Urgence between bitcoin and artificial intelligence, and the Lightning network is playing a big
role in that. Okay, I believe what of it. I've not seen
it in action. Elon Jack, who's a speaker on stage as an expert
on it. If you want to ask him any questions, what's up?
Elon, I would say Matt as well, I see you, Matt,
Matt Corolla is this is the Blue Matt. I met him in Uruguay,
a core developer. Very excited to have you on as well, Matt,
Thank you, yeah, thanks for having me. I really I really appreciate
all the work that everyone's been doing on all these ETFs, and I really
am looking forward to, you know, from the developer and working coin for
more than a decade, well more than that decade now now working full time
on Lightning, so trying to make bitcoin payments as much a thing as we
can. But I'm really looking forward to all of the Bitcoin Unlike nearly every
other cryptocurrency doesn't have any kind of foundation. There's no fees that people are
paying directly to developers, and there's no fund to fund people doing great work,
like all the work that Ark's been doing on making coin go more and
more mainstream by bringing the loopers to keep this software running, because ultimately bitcoin
is powered by a software project, and there's a lot of work that has
to go into all of that engineering. And we've seen several of the ETF
Bitcoin ECF offerings now offering to fund bitcoin development directly. Of course, ARC
also has directly funded, directly funded a lot of work for bitcoin, not
necessarily software research, and a lot of really important work. So I'm really
happy with where these things are going, just from the perspective of how much
more funding this is going to bring to the bitcoin ecosystem broadly and continue to
improve things like bitcoin technologies. Yeah, elon, so I brought up x
X X well truth and advertising. We own it in our venture fund and
and we're excited about the plans you have for it. We want to do
our part. This is part of what today is all about. We want
to break news on X and I think I think more and more companies and
people will break news on x SO hence ar KAB. But also you wanted
to be the everything app, and I know on this call there are a
lot of people who who have a strong view about how quickly you'd be able
to proliferate that throughout the world with bitcoin as as part of the infrastructure.
Yeah, I'm open to the using bitcoin. I mean, it's like it's
all the various things that I think about. I think about bitcoin very little,
but I've thought about monetary systems a lot, and the actual practicalities of
changing exchanging money or it's money's really just data information and a database and the
you know, it's money is information system for labor allocation. So most people
think of money as having power in and of itself. But you can obviously
run some basic court experiments and say, if you have eight twllion dollars on
it, you know, from you're marooned on an island, it's useless because
there's no labor to allocate you. Only once you have some complexity and you
know, you have people with different skills, then you need sort of an
information system for labor allocation and to shift obligations across time. But it's remarkable
how many people think money has power in and of itself, because that is
their experience, certainly in any advanced economy. You know, for for example,
if you were to say, like let's spend more money on healthcare,
I'm like, okay, well, you can't instantaneously change the number of doctors.
Doctors take roughly thirty years to you know, for for a new doctor,
a baby to be born and ultimately be educated, to be educated and
become doctor. You can't. Really, you can't just throw money at a
system and suddenly have you know, get doctors from a magic doctor factory.
So you can't over time change the r of doctors if you change the instead
of structure for doctors. But you cannot. Just adding money to a system
does not create more doctors. But people weirdly sometimes think that is the case
because that's they just they see what is immediately in front of them that they
do not see two or three layers deep. In fact, like this is
why inflation is such an effective means of taxation is because inflation is a few
layers deep, and most people simply see one or two layers deep. But
like if something is like three layers away, that they simply don't realize it,
and they will in fact be aggree at the store for the prices going
up, even though it is in fact the government that has caused the prices
to go up. That's why we have to get the government out right for
any given system, whatever the incentive structure is, whatever the incentives are,
that's what will happen. And it then it should be no surprise if you
incentse something better will happen. It would be weird if you intense something and
it didn't happen. Then the context of your company's elon SpaceX and Tesla,
like, what was the rationale behind using bitcoin and the treasury and is it
something that you've kind of backed off with or is it something that you're amenable
to kind of more broadly, well, I mean, we did make some
prominent purchases a bitcoin at Tesla were we just can't a bit concerned that the
big changes in the ratio of dollars to bitcoins, you know, that that
that value ratio of changing too much, you know, and the case we
needed the working capital, it would be better for us not to have a
bitcoin. And now space still has most of the bitcoin because basics did not
anticipate any working capital issues potential working capital risks, and you know, and
yeah, just and I was at one point it really seemed like the use
of electricity for bitcoin was on the margins really being quite a lot of dirty
electricity, and I hope people got always you know, rebuttals to high you
know high. I see it's energy being useful bitcoin. But like there was
at one point, like I think, an entire power station and coal mine
in China that was a truly gigantic one that was responsible for a massive amount
of bitcoin wining. Now I believe that is no bag shut down, but
I think that actually constituted some insane amount of bitcoin hashing at one point.
I think things have gotten better with just the usage full bitcoin hashing. It's
still a little bit of a concern, but it seems not as serious a
concern as it was in the past. That's analogy to me arguing that electric
vehicles are bad because I live because they're powered by a coal power plant.
Like I think you have to divorce the source of the electricity from the actual
fundamental good that spending energy to secure the bitcoin network produces. And that like
the reason the thing that Kathe and Hard are talking about is that, hey,
here's a currency that a government can't control. It can't control because you
have a basically decentralized distributed denial of service system preventing it from being kind of
controlled. And co opted, and the cost of that is the energy used.
I don't think they were exactly analogous. So in this case of the
gigantic coal mine and coal power plant in China, its sole purpose was bitcoin
mining, and it was really not something that would be used for anything other
than the bitcoin mining. In fact, when that plant went offline, there
was a massive drop in the in hashes for a second boitcoin. That's how
you could tell it was that plant. You know, that's it's when it's
that that was problematic. It went too far at a certain point. Now,
like I said, I think at this point it is better. And
when you look at electricity usage, when it's not being pushed beyond a reasonable
bounds, it is electricity use. Electricity production is increasingly sustainable coming from wind
and solar with buffering, with battery pack buffering, eatl on. If you
don't back the monetary units with work, something that actually takes energy as opposed
to keystrokes, I just don't know how you can build a better system that
actually pegs Fiat currency around the world without some type of proof of work mechanism.
No, I'm not saying we're going to have some proof of work mechanism.
I'm just saying that. And look, I don't want to you know,
I'm on this cope goest. Kathy asked me to be on this call,
not because I'm what's to argue about bitcoin. I still do think this
is this is an important If forget his annoying bitcoint arguments, I'll sign off.
