Is Bitcoin Going According to Plan? Gold, Saylor, Satoshi

Transcript

Bankless Nation. I'm here with Dan Held. Dan is probably one of the most OG Bitcoiners that we've had on the show in the past. Dan, welcome back to Bankless. >> Thanks for having me. >> I just kind of want to have a a pretty broad zoomed out discussion. Dan, you and I have been both in crypto Twitter. You're in Bitcoin Twitter. I'm in Ethereum Twitter, whatever, for it feels like a decade now. It kind of is approaching a decade, at least for me. I think you got into Bitcoin before before I came into crypto. I mean, crypto is kind of like dog years, right? Like every year that passes is like seven years. So, we've been in the space for effectively about hundred years, you know, >> right? That's certainly how it feels.

Uh, and so I kind of just want to ask ask you like if we go back and put ourselves in the shoes of our younger selves like the the 2018s, the 2020 era, is Bitcoin going according to plan is kind of the broad premise I want to investigate in this episode. So, I I'll ask that question to you. >> Yeah. And you know, the reason why I said yes to this is I think it's a pretty fun one. Uh both from my perspective as a kind of a Bitcoin maxi who's been in the space for 15 years and also I'd be curious to get your side of this. But um I think let me let me kind of zoom back all the way to the beginning because uh I got in in 2011, started purchasing in 2012, but I created my Mount Gox Mount Gox account

in December 2011. Um, back then, Bitcoin is a very rebellious anti-government sort of mechanism, right? You had people were who were into Silk Road, uh, peer-to-peer file sharing, so torrenting, um, those sort of and, you know, online gambling. The origins of Bitcoin came from a pretty, I would say, rugged place. It wasn't, uh, this wasn't clean nice institutionalized anything like that. So Bitcoin's core ethos I used to joke is, you know, 3D printed guns, drugs, and Bitcoin. You know, that that's what it originally was. You know, it came from the cipher punk extropian communities which were very libertarian meaning. Um what's interesting about that is, you know, both that was the

cultural values around the Bitcoin code itself, right? So you've got the code of Bitcoin which represents what Bitcoin is. I mean, it's essentially just the code that runs, right, across every Bitcoin node and that's what we all agree upon is the Bitcoin network. that is what Bitcoin is. Then there's the community and culture around it. So that's the old culture. Um today the culture is much more institutionalized. You have Bitcoin and ETFs. You've got top investment banks. You've got um you know Fed chairmans. You have presidents talking about Bitcoin. You have them referencing it in a positive and negative manner. You know Bitcoin has largely been institutionalized. And so I think there's a lot of hand ringing around the idea that Bitcoin has been captured, that the original Bitcoin

cultural ethos has changed. I do think that's true. So, you know, I'm not going to deny that Bitcoin's cultural ethos has changed a bit. Um, I think a lot of people view it as just another asset in their portfolio rather than truly understanding it. But that's not necessarily a bad thing. People buy a lot of assets that don't really understand them. people buy gold or the S&P 500, you know, with the S&P 500, I often joke, can you tell me one of the quarterly earnings of any company, the S&P 500? Most people can't, >> but that's fine. Um, you know, so Bitcoin in terms of the obfuscation of understanding how it works culturally, of course, I wish everyone understood how it works and would keep all their Bitcoin on a treasure or ledger, but that's just not how mainstream adoption

works. Now, when it comes to Bitcoin's core code, because that's ultimately representative of what Bitcoin is, you know, did we see institutions have any sort of capture of how Bitcoin's core code functions or do they push any changes that were implemented? And we don't see any of those. So, from Bitcoin's code perspective, it didn't bend the knee. The institutions bent the knee to bring Bitcoin into it. So, I don't think Bitcoin has compromised on its core code values, but the community certainly has changed. And as an OG, I don't mind that. I think this is how institutionalized and mainstream adoption works. I'm a a weird libertarian guy who studied finance

during the 2008 financial crisis, got radicalized from that, grew up in Texas, I own seven guns. I'm not a normal person. This is this is not normal person behavior. I'm a I'm a weird libertarian, you know, formerly gold bug, got into Bitcoin. >> So, I don't expect everyone to have my same cultural values. So, you know, Bitcoin's culture has certainly changed, >> but that doesn't mean that Bitcoin itself has changed at all. And certainly, we would have seen that in the code. >> Yeah. And and I think the purpose or the point of the question like is Bitcoin going according to plan is not really to answer like yes or no, but it's more to like understand the nature of the question itself, I think. And a little bit what I was thinking about hearing

you you talk just now is like the the measuring stick of what success is is really important. And >> you know we could just like talk naively. It's like oh it's the price of Bitcoin. Like that's the measure of success. And to some to some degree that's true and I kind of enjoy that the fact that that's true. Um, but I also I was I was thinking about um Burning Man as an example where if you talk to people who go to who went to Burning Man in like the 90s and the 2010 like the early 2000s, they look at Burning Man today and be like like we've lost the plot. What are we doing here? These influencers are everywhere. Like we have Starlings. Like the ethos and spirit of Bernie man is gone. It's it's failed.

But then you look at Bernie man, it's like there's a 80,000 people there and it's it's growing in energy and it's shifted and and this is all always what revolutions do I think like revolutions moderate as they grow up. And so I don't I don't want to like say that like oh the fact that like we are all looking at Michael Sailor and the Bitcoin ETS and we've like lost the plot of not your keys not your Bitcoin. I don't think that's a fair measuring stick, but I also don't want to lose sight of that either. And I have a hard time doing both. I don't know if you have if you have any reflections on that.

