WEBVTT

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Urgence between bitcoin and artificial intelligence,
and the Lightning network is playing a big

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role in that. Okay, I
believe what of it. I've not seen

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it in action. Elon Jack,
who's a speaker on stage as an expert

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on it. If you want to
ask him any questions, what's up?

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Elon, I would say Matt as
well, I see you, Matt,

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Matt Corolla is this is the Blue
Matt. I met him in Uruguay,

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a core developer. Very excited to
have you on as well, Matt,

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Thank you, yeah, thanks for
having me. I really I really appreciate

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all the work that everyone's been doing
on all these ETFs, and I really

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am looking forward to, you know, from the developer and working coin for

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more than a decade, well more
than that decade now now working full time

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on Lightning, so trying to make
bitcoin payments as much a thing as we

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can. But I'm really looking forward
to all of the Bitcoin Unlike nearly every

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other cryptocurrency doesn't have any kind of
foundation. There's no fees that people are

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paying directly to developers, and there's
no fund to fund people doing great work,

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like all the work that Ark's been
doing on making coin go more and

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more mainstream by bringing the loopers to
keep this software running, because ultimately bitcoin

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is powered by a software project,
and there's a lot of work that has

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to go into all of that engineering. And we've seen several of the ETF

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Bitcoin ECF offerings now offering to fund
bitcoin development directly. Of course, ARC

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also has directly funded, directly funded
a lot of work for bitcoin, not

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necessarily software research, and a lot
of really important work. So I'm really

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happy with where these things are going, just from the perspective of how much

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more funding this is going to bring
to the bitcoin ecosystem broadly and continue to

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improve things like bitcoin technologies. Yeah, elon, so I brought up x

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X X well truth and advertising.
We own it in our venture fund and

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and we're excited about the plans you
have for it. We want to do

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our part. This is part of
what today is all about. We want

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to break news on X and I
think I think more and more companies and

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people will break news on x SO
hence ar KAB. But also you wanted

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to be the everything app, and
I know on this call there are a

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lot of people who who have a
strong view about how quickly you'd be able

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to proliferate that throughout the world with
bitcoin as as part of the infrastructure.

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Yeah, I'm open to the using
bitcoin. I mean, it's like it's

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all the various things that I think
about. I think about bitcoin very little,

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but I've thought about monetary systems a
lot, and the actual practicalities of

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changing exchanging money or it's money's really
just data information and a database and the

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you know, it's money is information
system for labor allocation. So most people

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think of money as having power in
and of itself. But you can obviously

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run some basic court experiments and say, if you have eight twllion dollars on

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it, you know, from you're
marooned on an island, it's useless because

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there's no labor to allocate you.
Only once you have some complexity and you

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know, you have people with different
skills, then you need sort of an

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information system for labor allocation and to
shift obligations across time. But it's remarkable

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how many people think money has power
in and of itself, because that is

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their experience, certainly in any advanced
economy. You know, for for example,

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if you were to say, like
let's spend more money on healthcare,

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I'm like, okay, well,
you can't instantaneously change the number of doctors.

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Doctors take roughly thirty years to you
know, for for a new doctor,

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a baby to be born and ultimately
be educated, to be educated and

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become doctor. You can't. Really, you can't just throw money at a

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system and suddenly have you know,
get doctors from a magic doctor factory.

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So you can't over time change the
r of doctors if you change the instead

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of structure for doctors. But you
cannot. Just adding money to a system

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does not create more doctors. But
people weirdly sometimes think that is the case

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because that's they just they see what
is immediately in front of them that they

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do not see two or three layers
deep. In fact, like this is

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why inflation is such an effective means
of taxation is because inflation is a few

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layers deep, and most people simply
see one or two layers deep. But

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like if something is like three layers
away, that they simply don't realize it,

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and they will in fact be aggree
at the store for the prices going

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up, even though it is in
fact the government that has caused the prices

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to go up. That's why we
have to get the government out right for

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any given system, whatever the incentive
structure is, whatever the incentives are,

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that's what will happen. And it
then it should be no surprise if you

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incentse something better will happen. It
would be weird if you intense something and

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it didn't happen. Then the context
of your company's elon SpaceX and Tesla,

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like, what was the rationale behind
using bitcoin and the treasury and is it

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something that you've kind of backed off
with or is it something that you're amenable

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to kind of more broadly, well, I mean, we did make some

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prominent purchases a bitcoin at Tesla were
we just can't a bit concerned that the

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big changes in the ratio of dollars
to bitcoins, you know, that that

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that value ratio of changing too much, you know, and the case we

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needed the working capital, it would
be better for us not to have a

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bitcoin. And now space still has
most of the bitcoin because basics did not

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anticipate any working capital issues potential working
capital risks, and you know, and

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yeah, just and I was at
one point it really seemed like the use

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of electricity for bitcoin was on the
margins really being quite a lot of dirty

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electricity, and I hope people got
always you know, rebuttals to high you

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know high. I see it's energy
being useful bitcoin. But like there was

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at one point, like I think, an entire power station and coal mine

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in China that was a truly gigantic
one that was responsible for a massive amount

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of bitcoin wining. Now I believe
that is no bag shut down, but

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I think that actually constituted some insane
amount of bitcoin hashing at one point.

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I think things have gotten better with
just the usage full bitcoin hashing. It's

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still a little bit of a concern, but it seems not as serious a

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concern as it was in the past. That's analogy to me arguing that electric

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vehicles are bad because I live because
they're powered by a coal power plant.

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Like I think you have to divorce
the source of the electricity from the actual

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fundamental good that spending energy to secure
the bitcoin network produces. And that like

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the reason the thing that Kathe and
Hard are talking about is that, hey,

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here's a currency that a government can't
control. It can't control because you

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have a basically decentralized distributed denial of
service system preventing it from being kind of

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controlled. And co opted, and
the cost of that is the energy used.

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I don't think they were exactly analogous. So in this case of the

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gigantic coal mine and coal power plant
in China, its sole purpose was bitcoin

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mining, and it was really not
something that would be used for anything other

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than the bitcoin mining. In fact, when that plant went offline, there

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was a massive drop in the in
hashes for a second boitcoin. That's how

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you could tell it was that plant. You know, that's it's when it's

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that that was problematic. It went
too far at a certain point. Now,

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like I said, I think at
this point it is better. And

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when you look at electricity usage,
when it's not being pushed beyond a reasonable

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bounds, it is electricity use.
Electricity production is increasingly sustainable coming from wind

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and solar with buffering, with battery
pack buffering, eatl on. If you

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don't back the monetary units with work, something that actually takes energy as opposed

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to keystrokes, I just don't know
how you can build a better system that

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actually pegs Fiat currency around the world
without some type of proof of work mechanism.

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No, I'm not saying we're going
to have some proof of work mechanism.

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I'm just saying that. And look, I don't want to you know,

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I'm on this cope goest. Kathy
asked me to be on this call,

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not because I'm what's to argue about
bitcoin. I still do think this

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is this is an important If forget
his annoying bitcoint arguments, I'll sign off.

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I think Elon you you kind of
raising some of these concerns. I

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think part is part of the education
process for understanding bitcoin. This is exactly

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why we have these conversations. You
know, we don't necessarily need to go

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back and forth. But maybe I
see Harry's actually on the line. He

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is a bitcoin minor, perhaps kind
of setting up the case for just energy

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and bitcoin and how you're effectively converting
electricity into a hard asset. Perhaps my

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help as a framing. Hey you
seen thinks great to be your congratulations Kathy.

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The entire art team. We've actually
been through our own SEC process in

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the last two or three weeks as
well and got approval to take grid public.

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So congratulations. Than we're in good
company with you. To say the

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least, I want to address just
the energy thing in general, because I

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actually think Elon sort of is light
about the more fundamental heuristic, which is

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that bitcoin provides a revenue stream to
energy generation assets that they wouldn't have otherwise,

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and so on the one hand,
that can create you know, perverse

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negative dynamics and externalities when it comes
to a one off coal plant or several

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one off coal plants that are getting
shuttered, whether regulatorily or financially, and

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can breathe a second life into assets
that maybe, you know, we as

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a species would argue against. I
think that's true, and I think that's

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negative. I think that the positive
tailwind that bitcoin mining as a totally orthogonal

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purchaser of energy actually carries the positive
day because there's an enormous amount of opportunity.

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You know, if you look at
the you know, the Interconnect pipeline

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in the US, for example,
you know, there are wind and solar

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farms that are waiting multiple years just
to connect to the power grids to be

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able to enter their renewable energies into
our markets, and they're unable to,

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whether for regulatory reasons or system engineering
reasons. And so you're able to bring

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a bitcoin mind to that generation asset
and start clicking revenue much earlier. It

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means that the ability to finance these
projects is significantly expanded. It means that

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the infrastructure costs that get passed back
to rate payers get to be lowered because

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those revenues get brought to market much
sooner. And it does a lot less

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from an eminent domain. You know, where do you bring the lines that

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you know, those types of environmental
and regional issues, those all get diminished

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as well. The only other thing
I just want to add and shout out

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is just that this is not a
US story. This is a global story.

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And there are places all over the
world that desperately need a normal lead

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more electricity, and so we believe
and there are companies out there like Eric

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Hurstman and Gridless Compute who are bringing
new electricity on a clean hydro electric basis

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to communities that desperately need it.
They're taking kerosene offline, they're taking hydro

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electric online, and they're doing so
on the back of work in bitcoin.

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And so we're enormously excited about what
coin means as a bootstrapping mechanism for more

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clean electricity for more people on the
planet. Can I just say for a

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second that I think Elon's points should
be taken very seriously. You know,

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the electricity argument is a detailed argument
there. But the existence of bitcoin,

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the limitations of bitcoin, the programming
of bitcoin, are the really with the

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wonders of this coin and really will
be served the whole monetary system of the

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world. Now, the trans and
nature of a bitcoin is also true,

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but it's the same thing in gold. You know, what you had here

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is the bitcoin will be the reserves
if you will, of a transactional system

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that will include other entities with bitcoin, like reserves in the bank. That's

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where it's really going to go.
Elon, and I think you're totally correct

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that the electricity is a side show
to this and the transactional developments that will

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occur are really where we'll get a
new world money. But the bitcoin is

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the monetary base, if you will, of that, just like gold used

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to be. ARC actually wrote a
really great research paper a number of years

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ago and around bit quiet ability to
fund clean energy like Harry was talking to,

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but that I would encourage people to
go look up. In fact,

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Tesla was a part of helping bring
pilot plant to demonstrate that and how bitcoin

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can help fund solar energy using some
of their battery technology. Who wrote that

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mat Arc did? In fact,
we did with block oh Arc oh the

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one we did. Oh yes,
yes, yes, and Elan this was

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on we did. Remember with Jack
Dorsey we did the B word. It

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was called the B Word. It
was a five hour seminar that you Jack

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and I think Steve Lee kicked off
and we spent a lot of time talking

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about this use case. I actually
have one question. I don't know how

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much time you have, Elon,
but I do. I would love to

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know you've been clear about the need
for us to be an interplanetary species.