I think Elon you you kind of raising some of these concerns. I
think part is part of the education process for understanding bitcoin. This is exactly
why we have these conversations. You know, we don't necessarily need to go
back and forth. But maybe I see Harry's actually on the line. He
is a bitcoin minor, perhaps kind of setting up the case for just energy
and bitcoin and how you're effectively converting electricity into a hard asset. Perhaps my
help as a framing. Hey you seen thinks great to be your congratulations Kathy.
The entire art team. We've actually been through our own SEC process in
the last two or three weeks as well and got approval to take grid public.
So congratulations. Than we're in good company with you. To say the
least, I want to address just the energy thing in general, because I
actually think Elon sort of is light about the more fundamental heuristic, which is
that bitcoin provides a revenue stream to energy generation assets that they wouldn't have otherwise,
and so on the one hand, that can create you know, perverse
negative dynamics and externalities when it comes to a one off coal plant or several
one off coal plants that are getting shuttered, whether regulatorily or financially, and
can breathe a second life into assets that maybe, you know, we as
a species would argue against. I think that's true, and I think that's
negative. I think that the positive tailwind that bitcoin mining as a totally orthogonal
purchaser of energy actually carries the positive day because there's an enormous amount of opportunity.
You know, if you look at the you know, the Interconnect pipeline
in the US, for example, you know, there are wind and solar
farms that are waiting multiple years just to connect to the power grids to be
able to enter their renewable energies into our markets, and they're unable to,
whether for regulatory reasons or system engineering reasons. And so you're able to bring
a bitcoin mind to that generation asset and start clicking revenue much earlier. It
means that the ability to finance these projects is significantly expanded. It means that
the infrastructure costs that get passed back to rate payers get to be lowered because
those revenues get brought to market much sooner. And it does a lot less
from an eminent domain. You know, where do you bring the lines that
you know, those types of environmental and regional issues, those all get diminished
as well. The only other thing I just want to add and shout out
is just that this is not a US story. This is a global story.
And there are places all over the world that desperately need a normal lead
more electricity, and so we believe and there are companies out there like Eric
Hurstman and Gridless Compute who are bringing new electricity on a clean hydro electric basis
to communities that desperately need it. They're taking kerosene offline, they're taking hydro
electric online, and they're doing so on the back of work in bitcoin.
And so we're enormously excited about what coin means as a bootstrapping mechanism for more
clean electricity for more people on the planet. Can I just say for a
second that I think Elon's points should be taken very seriously. You know,
the electricity argument is a detailed argument there. But the existence of bitcoin,
the limitations of bitcoin, the programming of bitcoin, are the really with the
wonders of this coin and really will be served the whole monetary system of the
world. Now, the trans and nature of a bitcoin is also true,
but it's the same thing in gold. You know, what you had here
is the bitcoin will be the reserves if you will, of a transactional system
that will include other entities with bitcoin, like reserves in the bank. That's
where it's really going to go. Elon, and I think you're totally correct
that the electricity is a side show to this and the transactional developments that will
occur are really where we'll get a new world money. But the bitcoin is
the monetary base, if you will, of that, just like gold used
to be. ARC actually wrote a really great research paper a number of years
ago and around bit quiet ability to fund clean energy like Harry was talking to,
but that I would encourage people to go look up. In fact,
Tesla was a part of helping bring pilot plant to demonstrate that and how bitcoin
can help fund solar energy using some of their battery technology. Who wrote that
mat Arc did? In fact, we did with block oh Arc oh the
one we did. Oh yes, yes, yes, and Elan this was
on we did. Remember with Jack Dorsey we did the B word. It
was called the B Word. It was a five hour seminar that you Jack
and I think Steve Lee kicked off and we spent a lot of time talking
about this use case. I actually have one question. I don't know how
much time you have, Elon, but I do. I would love to
know you've been clear about the need for us to be an interplanetary species.
What money would you use on Mars? It probably would make sense to use
some kind of cryptocurrency on Mars. Now, you couldn't use bitcoin because the
reconciliation time is too long. Like the Bars at times is Mars can be
like twenty light minutes away, not as easy that you can difficult. There
had to be some localized thing on Mos. Yeah, so I know some
very important movers and shakers in the community are here. I'm sure they are
already thinking about ways to make sure that bitcoin makes its way to Mars.
I'm positive. Yeah, it's just like I said, you know, at
times you're well, and when you was on the other side of the Sun,
I mean reasonable. There's a rough way to think about it is there's
eight lightnunits from the Sun. Mars is roughly one and a half times as
far away from the Sun as you you know as the Earth, and so
at times you're on the order of twenty minutes. But sometimes even like you
can't go right through the Sun, so that you have to be a backshuttered
past the sun chap probably I think might be like twenty three minutes. That's
max speed of light anyway, So I just think you could perhaps but points
sun degree. But you know, it'd be difficult to use it a lot.
Luckily, some of the other technologies, like lightning, it would work
totally great. Without latens, you'd have to have a localized lightning network like
you were talking about now. You wouldn't be able to mine on market.
You can't split mining across the Earth in Mars. But correct, I think
the Mars have some sunsets something like well, I mean that I hope we
have that problem to deal with it. If you have that problem deal with
then really civilizations advanced dramatically, so right now we've not yet been able to
put a single person on Mars just a few robots at extremely high prices.
So in order to have any you know, to in order to pass one
of the Fermi great filters, which is are you a one planet species or
a multi planet species, we have to have a self sustaining civilization on Mars,
where the acid test being if the reply shifts stopped coming for any reason
whatsoever, that the city on Mars does not die out. Well, I
want to thank you, Elon. I know if you want to hang out
and here continue with the coin conversation where you could, Yes, Kathy,
you're back. Yeah that did I get cut out? I don't know what
happened there for just a second. Okay. What I was saying is I
don't know how much time. I mean, I'd love to keep that back
and forth Bitcoin. I know your time was short, but I want I
wanted to thank you for joining us. This has been awesome. Spaces is
awesome, and we're going to be doing a lot more on spaces, so
so thank you. Those good good, just great great, thank you.