>> Yeah, this is a I think this is I I think what you're referencing is what are the KPIs that we would have initially set up to determine and KPIs for those who don't understand what that means. It's a tech term to stand for key performance indicators. What KPIs would we have set up to represent the success of the Bitcoin network? Now, having done this both at Kraken, Uber, and since leaving Kraken, I've had 15 fractional CMO clients. So, like I've had to do this OKR KPI process more times than almost probably anyone my age. >> Um, setting proper KPIs is really difficult, right? It's not just measuring every single metric we could, right? because it could be hardware wallet ownership, it could be a private

key management like how many people are self-custodying their assets. >> Usually what we try to do when we create KPIs is we try to distill them down to the really core key metrics that represent success. That's why it's called e- performance indicator. It's not a measurement of all metrics. I would say first and foremost a nice compression of all of those metrics together is Bitcoin's price because the price represents the aggregate belief that it is a new digital gold or sound money. So the price is a one-way hash function of all of the collective belief in it and that's what the price represents. So that I think is the number one KPI because price also loops into everything else. It's adoption,

it's liquidity, it's resilience, it's narrative, it's all these things combined. So price first and foremost would be probably the top KPI. Um from there, you know, obviously self-custody is a hugely important issue. Um, so self- custody would be how many people manage their own private key whether that be you have a dedicated hardware wallet which would be ideal or other setup. Um, which there's a pretty low percentage and it's not too unsurprising. I mean I've managed my own private key for 15 years and honestly it's it's pretty stressful.

>> Um, you know I don't have a multi-IG setup. I do single key because you know the two out of three has its own issues but I don't I don't want to go down that rabbit hole. um you know private key management I would say liquidity is also a function of price now how deep is the market like the price could be high but there's no liquidity um and you know if you look across those KPIs you know even with private key management like self-custody we've seen that improve but as a percentage of total hodlers it's still lower than what I'd want um you know from there it gets a little fuzzier right like if you measure changes to Bitcoin's core code um you know that would be a function of it's really subjective like you don't want to be like oh we should change it all the time

but certainly it needs to improve. So that's a really fuzzy one. I'm not sure how we exactly measure that. >> Um but yeah that's kind of my initial foray into how would we measure success >> would be probably price is the simplest answer just because it reflects everything else combined. >> Markets don't move one asset at a time. One day it's Bitcoin, the next Nvidia, then gold and then the S&P. But most traders are still managing their portfolio across different platforms, different accounts, and different pools of capital. Bit just changed that. Their new stocks 2.0 product lets you trade tokenized equities directly with USDT, all inside the same app you already use for crypto. This is not just another tokenized stock product. Stocks 2.0 is designed around deeper liquidity, faster execution, and the lowest fees on the market at just 004% and onetoone

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I've been following him for years, and this year we started recording weekly podcast episodes. Each one, we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than most. So, let's do it together. Go subscribe to this podcast. Search the DeFi Report wherever you get your podcast. YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you. Now, I I think a lot of people who come into crypto on the earlier side of things, like the pre20201, you have to have come in it for like the ideology like it's it's you're not just there for the money like the you were

crazy to be there before 2020. And that's because you were like ideologically motivated like or like some emotional motivation to like be in the crypto space either in Bitcoin or Ethereum. And I I think a lot of it was like you cited your uh um radicalization because of 2008 2008. And so I think a lot of early Bitcoiners and like people like for me believing in Ethereum it's like I I want to change culture like I want to change the world. And now we have this like financial tool to do that. And like what what more powerful of a tool to change culture and change change the world than with money and finance. And I think that's kind of like the me a potential measuring stick. And one an old article that I really like

from Nick Carter, he wrote about um how how Bitcoin uh is a peaceful revolution, right? like you're just demonetizing the nation state's ability to engage in in warfare or like that that was like one angle or another angle is like h it's just like a check on power of of central governments like inflating their currencies. I don't know if we've been impactful on those fronts and I know it's early like Bitcoin is 15 16 years old so it's early to say that like yo we're like Bitcoin is going to defund violence but still I don't know if I don't know if there's any hints of success on those like big macroscopic ideas that we once had as an industry.

Look, we memes. When I first got into Bitcoin, it was largely associated with drugs and money laundering, right? This is early early days. I mean, I even went on a date in San Francisco and she said, "Are you a drug dealer?" when she asked what I did. >> So, like, >> Bitcoin's improved somewhat from there. >> Sure. >> Now, it's largely perceived as a speculative asset, I would say. Which is still a pretty negative connotation rather than a positive one and it's like freedom money. Um, you know, culture-wise, like we me'd Bitcoin, which is a [ __ ] randomass magic internet money, largely perceived as dirty and filthy and [ __ ] We memed that into what was a tiny obscure community. I mean, in San Francisco, you

know, I went to the Bitcoin meetups there in early 2013. It was just Brian and Fred from Coinbase, Charlie Lee, Jed Maleb, Jesse Powell, Jared Kenna who hosted it at 20 Mission. I mean, there was a dozen of us in a cooler full of PBRs. Like, from that into the president is talking about it and there's a bill in Congress and Goldman, JP Morgan are all like, "Yeah, this is legitimate." And same with the Fed. I mean, I think we me'd it existence where people believe it's digital gold. For me, since that was my original thesis, I think we largely succeeded. Um, you know, does the everyday person see it that way? You

know, I think market, last time I checked the surveys around market penetration in terms of what percentage of the US owns Bitcoin, I think it's under 10%, but I I might be making numbers up, but I'm pretty sure it's like 5 to 10%. >> Mhm. >> That's not bad. I mean we convinced what is the population of the US like 400 million you know we convinced 40 million people to buy Bitcoin >> just numbers globally might be bigger from obscurity of this crazy magic internet money into being semi-relevant I I consider that a from a marketing standpoint that's a huge success 15 years people don't wake up and and wonder should I shake my core foundations of understanding what money

is like that's You wake up and you wonder if you should buy uh Chick-fil-A or Burger King. You don't want to wake up and be like, "Let me question the nature of reality. Both my God, family, and purpose in life." You don't want to go down that rabbit hole. You know, so the fact that 40 million people in the US alone, let's say the 10% number is true. 40 million people woke up and decided to go down the rabbit hole of questioning the nature of the reality so core to them like what is money? I think that's success. Uh but yeah, you know, it's still a battle to be won. I I think this is a gener, you know, I realized a long time ago that this is going to be a generational thing. I don't think the boomers, most boomers, I think, are are

kind of too far gone. They're too set in their ways. And so, as the famous quote goes, "Science progresses at the death of every scientist." You know, I think like Bitcoin adoption will >> Oh, my my I I understand that quote slightly differently. that my the quote that I have in my head is um uh science progress one grave at a time. >> Same same I think. >> Same same. Yeah. Basically, >> we need the old people to die so the new people can take over. >> But that's not a revolution. That's just time passing. >> Well, I guess every invention before though had the same same effect. you know, after going through this myself with Bitcoin >> and then uh you know, uh six years ago, I invested in SpaceX, which had a lot of similar I I would say like very like a

lot of intense feelings in a negative manner towards the concept. Um after going through this experience myself, I I really have this empathy for every single inventor or artist before us. Like can you imagine most people were never recognized for their contributions, whether it be science or art, until after they died. Imagine living a whole life like this. At least we were validated that we were right. But imagine living a whole life and everyone is just ridiculing you all the time. Like it's like Bitcoin and ETH being at super low prices your entire life, >> right? Yeah.

