SLP451 Dissecting cRyPtO Scams and Outlook for 2023 with Brad Mills

Brad Mills (Bitcoin HODLer and VC investor) joins me to dissect cRyPtO scams from the last cycle. What lessons are there to be learned about the dynamics? Listen in to hear some post mortem commentary, as well as some views on what’s coming. We discuss:

• cRyPtO ponzi dynamics
• How the cycles line up
• Fake decentralisation
• Liquid staking
• Yield chasing
• Bitcoin fundamentals

Links:

• Twitter: @bradmillscan 
• Site: Bradmills.ca

Sponsors:

• Swan Bitcoin
• Mempool.space
• Unchained Capital (code LIVERA)
• CoinKite.com(code LIVERA)
• Buildonl2.com

Stephan Livera links:

• Follow me on Twitter @stephanlivera
• Subscribe to the podcast
• Patreon @stephanlivera

Podcast Transcript:

Brad, welcome to the show.

Brad Mills – 00:02:31:

Thank you very much. Stephan, longtime listener.

Stephan Livera – 00:02:34:

Fantastic. Well, that’s great to hear. And I know there’s a lot going on in the whole world of bitcoin and shitcoins or crypto, quote, unquote. And I know this is an area you have previously delved quite a lot into, and I thought it’d be interesting to chat with you about it. But first, let’s talk a little bit about sentiment. Sentiment. And where are we in the cycle right now? Is the crypto bubble over?

Brad Mills – 00:03:01:

All right, well, it’s something that I think a lot of people recently because we’ve had the price run from the low of like 16 into 21 just as of the last week. So a lot of people have just suddenly shifted from we’re going to 8k, we’re going to 10k tether’s a ponzi scam that’s going to implode. The government’s going to shut bitcoin down. There was a lot of, like, bottom fear a week ago. It’s a bull market. We’re going to might as well load up on NFTs and shit coins because bitcoin is back in the bull market. So I don’t know. People are just elastic banding from one emotion to the next when it comes to this market. So it does remind me a lot of the last cycle, if anybody was paying attention to the last bitcoin cycle, where most participants that found their way to bitcoin maximalism or the bitcoin only thesis in the last couple. Of years. They found that because they were involved in the 2017 ICO bubble and they kind of heard about crypto from an influencer, from a story where all these people are getting rich with crypto, and they came in and they either just started buying shitcoins on the exchanges or they launched their own coins or got messed around with doing that. Because a lot of entrepreneurs come into this top of the funnel thinking like, oh, this must be technical financial innovation, blah, blah, blah. So they don’t really come with that principled sound money thesis. And they go down the shitcoin rabbit hole and start their own chain or whatever, launch their own coin, not realizing it’s kind of an unethical thing to do. And these are illegal securities and just in general, overvalued pieces of equity that are not worth what they’re selling for because of the bubble. And you had about a year into the pop of the 2017 bubble, where we all remember Binance and Pony X and Bittrex and all these big crypto exchanges of the last cycle, we’re doing like, lottery tickets. Towards the end of it. They were basically like, there’s so much demand for shitcoin ICOs, we can’t sell it to everybody. So we’re going to issue you a lottery ticket. And if you are lucky enough to be the person who gets to buy into the shit coin, then you get to get the 10x. And that was kind of like peak insanity, where Long Island Iced Tea changed the name to Long Island Blockchain and then pumped 300%. And the next year was like everybody realizing that that was a bubble and it was an actual bear market. By November, December of 2018, most participants realized it was a bear market. This was a lot of nonsense and some things were still selling out. You still saw ICOs raising tons of money even though it was clearly over, the bubble was clearly over. And the reason why I’m going into this detail here is because you go back and look at the cycle of the last bubble, and you like, mirror it onto the one we’re currently in right now. We’re almost exactly a mirror of the last cycle where bitcoin topped, then altcoins topped, and the next year was just a very painful bear market that took a long time for people to recognize. It was an actual bear market. And by a year in, which is where we are right now, in both cycles, we’re a year into the bear market of the of the 2022 pop and the 2018 pop. You had bitcoin bottom after a major drop in in the last cycle. It was we were hovering around the the 6000s range, and then we dropped down to like the 3000s on really bad news and final capitulation. In this cycle, it was hovering around the 20s range. We thought, like, all the worst was over. Terra Luna blew up 3 hours capital. All of that was so bad, we consolidated in 20k and then FTX, and the end of the year, we drop even further. Final capitulation. What happens then, if you line up the charts is the next year. So all of 2023, basically, if we repeat the same cycle that we had last time, what happened in 2019 was bitcoin recovered, bitcoin found the bottom, bitcoin had a really good year. It was accumulation turned to mester, released his report on, I think it was the

Stephan Livera – 00:07:23:

Great reformation.

Brad Mills – 00:07:24:

Bitcoin reformation. Yeah. And went on Preston Pysh’s podcast and discussed about how institutions are starting to get it, and high net worth investors are starting to understand bitcoin is different from all this stuff they’re accumulating. And bitcoin had a really good year. While cryptocurrencies and altcoins, it took another full year for people to actually capitulate on all this stuff. So people right now are so excited still for some reason. Like you asked about sentiment. The sentiment right now is not as bad as it should be in the crypto world and in DEFI and NFTs. And it’s not surprising because a lot of coolaid was served up over the last year and a half. And there’s a company right now that got investment money from Andreessen Horowitz, FTX, Paradigm, all these shillicoin valley vulture capitalists that were pumping the bubble in the first place. They put $200 million into this NFT company, and they’re sponsoring the super bowl next month to give away 15,000 NFTs. So it’s still going to be triggering the next year is probably going to trigger a lot of us, because it’s like, this thing clearly popped. Why are you guys still wasting your time with JPEGs and shit coins that give you 20% APY? But it’s going to take a while for the full cycle to play itself out, and it’s going to be a rough year I think for a lot of people that think like, oh, it’s a bull market, so I’m going to go deploy into all coins that are down 90%. Because if you look at the charts, the all coins that went down 90% in January 2019 that were already down 90%, people were deploying into them. The next year they went down another 90% in most cases. So just because it’s down 90% doesn’t mean it can only go up from here. It can go down another 99% from now 90%. And a lot of people are going to learn that lesson over the next year. And I think that just means that by 2025 we’re going to have a lot more Bitcoin maximalists minted in this next year of what I think is going to be a lot of pain to come for people that still haven’t learned the lesson.

Stephan Livera – 00:09:17:

And I think I broadly agree with you there, Brad. I think I’ve been quite critical of this idea of just people who are just totally pumping hopeium and I think it’s going to take time for the cycle to play out. And just like in past cycles, as you and I have kind of been around over those cycles, I think people get overly exuberant and they want it to all be over soon. And I think there’s a difference between what is happening and what will happen. And I’m also curious, your view is the macro different this time, right? Because it’s also fair to say that up until for most of Bitcoin’s life the fed has been relatively in an easing mood and the central banks around the world have mostly been on an easing trajectory. Whereas right now they’re sort of in a tightening or at least they have been tightening. And maybe they’re going to hold still for a little while and see what happens with CPI inflation, not monetary inflation. And so is the macro different this time?

