Nic Carter Stablecoins: Bullish or Bearish For Bitcoin?

Hi and welcome to Stefan Livera podcast. Today for episode two hundred and thirty-six, we're talking about stablecoins and whether they are bullish or bearish for Bitcoin. Nick Carter is with Castle Island Ventures, he's a well-known author and podcaster in the space also. And so we explore some of these questions around what stablecoins are, who uses them, what kinds of volumes we're talking about, what sort of platform risks are involved, and obviously some of the factors around whether they are bullish or bearish for Bitcoin and what the outlook is for stablecoins going forward. This show Brought to you by swanbitcoin dot com, the best place to auto stack your Bitcoin in the US with incredibly easy setup and low fees. Swan recently announced availability in New York, they are now available in all fifty US states. They've got a range of new features like xPub support, so you can use that when you are wanting to automatically withdraw to a new address each time. Swan's service is built around regular stacking, and if you want to wire money in for a special smash buy, well, the support is coming for that very soon also. They're Bitcoin only, they're focused on teaching people to self custody, so send all your new coin of friends there. This is a company focused on helping customers stack sats safely and easily. Go to swanbitcoin dot com slash livera to sign up. Are you looking for an insured custodian? Check out Knox, a Bitcoin custodian dedicated to ensuring their insurance protection covers the full value of their customers' assets. For example, suppose a fiduciary wants to hold two hundred and fifty million dollars of Bitcoin with Knox. Knox will seek to Obtained two hundred and fifty million dollars of insurance dedicated exclusively to that account and adjustable to volatility. There's no fractional coverage here or narrow scope insurance for what it's worth at all to transfer risk. If you are a Bitcoin company, investment fund, trust, or family office, check out Knox for your insured custody. Go to knoxcustody dot com. Lend at Hoddle Hoddle is a global Bitcoin backed lending platform so you can lend and borrow anonymously on your own terms. Hoddle Hoddle offers a peer to peer Lending solution ensuring a secure and transparent collateral storage system by providing unique multi-signature escrow for each deal so you can grow your savings and earn attractive returns on your investments. We're talking about stablecoins in this episode, and if you've, if you've got some lying around, create your offers and earn interest by lending on Lend at HodlHodl, or if you hold bitcoins and you need some liquidity, you can borrow stablecoins and keep on hodling. With HodlHodl's Lend platform, you set your own terms and put Borrow offers depending on how long you want to borrow or lend at the interest rates. Go check it out at lend dot hoddlehoddle dot com. Nick,

welcome back to the show. Thanks, Stefan. Thanks for having me back. This, this is either my second or third appearance, I, I can't remember exactly. I think it's the second one,

but, yeah, certainly there's a lot of interesting stuff going on, and I know you have been chatting about this whole topic as well of stablecoins, so I thought it would be good to, you On, is it bullish or bearish for Bitcoin? And, you know, some of, what are some of the things that we need to think about with stablecoins? So perhaps just, to start off, just for listeners who might, might not be so familiar, what is a stablecoin and what are some of the main ones?

Yeah, I mean, this is actually a topic of debate. What, what a stable, you know, what the definition of a stablecoin is. What should we even call them? You know, it's not even necessarily settled that stablecoins is the but basically, the way I define them is a tokenized representation of a fiat currency that circulates on chain. and so that's really the, the simplest definition, and then, you know, there's a number of different ways they try and target the return profile of that sovereign currency. The main way is just by being redeemable for units of that currency that are immobilized in a commercial bank. but there's other ways. some of them are In my opinion, you know, pretty crazy and not likely to work. You know, the algorithmic uncollateralized model, I don't think we've ever really seen that work. I think it's unlikely to work. And then there's the maybe the more interesting approach, which is to take some crypto collateral and, which is volatile, and use that basket to create, something which is more stable in terms of its risk profile, with sort of algorithmic, risk management systems. And you could- In theory, do that against Bitcoin. And then there's a final way to create stablecoins, which is basically to create a pair of, a Bitcoin derivative and a spot position, so you could have a short and a long position paired up together, and, that's one way to, to create a stablecoin, which we're seeing out there. so there's a bunch of different ways to do it, but the sort of key idea is, hey, public blockchains are great for moving value around, wouldn't it be Great if we could move stable value around. I know a lot of Bitcoiners don't like this concept, but the truth is it really is catching on and, you know, it's sort of one of the early industry killer apps.

I see. And it's probably also good to contextualize here, what's the kind of split in terms of the stablecoins? Are they, I presume, they are mostly-- Well, Tether is probably the elephant in the room here, right? Like the most, most of the stablecoin volume would be of that type, right? Like the type where it's, there's, you know, US dollars in a bank account somewhere, and these stablecoins represent some, you know, claim or some, yeah, the me-- the value is meant to- To reflect those, right?

Yeah, that's by far the most popular model is the sort of fiat collateralized or convertible model, whereby in theory, by holding this token, you could, again, in theory, redeem it for units of actual currency in a commercial bank somewhere. Now, with Tether and, actually other ones, there's complications. Not everyone can necessarily redeem it. You might have to be kind of a special entity or you might have to have a certain threshold in order to do that. That redemption, but it's still the possibility of redemption which is the thing that keeps it trading around one dollar. Yeah. And so, who

are the main users of these products?

Well, it's kind of hard to directly apprehend that, right? Because if you're using a stablecoin, you know, you're outside of the traditional financial system, and you might be outside of that system for a good reason. You know, you might be an import-export business operating on a cross-border between Russia and China, and you have very good reasons to not, you know, Make your transactions known to the authorities, and so you are strongly incentivized to not sort of broadcast your usage of stablecoins. I think unambiguously the biggest consumers of stablecoins are Just NIDs that are active in the cryptocurrency markets, so traders, hedge funds, proprietary funds, arbitrage funds. market makers, you know, these are the entities that need crypto-denominated liquidity, and they need, you know, an arbitrage or market maker firm You know, they'll be active on dozens of exchanges at the same time. They need to manage their collateral. They might have a preference to hold it in fiat terms, they may not wanna be directionally long Bitcoin at all times, so they might prefer dollar-based collateral. And so, you know, stablecoins would be a good choice for them. You know, they get the settlement assurances of using a public blockchain, but they also get to manage their risk in terms of volatility. so that's a huge, huge consumer of stablecoins. Increasingly, we just also have regular old businesses denominated their balance sheet in stablecoins. And, you know, more and more, the firms that we invest in as a venture fund Will ask us for stablecoin denominated investment. They don't wanna get bank wires, they want usdc, and we've begun to do that as well. And so what we're seeing is the whole supply chain of some of these early stage businesses is flipping from commercial bank liquidity to on-chain liquidity, and it flips, you know, because they'll receive investment in stablecoin terms, and then their expendi- their expenditures will be denominated in stablecoin terms. You know, this crypto industry is kind of a globalized system where, you know, it, there's less sort of geographic- Traffic hubs of consequence and the talent is much more globally dispersed. For payroll, for instance, for a global audience, it actually is generally more convenient to use something like USDT or USDC, to pay people if, you know, you've employees in fifteen different countries, that's probably cheaper and easier than the correspondent banking system. And so you see the whole kind of supply chain, of certain businesses flipping from being commercial bank based to being sort of crypto liquidity based. so that's another really interesting new genre of stablecoin consumer that we've seen emerge this year. but yeah, I mean, it's It was an easier question to answer kind of two years ago when it really was just traders that were using stablecoins, and today it's just all kinds of businesses. I mean, we have fintech providers, you know, we've invested in some of these businesses that are giving stablecoin access or intermediated access to stablecoins in countries where there's currency crises, you know, as kind of a fintech product. So Yeah, the phenomenon is really taking off and there's a really heterogeneous set of entities that actually use these things.

