The rise of Bitcoin treasury companies

Transcript

GM. Good morning. Welcome to the Milk Road Show, the daily crypto show for investors who check their portfolio more than you check your tax. I'm your host, Jay Hamilton. We're recording this live on Thursday, June 5th, but you might be watching this on Friday, June 6th, wherever you are, whatever day it is. We're so happy that you're here to join us today because we're talking about the biggest bubble in crypto that people are starting to talk about, but not really talking about enough. We're going to dive into the IPU, IPO boom that's coming. We're going to talk about politics and US regulation. Bitcoin Vegas. We're going to takes get some takeaways from that. To talk through all this, we're joined by Pete Rizzo, known on X as the Bitcoin historian. He's also the host of a fellow podcast, Supply

Shock. You guys should check it out. Awesome podcast. We'll link to it in the show notes. And he's really just an OG in the space who knows so much about Bitcoin and crypto and understands it quite frankly, the way few people understand this tech. and also understand the financial market side of this tech. Now, before we jump in, I got to let you guys know about a pro report that is dropping this Saturday. You if you're not a pro member, just check it out. Read the first section. The first section is free and then you can decide if you want to go pro. It's our monthly market post check where we take a look at what we think is going to come in the crypto markets for the month ahead for June. And it's absolute fire. I just read it. You got to check it out. Uh

before we jump in here from Rizzo, today's episode is brought to you by Letin get cash without selling your Bitcoin. It's also brought to you by Definitive, the leading multi-chain trading terminal trusted by funds, Dows, and Protraders. Without further ado, Pete Rizzo, welcome to the Melk Road Show. Happy to be here, Jay. Pleasure to have you, my man. Pleasure. You got a great great setup. I love the the way you're sitting is so casual and just like a historian. You really live this Bitcoin historian like darkly dimly lit settings, you know. It's very nice. It's very nice. Okay. You and I were you and I were chatting before recording. Um that you have a a thesis on how you think the next we actually didn't set a

time frame. I don't know if it's the rest of this year or if it's the next few years. How you think this how you think all this could play out, which I realize is a very broad question to start an interview with. Uh so um give us give us a with that try to give us a walk through of where you think we are now and the trajectory that we're going on and you can focus on Bitcoin specifically to give you some parameters for this. Yeah, sure. So brief introduction, Pete Rizzo, you know, go by the Bitcoin historian. I've been a Bitcoin and cryptocurrency journalist uh since 2013. So this is going on my, you know, fourth or fifth Bitcoin bubble cycle. Uh so yeah, the good news we're still in a bull market, right? uh no matter how boring it might be on the

day-to-day, right? This this this happens. This is this is normal. But yeah, I think to your point, you know, I think what you're seeing is is that there are kind of larger macro factors at play in this in this Bitcoin and crypto bull cycle that are much different than we've seen before, right? Like earlier in Bitcoin's history, uh you know, the uh you know, it was a more small insular community. We weren't really affected by regulation. We weren't really affected kind of by these these larger things. You know, sometimes there was technical kind of innovations that propelled the industry forward. I think at this point it's basically all about the regulation. I I would be hardressed to find that we're going to set a new all-time high prior to the market structure bill being passed in August. So if you're looking for kind of a a prediction one, you know, I think

that, you know, we're locked in a pretty solid range, you know, selling may go away. I think that's going to ring true. Don't think we're going to see a lot of activities until then. Um except in a couple places. One is in the IPO boom circle obviously going IPO today. Uh pretty huge over overperforming kind of up two or 3x. Uh yeah, it's a 3x right now since Yeah. And like Circle, you know, not even a not to be honest and in my opinion, like not I I don't know. I wouldn't invest in Circle, right? Like not a company that I'm super excited about uh from a tech standpoint. Uh but I think you're going to see every uh crypto and Bitcoin company go public, right? So I think this is just the start of the wave. The wave is going to be big. You know, stable coin issue in

