Bitcoin Halving Conversations: Half Is More

Transcript

hi everyone thank you so much for joining this event today um so my name is emily from the crypto valley association this is mattie my assistant for today so um our event tonight is going to be separated in four sessions the first one we're gonna have a keynote um from sigma our partner so sigmund the swiss crypto bank that you that you all know and then the second session we're going to have five fireside chats um with guests that we carefully selected to represent five different expertise in the bitcoin community so we're going to have the mining expertise the security the investing the scalability and also the

research perspective then the third part of our event we're going to have a live q a so you will have an opportunity to ask your questions live with us um and you have the the opportunity to get answers from the speakers and then uh we're gonna have a networking session so you'll be able to join rooms to speak to meet uh people as we would do in the traditional conference and then uh we are going to have a little party so we're going to have actually a concert a live concert from tatiana mohawk um i guess many of you uh know her um and then we'll have a chance to all have a drink together so i hope you you guys are comfortably installed

at home enjoying a glass of wine because we're really gonna have a good event for you in store so first uh i'd like to give the uh the chance to jerome to say a few words jerome is the uh executive director of the crypto valley association to usual super thank you emily thank you for this intro thank you for everybody joining uh today attending the the third online events of the the crypto valley conference uh we called it the the crypto valley virtual series so today more than 500 people registered from 50 different countries um and yeah i just want to explain you a

little story behind behind this this uh this event so five months ago uh together with uh emily and amy we had this idea of uh organizing uh a bitcoin authentic event uh and party so we wanted to do it in uh in in a bar uh we wanted to um uh uh to do it and uh in geneva we wanted to we wanted to to have it live but that was before that was uh that was before the the the kovid of course uh so um one months ago we decided to um

to do it but to do to switch to an online event um and uh that's what we that's what we did uh maybe you see it now some people told me that uh you were not even so okay so we did we decided to do this event online but we really wanted to keep them as it as a celebration celebration of uh of bitcoin celebration of uh our main cryptocurrency celebration of the crypto valley association member so that's why after this event as emily said our members and all the registered participants are welcome to join us uh on online party at 9 00 pm swiss time so you should have all received uh by email

the access and the different zoom room so if we if you do not um receive it we will share and um in the in the chat letter so first of all thank you to our speakers uh amazing lineup tonight gathered by emmy lawrence here she's our new board member who's been uh very actively involved in this event organizations and tonight she will be the moderator of the fireside chat also thank you to our presenting partner signum bank thank you for supporting the our association thank you to our media partner coin telegraph and by the way hi to all the viewers who are now following this event from the coin telegraph youtube

channel uh and yes thank you of course to all the cva uh team involved again more than 10 people uh 10 volunteers helped to make it happen to this so thank you very much um for for that so just a few words about crypto valley for all the people who don't know us already so we are an independent non-profit association based in switzerland our mission is to build the world's leading ecosystem for blockchain and cryptographic technology and businesses so we gather around 600 members including more than 150 corporate members like signum or ledger tonight so we started three years ago

from zoo in switzerland uh we now have uh local chapters covering uh old switzerland and are now expanding our ecosystem uh worldwide we have already more than 30 percent of our members outside of switzerland and i'm sure that after this event we we have more so why joining us um be first of all the benefits to join us is to be actively involved um as a member and to join working groups uh to the chapters where we create the contents where we we work together to produce studies or organize these events for example um another benefit is to have access to our private marriage portal

and interact with our members directly and of course get invited to speak for example uh to our next online events uh so you could get of course the full benefit list uh forum on our membership on our website but the most important things is by becoming a crypto valet association member you you will get part of a large and strong community to learn connect advocate and innovate so membership starts at uh from 100 swiss ranks so 100 for one year and you can journal online of course on crypto valet dot swiss okay so that's why for my intros and now let's even start so to you

uh to you emily uh for the the next start and uh see you later for the networking in the crypto valley room and see you in the party bye [Music] perfect technical difficulties but i guess we're here not perfect that's a bad assistant so thank you so much joe um so now it's going to be time for our first session a keynote from our partner signum um so we will welcome now the head of

brokerage dominique lavengar dominic door and the floor is good yes thank you emily hello everyone let me share my screen here so can you see it yes fantastic all right so good evening everyone well at least it's evening here in switzerland so thank you amy emily and sharon for having me and also for giving me the opportunity to introduce you to signum and our view on the market and the halving tonight here so i'll start by by introducing you to

signum and we'll then have a closer look at some of the key facts around the halving to get everyone on the same page before we dive a bit deeper in some of the market dynamics that we see around the holding and their impact on on future holdings and the months to come so signum we are the world's first digital asset bank and we claim that title having received a banking license by the swiss regulator finma in summer last year so we're operational since about nine months now we are 80 people both in zurich and in singapore combined and our mission really is to give institutionals and

private qualified in investors access to digital asset economy and this whole ecosystem that we all care about with complete trust and peace of mind and we're doing that through a range of services from asset management where we have an alpha and beta products to accounts in custody where clients can safe keep the digital assets as well as their fiat currencies with us we have a landing facilities where clients can draw fiat loans against a digital asset collateral that's all also offered on a b to b basis and i think everyone at signum is a fundamental believer in the potential of

the blockchain technology to revolutionize the financial industry which is why we're engaging in a number of asset tokenization projects as well then last but not least we have our trading desk which allows clients to trade the digital assets against the range of the major fiat currencies on a 24 7 basis so enough from signum let's focus on the topic of this evening which is the halving and that's maybe set the stage with some key facts around this particular halving here so it's holding number three of 33 and as we all know one is about to occur every four years so the last one in 2016 the one before

in 2012 and the halving is essentially bitcoins built in this inflation function ensuring that we have a finite supply of 21 million bitcoin ultimately now for this particular halving the block reward dropped from 12.5 to 6.25 btc which leads to a monetary inflation rate of about point eight percent and that's actually for the first time below the fed's two percent uh target inflation rate and if we scan the bitcoin source code for the for the halving we can actually find this function here it's very interesting to see that in the source code the halving is

nothing but those 10 lines of code here so very simple and very elegantly coded by satoshi now at the stage set let's go a bit deeper into two topics that in our view have shaped the market environment around the hobbing and will continue to shape it uh in the months and years to come so we'll start with a deep dive into those two topics before then zooming out again and assessing the impact on the market these days the first topic that we're going to cover is the growing importance of the derivatives market and then i'll share some of signum's insights into the institutionalization of the crypto space

so starting with the growing importance of the derivatives market here represented by by futures i think there's one very interesting way to to visualize this impressively and that's if we plot the market share of the bitcoin futures market um against the the spot market right assuming that the sum of the two is 100 if we do that and go back into the early days of crypto we can really see that 100 of the market was on the spot site for quite a while until bitmex came along which started to increase volumes in the futures so we pause here at the second halving and we can see that at this time around the the futures market was about 10 of

the overall volume so there wasn't really enough liquidity around for some of the larger miners and hedge funds in the market to hatch all their exposure ahead of such an impactful event right then we go into 2017 the bull market we see the importance of the futures market growing cme cboe joining the game along with a range of other providers like dairy bait and binance and many more that that would have been just too many to listen to to mention here so right now just ahead of the third halving we're at the point where the futures mark is significantly larger than the spot market and there's really enough liquidity around

for some of the larger players in the market to hatch your price uncertainty so i think that's one very nice way of visualizing this and then that's maybe the next question that that arises is then um why is this so important why is the derivatives market so important in crypto basically in any market actually and one important role of the of the derivatives market is actually supporting the efficient price discovery in any market and it does that by adding the time dimension to the spot market which in itself is very one-dimensional right it's just the current price and it's actually hard to distinguish how much um of a future prediction is actually priced in

in this market so the futures market adds that time access and allows for events and guaranteed in certain events like a halving to be priced in very efficiently in the bitcoin price so let's move to one of the sub topics of derivatives which i think is very interesting to have a look at also in the context of um of the halving and that's mining derivatives let's visualize this with this very obviously simplified diagram of how a mining operation would look like we have operating costs that assuming here occur in u.s dollars so electricity rent and a lot of other factors they are contractually agreed with their

suppliers and they serve as the input to the mining operation and together with the hardware and the software obviously the output of such a mining operation then is btc which is the revenue stream so now we have a mismatch between the currency in which uh the revenues occur and the currency in which expenses occur right and this is exactly where the futures market comes in very handy because it allows the miner to hedge that particular price risk the btc usd risk with with a future or an option but there's one stream of of uh there was there's one revenue stream that is actually left unhatched here and that is the number of bitcoins that you receive out of your