I think the, probably the obvious question that is going through many listeners' minds, they might be thinking, "Well, hang on, why don't, why don't they just pay directly in Bitcoin, but denominated in USD?" And I, I can guess there's probably some good answers for that. what would you, speculate or if you know, what do you, why do you think that is?

Yeah, it, I mean, it's, it's And just, I would say the, probably the main reason is the mental transaction cost of introducing a new numerair. now Bitcoin, you know, probably about Fifty to a hundred million people worldwide, are familiar with Bitcoin, but probably, you know, half of the world's population is familiar with the dollar. you know, the dollar is the de facto- Global reserve currency, and then even in countries where dollars aren't the local currency, people still kind of know how to price things in dollars, and they have an appreciation for the dollar. And this isn't like my love letter to the Federal Reserve or anything, it's just, you know, a statement of reality. as a unit of account, the dollar is very popular, so I think people are just more comfortable receiving payments in dollar terms. You know, at this state of Bitcoin adoption, of course, you know, I expect that to change in the long term as Bitcoin becomes much more ubiquitous. But for now, stablecoins are kind of an intermediate or a bridge asset where people are realizing, hey, you know, public blockchain infrastructure is actually a more convenient way to do business, and especially on a cross-border basis, but they haven't fully become used to Bitcoin as their unit of account. Account. So for this transitional period, it's a really suitable asset, basically. Right. And

I presume it's also a volatility aspect of it also that they would prefer to, you know, hold USD because maybe their expenses are in turn in USD in terms of their rent or their other, you know, food and other living costs.

Yeah, not everyone is like us and, you know, willing to tolerate the volatility of Bitcoin. so, and, you know, for payments, well, payments are in flight, you don't necessarily want the exchange rate to be changing dramatically. so yeah, there's, there's good reasons to use the dollar. I mean, my view is that these things are strongly mutualistic, and so I don't see crypto dollars or stablecoins as being a threat to Bitcoin in any way. I think they're kind of supportive of each other. Yeah.

And my understanding is also that it's, you know, there are traders who are using it to get around the exchanges quickly in terms of, you know, doing the fiat leg a bit faster for them to arbitrage and things like that. But there's also the story of people in, let's say, in other countries around the world who wanna get around capital or currency controls and, in some cases, get their money out of the country. Have you seen that in your, travels and your discussions in the industry?

Yeah, I mean, this is an established concept today. so China Analysis, you know, a lot of people consider them to be villainous, they do put out some good research, so I would, encourage your listeners to look at their report where they find, with, and, and I have no reason to doubt their methodology, I think it's probably quite sound. They find about fifty billion dollars worth of capital outflows from China, taking place in, in- Other terms. So these are real numbers, you know, and so that's the story about evading capital controls. And now, you know, both the Chinese government may not like that, but we're talking about a new epoch in payments technology. I mean, you know, we're talking about digital bearer assets, and so this is their manifestation. This is what people to choose to, to use them for. And that's just a reality. So China, you know, and if you look at Tether transactions, you can see mostly they happen During Asian trading hours, so they're very, very popular as an alternative kind of payment system and a way to offshore wealth, from countries that are engaging in monetary repression. a more direct answer where I have first-hand experience would be in places like Latin America, Argentina in particular, Venezuela and Colombia. In those three countries, the currency is very weak. there's a big kind of Venezuelan diaspora, which is internally displaced within Latin America. there's a number of startups that are using-- So there's a lot of Bitcoin there, but there's also a lot of number of startups that are using stablecoins, to give people a dollar savings device. Now, there are dollars that are present in those countries, physical dollars, but they're kind of hard to get your hands on. And they aren't necessarily in the right denominations. There's a lack of small denomination bills, and of course, you know, dollars are easy to seize. And, there is Bitcoinization occurring, of course, but there's also, a movement where people are engaging in this sort of crypto-dolarization Where they are getting exposure to dollar-based products through public blockchains. And now, Bitcoin is critical in this whole process, but what people are really after, for the most part, is dollars. And, you know, they're seeking dollars as a way to, conduct remittances, you know, move money around, without asking for permission, but also just to, as a wealth preservation device. so we're seeing, you know, we've- We've invested in startups active down there doing exactly that. I think fintech experiences that are built on top of crypto dollar rails are gonna be a much more pervasive concept in the next five years.

Yeah, so it's a range of different people who are using these stablecoins, whether it's traders or companies who want to get funded in stablecoins or people in the developing world who want to get around capital and currency controls. So my understanding as well is with some of the, you know, the South Ameri- American story is that there are all kinds of different ways people are using different payments, whether that's things like Zelle or some of these other, you know, just normal fiat banking dollars, but this is just now presenting another option for people who wanna try to, you know, maybe they're not necessarily looking for the maximum level of censor-censorship resistance, but they're just using some of these different bank accounts and so on, and this is just another way of helping, I guess, maybe we can think of it like greasing the wheel Right.