>> You know, at least we had moments where like we definitely had our victory laps where everyone who was a critic was coming back and saying, "Hey, you guys were right." >> So, yeah. I and again like I said I I I have deep sympathy for every inventor or critical thinker or contrarian thinker before us. >> Yeah. What do you think about uh Michael Sailor's influence or just role in in Bitcoin? Like I I think it's pretty easy to say like obviously he's been good for it if our measuring stick is price because he bought $60 billion. He just piled $60 billion into Bitcoin. So how is that not good? Uh but there's also there's definitely a double-edged sword and we can talk about that. What what do you think just overall about like Michael Sailor and his relationship to

Bitcoin? >> Yeah, first and foremost, I think he's play played a really good critical role in advocating for Bitcoin. Um I've had a lot of time I've spent with him at his uh his place in Miami. We've gone out to dinner quite a few times. Um you know I there's some funny things as well where you know his proof of work he has whole energy memes. you know, he's mentioned before that like, oh, you know, a lot of what I learned about Bitcoin is from Dan. So, I've seen some weird after effects of like I think his his take on energy is a little too uh >> a little bit esoteric, let's put it that way.

>> And so, you know, whereas I feel like mine was a bit esoteric, but more for a easy concept for people to digest, but I didn't go a little I didn't go as crazy with the energy meme. I think he's taken some narratives and I think gotten a little too esoteric with them. Um, so overall I think he's a net positive. At the same time, you know, he is advocating ultimately he represents Micro Strategy and so at the end of the day he's sort of not recommending but advocating for Micro Strategy and as a you know I never got involved in any of the DATs. I got offered to be CEO of three of them.

>> Actually, no, I think it's four of them. Um, you know, I could have participated in them like buying it early. I didn't do that either. You call me oldfashioned, but if you want to buy Bitcoin, just buy Bitcoin. And I think a lot of people had this whole concept around like, oh, well, what if we get like a leverage play on Bitcoin and whatnot? You know, I don't think that I think Stretch and Micro Strategy I don't think were represented in the, you know, most accurate way possible. I don't think there was malicious intent behind it, but you know, ult. So, TLDDR, I'm kind of waxing poetically here. TLDDR, I think, isn't that positive for Bitcoin.

>> However, I would not have recommended Bitcoiners buy Micro Strategy or Stretch or any of those products. >> Yeah, my my concern is about the role of DATs and the success of DATs is just like the centralization of the supply. Like if you if you tell me like okay what if strategy owned half a percent of Bitcoin be like that's great 1% of Bitcoin that's great 2% of Bitcoin I was like wow that's a lot of Bitcoin it's not 4% of Bitcoin dude and at some point like we just like as a thought experiment like what if strategy owned 50% half of the Bitcoin supply I'd be like that's too much that's bad that's a bad thing and I bet you price can't really move too much if one entity owns

50%. Now we're we're at 4% so very far off but still like it starts to be a little worrisome that there's just this like one dude like the the whole like metaf law in interpretation of like networks depends on the Bitcoin supply being diffuse and so I I do kind of worry like at what point is there just like too much attention not like there's no risk to to Bitcoin because Bitcoin code doesn't care about Michael strategy so like whatever But just like the attention and the branding see can be like captured a little bit and that kind of worries me. What do you think about that?

>> Yeah, I don't think you're wrong that there could be a narrative that would impact price around concentration risk being like oh this people just inherently believe more concentration means wealth inequality censorships centralization. Um, so you're not wrong narrative-wise. As you mentioned before though, the Bitcoin code doesn't really care, right? Like Bitcoin's proofof work function isn't a proof ofstake function. Think in a proof ofstake protocol that'd be very worrisome. Um, in a proof of work work protocol, it's a little less worrisome. Granted, with someone with that much capital, they could also buy a lot of miners. But, you know, proof of work basically functions. You you have all this capex, you buy these machines, and the only thing these machines can do is print money, which is Bitcoin. So if you

buy too many of them and then people perceive the network as being centralized, you would and then you act in a bad manner like doing 51% attacks, you would essentially destroy the machines that print the money and you've already spent upfront capital. Proof of work is provably burning capital to purchase machines up up front. And so you anyways, even if they had a concentration of the miners, uh they would have to be willing to burn the money and be willing to destroy their all their invested capital. uh if they wanted to manipulate the network in their favor.

>> Yeah. >> Yeah. I don't really I don't really think it's it's a technical thing though. It's more of like a it's a it's back to just like it's a it's a sociological thing and it's kind of similar in the sense that um you know the United States has really planted their flag on Bitcoin and cryptos like Bitcoin is we have a strategic asset reserve strategic Bitcoin reserve and like Donald Trump wants to make crypto the capital of of the of the world crypto capital of the world. And I see like, well, China doesn't give a [ __ ] about Bitcoin. What's China buying? But gold. And so there's like a branding. It's like it's not as credibly neutral.

It's not as like permissionless and balanced and harmonious across the globe as it once was. And so it's kind of the same thing with the United States planting of the flag. Like Bitcoin is just US coded, which works for me. I'm in the US. Bitcoin is also kind of Michael Sailor coded. And that's kind of like that's part where I go back. That wasn't the plan. That was not the plan. What do you think about that? >> Yeah. I mean, first I'm actually quite surprised that China and other like Russia and China didn't try to buy as much Bitcoin as they could, >> right? >> I mean, Russia right now is dealing with the consequences of that. With the Ukraine war, they've had a lot of their assets frozen.

