Trading Strategies, Charging the Monetary Battery

Welcome everyone to POV Crypto, the only podcast that both big corners and a theory in system two. I'm David Hoffman, here with my buddy Christian. Christian, how you doing? Doing good man, missed you last week. Yeah, it took a little breather last week, but now we're back at it because now we got some spicy POV stuff to talk about. Yeah, and I mean in the hiatus

Bitcoin went from like 43k to 60k and then now back to 56k. I think ether what traversed like almost back down to a thousand and then I guess not that much like 1400. The low the low said got was 1297 and I know that number very specifically because I kept on saying to all my friends without completely knowing the truth. Obviously I don't know the future,

but I kept on saying like below 40 below 1300s like isn't doesn't exist. You can't actually go there. And so we went down to 1297 and then just yeeted right back out and I was like, wow, that was that was probably the biggest like claim about the future state of the markets. I've ever made it actually just been like fucking nailed it. It was pretty cool.

It's better to be lucky than good. I have no reason why I can't chalk that one up to luck. Yeah, no, I mean I have been lucky with calls and then I've been unlucky with calls and not talked about it. Yeah. That's what I've tried to do when I actually like want to position myself to be able to have bragging rights is like usually I'll make

calls and I'll just make them silently because I'm not a trader. I don't really care to like brag about my trades, but sometimes they're like when I when I went tits out leverage at fortitude 90 and while I did first I did that privately, then the next day I DMed Sazel about it. Anthony Susanna was like, yo, going tits out tits out leverage at 1490. And

the fact that like I did it, but then also set it to someone makes it like that much cooler because we're in the fucking green now. So if you know you get you both get like a you have more money and be you have bragging rights. Almost slightly in the green. Oh, I mean, I think it's for being leveraged. This is in the green. Yeah, no,

I mean, it's just we saw that volatility, man, you never know where it's going to go. Yeah, it's so funny. Every single time that like Bitcoin and ether and all and it takes a dump like 30% does one of his 30% dumps, which I guess it's only really done like two of these in the past like six months or so. But every single time people are

like, oh man, like it could be over like this could be it. It could turn around at any moment. And I'm like fuck that. Like if you think this is over, this fucking bullshit. We're going so it's absolutely not over. I was actually just talking to someone today. Um, our good friend, checkmate. And he was like, oh, the on chain indicators are looking a lot like

the end of 2017. I'm like, dude, come on. Come on. Come on. And really what I'm saying is just got to be careful with the leverage because, you know, this shit's volatile. I don't know when it's going to end, but I know it's volatile. And that's why personally, I just prefer to buy and hold spot. Not be greedy. I guess, okay. But I mean, you know,

maybe I'm just letting letting up on a valuable opportunity in front of me. I'm kind of I'm curious for you. Like, what's like your comfort level around like using leverage? Like how much do you think about the price when you do it? Like what what goes through your head? So the the process that I've done so far, this cycle, which I did not even have the

option to do last cycle because DeFi wasn't a thing last cycle is that like, and I see this in a lot of my friends who this is that their first cycle as well as like, they'll compare all like, oh, like, you know, do I want to be in this all versus that all? Oh, I'll trade. I'm going to trade some ether first and unity tokens or

you need tokens for MKR tokens. And then, and then like that changes your psychology because of what you had to denominator your purchase in, right? Did you sell it? Eath to get that or did you sell X to get that right? Like what set what asset did you sell to move into that trade? But if you just sell dollars to get into the trade, then you

don't care. And so leverage or not, I guess it's always leverage, but like just borrowing USDC from compound and AVE to take a position in a DeFi token or an altcoin or whatever. The ease of mind, even though it's leverage, which is not supposed, people don't usually associate like leverage with ease of mind, even though it's leverage the ease of mind from just being short the

dollar and long the token rather than like short Eath long the token because I sold Eath to go into the token. Yeah, okay, it's just a weight off my shoulders. Like I don't have to think in like, oh, I don't have to denominator anything other than the dollar. And the dollar is a great thing to denominator a short position on in relationship with all these tokens

that are going up into the right. Okay. I mean that I'm glad I asked the question because that makes a ton of sense, right? You want to express a short dollar position. You have all this collateral that you don't want to quote on, quote, sell when you sell Eath and you sell Bitcoin to buy something else, you, you know, you're trading that and anticipating for that

something else to outperform it. And so you can cut with leverage, you can have your cake and eat it to some degree. Obviously you add on the ball, like the risk that comes attached to volatility, but you can express your position more accurately, if you will. Right. So like I see so much in like these these group chats that I'm in with with old college buddies

about like, oh, like, you know, this token pumped 30% and I sold this token to get that token and they're just comparing tokens all the fucking time. And I'm like, I just doesn't, I don't really care about any of it because like all of my buys and sells are against the dollar, which, you know, in my, in my theory of the market. So long as you

