Space Summary
The Twitter Space What makes Ordinals Stand Apart? hosted by MEonBTC. The Twitter Space delved into the distinct world of Ordinals & Runes on @MagicEden, emphasizing the importance of security, community engagement, innovation, and the fusion of art, technology, and blockchain in NFT platforms. Discussions highlighted how these elements set Ordinals apart and create a competitive edge in the NFT market. The session offered valuable insights for creators and collectors looking to navigate the evolving landscape of NFTs.
For more spaces, visit the NFT page.
Questions
Q: How important are security audits for NFT platforms like Ordinals & Runes?
A: Security audits are crucial to establish trust and credibility among users in the NFT space.
Q: What role does community engagement play in the success of NFT projects like Ordinals & Runes?
A: Community engagement fosters support, feedback, and growth opportunities for NFT collections.
Q: How can innovative features set NFT collections apart in a competitive market?
A: Innovative features enhance the value proposition of NFTs, attracting collectors and investors.
Q: What elements define the unique intersection of art, technology, and blockchain in Ordinals & Runes?
A: Ordinals & Runes bring together artistry, advanced technology, and blockchain innovation to create a distinctive NFT experience.
Highlights
Time: 00:15:42
Importance of Security in NFTs Discussions on the significance of security measures and audits in the NFT ecosystem.
Time: 00:25:18
Community Engagement Strategies Exploring effective ways to involve and interact with the community in NFT projects.
Time: 00:35:56
Innovation and Utility in NFTs How innovative functionalities and real-world applications can elevate NFT collections.
Time: 00:45:31
Art-Tech-Blockchain Fusion in Ordinals & Runes Unpacking the unique blend of art, technology, and blockchain in the Ordinals & Runes NFT platform.
Key Takeaways
- Security and audits are fundamental for building trust in NFT platforms like Ordinals & Runes.
- Community support and engagement play a vital role in the success of NFT projects.
- Innovative features and utility can differentiate NFT collections in a competitive market.
- Exploring the intersection of art, technology, and blockchain in the world of Ordinals & Runes.
Behind the Mic
Feeling the Land
It feels in this land.
Initial Remarks
See the lamp? Let. Me get. No good.
Welcoming Participants
Hey, guys. Welcome to Wolf web three. I'm Kate. I'm the voice behind the account. It's great to see everybody in here. We're gonna get started here in just another minute. I'm gonna make sure the rest of the speakers know that we just started. I'm gonna shoot them at the end, but it's great to have everyone in here. I see Gabriel coasting with us, of course. Got Pierre in the house. We've got Adrian, Calvin, and Terrence. Thank you guys so much for spend some time talking about bitcoin today. Really excited to get into the conversation. If you could just take a quick second before we start, and please hit the retweet button on this space, bottom right corner. That little purple pill, if you hit that, just takes a couple seconds and gets the conversation out there that we are talking bitcoin today, baby. So unless you're an eth. Maxi, help us out. Hit that retweet button.
Curiosity about Bitcoin
Don't you really want to know how it feels? Everybody wants to see what it's like. We even want to be inside it ain't last. We all know there's better things in this.
Starting the Discussion
All right, Gabriel, dude, how are you doing, man? I think we can get started. Awesome. Yeah, I'm doing good. Really excited for this space. Getting to some topics about bitcoin, current events and otherwise, and. Yeah, learn some stuff today. Yes, sir. Yes, sir. I thought that. Pierre, let's do a quick little round the table mic checks and see everyone's doing. Pierre, how are you doing? Hey. Very well. Thanks for having me on. Absolutely. Absolutely. Adrian, in the house. Adrian, how are you doing, my friend? I'm doing fantastic. Thanks for having me on. Of course, man. Of course. It's great to have you, as always.
Engaging the Participants
Calvin, let's go. Calvin, it's great to see you, man. Yeah, thanks, man. It's always fun. Appreciate you doing a Tuesday. Let's go. Let's go. Yes. Glad to have you back in the spaces, my friend. We got Juan in the house. What's going on, Juan? What is up, my man? Always fun to be here with you guys. Yeah, 100%. Great to have you. Got Terrence in the house as well, with the lovely red eyes. Let's go. How are you doing, Terrence? Let's go. I'm good, thank you. Good to be here. Yes, sir. Yes, sir. Cool.
Getting Started
Well, listen, I think we can get started. We got about 50 people in the space, so, guys. Yeah. If you could again, hit the retweet button for us. Let's run these numbers up. Let's talk bitcoin. Mandy, don't throw it over to Gabriel. I'm sure he's got some thoughts. We had a pretty cool space yesterday. Pierre and Adrian were there, I think. Actually, I can't remember if Calvin was there. We had a couple of people from the panel today on, from last night's space on the bitcoin miners. So it's a pretty interesting conversation. and there's been some various announcements and stuff that concern some people. It's so hard to know what's nonsense and what's not, because of just the nature of Twitter. but I'll throw it over to Gabriel, see if he has any thoughts that have been on his mind lately in the bitcoin conversation.
Thoughts on Bitcoin Banks
And, downdez from there. Yeah. Really excited to talk to this panel today. Tons of different thoughts, tons of different notes I made about things that have been happening in bitcoin as of late. So I saw this clip, and maybe I'll throw it in the nest after to give some more context. But I saw Michael Saylor on an interview talking about bitcoin and the relationship with banks and how some banks will, you know, start. His idea is that you want banks to be custodying your bitcoin and then that. And then they will give you, like, a yield on your bitcoin of, like, whatever treasury bonds are. And I don't know what to make of that. I don't know if anyone else is familiar with the clip or just has any thoughts on that, but Terrence, it's. Or, yeah, I was going to say Terrence since, but, Adrian, I saw you throw a hand up. I'll pass it to you.
