Bitcoin Halving Priced In Efficient Markets VS. Pr

Welcome everyone. It's the CryptoLark super excited to have on today, Adrian from Independent Reserve. They are one of Australia's top cryptocurrency exchanges. Adrian, how's it going? I'm going excellent and it's a pleasure to be here, Lark. Great to have you on. Now, we're going to be diving into all kinds of really great topics that we've been talking about at the price and some crazy predictions that

have been thrown out by some people as well as efficient markets and dollar cost averaging and exchanges and regulations and all kinds of fun stuff. So it's gonna be a lot of great value in this chat. So make sure you stick around for the whole thing. And now, even though Independent Reserve is an exchange that is great for Australians and for New Zealanders. There's gonna be

a lot of value in this chat for everyone. And a quick note as well. I am an affiliate for Independent Reserve. So if you are in New Zealand or Australia's linked down below, we can get signed up to Independent Reserve and start buying or selling Bitcoin today. But this is not a sponsored video. I'm just really appreciative of Adrian's time to come on and have a

chat about crypto because he's been in crypto for a long time and I love to get the thoughts of OGs, especially you. OGs who have been building for years and years in the industry. So super excited to hear some of your insights today, Adrian. And I think we'll start off today with talking a little bit about where your story starts. So Independent Reserve started back. And

I think it was 2013. Is that correct? Yeah, that's correct. So I guess my background is in tech. So prior to Independent Reserve, Iran and IT consultancy here in Sydney. And we kind of built large enterprise systems with some pretty large clients here in Australia. We had our own team and we had a lot of clients, a lot of expertise. And I first heard about Bitcoin,

probably about 2010. And I guess like a lot of people back then, I didn't give it the attention that it really deserved. I kind of looked at it very quickly. And then I kind of dismissed it. I was busy with something else. And then I just forgot about it. And then I heard about it again, probably about mid 2012. And I was like, ah, it's this

thing that I remember. And it's interesting that it's there still. And then I learned that there's this that you know, it actually has a value. And there's an exchange. And then I was like, oh, I'm going to get out there and you can trade it. And they're like, okay, this thing's around still. And I wasn't expecting it to be a, it's probably deserves more of my

attention. So initially I read the white paper, of course. And I was like, ah, okay, this looks really novel. I really liked the economics behind it. I liked the fact that it represented a hard money. I liked the fact that it kind of modeled the issuance of a precious metal like a gold. You know, it's easy to mine gold at the beginning. And then it gets

harder and harder. You have to dig a bigger hole. And ultimately, the amount of gold in the earth is limited to what it was when the earth was created. And that's kind of how the issuance model works in Bitcoin as well. And I found that very interesting from an economics point of view. And from a technology part of you, I really wanted to make sure that

the tech worked the way it was advertised. So I built my own Bitcoin clients, like a little wallet, just to connect it in network and you know, these transactions real or these blocks real. Okay. And like I just think so. And I think that's actually working the way it's meant to work. And it's really interesting. It's got the potential to really disrupt a lot of things.

And I thought, okay, maybe I want to get some Bitcoin for myself. Maybe I want to invest. And I found this website online. Good amount of gaps. And it seemed to be kind of the only exchange around at the time. This was probably like late 2012 or 2013. Bitcoin's worth maybe $10 or so. And I tried to open an account. And I found it really cool.

It's a little bit more funky than at some point the website would get down for a couple of days and they'll come back up. Or there was a hack or something. And I'm like, well, it's incredible that this new thing that's got the potential to disrupt the world is being traded on an exchange that was originally built to trade some kind of a playing card or

something. Magic cards. Yeah. Magic cards. Right. Like well, this is this is an opportunity of a lifetime to actually build something. In a niche that we've seen really early and we feel like we have the expertise to do it and do it in the right way. So I got together with a few of my friends. And we decided to incorporate. I mean, if I reserve in

I think April 2013. And we spent about 18 months building the platform. And we really kind of built it in the way we felt an exchange needs to work. So you know, built in a way that's very secure, very reliable. And you know, it's just a pyramid and you can keep it down just basically the way, you know, if you log on to your internet banking,

to launch this cryptocurrency exchange. Can we get a license to do it? And this license would be called an, um, and, uh, AFSL. And ASIC basically looked at their application. They said, look, you know, we don't really know what this thing is that you're doing. But, uh, seems, man, Gox has gone under. So Bitcoin's gone bankrupt. So you probably don't need it anymore. Bitcoin's gone bankrupt.