Okay, the guest appearance, he's pretty amazing. But I actually I think
we scored a few bitcoin points there guys. I think we're bringing him back
into the fold. So I think this is very similar pattern as to what
happened over the last ten years. We'll probably repeat itself. A huge reason
of why we've been able to list these in other jurisdictions with other skeptical regulators,
and the same reason that we've been able to do it in the United
States is it's becoming way too big to ignore. I think if you just
look at ownership levels anywhere to the estimates I've seen, there are anywhere between
fifteen and twenty five percent of American adult there's one hundred million or more coin
base accounts and so on, and so I think of considerable part of this
is that it's just becoming much larger to impossible to ignore, and that's going
to continue to push adoption. In my opinion, I'm going to go pre
soon. Yeah, we should obviously a lot of people have joined us just
recently, and we should just say, obviously we want to thank the guests
we've had so far. You know, we're gathered here today and they're on
with us to really highlight the fact that at the monumental day with the approval
of the Bitcoin ETFs and ARKB for the R twenty one shares Bitcoin ETF launching
tomorrow, and he's become very relevant conversations very fast for so many. It's
the reason that the tagline for the R twenty one shares Bitcoin EATF is aren't
you a little serious? There's so much to be curious about for so many
who, as I think Brett said earlier, previously had almost excuses not to
pay attention, and so we want to bring high quality content. We thank
Elon certainly and many others because curiosity will lead to so much knowledge, and
there's still so much debate and so much innovation to go. Thank you,
Tom. I wanted to just get quickly back to finishing up something that I
think we started talking about using the gold ETF. And I know that a
lot of people on this call think about inflation and as I do all the
time, risks and so forth. But back then it was Russian default,
long term capital Y two K, then the tech and telecom bus. The
FED just kept easing, even though that recession was very narrowly focused, and
I think that's what greased the skids for gold and all other commodity prices in
the early two thousands, so you know, when people do use gold,
the gold ETF as a guide. I just I think gold actually might have
gone down as a you know, relative to other commodities. And then we
were going to go somewhere with that. Yeah, see, and I've forgotten
where, Kathy, I'm going to have to take off our labber here.
Thanks you very much. Congratulations again on all you've done. You're amazing all
of you the whole time. Thank you Lafe so much for joining. I
think that the context was basically trying to find analogies to how call it momentous
of an occasion and ETAP approval is to an asset like bitcoin and whether we've
seen you know, similar tipping points in the past. Well, your research,
yes, seen, is I think very powerful in terms of you know,
getting us to And people think this is crazy to say that we think
bitcoin could hit one point five million by I think twenty thirty or I think
it's twenty thirty, which is a sixty percent annualized increase. But I think
our research is sound, and again it's sound big ideas for those of you
who haven't seen it. The building blocks of getting to that price are not
crazy. They're not quite there, and in some cases they're quite conservative.
That's right. I mean, I think without even going into the building blocks,
if you just apply simple heuristics, like taking what the market cap of
gold is, which is around twelve trillion dollars, in the market cap of
bitcoin, which is just under trillion dollars, if you really compare, how
much better of a version bitcoin is too, Gold as this store of valuable
that's portable through Yeah, seeing we lost you. Oh sorry, I don't
know where it's I think it just muted. I don't know where I value
store of value. And just to think about bitcoin as being that better version,
you know, to think that bitcoin is not going to reach parity with
gold then perhaps even exceeded over the next ten years. You know, that's
an order of magnitude increase from where we are today. So just alone reaching
parity with gold brings it to you know, that five hundred thousand dollars price
per bitcoin, and then you talk you add on top of that all the
use cases, Kathy that you mentioned as an insurance Paul against arbitrary asset seizure,
as this hedge against counterparty risk, really as a remittance network, an
economic settlement network and then you know, really as an institutional now allocation,
as a legitimate asset, that getting to that one point five million dollars you
know, over the next ten years is seems quite plausible in our view.
Can I just I want to make sure this We had people popping in so
I had meant to do this before, but I mentioned we have Matt with
us. Matt Corolum and Adam Back. I met them at a bitcoin confab
in twenty nineteen in Uruguay, and you know, here we were getting a
lot of flax still for owning bitpoint. You know, there were some wirehouses,
some of the brokers who brokerage houses that you know, made us take
GBTC out of some of our funds otherwise they were going to fire us.
And you know we held firm where we could aarkw But my confidence at the
after reading Matt and Adam shot up dramatically. Core developers, you know,
monetary experts, you know, at this conference really comparing notes you know,
from you know, young in age to more seasoned in age. I certainly
was there so but that was for me, like the crowning cap on so
much of our research. It just brought it to life, and I wanted
to well thank Matt and Adam. And for those who don't know, Adam
just joined he is an og cipherpunk and invented I wish he was on to
talk about proof of work with Elon, but invented hashcash, which is really
the first proof of work system that was used as that to prevent that attack.
So Adam's great to have you on. I know that you tweeted a
few questions about the ETF approval, and I think that this is actually a
platform that we can use to maybe answer those questions and get your thoughts here
broadly. So actually a technologist is going to put the ETFX personal questions any
of the direction, right. Yeah. What I was wondering about is the
mechanism by which inflows get into the market and if the usual t plos two
kind of sumtment delays mean that market makers or aps run out of capital,
which tends to happen from time to time. And Bitcoin in the big share
space good. Yeah, So Athelia and Ham are partners at twenty one shares
have built out the infrastructure are experted ups. So a Feilia or HENI yeah,
sure, look I think one of the things that's really been critical over
the last couple of years running this company has been how we build out this
infrastructure. The infrastructure is so core to running these products. I think there's
been a lot of speculation over the last couple of weeks, well, you
know, all these big names and finance are coming in and that's not you
know, and they're going to know what they're doing. And maybe, but
at the end of the day, there's a certain element of this which is
technical and does require an actual understanding of how blockchains work. But to the
correct question, I will say, well, Adam, in terms of our
own experience with active equity ETFs, and many people thought this was a ridiculous
concept, that you know, the ETFs, the ETFs wrapper, and the
infrastructure surround surrounding it would not be able to handle us. The opposite was
true, that there were the market makers, the authorized participants. They all
do very well with our volatile strategies, and of course pitcoins are very volatile
as well, and there are other there are lots of arbitrage opportunities popping up
now around the world. I mean, twenty one shares has forty funds well
now forty six with this one, and you've also got the underlying assets.
So I have witnessed the liquidity in our utfs is far greater than I would
have ever imagined, so a feeling maybe you can leverage off of that in
terms of what we expect for this bitcoin et. Yeah. So look,
I think one of the things that we can expect to see, and I
think this has been a little confusing. So the way these products start trading
is you convert these the seed numbers you've seen into bitcoin, and those exist
in the products prior to the first day of listing. After you list,
you've got market makers who are coming in with orders. Those orders are going
to need to be routed typically like through OTC trading desks, partially in order
to support some liquidity and also frankly virtually so that you don't have to take
the coins out of cold storage to trade by putting them on an exchange.
So we're actually going to be trading out of cold which is far safer,
just purely at an infrastructural level. That's actually true of all of our products.
We don't ever have assets that aren't in actual cold wallets. Essentially,
the way this is going to end up working is you're going to have these
market makers that are making markets public markets in the security itself, and then
on the back of that, they're going to come in and check what their
inventory is. If they're short, they're going to create, If they're long,
they're going to redeem, so that they're managing their inventory against that creation
redemption process, and that's really where you're going to see that trading come in
on the crypto side. And fundamentally, the way we approach to this is
a little bit different. We've taken a very intent approach to custody and security,
and why we have approached it this way and the kind of technology that
we've built over the last five years to support it is quite significant. It's
not that easy to make an asset like bitcoin play nicely within traditional financial infrastructure.