Yeah, I mean, you know, Zelle is very popular in Venezuela, you're absolutely right, but Zelle is also created by a consortium of US banks, and those banks aren't really too keen on having- end users in Venezuela, because there are no formal US sanctions on the country of Venezuela, but there are sanctions on members of the Maduro regime, and it's kind of like taint, if you think about taint in the network graph, it's basically the same concept. Like if you go to the coffee shop where, you know, which is run by, you know, the nephew of the minister of transport, and he happens to be sanctioned, you know, there's a risk that you inherit that as well, so you become tainted by association, and then you get deplatformed from all of your Western fintech and payment apps. And so that happens a lot. I mean, Wells Fargo has been on a real campaign to basically deplatform the Venezuelan users of Zelle. So Zelle is, you know, it's good UX and people really seem to like it, but it's very much exposed to what the banks wanna do. Now, stablecoins have bank relationships Most of them, the fiat convertible ones, you know, those ultimately are claims on dollars in a bank. You don't need to interface with a bank to use a stablecoin, you just need to acquire it on the open markets or receive it in an on-chain transaction. You don't, you know, ninety-nine plus percent of stablecoin transactions don't involve, you know, facing off against the bank directly or against the issuer. so they are kind of less encumbered than You know, commercial bank relationships. And I know people talk about the freezing possibility. Tether has frozen a couple hundred addresses in its history, USDC has frozen a small handful. So that does happen, but it's, you know, nowhere near as pervasive as, you know, deplatforming from, you know, the financial system. so it's certainly not as sensor resistant as Bitcoin. Now there are stablecoins that you can look to, which probably have slightly better sensor resistant qualities, like Dai, which is built against, you know, crypto collateral, and in theory you could do the same with Bitcoin. You could probably figure out how to- build a stablecoin, using DLCS or, you know, other smart contracting technologies to build a dollar-denominated asset which is backed by a basket of bitcoins, which would also be pretty trustless. So, I, and I expect someone to make that in the next year or so. So there are, you know, even within the stablecoin space, there's a bit of nuance in terms of, you know, the, the settlement assurances you have.

Yeah, that's an interesting idea there as well. I recall from, one of my relatively recent episodes with Nadav Cohen from Short Bits, he spoke about exactly that kind of idea using discrete log contracts to do a similar kind of thing with Bitcoin. so I think also probably just more broadly with the whole space, it's probably Actually, one other point I wanted to touch on was around the compliance aspects. So you were mentioning there, in, you know, AML, well, it's usually AML laws and sanctions laws that we're talking about here, and typically one of them is the, I think it's called politically exposed persons, right? And so that's where this whole idea of if you're a politician or you're a senior level bureaucrat or something, and then your family might be also implicated in that and blah, blah, blah, right? But with stablecoins, it's kind of more like- The compliance seems to be occurring at the entry and the exit points, and then once you're kind of inside that system, it seems to be a little bit more of a freewheeling system, wouldn't you say?

Yeah, yeah. So this is-- anybody that looks into stablecoins long enough eventually has this realization. And it's like, oh wow, like this is actually a little bit different from the way that the financial system works, right? Or even something like PayPal, right? Pretty much every transaction on PayPal, you know, contains metadata and identity information, and PayPal has the right, you know, and they take advantage of this to freeze any of those transactions. In fact, I sent a joke PayPal transaction to, my friend Nouraj of Coin Center, and I think I made- The memo field something like, you know, North Korea, and like Persian rugs, just to see what would happen. And they, they froze it. Are you trying to get his account canceled? and, so, you know, every single transaction in, you know, most, you know, mainstream fintech apps is effectively surveilled or, you know, risk analytics are being run against them. Now, in stablecoins, as you say, those egress and ingress transactions where you are creating or redeeming stablecoins, there's KYC involved there. But on the internals of the transaction graph, those transactions that are actually occurring on, you know, either Bitcoin on the Omni protocol or on Ethereum as ERC20 transactions or even on Tron, which is popular for stablecoins for some reason, those P2P transfers are really not meaningfully being surveilled. There's not a lot of identity information that can be associated with them 'cause it's pseudonymous. So on the internals of the transaction graph, you have a situation where it much more resembles actual digital cash, in the same way that physical cash transfers don't carry any surveillance. and, and basically P2P stablecoin transfers on chain much more closely resemble physical cash transactions, and they have less in common with, you know, these transactions on these digital payments networks that we're used to. And it's kind of a startling realization, JP Koenig, who isn't a Bitcoiner, but he writes fairly intelligently about payment networks, has called this the permissioned pseudonymity model, and it's honestly a really big outstanding question whether You know, the state or regulators gonna take a look at this and realize what's going on and say, "Okay, we have to put an end to this."

Yeah, that's an interesting question because if they allow this to carry on, well, then it just kind of helps this overall greasing of the wheels, if you will, around in and around the exchanges of the space, and so it allows all sorts of kind of hack workarounds in some ways, whereas if they- Do clamp down harder, then obviously it becomes more difficult for people to kind of get money in and out of exchanges and move it around and do all these other kind of on the side Things and other services that are operating on a more stablecoin basis, like stablecoin lending and so on.

Yeah, and honestly, I honestly don't know how regulators would build regulation into stablecoin networks. You know, fundamentally, we're talking about blockchains which are pseudonymous. I'm not sure how you would try and inject identity information. And, you know, currently stablecoin issuers operate on a, a blacklist model, right, where they will blacklist certain addresses and freeze those funds, you know, if, for instance, they get a subpoena from law enforcement and it says, "Hey, this is a, you know, entity that hacked an exchange, you know, could you..." immobilize these funds. But the, you know, you can't transition that really easily to a whitelist model where default no transactions are permitted unless, you know, you make yourself known to the issuer. The whitelist model would just make these networks not work. So I don't know functionally what it would even look like for regulators to try and grapple with this.

Yeah, I guess, that's a tougher one to answer. I, and I would also like to just get a bit of context here in around, the volumes that we're talking about here. Like, what kinds of volumes are we looking at in terms of stablecoins versus, say, Bitcoin volume?

Stablecoins will do, currently collectively all of the stablecoins are doing about five billion dollars worth of settled value every single day. So pretty meaningful, that's up from effectively zero, a couple years ago. Now Bitcoin is doing also about five billion dollars of settled value per day. now the thing to note though is that Bitcoin's aggregate market cap is, you know, north of three hundred billion, the sort of aggregate market cap of stablecoins is closer to twenty-five billion. So, you know, you can s-see that stablecoins have a much higher velocity, they're turning over more often, more frequently, whereas Bitcoin has a much lower velocity. So what this sort of tells us is that They're doing e roughly equal amounts in terms of settling value every day, but stablecoins are doing so with the whole supply turning over more frequently, which shows that they're being employed more as kind of means of payment, whereas Bitcoin is this, you know, this more slow moving wealth storage mechanism.