It's great. We're dealing with such a high level of understanding. In the end, the issue asks, uh, what's called our relief letter that says, uh, Bitcoin's not a financial product. You've had an license. They hurt yourselves. Don't hurt anybody else. Good luck. They had more words than that. But that's basically what it said. And, um, we launched independent reserve in, uh, I think November 2014. You

know, the initial few years are pretty slow. The market is pretty flat. And then we saw the huge spike, you know, in three or four years ago. And, you know, I guess, when all the exchanges really experienced a huge boom. So that's kind of been our story. Nice. Nice. That's a good story. It's interesting to see, you know, this early desire to want to build something,

right? To actually go into, to be an early Mt. Gox user and go, ah, this is rubbish. I've got to build something better, right? Something that people are going to enjoy using more. Now, I want to talk about, I guess Bitcoin more in itself. Um, we've seen so much change over the years in the markets. But this, every four years, we get this little, ping from

Bitcoin, where we have this Bitcoin having. So a lot of people talk about the idea of the sort of, um, efficient market theory. So in the idea of Bitcoin being priced in or not priced in, depending on where we are in these cycles. So, uh, what are your thoughts on the Bitcoin having in this idea that the price is not priced in or that it is

priced in or that's going to be priced in. Yeah, look, I remember being a first year economics student learning about macro economics. And being told, you know, the invisible hand is going to do it. And, you know, markets are perfectly efficient and people are perfectly informed and they maximize the utility. And, you know, as a 18 year old, that, that seems, to make sense. And it

seemed really great. But then I guess, as a grow order, and I looked at various different markets and I guess the cryptocurrency markets more than anything else, I realized that a lot of those ideas that really hold in real life. Um, so even though everyone knows the harbing is coming. Um, I mean, everyone knew the last harbing was coming and everyone knew the harbing before that

was coming. Yet we really saw the increase in the price a few months after the harbing. So whilst maybe the market is different now to what it was last time, because it's a lot more mature, the participants are more sophisticated. There's more information out there. There's more infrastructure. Maybe it's priced in this time, but I guess it wasn't the last two times. And, you know, the

numbers speak for themselves. Yeah, it's a tricky conversation to have when you start saying, well, is it priced in or not? Because what are we really beacing that on, right? Is it? Based on, you know, minor production and their, you know, minimum rate and all these different things. And if that's true, then of course, the price of Bitcoin should theoretically basically double after the harbing because

then miners will have a much higher floor that they'll need to get out of Bitcoin in terms of price, which I guess leads me out to my next thought, which is about price predictions. We've seen some crazy ones. I mean, I feel like there's not a day that I turn on social media and there's somebody say, I was going to be a hundred thousand by this

month or two hundred fifty thousand by that month or a million at this time or four million dollars or why not do I just a big ones? You were the billion dollars guys, a billion dollars. That's what's coming. So, what do you make of all these crazy price predictions that we see coming out for Bitcoin? Look, I think it's important to remember this is still a

very much an unregulated market around the world, which means anyone can say anything and the consequences of that are usually pretty limited. So, you know, people will say things to attract media attention to get more followers on their Twitter or whatever. So, you know, really have to be really careful about what you read and look, I can't stress this enough, but I feel like everyone that

invests in the space should do a lot of research because, you know, you can't rely so much on the regulators, making sure that the information you see is all kind of more correct or at least a little bit sane. You know, you'll see some, as you said, some completely insane things in the press and especially if you read things like Reddit or Twitter or whatever, which

you know, just anyone can say, say anything. They're bathroom walls. They're bathroom walls. You're not going to go to the bathroom wall and be like, hey, buy Tesla today. Like, oh, man, Tesla's going to $10,000. I saw the bathroom stall. Yeah, do your own research. Do your own thinking. Don't rely on what you reach as much. Yep. Flip on the thinking stuff upstairs, guys. That's important.

Now, speaking of, you know, needing to be critical and do your own research and all this stuff. Right now, we're kind of in a bit of a sideways market and, you know, by the time the zairs made the market, we'll turn around a little bit. Right now, at the time of recording this, there's this kind of fear or pessimism in the air about Bitcoin and it

feels like every time we take this sort of 5% dip or something, everyone's running for the exits and it's like a fire has been started in the theater or something. So, why do people get so freaked out when we see these little bumps in price? Well, okay. So I wouldn't say that everyone gets freaked out. I think there are a lot of people who like to

huddle who, you know, I guess, the people that have been around for a while, they're kind of used to these ups and downs. It's a very volatile market. You know, if you want something very stable, we should buy some bonds. So, so look, I guess it's hard to see the value of your investments reduced by three or four percent in a day. And it has a