hold on enough for enough time in a bull market, you're going to be okay. So long as you can weather the volatility, the time is on your side. So how do you moderate your leverage to kind of make sure that you don't get liquidated? That's a good question. Well, my personal plan is to be pretty fucking risk on until 4k ETH and then have zero leverage

around 4k ETH and then around six to 10k ETH is when I actually do start rotating out of leverage into dollars and start taking on a long dollar position. And so I'm pretty fucking like I'm pretty risky. I would say with my portfolio, but even before I got into crypto, I was the guy that went like went 2x long on AMD stock, like with one single

concentrated bet. So I'm pretty tolerant to risk. But I am aware that like, I am aware that the price targets that I keep on having to like, this is when I'm going to go into USD has gone up and up and up. And so I am cognizant of this. And then I've never actually like meaningfully unwound. So like when ether goes up in price and I

have more borrowing power, I generally have taken advantage of that. Now my my ratio has always gone in my favor. But still some some bad habits that I know can get catastrophic if I don't harness them and reverse them. But for where we are right now, I'm I feel pretty good. Sound a little bit like the Federal Reserve Congress always raising the debt ceiling. We're never

leaving. So one of the reasons why I've been a little bit scared of leverage slash also a little bit scared of ever exiting my Bitcoin position is like this looming fear of like when is the last cycle when is like or at least not even last cycle. Maybe there's a meaningful downturn. But like then like does the bottom cash a lot of sellers, right? Because like

maybe institutions take that opportunity to buy a big time. And we never see like that 80% and we don't see the 30% and then they get it rips back up. Like who knows? Like I'm scared that if I sell at any point that I might have less Bitcoin in the future. And part of that kind of has to do with this. Financialization of Bitcoin as an

asset financialization. Hopefully, you know, in your hope of ether as an asset and kind of tags into what we're thinking talking about later, which is Michael sailor and his analogy is Bitcoin as a battery. But before we get into that, right? Like what's your view about ether financialization Bitcoin financialization. And like how do you like think about that in terms of like, you know, selling per

se, right? Because like I do think that this time is meaningfully different. Like the NFT thing has way more mass appeal than the ICO thing. Right. And then we'll this market turnover and go from bolt to bear. And like so long as the Federal Reserve can keep on printing money. Like we can keep on going. And that's the whole like rationale behind this whole NFT mania

like or not the whole rationale. NFT, T Mania is legit in its own respects. Legida, Samania, I guess that's a weird thing to say. Point is like the reason why it's a mania is because there's so much printing going on. Right. So so long as there's printing like there's no reason why these things can't keep on going up. And I totally agree with you. Because this

cycle has been called like crypto's most mainstream cycle ever, which I guess makes sense because, you know, it has to always be the most mainstream cycle ever because it's always going to be more mainstream than the last one. But like at this point, you can only have one mainstream cycle because that's it. Like once you are mainstream your mainstream. There's no more after that like you

are just mainstream now. And COVID has accelerated the movement into a digital world. And I think the we're all getting we're all circling around the same subjects as is the world ready for crypto. And if the answer is yes, then I'm totally with you in the sense that like any prolonged any bear market will get bought up into just being a bear plateau instead of a

bear market or something. And so I am cognizant of that and I do I do feel fear that fear of saying like all right, you know, I'm calling the top cashing out and then I like drops 30% of that. And you're like, fuck yeah, I got it right. And then it climbs 30%. And you're like, oh, like, did I actually sell the top or not? And

then you don't know what to do next. Yeah, no, I'm I'm very scared of that. And while that may sound like not practical, you know, it's not practical that Michael sailors doing what he's doing and buying the smidge Bitcoin like every two weeks, he's dollar cost averaging with Michael with micro strategies money and a lot of other companies are looking at him do it. And like

they bent his his seminar and they've done all these things and like what like two weeks ago coin desk talked about a company that allocated to both BTC and E then they actually allocated more into ether, which I found was was interesting. And I'm just trying to say like in terms of like ever rotating out of your crypto position into dollars, AK something that is known

to be easily manipulatable and principle like, why do you ever do that? I don't know. Like again, like I'm I'm just scared that there's never a right time to do it after this point. I don't know. On that note of the that company that wrote that put ETH and BTC on their balance sheet. It was a Japanese company, I think. I think I think that's right.

And the Anthony Sazono had a good take on this is like most when most people talk about like institutions, putting Bitcoin on their balance sheet. They're usually talking about just like companies in the S and P 500, but they're forgetting about all other companies in the rest of the world. Like this is not just a S and P 500 race or tug of war musical chairs.