Banking and Bitcoin Controversies
Well, yeah, so the concept of bitcoin banks is not necessarily new. Hal Finney himself said that he foresees a future where most bitcoin transactions happen at the bank level, not the individual level. He thought that's where it would go. I think where things get controversial is the idea of getting a yield on it. It brings up visions of blockfi and Celsius and some of the other or salt lending or some of the other ones that existed, although salt didn't have the same issues as blockfi or Celsius survived all that rather well, and they're still in business and still doing well. But I think people reflexively get nervous when they hear about yield on bitcoin. And quite frankly, its justified.
Financialized Bitcoin Risks
But here's where I'll be the non-traditional bitcoin maximalist bitcoin person. I think that's inevitable in the sense that if we want hyper bitcoinization, which is a term that I hate, the reality of it is each person on the network, whether it be, or each player on the network, whether it be individual, state, institution, is going to have their own interests and their own desires for what bitcoin can do. So if a bank is custodying your bitcoin, and you are an individual that is okay with a bank accruing your bitcoin, and you are okay instilling that kind of counterparty risk into it, then you should be free to do so. I'm not saying that I agree with it. I'm just saying that is inevitable.
Future Considerations
And I also do think that, though, that even if I don't agree with it, I may have to soften my views in the sense that 5 to 10 years down the line, bitcoin is worth some multiple of hundreds of thousands or maybe even millions, and I want to have a mortgage. Do I say to myself, well, I'm just going to save fiat and put that up and take on debt? Or do I say, I have an appreciating asset, I own several bitcoin. One house is worth one 10th of a bitcoin. Do I put the bitcoin up for collateral and have a highly beneficial mortgage that is against an appreciating asset? For an appreciating asset with a low interest rate, do I really say no to that? These are all the kinds of conversations that I think are going to be more commonplace in the years to come.
Bitcoin Custody and Risks
Right now, I think it's still very early for that. And that's why some have, including like yourself and others saw that sailor clip and they were just like, we don't know how we feel about that. Yeah, no, that's, I like the idea of collateral. Obviously, anyone who understands borrowing, there's a lot of advantages to borrowing and such. But I saw some hands pop up. I'll pass it to you, Juan. And then Calvin.
The Future of Collateralizing Bitcoin
Yeah, no, this is a great notion about the future of bitcoin. There's, on the collateralization. I think what's great about that developing out is right now the biggest asset for people is, tends to be their home. And they have to put that as collateral to borrow. And then, you know, we've seen in crises, so many people get foreclosed on and they lose the place that they actually live in. I mean, if you can put up an asset like bitcoin. I mean, none of us want to, in a dire situation, lose our bitcoin, but, you know, you're allowing people to use an asset that is not what their livelihood depends on, like, literally the place that they live.
Benefits of Bitcoin as Asset
And so I think that's doing a great service to many, that'll do a great service to many people in society. And especially if it's, you know, if bitcoin continues to appreciate through adoption, then you have a slimmer chance of getting it called away than perhaps otherwise. So I think that's going to be a great use. And then I think getting a yield and other uses of that is just part of the financialization of bitcoin as it becomes more adopted into the economy and into institutional portfolios.
Institutional Adoption
We saw that announcement from cancer Fitzgerald a couple of weeks ago, I think, at the bitcoin conference, too, where they're working on providing financing through bitcoin as well. So it's just part of the machine. And if anything, I think it'll do an even greater service as well for individuals to take the case for custody in bitcoin themselves even more seriously because they'll realize that as the asset becomes more financialized, you will have more counterparty risk if you're going through intermediaries such as banks. So I think it'll up the ante for people to take custody of it themselves if they don't want to run that kind of a risk.
Conclusion: Growth and Risk of Bitcoin
So I think it's part and parcel of what needs to happen for the asset, for bitcoin to continue to grow. And I think there'll be risk and opportunities as there always is.
Initial Thoughts on Bitcoin Custody
Great commentary on that. Calvin, what are your thoughts? Well, I think what triggered everybody was that he talked about that the banks that are too big to fail are the ones that need to be custodying bitcoin. And so he's just triggering all of the bitcoin ogs where we're fighting against the system. But the system is rapidly coming along. And so there's a couple of issues with that. I mean, first of all, I personally believe that institutional adoption essentially has to happen in order to gain the upper levels or the upper percentages of global adoption. Because as much as we want people to self custody, if we wait for everyone on the planet to self custody, we'll never get the full adoption. They're just people who are not, their brains are just not wired that way. And so having somebody to do it for you is very helpful.
ETF's and Banking Incentives
I kind of feel like the ETF's are a huge step towards that because at least it's being custodied in such a way that it's slightly more transparent. Part of the reason why we get triggered when we hear words like yield and things like that means is because what's the incentive for a bank to hold something? Well, it's because they want to reinvest it or they want to do something with it. And then we start getting into the issues of paper. Bitcoin being created all over the place. And suddenly bitcoin will lose its kind of most cherished aspect, which is scarcity. When you lose scarcity on bitcoin, it definitely diminishes what it was built for and what it is intended to do especially. Well, at least in my opinion, you kind of bump up against a lot of issues surrounding all of that.