Brad Mills – 00:10:11:

Well, I heard Bitcoin Tina on a space the other night and a lot of people give him grief for going from there is no alternative to like, okay, maybe there’s like a hedge, like bitcoin is a hedge or whatever and kind of like changing his narrative a little bit. But I still listen to him. I think he’s a smart guy. He gets things on a level that a lot of us Bitcoiners don’t quite think about compared to the macro stuff, which is like related to the macro stuff. And his point was that thinking about Bitcoin and how it reacted to macro in previous cycles is just not relevant anymore because bitcoin at a one or $50 billion market cap as an asset that’s kind of an illegitimate asset to most institutions and high net worth. They looked at bitcoin in previous cycles as like just a joke or for libertarians or whatever, but now at a much higher market cap, it’s actually a thing that people pay attention to, and we have our cycles, and we can look back inside of crypto and inside of bitcoin and see how the ship coin markets react to bitcoin’s trends. I think that’s relevant. But yeah, it’s tough to look at previous cycles of bitcoin and say, well, because it did better in this period or that period where the fed was tightening or not tightening or whatever, it’s kind of hard to correlate previous cycles of bitcoin to macro than it is now. I think it’s kind of like we kind of have to start fresh and start paying attention from, okay, this is an asset that now institutions, central banks, they’re all paying attention to it now. So it’s a fresh slate for relation. I think so, yeah. It is tough to see where things are going based on macro, although I do think that there’s no other alternative besides stimulus that they have. We had a whole year of basically high inflation induced by the Federal Reserve. Kind of like tightening everything and crushing the markets, trying to stop inflation and cause labor market participation. They call it the wage price spiral. They were afraid of the wage price spiral where prices are going up so people start demanding to get paid more. Imagine that you want your wages to keep up with inflation. They don’t want that, so they want to crush everything. They want to cause unemployment. There’s too many jobs hiring, so there’s too many jobs available, so that’s no good in their eyes. They want people to suffer so that inflation doesn’t take hold. It’s kind of like an evil thing actually when you think about it. Like the way that the Federal Reserve just continually manipulates things to cause higher and higher wealth inequality. But whatever you think about their policies and how they may have messed it up, they definitely caused a lot of pain. Like the nonprofitable Tech Index is something that a lot of people were looking at as part of the everything bubble. You know, macro guys like Jesse Felder and those guys were talking about the everything bubble for years. And the nonprofitable Tech Index, if you look that up, it just went parabolic in 2021. It was insane. This is like companies that are publicly traded that don’t make money, doesn’t even make sense to do a PE ratio on them because they’re just like meme value, right? They got crushed in the last year. Just like it looks like a shitcoin chart. It was down like 90%. Like the non profitable tech companies absolutely got crushed. We all know the biggest, some of the biggest, like tech companies, Peloton and Netflix and Facebook and things all got crushed. So yeah, bitcoin got crushed as well. Risk assets got crushed. But going forward, it seems like they seem to have gotten CPI inflation under control or at least wrangled it down. So the rate of change of inflation is not continually growing. I’m one of those people that thinks that CPI is a manipulated metric that is not really what real people feel and pay attention to, but it’s just a metric that the government uses to sort of measure inflation linked assets like Tips bonds and stuff and Social Security payments that’s all linked to inflation. So they’re kind of incentivized to keep that number looking as low as possible because the higher inflation goes in CPI terms, the more benefits they have to pay out and the more interest they pay on the Tips bonds. So they’re incentivized to keep CPI inflation looking low. But they’ve kind of gotten that under control. And so the next step is money printer go burr and unfortunately that’s what Bitcoin is going to do well in the situation where money printer goes burr and causes more wealth inequality in the world. So that’s why I’m passionate about, like, sound, money, education in different parts of the world, and why I’m so pissed off about DeFi and NFTs and all this stuff. Because this stuff is just causing more wealth inequalities, causing more people to just be gamblers and short term thinkers and jump on the hamster wheel of speculative gambling. Short term thinking. Whereas the monetary policy is creating conditions that makes wealth inequality worse and worse and worse. And Bitcoin is the solution. And why are we messing around with all this other nonsense? It’s only rich people using DeFi. It’s VCs and token devs that have pre mined the protocols. That’s who’s using DeFi that’s primarily not going to be used by regular people. Whereas what we’re doing in Bitcoin is actually spreading a savings technology that can benefit somebody that has $5 to their name to start thinking more long term and saving it in Bitcoin. So I think Bitcoin is going to do well over the next cycle of monetary issuance, whatever you want to call it. Sure.

Stephan Livera – 00:16:00:

And when it comes to the fake decentralization, I know this is an area you have done a bit of research and you’ve been playing around in the quote unquote crypto world. Can you tell us a little bit about what you saw there in terms of the fake DeFi or dino decentralized? In name only.

Brad Mills – 00:16:19:

Yeah. So this is a conversation I think is very worth having for a lot of Bitcoiners because it’s a lot more nuanced and it’s more detailed and there’s actually some interesting technology that’s been developed over the last two years because they’ve funneled billions and billions of dollars into development and that has actually created some interesting stuff. It doesn’t change the fact that most of the tokens and the assets that are being traded in these DeFi protocols are overvalued worthless meme tokens and in some cases illegal securities or whatever you want to call it. But most of it is overvalued nonsense and it’s just recreating the same toxic derivative garbage that Wall Street has done time and time again to create financial bubbles on Wall Street and then cause a lot of pain. They’ve done that. But in crypto they’ve done it, but where? There’s no central bank to bail any of them out. And that’s why it’s failed spectacularly with things like Terra Luna blowing up and Three Arrows Capital and FTX, Alameda, a lot of other DeFi companies that were like basically the VCs funding this stuff, losing money to hacks because there’s a lot of exploits in there and just Ponzi scheme generally like blowing up and people realizing that these yield farms don’t actually make a lot of sense when you’re not in just low interest rate stimulus fueled Ponzi bubble everywhere. So the question you asked was about decentralization and for the most part, most of it is not decentralized. I mean, we could start with kind of like back into the end of the last cycle. You had Bancor raise quite a big ICO and Bancor is this team from, I think, Israel that were building out an automated market maker, Am. And that’s what kind of started the AMM thing on Ethereum. It was Bancorp raising this huge round and then this guy, Hayden Adams, this Ethereum developer guide, said, well, that’s annoying. You don’t need a token to do an AMM. It’s just a decentralized exchange. So he got pissed off and he like, rage forked a Bancorp protocol and made uniswap. Kind of like what Nicholas did with BitPay, right, to make BTCPay server. He’s like, this is so stupid. I’m just going to make you irrelevant and I’m going to fork it and then create an open source bitcoin only version of the service that they were doing, that BitPay was doing. And he became very successful with that. And most Bitcoiners don’t pay attention to BitPay anymore. They only pay attention to BTCPay server and bitcoin only services. Well, that’s what happened in defy with Bancorp. Bancorp was the big blockbuster ICO that raised a ton of money to do it, uniswap forked it. It was one guy, he forked it, he ripped the token out of it and proved that you don’t need shit coins to make decentralized technology. And so I kind of admired that guy back then because he’s like, at least there’s still some principled cipher punk type people left building in that space that they realize that the token is just a grift, it’s a bolt on rent seeking thing, it doesn’t actually need to be there and they can build the technology. So that was one of the examples when I used to try to have nuanced conversations about what’s going on with Ethereum. Is it a bunch of just web dev people building or is there anything actually real going on? I used to look at things like tornado cash uniswab and say, look, there’s real things being built here and they’re not all trying to drift with tokens. So we should try to look at what they’re building without tokens that actually works and maybe try to put that on Bitcoin layers if it proves out to be valuable. And so the idea of an exchange it’s like if you are true, like libertarian free market philosophy, right? You kind of have to think about disrupting and disintermediating regulators that regulate poorly and what Bitcoin did to central banks or to the idea that you can have a money that’s distributed and decentralized and can’t be confiscated, can’t be stopped. Like a money that disintermediates those types of regulators from stopping you from using your money. That’s what some of these guys in Ethereum and in crypto were trying to do with Finance. They were trying to disintermediate like the SEC and the CFTC and the fatif regulations and stuff, which a lot of us could probably agree if it weren’t for a lot of cognitive dissonance that even I suffer from and stuff that’s like, well we’re the Bitcoin is we’re doing that stuff, we’re disrupting, we’re just intermediating. Well look, some of the people over there are also trying to do that. It’s just they’re not so focused on the money, they’re focused on Finance and they’re focused on securities and things like that. And just the general concept of having a decentralized exchange makes sense. If you’re going to have a decentralized world, having the ability to swap Bitcoin for a US treasury or Bitcoin for a dollar in a decentralized way, it would be useful to have that technology. AMMS have a lot of problems, especially on Ethereum, where it’s all transparent and you have the ability for people to write bots that siphon value out of the decentralized exchange through minor extracted value. I call it minor extorted value mev. They basically can see everything that happens and they know what they can take flash loans on and steal money basically from you and arbitrage your trade. And this happens continually. It’s like flash bots happening continually on uniswap that siphon value from the market makers. So if you’re an LP in an automated market making pool on Ethereum, somebody did research recently that showed that the biggest pool is ETH/USDC and it’s the biggest, most deep and Liquid pool on uniswap. And the guys that are doing the market making for that are down like $130,000,000 in the last twelve months because it’s just not profitable at scale to use automated market makers. So while I’m saying that there’s some interesting technology and some stuff has really been built, there’s also a lot of problems.

Stephan Livera – 00:22:44:

Right, it wasn’t sustainable, it wasn’t profitable. From what I understand, there were some LPs who were losing money from this. Now, I haven’t done a lot of research in this, but I’ve heard this concept of impermanent loss.

Brad Mills – 00:22:54:

Yeah, the impermanent losers came up with the term impermanent loss, which makes no sense. So basically how impermanent loss makes sense under to explain it simply for people, let’s say you have a million dollars on one side of a token where let’s say you print your own token. You make it up from nothing. It’s a dollar. And you have a million dollars of your pre mine, and then you have a million dollars of stable coins, right? You put that pair that up in a market making AMM like uniswap, you become an LP and you fund it with a million dollars on one side of the token, a million dollars of real money on the other side, and then you start to buy it up. And basically, the way that the bonding curve math works on uniswap, it’s very easy to pump a token because it’s not a deeply Liquid market like on Exchange. There’s no real efficiency there in that market because it’s going to go up. That’s how Richard Heart was able to actually pump the price of hex like 1000 X from the bottom on uniswap because it wasn’t on any centralized exchanges, it was only on uniswap. So he exploited the bonding curve math. Basically the idea that you can just put the two tokens, pair them up, and then just start buying the token and it’ll just shoot to the moon because it’s an inefficient market. So they call it a permanent loss when, let’s say now you’ve pumped your token up 100 X. Well, if you had it just kept the million dollars of your shitcoin, then you would have $100 million worth of the shitcoin. But because you paired it up with the dollars, it’s actually now you’ve got $25 million of other people’s money in stable coins and only $25 million of your check coins. So you’ve lost $50 million basically, if you had to just kept your token. They call that a permanent loss when the value of one of the tokens goes up. But you’ve become a market maker and you’ve lost those tokens because you can’t get those back. But I don’t know why they call it impermanent loss because it’s a permanent loss. So it’s another weird ethereal marketing term, but that’s what automated market making is. It’s basically like you’re going to lose tokens that may go up in value, and if they go up in value but you’ve lost them, then that’s called impermanent loss. I don’t know why they call it that.

Stephan Livera – 00:25:06:

Yeah. Strange, right? All the stuff I’m hearing, it just reminds me of how useful it is to just stay bitcoin only, right? Like it is just such an obvious just stay bitcoin only just accumulate bitcoin. And as long as you have a long term focus, obviously there will be times over which you’re down if you are only newer to bitcoin. But anyway, let’s bring it back to the whole dino thing. So or dino. Or dino, however you pronounce it. And what we found is that there was a lot of fake nonsense going on, right? There was fake volume, the TVL in Solana was fake. There were users who were bluffing in, like using pseudonyms to bluff as multiple users to make it look like there was lots of activity in the developer space for Solana. And that’s just one example, right? This is just Solana, one prominent example. And then obviously with FTX, there were these examples where Sam’s coins were being valued on only a tiny percentage of the overall float. And so they would basically bluff the value up to a certain amount because only a small amount is actually being traded. And then the other example, I think probably the key example or another example is being able to just remotely shut these things down, right, if there’s something found, and then they magically find a way to shut it down and stop the network, right?

Brad Mills – 00:26:27:

Yeah, that’s happened multiple times, so they don’t go to quite that far in most cases. The thing that frustrates me about it is that they have the ability to do it. In most cases, they try to keep it appearing decentralized as much as possible. So it’s like minimum effective decentralization. It’s like minimum viable decentralization or whatever. It’s like sort of like a Silicon Valley way of doing things to make it appear decentralized. That’s what I think about it. Like almost like the Ethereum DAO hack, right? Like there was a significant amount of Ethereum consensus and Vitalik, I think, lost a lot of ethan that so they made the choice to roll that back and that set the bar for most of us to say, okay, code is law is bullshit. That was just a marketing meme. They’ve rolled it back. It’s not code is law, it’s law is law and we are in control of this thing and we’re going to reverse it because it actually affects us. But then you fast forward a couple of years and then the multisig hack, the multisig exploit of Parity happened, where 100 million, $200 million worth of Ethereum that people were using multisig for got locked up when somebody just borked the whole multisig contract. And there was the opportunity for them to rescue Gavin Wood and the others who had lost their Ethereum to the multisig Parity hack. And they looked at it and they kind of said, well, I guess we could do this. We’ve done this for the DAO hack, but we didn’t lose any money in the parody hack. And look, we’re at 400 days without an incident of rolling back or interfering with our meme of decentralization. So I think it’s more valuable for us to keep up with the charade that this is decentralized. That way we can claim that this is like Bitcoin. So they didn’t roll back the parody multisig hack, they didn’t fix that, but it doesn’t change the fact that they are able to do that. That’s the sort of key difference. A lot of the new entrants into the market in this cycle, they confuse the choice of not doing it with the ability of the restriction of not doing it. Like in Bitcoin. It’s pretty. Much impossible for you to get consensus on something like that. It’s not going to happen unless it’s like a real threat to Bitcoin, like an existential threat that we get overwhelming consensus on from all the participants in Bitcoin, that, yeah, we want to change to a quantum proof algorithm or whatever. We’ll fork that point a snapshot and fork away if a real quantum computing threat happens or something like that, where everybody agrees, yes, this is what we’re going to do. Otherwise Bitcoin is dead. That’s, I think, the only way that you get consensus on a change of bitcoin of that nature, but in the theorem, they have done it in the past multiple times, and it happens again. In terms of the monetary policy, it happens every once in a while, six months to a year, where they’ll fork and change things and not just code, but monetary policy. So time and time again, they’ve proven that the market participants that are in crypto and Ethereum, they actually are aware. I think they’re aware that it’s not actually decentralized and they just don’t care. They’re like, well, we prefer a money that changes its monetary policy to try to make the stock to flow compete with bitcoin because we’re invested in this thing. And we prefer that there’s no unlock code with ETH 2.0 because that locks up supply and helps put pressure to drive the price up. They’re aware of all these things that are centralizing factors and they just don’t value what we value as bitcoin investors. I think. Now I’m trying to be as progressively describing this stuff and open minded as I can because I really don’t think it’s as simple as you’re a bitcoin or you’re a bitcoiner. I think it’s like a lot more nuanced than that. And because many people, like I said earlier, came into bitcoin through the crypto funnel, they found their way to bitcoin because they were trading ICOs on Binance, or they came in and even launched their own coin or something and eventually realized they were honest with themselves. They thought, okay, the important thing here is these things that bitcoin does, not these things that I can do over here with this coin, and it doesn’t add anything of value to the world. So I’d like to talk about these things in a way that doesn’t turn off potential. People that could be in that journey, maybe they’re open to the idea that what they’ve been doing is pretty much bullshit and they should come and learn more about bitcoin. So I try as much as I can to be careful with the language that I use, but it’s so hard on Twitter, man. It’s so hard to not call out all this bullshit and look at it like a big scam.

Stephan Livera – 00:31:20:

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Brad Mills – 00:33:03:

Yeah, I do. I mean, I’ve been wrong on that in the past, though, to be honest, I thought we weren’t going to repeat the same bubble that we just repeated. I figured after 2019 it was a brutal routing of the idea of MV equals PQ and the fat protocol thesis and all this stuff that the Sillicon Valley VCs were pushing to try to sell their token pre mises on people. This narrative that utility value is what gives value to a blockchain’s token and therefore you want to have lots of activity of non savings use case or spending use case, like what you do with bitcoin and the Lightning Network. You want to have like derivatives trading on your blockchain and you want to have stablecoin settlement on your blockchain and all of that billions of dollars of settlement value that gives underlying value to the token. Like that was the thesis they were pushing. And that mostly got invalidated in 2018 and 2019 especially. And so we did see a decoupling in 2019. There was only like one or two coins that held their value against bitcoin and maybe outperformed bitcoin of the 10,000 or so coins that were on the market at that point. And so mostly everybody kind of realized that, okay, bitcoin is different. But then we got the federal Reserve dropping interest rates to zero and like $10 trillion of stimulus that just reinflated everything and the same exact bubble reinflated itself. The same people that were involved in the previous cycle, they restarted all their OTC telegram rooms, the same WhatsApp channels. It was like pretty much the market makers and the crypto insider, people that had already been deployed into a bunch of crappy ICOs from 2017. We got all the guidance from the SEC and the CFTC and the department of justice and Finsen, and all these regulators were basically saying, like, look, this is not in compliance. This is not in compliance. You have to follow AML KYC rules if you’re going to sell to US. Investors. You cannot just sell a token to us investors and say it’s financial innovation. You can’t put interest rates, you can’t promise interest rates. You can’t be a celebrity and show this stuff to your audience without disclosing that you’ve been paid to do it. And so you saw a bunch of actions that were taken and a lot of people kind of thought, okay, well, this is going to be different next time. You’re not going to see the same ICO type stuff happen. And what they did was very sneaky. They changed it from like they used some kind of like logical loophole which, which ended up working because nobody gave a shit about DeFi protocols. Like, I mean, there was like, nobody was using DeFi protocols by the end of 2019 or early 2020. There was a bunch of stuff built, there was curve and compound, and Ave wasn’t built yet, but there was Uniswap. So there was the ability for you to borrow against your Ethereum or your rap bitcoin on compound, which is like decentralized lending. Then there was curve, which was an interesting DeFi primitive they call it, of being able to make pools. It’s kind of like what the federal Reserve does with the dollar system. Why is a dollar at Chase Bank fungible with a dollar at JPMorgan with a dollar at Bank of America? Well, it’s because the federal reserve actually acts as kind of like a liquidity pool between all these different bank monies and allows you to just have fungibility between any sort of form of dollar, right? And that is kind of a function of the federal reserve that they built and defy land and called a curve. So, like, how are you able to exchange one USDC for one USDT? Well, it’s because there’s deep pools of liquidity in this curve protocol, which is like a decentralized app where you can put a billion dollars of USDT in it and a billion dollars of USDC. And then that means you can pull out $10,000 of one or the other coin and they’re going to hold their value and be pegged. So it kind of is interesting in that it decentralizes the role of the exchanges because before the decentralized pools, it was all up to the exchanges and the arbitrage between exchanges to provide a stable or sometimes not stable price of stable coins. So Curve was kind of an interesting thing that they had built, but nobody was really using it because it wasn’t a great user experience. And this is what Udi used to always say when he was kind of like more of a bitcoin er and more rational about his arguments. He would say this all the time. And I think it’s still true that nobody wants to use these DeFi protocols where it’s not a great user experience. You have risk of smart contract failure, you have risk of being hacked, you have risk of them changing the rules on you, plus you have transactions sometimes gets stuck. And if you just want to use a stablecoin, then you’re just going to probably use an exchange or an app or something that just uses the stablecoin. And a normal person is probably not going to get over the hump of the user experience barrier of using crypto and DeFi. And so his argument, I feel like was correct. And over time I feel like it’s going to be proven correct because I still think the user experience of using DeFi is very bad when you compare it to the ease of use of using something that’s like a more clean app or a centralized exchange. But that’s a separate argument. Back to the core argument of like, how did they, how did we see this reignition of the nonsense we saw in the bubble? Well, they started making it so that you would get paid to use these protocols. So that’s where everything changed in summer 2020 and that’s where they added the yield farming. So like, nobody gave a shit about Uniswap, nobody gave a shit about Curve, nobody gave a shit about compound or urine or any of these DFI protocols that to their credit, some smart cypherpunk esque devs were building some of this stuff, but nobody was using it because it wasn’t a good user experience. None of the crypto traders cared about it because it was like Ghost Town. Nobody cared about it. But when they started paying you to use it, it changed everything and it reignited the kind of FOMO in the crypto trading scene. And so it’s like get paid to take a loan in these tokens, get paid to borrow, get paid to trade, get paid to put your LP tokens in this pool and create liquidity. And so they started incentivizing people by paying them and bribing them with these token rewards. And then the sinister thing is, back in 2019, multicoin capital and a bunch of other crypto funds. They were blatantly open about what they were doing. They called it generalized mining. They made up another term, and it was basically wash trading. They’re like, we’re going to simulate usage of these protocols. We’re going to take some of our treasury, we’re going to put it in and simulate trading and simulate lending and simulate put up actual liquidity and make it look like there’s people using it that will attract people as a honeypot to actually start using it. So they called it generalized mining. Back then, they admitted they were doing wash trading. They started doing that. But it still didn’t matter. People didn’t care. It only changed when they started doing the yield farms. And that’s the Ponzi. That’s what turned all of DeFi into a giant Ponzi scam. That was not only unethical because it was like breaking securities laws in the same way that they did it in the previous bubble, but they just did it. So it was like a logical loophole where it was like, in 2017, you give me money, I give you a token. That’s an illegal security, right? Like, if you give me money and I give you a token, I’m issuing an unregistered security and I’m afoul of the law. But if I write a smart contract where you give the smart contract money and then the smart contract gives you token, that’s cool. I’m not doing an unregistered securities offering. I’m in compliance, and then I can do generalized mining and wash trade it. And I’m not breaking any laws because, hey, there’s no rules against generalized mining. There’s only rules against wash trading. So I’m not issuing an illegal security and pumping it with wash trading. I’m doing a smart contract that’s doing yield farming, and I’m just mining tokens. See how they were able to so that actually worked. And because they were putting hundreds of millions of dollars in liquidity into these pools to provide people with actual returns, the whole thing reignited. And then it coincided with the Federal Reserve pumping tons of money and the Congress and Central and Commercial Banks pumping tons of money into the system, which caused rich people to go way off on the risk curve pile. Their money into like SPACs like stupid nonprofitable tech SPACs and crypto funds which the crypto funds like Alameda, a16z, Jump Crypto, which is a spin off of a massive jump trading which is a massive market maker in traditional markets. All of these guys were working together in the back end to pump the living shit out of the DeFi bubble. And they were using it going on podcasts, like Tim Ferriss podcasts. And all these successful entrepreneurs that influenced a lot of, like, I don’t know, gullible, naive, whatever, want to be entrepreneurs. And successful entrepreneurs in their own right to think that this was okay because hey, Balaji Srinivasan is talking about how DeFi is the future on Tim ferris podcasts. And Tim Ferriss is launching his own NFTs. He’s an ethical guy. I guess I should get into Web3. And so the entire bubble caused this top down, horrible logic to be propagated out amongst entrepreneurs who I don’t think are like evil shit coiners, but who are just people who’ve been duped and convinced that this is some sort of financial innovation when 99% of it is actually just a nonsense bubble that’s recreating everything that’s wrong with previous bubbles in Wall Street, throwing it on a blockchain and fooling everybody into thinking it’s financial innovation while all the while, bitcoiners are actually out there building shit, building the Lightning Network, spreading the sound money thesis all over the world and not getting involved in any of this token nonsense. So I think in the end, we come out of this with the reputation of not having been involved in this get rich quick bubble, token ponzi NAMIC stuff. And it’s going to take a while for this to sort of like people to, I think, grasp it. So you’re saying, will we decouple? I hope so. I think that the regulators are going to come in this time. I spent a lot of time in the last couple of years going through previous cycles of Surrey, historical cycles of bubbles, and what happens after they get so big. And typically what happens, whether it’s the gold rush or the oil boom or the derivatives or the housing bubble, whatever it is, when it gets to a level where it affects pensions and regular retirees and stuff like it did this like it did this time. The Quebec Pension, the Ontario Teachers Pension, some people, many people that were like, following influential investors and stuff got wrecked by this. It does cause a reaction by the regulators to come in and tame the market and there will be survivors, but it’s going to get tamed. And that taming of the market, I think, is going to cut a lot of the nonsense. So I do think that what we’re going to see over the next eight years or so is, yeah, sure, the shitcoin DeFi crypto NFT bubble is not going to die. The market itself is not going to completely go to zero. But I think we’re going to see bitcoin lift off and break through the atmosphere as a competitor, a global reserve asset competitor to gold and US Treasuries and things over the next decade. And the Altcoin stuff is going to hit the atmosphere and they’re going to be competing with things like tech companies, they’re not going to be competing with bitcoin. So the people calling for like, Ethereum at $100,000 while bitcoin is at a million, I think that’s kind of nuts. I think you could see bitcoin at a million and Ethereum at 502,000,000,000,000 of market cap of Ethereum competitors and NFT projects and all this stuff. So I do think that this whole segment is kind of here to stay. It’s just going to get regulated. And unfortunately, it’s not going to all happen on bitcoin layers over the next decade because they’ve got too much network effects. But it will stop being this, like, oh, this is like bitcoin, except it’s got utility value of derivative trading. It’s like, no, this is like a stock. Compare this to what it’s like. Don’t compare it to bitcoin. So I do think we’re going to see separation in bitcoin terms over the next decade, but I don’t think, unfortunately, we’re going to see complete logic come into the markets and people going to act rational around this because there’s a lot of money to be made doing this DeFi, token launching stuff. Just we’ll see how it shakes out.

Stephan Livera – 00:46:35:

Yeah, that was a great dissection of this last cycle. And I think there’s a lot of different dynamics, as you mentioned. It was people were put into this low rates environment. So all these people were chasing for yield, and they thought, oh, wow, I can get some money on my stables and my stables. And then that drove them to do all this yield farming and chasing the yield, and in many cases unknowingly, right? Like, they put their they thought they were with, you know, BlockFi, and it was all safe with BlockFi or Celsius or Voyager or whatever. And then actually, no, they got wrecked. And I’m also curious if you have any insight or interpretation of what happened with the whole GBTC trade, because that was partly what drove the Three Arrows Capital. They were making all this money on that GBTC arbitrage. And then what happened is that premium flipped. It then turned negative. And I wonder whether that was also part of this cycle, the comedown, right? That was part of the collapse of the popping of that, let’s say, crypto DeFi bubble.