This is a game of chicken that's global right every single global company is in this is in this like game of chicken right not just the companies in the S and P 500. So that's way more capital out there. Yeah. No, I agree. There's the fat tail and the long tail. And honestly, the long tail has a better chance of of adopting first like I think

micro strategy is definitely a long tail tech company right. But they used Bitcoin and crypto to really escalate itself in the conversation a lot. Totally. And dude, Michael sailor like. Ethereum's will have opinions about him, but like overall for this base, Michael sailor fucking saint man saint absolute saint. Like Ethereum is going to be like David, why the fuck are you promoting this Bitcoin or Max

and Bitcoin Maxi guy dude he's promoting everything that we need this industry to be. And then he's going to be promoted about like the guys the fucking hero. He's no, he's de risking and legitimizing the entire space and everything benefits from those tail from those tail wins. Okay. So Michael sailor had this analogy. And I believe in those seminars and in other places about Bitcoin as

a battery. Maybe, maybe before we go into that conversation, can I ask you to try and like do your best to rehash whatever you remember about Michael sailor making these comments or to have you not consumed any of that content. I've consumed an okay amount of Michael sailor content. It's really like honestly, I think the best one is what is money series and Michael sailor and

Robert Bredlove do like seven parts and go down the street money. And they don't even talk about Bitcoin in most of it, but highly recommend that. But on many occasions, Michael sailor has said that Bitcoin is the network that is demonetizing and harnessing monetary energy. And there's been monetary energy like throughout the analog sphere. And there this it like just like Google, you know, became a

search engine network and a website network. And just like Apple created the the strongest mobile network. And just like Facebook, demonet realized your social network and and and made it. Kind of exists and be documented on the internet. He sees Bitcoin as dematerializing the world's money and and and harnessing that monetary energy in a monetary network on the internet. Right. So I have this vision, this

image of who's the superhero evil guy with the glove that snaps his fingers and makes people like disappear and dissolves it just into the nothingness. Whatever that metaphor is. And so it's it's from Mark. Marvel. Yeah. Kill me for. I don't I don't watch any of these movies. Anyways, there are no tear nose or something. Yes. Yes. There are no. Okay. They know. They know. There

are no. So there is the is the. The scammer. Okay. So so what Michael sailor is saying another another digital things is like it's being dematerial. It's being deleted from the physical world. And being recreated in the digital world through these digital. So it's like a container. It's vehicles or batteries for value. Right. And so my question to you is how do if Bitcoin is a

battery for money or battery of a storehold of wealth, a battery of money. How does one charge the battery? What is the thing? What is the thing that I have my answer. And so I can skip I can answer the question. My own question because I have my own answer for the battery. Well, I don't know if I'm necessarily speaking for sailor at all here. Like

I feel like the like Bitcoin is a battery as a metaphor has been used to describe proof of work and mining and the ability to like plot like theoretically take stranded energy. Plug it into the internet and Bitcoin mines and and kind of on take that stranded energy turn it into mind. Bitcoin export elsewhere. So I've heard of that analogy as to like why Bitcoin to

a battery and then okay, the energy of the universe that we can harness, you know, it would be, you know, and put into the network would be how you charge the battery. Part of it also is buying it, right. So people buying the like buying UTXOs for other things and demanding it like you're kind of like what filling the UTXO with energy. The only thing the

UTXO is is a little bit is a is a you know, a mark on the Bitcoin ledger, right. So it's just about society putting value in it and the network of value, right. That is that are the network of of data points or stakeholders that are putting value in and kind of reinforcing that that, you know, value chain. So I mean, I don't like it. I

don't know if that makes sense at all, but that's how I would answer that question. So yeah, your second part of that answer. It was was synonymous completely. synonymous with what my answer is the way that you charge a monetary unit is by buying it, right. And when everyone buys the same monetary unit, all of a sudden that monetary unit has a lot of power inside

of it, a lot of bad. It's a battery. It's like there's there's one time I old soccer coach took me and some friends to watch a football game and in order to like make a fool out of me, he paid me $20 to like sprint up and down the stairs just like in front of like thousands of people who were watching this football game. And so

I had to do like three laughs up and down the stairs. There's this fast like, are there any pay me $20? I worked, I released energy so that I can get $20, right. Or I go to work, maybe this is better metaphor. I go and go to work and do work for money. And so that the battery is the money and it allows work to be

expressed in the world. With the first part of your answer, I think is the opposite of the answer. You don't charge the battery by expending energy. That's you discharging the battery. Minors are actually discharging the Bitcoin battery because they expend energy in proof of work and they have to sell Bitcoin to do that. And so if buying Bitcoin is charging the battery, selling Bitcoin is discharging

the battery because you are doing work, you are doing proof of work. And so the whole the whole idea of you charging the battery by expending work makes no sense. You're double dipping on the on a different metaphor and you're jumbling it up. I think the proof of work is actually the discharging of the monetary unit and the monetary unit is charged by the $21 million

hard cap. What's your take about that? Well, I mean, I was just bringing it up as like from the battery metaphor perspective. And like, I guess the proof of work thing has to do with like, it's like a digital battery because otherwise if you didn't store you there's no way to physically store that energy. So the best way to do that is to get the battery.