In order to do that, you need to actually build a bridge between
these two asset classes that you know, they don't share that many features in
common. They don't tread on the same rails, they don't settle on the
same rails. It's not the same counterparties, it's completely different infrastructure. For
all the reasons that advisors and investors need the ETF in the first place.
That's why it's so difficult to build one. Did that answer the question or
I want to make sure that we answer the question precisely, so if we
missed the question, please we asked it and yeah, yeah. Let me
make a kind of extremists example. Right, So I don't know what people
are affecting the plus stay volume to be, but let's say it's ten times
what's expected. What does that do? Does that mean that, you know,
the marketmakers and aps run out of us all liquidity and it becomes difficult
to arbitrage and they trade above spot or something like that, kind of kind
of like the GPDC when it was in a premium, but in that case
because it's closed. Ended here just because the market participants run out of liquidity
to arbitragic in smaller doses, that's what's happened in the past. That Quinn
exchange is. Yes, you can see things like that in an ETS,
but the difference here is balance sheets are a lot bigger, and fundamentally you're
running on a essentially T plus one to T plus two structure, and there's
a little bit of a gap between when an AP is going our market maker
is actually making that market in the public markets and seeing that demand and when
they're going to be able to have those shares on the back end, Unlike
GBTC. Part of the problem with GBTC is you couldn't create any new units
of this product, right, whereas something like ARKB from the get go you're
going to be able to do that. That makes the arbitrage mechanism significantly more
effective. You got that there's a delta between the creation redemption process running on
a T plus one basis versus the actual public markets running on that T plus
two basis, and so there is a little bit of time in there in
terms of how they're managing inventory and balance sheet. Balance sheets are also quite
bluntly, just a lot bigger, very big. I mean, James R.
Put out it Financials or maybe they leaked. I don't know why they
got out. You know, it's an enormous company. Enormous companies all right.
Just always amusing to see if that going break things because all taile and
larger than people expect, and trades over the weekend and stuff like that,
so it'll be fun to exite. We've actually seen a bunch of that in
Europe, over the years. You're right, it requires a certain degree of
supports for aps and market makers that's way beyond what the what you would expect
in an equity market. It also means that you know, for example,
there are a lot of people who might you know, after hours trade product.
And this is a sun little quirk of these et apps is that you
know, there's this concept of market hours in the US, but there are
there is facility, there are facilities for after market hours trading. And one
of the really interesting things is that, unlike an equity product, where in
your after hours trading you're kind of guessing at what that price is really going
to be based on futures and based on demand in other markets, with this
product or actually going to be able to trice effectively off of an entitlement basis
because there's a fixed amount of bitcoin per share, so they can actually get
real pricing and provide actually competitive facilities for after hours trading. And I think
that's something we're going to see a lot more of. It's one of the
reasons why you know, you see a lot of the big market makers that
do work in crypto ETPs and ets actually operate on a global basis, and
so there's one desk that's globally distributed, and so that will likely also help
mitigate some of the things you're talking about. But I do think it's going
to be very interesting to see what happens as you start to have, you
know, the full course of that demand hit bitcoin markets, although I do
think it's likely going to take a couple more months than people think to see
the full picture in terms of demand. Does anybody on a kind of analysis
site of opinions about the multiple for inflows versus impact on market cap? And
a few years ago bikro America that some analysis indicating it was over one hundred
I think they had one hundred and nineteen. So it's kind of curious about
what the inflas will tend out to be the multi tuch that we'll have on
bitcoin price spectively have done this some estimates. Actually that's the power on channed
analysis. You can kind of see which of the bitcoin is readily available to
be absorbed by marginal demand and which one is kind of locked up. And
I don't think people fully appreciate kind of the price multiplier effect and that you're
not simply just dividing by twenty one million, and that a dollar inflow doesn't
necessarily translate to a dollar of market cap in our estimates. You know,
when you think about just broader long term versus short term holder supply dynamics,
about seventy six percent of bitcoin's supply is held by you know, what we
consider to be long term holders, so holders that haven't moved their bitcoin in
at least six months. And then there's kind of an additional half of that
which is considered short term holder supply that isn't sort of rarely available on liquidity
and exchanges. It's kind of just being overturned or turned over at the wallet
level. And so if you kind of call it, say a one to
two million bitcoint of total circul league supply is readily available, there could be
to one hundred to your point, there's one hundred x multiplier. We've estimated
it's between a twenty five to fifty x multiplier for every dollar in flow.
But it would be interesting to do some fallout analysis now that an ETF has
been approved. Yeah, I wonder if the profile of the ETF unit buyers
will be different than the active bitcoin traders. They might be lower polosity on
hold, whereas the two million or soap packet or you know, the laboration
there's eighth stay chun Whereas I think with ETFs, people are not generally looking
to day trade then looking see put it in their units. Some of the
fond we'll hold it for some years. So maybe that way. Yeah,
that's that's it. I think that's a great point part of of what our
thesis is that this really opens up or broadens the spectrum of the market for
individuals who are looking to buy a bitcoin. I know Tom rco is on
the line, but I'd love for Tom if you want to jump in on
just broader advisor market and kind of demand for something like a bitcoin ETF relative
to traditional spot and how those dynamics are evolving now that we have this approval.
I think some of the discussion has been so binary as an either or,
and I think what we're going to find is that's the wrong way to
think about it. It's really going to be the percentage of the total allocation
exposure that really is allocated between you know, the to date what it's been
the traditional way of doing it and that part. And that's other part that's
coming online. This quin eat and I think, you know, there are
numerous reasons, depending on what the buyer's profile looks like. I think one
that maybe is something for people to think about, and it depends on unique
And then the visual circumstances is that while there may be some ways to post
the bitcoin as collateral against alone to gain personal liquidity, they're not easy for
the average person. And so as we get into a regulated, audited security
that's custodies at a traditional financial institution, and mostly bang, you know,
these securities are going to be able to post as collateral to, you know,
to basically to borrow against. And that borrowing against could be used for
any purposes. It could be just increased individual liquidity, It could be reinvested,
could be a number of things, again very individual and specific circuits.
But I know there are people on this call already who have had exposure to
European et ass and the twenty one shares line in Europe who were able to
suddenly gain great personal equity without losing the exposure to the invest And that might
not be all of your allocations to Big One. In fact, I would
expect perhaps just a small portion, and yet bringing that inside the existing rails
of the financial system offer pultional benefits as well as potential investment benefits, you
know, to continue across the space. And you know that's also like realize
when we talk about that liquidity you're talking about like standard margin from your bank,
it doesn't cost anywhere near as much as what we've seen in terms of
some structured loans where maybe you're putting it coin up in order to get cash.