>> So, the fact that they didn't perceive Bitcoin as kind of a safe store of value is quite bizarre. Um, especially with how fluid they could pay their partners with it. You know, I'm not exactly sure why adoption didn't occur there. Granted, you know, Bitcoin is pseudony anonymous, so we don't know exactly how much the Russian government could own and they could make a very concentrated effort to keep it semi-privateish and just, you know, have it in a bunch of different wallets and distribute it in a way where we wouldn't know true ownership. But yeah, I mean, I for me, Bitcoin is a incredibly neutral asset.

There is a potential negative narrative being associated with both the United States and a certain party. I think the party is more troublesome than the United States being associated with it. The United States has the largest gold reserves in the world. So much so that it's larger than I believe um I believe it's larger than every other gold reserve combined, but it's huge. So the US has the largest gold reserves out there. Um just because the US believes in gold doesn't make gold any less valuable. And also the US is perceived as still the world reserve asset. Uh the dollar is perceived as the world reserve asset. So them adopting Bitcoin I think is a positive. I think it being Republican um you know I'm libertarian so I dislike both parties equally.

>> But um I think that could be a negative narrative here in two years or when Trump would come. Yeah. About two years from now. >> Two years. Yeah. you know, that that could come back to where especially since Trump and I find this very distasteful where he, you know, leaned into largely pump and dump schemes like Trump >> and all sorts of stuff where I'm like, you know, man, all you had to do is just be a little classy about it. You could have set up >> that's asking too much >> partnerships, a venture firm, you get a preferred terms, you get all sorts of different deals. you could have made your billions in a nice ethical clean way and instead it's just really grimy with how he did it. So I think that's going to really come back and buy this.

There's probably going to be some investigations after it comes out after he leaves office. >> Um so yeah, TLDDR we can't really control how Bitcoin gets adopted like who who adopts it, where who buys it. So I I think the US associ association is okay. Trump, not so much. When it comes down to concentration and to answer your first question, concentration and the narratives around that, I think 4%'s fine. I mean, it's pretty hard to accumulate a 4% position. It's taken them years of constant buying. So, I'm not too worried about that. Even if it gets to 10%. I still think set 10% in most people's minds would sound low. You know, 40% I agree with you. At those

numbers, it just sounds bad. So theoretically, yes, I agree. Can you know practically someone has been trying to do this? I don't know when he began. Was it five, five, six years ago? >> It was right around COVID. It's right around CO. Yeah. So five years. Yeah. >> Yeah. So he's it's taking him a long time to get to 4%. >> Yeah. It doesn't seem like he's going to be buying a lot of Bitcoin in the short term either. That's on pause >> with the uh with the trading below par. Not par. They're not really a par in that stretch, but trading below the $100 sort of target price, >> I don't think is a good omen.

>> Yeah. Yeah. Yeah. Uh I I want to ask about scaling in Bitcoin. Uh Lightning Network, I don't know what's up with that, but I don't see it anywhere on my feeds at all. Has like Bitcoin kind of just like become indifferent to scaling? >> Yeah, that's a great question. I think it's this one. I'd like to go back to the the block size wars. Basically, for those who aren't familiar, there's Bitcoin and Bitcoin Cash, Civil War, Bitcoin broke in half. Essentially, in terms of cultural community values, the small blockers, which was myself and basically what Bitcoin is today, we believe that you can't scale Bitcoin completely on the layer one. So, you have to scale it in layers. So, you have to build these other layers that eventually net settle on the Bitcoin base layer. for for those who don't know

what we're talking about here. Um, for the L2s, basically the community made a promise that we would push all this economic activity to L2s and that we would foster a healthy L2 to L1 relationship. I do think Bitcoin, the Bitcoin community has failed in that regard. We could have implemented things like opcat or other very basic scripting functions in the Bitcoin base layer that would enable trustless L2s. Most of Bitcoin L2s have different security assumptions that basically make the process of of of using your Bitcoin on an L2 less secure than Bitcoin's L1. And we could have made it almost

equivalently secure. So I do think that that is a promise that was made back then in the block size wars that we have not fulfilled. And so um I would say that's a big miss because we could have had a and I think the the rise of different other smart contract platforms like Ethereum, Salana and others represent that missed opportunity. I think that the lack thereof of really you know capable L2s that are anchored really well into Bitcoin's L1. I think because we haven't made those changes happen in the community. I do think like I said those those protocols represent that missed opportunity.

>> Interesting. interesting. Um, how do you think what what could have what could have that looked like if like say if um some of the things that you talked about like OPCAT and some of the other technical things actually worked out, what would Bitcoin look like? >> Yeah, it's a good question. It's all hypothetical, right? Can't really what would have happened. But, you know, if you have trustless bridging, which means you can take your Bitcoin from an L1 and bring it to an L2 and you don't have to trust the bridge, that changes a lot of things. I feel like that security would change a lot of user behavior around when they operate with this L2 if they trust they wouldn't have to trust it as much. Um there's of course zero day exploits and other functions with an L2 that you need to be aware of. You know,

protocol risk. You know, I was saying this 5 years ago, you know, just because it's DeFi doesn't reduce its risk. A lot of people were marketing DeFi as, "Yeah, I've reduced my counterparty risk to zero." Like, yeah, you did, but you also >> Yeah, your counterparty risk. Yeah. >> Yeah. >> Which isn't a bad or good thing. it just you just need to be aware of it, right? >> So, I think that um you know with with Bitcoin L2s I think it would have captured a lot of that DeFi demand. Bitcoin's L1 basically that the community is like, well, look, we're not going to do all the fancy cool stuff that Ethereum and Salana can do on the L1. And so, you know, we didn't have really robust L2s. And so, I think that, you know, we would have seen Bitcoin's market share in terms of like market