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What money would you use on Mars? It probably would make sense to use

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some kind of cryptocurrency on Mars.
Now, you couldn't use bitcoin because the

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reconciliation time is too long. Like
the Bars at times is Mars can be

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like twenty light minutes away, not
as easy that you can difficult. There

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had to be some localized thing on
Mos. Yeah, so I know some

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very important movers and shakers in the
community are here. I'm sure they are

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already thinking about ways to make sure
that bitcoin makes its way to Mars.

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I'm positive. Yeah, it's just
like I said, you know, at

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times you're well, and when you
was on the other side of the Sun,

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I mean reasonable. There's a rough
way to think about it is there's

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eight lightnunits from the Sun. Mars
is roughly one and a half times as

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far away from the Sun as you
you know as the Earth, and so

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at times you're on the order of
twenty minutes. But sometimes even like you

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can't go right through the Sun,
so that you have to be a backshuttered

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past the sun chap probably I think
might be like twenty three minutes. That's

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max speed of light anyway, So
I just think you could perhaps but points

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sun degree. But you know,
it'd be difficult to use it a lot.

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Luckily, some of the other technologies, like lightning, it would work

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totally great. Without latens, you'd
have to have a localized lightning network like

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you were talking about now. You
wouldn't be able to mine on market.

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You can't split mining across the Earth
in Mars. But correct, I think

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the Mars have some sunsets something like
well, I mean that I hope we

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have that problem to deal with it. If you have that problem deal with

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then really civilizations advanced dramatically, so
right now we've not yet been able to

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put a single person on Mars just
a few robots at extremely high prices.

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So in order to have any you
know, to in order to pass one

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of the Fermi great filters, which
is are you a one planet species or

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a multi planet species, we have
to have a self sustaining civilization on Mars,

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where the acid test being if the
reply shifts stopped coming for any reason

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whatsoever, that the city on Mars
does not die out. Well, I

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want to thank you, Elon.
I know if you want to hang out

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and here continue with the coin conversation
where you could, Yes, Kathy,

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you're back. Yeah that did I
get cut out? I don't know what

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happened there for just a second.
Okay. What I was saying is I

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don't know how much time. I
mean, I'd love to keep that back

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and forth Bitcoin. I know your
time was short, but I want I

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wanted to thank you for joining us. This has been awesome. Spaces is

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awesome, and we're going to be
doing a lot more on spaces, so

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so thank you. Those good good, just great great, thank you.

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Okay, the guest appearance, he's
pretty amazing. But I actually I think

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we scored a few bitcoin points there
guys. I think we're bringing him back

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into the fold. So I think
this is very similar pattern as to what

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happened over the last ten years.
We'll probably repeat itself. A huge reason

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of why we've been able to list
these in other jurisdictions with other skeptical regulators,

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and the same reason that we've been
able to do it in the United

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States is it's becoming way too big
to ignore. I think if you just

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look at ownership levels anywhere to the
estimates I've seen, there are anywhere between

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fifteen and twenty five percent of American
adult there's one hundred million or more coin

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base accounts and so on, and
so I think of considerable part of this

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is that it's just becoming much larger
to impossible to ignore, and that's going

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to continue to push adoption. In
my opinion, I'm going to go pre

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soon. Yeah, we should obviously
a lot of people have joined us just

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recently, and we should just say, obviously we want to thank the guests

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we've had so far. You know, we're gathered here today and they're on

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with us to really highlight the fact
that at the monumental day with the approval

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of the Bitcoin ETFs and ARKB for
the R twenty one shares Bitcoin ETF launching

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tomorrow, and he's become very relevant
conversations very fast for so many. It's

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the reason that the tagline for the
R twenty one shares Bitcoin EATF is aren't

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you a little serious? There's so
much to be curious about for so many

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who, as I think Brett said
earlier, previously had almost excuses not to

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pay attention, and so we want
to bring high quality content. We thank

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Elon certainly and many others because curiosity
will lead to so much knowledge, and

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there's still so much debate and so
much innovation to go. Thank you,

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Tom. I wanted to just get
quickly back to finishing up something that I

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think we started talking about using the
gold ETF. And I know that a

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lot of people on this call think
about inflation and as I do all the

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time, risks and so forth.
But back then it was Russian default,

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long term capital Y two K,
then the tech and telecom bus. The

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FED just kept easing, even though
that recession was very narrowly focused, and

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I think that's what greased the skids
for gold and all other commodity prices in

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the early two thousands, so you
know, when people do use gold,

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the gold ETF as a guide.
I just I think gold actually might have

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gone down as a you know,
relative to other commodities. And then we

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were going to go somewhere with that. Yeah, see, and I've forgotten

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where, Kathy, I'm going to
have to take off our labber here.

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Thanks you very much. Congratulations again
on all you've done. You're amazing all

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of you the whole time. Thank
you Lafe so much for joining. I

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think that the context was basically trying
to find analogies to how call it momentous

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of an occasion and ETAP approval is
to an asset like bitcoin and whether we've

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seen you know, similar tipping points
in the past. Well, your research,

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yes, seen, is I think
very powerful in terms of you know,

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getting us to And people think this
is crazy to say that we think

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bitcoin could hit one point five million
by I think twenty thirty or I think

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it's twenty thirty, which is a
sixty percent annualized increase. But I think

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our research is sound, and again
it's sound big ideas for those of you

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who haven't seen it. The building
blocks of getting to that price are not

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crazy. They're not quite there,
and in some cases they're quite conservative.

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That's right. I mean, I
think without even going into the building blocks,

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if you just apply simple heuristics,
like taking what the market cap of

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gold is, which is around twelve
trillion dollars, in the market cap of

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bitcoin, which is just under trillion
dollars, if you really compare, how

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much better of a version bitcoin is
too, Gold as this store of valuable

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that's portable through Yeah, seeing we
lost you. Oh sorry, I don't

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know where it's I think it just
muted. I don't know where I value

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store of value. And just to
think about bitcoin as being that better version,

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you know, to think that bitcoin
is not going to reach parity with

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gold then perhaps even exceeded over the
next ten years. You know, that's

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an order of magnitude increase from where
we are today. So just alone reaching

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parity with gold brings it to you
know, that five hundred thousand dollars price

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per bitcoin, and then you talk
you add on top of that all the

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use cases, Kathy that you mentioned
as an insurance Paul against arbitrary asset seizure,

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as this hedge against counterparty risk,
really as a remittance network, an

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economic settlement network and then you know, really as an institutional now allocation,

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as a legitimate asset, that getting
to that one point five million dollars you

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know, over the next ten years
is seems quite plausible in our view.

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Can I just I want to make
sure this We had people popping in so

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I had meant to do this before, but I mentioned we have Matt with

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us. Matt Corolum and Adam Back. I met them at a bitcoin confab

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in twenty nineteen in Uruguay, and
you know, here we were getting a

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lot of flax still for owning bitpoint. You know, there were some wirehouses,

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some of the brokers who brokerage houses
that you know, made us take

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GBTC out of some of our funds
otherwise they were going to fire us.

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And you know we held firm where
we could aarkw But my confidence at the

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after reading Matt and Adam shot up
dramatically. Core developers, you know,

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monetary experts, you know, at
this conference really comparing notes you know,

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from you know, young in age
to more seasoned in age. I certainly

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was there so but that was for
me, like the crowning cap on so

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much of our research. It just
brought it to life, and I wanted

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to well thank Matt and Adam.
And for those who don't know, Adam

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just joined he is an og cipherpunk
and invented I wish he was on to

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talk about proof of work with Elon, but invented hashcash, which is really

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the first proof of work system that
was used as that to prevent that attack.

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So Adam's great to have you on. I know that you tweeted a

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few questions about the ETF approval,
and I think that this is actually a

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platform that we can use to maybe
answer those questions and get your thoughts here

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broadly. So actually a technologist is
going to put the ETFX personal questions any

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of the direction, right. Yeah. What I was wondering about is the

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mechanism by which inflows get into the
market and if the usual t plos two

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kind of sumtment delays mean that market
makers or aps run out of capital,

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which tends to happen from time to
time. And Bitcoin in the big share

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space good. Yeah, So Athelia
and Ham are partners at twenty one shares

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have built out the infrastructure are experted
ups. So a Feilia or HENI yeah,

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sure, look I think one of
the things that's really been critical over

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the last couple of years running this
company has been how we build out this

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infrastructure. The infrastructure is so core
to running these products. I think there's

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been a lot of speculation over the
last couple of weeks, well, you

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know, all these big names and
finance are coming in and that's not you

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know, and they're going to know
what they're doing. And maybe, but

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at the end of the day,
there's a certain element of this which is

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technical and does require an actual understanding
of how blockchains work. But to the

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00:24:15.960 --> 00:24:21.519
correct question, I will say,
well, Adam, in terms of our

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own experience with active equity ETFs,
and many people thought this was a ridiculous

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concept, that you know, the
ETFs, the ETFs wrapper, and the

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infrastructure surround surrounding it would not be
able to handle us. The opposite was

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true, that there were the market
makers, the authorized participants. They all

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do very well with our volatile strategies, and of course pitcoins are very volatile

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as well, and there are other
there are lots of arbitrage opportunities popping up

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now around the world. I mean, twenty one shares has forty funds well

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now forty six with this one,
and you've also got the underlying assets.

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So I have witnessed the liquidity in
our utfs is far greater than I would

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have ever imagined, so a feeling
maybe you can leverage off of that in

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terms of what we expect for this
bitcoin et. Yeah. So look,

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I think one of the things that
we can expect to see, and I

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think this has been a little confusing. So the way these products start trading

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00:25:29.000 --> 00:25:33.359
is you convert these the seed numbers
you've seen into bitcoin, and those exist

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in the products prior to the first
day of listing. After you list,

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you've got market makers who are coming
in with orders. Those orders are going

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to need to be routed typically like
through OTC trading desks, partially in order

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00:25:47.279 --> 00:25:49.880
to support some liquidity and also frankly
virtually so that you don't have to take

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the coins out of cold storage to
trade by putting them on an exchange.

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So we're actually going to be trading
out of cold which is far safer,

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just purely at an infrastructural level.
That's actually true of all of our products.

