down an insane TFTC rabbit hole.  I went back and listened to 100 episodes, again because you're just at home.  But I think even then, people got a little crazy, and that's when you started to see a lot of new entrants, rightly so, because you had the COVID crash and then you had Paul Tudor Jones and then you had the halving and then you had a massive run.  And so tons of new bitcoiners got involved in 2020 and 2021, and everyone was a little stir crazy, a little wild. 

My friend Dennis Pourteaux calls this that you have, "The zealotry of the convert", and this is true in religion as well.  You have the newer sects of religions that tend to be much more radical, because it's like you're showing up late to the party and you've got to prove your bona fides.  They've just shown up, they're all about the current thing, the current culture, they don't know those history, they don't know the OGs, they don't know the reasons why the things are the way they are today.  And that's who ends up educating a lot of the next new people, rather than people with a deeper perspective and a longer view.  So, that's what we're doing, that's what we're all trying to do.

Peter McCormack: Well, that's why it'd be important to have your Marty Bents and your Stephan Liveras and your Matt Odell constantly at the forefront, those educators who are far better at maintaining their principles than I have ever been, and I'm happy to admit that.  We make a mainstream show and we're cool about that.  We want the show to be a nice entry point.  But we talked about it last night.  The people who've listened to our show and then end up complaining, take the baton and go and listen to Stephan, or just go straightaway.  Those people are going to maintain those core principles better than anyone and God help us if we lose them; God help us if they get buried by fucking Jake Paul talking about Bitcoin.

Alex Thorn: Yeah, it could happen, it's going to be weird, man.  I mean, we don't know.  I was like, my alarm bells are going off, not for those same reasons that people were worried about BlackRock fork choice rules and stuff that, but it was this, it was the scaling of the culture question.  And we don't know.  I mean, let's hope some of the strong, principled Bitcoin voices make it through to the other side when Bitcoin is widely adopted.

Peter McCormack: It might be Danny Knowles.

Danny Knowles: I hope not!

Peter McCormack: You might be the forefront.

Alex Thorn: The US Treasury Secretary is going to be the biggest fucking, you know, whoever!  Let's get Danny to be His Majesty's Treasurer in 30 years when Bitcoin is widely adopted. 

Peter McCormack: Dude, that stuff's viable and it could get fucking weird.

Alex Thorn: Yes!

Peter McCormack: Can you imagine the next Treasury Secretary being a bitcoiner? 

Alex Thorn: Dude, absolutely.  Again, it may not be inevitable but if Bitcoin is going to be successful like many people believe, this is the exact type of stuff.  It could be in presidential campaign issues. 

Peter McCormack: Well, it is a presidential campaign issue now.

Alex Thorn: Right, that's true. 

Peter McCormack: Vivek, RFK, DeSantis have all put Bitcoin on the ballot.

Alex Thorn: They've all commented on it, yeah.

Peter McCormack: They've all put Bitcoin on the ballot, and so they're nominees now, the next generation.  But if the BlackRock thing is huge, which we think it will be, with Vanguard investing in every mining company out, if it does what we think it might do over the next few years, whoever replaces Jay Powell will have to know and understand Bitcoin.

Alex Thorn: Absolutely!  It's crazy, but you're 100% right.  I mean, the central banks of the world, the big banks of the world, the treasuries of the world.  If Bitcoin is mega-successful, it's going to be a major part of the economy they'll have to reckon with.  And I think that's what most bitcoiners want.  It's just I feel like there's a blind spot where they think it's going to happen solely through Raspberry Pi full nodes and regular users DCAing.  No, dude, the big boys are going to be in.  If it's that successful, there's going to be big, big players involved, and that's where it's going to get weird.

Peter McCormack: Let me tell you what I hope and where this goes, and this is one of the reasons I like a BlackRock coming in, because if Bitcoin then ends up shooting through $100,000, $200,000, everybody is going to be talking about it.  I know it through every bull run, right.  All my friends, everyone in Bedford knows I'm the Bitcoin guy.  I hear from them once every four years.  Bitcoin was $40,000, $50,000 last time and $17,000 the previous time, they're like, "Pete, am I too late, should I get Bitcoin" etc, and it's always the same.