Right, it looks structurally very different, and it's also just from a
cost perspective quite different. I think Kathy made this point earlier and we really
agree with it at twenty one shares, which is we have nothing against physical
holding of bitcoin. It just so happens that the ETF rapper enables a certain
set of investors to be able to allocate more in the space or come in
at all. And from our perspective, as it increases the pie, we're
all in and so it doesn't take away from holding it physically at all.
It doesn't take away from any of that. But the ETF does come with
very real structural benefits, especially for more institutional investors and more traditional investors.
But I think Bret Whitten earlier said it very well, there's both of the
incentive structure around allocation to the asset class that the reality is just different when
you have an ETF structure than when you've had the coins in traditional wallets or
for self custody. And that's because brillions of dollars are tied up in intermediated
assets in this country alone. Those intermediaries are certainly not incentivized to lose the
fees or even if it's not fees, lose the oversight and the influence that
they have previously. With the case if you had clients leave the closed walled
ecosystem, and certainly, you know, those who are deeply invested in the
space correctly will point out that has not stopped them, and and they're right
and that and that's great, but it's also a reality that it has stopped
a significant pool of assets. And so you know, I think it's a
very clear different use case. I also think, you know, I've heard
a lot. We talked a lot about the inclusion in fact fact. We
didn't just had Elon Muskat on this faces if you're disjorting us, but we
saw what happens in the inclusion of fact when managers have to pay attention to
an asset. Tesla famously was not part of the S and P five hundred
until it was a huge thock in terms of market cap value. The imagers
five hundred billion dollars. A lot of managers conveniently, and you heard it
on CNBC and Bloomberg and Box Business and all of the different places, conveniently
got to not have an opinion on a stock that was quite literally changing the
world because it wasn't in the index that they been sparked against. Suddenly,
when it was included, they not only had to have an opinion, but
they were judged and held accountable for that opinion. And I think that again
that is not binary. It's not either or. But advisors now have access
where they're gatekeepers at their custodians or their home offices or their investment had perfect
cover to keep it out. They're now going to be accountable as wealth managers
for what they say and what they do around this asset. And they know
that they're bringing frankly, their incentiviz because even for some of them, they're
going to bring some of those assets back under their tent where it's packaged in
the same financial statements, the same tax documents, you know, overall correlations,
and they're going to put it to work instead. But with these benefits
for the clients, certainly the costs and of course they air KP is twenty
one basis points. I think compared to what somebody opening a brand new account
coming into this sasset class for the first time, that's lower than the trading
fees. And remember what he wanted the fees all in everything. Whereas you
know people talk about custody, they sometimes forget about the trading costs. We
have to have total costs, the total costs when we look at this,
and so things like liquidity, things like able the ability to post as collateral
are all cherries on top. So that I'm not even talking about the institutions
in this country that use about four layers as consulting for DYA reasons to protect
themselves in a latigious society, who now also have access and are held accountable.
And those are obviously massive allocations. Even if a small fraction of them
do a small percentage, we're talking about a meaningful amount of total capital suddenly
coming. So even if you don't believe what I just said for all of
it, but you believed one part of it talking about a significant chunk of
institutionalized intermediate wealth, and I understand that's not where the original eco cuperfcoin.
But I would also say these don't have to fight each other. They can
be complimentary, and I would be surprised if even those who are the most
focused on maintaining their autonomy don't find benefit from at least a small portion of
that within the traditional finance system. Well also, I mean not just them,
right, I can confidently say it was orange pilled by my mother,
which is a shocking thing for most people to realize. That's kind of supposed
to go the other way, and that happened in twenty like early twenty fourteen,
late twenty thirteen. My mom came to me and was like, hey,
listen, you know merk spends too much money hedging and governments running monetary
policy based on geopolitics is stupid. We should have an alternative. Have you
heard about a thing called bitcoin? Twenty fourteen from my mother, and she
missed the trade because of the infrastructure. She didn't feel comfortable setting up an
account that was new that was outside of her financial infrastructure. She totally got
the vision there just wasn't really rails for her to be comfortable with that.
So I mean, honestly, Tom, I would actually challenge you a little
bit there, which is it's a little different than the original ethos. But
the original ecost is about inclusion, right. We want everyone to participate,
and that's if you want a few billion users to use bitcoin, you need
to provide it to them in a package that they can actually use and feel
excited and constant about. My mom is never going to feel about. The
inaccessibility of bitcoin that Opailure is talking about is very real and it comes in
two flavors. One is how she described her mother or more traditional investors who
are just more comfortable with an etf rapper. The other thing that we haven't
discussed is if we really want this to become so ubiquitous and so world changing,
we need to get it in the hands of billions of people, and
at least on the institutional investors side. There are a lot of investors out
there who have mandate that prohibit them from investing without things like the etf rapper,
and so both worlds can exist, and if the aim is to increase
the market, a great title will lift all of our boats. We should
be working on every single one of these options. So I think that,
you know, it's interesting because on the ARC side, you know, I
sat on the other side of the table from twenty Shares when we first met
to evaluate you know, what a partnership woul book like, and I was
druck by the commonality of what the organization's state admission purpose was relative to the
democratization of assets. I mean, I look at the forty different funds that
twenty one Shares has in Europe's across assets and in the digital assets space,
much deeaper than what we're currently able to do in the United States due to
the regulatory framework, but that I have high degree of confidence that we will
get. I look at ARC and certainly democratizing using the etf rapper bringing out,
you know, a venture fund for mass retail to make private equity available.
This Bitcoin very much fits in it. But when we're keeping segments of
the potential investors out, that's not democratization. Right, to truly democratize,
it has to be indiscriminatory relative to the individual pain points in friction that any
individual may have. And I agree with Haney wholeheartedly that not everyone has the
same friction, not everyone has the same barrier. Some of them are mental,
some of them are psychological, some of them are financial, some of
them are regulatory, some of them are legal. But they're very real.