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We don't ever have assets that aren't
in actual cold wallets. Essentially,

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the way this is going to end
up working is you're going to have these

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00:26:10.599 --> 00:26:15.400
market makers that are making markets public
markets in the security itself, and then

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on the back of that, they're
going to come in and check what their

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00:26:18.039 --> 00:26:22.079
inventory is. If they're short,
they're going to create, If they're long,

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they're going to redeem, so that
they're managing their inventory against that creation

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00:26:26.039 --> 00:26:30.279
redemption process, and that's really where
you're going to see that trading come in

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00:26:30.519 --> 00:26:33.960
on the crypto side. And fundamentally, the way we approach to this is

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a little bit different. We've taken
a very intent approach to custody and security,

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and why we have approached it this
way and the kind of technology that

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we've built over the last five years
to support it is quite significant. It's

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not that easy to make an asset
like bitcoin play nicely within traditional financial infrastructure.

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In order to do that, you
need to actually build a bridge between

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these two asset classes that you know, they don't share that many features in

355
00:27:03.720 --> 00:27:06.200
common. They don't tread on the
same rails, they don't settle on the

356
00:27:06.200 --> 00:27:10.000
same rails. It's not the same
counterparties, it's completely different infrastructure. For

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all the reasons that advisors and investors
need the ETF in the first place.

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That's why it's so difficult to build
one. Did that answer the question or

359
00:27:18.759 --> 00:27:21.720
I want to make sure that we
answer the question precisely, so if we

360
00:27:21.759 --> 00:27:25.480
missed the question, please we asked
it and yeah, yeah. Let me

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00:27:25.519 --> 00:27:29.599
make a kind of extremists example.
Right, So I don't know what people

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are affecting the plus stay volume to
be, but let's say it's ten times

363
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what's expected. What does that do? Does that mean that, you know,

364
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the marketmakers and aps run out of
us all liquidity and it becomes difficult

365
00:27:41.680 --> 00:27:47.200
to arbitrage and they trade above spot
or something like that, kind of kind

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of like the GPDC when it was
in a premium, but in that case

367
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because it's closed. Ended here just
because the market participants run out of liquidity

368
00:27:53.599 --> 00:27:57.720
to arbitragic in smaller doses, that's
what's happened in the past. That Quinn

369
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exchange is. Yes, you can
see things like that in an ETS,

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but the difference here is balance sheets
are a lot bigger, and fundamentally you're

371
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running on a essentially T plus one
to T plus two structure, and there's

372
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a little bit of a gap between
when an AP is going our market maker

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is actually making that market in the
public markets and seeing that demand and when

374
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they're going to be able to have
those shares on the back end, Unlike

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GBTC. Part of the problem with
GBTC is you couldn't create any new units

376
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of this product, right, whereas
something like ARKB from the get go you're

377
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going to be able to do that. That makes the arbitrage mechanism significantly more

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00:28:37.359 --> 00:28:44.160
effective. You got that there's a
delta between the creation redemption process running on

379
00:28:44.200 --> 00:28:48.400
a T plus one basis versus the
actual public markets running on that T plus

380
00:28:48.519 --> 00:28:52.559
two basis, and so there is
a little bit of time in there in

381
00:28:52.640 --> 00:28:56.599
terms of how they're managing inventory and
balance sheet. Balance sheets are also quite

382
00:28:56.599 --> 00:29:00.160
bluntly, just a lot bigger,
very big. I mean, James R.

383
00:29:00.519 --> 00:29:03.720
Put out it Financials or maybe they
leaked. I don't know why they

384
00:29:03.759 --> 00:29:08.000
got out. You know, it's
an enormous company. Enormous companies all right.

385
00:29:08.240 --> 00:29:12.799
Just always amusing to see if that
going break things because all taile and

386
00:29:12.920 --> 00:29:15.960
larger than people expect, and trades
over the weekend and stuff like that,

387
00:29:17.119 --> 00:29:19.079
so it'll be fun to exite.
We've actually seen a bunch of that in

388
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Europe, over the years. You're
right, it requires a certain degree of

389
00:29:25.079 --> 00:29:30.680
supports for aps and market makers that's
way beyond what the what you would expect

390
00:29:30.720 --> 00:29:33.839
in an equity market. It also
means that you know, for example,

391
00:29:33.880 --> 00:29:36.680
there are a lot of people who
might you know, after hours trade product.

392
00:29:37.119 --> 00:29:40.359
And this is a sun little quirk
of these et apps is that you

393
00:29:40.400 --> 00:29:42.799
know, there's this concept of market
hours in the US, but there are

394
00:29:42.839 --> 00:29:48.640
there is facility, there are facilities
for after market hours trading. And one

395
00:29:48.680 --> 00:29:52.559
of the really interesting things is that, unlike an equity product, where in

396
00:29:52.559 --> 00:29:55.839
your after hours trading you're kind of
guessing at what that price is really going

397
00:29:55.880 --> 00:29:59.440
to be based on futures and based
on demand in other markets, with this

398
00:29:59.440 --> 00:30:03.920
product or actually going to be able
to trice effectively off of an entitlement basis

399
00:30:03.920 --> 00:30:07.279
because there's a fixed amount of bitcoin
per share, so they can actually get

400
00:30:07.359 --> 00:30:12.160
real pricing and provide actually competitive facilities
for after hours trading. And I think

401
00:30:12.200 --> 00:30:15.839
that's something we're going to see a
lot more of. It's one of the

402
00:30:15.839 --> 00:30:18.160
reasons why you know, you see
a lot of the big market makers that

403
00:30:18.400 --> 00:30:25.279
do work in crypto ETPs and ets
actually operate on a global basis, and

404
00:30:25.319 --> 00:30:30.920
so there's one desk that's globally distributed, and so that will likely also help

405
00:30:30.000 --> 00:30:33.440
mitigate some of the things you're talking
about. But I do think it's going

406
00:30:33.519 --> 00:30:37.200
to be very interesting to see what
happens as you start to have, you

407
00:30:37.240 --> 00:30:41.319
know, the full course of that
demand hit bitcoin markets, although I do

408
00:30:41.359 --> 00:30:47.119
think it's likely going to take a
couple more months than people think to see

409
00:30:47.160 --> 00:30:52.039
the full picture in terms of demand. Does anybody on a kind of analysis

410
00:30:52.079 --> 00:30:57.680
site of opinions about the multiple for
inflows versus impact on market cap? And

411
00:30:59.039 --> 00:31:03.559
a few years ago bikro America that
some analysis indicating it was over one hundred

412
00:31:03.559 --> 00:31:06.839
I think they had one hundred and
nineteen. So it's kind of curious about

413
00:31:07.480 --> 00:31:10.559
what the inflas will tend out to
be the multi tuch that we'll have on

414
00:31:10.680 --> 00:31:15.160
bitcoin price spectively have done this some
estimates. Actually that's the power on channed

415
00:31:15.160 --> 00:31:19.000
analysis. You can kind of see
which of the bitcoin is readily available to

416
00:31:19.039 --> 00:31:22.880
be absorbed by marginal demand and which
one is kind of locked up. And

417
00:31:23.160 --> 00:31:27.880
I don't think people fully appreciate kind
of the price multiplier effect and that you're

418
00:31:27.880 --> 00:31:33.119
not simply just dividing by twenty one
million, and that a dollar inflow doesn't

419
00:31:33.160 --> 00:31:37.359
necessarily translate to a dollar of market
cap in our estimates. You know,

420
00:31:37.400 --> 00:31:41.759
when you think about just broader long
term versus short term holder supply dynamics,

421
00:31:42.160 --> 00:31:48.119
about seventy six percent of bitcoin's supply
is held by you know, what we

422
00:31:48.200 --> 00:31:52.640
consider to be long term holders,
so holders that haven't moved their bitcoin in

423
00:31:52.799 --> 00:31:56.480
at least six months. And then
there's kind of an additional half of that

424
00:31:56.960 --> 00:32:02.440
which is considered short term holder supply
that isn't sort of rarely available on liquidity

425
00:32:02.480 --> 00:32:07.079
and exchanges. It's kind of just
being overturned or turned over at the wallet

426
00:32:07.160 --> 00:32:10.559
level. And so if you kind
of call it, say a one to

427
00:32:10.599 --> 00:32:16.000
two million bitcoint of total circul league
supply is readily available, there could be

428
00:32:16.039 --> 00:32:20.920
to one hundred to your point,
there's one hundred x multiplier. We've estimated

429
00:32:20.960 --> 00:32:24.039
it's between a twenty five to fifty
x multiplier for every dollar in flow.

430
00:32:24.240 --> 00:32:29.559
But it would be interesting to do
some fallout analysis now that an ETF has

431
00:32:29.640 --> 00:32:36.079
been approved. Yeah, I wonder
if the profile of the ETF unit buyers

432
00:32:36.480 --> 00:32:40.680
will be different than the active bitcoin
traders. They might be lower polosity on

433
00:32:40.960 --> 00:32:45.839
hold, whereas the two million or
soap packet or you know, the laboration

434
00:32:45.960 --> 00:32:50.119
there's eighth stay chun Whereas I think
with ETFs, people are not generally looking

435
00:32:50.119 --> 00:32:52.359
to day trade then looking see put
it in their units. Some of the

436
00:32:52.480 --> 00:32:55.480
fond we'll hold it for some years. So maybe that way. Yeah,

437
00:32:55.480 --> 00:33:00.799
that's that's it. I think that's
a great point part of of what our

438
00:33:00.920 --> 00:33:06.880
thesis is that this really opens up
or broadens the spectrum of the market for

439
00:33:07.119 --> 00:33:10.079
individuals who are looking to buy a
bitcoin. I know Tom rco is on

440
00:33:10.119 --> 00:33:14.079
the line, but I'd love for
Tom if you want to jump in on

441
00:33:14.480 --> 00:33:21.319
just broader advisor market and kind of
demand for something like a bitcoin ETF relative

442
00:33:21.359 --> 00:33:25.119
to traditional spot and how those dynamics
are evolving now that we have this approval.

443
00:33:25.599 --> 00:33:30.480
I think some of the discussion has
been so binary as an either or,

444
00:33:30.200 --> 00:33:34.279
and I think what we're going to
find is that's the wrong way to

445
00:33:34.319 --> 00:33:37.519
think about it. It's really going
to be the percentage of the total allocation

446
00:33:37.680 --> 00:33:43.640
exposure that really is allocated between you
know, the to date what it's been

447
00:33:43.680 --> 00:33:46.319
the traditional way of doing it and
that part. And that's other part that's

448
00:33:46.359 --> 00:33:51.119
coming online. This quin eat and
I think, you know, there are

449
00:33:51.319 --> 00:33:54.480
numerous reasons, depending on what the
buyer's profile looks like. I think one

450
00:33:54.519 --> 00:33:59.640
that maybe is something for people to
think about, and it depends on unique

451
00:33:59.720 --> 00:34:05.839
And then the visual circumstances is that
while there may be some ways to post

452
00:34:06.400 --> 00:34:13.840
the bitcoin as collateral against alone to
gain personal liquidity, they're not easy for

453
00:34:13.920 --> 00:34:17.920
the average person. And so as
we get into a regulated, audited security

454
00:34:19.000 --> 00:34:24.199
that's custodies at a traditional financial institution, and mostly bang, you know,

455
00:34:24.280 --> 00:34:30.079
these securities are going to be able
to post as collateral to, you know,

456
00:34:30.119 --> 00:34:34.039
to basically to borrow against. And
that borrowing against could be used for

457
00:34:34.039 --> 00:34:37.320
any purposes. It could be just
increased individual liquidity, It could be reinvested,

458
00:34:37.400 --> 00:34:43.400
could be a number of things,
again very individual and specific circuits.