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yeah, no, I mean, the, honestly, that's already happened to a certain degree. I mean, if you look at exchange volumes, you look at the pairs that are traded globally, you look at exchange reserves, you notice that a lot of these, what were formerly traded against Bitcoin, all these exchanges with altcoin pairs and derivatives, with Bitcoin being the more popular asset, I guess the, either the base pair Where the quote pair, I'm forgetting which one it is, Bitcoin was the de facto reserve asset of the crypto industry kind of from inception, right? And over the last couple years, exchanges, many exchanges became Tetherized, so Tether became the base pair, and all of these, markets were expressed in Tether terms, and the main collateral that was held on these exchanges, was, was Tether, effectively. So you had some purist exchanges like BitMEX, they were a purist exchange They never had any stablecoins on there. The only way to get collateral into the exchange was in Bitcoin terms, but, you know, now they've shrunk a little bit and other newer exchanges like Bybit and FTX, you know, they all use Tether, right, a-as the main form of collateral and the main way to make a deposit and, you know, a lot of them quote their markets in Tether. So This has actually already happened, but what's interesting is here we are, right, back at all-time highs for Bitcoin. So this kind of implies that, yes, some of this reservation demand for being the reserve asset for altcoin trading and for derivatives trading, some of that reservation demand was effectively removed and was, you know, moved into Tether basically and, and other stablecoins, right? But this hasn't really affected Bitcoin, Bitcoin is still fine. so it's just the nature of Bitcoin that's changing a little bit, it's more of a sort of a global macro asset, doesn't necessarily need that sort of reservation demand. But yes, unambiguously, I think exchanges getting Tetherized did remove a certain reservation demand from Bitcoin and probably had a bit of a The price impact, it's, you know, impossible to quantify. but, you know, the ultimate question is, can stablecoin sustain this indefinitely? And I would probably argue, no. I don't think that they have the same characteristics as Bitcoin, because stablecoins ultimately are someone's liability. The reliability of an issuer, in most cases, of a commercial bank, and the, you know, that's not a great property to have for a monetary good. You know, pure monetary goods like gold and Bitcoin are no one's liability. Their value comes not from someone else promising to back it, but the value is solely market determined, which is the case for Bitcoin. So ultimately, a true reserve asset, the true monetary base asset at the base of that pyramid You do want it to be, something that's trustless collateral, which stablecoins aren't. So, I don't think they can ever really fully replace Bitcoin as that key, you know, high-powered collateral

Yeah, I think that's a really nicely put, that's really nicely put because ultimately they're not monetary competitors with Bitcoin in the longer term sense, they are just more like a A, a helping tool or a bridging tool that people are using in the here and now, a-and also to the point about volumes and sizes, obviously there's this whole canard that seems to come up against some pe- from some people who aren't that familiar with what Tether is and what some of these stablecoins are, the typical argument is, "Oh, see, Bitcoin is being pumped by Tether." What do you think, on that kind of argument?

Yeah. so I'll go on the record here. I don't know I don't know if I've ever really addressed it on a podcast before, but yeah, I, I'd love to see some evidence of that, you know, I, I think the, the onus and the burden of proof is on the people making the positive claim. You know, all the proof I've ever seen, all the evidence, talking to traders that have created hundreds of millions, in some cases billions of dollars worth of tezer, sorry, of Tether, is that there is a counterparty there, they are using bank wires, you know, they're moving real fiat currency through the commercial banking system around to create and redeem Tether. you know, and I am not a Tether user, I personally have never used Tether, but, you know, I- I had Dan Madorshevsky on my podcast a while back, and he told me that when he was at the Circle OTC desk, they created billions of dollars worth of Tether, and that's with bank wires, you know, so that's taking real dollars and wiring them to the counterparty and getting Tethers against those dollars, and then redeem them on the other side. So that's all consistent with Tether being, you know, at least in some sense, a real thing. Now Obviously it's impossible to ascertain the reserve quality, and that's a huge shortcoming, which I totally agree should be addressed. and I'd love to see more transparency behind all of the stablecoin issuers, not just Tether. It's actually hard to get good, reliable information on the quality of the reserves for even the onshore US-based stablecoin issuers. But now this, this notion that is taken a little bit further, which is that You know, Tether is somehow responsible for the price of Bitcoin. It's just preposterous to me. I mean, there was one study from Griffin and Shams which relied on kind of a timing analysis, and they found that during periods when Tether was being issued, Bitcoin's price rose in those periods, which is, you know, there's so many alternative expla-explanations that aren't consistent with Tether somehow buoying the price of Bitcoin. You know, the obvious alternative expla- Explanation is, well, tra- you know, traders were engaging in dip buying and they used Tether to, as a conduit, to get into crypto exchanges, get into crypto liquidity, and they, you know, so it's no coincidence that Tether issuance was happening at the same time as they were placing their buy orders because they were using those Tethers to subsequently buy Bitcoin. So You know, there's, there's very simple alternative explanations there. The other thing is, you know, part of their paper relied on this analysis of looking on-chain and seeing when there are high periods of on-chain volumes, and, you know, for Tether and finding that correlated with Bitcoin price increases. But, you know, the other thing to point out there is price increases are synchronous and coincident with, high on-chain transfers just by their very nature, because when price is going up, there's a lot of activity, those arbitrage funds kick into high gear. So, you know, that's also something that can be very easily explained. So, look, I mean, I'm not gonna deny that Tether could be doing a much better job with their transparency, and at this point, they're systemic to the whole crypto industry. So like many others, I would love to see more transparency from them and their reserve quality. But I've also never seen any direct evidence whatsoever that Tethers are somehow either unbacked or more perniciously being used to inflate the price of Bitcoin, which makes no sense. I mean, if you're Tether and you could magically inflate the price of Bitcoin by printing unbacked Tethers, without the market ascertaining that, what's to stop you printing the price of Bitcoin? Arbitrarily high, you know, why in that case are we only at nineteen thousand? Why aren't we at three hundred thousand? you know, like the, the critics don't really have a plausible story to tell here. so the other thing I'll mention is that there have been subsequent analyses that have focused on the same Griffin and Shams paper and found no correlation between, no or no direct, effect between Tether issuance and the Bitcoin price, one was by, Vishwanath Nataraj. so, you know, the, the academia isn't, you know, settled on this topic either.

Yeah, and, it seems, I guess, just a historical comment, it seems that every run seems to have its little story as well, right? So twenty thirteen and it was Mt Gox and the Willybot, and then in twenty seventeen, the story people have is, "Oh, I see, it was pumped by Tether." And then, so even this, kind of bull run, you're hearing some people saying,

We tell ourselves these little stories, but those aren't necessarily the full explaining factor.