And so you know, when you think about the tagline that we put on
this product, aren't you a bit curious? We have to also destigmatize the
curiosity versus those of us who have dedicated considerably more time to learning about this
in greater depth and say this in this vehicle in part is to help overcome
the friction points so that you can gain exposure. But also once you can
gain exposure, that is one of the most powerful catalysts, you know,
no matter what we're talking about, the most powerful catalyst for you to spend
more time, to be more engaged and to overcome any real or perceived hurdles
that you've had. And I think that is truly what democratization is. I
think that the ETF is there, but the reality the cost is very regularly
a hurdle in almost anything in life. It's one of the reasons why we
wanted to have a price twenty one. Obviously twenty one. I mean the
price was always hidden in plain sight with the name of the fund, with
the partners that twenty one shares, but to have it that low is designed,
as Kathy said earlier, in this call to reduce as many, absolutely
as many barriers and fortunes as possible. We're really proud of that. There
are certainly bigger named firms that are coming with higher products. They don't necessarily
share what we're trying to do here, and that's fine, but you have
to understand that with a dedicated mission towards democratization, we're going to talk to
all sorts of people's who are in all different parts of their crypto journey,
and some of them going to recognize things that we did, specifically for those
more educated, like what the nav of this product is going to come out
as, and it's pegged directly to the bitcoin price rather than some arbitrary esoteric
price that every other filing has put on. This in a nod that it
has utility value and for the very purposes that we've said before that the existing
ecosystem will find value. But it's also in light of the research. It's
calls like this bringing experts together and for the advisors out there, if you're
listening right now. You know we intend and we can personally pledge that we
will have the greatest amount of support for advisors. If I were an advisor
right now who had not put any clients in this ATHA class ever before,
I know that tomorrow is going to be a very scary day because my clients
are going to call and I might not have all the answers. And honestly,
that's okay, And not only is it not okay, it's a good
because because that's what a new asset class is. When we're bringing people in
who are going to have difficult but exciting conversations that the positive outcomes for everybody,
and we stand behind you. Twenty one shares stand behind you. Advisors.
Know that we have were partners with Resolute investment managers for the wholesalers and
product specialists and support, and what we want is for anyone who's curious at
any part of your journey in bitcoin, we are here from you, and
we're extremely proud that AARKB is going to be here for you starting tomorrow.
And people may not realize just how ingrained this is in both of our firms.
Actually, I remember Tom, I remember that one of the One of
the things that comfort us the most, one of the things that we were
most excited about when we first started to get to know ARC is the obsession
with research that you guys have they research background that Kathy clearly has, because
we think about it the same way. I think it was John Oliver who
said bitcoin and crypto is sort of like everyone doesn't understand about encryption and technology
combined with what everyone doesn't understand about finance and economics, and they do have
a point. As transform as this technology be, it's incredibly complex, it's
challenging, it's difficult, and as a result from a research perspective, from
a learning and teaching perspective, our research team, arts research team, this
is so central to our identity and what we bring to the table. And
so I echo everything that Tom said and agree with him one hundred percent.
And we will be providing advisor specifically with the top research in the space because
this is a long term journey. Crypto is going to be transformative over the
next decade, not just over the next month or so, and we're in
it for the long haul, and that involves a lot of knowledge and education.
I think that's a good segue to maybe talk about agree our commitment to
research, but maybe dive into how important sort of paving this new framework to
understand bitcoin as an asset class, understand its fundamentals. You can't apply a
discounted cash flow model to bitcoin like you can to equities, and yet there's
so much information that is out there, given the transparency of bitcoin, given
its open source nature, given that you know, bitcoin is basically this twenty
four to seven fact sheet of economic behavior in this mini sort of monetary system.
And so I thought, you know, we have a new set of
speakers that I'm kind of really excited to introduce that have been pioneering a lot
of the fundamental analysis of bit boats through just sharing on chain analysis, but
also you know, providing that data for the end investor to be able to
analyze and understand. And so we actually have will Clemente Checkmate on theline and
Pomp as well, who have in some capacity helped really spearhead frameworks to understand
bitcoin fundamentally, which I think is again a really important and point we're in
the business of also bridging that education gap, and in the case of Pomp
has been a supporter of both of us for a while and at least with
twenty one. Coke is at one of our earlier investors as well. Well,
check pomp. Great, great to have you guys on. Adam actually
asked a question and maybe this one's for you checking just to introduce before you
answer the question, it would be great to introduce yourself on this almost price
multiplier effect of bitcoin flows and how bitcoin's call it liquid versus a liquid supply
plays a I'd say a big It's a big component in trying to understand that
price multiplier effect. So perhaps kind of maybe setting up what is on chain
analysis, why that's fundamental to this asset class, how heavily involved you know
you are, we've collaborated on research together, and then maybe give some kind
of statistics on just bitcoin Bitcoin's economic state would be super helpful for this audience.
Thanks a lot, Thanks for the production. Just quickly let me know
if you can hear me. Okay, we can hear excellent. We're a
business, so yeah, So I'm the lead analyst at last note, and
we really kind of pioneering this world of bitcoin on chain analysis and really looking
at the heartbeat of not only the network and the protocol itself, but also
how investors interact with it. And bitcoin is one of these fascinating and super
organic. It's a thing. It's almost like an organism, but it has
this digital footprint that it records every ten minutes, and within those blocks we
can pull out invested decisions, we can see how the network is performing on
a health perspective, but really looking at how coins move around the system,
which is just a fascinating It has been a fascinating field to really push into.
Now in terms of the multiplier effect, one of the most foundational metrics
we have in the unchained space is called the realized cap, and it's essentially
an equivalent to the market cap. Is that we value every coin at the
price when they last move. And why this is really powerful is so Toshi's
got a million or so coins, but they were moved last at a price
of zero, so we effectively discount them. They're worth, you know,
zero times a million as a zero early miners may have had a couple of
cents. But if those coins are lost and we've got this kind of pathway
of coins saved at their last move price. Now, from a capital flow
perspective, this is actually really powerful because when somebody acquires coins at a bear
market, for example, and then sells them at a ten x higher price,
somebody else has to come in with more capital than the original purchase to
actually take them off the market. And likewise, when people who buy at
the exact wrong time in the cycle have to sell coins at a lower price,
there's a capital destruction. So what we're looking at with this realized cap
is this kind of long smooth change in capital inflows and outfloats. So one
framework we can look at things is that when coins are on exchanges and they're
trading around in many ways, they're kind of one button away from a buyer
and a sell so they haven't quite entered that realized cap space. It's only
when somebody actually does the withdrawal transaction takes custody or in the event of an
ETF because they're spot denominated, and that is going to be this buying and
selling on exchanges, and there'll be coins moving between different multi sig wallets.
A lot of these transactions will get recorded into Bitcoin's database itself. So coming
back to that multiplier effect, we ran a study recently looking at how much
does the realized cap change, Essentially how much capital needs to float into the
chain itself to achieve a one dollar change in the market cap. Now,
this goes through a couple of different cycles. When we see real euphoria ball
markets, we tend to see that you need eighty cents a dollar twenty of
capital inflows to get a one dollar change in the market cap. And from
this perspective, it's starting to get into unsustainable territory. Right. We're really
in terms of physics, you've got to put more energy in to achieve a
smaller output. Now, as we go into bear markets and interest wanes a
little bit and you start seeing that there's more volatility, that number can drop
to anywhere, and sometimes it gets down to ten cents. So a ten
cent inflow or outflow works in both directions, can produce one dollar change in
the market cap, which really heightens that volatility as a result of lower liquidity.