459
00:34:43.599 --> 00:34:47.000
But I know there are people on
this call already who have had exposure to

460
00:34:47.760 --> 00:34:52.159
European et ass and the twenty one
shares line in Europe who were able to

461
00:34:52.480 --> 00:34:59.800
suddenly gain great personal equity without losing
the exposure to the invest And that might

462
00:34:59.840 --> 00:35:01.559
not be all of your allocations to
Big One. In fact, I would

463
00:35:01.559 --> 00:35:08.400
expect perhaps just a small portion,
and yet bringing that inside the existing rails

464
00:35:08.440 --> 00:35:15.239
of the financial system offer pultional benefits
as well as potential investment benefits, you

465
00:35:15.280 --> 00:35:19.920
know, to continue across the space. And you know that's also like realize

466
00:35:19.920 --> 00:35:24.440
when we talk about that liquidity you're
talking about like standard margin from your bank,

467
00:35:24.599 --> 00:35:28.760
it doesn't cost anywhere near as much
as what we've seen in terms of

468
00:35:29.079 --> 00:35:31.559
some structured loans where maybe you're putting
it coin up in order to get cash.

469
00:35:31.679 --> 00:35:36.239
Right, it looks structurally very different, and it's also just from a

470
00:35:36.280 --> 00:35:40.800
cost perspective quite different. I think
Kathy made this point earlier and we really

471
00:35:40.880 --> 00:35:45.760
agree with it at twenty one shares, which is we have nothing against physical

472
00:35:45.760 --> 00:35:51.000
holding of bitcoin. It just so
happens that the ETF rapper enables a certain

473
00:35:51.440 --> 00:35:57.360
set of investors to be able to
allocate more in the space or come in

474
00:35:57.400 --> 00:36:01.880
at all. And from our perspective, as it increases the pie, we're

475
00:36:01.880 --> 00:36:07.400
all in and so it doesn't take
away from holding it physically at all.

476
00:36:07.440 --> 00:36:10.199
It doesn't take away from any of
that. But the ETF does come with

477
00:36:10.480 --> 00:36:16.719
very real structural benefits, especially for
more institutional investors and more traditional investors.

478
00:36:17.000 --> 00:36:20.840
But I think Bret Whitten earlier said
it very well, there's both of the

479
00:36:20.920 --> 00:36:27.679
incentive structure around allocation to the asset
class that the reality is just different when

480
00:36:27.679 --> 00:36:32.079
you have an ETF structure than when
you've had the coins in traditional wallets or

481
00:36:32.119 --> 00:36:37.480
for self custody. And that's because
brillions of dollars are tied up in intermediated

482
00:36:37.519 --> 00:36:44.199
assets in this country alone. Those
intermediaries are certainly not incentivized to lose the

483
00:36:44.280 --> 00:36:49.920
fees or even if it's not fees, lose the oversight and the influence that

484
00:36:50.000 --> 00:36:54.639
they have previously. With the case
if you had clients leave the closed walled

485
00:36:54.679 --> 00:36:59.119
ecosystem, and certainly, you know, those who are deeply invested in the

486
00:36:59.159 --> 00:37:02.840
space correctly will point out that has
not stopped them, and and they're right

487
00:37:04.000 --> 00:37:07.079
and that and that's great, but
it's also a reality that it has stopped

488
00:37:07.559 --> 00:37:12.840
a significant pool of assets. And
so you know, I think it's a

489
00:37:13.000 --> 00:37:15.559
very clear different use case. I
also think, you know, I've heard

490
00:37:15.559 --> 00:37:20.760
a lot. We talked a lot
about the inclusion in fact fact. We

491
00:37:20.800 --> 00:37:23.880
didn't just had Elon Muskat on this
faces if you're disjorting us, but we

492
00:37:23.920 --> 00:37:28.280
saw what happens in the inclusion of
fact when managers have to pay attention to

493
00:37:28.320 --> 00:37:31.880
an asset. Tesla famously was not
part of the S and P five hundred

494
00:37:32.360 --> 00:37:37.239
until it was a huge thock in
terms of market cap value. The imagers

495
00:37:39.159 --> 00:37:44.599
five hundred billion dollars. A lot
of managers conveniently, and you heard it

496
00:37:44.639 --> 00:37:49.039
on CNBC and Bloomberg and Box Business
and all of the different places, conveniently

497
00:37:49.119 --> 00:37:52.239
got to not have an opinion on
a stock that was quite literally changing the

498
00:37:52.239 --> 00:37:57.280
world because it wasn't in the index
that they been sparked against. Suddenly,

499
00:37:57.639 --> 00:38:00.960
when it was included, they not
only had to have an opinion, but

500
00:38:00.039 --> 00:38:05.480
they were judged and held accountable for
that opinion. And I think that again

501
00:38:06.119 --> 00:38:10.079
that is not binary. It's not
either or. But advisors now have access

502
00:38:10.159 --> 00:38:17.039
where they're gatekeepers at their custodians or
their home offices or their investment had perfect

503
00:38:17.079 --> 00:38:22.079
cover to keep it out. They're
now going to be accountable as wealth managers

504
00:38:22.119 --> 00:38:29.039
for what they say and what they
do around this asset. And they know

505
00:38:29.320 --> 00:38:31.800
that they're bringing frankly, their incentiviz
because even for some of them, they're

506
00:38:31.800 --> 00:38:37.000
going to bring some of those assets
back under their tent where it's packaged in

507
00:38:37.039 --> 00:38:42.079
the same financial statements, the same
tax documents, you know, overall correlations,

508
00:38:42.559 --> 00:38:45.920
and they're going to put it to
work instead. But with these benefits

509
00:38:45.960 --> 00:38:47.960
for the clients, certainly the costs
and of course they air KP is twenty

510
00:38:49.000 --> 00:38:52.360
one basis points. I think compared
to what somebody opening a brand new account

511
00:38:52.360 --> 00:38:55.920
coming into this sasset class for the
first time, that's lower than the trading

512
00:38:57.000 --> 00:39:01.639
fees. And remember what he wanted
the fees all in everything. Whereas you

513
00:39:01.639 --> 00:39:06.440
know people talk about custody, they
sometimes forget about the trading costs. We

514
00:39:06.519 --> 00:39:08.639
have to have total costs, the
total costs when we look at this,

515
00:39:09.280 --> 00:39:15.880
and so things like liquidity, things
like able the ability to post as collateral

516
00:39:15.239 --> 00:39:20.679
are all cherries on top. So
that I'm not even talking about the institutions

517
00:39:20.679 --> 00:39:27.800
in this country that use about four
layers as consulting for DYA reasons to protect

518
00:39:27.840 --> 00:39:32.920
themselves in a latigious society, who
now also have access and are held accountable.

519
00:39:34.159 --> 00:39:37.880
And those are obviously massive allocations.
Even if a small fraction of them

520
00:39:37.920 --> 00:39:44.760
do a small percentage, we're talking
about a meaningful amount of total capital suddenly

521
00:39:44.800 --> 00:39:49.079
coming. So even if you don't
believe what I just said for all of

522
00:39:49.119 --> 00:39:53.159
it, but you believed one part
of it talking about a significant chunk of

523
00:39:53.280 --> 00:39:59.920
institutionalized intermediate wealth, and I understand
that's not where the original eco cuperfcoin.

524
00:40:00.599 --> 00:40:04.159
But I would also say these don't
have to fight each other. They can

525
00:40:04.239 --> 00:40:07.400
be complimentary, and I would be
surprised if even those who are the most

526
00:40:07.840 --> 00:40:14.320
focused on maintaining their autonomy don't find
benefit from at least a small portion of

527
00:40:14.320 --> 00:40:20.360
that within the traditional finance system.
Well also, I mean not just them,

528
00:40:20.440 --> 00:40:23.199
right, I can confidently say it
was orange pilled by my mother,

529
00:40:23.519 --> 00:40:27.800
which is a shocking thing for most
people to realize. That's kind of supposed

530
00:40:27.800 --> 00:40:30.880
to go the other way, and
that happened in twenty like early twenty fourteen,

531
00:40:30.960 --> 00:40:34.679
late twenty thirteen. My mom came
to me and was like, hey,

532
00:40:34.800 --> 00:40:39.400
listen, you know merk spends too
much money hedging and governments running monetary

533
00:40:39.480 --> 00:40:45.239
policy based on geopolitics is stupid.
We should have an alternative. Have you

534
00:40:45.280 --> 00:40:49.360
heard about a thing called bitcoin?
Twenty fourteen from my mother, and she

535
00:40:49.559 --> 00:40:52.920
missed the trade because of the infrastructure. She didn't feel comfortable setting up an

536
00:40:52.960 --> 00:40:58.159
account that was new that was outside
of her financial infrastructure. She totally got

537
00:40:58.199 --> 00:41:01.760
the vision there just wasn't really rails
for her to be comfortable with that.