mining operation which is very much also a factor of mining difficulty so holding all factors constant a rise in the mining difficulty level would obviously lead to less income for the same amount of input and vice versa so in that sense miners are actually very much in inherently short the difficulty level because they profit from a lower difficulty level if all other factors are held constant and up to a few years ago miners weren't really able to hedge that particular risk very well but we now see that there's a demand for this and

that more and more instruments start to arise and we see futures on the mining difficulty level we see options on mining difficulty level obviously in a very um bespoke offering usually because it is a naturally it is naturally very hard to offer such a derivative as an issuer just given the fact that this product is almost impossible to hatch unless you are yourself very active in the mining space so as a consequence a lot of the issues of such derivatives are themselves very reactive in the mining space then we have a second topic to dive a bit deeper into and that is the institutionalization of the digital asset ecosystem

and we at signal really see a growing number of traditional asset managers entering the space and really adding digital assets to their portfolio obviously also driven by the current low yield environment for sure but a second dynamic at play here is is also the loss of market share from some of the retail exchanges to otc brokers and that is a direct function of institutionalization to some extent because otc brokers at the end of the day offering more bespoke and more tailored service and it's also no coincidence that some of those retail exchanges have acquired otc desks in the past to just compensate for that outflow that they have seen so otc brokers can act also as a sponge

uh to soften the impact of large orders with their principal books if they have uh such a book not all do or some claim another all do and thirdly we have also the emergence of algorithmic and high frequency training as a sign of institutionalization whereas actually algorithmic trading has been around uh since the early days of of crypto because the community has always been very developer friendly and embraced in an open api culture but throughout the last years a number of prop trading shops have joined the game and leveraged their high frequency trading infrastructure from traditional asset classes and ventured into crypto

we also see the supply side catering for that um with some exchanges offering uh low latency infrastructure and um virtual colocation services for example but it's really an industry that is still in its infancy but growing obviously at the very fast pace right now so if we summarize this we can say that the growing importance of the derivatives market as well as the institutionalization of the ecosystem lead ultimately to more institutional flow and more hatching products and liquidity and we if we put that into an equation and conclude those findings we can probably say that the more hedging products and liquidity

there is and the more institutional flow we have on top of that because this is not necessarily the case if we were in a retail driven market the less uncertainty and volatility there is in the market as a lot of these institutional players act as an absorb act as a layer that absorbs that volatility and and the price shocks and as a result of that we can expect less and less impact of future haulings on the btc price around the halving day not talking about the long-term implications here but really around the days before and and after the hauling date as this market becomes more mature and more important so for us as investors in digital assets that

should really give us more peace of mind and hopefully leave us with some good nights of sleep that we're safe when future halvings come along so thank you everyone at the crypto valley association and uh yeah i'm looking forward to see you at the party later tonight all right thank you so much dominique thank you thank you very much very very interesting presentation um so just a note to the attendees so you um if you have questions feel free to write them in the q a and then later on uh during the the live q a uh maybe we can select your question and

dominique can answer what questions you have um so thank you so much dominique now we're going to move on to the second uh session our fireside chats um so as i said before so we we brought five renowned experts in their respective fields um so which is mining security investing scalability and research so now i'm going to give the floor to emmy who is going to be moderating these sessions hi everyone this is emmy i can't um i can't start my video so please really help me in in letting um my video

go live oh okay now hello so nice to see some familiar faces and very happy to kick off the fireside part we will be talking about mining first as emily said and mining is that part of the bitcoin network and and also leading up to the halving mining's metrics um are the ones which which gave us um metrics which helps us see what is really happening so we can measure uh the development of the network and we managed to secure uh alejandro de la torre from poland in order to to walk us through what

really happened and where are we now past the halving and um alejandro hi are you there i'm here hi how are you really was so nice to see you so alejandro uh has been in the space since 2013 first he um founded block trail which is a block explorer which made an exit later on and then he worked for btc.com and then later he worked for pulling so he really specialized he still works for pulling he specialized in um in looking at mining and what really happens in mining alejandro do you want to tell us more and please also explain what

mining is for the attendees who don't who are not familiar with with that uh sure uh thanks for the introduction emmy uh my name is alejandro de la torre i'm currently vice president of poulin.com it's a mining pool or one of the largest mining pools in the industry uh specialized in um the major coins of of the industry uh and yeah i've been around for a couple years uh mainly focused on the mining side of business so yeah i think uh i think i can explain a little bit what mining is um so mining basically it's it's actually a very ingenious design um what it what what it does is basically

uh maintains the security of the network um and it actually confirms the transactions of the network so it's a double there's double work there um now the miner for doing this effort um is rewarded in bitcoin and that's how bitcoin actually enters the market as well through the mining uh industry uh so yeah that's basically it it it maintains security and it uh verifies transactions of the network so it's of actually a very vital if not the most vital part of the bitcoin network and system thanks alejandro for for that um uh explanation and um you have had a very busy week monitoring

closely what is happening can you tell us a bit more about the metrics as in how the hashrate um was developing or was um um increasing before the halving and also can we talk about the difficulty and uh also tell us a bit more please about how the holding did affect the miners uh sure so i'm going to go ahead and share the screen where i have some a little bit of data right here can you guys see that yeah we do okay so quickly this is what pool in mind um uh we're one of the biggest miners in these coins uh we have a pretty big amount of uh of

the network uh this is actually a couple of weeks before the halving but i'll explain what's happening now so let's get into the halving now we expected a drop um why did we expect to drop because there is a lot of mining machines still in the network that are from the older generation and these older generation mining machines um are competing against uh this reward uh against these better and stronger and newer machines now what happens is that over over time the network difficulty increases and and these machines become less profitable now when then now you add the 50 reduction of the bitcoin block reward

and it basically makes the the the mining machine unprofitable so we expected around 15 to 20 percent of the network to to basically shut off and as we see in this metric here on this chart here that actually we have seen around a 15 20 drop from around 130 135 to now around 195 somewhere around there it's there's a lot of variance but it's around a 20 drop um we we expect this drop to continue at least until the next difficulty adjustment where the the bitcoin network recalculates how much hash power how much mining machines are connected to the network um in order to find a constant of 10 minutes this is this is um this is so after this next difficulty

adjustment we might see again an increase in hash rate um but eventually over time when newer machines are coming into the network um these old machines will eventually have to shut off but there's nothing to worry about because there's all these new machines that are coming in that are very strong very good um in terms of mining bitcoin so um the hash rate will continue its upward trend uh like it has been doing for the last four or five years uh the network difficulty is also has been increasing incredibly as we see in this chart over here by blockchain.com which uh uh garrick is uh is uh uh you know works there um yeah so this is this is basically a

calculation of all the hash power that comes into the network uh and it tries to find a constant of 10 minutes that is the that is the that is the underlying um underlying uh reason for the difficulty to find a 10-minute block constant as we can see there's been an increase exponentially over the last uh couple of years we have seen we have seen sort of a dip before the halving because of the price uh decrease on the 13 the sort of the black uh thursday as it's called now um which really goes to show you that a lot of mining machines are actually some at least this percentage that we see this drop here this percentage around 10 to 15 percent

are mining at a very slim marginal like they make a very slim profit as soon as the price decreased they had to shut off moving on to moving on to sorry yeah that's uh that's that's the rest of the slide but i can uh go ahead and me you touch based on the mining machines and it's so exciting mining would not exist as of it is today if btc would have not been invented and the evolution of the machines like like how in size and also in uh capacity it's just fascinating so could you talk a bit more about the risks and then the different type of machines

sure so i'll go ahead and share another uh my screen again and i'll share this time a tool that we provide at poolen.com what this tool basically shows is the new uh generation of miners and it gives our calculation according to how much uh a cost for electricity as you can see here we have energy or electricity cost of five cents per kilowatt hour which is really cheap um it can only be found in very you know in some regions of the world but that is more or less where what mining operators are trying to aim for around five cents six cents bit of course lower is better now we can see that here you see the breakeven price of the cost of one of these

uh the watts miner m30 which is one of the best machines in the network now after calculating of course the cost of electricity the cost of how much uh it it is it's waste per day then you can see that it actually makes around a profit of 5.71 per day um and here you see here break even price now if you go down we look at the older generation of machines and you see as we go down the the the profits and and the cost of break even price increases exponentially so this is this this goes back to what i was saying earlier now these machines over here let's say the watts miner m10 or or the you know and s11 are no longer profitable um and these are the ones that have been