psychological effect on a lot of people. But I think it's Bitcoin shouldn't be viewed as a short term investment. Although I guess a lot of people like to trade at each day. But I guess personally, if I was to recommend anyone investing in a space, I would recommend them having a much longer term view and you know, learning more about the economics of it and not

worried about the day to day fluctuations. Because otherwise, you know, they're going to lose a lot of sleep and ultimately it's more of a long term thing, I think. We got three important letters for everyone out there. DCA dollar caused average. You know, this is not everyone has time to be living in the charts 24 hours a day. Trading zone thing, but for most people, you

can just buy in once a week or 12 every two weeks and just wait, just be patient, right, and you guys actually over independent reserve offer a great tool for that as well. Yeah, that's right. So we have a tool called, it's called the auto trader and it basically lets you trade on a schedule. So you can say, you know, I want to buy $100 worth

of Bitcoin once a week or once a month or whatever. And I guess a lot of people have realized that this is a good way to invest in this space because it kind of, I guess it kind of abstracts you from the volatility of the markets. So every now and then you'll buy at a dip, everyone, every now and then you'll buy when it's high, but

if you do it, you know, a hundred times over three years, those ups and downs will kind of average themselves out. So, you know, a lot of people have done research on, you know, how much money you would have made had you done DCA from 2010 or 2012 or whatever. And I guess most of that comes out, you know, you would have done pretty well if

you just bought a little bit once a week or once a month or whatever. That's it. Slow and steady wins the game. Now one thing that's got a lot of tension. Some people criticize it very heavily. Some people are massive opponents of it is the idea of leverage trading. So it seems nearly every exchange at this point is offering leverage trading. It's increasingly more and more

we see offering leverage trading. So do you think that this is having a positive or a negative impact on the crypto markets overall, having the ability to, you know, long and short Bitcoin with potentially sometimes very high leverage? Yeah, look, I wouldn't say I wouldn't call it a positive or a negative thing. It's just basically a thing that you need to be aware of. So whether

you use leverage or not, you need to be aware that it exists because the volatility will increase the more leverage the market is. So what, you know, tends to happen is, you know, if the price were to move up or down too much in one day, leverage positions will start to get liquidated. And that actually causes the price to move even more in that direction. So

being aware that the market is very highly leveraged and it is at the moment, means that, you know, you need to be aware that it may be more, more, you know, the movements may be larger than you'd expect. So the volatility is likely to be a little bit larger because of the leverage in the market. And then, you know, if you do want to use the

leverage, you need to be really aware that, you know, what that means. So it's just introduces another level of complexity. And it puts another tool into the hands of people. And it's just important to understand how the tools you use actually work and the risks that they have. The risk management parts, incredibly important. And I feel like a not enough new traders really understand that you

have to be super keen with managing your risk. Absolutely. You know, when you're doing leverage, I think of like kind of like a bar or something. And you can say, you know, you want to have two or three beers, but two or three acts leverage, that's fine. You're going to be okay. Just because you can order a hundred shots at the key. That the bar doesn't

mean that you should order a hundred shots to kill. And if you do, or to certainly as many as you take them. And that's kind of what I think, like, 100 extra eating. It's very high risk. Right. It could be the best night of your life or the worst night of your life very, very quickly. So, absolutely. You know, leverage safely, everyone. Don't let me drive.

Now, I want to move on. Talk a little bit about. right there on the cusp of being open to innovation, being open to new technology. My question to you. Is crypto actually I would say yes almost. I mean, the last huge pump we saw was about three or four years ago. And as you say, a lot of the exchanges had issues. But I think since that

time, there's been massive investments in infrastructure. So, you know, the last big pump caught a lot of people kind of unaware and some exchanges were really courts with their pants down. And, you know, I think Crackin was down for a couple of weeks and, you know, everyone had issues. I don't think we went down, but our systems are also super stress. And it's because it just

happens so quickly. And I guess to give you an example, you know, for independent reserve during the last huge boom, we had maybe seven or eight staff if that now we've got about 30 233. So, you know, everyone has really invested in the infrastructure, in the processes that they have in the manpower. So now, you know, if we were to get a hundred support tickets in

an hour, we actually have the people to answer them. Whereas before, well, we just didn't have the people and the other exchanges also didn't have the people. And it's hard to hire people that quickly when the spike happens so fast as it did last time. But I feel like now the infrastructure is multiple orders of magnitude more mature than what it was back then. So it'll

be interesting to see if another huge boom happens. How exchange is there? I would have handled. Yeah, it's a you never really know until it's happening. How you're really going to react. You know, you can say, well, we have no people. We have enough infrastructure. We have no throughput. You'll find out. Now, independent reserve, you guys are expanding. So to Singapore, right? So the monetary authority