Brad Mills – 00:47:36:

Yeah. I think the thing that I don’t know a lot more than most people following this about GBTC, the way I understand it to have worked was just a lot of leveraged stuff happening outside of DFI. Say right. There’s a lot of nonsense that was Happening inside of DeFi and a lot of yield, like promoting yield that attracted a lot of entrepreneurs and maybe people that had 10,000 $20,000 of capital to put at risk. I had a lot of friends talking to me about, like, hey, I’m going to do this 10% yield thing. You should do it too. It’s called anchor protocol. You got to go on the Terra Luna blockchain, buy some Luna tokens, put it in an anchor protocol, and then you can go and put that onto magic Internet money on Ethereum, and then loop it over towards and then you get 100% API. I’ve done my research. It’s safe. Here’s my referral link. I’ll get 10% if you do it. So there was just, like, a lot of crazy nonsense in DFI that was extremely leveraged, derivative nonsense that people were even still you see it in DFI, like staked ETH. So I was very critical of the Staked East East thing. And I think the best comparison from GPDC and BTC is Staked East East. So what three years capital and DCG and Genesis did with the GPTC trade was very similar to what Celsius did with the stake dees trade. They were earning yield. So Celsius was taking customers, bitcoins, stable coins, ethereum, shitcoin, whatever. They were taking all that money in, they were buying Ethereum with it. They were then putting Ethereum into staked Ethereum. So we’re talking big money too. Like a significant amount of the money that Celsius brought in, they funneled it into ETH and then they staked it into the SD ETH in the they called Lido and they bought staked ETH which locks the Ethereum. Lido does it for you. This is a company that locks the Ethereum into the staking contract of Ethereum and then they take a fee from managing the validator nodes and all that stuff. But basically it’s called Liquid staking. And they let you now take that stake death, which is a derivative of Ethereum, and trade with it in DeFi. So then you can take your stake death which is a derivative of Ethereum put it for one to one par value in some sort of like curve or other lending pool and borrow against it at a pretty risky rate like 70% loan to value or something where then you can go back and you can get 0.7 ETH for one stake teeth so if you have 1000 staked Eth you can borrow 700 ETH and then you can take that 700 ETH and you can go do some other nonsense with it and farm some more money. And you just keep leveraging that up. And that’s how it grew to like billions and billions and tens of billions of dollars in crazy over leveraged under collateralized lending in DeFi, through things like Celsius. And even still Celsius has about 450,000 state death on the treasury. That’s like assets of the creditors. There’s not enough liquidity to sell 450,000 stake deaths in curve. You can look at the curve pool and see that if they tried to sell even half of that steak death to get back Ethereum or dollars, they would completely crater the steak death price. It would drop to like 0.6 or 0.5 discount. So that was one of the things that like, for some reason Celsius and whoever was involved in chasing their liquidations down, they chose to sort of not sacrifice ETH, which is the weirdest decision, because instead they sold other bitcoin. They allowed like Celsius had a $1 billion loan with Tether, so they gave Tether $2 billion of bitcoin. I think these numbers are kind of rough, but they’re in a range of reality. They gave them like $2 billion of bitcoin. They got like a billion dollars of Tether because it was a way over collateralized loan a lot of people thought so Tether was giving unclateralized loans to companies like Celsius because you can see mints of USDT going to companies like Alameda and Celsius. So a lot of people on Twitter like Tether is a part of the ponzi they were part of like giving fake money. No, Tether actually had a pretty conservative strategy. They never issued loans of Tether from nothing. They took bitcoin over collateralized from risky companies like Celsius and that way when shit hit the fan they can liquidate them with no losses. So Tether was able to liquidate a billion or more dollars worth of Celsius’s BTC that they had when shit was hitting the fan. And that was part of the reason why, when Three Arrows and Celsius kind of collapsed in that weekend in june or may or whatever it was, that we hit such a massive drop in the price of bitcoin, because there was two big, huge scam whales getting liquidated on all their bitcoin loans, because that’s the most deepest Liquid pair. If they tried to liquidate them on the staked ETH it wouldn’t have gotten them as much value back because it’s.

Stephan Livera – 00:53:00:

Not eat would have tanked.

Brad Mills – 00:53:02:

So that’s kind of what’s happening. That’s what happened with Three Arrows Capital and Genesis as well. There was all this sort of similar, like Three Arrows Capital, gets unsecured loans and then they buy GBTC and then they put their GBTC up as collateral with Genesis, which Barry Silbert group owns Genesis, and give them a loan. And then they’ve got now a loan on GBTC at a similar risky lending rate as the stake. The situation. So then the worst part of all this is that then Three Arrows Capital goes and takes all that money they borrowed from the GBTC. So they’re using bitcoin as collateral basically right, for these big loans and then they’re going and putting it into avalanche and Ethereum defy ponzi’s and they’re basically taking customer bitcoin and using the loans to go pump shit coins and go launch Ponzi scams on Ethereum and Avalanche and salona and they were part of Terra Luna. So a lot of the money that these guys got was actually bitcoin collateralized loans or uncollateralized loans that they used to buy bitcoin and then take a loan on that. And they took all that money and they made a bunch of Ponzi scams and promoted a bunch of Ponzi scams and did a bunch of pump and dumps. So not only were they like doing crazy risky stuff with bitcoin and kind of hurting bitcoin, they were also elevating network effects of all these other shitcoin chains that also like pay Greenpeace to say that bitcoin proof of lining is proof of work is bad and flood bitcoin and promote ponzi scam narratives. So a lot of people are kind of like giving a pass to Kyle and and Suzu and them now, but like I think what they did was highly unethical and they’re kind of like trying to brush off like, oh, it was not our fault, it was the fault of these guys or those guys. But really what they did was kind of the same as what a16z and, Coinbase Ventures and Paradigm and all these other Silicon Valley and crypto funds were doing multicoin. They were all amplifying the network effects and wash trading, Ponzi scam, basically ponzi scam like defy schemes. And what it caused is now Barry took a lot of his Treasury’s profits from the Grayscale Bitcoin Trust, which is probably the most profitable thing that the whole Digital Currency Group owns. They were taking the profits from that and as the discount was dropping on GBTC, they started buying GBTC to try to get the discount back into par, but they could never do it. So then what they ended up doing was just like how Celsius ended up acquiring a massive bag of staked ETH, which is very Liquid. DCG ended up acquiring a massive bag of GBTC. And so when you’re becoming insolvent, you can’t meet your bills or whatever, you’re going to have to sell your collateral. And so what Digital Currency Group owns is a lot of GBTC. So the problem is, if there’s insolvency there in the market with DCG and they may be forced to sell their GBTC and that might drop the discount even further. I don’t think it’s any kind of systemic problem with the trust itself. I’m not worried about the trust collapsing or anything like that. The bitcoin is there like lots of people have done analysis to show where the bitcoin is. It’s just there’s a risk of the discount being not closing because of problems at DCG. And that’s the same with the Ethereum holders with stake death on the defy side, celsius has to do something with that stake death. And unless they can get the unlock code written in time for the creditors of Celsius to not have to sell the stake death, that’s the big thing. Like, ETH has a big problem looming where if 450,000 state death have to get sold by the creditors of Celsius, well, that’s going to tank the price even more of the theorem. So I think they’re going to try to write the unlock code so that people can start slowly, orderly exiting the ponzi so it doesn’t completely blow up. And then they can just swipe that under the rug just like they did the DAO hack and the code is lost stuff and the DAP narrative and all these other narratives that they use to pump to create marketing. And then when that bubble is done, they swipe it under the rug and then there’s this big giant pile of failed narratives under the Ethereum rug and this is probably going to be one of them. I do think they’re going to probably be able to pull it off without massive damage to the steak death market because it. Seems for some reason, like they’re able I don’t know, maybe they won’t because it’s going to take a year and a half once they even do write the unlock code to unstake your steak death, they can’t just let everybody out all at once because that will cause problems with validation. So there’s going to be like a year and a half wait to get out of stake death. So there’s still a lot of risk in the Ethereum markets and in the DFI markets. And that’s why I still think the next year is going to be a lot of pain for DFI coins, NFT coins, Ethereum itself, and a lot of people are way too exuberant about this. But I don’t think the GBTC price discount is going to affect the bitcoin price as much as I think the staked Ethan DeFi stuff is going to affect the crypto prices if it keeps going down. Yeah.