So the best way to get some use out of it is to utilize it and store it in UTXOs. So, but I guess I understand what you're saying is like miners selling Bitcoin's, you know, which is very effective at distributing the supply. Right. That's one of the key features of proof of work miners having real cost in which they have to actually sell coins for. But

at the same time, there's been already talk about miners never selling at this point because now that's not going to be a good idea. Yeah, that Bitcoin's become financialized enough that they can they can always just use the Bitcoin as collateral and then and then pay their bills with with Fiat and Omnid bills and money that they borrow. Just kind of like what you are doing

with ether and DeFi leverage, which also only works if the asset keeps going up in price. Yeah, one of the assumption is that all Fiat nominated liability will lose value against the Bitcoin. So, I mean, if that's the case, then miners kind of stop selling. I mean, obviously, you know, it's difficult to say, you know, maybe only institutionalized miners stop selling. It's kind of difficult to

say like how that playing field kind of develops. But we're already kind of getting to a point where miners mind a horde bitcoins and they do whatever they can finance. Riot blockchain, you know, they can do bond offerings, anything that's available to public companies to finance not selling coins. Any senior is possible. Exactly. So, I mean, yeah, I feel like I'm digressing a little bit. I

guess what I'm saying is I do agree that selling is antithetical to recharging battery energy in terms of like value inside the ledger. Okay. So where this where this extends to is that does just generalized buying. Is that what monetizes a asset, right? And this is Nick Carter wrote this in one of the pieces one time where, you know, anytime someone buys and holds something, they

are actively monetizing the asset, right? And this goes back to the OG 2017 conversation that big corners would have where they say, hotlers are users. If you are holding, you are using right by definition. And so is it is the is it as simple as like the asset that is bought the most the most money or the asset that is bought the most and sold the

least the most money. Because that battery is maximally charged. I think that's where that conversation naturally extends towards. I mean, are you just trying to like have a logical justification proof of stake. Yeah, I am. That's that does that's where extends to after that. Yeah, I mean, like the thing is like I just don't think that you can take it. Like it's just not one feature,

right? It's not like okay. So you can have an illiquid asset that's not that you know, it's not sold at all and it's only bought by a select group of people that value it. And you know, maybe that asset will continue to appreciate. Maybe, you know, no one gets access to it. But I think for something to have money, it has to kind of have like

this magical mix of distribution, some sort of scarcity, some sort of universal desire. Like it's not just one thing, right? And so if you have like this, you know, proof of stake system that effectively, you know, makes it so that every, every ether that's used is being burnt. Maybe everyone that is running a staking node never needs to actually exit their position or sell and keeps,

you know, kind of lowering the supply and not distributing the supply. Like that doesn't help with the monetary network side of things as far as I'm concerned. So that's where I'm kind of quite like it could be an asset that goes up in value a lot. But does that make that money? Does that make that the way that people think about denominating everything in the world?

I don't know, maybe that's what they did on the NFTs in right now. But is that possible in the world where like, you know, either is not something that can be distributed well or it's at least incentivized to be hoarded to some insane degree. I don't know. I mean, it point is hoarded in a world. But it's also not synthetically also going to be a lot

of money. I don't know. I mean, maybe, maybe financialization and minors never selling it does do. Right. Use that word synthetically where we are kind of implying that there's some of some sort of like optimization and tinkering tinkering to make to make this the case, right. But I would also say that the hard cap is also the same thing. It's just very blunt and straightforward. It's

also synthetic. And again, citing the Carter, when we had him on the podcast, I talked to him, I asked him a question about engineered versus unengineered money. And he said, well, and I was saying that Bitcoin is unengineered money in the sense that it's bottom up adopted rather than rather than like socially engineered, which is what I would call fiat currencies. Bitcoin is unengineered because it's

adopted from the bottom up, right. But he goes, well, no, I think Bitcoin is a extremely engineered is engineered for perfect scarcity, right. And so these two is a lot of things that I'm going to do. There's a semantic difference two sides at the same point. But I would say like to say that if ether is synthetically deriving its scarcity, I would also say Bitcoin has

also done that. That's exactly what the hard cap is. Yeah. Well, in the hard cap is quote unquote synthetic scarcity. But part of it has to do with like, there is no correct inflation rate. So let's just do no inflation rate. Right. That I think was part of Satoshi's thinking. So I mean, I feel like ether is a little different. And I mean, part of it

is under the guise of security. Like, okay, you know, we need to ensure the long term security of this network. And so therefore we need to maintain the ability to print when we need to print. Right. That's, you know, it sounds, again, it sounds a lot like the federal reserve to me. But like that would be my personal quam with like, and why I would call

it synthetic because now it's like, okay, we're going to do it again. We need to change this monetary policy in order to achieve this sort of behavior. And it doesn't have to do with like not having people tinker. It's like about tinkering in order to get. Like a desired end result. So I mean, again, like, maybe synthetic is just like a way to say like it's

manufactured scarcity. But then again, like you could push back and say like, okay, well, Bitcoin is by but like the reason is better than gold is because it is synthetic, right. Gold is is is is. Organic scarcity, right through just natural things that happen in Bitcoin is like, nope, 21 million. That's it. Right. So you said that Satoshi said that there is no correct inflation schedule.