Bitcoin dominance metric. I think we would have seen that higher. I think we would have seen Bitcoin absorb a lot of those positive narratives that Ethereum and Solana got around DeFi, smart contracts, you know, that could have floated to Bitcoin, which would I think would have been value accreative to the store of value narrative like a use a more useful store of value or a you know a digital gold that's more um you know more productive. You know, those narratives I think would have amplified the digital gold. It wouldn't have been distracting from it. So yeah, I think that it was definitely a missed opportunity and and that's where I think the market capitalizations of both Slana and Ethereum represent that missed opportunity. Granted, those protocols

are still a very small percentage of Bitcoin's market cap. So how much of an opportunity do we miss? I'm not sure. But I do think DeFi is the future. Like seeing Ethereum DeFi summer was interesting. Like as a Bitcoin maxi, I still appreciate it and and spent a lot of time exploring why Ethereum DeFi summer occurred and because a users want it, b there's a lot of very basic primitive financial um types of financial transactions that people want. Lending, borrowing, you know, staking, lending, um you know, different types of uh you do smart other smart contracts or options, derivatives, these are all productive things. Um, you know, there

there's a whole host of like do we need millions of tokens? I don't think so. I don't think uh that's exactly useful. But taking an asset like digital gold and being able to borrow against it in a trustless manner, there's a massive amount of demand for that. >> Being able to lend it out in a way that's semi-rustless, um, you know, I think is useful. >> What about privacy? I I I can't actually remember if Bitcoin had like a commitment to privacy in its culture. I don't think it did. But nonetheless, privacy has always been interesting to Bitcoiners. Uh what what is kind of like the idea the relationship that Bitcoin and Bitcoiners believe about privacy with regards to the Bitcoin protocol?

>> Yeah, that's a good question because the early community the word cash actually means that. So when the Bitcoin white paper was written, Satoshi wrote it for the cipher punks >> which are on the bit the cryptographer mailing list. >> The cipher punks don't use the word cash to mean everyday transactions. That's a huge misconception. >> Interesting. I've never realized that. That's that's crazy. >> Yeah, cuz you know like you had like ecash hash like what why are they using this word cash? >> Right. >> It means a couple different things. It means a one-way function. That means once I make a payment, it can't be reversed. So it's irreversible. That's what a cash transaction is like. If I pay you cash for your plant in the background, >> Yeah.

>> can't ask for that back unless you want to give it back. >> Yeah. >> So it means it's it's irreversible and usually means that it's private >> between the two parties. Yeah. >> Yeah. That was a big component the cipher punks really cared about. Now Bitcoin is pseudonymous. We don't know which Bitcoin address who owns which address. But if we ever dean anonymize if you've owned an address, >> Yeah. Then we can trace through the blockchain and probably figure out some of your ownership. But it is still difficult. It's not easy and you can do coin joins, you can do all sorts of other offiscation, you know, lightning which is a bitcoin l you know that channel activity is largely anonymous.

Um but for the cipher punks and satoshi that was actually a critical component with the idea that bitcoin would be semi semi-private or fully private. That's what the word cash means. Not cash in your pocket, not not pay for everyday stuff. Now, Satoshi of course does reference merchants and paying for things, but the word cash does not represent that because he's writing this to the cipher punks. Um, the privacy issue though very early on, you know, Satoshi in his writing both on the forums, the peer-to-peer foundation forums rather than Bitcoin talk forums, but also there, you know, he mentions that privacy is a good thing. They want to explore adding more privacy. He talks about ZK. Um, you know, Satoshi also had a lot of mistakes that he made with

Bitcoin. People forget that, too. And there's a there's actually a few things that I would consider Satoshi actually missed on significantly. Um, one would be the units. Why 21 million versus 21 billion? I think he was quite bearish. So, he said, >> why 21? I actually never figured out why 21. >> Supposedly, that's like a computer science thing. The 21 just makes it easier from like some sort of like floating point number or something like that. little beyond my uh my my plebian marketing understanding of tech. >> Okay. >> So the 21 is like I guess a more elegant way to do it. But 21 million versus 21 million versus 21 trillion. I think he wanted to break the dollar parody sooner and he this is an experiment. He didn't know if it was going to work.

>> Right. Right. >> I think he was a little too bearish. And that unit bias problem I do think is an issue. >> Oh wow. I that's that's novel to me. >> Right. Like so >> Bitcoin is just too expensive. >> Yeah. Everyone thinks Bitcoin's too expensive. So, I think Satoshi did make a mistake on that where he put the decimal. >> You think Bitcoin should be like $65? >> Yeah. I mean, it probably would have got a more adoption, but maybe it wouldn't have. We don't know. We can't replay time. >> Yeah. >> And then he also had a very aggressive issuance schedule, you know, like to produce that many Bitcoin in the beginning. It was very aggressive. It could have been a much flatter trajectory.

>> So, >> I definitely agree with that. Yeah. >> Yeah. >> And you and I have talked about this extensively, but Yeah. Yeah, >> it's um >> I mean outside of the security budget, I I'll I'll talk about the security budget in a second, but just like yeah, just like having like so many coins be mined so early, like imagine how you could have just stretched the security budget like four times 10 times further. >> Totally. Totally. Yeah, we we'll touch on that if we want to go at that a little bit later, but um there's a there's a very clear trade-off between auditability and transparency. So, if it's private, we can't audit it as easily, which we just saw on Zcash l literally a month ago. That's not the first time it's

happened in Zcash. It's also not the first time it happened in Bitcoin. It happened in Bitcoin in 2010. However, it was before Bitcoin was worth a penny. It was immediately fixed. And you know, Bitcoin was a very rough >> Bitcoin was rough code in 2010. It wasn't like a real protocol like not not tested, not really. It was very basic. Again, it was before Bitcoin was worth a penny. >> I think a lot of like Zcash people will bring that up, but it's a false equivalency. >> Yeah, Ethereum people bring it up when Bitcoiners FUD Ethereum about the Dow hack and they're like, "Well, you guys did it, too."