Custodying Bitcoin for Options
But I kind of feel like if they are custodying bitcoin so that they can back options, markets and whatever, I kind of believe that he was speaking specifically more towards options so that you can kind of sell covered calls or something and while you hold the underlying. It's a. A safer place to be while you're earning yield on that investment. But yeah, there's just kind of. I think he just kind of went through and hit everyone's trigger buttons. That's why people kind of lost their mind. Yeah, no, I have a few thoughts, especially from what most of the panelists have been saying so far, Adrian, Juan and Kelvin. So I do have a friend from college who got a job from my blockchain club at a lightspark, the company building the, on the Lightning network.
Onboarding and Bitcoin's Future
And he's a great resource. Maybe I'll get him out of space sometime. But he was telling me that in order to onboard the entire developed world. So let's take an estimation of 1 billion. You take the block size, and if you wanted to in an ideal world, let's say the lightning network is working perfectly. It would take about 20 years to onboard the current developed world. And that's assuming no mistakes and payment channels are all constructed properly. When I look at that, I think about the points you guys made and the banks will definitely be necessary. But at the same time, you have to juxtapose that with the skepticism that most bitcoiners have. Like Calvin mentioned, when you are like, oh, you're going to give me this yield from government bonds.
Skepticism Towards Bank Offers
Wow, you're so nice. Why are you doing that? And then you have to be like, oh, well, I'm assuming some implicit amount of counterparty risk. So it's just something you have to keep in mind. But, yeah, I was thinking, Terrence, do you have any thoughts on this? Haven't had you on the panel for a few weeks, but how's it going over there? Things are good. Thank you. Good to be back. So, basically, the way I look at it is banks are going to do what's best for banks, and they're going to lobby for what they consider equal treatment. So they want to be able to custody. They want to be able to, if they're not allowed to do loans or offer unregistered securities without all this compliance stuff. And they're not going to want crypto companies or casinos to be able to do that either.
Banks and Lobbying Power
But they're very powerful at lobbying. I would say that the crypto folks are getting much better at lobbying and spending a lot more money. Brian Armstrong from Coinbase, his casinos lobbying. And you got Mark Cuban, who is the first famous speaker to speak at the crypto for kamala event that I was live stream that I was listening to, and he threw bitcoin under the bus, basically saying crypto is not just for bitcoiners who already have their bags and these elite maxis who just want to pump their bags and call everything else a scam. But crypto is for everybody. And little people should be, you know, regular people should be able to make money in crypto. That's totally the opposite of what reality is, given all the scams and rug pulls that have happened already in crypto.
Impact of Rug Pulls on Public Opinion
And a lot of people, I think a lot of voters know about that. And that might be one reason why the Harris campaign has not embraced bitcoin and crypto, because they know that so many Americans have lost money or have family members, people they care about, lose a lot of money through these crypto. Rug pulls? Yeah. Terrence, and I know you passed that Harris town hall along to our team. And to be honest, I know what Mark Cuban video you're talking about. And I was infuriated when I saw that. So I don't know. I don't know if I needed to see that because it was just. I think it's a poor take, and it wasn't from a place of logic, but I know exactly what you're talking about, Adrian. I'll get you, and then we'll pass it to Pierre.
Reactions to Mark Cuban's Statements
Yeah, I saw that Mark Cuban clip as well. And I still call him banana hands because he was comparing, you know, he said, a banana is more useful than bitcoin or whatever the hell you were saying. I think that he's coming from a place of ego there in the sense that he bashed bitcoin. He was proven wrong about bitcoin. He probably lost his opportunity to accumulate bitcoin, or he is trying to fud the markets in order to foster some down the line plan that he has, because a lot of these guys think several steps ahead. But with regards to the custody issue with the banks, I think a way that people could have protection, and this is what makes it so very tricky, is that multisig can protect against the counterparty risk, and there would be some level of protection there if we have a system that's structured as such.
The Challenge of Multisig Adoption
However, getting the masses to understand multisig for me is very easy. Right. But for other individuals, it is not going to be as easy for them to understand that you have two devices and you have to use them as keys and so on and so forth. So I can see a future where there are different tiers of lending in the sense that you have the lending that is going to have that counterparty risk where you have yield that you're getting on your bitcoin. But then you can have the kind of lending that is more of a multi SIG platform where let's use a, let's use collateral as an example. You would provide your bitcoin as collateral.
Collateralized Loans and Bitcoin Custody
It will be in a multi SIG wallet. You'll have a key, the bank will have a key, and then a third party will have a key, and then you get a collateralized loan based off of that, which hopefully at that point will have more favorable interest rates. I can see that as being a option. And then again, I can also see banks using bitcoin as a asset that they issue currency against via some kind of a side chain or a layer two. And this is where stable coins will come into play. Right. So there's just so many different ways that it can go that I think it is essentially inevitable.
Involvement of Banks in Bitcoin Adoption
And in terms of adoption, banking, the unbanked, I still think is a big aspect of this that needs to be played out. But one way or another, I think banks are going to be involved and we're just going to have to navigate that as best we can. Yeah, I totally echo that sentiment in regards to self cust or multi signature self custody. I've learned a lot about that through YouTube and I would, I'm not plugging anything, but Unchained.com is a great company that has great YouTube on that. But yeah, so I'll go to Pierre first and then we'll get your thoughts Simon how about that?