And that that like Ethereum will mint what it needs to to secure itself and how that's like the Fed. The missing component here is that. There's the there's one more side of the equation that we've never unlocked before. And this also kind of reminds me of breed loves Bitcoin is zero. Where you know, once you discover the number zero, you also discovered negative numbers in the

whole the whole rate and you also discover infinity like the whole range. Well, with Ethereum, like not only will it inflate the supply in order to maintain security. But it will also deflate the supply in order to maintain security. And it will inflate when it needs to inflate. And it will deflate when it also can deflate. And if it can deflate, it will deflate. And so

no, and then that is also built into the programming of the Ethereum. Ethereum protocol, which is very much not like the Fed where they tend to only inflate because they are humans. But Ethereum is a protocol. And if it can capture excess transaction fees and save those for a rainy day, then it will. And maybe it can keep on capturing transaction fees and not only save

them for a rainy day because maybe that rainy day never comes because Ethereum is a global internet size economy with global buying pressure upon EFESET to achieve some end on Ethereum. And so perhaps that rainy day never comes in. It's only deflationary. And all of a sudden we go from sound money to ultra sound money. I mean, again, like that's that's the story, right? I mean,

you can say the same. You can say the same thing about stocks and stock buybacks. Okay, Apple is only deflationary because they're only borrowing fee and buying back like that doesn't make it money. So I mean, again, Ether is is more like Bitcoin than it is like Apple, but I don't know. I just like you can you can keep spending the story in nice ways. Ultimately,

I will do people. It's a group of people that are trying to organize to get some end, you know, and you can't really compare that to like 21 million. This is beyond any humans control. This is beyond any even group of humans control in terms of changing 21 million or even changing parameters around consensus. So I mean, like I just feel like it's a completely different

ballgame. And that doesn't mean that. Ethereum won't find some sort of like massive appreciation plateau because of their ability to, you know, engineer game theory that, you know, enables the system to keep creating value as well as destroy and burn tokens. But I mean, again, I don't think that that necessarily means it's going to out compete. Bitcoin, I think the beauty of Bitcoin again is like,

there is no right amount. There is no like less pump the bags of holders like it's just like 21 million straight and simple. This is like, let's repress. The world based on like this, this clean cut measuring system. I don't think that really, that's a very gracious interpretation of what is going on with the Ethereum researchers, right? It's not like a bunch of people trying to

pump the bags. I'm trying to pump the bags because I work in Ethereum's narrative layer. But the Ethereum researchers are working to secure the Ethereum protocol. And I think it really, we didn't really find this out as an ecosystem until very lately where the security of the Ethereum product protocol and the soundness of ether, the asset are actually the same thing. And this is, this is

very core to what makes a good crypto economic system a good crypto economic system is you have the engine and you have the fuel and those are integrated systems and you can't optimize for just one you can't optimize for just good fuel. You also have to optimize for a good engine. And by proxy of the interest in optimizing for Ethereum's security so it can be a

good host of economic activity. By proxy, you optimize for the soundness of ether and therefore the value of ether. And that as a shelling point, I think can be extremely compelling. And there's, I don't really think there's any sort of like, this is for the interest of a few group of people in this in a private zoom room. This is just the interest of protecting the

zoom economy or the Ethereum economy. Sure. Yeah, I mean, like again, it sounds great. But you know, I've heard lots of really smart people talk about optimizing tokenomics in order to have this beautiful aims and guess what? It's mostly just, hey, insiders see opportunity to increase price and they're going to do it. And I mean, I don't know if that's moral or unmoral or whatever, but

to be honest, like, it's just not as good as 21 million, no one controls it in terms of being money. So I mean, I don't know what to say. Like that, that's, that's my perspective. I don't think that ultrasound money, aka whatever, some ledger that's designed to be to reduce units makes it better than a clean, hard 21 million ledger, like at being money. So I

mean, that's my ultimate objection to that. Right. In terms of like branding it ultrasound money, like, okay, good luck. It's like, it's not that good of a meme as far as I'm concerned. I disagree with that. I'm going to come back to that a second. But, but I wouldn't say it's like, well, yeah, at some point these are just going to be different things, right? Like

these are going to produce different outcomes. And yes, it's not. Hard cut 21 million. It's not simple like that. It's more complicated. But what is that difference beneficial or for the market cap or is it not beneficial for the market cap? I think is the real question. I think that's what is having humans involved tinkering with the supply schedule. Good or bad for the market cap.