shutting off uh uh in the last couple days i think i read was it a coin metrics that 23 percent of the machines are the oil generation machines um what what concern does that raise in your book and also um for for what is bitcoin miners mining uh on the bitcoin blockchain is not profitable anymore do you think they are moving on to other chains um yeah well that's a good question i think i think we're not we're not concerned with um with the drop in the hash rate 23 percent whatever it is

because we we see this as a momentary drop and we see a lot of investment in the mining industry coming in to buy all these new machines which will eventually down the line increase the total hash rate and the total network security of of bitcoin so we only see this as a momentary blip in the grand scheme of things um so that's nothing to be concerned about now the the your next question about mining machines that are have been moving to other coins yes we have seen some um uh increases in the other shock 256 so the same algorithms so basically you can only mine the same algorithm per machine and we have seen an increase in bch and bsv mining uh that basically suggests that a

lot of the older machines that are no longer profitable in bitcoin have been moving to the other coins um it took at the end of the day the mining operator wants to maintain profitability that's their business uh that's that's the end of the line and if they can switch to another coin to make money then they will great how about um the global hash rate distribution because of course like most of the mining happens in china as of today but how do you see the development in the coming years yeah sure so i have one last thing to share here i'm going to go ahead is actually a very interesting um development or or a study by the

cambridge center for alternative finance um what they did is they took data from uh three of the major mining pools one of them was was us and they looked into the ranking or the amount of hashrate that is across the globe as we can see this is um september uh of 2019 and we see that 75 percent of the whole entire of the mining uh uh hash rate from these three pools was in china now if we click on april we see that it actually has decreased by by 10 in china and you we also see a new entrant as the united states uh malaysia is also pretty interesting uh addition to

to this chart so we the charts show what i'm about to say uh we've seen that we've seen the trend that the global hash rate is spreading across the globe it's no longer just all in china which is a good thing because you can't have i mean it's always it's always a risk to have all the hash rate in one particular region be it wherever it is so it's a good thing for the network good thing for bitcoin that is expanding globally and that's one of the reasons why pooling is also expanding globally we have office now berlin um to to to take advantage and to be there grow with the network thanks so much alejandro i have two more questions if you you think back um and then you take a take a look back at the evolution of bitcoin

is there any memorable moment in your career or or any event in bitcoin uh what what you would like to highlight and what was very surprising to you uh that's that's a that's a difficult question to answer but i think i think um i got into bitcoin 2013 and when i was in when 2013 early 2013 it was only really just uh hobbyists and die hard cyberpunks and and these type of guys so it's it's for me it's been an awesome ride seeing the development of the industry from just being everything about you know you know very very nerdy stuff i'd say is the best work to put it to it becoming a worldwide global

industry and i think we're just getting started i still think we're in the very beginning but it's been a beautiful thing to to witness to grow to grow with the bitcoin industry itself yeah and this halving has been has has gotten so much attention like so much um coverage uh not only in in our ecosystem but but uh also in other areas okay the last uh closing question is you are in your living room in berlin where you where will you be in 2024 when this is uh well in 2024 i i hope to be maybe in some islands somewhere

having a good time i don't i don't know i i we're building a big office here and a big team so probably working somewhere in some office for pooling wonderful thank you so much thank you thank you emmy you will be able to ask alejandra further questions in the q a and also in the networking room and with that we transition over to emily because our next topic is security thank you very much emmy all right so now our next guest is going to be pascal gautier the ceo of ledger which is one of the leading providers of secure crypto storage solutions pascal can you connect so i am connected ah perfect hi pascal good to see you

nice location i like your office that's where i'll be in 2024. all right so um when we were preparing uh this event in this conversation you told me um kind of a weird story about someone who thought was an expert in the space and tried to give you advice but it ended very badly for him can you maybe share this story with the audience yeah sure so very short story so uh in 2014 i was trying to figure out what would make what my next move would be in terms of building business and i you know spoke to that guy and he said don't go in crypto because there is nothing to do there it's too

complex and you know i started something i failed and you probably fell and i said okay well you know so i didn't take up uh take him up on up on his advice but a few years after uh when i was working with uh ledger and kaiko and had done my thing he told me the second story which is uh that he had lost uh 500 500 000 dollars worth of ethereum because he had the ethereum on a computer and he wiped his hard drive and so therefore lost the private keys of the ethereum so not only it didn't give me a very good advice and i'm glad that didn't follow it but also it seemed that he didn't really pay attention to to his security much and um and so the you know that's the whole story combined is sort of why

i'm still at ledger today i am very interesting now but he's very interesting all right is this okay now okay cool all right no it's a very interesting story and you know i think maybe that the problem wasn't crypto maybe it was it was him and i'm happy he didn't listen to his advice so um when we were discussing you told me that there is something that is very important it's endpoint security and that it's often overlooked uh can you maybe explain to the audience what it is and why it is so important sure i mean i'm sure that the audience is probably more educated than me on the

matter but you know the endpoints the endpoint security means that in order to own a bitcoin or any form of cryptocurrency you need to have a secret and be the sole owner of that secret and that's the private key the crypto private key and so therefore you know when you sign a transaction you have to sort of show that you are the owner of the secret and so you have to show the private key and so it's at the moment of transaction is when you come in and out of a blockchain that actually there is a vector of attack to steal the private key um and so that's what we call the security that's what is called the security endpoint the endpoint security which means that when you use one of our products for example at ledger we protect the private key at

any moment so even when you do the transaction the private key never leaves the enclave in your ledger nano and so therefore you know you never reveal the entire private key to anyone so therefore the private key cannot be hacked and so therefore you cannot lose your bitcoins and so the endpoint security is really the key challenge for the industry when you think about it because you know whenever it's in the blockchain it's safe uh but when it's it's coming in and out of the blockchain that is uh unsafe at the moment of transaction and of course when you have that private key then when you where do you put it like those 24 words and and the private key so the private key can be on the ledger but then you need to worry about the 24 words so the

security of the endpoint is really the uh you know one of the big challenges of this industry for sure yeah definitely and as usual the the risk is more on the human side than on the on the technical side actually um so um i think this is also one of the things that makes crypto kind of hard to approach as a newcomer as a newbie you know you have these private keys and all these numbers to remember and it's really it's really complicated how do you at ledger so you provide solutions that are easy to use for anyone can you tell us a bit more about how you help people build that problem yeah sure i mean first of all i think you know there is a big shift in terms of technology we come from a world where

if you think about data in general and you know your digital life you don't own anything and the way that we set up our digital lives today is whenever we download a program or an application or whatever product we use we click yes yes yes yes and then you can use the products and that's how we use the internet today that's how we use our phones and so if you understand what you're doing with your phone you know that you're giving everything to a third party google knows more about your life than you probably do they know where you've been how many seconds you stayed who you exchanged email with et cetera et cetera so de facto your data is not yours and you've given your digital life to third parties and that might be okay i mean most people don't care but but it is

what it is with bitcoin uh it was an invention that where suddenly you could own your uh digital assets you can own a bitcoin and it's unique so that's very interesting uh but then you know with this power comes also great responsibilities you know suddenly you're in charge of your security because it's not a problem of clicking yes yes yes yes yes because the problem is if you've done anything wrong you can always call someone you can always reset the account you can always do something to recover uh your data either fully or partially with bitcoin you know you don't call the hotline like you know when your private key is gone it's gone and so therefore you know suddenly you have to be in charge of your own money

but that's actually okay because people feel that it's a change because we're coming from that yeah css world but it's not so much a change because you know for centuries humans have been uh humans know how to protect their own money and by the way we're talking about money we're talking about value we're talking about wealth uh if you think about our grandparents i mean my grandparents had gold diamonds like you know there are many things at home that they were keeping at home they had a safe they already had they were their own security to protect uh to protect value they had jewelry they had those type of things um in a cash society in most cash societies people have cash on them they trade with cash and so they have their wealth with them so it is not so uncommon that people have to

worry about their the security when it comes to to value and so therefore but in order to do so they need the tools what what people cannot do is to develop their own safe uh i mean very smart people can maybe do it but in general you buy safe from a safe manufacturer so what we do as ledger is just to help people uh you know build [Music] their digital life protect their digital value and by giving them the tools that they need in order to do what we've been doing for centuries but that we have to do again now if you want to keep the value with you all right very interesting i like your your quote and i'll quote you on this with great power comes great