So it's just one framework we can look at things. But the long
term medium is typically around twenty five cents thirty cents somewhere in that ballpark,
and where we are at the moment is in that range twenty cents twenty five
cent. So again it's just trying to put a bit of a figure around
things, but we're looking at somewhere on the auto about a four to five
x kind of range in terms of dollars in versus market cap change. And
again this is in both directions. It's a non directional study, just basically
looking at how much does that realize cap change per unit change in the market
cap and how do you think an ETF approval might impact that that dynamic or
what are you kind of looking at to see massive shifts in that price multiplayer
effect? Yeah, I think that's a really good question, and I think
the first thing when I just kind of take a very objective look at things,
the ETF, as we've discussed on this on this spaces is just opening
up a new level of demand vector. Right, So Bigoin's always had this,
you know, there's always been the harving and the data and how much
the harving has an impact, and that's a supply side shop and people's narratives
starts to you know, people get excited about the harving and it's kind of
a self fulfilling prophecy. Whereas with the each affort we're seeing is opening up
of the doors of just more people able to come into this space. So
for me as a non chain analyst, it's constantly this game of how much
does the on chain data Because there's obviously trade activity, there's futures markets,
there's spot markets, there's actual activity that's happening on the chain itself. How
much do these speak to each other? And what I've always enjoyed is understanding
those is almost statistically significant subsets of the market. The data we can extract
from a futures market or a spot market or on chain, it typically represents
a statistically significant subset of bitcoin investors. And whilst their data may plot differently
open interest or spot volume or realize cap, when we actually reconcile these,
we tend to see they're telling the same story, just with their data explained
differently. So it's very much about, you know, reconciling seeing how markets
move. One thing we do at Glassdows we actually label entities so we can
see, you know, these are coinbase or buyinance or ETF A, B
and C, and we can actually look at those dynamics individually. So it
may be that there's a result where we actually look at the realized cap including
or excluding ETFs. It maybe we look at only ETF flows, so we
can actually start to really dive in and build out this data layer to understand
how these flows impact that both interpretation and whether it actually does change things in
our perspective. So one of those things where it's constantly evolving, which makes
my job very exciting. Well, and I know we have you on as
well, Please introduce yourself and if you have any thoughts on it, just
the broader implications for the on chain world as it relates to this Bitcoin ETF
approval. Hey, thanks for having me up. Sorry about background noise checkway,
it was super scinct. As always, I would say it's probably the
best on channelists in the world, so definitely always pay attention to his insights.
I think one thing that's really interesting to me. I think it's been
pretty well circulated throughout the bitcoin it's the fact that seventy percent of the circulating
bitcoin supply hasn't moved in at least a year. So you know, if
you kind of go back where were we trading at a year ago, you
know, this is right after FTX went down and kind of the back half
of all the credit contation that took place throughout the bear market, and so
you know, not only is that pretty remarkable kind of standalone statistic, but
you know when you kind of add in the context of you know, where
we were at yer ago, I think it kind of makes it even more
remarkable. Sorry, will you cut out? But I we may have lost
you. I yeah, we brought up that status in terms of long term
vulder supply broadly, I mean the way that we think about it, and
for anyone interested in kind of learning more about on chain analysis broadly, we
publish a Bitcoin monthly spearheaded by our on chain dedicated on chane Us David Pula,
who you know. I'm hoping we can get on as well. David,
if you want to request just to kind of share a little bit of
your insight as we speak about this, that would be awesome. At a
high level, I think when you think about the fundamental framework by which to
analyze bitcoin, it's going to require an understanding of buyer and seller behavior,
and the most sort of granular and succinct way to do that is through you
know, n chain data. And so the way that you can parse this
data is you have you know, raw data that you scrape by running a
blockchain or bitcoin node that allows for you to assess the relative health of the
networks. So think things like pash rate as a proxy of network security,
you know, broader transaction volume, active addresses, and then you can sort
of further manipulate that data to checkspoint measure sort of the cost basis through time,
where you're able to basically timestamp every bitcoin based on which they were last
moved, and that allows for you to get an aggregate cost basis of the
market, and in so doing you're able to see sort of relative profits versus
losses when you compare it to the market cap. So things like realized capitalization
are a new phenomenon in understanding and analyzing bitcoin as an asset. And then
when you think about you know, one layer above that, what that does
is that it provides an entirely new framework by which you can you know,
even actively manage those assets. And that's something at ARC that we're you know,
thinking about, is we understand the the the underlying fundamentals, are you
able to translate those fundamentals into actual active management decisions and so being able to
sort of create you know, oscillators and fundamental metrics that allow for you to
understand the relative valuation for bitcoin is also a really interesting kind of dynamic that
hasn't really existed in other asset classes because of our ability to see supply and
demand. So so Granular Pump, I know that you jumped on as well.
Happy to have you on. I would love your thoughts on this long
awaited news that we finally being a Bitcoin ATF announced. You know, you've
been obviously quite vocal about bitcoin as a new asset class, sort of the
institutional demand dynamics, and your thoughts on the implications of a Bitcoin ATP I
would be greatly appreciated here. Everyone cool to see somebody so any people have
worked so hard on this, so congrats to all of you. I think
that it's the ETF is going to be a blessing and a curse, which
just kind of a unique way to look at it. But I think this
really marked kind of a moment where bitcoin has now fought for fifteen years to
be accepted, right and you kind of put that in air quotes whatever that
means a traditional finance, and now that it is accepted, there's many of
the things that maybe we're attractive about it previously that may you're not going to
go away but they may just become a little bit less important, and you
know, kind of the best example is a lot of people were attract bitcoin
because financial advisors or others weren't interested in it, right, It was kind
of a counterculture, et cetera. I think now we're going to see you
know, alas might in power. And my expectation is that this will become
an asset that's in everyone's portfolio. When you do that, obviously, you
know, returns, correlations, a lot of things change. I don't know
if we have enough information today to really predict exactly how that's going to change.
We can look at other assets, but I think that this is like
this really important moment where essentially, now bitcoin has you know, wall,
you opened its arms, hugged the asset, going to pull it in into
these portfolios, and that's probably great for price over the long run. But
I also think that investors are going to have to pay attention. Right the
ground is kind of shifting now. The holder base is going to expand as
it has in the past, and so it's going to be fun to watch.
Like every time that we've seen this happen and kind of gone through these
different paradigm shifts, if you will. I think that everyone learns something,
but also it's kind of what is intellectually stimulating about an asset like this palm.