That's just only what it takes to get the system up and running. And then ossification can come later. You have to also integrate the possibility that L ones blockchains ossify over time. We know this. This is how the blockchains work. And Ethereum has the option to ossify when it needs to at the time it needs to, which is not yet because we have not we have

not implemented the ETH one chain into the East two chain and then implemented the IP one of five five nine. Why would we why would we ossify before that. It's the right order of operation. So first we implement these two things and then we implement the office of ossification because the office ossification comes last also Ether it's ultrasound money is the best meme in crypto. It's

at least the top three memes in crypto if not number one. Not garbage. It's the best meme in crypto again because like so when the monetary supply when what the asset is is defined by the narrative rather than it actually rubbing up against people and people figuring out what the narrative is then you know when you lose the narrative all of a sudden you realize that

your network is attackable. So that's what I'm saying. I think this like when you you're losing soundness because like what you're calling Ethereum ultrasound money because okay it's going to reduce supply right it's going to reduce units on the ledger but you're really missing out on like okay what else makes it sound right is it the fact that there's this massive networks of nodes that ensure

that the network can't be changed like got it again like that doesn't exist yet okay and how are you going to get. Well what will ETH price be? When we go to Byzantine attack the the proof of work chain in order to get there. No you you you're missing the point here is that the network the the network that's holding the value isn't even network that

you're prophesizing about yet right yes so like when I make content I want it to be ever lasting. Or or have no staying power whatsoever because you're talking about something that doesn't that doesn't exist yet. Sure okay. So I think that's what I'm saying is that you're not going to be able to do that. So if that's the main criticism of this that's completely fine I'm

okay with that. No again what I'm trying to say is that the the difference is that you're measuring soundness on one axiom when there's many axioms of soundness and one of those axioms of soundness is unfuckable withable and you're saying we will be unfuckable withable at some point in the future after we do these things that we want to fuck with the system on. Yes. So

that is that those are terrible assurances that take away from the soundness of your thing that is reducing units systematically eventually. But the solution for that is time right and so if my version of the universe is correct in 2050 Bitcoin will have 10 more years worth of Lindy attached to it than each to will maybe it'll be 12 or something and that'll be a ratio

of like it'll Bitcoin will have 50 years of Lindy and Ethereum will have 38 years of Lindy like it's going to work. And how and how many years of unfuckable withability and like ossification on those consensus layers. Something roughly around those numbers at some point. How do we know we're only going to have to wait. But the thing is like when we started this podcast proof

of stake wasn't shipped in the IP 1559 wasn't even thing proof of stake is live. People forget that proof of stake is a real thing. It's securing a real network. And it's a different network than the network that is Ethereum right now. And Bitcoin is sent to the genesis of Ethereum has always been like they'll never going to get there and every and we're slowly marching

them back every step of the way. I mean I I'm very doubtful that. Do you think Ethereum lowering supply makes something sound money. Do you think that Ethereum will ever get to charted proof of stake with with no proof of work issuance. I mean I don't even understand why you want to get to proof of work. So we can reduce issuance. I mean, again, like we're

going to it's just like this circular argument like hey proof of work is not good enough because it's distributing too many coins. We need to reduce issuance. But also proof of work is bad for the environment. So that's also another reason why we need to do it. But also it's going to help us democratize access to Ethereum. But also it's going to be going to reduce

the amount of coins that are in circulation. And guess what? It's going to also make our system better if we burn coins when they're used because that is going to reduce issuance even more. Like these are like these weird circular. They make complete sense to me. I mean, again, you're drinking the cool a really hard. But like I don't necessarily see how I don't necessarily see

how like all of these little tank. I got a big cool a tub right here. I know man, you're getting drunk off it. There's why they call you eath heads. Is that you like even even even hopped up on the eath real hard. Again, like it's just I don't I don't believe in the group of people to to tinker with the parameters of this thing to

improve the tokenomics. So that way it out competes Bitcoin with proof of work. It's like I just don't think that that's going to happen. Like proof of work. Uncensored ability. No changing the consensus rules. And then like 21 million. Like that is a formula to winning. Compound. Because security is compromised. Bitcoin won't last longer than 60 years. Explain. The proof of my check coin because Bitcoin's

broken. Proof of work with zero issuance does not work. Proof of work is inherently expensive. But I think that's what I'm saying. And if you don't have any issuance to fund that transaction fees will never be enough because of how in in expensive proof of work is proof of proof of work is a gas guzzler. And you're asking it to guzzle the gas of of something

that you can't issue. Bitcoin has optimized for short term security and long term by that by that definition. Long term unsustainability and unpredictability and security. Whereas the theory is doing the opposite. But I do know 50 years. I would argue it very. So it's kind of funny to me that security for you has to do with like we need to make the we need to mess