Yeah, and, you know, the other thing to note is that Bitcoin has- Was flat, you know, in twenty-- it was roughly flat from, for a long kind of two year period here. I mean, if, if you measure, you know, from sort of late twenty eighteen to sort of earlier this year, whereas Tether was increasing by a full order of magnitude, it went from about, you know, a couple billion in late twenty seventeen to twenty five billion today. So for a long period where Bitcoin was trading sideways. More funds were getting on-shored onto Tether, partly due to this replacement that I mentioned, where, Bitcoin s- kind of ceased to be the crypto reserve asset or lost some of its qualities as the, the crypto industry reserve asset. So Tether was increasing by hundreds and hundreds of percent, but Bitcoin was flat during that time. So that's completely inconsistent with this "Tether inflates Bitcoin" thesis as well.

Right, I see. And, I guess, you know, if I was to put on my Peter Schiff or Nouriel hat, they would say, "Oh, see, they were just trying to pump it so hard, and they needed to keep making all these tethers to even try to keep it the same." And, but I think at some point, you're just never gonna convince some people, and so you just have to let them, let them, Wait until they're comfortable to actually see Bitcoin for what it is.

Yeah, and people like one-dimensional explanations for price action, as you said, Willie. But no, nobody seems comfortable with the fact that Bitcoin is just undergoing this process of monetization and waves of adoption, and that it's, you know, a fundamentally kind of random process in terms of the, you know, how the key variables interlock, but it's also, you know, just a long-term secular process of growth. And rather people would instead lean on these incredibly, you know, simplistic explanations of insidious market makers somehow manipulating the whole market and manipulating price upwards. They, they can't, you know, find it in their souls to believe the Bitcoin is just this newly monetizing monetary commodity. That's, that's too difficult or complex of an explanation for them.

Yeah, and perhaps at some level it's, they've, they've already committed their minds in a certain direction, and now to turn around and go back is maybe that's just difficult for people to do, or maybe they feel like it would make them look weak or whatever. one other point that you brought up, just, just on that there recently is systemic risk and blow up, right? So that could potentially be another bear case for stablecoins in terms of Bitcoin impact. It might You know, if one of these big ones, for example, Tether or one of the other ones, if there were to be some big systemic blowup, could that, you know, look really bad for the ecosystem?

Yes, it could. And I think the big casualty would actually be long tail altcoins which trade exclusively against Tether, right? So, if, you know, a lot of these marketplaces and exchanges don't have connectivity to the fiat system, and in fact, the reason they've been able to emerge is because- Stablecoins exist, right? So once stablecoins were in place, this new set of altcoin exchanges could emerge, right? And they have done so. They would be the big casualties, I think, if, if Tether blew up, and that would eviscerate the liquidity for a lot of long tail alts that are traded only against crypto pairs. They're not traded against, you know, there's no fiat kind of pairs for those alts coins. So they would be the big casualties in my opinion. Now, the effect on Bitcoin is Is more mixed, and I think what is very possible is that there'll be an inflow of funds back into Bitcoin as a kind of safety net, because if, you know, it emerged that Tether was kind of insolvent or, you know, not fully reserved or something, what are traders gonna do with the Tethers that they hold? What is the most liquid pair that Tether is traded against? It's against Bitcoin. So I think that's where they flee. Now, it might be more challenging for them to flee back into their sovereign currencies, and they may not want to do that. So I think they flee into the alternative crypto reserve asset, which is truly liability free and, you know, cannot be impaired by a lack of reserves the same way Tether can't be. So my guess is that if anything happens to Tether, a lot of capital is gonna flow back into Bitcoin as a safety net, the kind of the same way you have a global risk off event in regular capital markets, and capital flows into US Treasuries, which are considered, you know- You know, the safest and most liquid asset. So, I would say there's the potential for it actually to cause a huge capital inflow back into Bitcoin, and we're talking about roughly twenty billion dollars worth of Tether, so it's a really material amount. so bad for crypto markets generally, but potentially good for Bitcoin as this liability-free base asset.

Yeah. Yeah, and, I think that's a really great way to put it. one other, I guess, kind of bearish argument, but it's not exactly, it's, it's more just about there's different platforms and we're taking different kinds of technological risk when we use them. So obviously, things like if you use some coin that is really centralized as the platform, then is there a risk that, you know, some rollback changes things for you or that potentially it- is more amenable or li-likely to get shut down, or to go down under its own steam, and then, you know, the stablecoin people are left kind of holding a bag if they've, if they're using an altcoin platform to do that stablecoin with. So, do you have any thoughts on that and how the market participants are? I guess evaluating that risk.

Yeah, I don't think they're evaluating it, Stefan, to be honest with you. you know, the most number of tethers that ever existed on Bitcoin was about three billion. Now, on Tron, there's double that today. There's six billion worth of Tethers that circulate on Tron, which is kind of, they've got a, you know, a fixed validator set, and it's, you know, pretty centralized in terms of the node validation and the consensus formation, right? I don't think it'd be that difficult for a highly motivated state actor to interfere with Tron if they wanted, right? But you have more Tether is circulating on TRON lots more than ever circulated on the Omni protocol on Bitcoin, and on Ethereum, you have over twelve billion dollars worth of Tether. And you also have billions of dollars worth of other stablecoins on Ethereum too, like USDC. There's another three billion of USDC on Ethereum. So I think the entities using Tether are just, they kinda take it as given that the blockchains that they circulate on are gonna just function well in perpetuity. They don't seem too concerned about it, and they switch between them all the time. What they do is they use exchanges as these hubs to switch between Tether, Tron Bitcointron or, yeah, Tethertron, Bitcointron. Why am I saying, why am I getting this wrong? Tether, Bitcoin, Tether, Ethereum, and Tethertron. So they switch between them seamlessly. it seems like traders kind of treat it as the same asset. Regardless of the actual blockchain infrastructure that it's circulating on. But yeah, it, it seems to me that people aren't really concerned with the underlying infrastructure, and maybe they feel that if something were to go wrong, then the ultimate ledger would be managed by Tether itself, and, you know, effectively Tether maintains an off-chain ledger of their own where they can step in if something goes terribly wrong.

I see. So at the end of the day, these things are just far more centralized anyway, so that's kind of, most people are just gonna, the participants in the market are relying on that as their get out of jail free card if something were to blow up with Tron or Ethereum and so on.

Yeah, I think so. And, you know, people already appeal to like Bitfinex and Tether when something goes wrong with Tether, and this is another thing when you see exchange hacks, now the fact that some of these stablecoins have this reversibility Which is, you know, a bug in my opinion, but on stablecoins it's treated as a feature. this reversibility allows for the undoing of some, you know, negative events. so Tether's already begun to kind of play that role.