538
00:41:02.159 --> 00:41:05.840
So I mean, honestly, Tom, I would actually challenge you a little

539
00:41:05.840 --> 00:41:08.039
bit there, which is it's a
little different than the original ethos. But

540
00:41:08.079 --> 00:41:12.679
the original ecost is about inclusion,
right. We want everyone to participate,

541
00:41:12.679 --> 00:41:15.280
and that's if you want a few
billion users to use bitcoin, you need

542
00:41:15.320 --> 00:41:19.840
to provide it to them in a
package that they can actually use and feel

543
00:41:19.840 --> 00:41:22.480
excited and constant about. My mom
is never going to feel about. The

544
00:41:22.559 --> 00:41:27.559
inaccessibility of bitcoin that Opailure is talking
about is very real and it comes in

545
00:41:27.599 --> 00:41:31.400
two flavors. One is how she
described her mother or more traditional investors who

546
00:41:31.440 --> 00:41:36.760
are just more comfortable with an etf
rapper. The other thing that we haven't

547
00:41:36.800 --> 00:41:42.800
discussed is if we really want this
to become so ubiquitous and so world changing,

548
00:41:42.880 --> 00:41:45.599
we need to get it in the
hands of billions of people, and

549
00:41:45.639 --> 00:41:49.400
at least on the institutional investors side. There are a lot of investors out

550
00:41:49.440 --> 00:41:54.519
there who have mandate that prohibit them
from investing without things like the etf rapper,

551
00:41:54.960 --> 00:42:00.000
and so both worlds can exist,
and if the aim is to increase

552
00:42:00.280 --> 00:42:02.519
the market, a great title will
lift all of our boats. We should

553
00:42:02.559 --> 00:42:07.360
be working on every single one of
these options. So I think that,

554
00:42:07.599 --> 00:42:09.159
you know, it's interesting because on
the ARC side, you know, I

555
00:42:09.239 --> 00:42:13.760
sat on the other side of the
table from twenty Shares when we first met

556
00:42:13.800 --> 00:42:15.719
to evaluate you know, what a
partnership woul book like, and I was

557
00:42:16.199 --> 00:42:23.079
druck by the commonality of what the
organization's state admission purpose was relative to the

558
00:42:23.119 --> 00:42:29.280
democratization of assets. I mean,
I look at the forty different funds that

559
00:42:29.280 --> 00:42:32.599
twenty one Shares has in Europe's across
assets and in the digital assets space,

560
00:42:32.719 --> 00:42:37.440
much deeaper than what we're currently able
to do in the United States due to

561
00:42:37.440 --> 00:42:40.159
the regulatory framework, but that I
have high degree of confidence that we will

562
00:42:40.199 --> 00:42:45.719
get. I look at ARC and
certainly democratizing using the etf rapper bringing out,

563
00:42:45.880 --> 00:42:50.760
you know, a venture fund for
mass retail to make private equity available.

564
00:42:51.039 --> 00:42:55.039
This Bitcoin very much fits in it. But when we're keeping segments of

565
00:42:55.079 --> 00:43:01.239
the potential investors out, that's not
democratization. Right, to truly democratize,

566
00:43:01.239 --> 00:43:07.039
it has to be indiscriminatory relative to
the individual pain points in friction that any

567
00:43:07.079 --> 00:43:13.400
individual may have. And I agree
with Haney wholeheartedly that not everyone has the

568
00:43:13.440 --> 00:43:16.360
same friction, not everyone has the
same barrier. Some of them are mental,

569
00:43:16.760 --> 00:43:20.920
some of them are psychological, some
of them are financial, some of

570
00:43:20.960 --> 00:43:24.360
them are regulatory, some of them
are legal. But they're very real.

571
00:43:24.960 --> 00:43:28.480
And so you know, when you
think about the tagline that we put on

572
00:43:28.519 --> 00:43:34.719
this product, aren't you a bit
curious? We have to also destigmatize the

573
00:43:35.000 --> 00:43:42.320
curiosity versus those of us who have
dedicated considerably more time to learning about this

574
00:43:42.400 --> 00:43:46.400
in greater depth and say this in
this vehicle in part is to help overcome

575
00:43:46.440 --> 00:43:51.840
the friction points so that you can
gain exposure. But also once you can

576
00:43:51.920 --> 00:43:55.480
gain exposure, that is one of
the most powerful catalysts, you know,

577
00:43:55.599 --> 00:43:59.920
no matter what we're talking about,
the most powerful catalyst for you to spend

578
00:44:00.119 --> 00:44:06.800
more time, to be more engaged
and to overcome any real or perceived hurdles

579
00:44:07.119 --> 00:44:10.800
that you've had. And I think
that is truly what democratization is. I

580
00:44:10.840 --> 00:44:15.880
think that the ETF is there,
but the reality the cost is very regularly

581
00:44:15.880 --> 00:44:19.119
a hurdle in almost anything in life. It's one of the reasons why we

582
00:44:19.199 --> 00:44:22.199
wanted to have a price twenty one. Obviously twenty one. I mean the

583
00:44:22.239 --> 00:44:25.440
price was always hidden in plain sight
with the name of the fund, with

584
00:44:25.480 --> 00:44:30.760
the partners that twenty one shares,
but to have it that low is designed,

585
00:44:30.760 --> 00:44:35.119
as Kathy said earlier, in this
call to reduce as many, absolutely

586
00:44:35.159 --> 00:44:38.159
as many barriers and fortunes as possible. We're really proud of that. There

587
00:44:38.159 --> 00:44:45.000
are certainly bigger named firms that are
coming with higher products. They don't necessarily

588
00:44:45.039 --> 00:44:49.519
share what we're trying to do here, and that's fine, but you have

589
00:44:49.599 --> 00:44:54.159
to understand that with a dedicated mission
towards democratization, we're going to talk to

590
00:44:54.280 --> 00:44:58.960
all sorts of people's who are in
all different parts of their crypto journey,

591
00:44:59.360 --> 00:45:01.840
and some of them going to recognize
things that we did, specifically for those

592
00:45:02.239 --> 00:45:07.039
more educated, like what the nav
of this product is going to come out

593
00:45:07.079 --> 00:45:13.360
as, and it's pegged directly to
the bitcoin price rather than some arbitrary esoteric

594
00:45:13.400 --> 00:45:16.320
price that every other filing has put
on. This in a nod that it

595
00:45:16.440 --> 00:45:22.719
has utility value and for the very
purposes that we've said before that the existing

596
00:45:22.760 --> 00:45:28.280
ecosystem will find value. But it's
also in light of the research. It's

597
00:45:28.320 --> 00:45:32.159
calls like this bringing experts together and
for the advisors out there, if you're

598
00:45:32.159 --> 00:45:37.119
listening right now. You know we
intend and we can personally pledge that we

599
00:45:37.199 --> 00:45:40.119
will have the greatest amount of support
for advisors. If I were an advisor

600
00:45:40.199 --> 00:45:45.239
right now who had not put any
clients in this ATHA class ever before,

601
00:45:45.679 --> 00:45:50.440
I know that tomorrow is going to
be a very scary day because my clients

602
00:45:50.480 --> 00:45:54.599
are going to call and I might
not have all the answers. And honestly,

603
00:45:55.079 --> 00:45:59.000
that's okay, And not only is
it not okay, it's a good

604
00:45:59.679 --> 00:46:02.239
because because that's what a new asset
class is. When we're bringing people in

605
00:46:02.519 --> 00:46:08.480
who are going to have difficult but
exciting conversations that the positive outcomes for everybody,

606
00:46:08.559 --> 00:46:14.000
and we stand behind you. Twenty
one shares stand behind you. Advisors.

607
00:46:14.000 --> 00:46:16.840
Know that we have were partners with
Resolute investment managers for the wholesalers and

608
00:46:16.880 --> 00:46:22.280
product specialists and support, and what
we want is for anyone who's curious at

609
00:46:22.320 --> 00:46:25.920
any part of your journey in bitcoin, we are here from you, and

610
00:46:25.960 --> 00:46:30.039
we're extremely proud that AARKB is going
to be here for you starting tomorrow.

611
00:46:30.639 --> 00:46:37.440
And people may not realize just how
ingrained this is in both of our firms.

612
00:46:37.480 --> 00:46:40.400
Actually, I remember Tom, I
remember that one of the One of

613
00:46:40.440 --> 00:46:44.079
the things that comfort us the most, one of the things that we were

614
00:46:44.119 --> 00:46:47.760
most excited about when we first started
to get to know ARC is the obsession

615
00:46:47.800 --> 00:46:52.639
with research that you guys have they
research background that Kathy clearly has, because

616
00:46:52.679 --> 00:46:55.880
we think about it the same way. I think it was John Oliver who

617
00:46:55.960 --> 00:47:02.079
said bitcoin and crypto is sort of
like everyone doesn't understand about encryption and technology

618
00:47:02.079 --> 00:47:07.480
combined with what everyone doesn't understand about
finance and economics, and they do have

619
00:47:07.559 --> 00:47:13.440
a point. As transform as this
technology be, it's incredibly complex, it's

620
00:47:13.559 --> 00:47:17.599
challenging, it's difficult, and as
a result from a research perspective, from

621
00:47:19.000 --> 00:47:23.480
a learning and teaching perspective, our
research team, arts research team, this

622
00:47:23.639 --> 00:47:28.360
is so central to our identity and
what we bring to the table. And

623
00:47:28.400 --> 00:47:31.519
so I echo everything that Tom said
and agree with him one hundred percent.

624
00:47:31.639 --> 00:47:37.280
And we will be providing advisor specifically
with the top research in the space because

625
00:47:37.559 --> 00:47:43.559
this is a long term journey.
Crypto is going to be transformative over the

626
00:47:43.599 --> 00:47:46.079
next decade, not just over the
next month or so, and we're in

627
00:47:46.119 --> 00:47:50.199
it for the long haul, and
that involves a lot of knowledge and education.

628
00:47:50.679 --> 00:47:54.159
I think that's a good segue to
maybe talk about agree our commitment to

629
00:47:54.239 --> 00:48:00.800
research, but maybe dive into how
important sort of paving this new framework to

630
00:48:00.000 --> 00:48:06.480
understand bitcoin as an asset class,
understand its fundamentals. You can't apply a

631
00:48:06.599 --> 00:48:09.599
discounted cash flow model to bitcoin like
you can to equities, and yet there's

632
00:48:09.719 --> 00:48:15.840
so much information that is out there, given the transparency of bitcoin, given

633
00:48:15.840 --> 00:48:20.119
its open source nature, given that
you know, bitcoin is basically this twenty

634
00:48:20.159 --> 00:48:25.000
four to seven fact sheet of economic
behavior in this mini sort of monetary system.

635
00:48:25.360 --> 00:48:28.400
And so I thought, you know, we have a new set of

636
00:48:28.400 --> 00:48:32.119
speakers that I'm kind of really excited
to introduce that have been pioneering a lot

637
00:48:32.159 --> 00:48:37.920
of the fundamental analysis of bit boats
through just sharing on chain analysis, but

638
00:48:37.000 --> 00:48:42.400
also you know, providing that data
for the end investor to be able to

639
00:48:42.880 --> 00:48:49.119
analyze and understand. And so we
actually have will Clemente Checkmate on theline and

640
00:48:49.239 --> 00:48:55.960
Pomp as well, who have in
some capacity helped really spearhead frameworks to understand

641
00:48:57.000 --> 00:49:00.599
bitcoin fundamentally, which I think is
again a really important and point we're in

642
00:49:00.639 --> 00:49:06.000
the business of also bridging that education
gap, and in the case of Pomp

643
00:49:06.000 --> 00:49:09.880
has been a supporter of both of
us for a while and at least with

644
00:49:09.960 --> 00:49:15.400
twenty one. Coke is at one
of our earlier investors as well. Well,

645
00:49:15.559 --> 00:49:19.239
check pomp. Great, great to
have you guys on. Adam actually

646
00:49:19.280 --> 00:49:22.320
asked a question and maybe this one's
for you checking just to introduce before you

647
00:49:22.400 --> 00:49:27.840
answer the question, it would be
great to introduce yourself on this almost price

648
00:49:27.920 --> 00:49:34.599
multiplier effect of bitcoin flows and how
bitcoin's call it liquid versus a liquid supply

649
00:49:35.119 --> 00:49:37.840
plays a I'd say a big It's
a big component in trying to understand that

650
00:49:37.880 --> 00:49:44.079
price multiplier effect. So perhaps kind
of maybe setting up what is on chain

651
00:49:44.119 --> 00:49:49.760
analysis, why that's fundamental to this
asset class, how heavily involved you know

652
00:49:49.880 --> 00:49:52.840
you are, we've collaborated on research
together, and then maybe give some kind

653
00:49:52.840 --> 00:49:58.840
of statistics on just bitcoin Bitcoin's economic
state would be super helpful for this audience.