responsibility i think it's a great way to to sum this up um so it's coming it's coming from it's coming from uh from spiderman okay so don't quote me it's spiderman i'm happy i got my assistant there all right so there's another question i wanted to ask you so uh right now we're in this kind of weird period right with the coronavirus with the lockdown you know it's a very uncertain time economically it's a very uncertain times but on the other hand we have the bitcoin halving which is a very bullish event you know usually it leads to huge price increases so you your company ledger how is it affected by this i mean do you have one counter

balancing the other or were you touched negatively by the coronavirus or or can you tell us about your situation now sure are you guys hearing me okay yeah i'm fine okay um uh i would say that everything has been available to us in the past uh we you know we there is a huge influx of new users uh in crypto um and uh is it okay um i think do you is your connection okay or is my

connection i have a problem it's kind of like um it could be could be both uh let me let me see if i can okay keep it like that and if it's not okay i'll try to switch connection again um i don't let me let me give me one second sure all right so just a reminder um if you have questions you can write them in the q a okay and then we will select them later and we can ask them to the speakers pascal back to you well okay sorry i switched connection maybe this one is better but um so what was the question actually so coronavirus a negative impact

oh yeah so how does it work for you sure so so far it looks like a perfect storm um for several reasons one bitcoin has died 380 times and so you know crypto businesses have been built to be very resilient to catastrophes um and in the same way that we were waiting for bitcoin to die i mean whether it's bitcoin dying or coronavirus coming we were sort of ready for any event of that magnitude that we would say um but what so that's number one number two what happened is while coronavirus was

happening and people were getting confined we've seen an increase of new people coming into the market and so therefore new people coming into the market we sell more products and so continuously we sold more products you know february was better than january march was better than february april is better than march and may is better than april and it's a very significant upward trend uh from from where we look at it um and so therefore what we had to do during the carnival square this is to ensure business continuity uh and to make sure that we could keep on shipping the products to our customers uh which which we have done and we think that you know a few things are happening at the same time you have the perfect storm of you know of course bitcoin having is here and that gets everyone very excited

and you know people you know might think that it's going to have a positive impact on price so they invest now but also equally you probably have a huge economy crisis coming our way and so people are probably trying to combine the two uh you know interestingly uh i've also talked to uh people that are involved in online trading so we're talking about securities and you know just buying you know stock online and apparently that activity has gone up also very drastically so you know it feels that because of the halving and because of anything that's happening people are investing in bitcoin in the same way that we invest in apple stock or amazon stock uh you know in terms of value protection wealth protection you know diversification of investments uh all of these good things but uh but

what we can say is there is definitely a lot of people coming in the space it doesn't always reflect on price because price is under 10 000. so it's good but it's not crazy but the behavior that we see right now is the same that we saw in the previous bull run which is you have a large influx of retail investors coming into the game uh and that precedes usually the um the bull run but so for us right now it feels like it's the bull run that started okay interesting yeah um and how would you you know you've been in the space for quite some time how would you compare this housing versus the previous one and how do you think the next halvings are going to look like can you give us a bit

of perspective on this sure i mean i think you know the hard thing is just uh i mean it's an event but it's a it's a date like you know and so uh i think what has changed is you know just the industry has changed people you know that's having uh and now it's just you know four years have passed and in four years the industry has built uh tremendously and so there are many companies uh that are much stronger today than they were before there are many new companies when it comes to us to give you just a you know an example i don't think that we knew that what we were doing in 2017 like we had no strategy we were just like riding the the wave of

of or riding the bull like everyone but not really knowing where we were going which which i hated at the time because i i knew that we were doing great in terms of revenues but i also knew that we had no idea uh where we were going um and how to control that uh and so what has changed is now in 2020 you know as we start writing this bool we are in control we know exactly what we do we have better products we have better delivery we have more engineers we control everything uh so it's it's a much better feeling so right now we're ready for the real bull run uh we're ready for the plus 600 uh rise um uh and we've built the company in the past four years what

we've done is to be ready for that uh and so this is why it's very exciting now many many big companies in the space and so you know that's why it's exciting because we can ride that bull with more class this time maybe all right very bullish message i love that thank you very much um so now um thank you very much for joining us i'm going to give the floor back to emmy now emmy thank you emily in the next fire side we're going to talk about investments and we have uh someone amazing someone

fabulous who is going to to um lead us into the nitty-gritty of of disrespect and of this field and um she is madame the mirrors and uh i met madame in boston in 2018 where she gave a talk about the evolution of money or what money really is and uh that was already her her fourth or fifth year in crypto and then since she has been working hard every day and advancing uh advancing the development of bitcoin she's the chief strategic officer of coin shares and she has been testifying last year at the congress in july madame are you

there i am here can you uh hear me hi martin welcome we hear you hi how are you good uh can you turn on my video as well okay here we go hey everyone i'm you nice to see you all i'm happy having you how are you coming exactly tell us a bit more about yourself and what have you been busy with at coin shares and how did you find this halving yeah um so i was just listening to pascal chat and it's funny because i've known pascal since around the last having

i think we first met in may of 2016. um and so you know it's just interesting to think back on where we were four years ago i recall i actually threw a having party in new york um it was not well attended there were a small handful of people there uh but i made a prediction at that having which i revisited at this having and my prediction was that a bitcoin would be at ten thousand dollars and mind you the last having it was at 653 uh on the nose so my prediction was bitcoin at ten thousand dollars as well as the advent of um fedcoin and so you know it's not too far off given all the interest we've seen in

central bank digital currencies and so um there are a lot of things that are still the same there are a lot of things that are very different i mean the great thing about bitcoin is the having was programmed into the protocol and so there is this aspect of bitcoin that's beautiful it's it's unemotional it doesn't depend on individuals or people to make decisions um the protocol keeps running as as was intended and um anyone can view the the bitcoin source code to sort of understand what's going to happen what's really different this time when we talk about investing in just the shape of the the market around bitcoin is in 2016 you could really only be fundamentally long bitcoin meaning you were holding it um believing the price

would go up there weren't really ways to go short bitcoin not in scale not in size and definitely not in a way that um traders and institutional investors and institutional trading firms could access and today that's very different last year alone the bitcoin derivatives market uh traded over three trillion dollars in notional value there's a huge number of platforms that are available um to trade on there are a number of different contracts that now exist beyond just the perpetual swap that was pioneered by the team over at bit max and so i think again just looking at what still drives the market to pascal's point i think a lot of the market is still largely uh retail

investors and we see that thanks to uh platforms like squares cash shop and robin hood and and so far um an etoro and all of these retail platforms being really accessible and giving people price exposure to bitcoin particularly retail uh we see it with the growing trust in platforms like blockchain.com in platforms like coinbase but also a whole host of new platforms that have popped up since 2016 that have accrued a lot of retail users but we also see it in the institutional market and i think um this is an area where we've been spending a lot of time last week we announced the rebranding and sort of in integration of our our trading business which was formerly known as gabby trading

um into coin shares in the first quarter of this year alone they traded 1.5 billion dollars of cryptocurrency that's that's a lot of volume and um the the landscape on the trading side in terms of both technology types of players and integrations continues to grow uh we recently did a whole series on the future of capital markets and all of the advances we see in both the market venues that exist in bitcoin but also the structure of those venues also being more software driven and less custody driven like traditional trading venues and then just what that's enabling in terms of new players who are participating in the market ranging you know all the way from uh speculators to trading firms who are deploying statistical arbitrage

models you know could care less about whether it's bitcoin or potatoes they're trading they're just looking for vol and abilities to arm and they can do that in bitcoin um to you know really ideologically motivated individuals as well as funds to have a philosophical thesis around bitcoin so you know it's very very different it's very exciting some of it is extremely positive some of it i think is is less positive and a little you know more dystopian uh particularly large banks looking for ways to um take on crypto capital and custody bitcoin and and give people synthetic bitcoin to trade but but look um very different world a lot more money a lot more people

a lot more opinions and the conversation has moved from the very small you know meeting room that i rented out in 2016 where we had about 40 people to now the global stage where we have some of the most respected fund managers in the world talking about bitcoin where we have celebrities talking about bitcoin and where we have you know 150 people taking time out of their evening to be on a video chat talking about bitcoin so different worlds yeah absolutely thank you so much for for that recap what is what what you're most excited about in the space and also earlier this week one of uh one of the head fund managers a billion dollar hedge fund manager paul