Stephan Livera – 00:58:13:

And so when it comes to bitcoin, then I know you’re also active in bitcoin venture capital and obviously you’re bullish on bitcoin, as am I. Do you have any views on what we’re looking forward to in bitcoin to see whether that’s building stuff, is there any technology or any particular trends that you’re looking forward to seeing in the bitcoin space?

Brad Mills – 00:58:32:

Yeah, we could do a whole podcast just on that. I’ve invested across a whole bunch of bitcoin companies, probably like 26 or seven bitcoin companies at this point. And I have a lot of, like, criticisms of DeFi and crypto and Ethereum. So somehow I like to talk about that a little too much. Then I like to brag about and be excited about the bitcoin companies, but I’m just as excited about what’s going on with the bitcoin space as I am with my frustrations of what happened in the crypto space. So, yeah, it comes back to the fundamental thing of, like, defy. And crypto was built on perverse incentives. It’s a top down, force fed narrative by VCs, where real people aren’t going to be using it. The only real thing that was happening in crypto and DFI was people playing the slot machine on these DFI games. There was like 3 million people playing Axe Infinity and buying Safe Moon and buying NFTs to flip them. But, like, that to me is incentivized fairweather friends. So you’re going to have a lot of users in a bubble and it’s going to look good if you’re just looking at things like users and total value locked. But when you actually look under the hood, it’s all VC top down narratives that they’ve already been complying, they’ve been surveilling everything. They’re all, like, OFAC compliant. They’ve already used the admin keys to sort of like, invalidate the decentralization thesis, do things like stealing money from Wales to liquidate them before they get liquidated, kicking out protocols, like supposed decentralized protocols, actually using emergency keys to kick out other protocols, and all kinds of crazy shit. Right now, the biggest stable Coin algorithmic, stablecoin die actually just signed an agreement with BlackRock. So they’re giving a bunch of their money to Coinbase and BlackRock to manage their treasury to buy US Treasuries. How is a decentralized stablecoin buying us treasuries through BlackRock? Like, that doesn’t make any sense. It’s not decentralized. Uniswap has a $25 million lobbying arm. They hired one of Obama’s advisors to go to DC and lobby for Uniswap. That’s not decentralized. So the whole thing is super frustrating. There’s tons of examples of how it’s not decentralized. Contrast that with the actual ground up usage of bitcoin in all these different apps. Like the value for value stuff that’s happening with like, Fountain and all these different Lightning Network micropayments companies, the Lightning service providers. There’s a ton of exciting things happening where companies are building, like Lightning, SDKs, basically to be able to integrate into point of sale systems. And one of the biggest things actually, I’m very excited by the bitcoiners that are like, building out cool stuff on the Lightning Network and just bitcoin generally. But what makes me kind of, like, gives me solace and gives me hope and makes me not get too much in my head about all the crap that’s going on with the crypto stuff and how maybe they could win if they’ve got all these tens of billions of dollars going towards lobbying and wash trading and shit and the regulators aren’t seeming to do anything about it. What makes me still super confident in bitcoin is seeing how many people in the crypto world are completely sleeping on what’s going on in bitcoin. They all still think we’re at 2017 level of Lightning Network. They’re just totally ignoring everything happening in bitcoin. They think that there’s like 100 bitcoin developers and they’ve got 10,000 DAP developers over in Salon and Ethereum. So that’s where the future is. They’re totally sleeping on all the global adoption in bitcoin that’s happening in terms of development. Like, tons of people are building on top of bitcoin and bitcoin adjacent layers. So there’s like the two sides. There’s the top down VC funded shit. They’re not paying attention to what’s going on in bitcoin. And then you have Nostr and Hole punch and TBD and like Square and Cash App going all in on bitcoin with their Lightning wallet stuff and their physical wallet stuff. They’re going to integrate Lightning Network into the Square system. You got Bitfinex and Tether supporting John Carvalo with synonym to do all the decentralized identity stuff. You got like HyperCore, hyperdrive, all that. There’s actually another whole side of people building the decentralized web. They’re calling this Web3 over here and they’re doing it basically, it’s like pre mining the future of the internet so they can dump it on you. And over on the bitcoin side, you got bitcoiners and non bitcoiners actually building up the decentralized web with useful and simple open source peer to peer technologies and distributed technology that doesn’t need a blockchain, it doesn’t even need bitcoin. It just is actually the real cipher punks that are over there really building the technology that I think we’re going to see by the next, you know, 2025 or so. When you see the the fruits of all the labor that’s been happening over the last few years in the Lightning space and bitcoin adjacent, like like I’m saying the decentralized web stuff. I do think it’s going to be hard to ignore for all these guys that have been sleeping on bitcoin and the Lightning Network and all the development happening. And I will say that the other thing that gives me some solace and some I’m breathing more easier and sleeping more easier lately about all this bitcoin stuff is the freaking AI revolution, because that’s draining a lot of people who were just kind of, like, opportunistically minded about crypto. Web3, DeFi, they were just like, oh, well, all the money is here, so I’m going to develop here. And you know, that actually does build hard to stop network effects when you have tens of billions of dollars going to fund smart people to build on Ethereum. That does build Lindy effect. So the fact that you have all the other shit coin chains like Binance Smart chain and Salona and all that siphoning away value from the Ethereum, Lindy Effect and network effect, I was a supporter of that. I’d like to see that happen because it weakens the ability for Ethereum to overcome bitcoin’s network effects because it siphons value away and they cannibalize each other in terms of their network effects. But now you have a whole new class AI, which is sucking away all these Web3 gaming people and DeFi people to go and look like this is actually real technology. There’s no perverse token grifting happening in it, at least not yet. But it’s actual real important stuff. So people that were maybe not so fulfilled working on DeFi stuff, token grifting now they’re like very smart people. Now they can also be fulfilled intellectually and ethically because they’re going and just building something that’s neutral technology that’s not like to dump tokens on somebody. So those two things, like the AI stuff sucking away value and like network effects from crypto, that makes me very bullish. VCs are also starting to redeploy from crypto Web3 stuff. They see the bubble has popped, they’re going more into AI stuff and the bitcoin stuff is picking up. And the network effects of the builders on bitcoin layers and side chains and non bitcoin even just like decentralized web stuff, that’s also strengthening as well. So I’m super bullish, man. I think we’re going to have like by 2025, imagine how many important bitcoiners came from the 2017 ICO bubble. You had like Cory from Swan, he’s like one of the most important network effects for bitcoin in my opinion. In this phase of the cycle. And he came from the token side of things in 2017, and he openly talks about that. So another guy, the guys from Galloway Money, they were the same thing. They came from VR. Then they were doing token stuff like crypto blockchain stuff. And then they realized, wait, bitcoin Lightning Network is the thing. So they started building the bitcoin beach wallet and now, like, bitcoin is legal tender in El Salvador. And that came from a guy coming into an ICO and thinking crypto is cool. And now he’s like, bitcoin is the way building, like the foundational technology for communities to adopt bitcoin globally. So I’m just super excited. How many more Michael Saylor, Cory Klippsten, Galloway Money, like, how many more of those people do we have that are going to emerge in 2024 and 2025? I think it’s going to be pretty exciting for the next phase of adoption of bitcoin.