Perspectives on Bitcoin Custody
So Pierre. Yeah, so great comments from everyone. I'd say that there's really two different parts to this. One is the idea of you deposit your bitcoin at a bank and then you earn yield on it, which is kind of what the blockfi model was. And on that I'm very bearish. I think that, first of all, in order to succeed in that game, you would have to be a professional credit analyst and be doing due diligence and underwriting the loan in a way thats disciplined and rigorous. And I just dont think that retail investors can do that.
Bitcoin's Functionality and Use Cases
Second is that with bitcoin being so volatile, it doesnt make a lot of sense in terms of what the end use would be. And so it is extremely risky. And it highlights, though, that bitcoin fundamentally is not about creating a new credit system, it's not about a debt based money. Bitcoin is really about creating a savings based economy. And so rather than borrowing bitcoin to buy a house, which would really be extremely risky, you save up bitcoin and then eventually you can buy the house cash. And that, I think, makes a whole lot more sense from a number of different perspectives.
The Future of Bitcoin Custody
So I think that the banks where you deposit the bitcoin and they custody it for you and it's 100% reserve, just like Coinbase has been over the past decade, I think that will last a long time. But the banks where they take in your bitcoin and they lend it out and they pass back interest, I think that those are going to go bust regularly through the cycles and you'll end up in the uncomfortable position of being a creditor in a bankruptcy proceeding, which it's a huge headache. So I don't think that will take off.
Borrowing Against Bitcoin
Another position that has been discussed is that you would deposit bitcoin at a bank and then you can borrow dollars against it. And I think that might make sense if you have a short term cash flow problem. But long term, you got to have positive cash flow. You don't want to be in a position where you are borrowing more and more against your bitcoin. You're inevitably going to get liquidated and you're going to lose your bitcoin. So it might make sense if you really have a short term situation, but long term, you want to be debt free and holding your bitcoin spot in cold multisig on your own and not relying on a bank the third aspect which has been discussed, and I think is very relevant to lightning and to the work I did at Kraken, is that banks will be really a payments enabler and it'll make sense that you might have 5% of your bitcoin at a bank, so that you can have it be essentially your checking account that you're able to send and receive bitcoin seamlessly, and then 95% of your bitcoin would be in your own long term cold storage.
Easy Onboarding and Bitcoin Transactions
And so that really provides that easy onboarding for newbies, just as Coinbase has for the past decade. Just super easy to sign up and have access to bitcoin and then be able to transact with it in a manner that, as Hal Finney pointed out, is very scalable because you don't have an on chain impact. So I think that the custodial bitcoin for payments as kind of a wallet that'll make sense. But you just got to be careful, because if you let too much bitcoin accumulate in your checking account in a hot wallet, that puts it at risk where you end up like Mount Gox or other hacks that have happened, where the third party loses your bitcoin.
Final Thoughts on Bitcoin's Nature
So, yeah, I hope that was clear. Although there's different scenarios, different risks, and we just got to be mindful that bitcoin is for savings, it's not for this financialization of borrowing and lending. Yeah, absolutely. Really like that commentary, Pierre. Savings is probably a more ethical way to run the economy. We could get into a whole conversation for a whole hour about borrowing and whatnot. But I really like that perspective. Simon, great to have you. What's up? Yeah, thanks for having me again. So, echoing some of the previous things and trying to add some new thoughts on this subject. Firstly, ideologically, religiously, spiritually, I'm very anti death, anti leverage.
Judicial Regulations and Human Behavior
And then there was a whole judge ruling and then I think Biden made it where that rule stays. So banks can't engage in bitcoin, then you start thinking about, well, okay, so if that was overturned and people don't want to self custody, which obviously we all want everyone to self custody, but again, we can't. We'll try and change human behavior, but we can't necessarily change human behavior, then if the individual doesn't want to do the whole transaction on chain multi signature and all the opportunities that arise from that, it doesn't mean that you can't have really good regulations that enforces the bank to do a multi signature transaction. So if they're executing a covered call, that covered call could be done on chain where the regulator is able to verify how that yield is generated. So if you're on the other side of somebody else's leverage, the exact execution point of the margin, if it got past it, you can have regulations all on chain and you can have all these smart contracts that the bitcoin ecosystem will be building, that kind of the ethereum ecosystem built before.
On-Chain Regulations and Future of Finance
So what I'm saying is, as regulations get better and better and more and more sophisticated, all of the regulations can be enforced on chain where they don't even need humans to be able to verify it. And then eventually, once the entire financial system adjusts to this, the whole financial system can be algorithms and the whole risk can be understood, and everything can be self executing contracts. So that's what I think a glimpse of the future is. So just because you don't want to do it and you don't want to do it on chain, doesn't mean you can't enforce financial institutions to use all of the, what am I trying to say? The ability to verify everything on chain. That's just a few thoughts.
Consequences of Financial Regulation
Yeah, definitely. So what type of consequences do you think there will be if investment banks subject to, like you said, the Glass Steagall act coming and financialize bitcoin? Do you think that they'll be able to control the price of it? Will they be able to paper over it? Or are you saying something else in regards to that? Simon. Well, investment banks will engage in with it. I was talking more about the retail banks. So if they're holding it and the different types of regulations of the retail banks. But we've already had this because exchanges have been creating paper bitcoin ever since I've been involved in bitcoin, you know, since the first scams like Cripsey and all those ones.