Yeah, so I guess we can, I guess say, "Well, look, these are more openly centralized, and so that's, you know, I guess even in the case of a blow-up, they're just more centralized anyway, so it's like, it's just not gonna..." Yeah, hard to, hard to kind of, go from there. But, I guess those are probably the main bear arguments I can think of. actually, are there any other kind of bearish arguments you can think of while we're here before we go to bull arguments?

Yeah, and this is very salient to our current discussions, but the other thing is that if you talk to a central banker about the cryptocurrency space and you ask them, you know, what are you nervous about? They'll almost always say stablecoins. They typically don't say Bitcoin, I don't know if this has been your experience as well, but it's certainly the case with me. Central bankers are fixated on stablecoins, and really Libra is actually the one they cared the most about, but increasingly also, you know, the, the parts, the stablecoins that exist on chain. So You know, stablecoins have catalyzed a lot of, you know, keen investigation on the part of central bankers and financial regulators into the crypto space, and they could be the, you know, the, the element of this industry that actually gets governments to care about it and attempt to crack down on it, because all of these central bankers are pretty afraid of, not necessarily bitcoinization, but involuntary dollarization Whereby they lose their monetary privilege because stablecoins become so frictionless and easy to acquire that there's a currency substitution that occurs in their country. And for sure, this is something that's happening in Venezuela today, it's happened historically in Ecuador, you know, not with crypto rails of course, but with physical dollars. So it's not too far fetched to think that this totally is possible. So the way that could affect Bitcoin would just be by causing A regulatory hammer blow to fall on the industry. Now, I think we all expect and hope that Bitcoin is sufficiently robust that it can deal with that if the time comes, but that's another part of the bear case is that the stablecoins provoke Governments into cracking down pretty hard on the industry.

Yeah, that's a good point. And so just to clarify there, I guess in some sense, the US government is kinda happy that more people are gonna use US dollar, right? It's more other countries who are gonna be unhappy about, you know, basically historically you had to use physical cash to try and US dollarize, but now that people can do it with stablecoins, that makes it more of a risk for them. And that's, you know, if you're the Venezuelan government, that's why it's more of a concern for you, right?

Yeah, yeah, exactly. It's just easier to dollarize on, on, you know, public blockchain rails, and so potentially, you know, it could happen more aggressively, right? on, on your question about the US government, I would say it's a little more nuanced. I mean, the government does issue the world's reserve currency, and they wield strong benefits from doing that, but they don't want dollars to be percolating Letting out into the world through a means that they don't control, and, you know, currently they don't control stablecoin infrastructure, it's, you know, run as a protocol by a bunch of nodes. and so that's also part of the reason we've seen a bunch of policymakers in the US express their misgivings about it, even if it is effectively adding demand to the dollar and, you know, potentially exporting the dollar overseas, it's doing it in a way that's outside the New York based correspondent banking system outside of their surveillance apparatus. So my guess is that they're actually not too happy about it, all things considered.

Right, and it may be different regulators and different parties who have different concerns, and so the ones who are more concerned, like say FinCEN, might be more concerned, Because they have less visibility into their whole surveillance, financial surveillance network. so I guess let's bring it to the bull arguments then. So the bullish case for stablecoins in terms of their impact on Bitcoin, I guess the main one that I can think of is just that it, it, it just helps the overall liquidity and kind of greasing the wheels for people to move through the exchanges and through different, Other businesses and products and services that can be built using stablecoins that weren't otherwise possible with Bitcoin. what's your view on that kind of idea?

Yeah, so that's undeniably a positive for Bitcoin, just more liquidity, better connectivity between exchanges, so fewer kind of dislocations in inter-exchange prices. The existence of stablecoins mean that these- Arbitrage funds can operate in a capital efficient way, which is good for Bitcoin liquidity, right? And so I would say that's the number one way. But the number two thing I would point you to would be stablecoins might be penetrating a global audience of potential Bitcoin adopters before they have the experience of using Bitcoin. So right now, the first experience most people have with cryptocurrency is with Bitcoin. and that's kind of been the default way that people get exposure to storing cryptographic information, storing value in the form of key pairs, and getting used to that concept. But it could be the case that in a couple years' time, the de facto way, the default way that people get exposure to this concept, which is something that people need to-- it's a transition people have to go through, understanding information is value. You know, we've never really had to deal with that before. The default way they might do that would be through a stablecoin lens, and I, you know, Bitcoiners may not like hearing that, but it's totally possible in my mind that that is the A more immediately addressable way that people get exposure to, you know, digital assets basically. And I think that could actually be an accelerant for the whole concept and give, you know, let people go through that learning experience and then when they're ready, you know, they could level up and move to non-state monetary assets, you know, like Bitcoin. So I think that's another way is that it penetrates a slightly different niche, it's people that- Maybe want dollars, and they're willing to consider this alternative infrastructure for those dollars, and once they're onboarded into that and they're mentally ready, then they can make the leap, to Bitcoin. so that would be kind of the second way I think it could be really positive, for Bitcoin. the third thing, and this is already a feature of the market, is that Stablecoins only exist because of Bitcoin, and a lot of these stablecoin pairs are only liquid in a lot of these markets also because of Bitcoin. There's plenty of stablecoin usage in Venezuela, but that market was bootstrapped by the local Bitcoins peer-to-peer market, where Bitcoin was obviously the main asset. So Bitcoin is this kind of non-state asset which is available globally, you know, permanently. It's the asset against which stablecoins trade most of the time. So Bitcoin is the true, you know, ultimate clearinghouse of value, and then stablecoins are trading against Bitcoin. So it gives stablecoins kind of a liability-free pair to trade into. And the way I see it is, you know, we're gonna have progressive ways of regulation here, and so the popularity of stablecoins is gonna rise and fall over the years as regulators get more and less onerous. But Bitcoin will sort of always be there, and at the times when When, you know, nations start to be more hostile to stablecoins, more value will flow back into Bitcoin, and then as things open up again, some value will flow back into stablecoins as the perceived risk declines. And so I think you'll just get this back and forth, but the constant is that Bitcoin is always gonna be there as this capital sink to, you know- To satisfy this demand and to be this, you know, monetary constant with stablecoins waxing and waning around Bitcoin. so, you know, it's kind of a difficult concept to express, but Bitcoin's, you know, permanent presence in these markets is what permits stablecoins to work. so they, they kind of-- Stablecoins certainly need Bitcoin, Bitcoin doesn't need stablecoins, but I think it does benefit from their existence.