>> Yeah. Exactly. Exactly. But yeah, I mean, one was a consensus change. One wasn't like like >> Yeah. Yeah. >> The Ethereum Dow hack was like saying, "Oh, this theft is bad." The Bitcoin one is like, "This broke consensus." That's 21 billion. >> I take that point. I take that point. >> Yeah. So, you know, I would say privacy is of course is something I strive for. Like I think that's a great value to have, but you cannot have perfect privacy on an L1 and auditability and Bitcoin's core value prop is around the 21 million hardcap being a credible monetary policy. That's why that's why it makes for a good sound money. Not its rate of inflation or deflation, but the fact that we can trust that 21 million won't be changed or has a high credible chance that it won't be changed.

>> Yeah. So privacy is like an application layer thing, not a not a protocol thing. >> Totally. And you know, we look at the market cap as ecash and these other coins and they're tiny. So like how much do users truly value privacy? I think it's quite low. Even though I wish from a libertarian perspective that people would care >> more people valued it don't, you know, so I also wrote about this in 2020. It's called Bitcoin privacy. Is it the article I wrote on my blog? Let's say we had perfect privacy on Zcash or Bitcoin and we didn't have any auditability flaws. Okay, so I spend it on various activities and I buy a house.

My house is has a title and that title is in my name and you know the IRS and various other entities, anyone in public can walk by my house and see how big my house is or small or whatever it is. the IRS can ask me where I got that money from because they can see that I bought a house. And so the idea that you could live in this perfect level of privacy if we just had a perfect private money, I think is a little bit um a little bit ridiculous. Like I think you can't have perfect privacy if you buy any big items. You know, it's kind of impossible, >> right? Yeah. If you buy any big items, you're kind of like filling in some numbers on the Sudoku puzzle for other people to kind of like figure out. Yeah.

Yeah. And like Yeah. And and also yeah, I think what what we're saying and what I what I understand is like we enjoy privacy. We enjoy technically strong privacy, but there's a limit as to how safe it is to put it deep into the protocol and we can get privacy elsewhere. I I take that point. >> In a perfect world if with no trade-offs, absolutely. It's it's you know, and that's where I find the Zcash folks just so dishonest >> where they act like as a we could just snap it with our finger. we could have privacy on Bitcoin's L1. Obviously, we've thought about that.

This isn't like um oh yeah, we're just being, you know, cremagins and we're like, no, we don't want privacy because we we're all institutional now. No, it's not that at all. It's it's basically there's a huge trade-off and we're like the trade-off doesn't make sense for us, but you guys go on and do that. Cool. I mean, and then Zcash had that, you know, the flaw in it with the inflation bug and we were kind of largely validated by our concerns. >> Not not an inflation bug. uh an inflation bug inside of the privacy pool and so not not a actual unit inflation bug kind of an inflation bug but not not yeah ultimately the the number of Zcash remains the same >> appreci appreciate >> but yeah nuance nuances is hard with privacy and that's kind of the point

actually hey bank list nation it's David if you're hearing this that's because you are listening to the free bank list podcast feed did you know that there is a premium banklist RSS feed the premium feed has extra interviews that I do for my own personal research and deeper questions that I want answered about the crypto industry. Questions that I want to answer so I can be more informed as an investor both at Bankless Ventures and also just in my own personal portfolio too. Also, there are no ads which means if you listen to the premium feed instead of the free feed, you'll get about 20 hours of your life back every year because you choose to support Banklist directly. So, if you're interested in getting extra content all while skipping the ads or you just appreciate what we do here and want us to keep doing it, we'd appreciate it if

you signed up for Banklist Premium and there is a link in the show notes to get started. Cheers to a good 2026. >> I want to talk about BIPS. Uh what is what are what's the current BIPS being talked about? And B bits BIPS are Bitcoin improvement protocols. So this is like for Ethereum people this is EIP the Bitcoin improvements. What's being discussed in the modern day and age around Bitcoin? >> Yeah. So you know Bitcoin bit the BIP is basically in a Bitcoin improvement to the protocol that's proposed. Um you know there's a couple floating around. I think BIP 360 is around quantum like improving Bitcoin to be quantum uh postquantum cryptography. it basically solving some of the you know with with quantum the current issue with Bitcoin is that um you know when you sign a transaction with your private key that

the private key can get exposed and if that gets exposed and people can steal your Bitcoin and so we have to upgrade Bitcoin signatures to postquantum secure signatures. >> Yeah. And we have to pick which signature is the best one and there's a bunch of trade-offs with each one. bunch of trade-offs from potential zero day exploits to large bite sizes. Overall, anything postquantum is going to be a much larger in bytes, uh, aka data size. So, that'll make Bitcoin transactions more expensive. Certainly opens up another conversation around Bitcoin block size though.

>> Yeah, I'm kind of okay with that actually. I think I was having this debate with Ryan where Ryan was like, "Oh yeah, Bitcoiners like are going to need to increase the block size." I'm like, "I don't know if they do. I think they can just pay the fees." Do you have an opinion on that? >> Well, block space currently isn't super busy, so you could probably do the fees. But, you know, in a theoretical world where like a lot of people are trying to do it at once, block size increase may be necessary. But that's a that's a whole can of worms. >> But anyways, any any postquantum secure anything any postquantum encryption that we select will likely be larger in bites. there is some improvements that are like magnitude shifts and I think that's some of the criticism that some folks have is that you know we shouldn't

make these changes until we you know basically have much more data dense transaction types or not data dense but just and more efficient. >> Um so that's BIP 360. There's a couple other proposals as well. There's also kind of a [ __ ] one called BIP 110 uh which I don't know if you've seen those voices. I don't even know if you even see those people on crypto Twitter cuz the Twitter the nature of Twitter has changed a lot like >> Yeah, it's very bubbly these days. >> Yeah, that and like um I feel like we were all part of the same conversation before and now >> now kind of gets a bit more convoluted.

Um >> so yeah, I would say BIP 110 basically a bunch of these moronic plebs uh believe that you know we should censor Bitcoin because >> Okay, I was wondering if this was still relevant. Yeah. Okay, so this is this is the arbitrary data. Uh do we allow arbitrary data in Bitcoin or not? >> These idiots don't understand how computer science aka information theory works. You know, these are these are very uneducated. >> Aren't some of these idiots core devs though? >> No, one there's one core dev whose name >> it's a super religious guy. >> Yeah. He's believes that the Catholic Church has perverted Catholicism. He believes in eating cats. He >> Oh my god.