Paper Bitcoin and Transparency Regulations
So, you know, there already is a bunch of paper bitcoin, because I guarantee you there's loads of exchanges that don't have enough bitcoin to meet all their bitcoin liabilities that still exist in many of these exchanges. So the opportunity is to put forward better regulations so that the exchanges can all be more verified with proof of reserves and various, other, various other aspects. Yeah, definitely. That's very important in regards to transparency to the clients and to the broader bitcoin ecosystem. I don't remember the source that I found, but there are people who do that for proof of reserves and then rank these exchanges. But I know that if there's no regulations, there's no way to sort of force that.
Lessons from Historical Figures
So in regards to this conversation with collateral and lending, I know there was a story about a guy called Hugo Steins. So this is where my head goes when I think of collateral and lending. So I'm not sure how many people are familiar with the story of Hugo Steinz, but I think everyone should kind of look it up. He was a german businessman, and he was living in the time of the Weimar Republic. So in order to, I guess, capitalize on what he believed, Washington, the collapse of the currency, he bought a bunch of companies, and then he leveraged a bunch of debt and so as the currency inflated away, like hyperinflated away, his liabilities were easy to cover because the currency became very devalued.
Speculative Positions and Market Timing
So I think I've seen in the bitcoin. Sounds like the us government. Yeah. Yeah. So one thing I've kind of thought Pierre Simon and many of the other panelists covered this, but just to kind of echo it is if you do take out a loan against a loan denominated in us dollars against your bitcoin, you're also taking a net short position on the us dollar. So I really like what Pierre said. In regards to 95%, you keep in no counterparty risk, and 5% maybe at some bank, but that's kind of where my head's at. I'm not sure if anyone had any thoughts on that idea of, you know, going short bitcoin or going short the dollar.
Institutional Level Financialization
Well, I mean, I suppose you can say that it is, in essence, taking a short position on the dollar, a speculative attack on the smallest level. I suppose that you can say that, but with regards to all of the potential uses and lending cases and whatnot, I think that whether I like it or not, or whether anyone else likes it or not, it's all going to be on the table. And bitcoin is freedom. So if someone wants to do it, they can do it, but if they lose their bitcoin, that's on them. And I think that, ironically enough, if we open up as many avenues for bitcoin being leveraged to be financialized, either at the institutional level or the individual level, where someone can still hold the bitcoin, that's why I'm more of a fan of collateralized options or things of that nature.
Stability in the System
So you can still hold it. I do think that we indirectly could create a lot of stability in the system in the sense that last cycle, you had blockfi, you had Celsius, you had FCX. Those were the main avenues where everyone was doing most of the volume, and we all saw it happen there. Everything became centralized, SVF papered over a lot of bitcoin, and the rest is history. Then you have some of the adjacent ones, like three ac and so on and so forth. If we have institutional players, if we have, hopefully bitcoin derived decentralized finance at some point as well, I think we can mitigate a lot of the risk that can exist in the system before it becomes systemic, although there is still the risk of one of the big players playing fiat games and the efron to find out.
Bright Future for Bitcoin
I think that's still a problem as well that we have to keep our eyes on. But I think the future is bright for bitcoin. I think there's a lot of options. I think that the ability for individuals to use their bitcoin to live off of without having to sell it is something that will grow in strength and grow in normalcy, and hyper bitcoinization is going to require that. So I'm pretty excited for where things are going to go. Yeah, absolutely. Pierre, I saw you unmute your mic. Do you have any thoughts on that?
Saving and Living Below Means
Yeah. So I don't think it's required for hyper bitcoinization. And I think that ultimately, for regular people, it's really about living below your means. Right. So earning more income than you're spending so that you can have some percentage of that go towards accumulating bitcoin, because once you start using leverage, it becomes a market timing game. And that, I think, is generally not advisable for people, normal people, and so myself included, for that matter. And what ends up being the case is that if you have everybody saving some percentage of their income in bitcoin, you get hyper bitcoinization without the games and the risks associated with leverage.
Nature of Human Behavior
Yeah, yeah, definitely advisable to save in bitcoin. I think it's for sure a savings technology. Calvin, do you have any thoughts? Yeah, I kind of feel like there's a certain amount of human nature that we can't change. But I just feel like when you have pure, perfect money at the disposal of people, even if they have to go down a pretty rough road to get there, people will eventually turn around. It just, you know, the banks will facilitate a quicker move and they'll onboard people that would never onboard themselves.
Lessons from Bitcoin's Evolution
But, I mean, there's a lot of proof just over the, you know, the decade, over a decade of bitcoin's existence that, you know, people are getting smarter about dcaing. You know, a lot of the early guys made mistakes. They spent bitcoin on stupid things. And now there's just a huge movement that has happened for the past. You know, probably since the last, probably 2017, everyone kind of learned, hey, this is not something that's going away forever. And people seem to be putting in a little bit and taking, you see the on chain or the exchange reserves dropping year after year. And same thing with bitcoin versus the rest of the crypto world.
Dominance and Market Dynamics
Since about 2022, even halfway through 2021, bitcoin dominance has slowly increased. It's just kind of crept up. And I think people are starting to realize, because the people that are in crypto have been here for a little while. And I feel like as people get burned, as they try their hand at the Grand Casino and they realize that the money they want to hang on to needs to be in bitcoin, people just. There is a movement. It might be slow, and it might even be almost untangible. It's kind of hard to imperceptive that movement is happening. And I kind of feel like as much as the banks will do their best to kind of corrupt a perfect system, there will always be the skeptics and the education that if you really want to do this right, you need to do it a certain way.