you have to recognize that proof of work. And then the largest network that utilizes proof of work in particular. Unlocks energy or profit opportunities for energy producers that do not exist. So if you think about like what that means is that the earth itself. Is literally funding Bitcoin mining, right? Because as long as there's trapped gas that is accessible the human infrastructure and internet infrastructure. That

gas can be monetized. So even if there's no block reward. Any sort of Bitcoin that enables the capture and monetization of that gas. Is going to be worth it, right? Because they're ready. It's taking a negative something that was not monetizable. And making sure that it's not monetizing. It's not monetizing it monetizable. So that's also the same with energy production facilities. So do you get do

you deal with your energy bill in Seattle? Hunter pays it. But okay. Well, if you look at the energy bill. They try to encourage you to not use electricity during peak hours. Right. By increasing the amount that it costs during peak hours. And they say, Hey, if you're going to run your AC or run the heater, do it in the middle of the day during non

peak hours because we have a lot of abundant electricity. We have a lot of a bunch. Yeah. So we have a lot of abundant electricity. And that's why we are going to encourage you to spend during or run your electricity during that time. So again, the reason why they want you to do that is because they have to produce electricity at peak the whole time. Right.

So for those energy those energy producing facilities. They have all of this energy that they have to produce all the time to meet peak hours in the morning and the day. And they have nothing to do with it. Guess what they're going to do with electricity? They're going to make sound money with it. That is efficient. That is turning a resource that was uncapturable. Like literally

physically uncaptured because you couldn't physically ship it and you know one physically needed it. So they're turning it into an asset. So I mean, if you look at the way that proof of work fits into how the world works. It fits in extremely well. So I find it very, very hard to the big thing. Like, okay, in a world where guess what Bitcoin hit 60k after

the having and miners have never made more money ever. That Oh, and guess what Bitcoin is not sustainable. It doesn't fit into any sort of long term infrastructure play. Like that narrative just doesn't stick to me. Like guess what? Every energy producing facility in the entire world is going to be a Bitcoin minor. Like Bitcoin mining is not only set up to thrive. But it's it's

set up to literally completely dominate kilowatts. kilowatts will be priced in sets because every energy facility will need the will need the grid balancing that proof being able to turn on electricity consumption turn off electricity consumption that Bitcoin provides. So like when you understand that, you know, how the how the infrastructure works. Where proof of work fits into that. And then I hear you who understands

the things too say, oh, it's unsustainable because we need to be able to tinker with the monetary policy in order to maintain its sustainability. I just laugh. It's just laughable. It's like you are going to get completely blindsided. You sound exactly like the Fed. So I'm compelled by that energy argument. But if you don't think that that it sounds exactly if not 10 times more than

than whatever cool aid I was just trying to spin up saying that like Bitcoin is going to fund itself out of the energies of the earth, that is that's the same thing. That's equally as cool a to be cool a to be so can you can you point to actual examples of Ethereum instrumentalizing ultrasound money. Ness that are real today. What do you mean? Because I

can point to real areas where Bitcoin mining is unlocking profit opportunities for energy producers and stranded people who own stranded energy assets today. Those are real things. So I mean, what's more cool a to one is observing reality. One is saying in the future when this thing exists, it's going to work like this because I am a conist computer. Well, okay, you cut you cut out

at the end there, but I think you're trying to ask me to draw the same comparisons to progress in the in the east world, right? Well, I mean, we have or something to specifically backup your economic theory around proof of work proof of stake issuance. In inherent faults in proof of work, those kind of things. Right. So the the whole ultrasound. Well, the whole thesis behind

proof of wake is that proof of work is inefficient is is that there's perpetual buying pressure to pay for the overhead of the cost of mining Bitcoin, right? And if you do perpetual selling pressure, right? Prepetual selling pressure, right? And like if you also think of a of a world like that, where Bitcoin, where energy facilities can can just not have to sell any of their

Bitcoin, because they are producing energy. Well, that's no worse than proof of stake, because that's the same, that's the same complaint, because the people then therefore don't have any costs. What you're saying is that the the energy operators or the Bitcoin miner operators don't have to sell any Bitcoin because they figured out they they hacked the planet. They figured it out. Well, so I don't understand

why you know they they need to use financial engineering that they need to put down their Bitcoin as collateral in order to not sell their Bitcoin. Right. And that's what you have to do with proof of stake. You literally put up your stake as collateral. And then and then you secure the yeah, but but yeah, but the collateral and like the act of staking is what

it create, you know, what allows appending to the blockchain, whereas with proof of work is you have to burn electricity, right to append to the network to to the blockchain. So as a key structural difference. I don't think it's all that different. Yeah, proof of work is just more useful to energy producers, whereas proof of stake is useless for them. Yes. Yes, it's useless for that