654
00:49:59.039 --> 00:50:00.199
Thanks a lot, Thanks for the
production. Just quickly let me know

655
00:50:00.199 --> 00:50:02.400
if you can hear me. Okay, we can hear excellent. We're a

656
00:50:02.400 --> 00:50:06.440
business, so yeah, So I'm
the lead analyst at last note, and

657
00:50:06.480 --> 00:50:10.079
we really kind of pioneering this world
of bitcoin on chain analysis and really looking

658
00:50:10.079 --> 00:50:15.440
at the heartbeat of not only the
network and the protocol itself, but also

659
00:50:15.480 --> 00:50:20.000
how investors interact with it. And
bitcoin is one of these fascinating and super

660
00:50:20.159 --> 00:50:22.400
organic. It's a thing. It's
almost like an organism, but it has

661
00:50:22.480 --> 00:50:27.960
this digital footprint that it records every
ten minutes, and within those blocks we

662
00:50:28.000 --> 00:50:30.360
can pull out invested decisions, we
can see how the network is performing on

663
00:50:30.400 --> 00:50:35.079
a health perspective, but really looking
at how coins move around the system,

664
00:50:35.119 --> 00:50:37.519
which is just a fascinating It has
been a fascinating field to really push into.

665
00:50:37.840 --> 00:50:43.119
Now in terms of the multiplier effect, one of the most foundational metrics

666
00:50:43.119 --> 00:50:46.199
we have in the unchained space is
called the realized cap, and it's essentially

667
00:50:46.280 --> 00:50:50.519
an equivalent to the market cap.
Is that we value every coin at the

668
00:50:50.559 --> 00:50:53.239
price when they last move. And
why this is really powerful is so Toshi's

669
00:50:53.280 --> 00:50:57.920
got a million or so coins,
but they were moved last at a price

670
00:50:57.960 --> 00:51:00.280
of zero, so we effectively discount
them. They're worth, you know,

671
00:51:00.440 --> 00:51:05.079
zero times a million as a zero
early miners may have had a couple of

672
00:51:05.159 --> 00:51:07.800
cents. But if those coins are
lost and we've got this kind of pathway

673
00:51:07.840 --> 00:51:13.440
of coins saved at their last move
price. Now, from a capital flow

674
00:51:13.480 --> 00:51:16.719
perspective, this is actually really powerful
because when somebody acquires coins at a bear

675
00:51:16.800 --> 00:51:21.320
market, for example, and then
sells them at a ten x higher price,

676
00:51:21.719 --> 00:51:24.920
somebody else has to come in with
more capital than the original purchase to

677
00:51:24.920 --> 00:51:29.679
actually take them off the market.
And likewise, when people who buy at

678
00:51:29.719 --> 00:51:32.199
the exact wrong time in the cycle
have to sell coins at a lower price,

679
00:51:32.239 --> 00:51:36.880
there's a capital destruction. So what
we're looking at with this realized cap

680
00:51:36.960 --> 00:51:42.559
is this kind of long smooth change
in capital inflows and outfloats. So one

681
00:51:42.639 --> 00:51:45.920
framework we can look at things is
that when coins are on exchanges and they're

682
00:51:45.960 --> 00:51:49.719
trading around in many ways, they're
kind of one button away from a buyer

683
00:51:49.719 --> 00:51:53.000
and a sell so they haven't quite
entered that realized cap space. It's only

684
00:51:53.039 --> 00:51:59.079
when somebody actually does the withdrawal transaction
takes custody or in the event of an

685
00:51:59.119 --> 00:52:02.039
ETF because they're spot denominated, and
that is going to be this buying and

686
00:52:02.079 --> 00:52:06.880
selling on exchanges, and there'll be
coins moving between different multi sig wallets.

687
00:52:07.159 --> 00:52:13.199
A lot of these transactions will get
recorded into Bitcoin's database itself. So coming

688
00:52:13.239 --> 00:52:16.360
back to that multiplier effect, we
ran a study recently looking at how much

689
00:52:16.400 --> 00:52:21.760
does the realized cap change, Essentially
how much capital needs to float into the

690
00:52:21.840 --> 00:52:24.840
chain itself to achieve a one dollar
change in the market cap. Now,

691
00:52:24.880 --> 00:52:30.639
this goes through a couple of different
cycles. When we see real euphoria ball

692
00:52:30.719 --> 00:52:35.000
markets, we tend to see that
you need eighty cents a dollar twenty of

693
00:52:35.079 --> 00:52:37.920
capital inflows to get a one dollar
change in the market cap. And from

694
00:52:37.920 --> 00:52:42.000
this perspective, it's starting to get
into unsustainable territory. Right. We're really

695
00:52:42.320 --> 00:52:45.119
in terms of physics, you've got
to put more energy in to achieve a

696
00:52:45.159 --> 00:52:49.840
smaller output. Now, as we
go into bear markets and interest wanes a

697
00:52:49.880 --> 00:52:52.719
little bit and you start seeing that
there's more volatility, that number can drop

698
00:52:52.760 --> 00:52:55.400
to anywhere, and sometimes it gets
down to ten cents. So a ten

699
00:52:55.519 --> 00:53:00.880
cent inflow or outflow works in both
directions, can produce one dollar change in

700
00:53:00.880 --> 00:53:05.280
the market cap, which really heightens
that volatility as a result of lower liquidity.

701
00:53:05.320 --> 00:53:08.000
So it's just one framework we can
look at things. But the long

702
00:53:08.119 --> 00:53:13.880
term medium is typically around twenty five
cents thirty cents somewhere in that ballpark,

703
00:53:14.159 --> 00:53:15.800
and where we are at the moment
is in that range twenty cents twenty five

704
00:53:15.840 --> 00:53:19.800
cent. So again it's just trying
to put a bit of a figure around

705
00:53:19.800 --> 00:53:22.480
things, but we're looking at somewhere
on the auto about a four to five

706
00:53:22.679 --> 00:53:27.679
x kind of range in terms of
dollars in versus market cap change. And

707
00:53:27.760 --> 00:53:30.280
again this is in both directions.
It's a non directional study, just basically

708
00:53:30.280 --> 00:53:34.880
looking at how much does that realize
cap change per unit change in the market

709
00:53:34.920 --> 00:53:40.360
cap and how do you think an
ETF approval might impact that that dynamic or

710
00:53:40.400 --> 00:53:45.480
what are you kind of looking at
to see massive shifts in that price multiplayer

711
00:53:45.480 --> 00:53:47.079
effect? Yeah, I think that's
a really good question, and I think

712
00:53:47.119 --> 00:53:51.159
the first thing when I just kind
of take a very objective look at things,

713
00:53:51.519 --> 00:53:54.280
the ETF, as we've discussed on
this on this spaces is just opening

714
00:53:54.360 --> 00:53:58.440
up a new level of demand vector. Right, So Bigoin's always had this,

715
00:53:58.639 --> 00:54:00.840
you know, there's always been the
harving and the data and how much

716
00:54:00.840 --> 00:54:04.960
the harving has an impact, and
that's a supply side shop and people's narratives

717
00:54:05.000 --> 00:54:07.760
starts to you know, people get
excited about the harving and it's kind of

718
00:54:07.760 --> 00:54:10.719
a self fulfilling prophecy. Whereas with
the each affort we're seeing is opening up

719
00:54:10.719 --> 00:54:15.519
of the doors of just more people
able to come into this space. So

720
00:54:15.840 --> 00:54:19.599
for me as a non chain analyst, it's constantly this game of how much

721
00:54:19.639 --> 00:54:22.119
does the on chain data Because there's
obviously trade activity, there's futures markets,

722
00:54:22.159 --> 00:54:27.639
there's spot markets, there's actual activity
that's happening on the chain itself. How

723
00:54:27.719 --> 00:54:30.760
much do these speak to each other? And what I've always enjoyed is understanding

724
00:54:30.800 --> 00:54:36.559
those is almost statistically significant subsets of
the market. The data we can extract

725
00:54:36.599 --> 00:54:40.760
from a futures market or a spot
market or on chain, it typically represents

726
00:54:40.800 --> 00:54:46.239
a statistically significant subset of bitcoin investors. And whilst their data may plot differently

727
00:54:46.360 --> 00:54:52.280
open interest or spot volume or realize
cap, when we actually reconcile these,

728
00:54:52.320 --> 00:54:54.440
we tend to see they're telling the
same story, just with their data explained

729
00:54:54.440 --> 00:54:59.159
differently. So it's very much about, you know, reconciling seeing how markets

730
00:54:59.199 --> 00:55:01.559
move. One thing we do at
Glassdows we actually label entities so we can

731
00:55:01.599 --> 00:55:06.000
see, you know, these are
coinbase or buyinance or ETF A, B

732
00:55:06.119 --> 00:55:08.519
and C, and we can actually
look at those dynamics individually. So it

733
00:55:08.559 --> 00:55:13.320
may be that there's a result where
we actually look at the realized cap including

734
00:55:13.559 --> 00:55:16.760
or excluding ETFs. It maybe we
look at only ETF flows, so we

735
00:55:16.760 --> 00:55:21.880
can actually start to really dive in
and build out this data layer to understand

736
00:55:21.960 --> 00:55:25.559
how these flows impact that both interpretation
and whether it actually does change things in

737
00:55:25.840 --> 00:55:30.280
our perspective. So one of those
things where it's constantly evolving, which makes

738
00:55:30.320 --> 00:55:32.559
my job very exciting. Well,
and I know we have you on as

739
00:55:32.599 --> 00:55:37.760
well, Please introduce yourself and if
you have any thoughts on it, just

740
00:55:37.800 --> 00:55:44.119
the broader implications for the on chain
world as it relates to this Bitcoin ETF

741
00:55:44.119 --> 00:55:49.840
approval. Hey, thanks for having
me up. Sorry about background noise checkway,

742
00:55:49.840 --> 00:55:52.079
it was super scinct. As always, I would say it's probably the

743
00:55:52.159 --> 00:55:57.360
best on channelists in the world,
so definitely always pay attention to his insights.