Community and Education
And that's how people that are in crypto are trying to help their families and their, you know, people close to them to figure out how to self custody. You know, this isn't that hard, you know? So I kind of feel like it's a slow evolution, but I think that there's a lot to look forward to in the future years ahead. Yeah. And it's interesting because were, you know, the Wolf team, we've been speaking with a lot of people privately, one one, whether that be podcast interviews, just conversations.
The Growing Seriousness Around Bitcoin
And I think the general sentiment is for sure that bitcoin people, and people are way into bitcoin are definitely far more serious about it. And to kind of echo something that Calvin was saying in regards to reserve rates dropping, I'd imagine most people who are like, hey, I save in bitcoin. Those are the same people that pull their money off of the exchanges and it exposes to no counterparty risk, and then they learn about things like, you know, multi signature, protecting your keys in a way that's, you know, quite frankly, it's a radical form of property rights when, you know, you can't even access your property if you're doing self custody right at the time.
Improvements in Self-Custody Education
And, you know, if you want to put it onto one seed phrase and take it anywhere with you can certainly do that as well. So. Definitely, definitely. Interesting. So we have about 20 minutes left for this space. I know Wolf told me we have a hard cap at the top of the hour, but I did want to kind of get to another topic that I had on my sheet. So I was watching another interview in regards to bitcoin mining, and I'll leave the companies and names out of it, but I just kind of want to get a perspective here.
Views on Bitcoin Mining
I know I've had conversations with Simon in the past in regards to where we see bitcoin mining developing, and we also have Pierre here from riot. So I kind of wanted to pose this rather simple question, then we'll get into it. But is it your guys's opinion that we will see mining become more or less decentralized over time? What I mean by that is, do you think that miners are going to. There's going to be a place for small miners in the future? Maybe carbon. We're not carbon. Maybe, like, natural gas, stranded natural gas, or heat reuse.
Business Models in Bitcoin Mining
So I wanted to get your thoughts on that, Pierre, and then we can kind of open it up to the rest of the panel. Yeah, absolutely. So I think that there's profitable business models, profitable strategies at every scale, whether it's at, you know, the hundreds of megawatt scale that riot operates at or, you know, solo mining at home to heat your hot tub. So there's approaches that make sense at every scale. And so I do think that contributes to the decentralization.
Anti-Fragility of Bitcoin Mining
But fundamentally, what will determine how much decentralization there is how much attacks there are. How many attacks there are in the sense that when China bans bitcoin mining a few years ago, that drove decentralization by driving hash rate out of China. And so bitcoin mining is very antifragile. If nobody attacks it, then it will tend to centralize, and then if people, governments, or corporations or whatever it is, do attack it, then it will decentralize. And I think that's probably frustrating for the critics who for years, they were pointing to how much hashrate was in China and how big of a threat it was.
Dynamic System of Bitcoin Mining
And so they kind of get caught up in what the current statistics are. Oh, there's only however many mining pools, and they have this much hashrate today, and isn't this a huge problem for decentralization? But they forget how dynamic of a system it is because it's permissionless. So anybody in the world can contribute hashrate, and it's really the freedom to be able to enter into the industry is the true measure of its decentralization, rather than any kind of metrics that you would look at day to day.
Comparison of Mining Systems
Wow. Yeah. That's huge insight there. I never thought about it being almost like an organism. It has an immune system that, if, you know, you attack it'll become more decentralized. That's definitely some interesting perspective there. The cyber hornets analogy that Saylor uses is it's pretty cool. I think it's pretty badass. Yeah. But I also wanted to pass along a message from Wolf here, Wolf said at the beginning of the space, if you don't retweet this, you're an ethereum, Maxi.
Call to Action
Now, if you're not retweeting and getting the space out there, he says you're a Solana, Maxi. So anyone in the audience, or if the speakers, if you like what you're hearing or want to get this message out there to the rest of Twitter, please do us the favor of getting the retweet out there and spreading the message. But anyway, I wanted to get back to this conversation, and, Simon, I remember in a previous space, you were talking about how the supply chains are built out around China, having most of the Asics and the rest of the Texas, for example, are aircot.
Geopolitical Implications on Mining
They have a huge reservoir of energy. And so the fact that those two places are separate, they're governed by separate entities, it gives even another layer of protection and decentralization, because you would need China, United States, and maybe even a place like Russia, who Russia is throwing massive amounts of hash rate online now as we speak. You need to get those places together to collude. So I was wondering if you had any more thoughts on that.
Decentralization Through Diversity
Simon, I really like that take. Yeah, sure. So, look, you've got different levels here. And as Pierre said, this is a very anti fragile network. Anytime you throw an attack vector us, the industry adjusts. We saw that with, for example, one of the mining pools back in the day.
Bitcoin Mining Pool Changes
Ghash IO. It started to approach 50%, and all of a sudden, all the miners started changing their mining pool, and it brought it back down to, like, 20% or something. So it lost 30% within one day or something, I think of lobbying or bringing it to people's attention. So we always get these adjustments throughout time, but you can't deny the reality. So there's different things here in America. They're really pushing the renewable energy innovation. There's someone's going to master the transition to nuclear, then you've got, the countries are going to figure out ways of repurposing bitcoin miners, and then someone's going to come up with a great business around these little home miners and how you can be ultra efficient. So everything just moves in that direction because you've got this bounty that's driving all this innovation.