party. Yes, it doesn't it doesn't work for that party. It's consensus with less with less utility. Right. Yes. The other thing I would say, which is why proof of work is better. And again, is why it's even as the subsidy decreases subsidy decreased last April, but miners again paid more nominal in US dollar terms. You know, it's going to continue to see the end of the

first 12 years of Bitcoin's lifespan when it when it has that energy reserve the most, right? Like it still has plenty of Bitcoin to issue again in monetary terms, because it keeps on going up. But like, of course, of course, it's going to work out in the first three haveings. I'm not talking about the first three haveings. I'm talking about the 10th happening or the 15th

have any or something. So I have a question. Do you know what percent of the world's value Bitcoin network issue issues every single block? I don't know. Okay, well, it's less than 0.01% of the world's value. Are you because currently less than 0.01% of the world's value stored in Bitcoin? Yes. This is the BTC is going to pump forever. Cool. Is that what the cool? No,

but no, no, but that here like you're saying that Bitcoin's block award is going down, but I mean, if Bitcoin, if Bitcoin stores five, five percent of the world's value and its block reward, let's say decreases four extra. It goes to zero. Isn't that isn't that mean that each block is actually minting a larger percentage of the world of the world's value? Yes. In the earliest

in a time in the earliest part of its lifespan, when it obviously would do that. I mean, Bitcoin's block awards decreases linearly, but it's price appreciation opportunity can increase exponentially. So I mean, again, like, I'm not talking about the price of Bitcoin. I'm just trying to understand. I'm just trying to understand. It wasn't increasing exponentially. We wouldn't be talking about it. It wouldn't be Bitcoin. Totally.

But like, I just don't understand why you think that it's miners aren't going to get paid. Because like, the thing that they're getting, like they're going extra long Bitcoin all the time. I'm not going to say that miners aren't going to get paid. And like, if we start, if we denominator, and this is why we have this, we have this big commute miscommunication with Dan Hell

that we couldn't get around where I titled that POV, that old POV. So, the cryptocurrency podcast episode is Bitcoin safe from itself. But you and Dan kept on saying that the block reward in real value terms keeps on going up. That's not the problem. It's the block rewards in relation to the size of the Bitcoin economy. That's the issue. It's not about Bitcoin versus the value

of the rest of the world. It's about Bitcoin versus the size of its own weight. That's what you have to protect against. There's a clear separation between the value of the network and then the structure and the work that's securing. And while they are correlated, as the value goes, as the network increases value, hash rate comes on. Once that hash rate is on, it's like, it's

hard to take it off. And when that hash rate is used to being funded by a very, very small block reward. And whatever the fee structure is. And it's getting into energy from almost zero, if not negative cost electricity, then all of a sudden you have a very, very antifragible network that is less susceptible to whatever is going on top of it. I think we might

have to wrap this up because your internet really sucks. And I think we've exhausted. I mean, it's just a bunch of Bitcoin and Ethereum enthusiasts here talking about stuff they really don't understand. I think when you need to listen to the ultrasound money podcast that comes out a week from today on the bankless podcast. I mean, I listened to the one with maybe it was not

ultrasound money, but it was just in Drake and this is quite convinced. This is the other half. So crypto economics, that was crypto. This is economics. So there's two hard to just and Drake round two. Oh, so okay. So more more just in Drake, more just in Drake. Yeah, I wasn't super impressed with his knowledge of Bitcoin. That makes complete sense. All right. Well, look forward

to listening to it. What did you think of the Nizomi Hayes Bitcoin magazine podcast? Oh, yeah. She was great. There was a lot of parallels that when she was talking about Bitcoin to what I talk about with NFTs about how NFTs are a tool for disintermediating the emotional relationships that people have with each other. And I think the big takeaway I got was that like, between

technology and money, technology and money, mediate everything about humans at all, ever, everything. The whole relationship of humanity is mediated by technology and money. When you can revolutionize those things, you revolutionize the relationships that we have with each other. Which means you can revolutionize culture. I think that's pretty cool. Yeah, no, absolutely. I mean, culture is kind of like a way of instantiating experience, which is

kind of built on top. Money is a form of communication for expressing that more clearly. So IE Bitcoin better communication. I'm excited for the improved communication. I would say the improved communication of 21 million, which I can't see how some undefined lowering ether supply cap is better than making it. I don't know if that necessarily makes what makes something sound though. You can be able to

see that in real time. We're about to experience it. All right. Well, man, Bitcoin's slipping here. Yeah, we need to get out of this podcast because we're clearly dumping the price right now. Man, I should have sacked later in the day. Yeah, you guys can find me at CK underscore Snarks as well as at Bitcoin Magazine and on the Bitcoin Magazine podcast. David, you can find

me at Trustless Date, both on Twitter and on bank listings. Everyone's gonna see. Yeah. We'll you to see. We'll you to see. We'll you to see. We'll never cry. We know. We'll never cry. We'll go. It's a time you might easily time you might easily time you might easily time you might easily time you might easily you might easily