America. Probably not my my my favorite pick, but you know, again, you're going to see winners of everybody's going to win, right? Everybody's going to go public. Everybody's going to win. Uh it's going to be an exciting time. And the second one is the Bitcoin treasury companies, right, which we talked a little bit about. And uh yeah, my thesis is really I think this is the one that the crypto industry is broadly just sleeping on pretty profoundly, right? Um so one of the things that you see in in Bitcoin and crypto over time is that you know sometimes there's these big mental model se changes, right? Where something comes out and nobody thinks anything of it uh and then it just gets super big, right? So stable coins would actually be a great example of that. When I wrote my first article on stable coins in 2014, I

actually wrote the first story in Coindesk uh about Tether uh which was then kind of owned and operated by a whole different group of of people in including the founder Reeve Collins and the principal investor Brock Pierce. And broadly everybody in the crypto industry thought this was very uninteresting like no one was interested in stable coins at all. You know the kind of cries of derision were sort of you know we're doing all this innovative stuff. you know, Bitcoin at that time, you know, as fashionable considered Bitcoin more boring and, you know, there was a feeling in the industry were moving past that and so stable coins were just looked at as this, you know, weird kind of redheaded stepchild of the industry that just like nobody thought was interesting, right? And I think, you know, you you look at the history of Bitcoin and you see a lot of these ideas

that are sort of just like unilaterally dismissed. You see a lot of a lot of ideas that are kind of just embraced, you know, by the monoculture of whatever kind of crypto group and those tend to be broadly oversold. And what's interesting is you can kind of go back and you look at the real sleepers. The real sleepers seem to be the ones like everybody hates on, right? It was very fashionable hate on stable coins just like it was fashionable to hate on NFTTS just like it was fashionable hate on Bitcoin treasury companies and and you really look at it right you think of how long has Sailor been doing the strategy. Sailor's been on his own going in his own direction acquiring 600,000 Bitcoin asterric almost there including his personal holdings he's over 600,000 for five years and no nobody has followed him in this direction. I think you're

about to see a stampede uh in that direction precisely for that reason, right? Nobody thought it was interesting for a public uh company to buy and hold Bitcoin. Uh and now there's this whole kind of movement and you know, I was saying it on the live stream at Bitcoin Vegas. You know, it's Sailor Mania. Like when Sailor goes someplace, you know, he's flocked by this, you know, chorus of kind of Wall Street veterans, young kids. I mean, he really has become, you know, the Sailor Mania is a reference to kind of Beetle Mania. I mean, he he's the rock star in finance. And so what do Bitcoin treasury companies offer? Uh, you know, one, uh, they're essentially opening up Bitcoin exposure to older investors, right? Because essentially you're, you know, I kind of wrote in Bitcoin magazine at the end of last year when I it really kind of clicked for me

what Sailor's thesis was in terms of getting companies to hold Bitcoin, which was essentially that, you know, what do people like about the cryptocurrency market beyond Bitcoin? You know, they there's a lot of talk about that we like the technology and you like the features and sure there's some hardcore folks who are really in it for that. Uh but I would say a good 80 to 90% of trading in the cryptocurrency markets is just speculation on random tickers and you know symbols that people like. And so what does the Bitcoin treasury uh model unlock? Well, you know, you have boomer ICOs. You know, essentially instead of a three-letter ticker, you have a four-letter ticker. And instead of an unregulated marketplace, now you're in a regulated marketplace. So if you think about an environment where market structure is really protracted, that doesn't pass for three or four months,

doesn't pass for six months. you know where is capital flow in the industry that's regulated where these regulated companies that are buying and holding Bitcoin allow Micro Strategy start to look really attractive and that's why you're seeing people go jurisdiction by jurisdiction and the arbitrage there is really on the regulation right uh it was really the second and third wave copycats you know that have really proven this model out which is MetaPlanet in Japan the blockchain group and France which were both the best performing stocks of like the last year you know up by thousands and thousands of percent right so I think you're going to see just a a massive you know upswing and that and that and capital deployed there just in every regional globe and what does that look like? I really think this is a coin market cap type moment and for people who don't have the

historical context. Yeah. Yeah. I was going to dive in and say, you know, quickly like Coinbar cap really, you know, was an overnight success in the crypto industry, right? So from 2013 to 2016, the focus even in Silicon Valley was Bitcoin, right? And it was popular from even like your bologages, your marks, it was, you know, Bitcoin has the network effect. Bitcoin is going to win. And then all of a sudden in 2017, Ethereum takes off, really runs away, and it became everything's out replacing of Bitcoin. Bitcoin's old tech. Uh and the big winner in that transition on the data side was coin market cap. Um you know which was the only company that really listed just the pricing data of the longtail of coins, right? So most of the other crypto media websites, you