Yeah, very interesting argument. I think, so essentially you're saying that they have some kind of a symbiotic relationship, they're both benefiting from each other.

Absolutely, and the thing I didn't mention is that I believe that stablecoins will be issued against Bitcoin in the future, and we probably aren't gonna have to wait that long for it to happen. There's already stablecoins being issued, against spot Bitcoin, where you take a synthetic, you, you short Bitcoin and you have a spot long position, and that bundle of the two creates a dollar stable position, right? So that's one way that people are creating stablecoins against Bitcoin. But you could also do it in a maker style and- And there's no doubt in my mind that our smart contracting ability on Bitcoin is gonna progress in the near future to a state where it's totally possible to build the equivalent of Maker on Bitcoin. And then we'll just take, you know, the most successful concepts in DeFi and then apply them to Bitcoin in a trust-minimized way. so my-- and, and if you look at Dai, Dai is one of the most popular stablecoins on Ethereum, it really punches above its weight in terms of its velocity. So I think the Bitcoin equivalent would all- Also be pretty popular, honestly. you know, a native, you know, Bitcoin native dollar stable asset, you know, facilitated and issued against Bitcoin collateral, I think that is a good idea. And so I do expect that in the future, Bitcoin will be a reserve asset for the issuance of stablecoins, and of course, that will increase the reservation demand for Bitcoin. So that's kind of the final thing is, you know, stablecoins Just, you know, they are kind of strong evidence to the fact that people desire dollar-denominated liquidity on chain, and they're willing to, you know, issue it against kind of crypto collateral, and I think Bitcoin is obviously the best form of collateral on chain, 'cause it has the best volatility characteristics, and it, you know, has obviously the best monetary characteristics, so I do think it's gonna be another way That proves out the value of Bitcoin as this base monetary asset. So

taking that as given, then, is that an-- is there an implication there in terms of the kinds of software and Bitcoin wallets that people should be using? I guess as one example I can think of right now, Blockstream Green, right? You can have Liquid Tether on there and you can have Bitcoin on there. So is that a sort of scenario that might play out over the next few years where there might be some people who come into the-- they come into just having- Some Tethers in a, you know, a phone wallet, and then eventually they start seeing, obviously, number go up, and then they start thinking, "Oh, hey, why am I holding this USD Tether thing? I can hold some Bitcoin as well." And do you see that as a plausible story or as a po-potential method that you-- that software and Bitcoin wallets should be built out in?

Well, I'm not gonna prescribe any behavior to wallet developers. They definitely understand their users far better than I do. But there is something very convenient about multi-asset wallets, especially, you know, Blockstream being a great, great example. I hear Liquid mentioned all the time in terms of, you know, more sophisticated, complex smart contracting on Bitcoin. I expect that some of the first stablecoins issued against Bitcoin will be Liquid assets that exist This on the liquid side chain. so I, I also think we're gonna get a flavor of wallets that give you options in terms of de-risking your Bitcoin position. So maybe you'll be able to flip a switch and change your Bitcoin position to being market neutral and, you know, effectively flat in dollar terms. And maybe behind the scenes, there's some complicated on-chain derivative transaction that is going one X short on that Bitcoin, and so you've created An effective stablecoin against Bitcoin collateral, you know, so those are the kind of things that are possible with more development, especially in the DLT space. I think Taproot is also gonna give us some more tools to do this. I don't know exactly what it's gonna look like, but I have no doubt in my mind that, you know, smart developers are gonna figure this out and we're gonna have a much broader arsenal of sort of risk management products that are native, on-chain, Bitcoin-based, and, you know, trust-minimized.

Yeah, that's a really interesting vision that we might see with a kind of Bitcoin DLC wallet enabled vision there, as you were saying, or something, something related perhaps, or a similar idea, I guess. one other topic that I think we obviously should hit as well, which is stablecoin regulation. So recently there was this whole- You know, blow up on Twitter about the stable act. So can you tell us a little bit about, you know, first of all, what is that, and then what was your, reaction to that?

Yeah, so There's a lot of interpretations, and the authors of the stable act did themselves no favors by spouting off on Twitter, which really muddied the waters, honestly. But the stable act at its core basically says stablecoin issuers need banking licenses to operate, and their interpretation of stablecoins is that these issuers are engaged in a banking, depository-style activity, and as such, they should be regulated by the state as banks. And, you know, anybody that understands what it's like to get a bank charter knows that this is kind of an absurd proposition, because bank charters are incredibly difficult to come by. They require, you know, something like, you know, twenty million in paid up capital, and it's, you know, nobody gets bank charters anymore, at least in the US. the, the number of banks that exist just continues to decline year over year, and there's been a really stark decline in the number of banks, in the US Over the last kind of forty years. and so what this really is, is, is an attempt to nationalize a kind of private sector industry which has been doing really well, you know? and I'm, I'm ultimately sympathetic to the core idea, which is fiat backed stablecoins should probably be more transparent about the reserve quality and they should give depositors assurances that the, stablecoins are actually backed on on a one-on-one basis with actual dollars in a bank account. I'm totally sympathetic to that idea, and it, you know, should be the case that there is some mechanism for them to prove that. I would be in favor of something like the fintech charter, which Brian Brooks proposed, which would be a modified bank charter which takes note of sort of the idiosyncrasies of a fintech provider or something like an expansion of the Special Purpose Depository Institution, which is- Which is really suited for stablecoins, SPDI is in Wyoming, they are only entitled to hold a full reserve of the asset that they're cussiting, so they can't operate fractionally. And so that's kind of what a stablecoin is. Stablecoins are meant to not be fractional reserves, they're meant to be fully reserved. So there's a lot of interesting proposals for alternative bank charters, but the problem with the stable bill is that it was just trying to treat these things like actual, regular commercial banks that engage in maturity transformation, engage in lending, and are sort of heavily regulated as a consequence. But stablecoin issuers, to my knowledge, don't do any of this stuff. They just immobilize deposits in commercial banks and they issue IOUs that circulate on chain against those deposits that are convertible for them. So the instrument that is being proposed as the solution to this issue of sort of auditability is an incredibly blunt and ill-fitting one, in my opinion. So that's the problem with the act, is that it takes this really archaic view of stablecoin issuers as banks and, you know, tries to force them into that template, which- Basically makes no sense.