Singapore is kind of, you know, you found that attractive, what they're offering in terms of policy and stuff like that. So why? What's the kind of the idea behind moving to Singapore or expanding? So I guess being in the market here in Australia and most of our customers, the base in Australia as well. It's, you know, during the last few years, we feel like we've developed

a great business and, you know, a platform and technology and processes that are at absolutely world class. But the Australian market is not that big. It's, you know, Australia's got 28 million people or so correctly from wrong. And we feel like what we have could easily be applied to much larger markets. So, you know, we looked, we looked at multiple areas of the world. We went

to Europe, went to Luxembourg, talked to the guys there, talked to the regulators, went to the Middle East. And then, you know, we kind of had reasons not to expand into those markets. A, either the time zone was kind of off because we're in Australia or it's a little bit far. Or we don't like this, we don't like that. But then the MAS, over in Singapore,

announced the licensing that that's coming into place this month. They announced it about six months ago. And it looked, it looked like a really good piece of regulation. So it's really designed. In a way that's not too prohibitive for an exchange to be able to implement. But, you know, it has all the things in place to protect consumers, to have good AMO regulations. And we thought,

okay, this is going to be a crypto-friendly jurisdiction. And it wasn't just us. Pretty much every major exchange in the world is now applying for that license as well. So I think that you're about to see the birth of a new crypto hub over in Singapore, like in about 12 months. It'll probably be the biggest hub in the world. Nice. I think Singapore has been, been

just doing step after step after step to just stay ahead of and to capture that business. And they're very clever to do it. They have Singapore one thing they've definitely done over time is to be the financial capital in a lot of Asia. And this is just them saying this is the next big thing we need to be ahead of the curve here otherwise. Malaysia is

going to get the business of China is going to get the business. So Japan is going to get the business. We're going to get the business. It's a very successful place. I love it. Yeah. Really impressed by it. Now, with all that being said, do you think that Australia is falling behind in terms of its regulatory approach towards cryptocurrencies? So I guess the disadvantage that Australia

has of a place like Singapore, is that there are many regulators in Australia. It is this Ostrac who regulates AMO, who are now regulating the industries. So actually, Ostrac has often been used as an example around the world of how AMO regulation should be implemented in the space. I think Ostrac were on the first regulators to actually start to regulate this industry, which is great. But

that happened probably about 20, a year and a half ago, even a little bit more. I think April 2018 from memory. And I guess since then, the other regulators haven't really jumped on board. So I guess the other major regulator in Australia's ASIC, they kind of regulate markets. Then I'm quite ready to look at STOs or to allow someone to list a crypto ETF or anything

like that, to kind of a lot more conservative. And there's also another regulator, RBA, the Reserve Bank of Australia, that regulate the payment systems. And all these regulators kind of have different people working there. They have different definitions of things. So an interesting thing we found was the definition of cryptocurrency that Ostrac uses is different to the definition that the ATO uses. So something that Ostrac

was going to do is to make sure that the will classify as a digital currency may not be classified as a digital currency for tax purposes, which has all these other implications. So like all these little things, man, I wish you guys will just talk together. Whereas in Singapore, there's one regulator, MIS, it kind of does everything. So the coordination there is much better. So when

the MIS says, this is how it's going to work. Well, you kind of pretty certain there's no one else is going to say it. Yeah. So I feel like Australia is at a disadvantage because I'm not going to be able to do that. And we've kind of seen a slow down of the innovation from the regulators. I think because the getting kind of mixed up amongst

themselves a little bit. Yeah. Yeah. It's a tricky industry, I think, for regulators to work on because you have to keep it real. A lot of regulators, they are, you know, not always the most tech side. People don't know those a lot of regulators that are. So if you're a regulator, listen to this, we love, we love you guys. You know, a lot of people out

there who know a lot of great stuff. But I think in a lot of ways, they're really falling behind most countries. Our fall is going to be a lot of things. I think it comes to crypto regulations. They're just not keeping pace with the innovation that's going on. It's hard for me. I'm going to just talk about crypto. I'm going to keep pace. Yeah, I mean,