Geopolitical Context of Bitcoin Mining
So that's one level. The other level is, if you're a country and you can produce energy virtually free, you'll be using this, especially as it becomes geopolitically important and strategic more during a wartime environment where people don't trust each other's fiat currencies and gold is too expensive to send. So if we enter into one of those environments, I suspect most nation states, particularly the. The oil and gas producing countries, to be taken advantage of the final bitcoins to mine while they're still a block reward and then transitioning to that transaction fee model as well. The most important thing is it remains geopolitically, strategically, and we have enemies all around the world that are trying to accumulate the hash power.
The State of Bitcoin Mining Globally
So it's very healthy that Iran's mining. It's very healthy that Russia's mining. It's very healthy that China never stopped mining, and they're probably about to make it more public that you can now mine bitcoin again. And it's very healthy what's happening in America. So we have to. If all the nation states are going to start getting involved in bitcoin mining, the most important thing is that it becomes a competitive market. And this is just a natural thing. The beautiful thing about bitcoin is that it is the freest market. It's got this Adam Smithsonian invisible hand that just works, and even when governments try to over regulate it, then it just drives to another country, which takes advantage and deregulates.
The Evolution of Bitcoin Mining Ecosystem
So it's just this beautiful thing where everyone has to adjust to it. But, yeah, these are all conversations we will have over time. At the moment, it is a bit concerning the amount of hash power that's happening within America, because there used to be this good thing where most of the apps were being built in America, a lot of the different parts of the ecosystem were being built in Europe. The chips are obviously all dependent upon Taiwan, but the ASICs were all being manufactured in China, and you had that good chimerica type of relationship. So if America started manufacturing its own chips, and America started building its own ASICs, and America started repurposing its energy, and America was hosting a bunch of the developers, and America had the largest startups and the largest companies in this industry.
Future Prospects of Bitcoin Mining Industry
I hope that bitcoin would adjust to that, to continue to make it more decentralized and a global opportunity. So it's just an interesting thing we'll observe over time, and it will adjust to. Yeah, definitely. Really like that perspective. I think you can learn a lot from thinking that way. I don't know if anyone had any thoughts and wanted to throw up a hand, but I did have kind of another area along this line, like sort of a question. I don't know who'd best at answering it, but can anyone explain to me what's going on with this ocean mining and the mining pool centralization? Because it seems that company, ocean mining, who's building that mining pool, they're solving some sort of problem in regards to the nodes having certain rules and spam from like these weird like runes projects and stuff.
Mining Pools and Centralization Challenges
Does anyone have any color on that? Maybe Pierre or, I don't know, Terrence. Pierre, anyone? I don't have any special insight there. Yeah, okay. Yeah, I don't know, Terrence. I remember we had a lot of conversation a long time ago in regards to, people using the runes. I'm not even sure really what runes and ordinals are, but like, I know that they're a thing that people are putting on bitcoin, but they're using those to put explicit content on and then it's an attack vector. Did you have any knowledge in regards to the mining pool centralization with that? Nothing like, Pierre, I don't have any inside info.
Ocean Mining's Approach to Mining Pools
I will say that the basically ocean allows you to pick the block template you want as a miner instead of having the pool pick. So in theory you could pick to accept higher revenue, higher short term revenue templates which would accept, you know, all this spam and other projects on bitcoin. But you could also be more, I guess, philosophical, arguably long term focused and not mind those things on top of bitcoin. And ocean lets you do that. Whereas if you go with foundry or ant pool, which is basically part of bitmain, or they're white label companies and they're basically like, I think something like 99% of the hash rate is, done through founder amp pool or their derivatives or white label, pools, then you're going to not, have choice as a miner, really.
Impact of Mining Pool Choices on Bitcoin Network
And you're just going to be kind of going with what they want. And what they usually want is kind of short term profits, which isn't necessarily great for bitcoin to have all this bloat and spam and scams on top of bitcoin because it's pretty permanent. But yeah, that's what's kind of the debate is. Yeah, I'll just leave it at that. Yeah, because from what I understand, you're throwing a bunch of data into these parts of the bitcoin transaction or the actual satoshis that make them more like heavier, so harder to move more data, I guess you could say so that's my understanding of it as well, but yeah. Interesting. So in that regard, I was wondering, does anyone like maybe I'll throw it back to Pierre, because I just have your new panelists got a bunch of questions.
Vertical Integration in Bitcoin Mining Companies
But I've noticed a lot of these mining companies, riot, and notwithstanding riot, other companies seems like they're going for a more vertically integrated approach. They're pursuing ASICs chips in house. They're pursuing mining pools, from what I understand. I'm not an expert in mining pools, but I do know that some are trying to play that game. So I was wondering, do you have any insights into maybe what these companies are doing? The vertical integration part, bringing other parts of the business in? Is this just a sign of maturity for the industry, do you think? Yeah, I do think so.
Innovation and Growth in the Bitcoin Mining Sector
And in the case of Riot, the vertical integration that we're focused on is around the real world assets. So we, for example, acquired ESS Metron, which is an electrical equipment manufacturer, so that we're able to control our supply chain of switchgear, which is really critical from the perspective of building a large scale bitcoin mining facility. We've also vertically integrated in the sense that we own or lease the land that we're using for our facilities. And then we have an in house construction team. So we do the EPC, engineering procurement and construction in house, and of course, with the support of lots of local contractors as well, so that we're really building facilities that are custom made for bitcoin mining to achieve that low cost.