Stephan Livera – 01:07:07:

Yeah, we’re going to have more people get activated and become bitcoiners and really start pushing this thing, building something developing. And I think it’s also fair to point out that bitcoin has a lot more grassroots community. For example, there’s no Ethereum beach. There is bitcoin beach, there’s bitcoin island, there’s bitcoin ICASI in South Africa, there’s bitcoin prior in Brazil. There’s all these bitcoin projects. There’s actual real world grassroots and meetups and conferences and events. And so I’m still really bullish on all of that also. Right, because I think that it all helps, right. The more people there are out there using bitcoin, whether they’re stacking, whether they’re stacking bitcoin, whether they’re doing it as a merchant, it all adds together, or whether people are investing in bitcoin like you and I are in bitcoin companies and things like this. So there’s a lot of things to be excited about. One other area, I know you commented on this recently, Nigeria, and it looks like they are trying to force a CBDC. So did you have any comments on what’s going on there?

Brad Mills – 01:08:12:

Yeah, so that’s another area that I’m very excited by, just intellectually, I guess, because I got into bitcoin in 2011 and I was so excited by bitcoin back then because it was so cool and new and it was like you could send money to somebody through the internet without a bank or PayPal. That was actually cool. Now that’s just a given. Like, every coin can do that. It’s not that interesting to most new people coming in to be like, oh, bitcoin can let you send money directly with no intermediary. It’s like, well, every chip coin wallet can do that. They kind of ruined the excitement about that specific thing. But back then, it was like very much peer to peer. It was grassroots. It was like people meeting up and trading Bitcoin with each other and talking about Bitcoin and what I see happening in African countries and in some Latin American countries, too. The energy around Bitcoin is exciting because it’s back to that grassroots, sort of like belly to belly, peer to peer thing that in some ways in the west we’ve kind of not lost our way, but it’s become less. And less of the important thing, because we have a lot of people educating us about bitcoin as an investment, bitcoin as a technology or whatever. But when you go to Google search and you look at Nigeria, for instance, for search terms, for bitcoin crypto NFTs CBDC dollars, like when you compare what actual Nigerians are searching for, they don’t have the monetary privilege to be like, oh, I wonder what NFT meant. I should get into 10x my money. Because they’re actually going through some real problems with the limits on the amount of Naira they can take out of the bank in a week. I think it’s like equivalent to $100. And the new CBDC, this has no uptick, so they’re actually changing something now. So you have to give all your existing paper bills to the bank by, I think, next week or the week after, and then you’re going to be basically locked in to the system because they’re going to invalidate all the cash that’s currently out there. So if you’ve been able to squirrel away a few thousand dollars worth of like, naira, it’s going to not be legal tender anymore. So there’s going to the same thing that happened in India like five, six years ago, where they switched it up and got rid of the higher value bills. And what happens in Cuba all the time, they’re always rotating the bills. It does cause financial oppression and it’s very oppressive capital controls, in my opinion, because it sucks you into this system of you can only take out X amount of dollars a week, and if you want more than that, you have to use our CBDC. They’re actually trying to force feed CBDCs on people and it’s going to develop a black market, I think, for the old Naira bills, people are still going to use them because I don’t think people are actually going to trade them all in. But they did that with Lebanon too. Like, I have a friend from Lebanon who he was able to escape like three or four years ago when they froze everybody’s bank accounts. He was able to escape that system with bitcoin. Actually. He used tether to get out. He got tether from somebody, created a binance account, and then he started realizing, like, what’s this bitcoin thing that they’re talking about? He learned about bitcoin and now he’s a full on bitcoiner, and he’s like, credits bitcoin for saving his family’s finances. This guy from Lebanon that moved to Canada. So all over the world you’re seeing like a war on cash, a war on high value bills, and trying to shove these digital surveillance coins on us. And people are turning to bitcoin. So I’m very excited. Like, I invest in african bitcoin companies in Kenya and Nigeria and willing to invest really anywhere globally, that bitcoiners are trying to solve a real problem that is the biggest total addressable market on the planet. Like, solving the money problem is not just a meme bitcoin. You say, fix the money, fix the world. Compared to what they’re doing in crypto, bitcoin and money is the biggest thing that you can spend your time on and the most impactful thing that you can spend your time on to fix money for people and making money with trading coins or building a Metaverse for a game or something like that. Sure, maybe that’s got a high total addressable market, decentralized finance, doing derivatives and stuff, whatever, but it’s not exciting and it’s not solving real problems. So that’s why I’m excited by what’s going on in Africa, because they’re building, like, legit peer to peer networks, and it’s actually like they want bitcoin. You can see it.

Stephan Livera – 01:12:46:

Yeah, that’s amazing. And yeah, look, I think I’m seeing it in a similar way to you. I think maybe this next year we’ll be kind of hanging around this level price wise with the development and the building is going on, and give it a year or two, and it will be so different by the time we are rolling around in that, let’s say two years time. So, Brad, we’ve got to finish up here. So where can people find you online?

Brad Mills – 01:13:10:

Well, typically, I’m on clubhouse. Honestly, Clubhouse kind of started 2021, the beginning of the bull market, and it was a bunch of us on there. And that’s where I first met American Hodl. And me and him have actually become really good friends over the last couple of years because we were just, like, constantly on Clubhouse. Many people don’t realize Hodl is on Clubhouse all the time. It’s like he’s running a 24 hours podcast over there. So we just kind of hang out. We chat about what’s going on in the space. Half the time, it’s about bitcoin, half the time it’s just like world news or shooting the shit or whatever. But there’s a bunch of us over there, and you can find me on Twitter at Brad Mills. Can or honestly just come into the Clubhouse rooms and hang out with us. If people have questions, they want to shoot the shit about bitcoin, shit, coins, politics, whatever. We’re usually there, like, 24/7 just hanging out.

Stephan Livera – 01:14:05:

Fantastic. Well, Brad, thanks for joining me today.

Brad Mills – 01:14:08:

Thanks, Stefan.

Stephan Livera – 01:14:09:

So I hope you found that an interesting dissection of what went wrong with crypto, and this is a great one to share with any of your friends who might have been curious or maybe they got sucked into it, and this might be a useful one for them to get an outlook on what’s going on. So share this episode. It’s Stefanlivevera.com four five, one to find the show notes. Thanks, and I’ll see you in the Citadel’s.