Yeah, and, so it seems that, the creators of that and the advisors of that maybe aren't as familiar with how, you know, Bitcoin and the, you know, and this world works. And so it just, but o-from what I've also read of the analysis from, I believe Coin Center and also Preston Burns' analysis, it seems as though this particular bill is actually unlikely to actually get, you know, passed and become, you know, law, but it's- It seems that, this is now the, the, the, they're on this path and they'll probably keep trying, won't they?

Yeah, and, you know, the odds of any proposed bill being passed is pretty vanishingly low, so you do have to contextualize it and look at, well, where are we in the cycle? You know, what's the political, you know, trends here at play? Like currently, we actually have a split chamber, right? The Senate is kind of Republican and the House is Democratic, so I doubt there'd be be bipartisan unity on this topic, and also we have allies in the Senate and the House now, so I think it'd be unlikely for something like this to pass. It would also-- it's actually more broad-reaching in the language in the bill than just stablecoins, it would actually affect fintech providers like Venmo, PayPal Any e wallet where you can hold a balance, they would all be considered stable coins under this bill, which is preposterous. It's an abusive language, right? Nobody refers to those things as stable coins. You don't say, "Send me a, send me a ten dollar stablecoin transaction on Venmo," you just ask for your friend to Venmo you, right? So the bill's authors constructed it in such a way that it would actually capture all of this activity under a broad net, so it's just kind of a poorly constructed bill.

I see. Yeah, and I think some of the other lawyers in the space have spoken about how there are already a range of compliance issues with some of these stablecoins anyway. So, you know, if government and regulatory agencies wanted to come after them, they could already use the already existing laws and things and try to clamp down in those ways and sort of try to, apply other kinds of AML white listing or other kinds of controls. Or try to force, in a similar way, force that square peg into the round hole, couldn't they?

Yeah, we don't necessarily need new laws on stablecoins, although various legislative bodies are proposing them, not just in the US. I would say it would be welcome to have a specific kind of bank charter which would be useful, w- you know, which would suit stablecoin issuers, because right now the way they're regulated is they register as money service businesses with FinCEN. And that's, that gives them obligations around money laundering, you know, AML and so on, and KYC, and then they typically have to go after money transfer licenses in a bunch of states, and that isn't a homogenous regime, you know, the, the, the process of getting those licenses on a state-by-state basis is pretty onerous, and the states aren't necessarily the best You know, regulator for what those issuers are doing. and, you know, I, in my view, stablecoins are effectively narrow banks or sort of money market mutual funds. They should probably be regulated as such. Like, I'm not calling for more regulation, but if there is a regulatory instrument that's created, it should just be mindful of the way that they actually operate and not treat them as banks, which they really aren't.

So, I guess stepping back a little- A little bit more broad, what's your, I guess, view on stablecoins over the next five years? You think they're gonna wax and wane through these cycles, but it sounds to me like your view is fundamentally bullish stablecoins, but in a way that's also bullish Bitcoin.

Well, the demand for stablecoins has obviously been proven out this year. I mean, we went from four billion in sort of outstanding stablecoin float to start the year to twenty-five-ish billion today, which is just unbelievable. It's just unbelievable. I mean, those numbers in any context other than the crypto industry would be eye-watering. So there's no question in my mind that people want dollar-denominated liquidity on, you know, largely censor-resistant blockchain rails in a globalized format, such as you can hold those coins In your own possession with a private key. So, you know, digital bearer assets, you know, cash-like digital bearer assets, no doubt in my mind that there's huge global demand for that. Now, the big, big question is, is the hammer gonna fall on the likes of Tether and maybe even USDC and all the other issuers? Are these regulators gonna get their way and, you know, come down on the issuers? If that's the case, the only stablecoins that'll be left will be the Crypto collateralized stablecoins like Dai, which are much harder to regulate against because they are just merely created through smart contracts as opposed to commercial bank relationships. So there's one scenario where There are adverse regulatory outcomes for stablecoin issuers, and the only model that really survives is that crypto collateralized model. And then, there's another scenario where stablecoin issuers continue to exist in this gray zone and continue to be reasonably private and reasonably censor-resistant, albeit not perfectly so, and they just keep growing. But, you know, I do wonder what the end state of that. The only thing that constrains their capacity is the balance sheet of the commercial banks that are holding the reserves. but that's sort of almost unbounded. so one wonders what happens if you get to a hundred billion in stablecoin free float or two hundred billion. There's probably a point where it becomes systemic and where bank regulators worldwide try and triangulate the banks that are holding reserves for these things. So- I don't think it can grow indefinitely. I do think there's like a sort of Damocles hanging over the, the, at least the fiat-backed stablecoin industry in its current format, absent any sort of regulatory clarity. so I don't have a firm answer on it, but I do feel that we're sort of- We're waiting for a hammer to fall, which hasn't fallen yet. so, I, yeah, I don't know what form it's gonna take, but, I, you know, I don't think Tether, for instance, can exist sustainably for the next five years.

I see, yeah. And so I guess the fiat-backed stablecoin phenomenon may be a short or medium-term one, and then potentially, maybe, putting on the optimistic for Bitcoin hat, maybe, people work on some kind of DLC version of a Bitcoin stablecoin and then- If there's a crackdown from a regulatory point of view on the fiat stablecoin style, or the fiat-backed stablecoin style, then, maybe that's like the stress to the system that, causes the adaptation of a, you know, the Bitcoin-style stablecoin.

Yeah, that's very well put. I think that's very, very plausible, and I do think that the more, you know, truly kind of cypherpunk stablecoins that are issued in smart contract form against, you know, liability- Quality free collateral, those are the best ones, those are the most robust ones, and those are the ones that are likely to last the longest. The fiat backed ones are fragile, so they can pop out of existence at any minute. and, you know, regardless of the regulatory winds at play, I think we're gonna figure out how to create stablecoins on top of Bitcoin, and I think they're gonna be a hit. Honestly, I think they're gonna be a hit, so I'm pretty excited to see how, you know, developers figure out how to do that.

Fantastic. Well, I think that's probably a great place to leave it. But of course, before we let you go, Nick, where can listeners follow you and find your work online?

I'm not hard to find. Number one place is on Twitter, nick underscore underscore carter, that's two underscores.

Fantastic, and I'll include the links in the show notes. Nick, thank you again for a very enjoyable discussion. Thanks, Stefan. Thanks for having me on again. I hope you enjoyed the discussion and I know that it may challenge the views of some people because they may not like the idea or be in agreement with the idea that stablecoins can actually have some form of symbiotic relationship with Bitcoin and actually be bullish on Bitcoin. But let me know your thoughts and of course get the show notes at stephanelivera dot com slash two three six for this episode. Thanks, and I'll see you in the citadels.