we're doing all we can to talk to the regulators to educate them. But I guess another interesting thing is the MIS, you know, one of its remits is to actually grow the economy in Singapore and to do things that may be good for the economy in Australia. The regulators are more about mitigating risks and protecting consumers. So when you talk to them, hey, this can create

jobs, they're like, well, yeah, we don't really care. Because that's not our remit. Our remit is to make sure that, you know, no one gets scammed or everyone's protected, which is great. But sometimes, you know, you need to have a risk-reward equation, which I think the MIS does really well. And maybe the regulators in Australia are too risk-averse in some of their decisions sometimes. Yeah, it's

a tough balance. Tough balance. I'm glad I'm not a regulator. I just do to dogs and people. My life's much easier. Now, speaking of regulations, it's a very important thing that's happening this year. And I'm sure that it's been a lot of conversations had around this in your office. And that is the FATF travel rule. So this is, we can talk a bit about this. Maybe

explain everyone briefly, who might not have heard of it, kind of what the FATF travel rule is. And how has an exchange you're reacting to this? Sure. So FATF is the financial action task force. And they're basically an international group of AML regulators. So Ostrac is in the FATF. I mean, I guess a regulator from every country, which is about 100 country, is in the group.

And the FATF makes recommendations. And then it's up to the individual regulators in the countries if they want to adopt those recommendations. But usually they can't have all due otherwise. That country doesn't get to participate in the club of all other countries and be able to transfer money around. So they're almost like a global regulator of regulators. And what they recommended about a year ago, was

that cryptocurrency transfers are still kind of anonymous. You can sometimes trace the environment, a blockchain, and you can associate and address with a cluster of addresses. Then you can associate the cluster with an entity. And there are tools that let people do that. But I guess there's still a level of anonymity in most cryptocurrency transfers. And they looked at that. And then they looked at money

transfers that go through a system like Swift, where you have to, you know, identify the beneficiary of every transfer. And, you know, it's the regulator makes sure that the banks know exactly where the money is always going. And then money can be more easily traced. And they said, OK, this is a gap in cryptocurrency. You know, exchanges should also have an obligation to know exactly, you

know, if cryptocurrency gets transferred off of the exchange, the exchange needs to be able to report where it's going. But then the exchange is reacted. And they said, well, we're looking at the car car. Because, the way crypto is designed is, you know, you send Bitcoin to another Bitcoin address. You may not know, you know, who's the owner of the address that's kind of the whole

point of cryptocurrency. But then FATF said, well, yeah, that's nice. But we don't care. If you want to keep operating, you're going to have to solve this problem. And we look forward to your solution very soon. So basically what they're asking exchanges to do is each time a customer withdraws cryptocurrency off the platform. The customer needs to provide beneficiary details. As an if I was to

send Bitcoin to you, I would have to say I'm sending it to luck. And then if your account was another exchange, when the other exchange receives that transfer, they have to be, OK, this transfer was meant for luck. Is it actually going to luck? And if it's not, why not? And they have to be able to question it and all that kind of stuff. So it

basically requires for exchanges to have some kind of a central repository of all transfers. So it requires going amongst them between different exchanges, whether they can use to say, OK, you know, someone sent this transfer from Coinbase to an appender reserve. Who was it meant to go to according to Coinbase? And is it actually going to that person? So it requires basically an industry wide solution

that all exchanges adopt. And I guess there's a few different consortiums working on different solutions. At some point, everyone will have to agree on one because everyone will kind of have to use it. Because it ultimately has to be like a messaging system between all exchanges, kind of like Swift. Yeah. It's crazy. I understand why they're doing it. I don't like it. I'm sure you are

probably not a massive fan of it, but either. But it's, yeah, it's coming. Whether we like it or not. That's coming. We're going to like it or not. So we're just going to make sure we implement it in the best way possible that causes the least disruption, least friction and still meets all the requirements. That we have to meet and ultimately exchanges have to operate within

the law and the law, my changing, we have to adapt to that. You know, whatever our own opinions are, you know, whether we go into this because we're libertarians or whatever it sees us to really matter. Once you're running a business that handles a lot of money, employees, a lot of people has a lot of customers. You have to make sure you do things in the

right way. That's it. That's it. Very interesting stuff. Adrian, I think we're going to leave the chat there for a day. But wow, that's we cover a lot of great information. Again, anyone who wants to find out some of our independent reservists, a link down below, you can find it in the description of this video in the top pin comments. You can go and check that

out there. But Adrian, thank you so much for coming on and sharing some of your knowledge with us. My pleasure. Thanks very much. Thank you. She is my.