744
00:55:57.400 --> 00:56:00.840
I think one thing that's really interesting
to me. I think it's been

745
00:56:00.039 --> 00:56:07.000
pretty well circulated throughout the bitcoin it's
the fact that seventy percent of the circulating

746
00:56:07.039 --> 00:56:09.360
bitcoin supply hasn't moved in at least
a year. So you know, if

747
00:56:09.360 --> 00:56:13.639
you kind of go back where were
we trading at a year ago, you

748
00:56:13.679 --> 00:56:16.480
know, this is right after FTX
went down and kind of the back half

749
00:56:16.559 --> 00:56:20.960
of all the credit contation that took
place throughout the bear market, and so

750
00:56:21.599 --> 00:56:23.920
you know, not only is that
pretty remarkable kind of standalone statistic, but

751
00:56:24.440 --> 00:56:28.239
you know when you kind of add
in the context of you know, where

752
00:56:28.280 --> 00:56:30.679
we were at yer ago, I
think it kind of makes it even more

753
00:56:30.760 --> 00:56:34.480
remarkable. Sorry, will you cut
out? But I we may have lost

754
00:56:34.559 --> 00:56:37.719
you. I yeah, we brought
up that status in terms of long term

755
00:56:37.760 --> 00:56:40.800
vulder supply broadly, I mean the
way that we think about it, and

756
00:56:42.000 --> 00:56:45.239
for anyone interested in kind of learning
more about on chain analysis broadly, we

757
00:56:45.440 --> 00:56:52.119
publish a Bitcoin monthly spearheaded by our
on chain dedicated on chane Us David Pula,

758
00:56:52.480 --> 00:56:55.280
who you know. I'm hoping we
can get on as well. David,

759
00:56:55.320 --> 00:56:59.039
if you want to request just to
kind of share a little bit of

760
00:56:59.119 --> 00:57:02.000
your insight as we speak about this, that would be awesome. At a

761
00:57:02.119 --> 00:57:07.639
high level, I think when you
think about the fundamental framework by which to

762
00:57:08.280 --> 00:57:14.440
analyze bitcoin, it's going to require
an understanding of buyer and seller behavior,

763
00:57:14.880 --> 00:57:19.679
and the most sort of granular and
succinct way to do that is through you

764
00:57:19.719 --> 00:57:22.800
know, n chain data. And
so the way that you can parse this

765
00:57:22.920 --> 00:57:27.360
data is you have you know,
raw data that you scrape by running a

766
00:57:27.400 --> 00:57:30.679
blockchain or bitcoin node that allows for
you to assess the relative health of the

767
00:57:30.719 --> 00:57:36.039
networks. So think things like pash
rate as a proxy of network security,

768
00:57:36.440 --> 00:57:39.920
you know, broader transaction volume,
active addresses, and then you can sort

769
00:57:39.960 --> 00:57:46.239
of further manipulate that data to checkspoint
measure sort of the cost basis through time,

770
00:57:46.719 --> 00:57:52.559
where you're able to basically timestamp every
bitcoin based on which they were last

771
00:57:52.599 --> 00:57:54.800
moved, and that allows for you
to get an aggregate cost basis of the

772
00:57:54.880 --> 00:58:00.400
market, and in so doing you're
able to see sort of relative profits versus

773
00:58:00.519 --> 00:58:04.800
losses when you compare it to the
market cap. So things like realized capitalization

774
00:58:05.360 --> 00:58:09.800
are a new phenomenon in understanding and
analyzing bitcoin as an asset. And then

775
00:58:09.880 --> 00:58:14.159
when you think about you know,
one layer above that, what that does

776
00:58:14.280 --> 00:58:16.440
is that it provides an entirely new
framework by which you can you know,

777
00:58:16.480 --> 00:58:21.199
even actively manage those assets. And
that's something at ARC that we're you know,

778
00:58:21.360 --> 00:58:24.920
thinking about, is we understand the
the the underlying fundamentals, are you

779
00:58:25.000 --> 00:58:30.400
able to translate those fundamentals into actual
active management decisions and so being able to

780
00:58:31.000 --> 00:58:36.880
sort of create you know, oscillators
and fundamental metrics that allow for you to

781
00:58:37.360 --> 00:58:44.320
understand the relative valuation for bitcoin is
also a really interesting kind of dynamic that

782
00:58:44.760 --> 00:58:49.960
hasn't really existed in other asset classes
because of our ability to see supply and

783
00:58:50.039 --> 00:58:52.960
demand. So so Granular Pump,
I know that you jumped on as well.

784
00:58:53.159 --> 00:58:57.440
Happy to have you on. I
would love your thoughts on this long

785
00:58:57.639 --> 00:59:01.119
awaited news that we finally being a
Bitcoin ATF announced. You know, you've

786
00:59:01.199 --> 00:59:07.480
been obviously quite vocal about bitcoin as
a new asset class, sort of the

787
00:59:07.599 --> 00:59:13.199
institutional demand dynamics, and your thoughts
on the implications of a Bitcoin ATP I

788
00:59:13.239 --> 00:59:16.440
would be greatly appreciated here. Everyone
cool to see somebody so any people have

789
00:59:16.559 --> 00:59:20.679
worked so hard on this, so
congrats to all of you. I think

790
00:59:20.760 --> 00:59:22.840
that it's the ETF is going to
be a blessing and a curse, which

791
00:59:23.000 --> 00:59:25.960
just kind of a unique way to
look at it. But I think this

792
00:59:27.119 --> 00:59:30.960
really marked kind of a moment where
bitcoin has now fought for fifteen years to

793
00:59:31.079 --> 00:59:34.599
be accepted, right and you kind
of put that in air quotes whatever that

794
00:59:34.679 --> 00:59:37.760
means a traditional finance, and now
that it is accepted, there's many of

795
00:59:37.800 --> 00:59:43.440
the things that maybe we're attractive about
it previously that may you're not going to

796
00:59:43.480 --> 00:59:46.400
go away but they may just become
a little bit less important, and you

797
00:59:46.480 --> 00:59:51.039
know, kind of the best example
is a lot of people were attract bitcoin

798
00:59:51.239 --> 00:59:54.440
because financial advisors or others weren't interested
in it, right, It was kind

799
00:59:54.440 --> 00:59:59.639
of a counterculture, et cetera.
I think now we're going to see you

800
00:59:59.719 --> 01:00:04.519
know, alas might in power.
And my expectation is that this will become

801
01:00:04.559 --> 01:00:07.920
an asset that's in everyone's portfolio.
When you do that, obviously, you

802
01:00:08.000 --> 01:00:12.840
know, returns, correlations, a
lot of things change. I don't know

803
01:00:12.920 --> 01:00:16.079
if we have enough information today to
really predict exactly how that's going to change.

804
01:00:16.079 --> 01:00:20.360
We can look at other assets,
but I think that this is like

805
01:00:20.440 --> 01:00:23.440
this really important moment where essentially,
now bitcoin has you know, wall,

806
01:00:23.559 --> 01:00:28.519
you opened its arms, hugged the
asset, going to pull it in into

807
01:00:28.559 --> 01:00:30.880
these portfolios, and that's probably great
for price over the long run. But

808
01:00:31.000 --> 01:00:35.599
I also think that investors are going
to have to pay attention. Right the

809
01:00:35.679 --> 01:00:38.000
ground is kind of shifting now.
The holder base is going to expand as

810
01:00:38.000 --> 01:00:42.239
it has in the past, and
so it's going to be fun to watch.

811
01:00:42.440 --> 01:00:45.440
Like every time that we've seen this
happen and kind of gone through these

812
01:00:45.480 --> 01:00:47.760
different paradigm shifts, if you will. I think that everyone learns something,

813
01:00:49.079 --> 01:00:52.800
but also it's kind of what is
intellectually stimulating about an asset like this palm.

814
01:00:53.039 --> 01:00:57.840
This is Kathy. One of the
things as we've been talking, we've

815
01:00:58.000 --> 01:01:01.519
noticed, especially in the last two
years, since interst rates have started going

816
01:01:01.599 --> 01:01:07.800
up, bank deposits have been going
down, money has shifted towards brokerage houses

817
01:01:07.880 --> 01:01:13.760
and their money market funds that were
yielding much higher than bank accounts, where

818
01:01:13.880 --> 01:01:19.280
so all of this cash has built
up in the system and cash levels.

819
01:01:19.800 --> 01:01:22.920
I mean, I think money market
funds are over trillion dollars now something like

820
01:01:23.039 --> 01:01:30.159
that with this accelerated shift into them, and now it's housed in very often

821
01:01:30.639 --> 01:01:37.039
in the brokerage houses the wirehouses as
cash effectively, so and we know they

822
01:01:37.119 --> 01:01:42.039
need to put some of this to
work. There's been incredible risk aversion in

823
01:01:42.239 --> 01:01:45.159
the markets. So that's why the
equity market had such a big year last

824
01:01:45.280 --> 01:01:50.239
year. People were stunned that it
could do anything at all. So I'm

825
01:01:50.280 --> 01:01:53.360
just throwing that out there because I
think they need to do something with the

826
01:01:53.519 --> 01:01:59.800
cash they have to earn their keep, and I do think this is going

827
01:01:59.840 --> 01:02:04.199
to be one of the ways I
could not agree more. Actually, something

828
01:02:04.239 --> 01:02:07.679
that I will and I've talked quite
a bit about, and I've written a

829
01:02:07.719 --> 01:02:10.559
peeth and deleted it about four times
because frankly, don't know if I'm good

830
01:02:10.639 --> 01:02:15.239
enough to articulate it yet. So
I acologize in advance. But if you

831
01:02:15.320 --> 01:02:17.440
really think about dock market, maybe
so forget bitcoin for a second, but

832
01:02:17.599 --> 01:02:24.599
just equities in general, there's a
pretty strong argument that past value metrics will

833
01:02:25.159 --> 01:02:30.920
under predict or undercount the true value
of a business today because of this thing

834
01:02:30.960 --> 01:02:34.519
that you're talking about, Kathy,
where there has to be some sort of

835
01:02:34.599 --> 01:02:37.639
monetary premium, right when people are
aware of inflation, when they're getting out

836
01:02:37.639 --> 01:02:43.480
of cash and they're literally buying equities
as an escape or as an installation from

837
01:02:43.639 --> 01:02:46.159
some of these forces. That changes, right, That changes the way that

838
01:02:46.400 --> 01:02:50.559
you think about valuations. It changes
the way that you think about allocating capital.