Alex Thorn: I know.

Peter McCormack: And the same is going to happen again.  But the next wave is going to be everyone, everyone asking about it.  And if everyone gets on board and I'll be saying to them, "By the way, the more important thing is for you to learn about Bitcoin than buy it"; but anyway, if every fucker gets on board, I think this might end up killing the CBDC dream, the CBDC wet dream that the BIS had that we discussed with Marty the other day, or all these other central banks have.  And then, that's where you beat China, because we know this is fucking dystopian technology, we know it's horrific, we know we don't want it and we talked, me and Danny talked about it for a long time, Marty and Balaji talked about it, that you cannot beat China at CBDCs.  They're better at surveillance, they're better at control.  But you can beat them at freedom tech.

Alex Thorn: Totally agree with that.

Peter McCormack: And if the US leads the way, the rest of the world will follow. 

Alex Thorn: I think whether it is literally on a CBDC, or if it's Bitcoin as the counterweight, yeah, the way to compete with China is not to do what China's doing, it's to offer an alternative.  Even if you were going to do a Fed CBDC, make it private and secure and make it directly competitive.  Nobody wants massive renminbi liability to the Chinese Communist Party; that's crazy.  If you give somebody a better global money that they can rest assured is secure, they would choose that every time.

Peter McCormack: And look, America has historically loved going around the world and trying to spread democracy by dropping bombs on people and it hasn't really worked.

Alex Thorn: Yeah, let's do it without the bombs and let's drop some Opendimes.

Peter McCormack: Yeah, drop some Opendimes, drop some sats, just give people freedom money and I think that will drive the world that we all want to see, which is a more democratic, fair, open and free society.  And look, we criticise utopian thinking and I have utopian thinking, but we're in this weird fourth turning phase, right?  We have war in Europe right now.  War can spread quick and fast.  And God, I never thought we would see a large-scale war in my time, and I'm at that point as a father thinking it's a non-zero possibility.  And so let's get freedom money out there and hopefully, that can be a tool that stops all this.  And it is very utopian thinking, I just fucking hope it happens.

Alex Thorn: No, I mean you should strive to build a better world, I don't think that that is too utopian.  It's when you think though that all the world's ills will be solved.  But I agree, it's a scary time, I think it's a multipolar time.  The dollar is clearly not going to be the only big reserve currency, we're probably going to have some kind of multipolar situation, like China and Russia and India, all pretty ascendant in various ways, like literally war in Europe, right?  And I was thinking, I look at this war and I'm looking at World War I and I'm like, "It's just a couple of straws to break the camel's back on those alliances that turned that small incident into the global world war".  And I'm worried about that too, I think it's reasonable to be worried about it, and I do think cryptographic security, cryptographic money, Bitcoin, decentralised, self-sovereign money that's global, that's a powerful, I think counterbalance to some of the authoritarian or even just empire building that you see in the world.

Peter McCormack: All right.  Well, listen, Larry, if you're listening, don't fuck this up.  Maintain these principles of decentralisation and you might stop World War III!  Alex, I cannot believe we haven't done this before, this is fucking brilliant. 

Alex Thorn: Hey, thank you so much, Pete, for having me.  Danny, appreciate it.  I'm a big fan of the pod. 

Peter McCormack: Well, we will do it again soon.  Again, thanks to everyone at Galaxy.  Thank you to Amanda Fabiano, Sebastian, to Novo, to everyone there supporting what we're doing.  I will write a rap for the next one and I will humiliate myself as long as Danny does one too!

Danny Knowles: I am not rapping!

Alex Thorn: When you're in New York, you've got to come on Galaxy Brains, dude, we'll do the rap there, we'll swap raps.

Peter McCormack: Dude, I will come on Galaxy Brains, we will go and hang out with Thomas at Pubkey --

Alex Thorn: Yes, absolutely, love it.

Peter McCormack: -- and grab a beer.  Love it, man.  Where do you want people to go?

Alex Thorn: Check out our content, galaxy.com/research, follow me on Twitter @intangiblecoins, and yeah, I mean I would say that's the gist of it, we've got a lot of stuff. 

Peter McCormack: Thank you so much.  I loved this.

Alex Thorn: Thank you, Pete.