This is Kathy. One of the things as we've been talking, we've
noticed, especially in the last two years, since interst rates have started going
up, bank deposits have been going down, money has shifted towards brokerage houses
and their money market funds that were yielding much higher than bank accounts, where
so all of this cash has built up in the system and cash levels.
I mean, I think money market funds are over trillion dollars now something like
that with this accelerated shift into them, and now it's housed in very often
in the brokerage houses the wirehouses as cash effectively, so and we know they
need to put some of this to work. There's been incredible risk aversion in
the markets. So that's why the equity market had such a big year last
year. People were stunned that it could do anything at all. So I'm
just throwing that out there because I think they need to do something with the
cash they have to earn their keep, and I do think this is going
to be one of the ways I could not agree more. Actually, something
that I will and I've talked quite a bit about, and I've written a
peeth and deleted it about four times because frankly, don't know if I'm good
enough to articulate it yet. So I acologize in advance. But if you
really think about dock market, maybe so forget bitcoin for a second, but
just equities in general, there's a pretty strong argument that past value metrics will
under predict or undercount the true value of a business today because of this thing
that you're talking about, Kathy, where there has to be some sort of
monetary premium, right when people are aware of inflation, when they're getting out
of cash and they're literally buying equities as an escape or as an installation from
some of these forces. That changes, right, That changes the way that
you think about valuations. It changes the way that you think about allocating capital.
That changes the way that you think about what sectors even to allocate to.
And so I've always thought of bitcoin as kind of the truest free market
asset that we have out and so it kind of takes that idea and really
brings it to the extreme. But really, you know, the ETF I
think now is a signal of what used to be considered an extreme idea is
not really that extreme. And another way that I think about it is if
you were to ask somebody in the nineteen eighties, nineteen nineties, even probably
into the you know, two thousands and early twenty tens, what is your
benchmark? They would point to the S and P five hundred and maybe you
know, the queues or something like that. Now, when I talk to
people in their twenties, they tell me that their benchmark is bitcoin. You
know, well, can I can I beat Bitcoin? Well? The fit
was up one hundred and fifty percent, you know, hundred seventy percent in
last year, and so it's just very hard to do. And so I
think that's another thing is like, is there something happening where people are saying,
I'm not going to allocate to the S and P. You know,
why would I only want ten percent in a world of easy money? I
need more? And so they start using bitcoin as that benchmark, and that
just again holds value for a long time. It's sticky capital. They look
at it as an index almost and that would be a really big tail one
for bitcoin. Obviously if that continued as a trend well, and the intergenerational
wealth transfer from baby boomers is accelerating now, so what the trend you're talking
about is probably going to accelerate for sure. We're also just jumping and flag
the central research piece that are had for twenty days rategical quointum economics developed with
check made. Since I have it here, perhaps check we can discuss a
little bit of what we implement them. Daring and the ideas were discussed on
that topic. I guess we already talked about about how pecoin can be price
timed to some extent. Perhaps we can discuss how we could be time stamped
as well, and we can take the holding behavior and the holding time of
different investors at different times get a sense of how dormant or how active the
network is in a general sense. Yeah. Absolutely, And cointime economics was
kind of an idea that just spawned off one of Dave's. Dave had an
idea when we're in Mexico, and it just morphed into this framework of how
we can actually rethink analyzing bitcoin but also understanding its heartbeat. And as they've
mentioned, there's kind of two real key components in the world of one chan
analysis that either doesn't exist or is very hard to replicate for traditional finance,
and that is the price stamping. So every single unit in the supply,
we can price stamp at the time and it moved, But as Dave mentioned,
we can also time stamp it. And the problem that we set out
to solve was that many of our valuation metrics, even in the on chan
analysis space, they still include all of Satoshi's and the lost coins. So
another way to think about this, as the market moves and is volatile and
we go through you know, boom and bust cycles, there's a large swathe
of coins that simply don't respond, can't respond their loss. The keys actually
cannot bring those coins back online. Now, despite that fact, most of
our on chain valuation metrics still dilute and they basically say that those are still
circulating, right, we use circulating supply. And the question we tried to
set out was how can we actually build a robust framework that can you know,
more or less discount coins based on how long they've been dormant. And
this comes off the back of some work we did it last night. The
longer that a coin is dormant on chain, the more likely it is to
stay dormant. Another way to think about this, if you were to withdraw
your coin from an exchange tomorrow and you just unfortunately lose the keys, you're
the only person in the world that knows those coins are lost. The market
cannot discount those as lost. They're going to see them as still liquid and
able to migrate back into the space on any volatility. But let's say those
coins are dormant for three years, five years, ten years. The longer
those coins are dormant, the higher our probability curve goes up that they may
in fact be lost. So what coin time economics does. It uses a
really foundational metric of time, which is the coin day, which is actually
one of the first Bitcoin on chain metrics. It's literally how many coins are
held and how long in days they've been held for that period of time,
and the probability goes up that they've lost the more coin days these coins accumulate.
But conversely, when a coin is spent, let's say coins accumulated in
the previous bear market, they sit there for three years, They've accumulated a
large time economic weight. They've got a lot of coin days stored within them.
So when that investor or that cohortive investors who've got those two three four
year old coins, we typically see these folks come back into the market and
it starts spending when it's opportune, right the market is rally, they're seeing
large percentage gains. So we've historically seen large expulsion of coin days, which
we call coin day destruction. So this is economic information we're basically looking at
when those coins come back into the fold and they re enter circulation and what
cointime economics does. It's a framework to actually create a discounting curve and it
biafocates the supply into vaulted and active. And the way to think about this,
vaulted is kind of the most dense coin that just simply don't want to
move. We actually don't need to measure which coins they are. It doesn't
matter if they're setoci's or if there's somebody else's that was lost yesterday. It's
a really nice simple mathematical framework. We can just say they're either lost or
they're mobile. And you know, one of the dave I might pass this
back over to you. But one of the really powerful things that we got
out of this we found this pricing model called the true market mean pretty much
exactly and always has been in the middle of bitcoin as a long term mean
and median of one. And this is what Dave's invention, so I'll pass
it over to him. But it's just these new valuation frameworks with a mathematical
rigor behind them that I think is just pushing the asset forward. Yeah,
I think that's a good segue to plugging our research. If listeners want to
find out a little bit more on what the true market mean, how it
works, it's formula, and it's mechanisms. We recommend going into our website,
both the cointine piece that we have publishers about six seven months ago and
the to but comes out every month a few days after close. Yeah,
that that that white paper is is available. And I think, you know,
the invention or the heuristic of the coin block check is is not to
be underestimated. You're you're you're basically implying that there's now this fungible unit of
measurement in Bitcoin's economy that allows us to even better assess the economic state.
And I think as for you know, those who are just trying to understand
bitcoin, and trying to understand the fundamentals. You know, these are the
kind of metrics that you