tudor jones who was a skeptic of bitcoin announced that he uses bitcoin as a hedge and two percent of his net worth is in bitcoin so we we have been always wondering when the institutionals are coming finally uh to the to the space and when will when will they um invest more and more you think that that we will see this trend picking up yeah so so let's start with um the institutions um first and foremost look at the end of the day institutions have one job and one job only it's to make money right so as an investor um my my

responsibility is not just to find interesting themes and trends um that are sort of dictating where the market's going it's not just to find interesting investment ideas it's to make money and as the crypto asset class grows um as the opportunities in this asset class grow beyond just spot buying and holding bitcoin and waiting for for more people to come into that trade um the number of institutions that see opportunities to make money in bitcoin is also going to grow uh what i loved about um paul tudor jones entry public entry i should say into bitcoin is uh the paper he wrote which added context around his conviction

and again um just people's ability to grasp uh the value proposition of bitcoin in such nuanced terms is is really impressive again we saw this you know last year um during the libra hearings when jerome powell talked about bitcoin right he had this whole three-minute uh talk about bitcoin where he called it digital gold a store of value and he nailed all of these really important points about bitcoin on the national stage um we see it again and just more and more people as a result of what's happened over the last few months with this global pandemic which has led to global economic crisis but also forced people to recognize that the system we are

in is completely unsustainable and is completely you know the incentives are misaligned i think people are being forced to confront the reality that we're going to need to see some pretty drastic change and so you know in a way bitcoin was a product of the last financial crisis and i think it's really come into prominence um during this financial crisis as people are looking at the world and saying well what else because clearly the way that risk has changed the things i used to invest in the things i used to do are no longer necessarily profitable nor are they sustainable but at the end of the day like let's not forget it's about money um in one way i think it's kind of funny that everyone in the bitcoin industry which at its core you know

is a bit anti-establishment it's about building a new financial system it's about building kind of this this new vision um that we're all obsessed over what someone who's very much a product of the old financial system and has become successful and prominent as a result of you know this this system that's collapsing that this person is is our hero in a way it's it's sort of funny you know um but it is it is interesting and then i think the other great sign is you know jp morgan which for a long time jamie diamond you know spoke very negatively about bitcoin they're publicly now wanting to work with ultra high net worth clients and institutional custody clients because

they see the opportunity to accrue aum they realize that they have to change and so instead of fighting bitcoin they're now embracing it although arguably you know in my view pushing more people into uh to take their bitcoin and deposit it with a financial institution is kind of the opposite direction of where i'd like to see this go um at the end of the day you know we're trying to create the systemic hedge we can't really do that effectively if we're relying on financial institutions to hold hold our coins so you know the the way i kind of articulate it is bitcoin can't be a systemic hedge if holders of bitcoin are beholden to large financial institutions so i think there's still some some ideological tensions there that

need to be worked out and i think regulation is going to play a big role already in the u.s we see some very draconian regulation that will make it very difficult for bitcoin companies to service um clients we see this in the uk we see this in other jurisdictions but i'm i'm of the belief that bitcoin is money for the people not just for institutions large asset managers and and large banks so um we're going to have a fight ahead to preserve that absolutely it's um this reminds me of one of the reports what coin shares shared last year and and you guys stated that there should be a shift also in in generations and as in uh when uh when the assets

of um whereas the new generations will inherit the assets of their parents then they are digitally native they are very familiar with bitcoin and um yeah so that shift has to happen what do you think what products are missing to to help a greater adoption because you guys have the etps and the tracker products and wonder if if you have a view on this yeah so um again i think in contrast to the last having there's now a lot more ways for people to get exposure to bitcoin and what i think is so great um about it is there's a really wide spectrum right

so for us the the tracker product um xbt provider which trades throughout europe um the the motivation for that product is getting exposure to bitcoin should be easy and simple and people should be able to do it in the same way they would buy a share of apple right so the idea is you go to whatever brokerage platform you're on you type in the ticker and boom you can buy bitcoin unlike other um exchange trader products that are out there our product has no premium shares are created and redeemed on a daily basis and so our product tracks the net asset value or the underlying value of the the bitcoin um one to one there's there's no big markup

um and the fees are quite minimal um at 2.5 percent whereas the the largest product has fees of percent per year um and so i think again you know our view is is that there's going to be this wide range um you know what pascal and the team are at leger during and i'm a ledger user myself is there enabling people to buy bitcoin and custody themselves they like um they can go through third party like a coinbase or a gemini or you know a bit wallow where they can buy their bitcoin hold it on the platform transfer it to a wallet um themselves i'm also a client and user of casa i'm an investor in that business personally as well which is a multi-sig solution so it's a

piece of software that works with a ledger hardware and treasure hardware but it allows you to basically uh use multi-sig custody to secure your coins and create some effective inheritance solutions so you can make sure that um if something happens to you there's a way for your your loved ones to recover your coins um and so look there's this really wide range of options you know some people have nothing but a crypto steel or maybe they've memorized their seed phrase and and that's their strategy but what i think is really beautiful is what this technology allows for is for companies to create products and services that cater to a really wide range of preferences

um i believe it's my job and sort of our job as the bitcoin community to educate users of these products and services about the risk reward trade-offs between these strategies and so it's important for people when they custody their coins to someone to understand that you know there is a risk associated with with that um and the risk is not just a counterparty risk but there is also regulatory risk um particularly you know the irs has been been fishing over at coinbase uh to get the the information of their users um so that they can review their taxes and make sure they're claiming crypto on their taxes so i think again you know they're gonna

be different trade-offs and um people have different preferences they should have lots of choices but i want to make sure that people have choices that empower them to be their own bank to be their own custodian and to really make decisions with information to be empowered with with education so that they can make decisions that that fit with what they want to do wonderful yeah we we all should take that as a as an assignment uh and what you have done last year in july at the congress it just blew my mind saying that five minutes if if you guys this is to all the attendees who have

not seen that um the testimony of maltam where she talks about bitcoin in five minutes that's that's fabulous i mean a huge super tanks in in in the name of everyone that was uh yeah that was phenomenal i mean i no but the great thing is like nobody speaks for bitcoin um nobody represents bitcoin like bitcoin doesn't have a ceo it doesn't have a leader that's that's what's so great about this um but i think whenever we're given opportunities to communicate um about bitcoin to larger audience i think it's very important for me personally just to remember why i was attracted to bitcoin and why i spent the last six years of my

life not just my career my life in this industry um it was to change certain things in our world and i think as more and more of um you know the banking industry and the hedge fund industry and the asset management industry comes into bitcoin um some of the incentives and the aspirations start to change but i think it's important to remember the intention that we all started with um along the way so madam where were you being in 2014 at the fourth or it's not 14 20 24 at the forest halving who knows um i'm in my living room in in brooklyn new york right now

um you know who knows i'm sure wherever i am it will be exactly the right place but i'll definitely be online talking about bitcoin with all of you yeah thank you so much um we will we will have the chance uh to ask more questions in the q a and also in the um in the networking session thanks madam yeah of course with that now we transition to building on bitcoin and back to you emily thank you very much emmy all right thank you amy and bentham um all right so now our next speaker is elizabeth stark the ceo of lightning labs

elizabeth are you there hi can you guys hear me yeah perfectly perfectly welcome okay awesome so elizabeth is joining us by phone you are now on the west coast of the us is that right indeed yeah it's been quite a crazy few months but i am currently uh yeah on the west coast of the us all right well thank you very much for joining um could we maybe start up could you tell us a bit what is lightning labs what are you guys trying to achieve what is building on bitcoin can you explain it a little bit with your kids uh sure but before i get started um i just uh heard melton's

uh discussion and i have to say that so nelson and i actually uh both spoke at this event uh in february february 18th it was uh for sophie and melvin was talking about doom and gloom and the whole economy was going to crash and i was trying to be more optimistic and positive about all the great use cases and bitcoin and lightning and people were like thought we were crazy and then everything kind of happened so i think we can name milton the oracle of bitcoin now because she predicted the price and you know cbdc's and then she she kind of knew what was coming next so um good work melbourne we need to be expected