839
01:02:50.599 --> 01:02:53.679
That changes the way that you think
about what sectors even to allocate to.

840
01:02:54.360 --> 01:02:59.079
And so I've always thought of bitcoin
as kind of the truest free market

841
01:02:59.159 --> 01:03:01.239
asset that we have out and so
it kind of takes that idea and really

842
01:03:01.320 --> 01:03:05.320
brings it to the extreme. But
really, you know, the ETF I

843
01:03:05.360 --> 01:03:08.559
think now is a signal of what
used to be considered an extreme idea is

844
01:03:08.679 --> 01:03:13.480
not really that extreme. And another
way that I think about it is if

845
01:03:13.559 --> 01:03:17.360
you were to ask somebody in the
nineteen eighties, nineteen nineties, even probably

846
01:03:17.440 --> 01:03:21.400
into the you know, two thousands
and early twenty tens, what is your

847
01:03:21.480 --> 01:03:23.719
benchmark? They would point to the
S and P five hundred and maybe you

848
01:03:23.760 --> 01:03:28.039
know, the queues or something like
that. Now, when I talk to

849
01:03:28.119 --> 01:03:31.239
people in their twenties, they tell
me that their benchmark is bitcoin. You

850
01:03:31.320 --> 01:03:35.559
know, well, can I can
I beat Bitcoin? Well? The fit

851
01:03:35.599 --> 01:03:37.159
was up one hundred and fifty percent, you know, hundred seventy percent in

852
01:03:37.320 --> 01:03:40.039
last year, and so it's just
very hard to do. And so I

853
01:03:40.079 --> 01:03:44.599
think that's another thing is like,
is there something happening where people are saying,

854
01:03:44.599 --> 01:03:46.360
I'm not going to allocate to the
S and P. You know,

855
01:03:46.719 --> 01:03:50.280
why would I only want ten percent
in a world of easy money? I

856
01:03:50.360 --> 01:03:54.079
need more? And so they start
using bitcoin as that benchmark, and that

857
01:03:54.400 --> 01:03:58.760
just again holds value for a long
time. It's sticky capital. They look

858
01:03:58.800 --> 01:04:00.599
at it as an index almost and
that would be a really big tail one

859
01:04:00.599 --> 01:04:05.239
for bitcoin. Obviously if that continued
as a trend well, and the intergenerational

860
01:04:05.480 --> 01:04:14.039
wealth transfer from baby boomers is accelerating
now, so what the trend you're talking

861
01:04:14.079 --> 01:04:18.320
about is probably going to accelerate for
sure. We're also just jumping and flag

862
01:04:18.679 --> 01:04:25.039
the central research piece that are had
for twenty days rategical quointum economics developed with

863
01:04:25.639 --> 01:04:29.280
check made. Since I have it
here, perhaps check we can discuss a

864
01:04:29.320 --> 01:04:33.159
little bit of what we implement them. Daring and the ideas were discussed on

865
01:04:33.280 --> 01:04:39.039
that topic. I guess we already
talked about about how pecoin can be price

866
01:04:39.119 --> 01:04:43.679
timed to some extent. Perhaps we
can discuss how we could be time stamped

867
01:04:43.880 --> 01:04:46.800
as well, and we can take
the holding behavior and the holding time of

868
01:04:47.079 --> 01:04:54.320
different investors at different times get a
sense of how dormant or how active the

869
01:04:54.440 --> 01:04:59.800
network is in a general sense.
Yeah. Absolutely, And cointime economics was

870
01:05:00.119 --> 01:05:02.440
kind of an idea that just spawned
off one of Dave's. Dave had an

871
01:05:02.440 --> 01:05:06.880
idea when we're in Mexico, and
it just morphed into this framework of how

872
01:05:06.920 --> 01:05:13.599
we can actually rethink analyzing bitcoin but
also understanding its heartbeat. And as they've

873
01:05:13.639 --> 01:05:16.039
mentioned, there's kind of two real
key components in the world of one chan

874
01:05:16.039 --> 01:05:21.400
analysis that either doesn't exist or is
very hard to replicate for traditional finance,

875
01:05:21.719 --> 01:05:25.960
and that is the price stamping.
So every single unit in the supply,

876
01:05:26.159 --> 01:05:29.400
we can price stamp at the time
and it moved, But as Dave mentioned,

877
01:05:29.400 --> 01:05:31.599
we can also time stamp it.
And the problem that we set out

878
01:05:31.639 --> 01:05:34.800
to solve was that many of our
valuation metrics, even in the on chan

879
01:05:34.840 --> 01:05:41.079
analysis space, they still include all
of Satoshi's and the lost coins. So

880
01:05:41.320 --> 01:05:44.960
another way to think about this,
as the market moves and is volatile and

881
01:05:45.039 --> 01:05:48.039
we go through you know, boom
and bust cycles, there's a large swathe

882
01:05:48.039 --> 01:05:53.440
of coins that simply don't respond,
can't respond their loss. The keys actually

883
01:05:53.559 --> 01:05:57.360
cannot bring those coins back online.
Now, despite that fact, most of

884
01:05:57.440 --> 01:06:01.440
our on chain valuation metrics still dilute
and they basically say that those are still

885
01:06:01.519 --> 01:06:05.000
circulating, right, we use circulating
supply. And the question we tried to

886
01:06:05.039 --> 01:06:09.400
set out was how can we actually
build a robust framework that can you know,

887
01:06:09.559 --> 01:06:13.320
more or less discount coins based on
how long they've been dormant. And

888
01:06:13.440 --> 01:06:15.719
this comes off the back of some
work we did it last night. The

889
01:06:15.840 --> 01:06:17.599
longer that a coin is dormant on
chain, the more likely it is to

890
01:06:17.679 --> 01:06:20.719
stay dormant. Another way to think
about this, if you were to withdraw

891
01:06:20.760 --> 01:06:25.719
your coin from an exchange tomorrow and
you just unfortunately lose the keys, you're

892
01:06:25.800 --> 01:06:28.639
the only person in the world that
knows those coins are lost. The market

893
01:06:28.719 --> 01:06:31.199
cannot discount those as lost. They're
going to see them as still liquid and

894
01:06:31.280 --> 01:06:35.880
able to migrate back into the space
on any volatility. But let's say those

895
01:06:35.920 --> 01:06:41.559
coins are dormant for three years,
five years, ten years. The longer

896
01:06:41.639 --> 01:06:45.400
those coins are dormant, the higher
our probability curve goes up that they may

897
01:06:45.679 --> 01:06:48.039
in fact be lost. So what
coin time economics does. It uses a

898
01:06:48.119 --> 01:06:54.400
really foundational metric of time, which
is the coin day, which is actually

899
01:06:54.440 --> 01:06:58.800
one of the first Bitcoin on chain
metrics. It's literally how many coins are

900
01:06:58.880 --> 01:07:02.519
held and how long in days they've
been held for that period of time,

901
01:07:02.960 --> 01:07:08.039
and the probability goes up that they've
lost the more coin days these coins accumulate.

902
01:07:08.480 --> 01:07:12.280
But conversely, when a coin is
spent, let's say coins accumulated in

903
01:07:12.320 --> 01:07:15.039
the previous bear market, they sit
there for three years, They've accumulated a

904
01:07:15.320 --> 01:07:19.360
large time economic weight. They've got
a lot of coin days stored within them.

905
01:07:19.800 --> 01:07:25.760
So when that investor or that cohortive
investors who've got those two three four

906
01:07:25.880 --> 01:07:29.920
year old coins, we typically see
these folks come back into the market and

907
01:07:29.960 --> 01:07:33.000
it starts spending when it's opportune,
right the market is rally, they're seeing

908
01:07:33.599 --> 01:07:39.360
large percentage gains. So we've historically
seen large expulsion of coin days, which

909
01:07:39.360 --> 01:07:44.119
we call coin day destruction. So
this is economic information we're basically looking at

910
01:07:44.199 --> 01:07:47.760
when those coins come back into the
fold and they re enter circulation and what

911
01:07:47.840 --> 01:07:53.039
cointime economics does. It's a framework
to actually create a discounting curve and it

912
01:07:53.159 --> 01:07:57.719
biafocates the supply into vaulted and active. And the way to think about this,

913
01:07:57.880 --> 01:08:00.320
vaulted is kind of the most dense
coin that just simply don't want to

914
01:08:00.440 --> 01:08:03.840
move. We actually don't need to
measure which coins they are. It doesn't

915
01:08:03.880 --> 01:08:08.400
matter if they're setoci's or if there's
somebody else's that was lost yesterday. It's

916
01:08:08.480 --> 01:08:12.880
a really nice simple mathematical framework.
We can just say they're either lost or

917
01:08:13.119 --> 01:08:15.239
they're mobile. And you know,
one of the dave I might pass this

918
01:08:15.319 --> 01:08:18.960
back over to you. But one
of the really powerful things that we got

919
01:08:19.039 --> 01:08:24.560
out of this we found this pricing
model called the true market mean pretty much

920
01:08:24.640 --> 01:08:29.159
exactly and always has been in the
middle of bitcoin as a long term mean

921
01:08:29.239 --> 01:08:32.119
and median of one. And this
is what Dave's invention, so I'll pass

922
01:08:32.199 --> 01:08:36.279
it over to him. But it's
just these new valuation frameworks with a mathematical

923
01:08:36.359 --> 01:08:40.279
rigor behind them that I think is
just pushing the asset forward. Yeah,

924
01:08:40.439 --> 01:08:45.520
I think that's a good segue to
plugging our research. If listeners want to

925
01:08:45.560 --> 01:08:47.640
find out a little bit more on
what the true market mean, how it

926
01:08:47.800 --> 01:08:54.840
works, it's formula, and it's
mechanisms. We recommend going into our website,

927
01:08:55.039 --> 01:08:59.399
both the cointine piece that we have
publishers about six seven months ago and

928
01:08:59.399 --> 01:09:03.840
the to but comes out every month
a few days after close. Yeah,

929
01:09:03.960 --> 01:09:06.920
that that that white paper is is
available. And I think, you know,

930
01:09:09.840 --> 01:09:13.520
the invention or the heuristic of the
coin block check is is not to

931
01:09:13.560 --> 01:09:17.560
be underestimated. You're you're you're basically
implying that there's now this fungible unit of

932
01:09:17.720 --> 01:09:23.960
measurement in Bitcoin's economy that allows us
to even better assess the economic state.

933
01:09:24.520 --> 01:09:28.640
And I think as for you know, those who are just trying to understand

934
01:09:28.680 --> 01:09:30.960
bitcoin, and trying to understand the
fundamentals. You know, these are the

935
01:09:31.039 --> 01:09:31.920
kind of metrics that you