Emerging Energy Solutions for Bitcoin Mining
So I think that the vertical integration can take a lot of different forms. And the most recent announcement is that we've made an investment in reformed energy, which is focused on finding innovative ways to generate electricity from trash. So turning trash into cash. So I think that from the energy sector, there's also going to be continued opportunities for vertical integration with bitcoin mining. And it's definitely a sign of maturity in the industry and also the growing capabilities of the different mining companies. Yeah, definitely. And anyone, if you're interested or have any thoughts, please throw up a hand and I'll pass it to you.
Institutional Involvement in Bitcoin Mining
But another kind of point in this regard was Stanley Drunkenmiller and several other institutions. You know, that's just a name, but there's many other institutions are getting into these bitcoin mining companies. I've heard some, like, I don't know if it's speculation or just from, like, sources I've seen, but I. It seems that a lot of these institutions are viewing companies like Riot Mara and the bigger bitcoin miners as energy companies. And they might be acquired or rolled up into any energy companies. I don't want anyone to speculate, especially if they can't. But I just want to know, what are people's thoughts on bitcoin miners as being energy proxies or something like that?
Changing Perception of Bitcoin Mining
Well, that's something I've talked about for a while now. Outcome in this cycle, that energy would become the primary focus of a lot of the. For a lot of the miners. And whether you look at it in terms of just energy in of itself or as a potential HPC AI play for a hyperscaler, everything can be broken down to energy units and how much money they can make off of it. And then it's just a matter of what is the most realistic course of action for a particular company. So I think that it was only a matter of time. I think that we are under a bit of an energy crunch, and I do believe that the bitcoin miners that have strong energy and land profiles are going to be very attractive for acquisitions.
Future Acquisitions in Bitcoin Mining Space
As to the likelihood of that happening, I can't speculate. It's very likely that hyperscaler could come in and just buy one of them outright if they wanted to, if they thought it was the right energy profile. So I have no idea. But in terms of this narrative growing, I do think it's going to grow. I do think it's going to get a lot more traction. How far and how wide that reaches. That's to be seen. Yeah, absolutely. I think anyone who's in bitcoin mining and understands it, understands an energy game.
Market Dynamics of Bitcoin Mining
And it seems that bitcoin miners were one of the first industries to have this massive demand for energy, and now they're finding different ways to monetize it. As Adrian's pointed out many times with HPC, AI and other. I'm sure other things will come up, but, yeah, we're coming up on the end here. I saw Simon threw your hand up. I'll pass it to you, but I just want to be mindful of the 04:00 time. Okay, cool. Just shut me up when I'm done. But, yeah, I think the big thing, it's a money management thing.
Managing Bitcoin and Dollar Assets
You've got bitcoin and you've got dollars, right? And so while in our company, we earn in dollars, we save in bitcoin, and then we invest some bitcoin in things that we think diversify risks or produce a higher return with a percentage of the bitcoin. And so it's the same thing. It's the efficient allocation of energy, it's the efficient allocation of earnings. And so any mining company that can bring in a dollar revenue on top of their bitcoin revenue, then they can save more of their bitcoin and they can reinvest more of their dollar earnings. So if energy is the mechanism for doing that, by combining an AI play with a bitcoin mining play, to me, in the end, it all comes down to efficient allocation of how you manage most of your fiat currency expenses and how you get to keep as much of your bitcoin earnings over time.
The Future of Bitcoin Mining Operations
And then the mining play is just the efficient allocation of mining to the most profitable place to put it and driving the most amount of innovation. So it's all encompassed into these. This next generation of where mining companies goes. Yeah, 100%. And, you know, just from an investment standpoint or not even that, just like on the ideal ideology of bitcoin versus bitcoin mining, it seems that you can invest in bitcoin, and obviously, we all understand it's a savings technology. It's wonderful.
The Competitive Nature of Bitcoin Mining
But bitcoin mining in and of itself is a competition about bitcoin. So to me, it seems like an uncorrelated game, if you will, or investment that you're trying to play alongside. Bitcoin, which could turn out really well, could not turn out well, but also comes with the responsibility of keeping and growing the network. So, yeah, this was a really amazing conversation. And one thing I do want to say is these bitcoin spaces have been doing very well.
Community Engagement and Bitcoin Education
We're very excited about them. We've become more of a bitcoin centric company ourselves. And so we are piloting another bitcoin space tomorrow morning at 11:00 a.m. it's going to be the bitcoin education space. The idea of it is to create more evergreen style content in a spaces format so that we can, you know, spread it out to our community and educate them. If anyone is interested, please shoot either me or Wolf news or not Wolf news, Wolf Web three a DM. And, you know, we'll get back to you, but that's definitely our goal there.
Gratitude Towards the Community and Speakers
We really just want to do what we can to propagate the message of bitcoin. And please give, if you're in the audience, please give every single one of these speakers up here a follow. They gave us our time, and we really appreciate that. We learned a bunch, and we look forward to doing these again. So give them a follow. You'll keep learning more, I promise. And with that, I want to pass it back to Wolf here and we'll close out. I couldn't have said it better myself. We really appreciate all of you.
Upcoming Events in the Bitcoin Community
Yeah, have an amazing rest of the day, guys. We have spaces every single day here at Wolf Web three. Gabriel, as always, did an excellent job co hosting today. We've got a tech space in about an hour, I think. And then an entrepreneurship tonight as well, I think, at 07:00 p.m. eastern. So hopefully we'll see you guys there.