for the next predictions yeah exactly whatever about them says is going to happen in four years let's bank on that um so yeah so i'm ceo and co-founder of a company called lightning labs and we are building uh the leading lightning infrastructure called lng and a variety of products around that and for those that aren't familiar lightning is a layer two solution on top of bitcoin for instant high volume transactions um and it's really been a wild ride within the community over the last four years um lightning itself is a protocol so you can think of it as kind of like the world wide web and there are different implementations um we've built lnd there's one called sea lightning one called eclair and a variety of other people working

on lightning implementations out there um so in 2017 we released the uh test net version so for use with uh fake bitcoin or test bitcoin and then in 2018 uh we released the beta of our lnd implementation for bitcoin mainnet uh so it's been about two years at lending's been on mainnet but it's still definitely in the uh beta early version that's out there and since then we've seen this incredible um evolution of startups right now we have probably 50 or so companies that have built on lnd we have and melton has actually invested in a bunch of them we have a huge developer community over 4 000 devs on the l

d plaque we have a very vibrant group of people that are that are building and participating and contributing in the lightning ecosystem just last fall in berlin we had the first ever lightning conference with 500 community members developers you know entrepreneurs investors and all of that and that was an incredible in-person event back when we did those um and actually shout out to there were some great uh swiss devs there who made the lightning beer tap where you could actually pay with lightning you didn't have to deal with a human and you automatically got you know beer in your cup so that was clearly very popular we had almost a thousand beers sold uh with a lightning beer tap well

actually i'm kind of curious so you have 50 companies building on on your protocol can you tell us about you know some examples of you know prominent use cases of you know what can be built on bitcoin totally yeah so the goal of lighting is really to be the api for bitcoin if you will um it's not super easy to build on the base uh chain but also you have 10 minute confirmation times you know you have fees that can spike you know somewhat unexpectedly um and then of course you have the scalability limits i know one of our subjects is scalability so you have around five you know maybe 10 with segwit transactions per second so building on layer 2 and building a

lightning the goal is really to get you a better user experience and to make it more seamless um so we've actually seen i mean there are a wide variety of interesting companies some of them are involving things like you know paying with lightning you have bit refill and fold um a great example of that but there's three uh emerging areas that we've seen as of late that i'm really excited about um so the first is gaming so you can actually um play in-game with lightning you can earn sass and by the way the in the lighting community we sas is our um unit of account so you know the lowest denomination of bitcoin so you know staffing stats and all that has become a part in earnings tax uh of the lightning community um so

you've got the gaming world um companies like dvd um donner labs churches games and a variety of other ones people even using lightning via live live twitch streams and there's a weekly event now called small weekly or monthly anyway check out malcox and i'm sorry minkock um so that has the community online um yeah it's a little confusing because it sounds like um my auntie got then you've got um the second area is actually lightning chat which people thought okay lightning is useful for payments which of course it is and that's the main use case in transactions but

people are actually now sending messages over lighting and they're attaching payments so in order to send a message we actually have to have a payment so for example you said one stat and um it's like okay interestingly back in the day with hash cash if folks were familiar you know adam backsport then satoshi integrated into lightning which was integrated into proof of work the goal was anti-spam for email so this is actually we've come full circle with anthony spam with lightning where you know somebody's not going to spam you i i i know a variety of people are on the sphinx.chat app there's a new one called juggernaut um one of our devs on our team built out something called whatsapp not to be confused with whatsapp um so there are a variety of these chat apps where you actually send one satoshi for

message or maybe a couple of satoshi's so it's harder for people to spam you because they actually have to pay if they want to spam you so that's the second and then the third is um what i think is now being called li-fi although um so the lightning finance side of things yeah it's a it's a new me it's emerging and um so there's for example a company called ellen marcus in nine days their volume went from one million to three million total um and they let you do things like derivatives using lightning where you have transient custody you've got river.com here in the u.s that enables people to withdraw and deposit you have a variety of people working on new types of say assets on lightning um using what's called discrete log

contracts um so that's a new emerging use case as well and i'm really excited to see that evolve okay very very interesting so basically a lot of use cases you know when people say that bitcoin isn't scalable etc yeah hugo protocol actually kind of allows people to build use cases to to build projects that can actually um have a higher throughput so it's uh it's very interesting interesting thank you very much and congratulations um so you seem to be a very early uh a kind of a veteran of the space so that you got that you got there pretty early can you tell us a bit you know kind of what got you into bitcoin and what it means to you yeah so i actually got involved and

interested in bitcoin more from the technical side um i was never like a finance person and that i'm actually it's been really interesting to learn a lot more about that world and about that space because i feel like i'm like the tech geek that's coming in and saying you know here's here's what the internet is but you know i'm yeah so i'm i from my standpoint it was much more about open source technology and decentralization and having been interested in areas like encryption my background is at the intersection of non-technology but for example i actually taught at universities at um yale and stanford and i first found out about bitcoin because the ta of the course i was teaching sent an article in 2010 about bitcoin and my initial reaction was oh this is open source money

and okay it's using encryption and so for me um i actually got interested in it from you know there's a privacy element as well this is part of it from the cyberpunk standpoint but really from the open source technology side of things and also the dangers that come with centralization um in the classes that i taught we would uh discuss the dangers of okay what if you have one platform or one entity that controls say all of user data what if they go out of business what if a government compels them to do a variety of things like there are all those dangers there so clearly bitcoin encapsulates that um quite well so i mean it's it's really been amazing to see the technology and the community evolve and in fact um years ago and and we actually at lightning labs um

announced our series a fundraise um in february this year and i there was a blog post i wrote about it and i noted that um in 2014 i wrote you know bitcoin uh is like the http but nobody's really built the worldwide web yet of you know bitcoin and i think that's what we're doing with lightning we're building kind of the easy way for developers to build on top of it and for you to really have the internet of money oh yeah excellent excellent i think yeah your company has been hugely successful and i hope that it continues like this for you can you can you tell us a bit so how did the previous housing and this helping

how does that affect your company how does that affect the lightning labs well yeah so i know nelson talks about her uh conference room party at the last having but actually last time i was uh bitco um you know the prominent company in our space uh through a having party with and there were actually a lot of bitcoin devs i've always been very involved in the technical community uh there so we were uh having fun outside and had a really cool courtyard but that was really in the early days in terms of lightning development and protocol development at that point um you know there really there hadn't been any releases yet there was a bit of code out there but it wasn't a full-fledged release um so actually it's interesting because

the having kind of coincided with at the last having lightning development was really in its embassy you know building up protocols takes time um and there are only a small number of devs working on it and and we've seen just the evolution and of the community to you know many thousands of devs like all these startups building on it all these people contributing to the code base a variety of implementations so it's been really cool to see what's happened between the last having and this having um i would say that this current having i think it's been fascinating to see that happen with the you know very unfortunate global pandemic and situation and then also the economic climate obviously the money

printer going bur but you know the international implications of what's going on from a macroeconomic standpoint and to me i think there's a really interesting timing right now where we have you know the and the large hedge fund folks getting interested but i think we're also seeing a lot of international attention um to bitcoin especially as uh a variety of currencies face issues need to be the us dollar um in that are weakening so to me i i see bitcoin as playing a major role and as lightning increasing the usability for this so i know pascal mentioned you know we're seeing a lot of retail interest i know there are a lot of say uh boomers getting interested in bitcoin and you know reading up on everything that's

going on in the macro planet so to me i see lightning is really making bitcoin more reusable and playing a substantial role coming out of this cabin all right interesting so you talked about the previous halving this halving um so do you have kind of uh an idea of what the future is going to look like how do you think what are we going to be talking about at the next hobby yeah i mean it's like right now in the world there's so much uncertainty but if there's something that's certain that on average bitcoin will you know there will be a black mind every 10 minutes right so to me bitcoin is is kind of this rock of certainty in a world of uncertainty right

so you know i don't i'm not like the type to make like you know price predictions your milk melt them can do that and you'll probably be quite accurate um but i i see that so a lot of people have said like with you know the pandemic and the macro situation we've seen like weeks um sorry years of change happening or even a decade and weeks and to me i'm thinking well if it was possible in weeks and it's really weeks of change right um but i see this really big opportunity for bitcoin right now and i do think uh we'll see acceleration of growth and adoption because uh there's the global climate demanded and you know there's just going to be more demand and more people out there um

also you know i know you were asking around where people will be for the next halving uh very hard to say but i really hope that there's a dance party with nelson in person in four years so i'm excited for that aim elizabeth same exactly you know me we can be outside and who knows good music hopefully well thank you very much elizabeth i really like your quote that bitcoin is the rock of certainty in the world of uncertainty i i think this is really a tweetable right there thank you for joining us today and guys if you have questions for elizabeth you can post them in the q a and we will cover them later emmy back to you