>> also believes all sorts of crazy [ __ ] Um he he's a >> So we don't take him seriously anymore. >> No, no, he's a lunatic. And so you got a lunatic and a bunch of uneducated plebs that are behind him, >> right? >> And they're like, "Signal for 110." You know, so they're kind of shouting right now about that. And literally every minor in every business is like, "What the [ __ ] are you doing?" >> They're like, "Stop stop being weird." >> Yeah. Stop being weird. And so they might actually fork off, which would be great. >> Great. Great. Great. Let them. I hope they do. I hope they do, >> please. Exactly. So BIP 110 is a joke is like being considered slt talked about a little bit but there's nothing I would say in the immediate short term

that's that's kind of like >> for sure what's what about the like the level of urgency around the quantum bit 360 or just like how fast things are progressing because there is like a a level of urgency around quantum right >> yeah I would say this is the biggest unresolved question and I would say most pressing issue in Bitcoin Pressing doesn't mean it's an immediate concern, but pressing as in we need to have, I'd say, some forward momentum. >> Yeah, we we the foot needs to be on the gas. >> Exactly. >> Um, you know, Nick Carter obviously has been been kind of ringing that bell a bit. I do believe that we should be making actions now or progressing towards a solution. I don't think the threat's imminent even in some of the most aggressive timelines for uh you

know quantum mechan you know quantum yeah or what do they call that the Q event or something like that QA yeah um I think it's still five years away probably at a at a minimum but even then it still might take us quite a while to agree upon how we upgrade and the process of migration you know if every single Bitcoin address wanted to you know move over to a postquantum secure encryption standard. It would take significant amount of time. So yeah, this needs to be figured out I'd say soon in the next couple of years. It would be great if we had consensus over the next direction and then we have actions happen in like year three. I think that would be like an acceptable or good timeline in my my book.

>> I think the big concern was that it it wasn't being taken seriously as an issue broadly by Bitcoiners. Is that still true or do you think everyone has kind of realized like that we have to we have to take this head on? I think that's where like I respect Nick, but I think he definitely kind of exaggerated the level of apathy. Um, it was largely talked about in most circles I'm a part of. Um, I think the only disagreement was the level of concern like how how soon does this need to be resolved? I think is the bigger question. And Nick was kind of raising the alarm, which I applaud him for his efforts. I also think he was a bit too critical of various efforts that were going on. I don't think people were just like, "Oh, this isn't a problem." I think it was

more of like it it's going to be a problem but it's going to be a little while from now. I think game theoretically that given how advanced AI is getting that the AI coming up with solutions to make quantum computing more effective will likely lead to its adoption sooner than later. So I do think that 5-year timeline while previously was considered extremely aggressive I think is a safe one. I think even with AI breakthroughs on on, you know, building quantum computers, I still think five years would be pretty pretty aggressive in terms of of when we think Qay might occur.

>> Dan, did you watch the uh um Finding Satoshi documentary? >> I did. >> Yeah, good. >> Do you like agree with the conclusion? >> You know, I'm I'm kind of a Hal Maxi like Maxi. >> Sure. >> To me, he embodies >> which I think you can be and also still agree with the conclusion. So the the documentary uh we had them on the podcast for listeners who didn't watch kind in my opinion kind of does the best job that I think will ever be done about investigating Satoshi and comes to a conclusion that it's both Hal Finny and Len Sassman. Uh to me the addition of Len Sassman was the curveball. Sassimon was a curveball. Um but like I I my opinion is that I don't think we're ever going to have a more definitive answer

than this. Maybe maybe that's what I'll ask you to like uh qualify or disagree about. >> Yeah. What's interesting is that I I had a question posed to me once. Given more and more time, will it become more or less likely that we find Satoshi, which I thought was super interesting. Um, and I I think it's more likely we would have found him sooner. And I think the more time that progresses there, it's less likely that we find him. Even though our ability to like analyze this text and look at all the data we have becomes better with the AI there there is data decay that is occurring. Um emails, written communication logs that are slowly being deprecated and or erased that would have been help us

definitively find who Satoshi is. Um so I would say like the the lens the lens sassiny connection I thought that was an elegant good narrative. Um, I don't have any strong opinions for or against the argument. It's certainly a lot better than the New York Times one about um >> Yeah, right. >> Oh man, that was so bad. >> Add him back. >> Yeah, that was just so so bad. Um, >> Adam Back is definitely not Satoshi. >> So, >> yeah, I would say like Halfy, it definitely feels like Hellf wrote the code. Um, >> it Henny fits the bill perfectly for who Satoshi is. You know, the idea that Lyn Lynn Lynn Sasserman wrote the white paper. I mean, the idea that like how

Finny couldn't write a white paper though, that seems a little weak. Um, the idea the idea that he had to bring in Len Sassimon for that. Yeah, maybe. But white papers aren't exactly rocket science. >> Yeah. >> Um, >> do you think identifying Satoshi, does that do anything or is this just a fun game? >> Well, I don't want it. I don't think we should know who Satoshi is. It's a fun game, but it would be negative if we definitively found who Satoshi was because one, it creates, you know, this this this basically deity now becomes a a cold hard real person, >> right? It pops the illusion.

>> Yeah. And Satoshi's whole purpose of creating the pseudonym was to be, you know, a pseudonym is to be, you know, someone who wasn't there. There there wasn't a physical representation associated himself with this. It was more of a um I am an individual. I've done my contribution and now I'm gone versus uh you should look up to me. You should you should ask me what to do next. He didn't want to be that. And so I think it wouldn't be good if we identified who he was. It is still a fun game. I still try to attempt to identify who Satoshi is, but I don't think it'd be good for the protocol to know who he is, but I don't think it'd be ultimately that much detrimental. Satoshi has likely passed away. And if that's true, then he doesn't really have any say over

future direction of the protocol. four year cycles. We seem to be doing them, but I I kind of want to look at what happens in the next four years, like 2028, but then even into like well into the 2030s, like the the medium-term future of Bitcoin. Um, we got we got Bitcoin treasuries, corporate treasuries, we got the Bitcoin strategic reserve, some huge wins, some huge dubs for Bitcoin. What kind of wins does Bitcoin do we want to Bitcoin to get in like its next phase of growth?