thanks emily thanks elizabeth that was so good so energetic i loved it with that we go to our fifth fire side and we will look closer at um at the halving from the research angle with gary kiliman hi garrick how are you i'm doing well how are you amy i'm good so good to see you so just let me let me give you this a short intro about garrick he has been researching bitcoin since 2011 and then he went on working for coindesk and then later he researched um cryptocurrencies at cambridge and he has been

with blockchain.com since 2017 or 18 i believe and um gary it's so nice to have you is there something i should add oh yeah the first question is to tell a bit more about yourself and also tell us how blockchain has been adapting to the to the market needs i've seen blockchain has been around since 2011 if i'm not mistaken and from a web wallet it grew into becoming a lending company and so many other products you have it's just fascinating how how you're at the forefront of all the the companies uh out there thank you for that very kind

introduction and it's a real pleasure to be here um i'm pretty boring so i i would rather talk about the company and and then myself but uh yes the company has been here since 2011 i joined two years ago in 2018 uh came over from the university of cambridge where i i started uh at the judge business school the blockchain cryptocurrency research program um and you know blockchain got info originally now blockchain.com as we're known uh has been a really important resource for researchers like myself from the early days who were trying to you know get a hold of data on you know how big is this network and how is it growing and what are the

key metrics so we can understand the health of bitcoin and the crypto asset ecosystem and so uh you know it's been great for me as a research to join a very data driven data first company that has grown into a major wallet platform uh has an exchange now uh lending desks uh and all sorts of other nice things uh to come that we'll be talking more about i believe next week uh with some announcements um so uh yeah and you know hash rate was a term that uh i just learned that we coined back in 2011. we created a very widely used hatch rate chart to help track the effects of things like the having

uh on the you know you know the you know the security of the network is driven by the computing infrastructure of course uh in power and um i'm looking at our hash rate chart here now it's showing about a 30 drop uh in computing power since the having i think it's really important for people who uh are new to bitcoin um to not necessarily freak out by by that number because it's just an estimate first of all uh it's impossible to know the actual hash rate uh we just estimated uh using a formula but we really don't know with you know 100 precision uh the the um you know the amount of computing

power actually being applied to secure the bitcoin network so this is an estimate but it does show as not you know not unexpected a decline um you know with the reward being cut in half um from earlier this week what what are the major differences when you look at all the metrics between the first two halvings and this one when we talked you mentioned um the pantera slide um i don't know if you want to show that now and also i would love to know that um that what do you think like it isn't it weird that some people call the halloween halving and there's some husbanding and if we really want to bring clarity

um in in in the space then why do we have two names for for this event i i'm so glad you reminded me of that that that topic because uh you know i think it just is really illustrative of how early days it is in in the crypto asset space yes bitcoin's been around for over a decade yes you know a lot of people have been working on this now for for a decade almost um but yeah we can't even agree on the same you know taxonomy the same language to describe this super bowl as we americans call the the having uh of crypto this is the the big big enchilada you know every four years we have this

you know kind of celebration and and um this amazing kind of you know predictable uh anti-climatic in some ways but incredibly important event and we have two different words to describe it um that means you know people doing you know research on google trends are getting an incomplete picture of how much interest there is uh you know in in in this in this event um so so uh you know i think we ran a poll i think blockchain uh social media team ran a poll this week asking if there was a preference for one of these two terms i think for the next having i hope we pick one term to describe uh this event so we can uh we can all get

alignment uh around it um but i think it's it's also just i think an important point about education and how uh much we still um you know need to do in terms of introducing people to to bitcoin and cryptocurrency and educating them on what what it is what things like the having is you know some 85 percent of americans of canadians australians based on survey data have heard of bitcoin have heard of cryptocurrency but i i suspect that a much much smaller percentage actually understand things like the having uh or or a lot of the other details around around this space thank you so much um so what do you think that

that overseeing research in and you have been analyzing the years and months leaving up to the halving we talked about this that there are certain similar uh trends and and also the stock to flow like based on stock to flow pantera's partner said last year that he believes that bitcoin could be worse 115k in 2021. do you have any feedback on this yeah no i i expect the journalist to always put me on the spot for price uh predictions but like uh like elizabeth i

i i i'm a little more cautious around um you know making any forecasts i i think you know you know all other things being equal if we see it you know you know sustainable amount of demand uh for for bitcoin and you have a declining rate of new supply coming to market that should be certainly bullish you know but it's no guarantee you know we don't know just come back to the hash rate we don't know what the optimal amount of security is needed for bitcoin you know what we know is it hasn't been you know successfully attacked uh you know

kind of the network level in over 11 years so we've had enough security but you'll only know probably if you uh if you don't have enough security um you know after after the fact um and so you know a lot of the focus is on price price is very exciting uh it's an exciting time with regards to price i'd love to talk more about some of the positive things that have happened um you know jp morgan some very important news this week obviously our paul tudor jones uh you know other other things that are happening on both the regulatory side and also the market investors side are very exciting but all of that price uh you know you know action kind of sits atop security

if we don't have a secure network we would not be talking about price we'd be not we wouldn't be talking about bitcoin and and there are open questions as we go way out in the future that uh people in the research space you know in the computer science base economics arena lots of different disciplines are looking into the future and wondering about bitcoin security 10 20 30 years down the road it is an open question about how much hash rate you know bitcoin really needs to remain secure and how that hash rate is going to be paid for um you know through fees through uh subsidies through you know other things uh it's a really really interesting topic but there are just i think i've now twice

dodged your question about what's different about the market uh from prior happenings so i do want to i do want to briefly at least touch on that um and our friends at crypto compare and other other places have done a nice job um you can look at our our main monthly outlook we just published um on blockchain.com blog where we kind of go through what's different about the 2020 having from from prior prior years um you know derivatives are a much bigger part of the market um you know the ability to to speculate um on price declines is much easier than it was in 2016 and 2012. uh i like to describe the kind of investment landscape back then as a bit lopsided it was very tilted

towards going long there just weren't many ways to to go short uh there are now some very easy ways to go short and borrow a lot of bitcoin through lending desks like the blockchain.com one to you know put a short bet on so that's a big huge difference miners are becoming a relatively smaller and spar smaller uh uh kind of part of the trading and investment landscape as their share of coins you know gets cut uh with each of these havings um you know we've got you know you know some real interesting investors coming to the table renaissance paul tudor jones others some of these folks may um you know renaissance might be a good example here uh you know the most successful hedge

fund arguably in history you know they may not care about whether or not bitcoin's price goes up you know or down they're just in it for the money you know it's not totally clear um you know that they're they're here for the tech uh so so that's uh that's another i think angle whereas a lot of the early participants in the bitcoin ecosystem who owned a lot of coins were were you know here for the tech are here for political reasons or censorship resistance or really believed in much more than just price go up right so that's a huge huge difference absolutely and how do you see now i'm going to to make a sharp shift here and uh and ask you

how how do you see the development of web wallets because you guys were one of the first web wallets in one of the most popular software wallets how do you see the development um when we compare web wallets to hardware wallets or how how do you still think that software words and hardware wallets will play an important role side by side yeah it's a great great question um and probably one that our product team uh you know would be probably better positioned to to comment on than myself i certainly just to talk about web wallets i'm a big believer in the importance of the web

wallet our company is uh you know some companies have come out recently with an app only uh wallet uh model and you know when you go down that path um of not giving people a web option i think you are really potentially you know uh putting yourself uh you know in in a in a position where you're giving users a lot less flexibility to access your product under a variety of scenarios so for example you know the blockchain.com wallet is not available in chinese app stores but you know the web interface if you you know how to

navigate you know with a vpn and whatnot is something that can be accessed in markets where apps are cut off so we're a big believer in the importance of uh maintaining a really good web wallet um and and provide we think that's the the most open way to provide access to the blockchain.com wallet uh and it's something that i hope more and more wallet companies continue to to um prioritize even with the rise of mobile and and you know the the you know continued popularity of apps and using crypto on mobile devices thanks for the very elegant response we didn't have pascal on any local hardware uh wallet uh part

if you could pick just one event uh since 2019 up until today 2009 up until today what what would that be what um surprised you or what what um was a highlight to you garrick um good good question surprise or highlight um boy what what's been the the biggest uh biggest highlight um boy that's you know that's a tough one um that is a really really tough question i mean you know it's it's funny you know i i don't know that we'll know the answer to

these kinds of questions uh you know until we're 10 20 years down the road to be honest um some things that may have happened already uh we may be discounting their importance um we may look back and say whoa that was a real inflection point that was a real turning point i think it's safe enough to say now that in terms of kind of legitimization um and kind of really clearing an important regulatory hurdle um the chicago's futures markets in december 2017 were were pretty a pretty big deal um i feel pretty comfortable saying that uh at this point i think you know the fact that you know that's the way that

paul tudor jones is choosing to to go along bitcoin uh is a real validation of that um and and uh you know i i i i you know i think regulation is something that we have to continue to kind of think carefully about uh in this space and how we um you know bring regulators and kind of policymakers along uh with with cryptocurrency um i i worry a little bit about excessive exuberance um you know spent a lot of time around regulators they worry about this too they worry about you know the little guy getting getting hurt um rightfully so that happens um and i do worry about

the risk of another big you know albeit very exciting kind of bubble um leading to a big speculative crash and and you know a regulatory crackdown i think it is a risk factor um and so i i often tell people i get a lot more nervous when i see the price going up rapidly and on days where it drops 50 having seen a few of those gotten kind of used to a 50 drop hey you know but but it actually makes me a little more uncomfortable um when the price starts uh kind of moving up too quickly maybe um which is i think interesting thanks so much gary the the closing question where will you be in 2024

um you know i uh i've i've gotten interested in a lot of things throughout my life um i've been researching crypto since as you mentioned 2011 and uh i'm i'm just as excited about researching it as i uh you know today as i was when i first discovered bitcoin which i think is you know unbelievable um that it's that fascinating it's uh the only thing that's kept my my interest from research perspective for that long um so i expect to be still kind of you know researching it and exploring where it can all go um you know four years now fabulous thank you so much that's a beautiful

closing and uh putting my hands together and with that we transition back to emily for one question and then to the breakout rooms all right one question that okay so uh we have received a question from uh ahmed tarek um so aaron if that's okay with you uh we are going to allow you to uh unmute the microphone and then you can ask your question yourself so your question was for alejandro de la torre uh ahmed are you there can you is your microphone on yes perfect how's it going hello hello

where are you calling in from i'm in london right now all right amazing thank you very much thank you uh i just had a question alejandro um what's what's the impact of of the um volatility in bitcoin prices um on on the appreciation does it does it hurt does it help bitcoin going forward but personally i cannot hear you is still connected he is now he's unmuted himself hola alejandro

raleigh is is his mic um enabled thanks for bearing with us guys [Music] hello hello hello hello perfect with you hey guys hey did you hear the question alejandro well i think or might have some

connection issues hello hello hello hello hello oh sorry yeah sorry about that guys i don't know what's going on sorry well uh yeah the question was about uh the hashtag volatility and if it affects the price correct bitcoin price volatility and its impact on price appreciation does it hurt or does it help well you know at the end of the day i'm uh i'm i'm part of the mining side of this of things and um what i can say is that the price does indeed uh give uh uh miners uh you know like the impromptu to start mining it is

definitely a very strong reason why most miners get into the industry or why most people get into becoming miners um so that's that's uh that's that's that's what i can say you know i'm just a minor um do we emmy do we have time for another question we have three more questions do we have time for them and then one more and then let's transition so we still have 15 minutes in the networking rooms okay all right all right um so then uh okay that's what i have to choose which question is their best um okay so i'm gonna take a bit of a controversial question but i think it's a question that it's on

in a lot of mind so sean murphy asked to alessandro alejandro what is the annual carbon footprint of your mining activity how much of coolant's hash rate is linked to fossil fuel fire stations what is cooling doing to offset its carbon footprint i'm sorry for the for the controversial question but i think you know a lot of people are wondering the same thing so maybe anything wrong with you i get this question every single uh uh basically every single day uh well look a lot of the mining as as i showed earlier in my presentation is taking place

in china and um exactly where in china is in the sichuan region uh at least most of the year and that region is 100 hydroelectric so if you if you if you then take uh if you look at the numbers or the average or excuse me the percentage that is mining in china is around 65 percent and if most of that is in the sichuan region if not all i think uh uh then you you can come to the conclusion that 65 of at least 65 of the of the mining is hydroelectric now if now let's let me let me add a little bit to that to that answer um a lot of miners are also based in iceland which is geothermal

a lot of miners based in norway sweden which are hydro and canada northern united states are also hydro so i'd say that i'd say that around 70 75 of the electricity used for for bitcoin mining is of a green source so already this whole notion that it's uh very bad for the environment is is uh is incorrect because a lot of this uh the reason why miners are in these regions uh is because there's a surplus of energy used by these uh green or hydroelectric power plants geothermal so miners connect to them at a cheap price um i think i i suspect i suspect the future is going to be the

same this trend is going to continue all right thank you very much just very quickly before we move on to the networking maltem can you can you connect again you posted a very interesting comments maybe you'd like to just say this out loud so the the our audience can hear it uh sure yeah so um we do a lot of research on um the state of the bitcoin network uh at coin shares partially because we want to understand the um capex and opex that goes into producing bitcoin so that we can do both a supply and demand driven model but also a cost production driven uh pricing model for bitcoin so uh we have done this research now um four times in a row we're about to

publish our newest report i linked it in the chat but um according to our research which is very consistent with what alejandro expressed um as of last december 75 of all bitcoin mining was done with renewable energy that would otherwise not be utilized and a big topic i've been writing about and speaking about is um the ability for uh places where there is power generation that can't be brought to market um at a at an economic sort of way a lot of people are using bitcoin mining but also data centers uh gpu processing capabilities for rendering protein folding and other compute intensive sort of processes uh using this trapped energy as a way to

convert energy into monetary value in a way bitcoin is actually a money battery um which is pretty cool and as a result many countries and regions that are energy rich but uh not necessarily you know able to monetize that energy for example morocco um kyrgyzstan azerbaijan are looking at bitcoin mining as a way to convert natural resources and natural sources of power into monetary value so in a way there's a really dorky phrase i like to use like bitcoin is a continuation of the laws of thermodynamics which state that energy can neither be created nor destroyed and so by converting uh energy into money which is another form of energy

effectively we're just continuing that cycle so very very interesting and also you know the point that you were making that you know some sources of energy wouldn't be used so maybe you know with a lot of people needing this energy increasing the demand might make these technologies more efficient actually so um you know maybe in one sense bitcoin can be environmentally friendly to make us develop more clean energies well i mean look we're rapidly approaching a state where uh compute is becoming cheaper data storage is almost effectively free at this point and pretty soon in our lifetimes you know i think of you know one terabyte hard drive used to cost a thousand dollars then it cost a hundred dollars now it costs ten dollars in the near future terabyte of data

storage will cost next to nothing so as we look at the declining cost economics around both compute and connectivity which are big drivers um i think the next thing we need to think about is the power that goes goes into it and ultimately you know um we we are looking at at different sort of transitions in terms of how energy intensive human activity is as things become increasingly virtualized you know you need increasingly more compute and so i think um there is this natural tipping point where you have to find different ways of using different low-cost um efficient sources of energy so i think in a way actually bitcoin might accelerate the growth of alternative fuel sources but also potentially accelerate the use

of nuclear sources of energy so it's pretty interesting thank you so much melton so guys she posted the link to to their research in the chat so don't hesitate to go there now we are i'm sorry for the delay i'm sorry for for launching the conversation but now uh you can go to the networking rooms so you have received the links via email and also here in the q a so um there are different networking rooms that you can choose to join there is a room for the crypto valley association there is a room for pulling with alejandro who's going to be there there is a room for a ledger one adjustment here to make uh the

ledger uh questions will be answered in the coin chairs room as well so we we will join uh these uh two for the 15 minutes we have okay okay so everyone who wanted to go in the living room going to coin chairs room um where melton and all the ledger questions are going to be answered there is the blockchain.com room and the signum room also the wine and beer and the vegan room so you have the links in the q a you have also received them by email so please um go in the other rooms and and i will see you afterwards at the party um so when is the party gonna start still at the same time at 9 00 pm

or is it gonna be a bit delayed at 905 we start with tatiana all right so 905 we can go on which link have they received it by email or is it the same link now ah perfect it's been posted in the q a so you have the link you can join at 905 and now we can go off to networking bye everyone thank you so much thank you guys bye everybody bye bye