>> Yeah, I mean both further I would say market penetration of how many people own Bitcoin like that's a really important KPI for me like how many people across the globe as a percentage of the population own it whether it's a $100, $10 or a million dollars doesn't really matter because then >> does it matter how like if it's an ETF does that matter? >> I would prefer them do self custody but it doesn't really matter. they can do non self custody and they still by buying bitcoin they have bought into this new financial system this new belief in bitcoin and by believing in bitcoin it does make it more real and it's all a shared aggregate illusion that's what all money is both gold the dollar and bitcoin and so the more people that buy into the concept of it the more it has lindy the more longer

it'll stick around the bigger it'll become it's a network effect it's like a social network but for money so the more people that buy into it the better it's like a social network where you can plug directly into it or you can use an app to go access it. Um either way you you're buying into this new system which further disenfranchises you from the existing system and ultimately brings about Bitcoin success a global reserve asset um or like a a new global money. So I I do think buying it even in an ETF is good. It's certainly not negative. Um it's good but it's not as good as self- custodying it.

>> Do you think Bitcoin flips gold >> over a long enough time period? Yes. and >> like a lifetime or like a couple decades. >> Well, you know, it depends on the growth rate, right? Like 15 years we went from zero to 1.5 trillion. >> Um, I do think what was nice about gold's recent movement is it showed that large market cap assets can still have huge volatility. So, there was an argument to be made that like Bitcoin would never have such large movements ever again because like large market cap assets don't move that much. SpaceX, Bitcoin, Apple, I think very much proved that wrong in gold. Um, so yeah, I do think Bitcoin will eventually flip in gold. I think that's probably at least 10 to 15 years away. Um, you know, it

requires more people to believe at a fundamental level with what the market cap represents is do people believe more in gold or more in Bitcoin? And like I said before, this goes back to a generational divide over, you know, world boomers adopt this. As they die off, millennials and Gen Xers bought into Bitcoin a lot more. We start to set policy for different sorts of uh institutions, both banks and the Fed, etc., Treasury. So through these, I'd say gradual lifetime sort of generational adoption cycles, that's when we should see gold flipping with Bitcoin flipping gold. I mean, gold is a pretty pretty boring asset. Not many Gen Xers, Gen Z, and millennials buy gold. I

mean, it's considered kind of a boomer thing. So, as boomers, which are basically the only gold bugs left, as they die die off, I do see gold's value or gold's perception of being a a uh, you know, store value assets slowly fade away. Especially as well with SpaceX, SpaceX as Starship program improves and the tonnage that goes to space improves, there will be extremely credible opportunities to mine asteroids and return that gold back to Earth in a way that is economically doable. um all gold on earth is from asteroids.

So you know the once we see that become more tangible and people start to price in that future expectation of of asteroid mining becoming real then gold really has a crisis of faith where its supply becomes largely irrelevant. Um that will happen in our lifetime. Um so that's where I think 10 to 15 years is when we see the slipping in of gold because that future expectation of 30 years from now starts to get priced into today. I don't think a lot of people really grock how big Starship will be um in terms of basically what what he's doing what what Elon's doing is he's mass- prodducing spacecraft at such a huge scale that space travel will be as reliable and as cheap as airplane

travel. I mean the consequences of that are so enormous and when it comes to gold it's a a very detrimental consequence because with gold mining you know on asteroids you know one asteroid I forget it has like four quadrillion dollars worth of precious metals you know just harnessing one of those asteroids would essentially and all you have to do is is land a you know a a small small craft that has additional thrust and it can slowly push that asteroid towards and we make it crash into Earth.

>> No, you just push it into Earth orbit to make it a little >> Oh, okay. Yeah, cuz you can't make it crash into Earth because then it's kind of a it's a free-for-all. >> But I can't I can't imagine what'll happen is when you like land either you can either land mining craft on the spaceship or sorry, like mining craft on the asteroid or you can push it into an orbit and then and then work on it. But once that happens in any sort of tangible manner, I bet gold drops 25% in a day, you know, like that's that's going to be a death sentence for gold. Anyways, I've been talking a little bit too long.

>> I I remember when um the Winklevi went to Dan Dave Portoy's house and they were trying to shill him on Bitcoin. This was in co this was during COVID I think uh right after COVID and like they were pitching this like at gold asteroid mining to Dave Porto and they were doing a terrible job and David Porto was so turned off but that was like six years ago because it was like so absurd and sci-fi and crazy but that was like six years ago and for some reason I'm listening to you now and like >> this is now we have AI SpaceX is capturing rockets with with chopsticks.

It doesn't seem that far-fetched anymore. >> Totally. Yeah. I mean, I saw the first Starship launch in person. I bought SpaceX before they built the Starship program. So, that was my original faith, my my risk was that they wouldn't be able to execute on that. They did. It's pretty cool. I mean, I I recommend that everyone go see it because it's um you know, a lot of the things that I grew up watching sci-fi wise are coming true and that's one of them, space travel. So, yeah. Yeah. I mean, look, you if Elon's right about this, which he's pretty damn right, like this, they did it like >> Earthship has been built. They caught it with little chopsticks.

>> You know, it's pretty wild. So, I you know, you're right though. Sometimes being early is the same as being wrong. And uh if you're really really early, you look like a lunatic. >> Yeah. Yeah. Yeah. Dan, this has been great. Thanks for coming on the show and talking to me. I appreciate your your perspective on stuff. >> Yeah. Been too long, David. Glad you could have me out. >> Cheers. Bank station, you guys know the deal. Crypto is risky. Bitcoin is risky, but that's what we're here for. You can lose what you put in, but this is Frontier. It's not for everyone, but we're glad you were with us on the bankless journey. Thanks a lot.