know, they would just have the price of Bitcoin. Coin market cap, you know, included back then it was coins like one through 100 and by the end of the year it was one through a thousand. I think you're going to see that type of stap increase. You're going to see thousands and thousands of Bitcoin treasury companies. You think we're gonna see thousands? Wow. Yeah. Wow. Okay. You're already seeing it right now. I think there are multiple in different jurisdictions that are coming out. I think in the last week you've seen three or four that are going to launch in Sweden. You know, these are competitive. If that happens juris jurisdiction by jurisdiction, yeah, I think it's going to be big, right? And and what does it look like? It looks like the website that you visited every day, Bitcoin treasuries, and you you kind of think is

interesting becomes kind of a new mimemetic. Look, that's that's possibility, right? And I would say that's what I watched happen with Coin Market Cap, right? I also looked at coin mark every day for you know maybe checking the price of the third or fourth biggest coin but it never really occurred to me that this was something to take seriously until it's like the longtail becomes valuable and that's when market cap became a you know half a billion dollar business and you know still the number one you know crypto media site so uh yeah very bullish on Bitcoin treasuries don't think the model is gonna you know it's not like a this is the end all beall what the crypto movement is aspiring to but it's going to be big Right. Mhm. What's What's everyone missing about this? So, everybody's missing. I I don't The

number I think everyone's missing. I think people are expecting in the doz in the dozens, but not in the thousands. What else is everybody missing? What do you think? Because I feel like you have a thesis here that I think you're into something that people aren't paying attention to. And I want Well, if you think about it like this, right, nobody who I like to say I've never met somebody who was happy that they sold their Bitcoin, right? And um there's something really basic about just like a company owning Bitcoin in the same way that individuals do. Um and so the the classic critique of these Bitcoin treasury companies is oh well they're not very good companies and they're they're not very you maybe they're not the best cream of the crop. And I would say uh you know I watched a lot of people in 2013 2014 get insanely rich uh

you know who necessarily didn't really provide that much of value to the cryptocurrency sector right they they maybe were founders of projects that you know failed or didn't provide something of value like you would probably have never heard of them but they're multi-millionaires they live in you know Puerto Rico they're fabulously wealthy and you know they provided to the space uh in terms of um you know just uh helping the the space go through ideas and disproving those ideas but you know we're very disproportionately rewarded, right? So, I think that um yeah, you're just going to see a big capital unlock. There's just no regulatory barrier to large investors allocating, right? In the same way that there's not for Micro Strategy today. Like there isn't that's why, you know, you see like the central banks of Switzerland like owns exposure to master, right? Or the central bank of

Saudi Arabia owns exposure to MSTR. So, uh the reason for that is is regulatory, right? uh because you don't have things like the market structure bill in place in the United States and it's not in place globally uh that means that you know capital allocators aren't able to play in the crypto market. I mean, you can you can ask then like, you know, would they actually want to do that? And sure, maybe your viewers would would would take that position. But let's just take the position that like until that bill passes, they can't. And so, where does that capital flow? I think the Bitcoin treasury companies start to look really appealing, especially when you look at the track record of all the companies and just how well their stock has performed. And again, if you look at the attributes of these stocks kind of generally, I would argue that they offer

the retail public an experience that looks very similar to being on a coin market cap, being on a moonshot, you know, in terms of offering, you know, people who want to speculate, it replicates a lot of the basic components of that, right? So, you know, somebody who's sitting on moonshot and they're deciding whether they're going to buy, you know, Fartcoin or Poopcoin, you know, I don't think is really, you know, providing that much of the space, but like, you know, they're they're they're doing what they want with their money, you know, this is this is a freedom movement. Do you think it's the same is it the same person that's that's going to like where I see you going with this is a a thesis that is very interesting, which is is do we get an altcoin season,

right? or does all the capital flow? Yeah, I think I, you know, I've been broadly pretty bearish on the alternative cryptocurrency space for a long time. You know, I I was debt neutral on it, I would say, up until 2017. Um, you know, maybe the folks in that movement would say I was pretty supportive. Um, you know, I did lead the conversation at CoinDesk to uh have the publication start covering Ethereum. I was the largest larger proponent of that and did have that come to pass. Uh, so, you know, I broadly I think at that point thought, you know, experimentation was good. always good to see a lot of projects. Um, I'd say I'm pretty dissatisfied with kind of the net result of that. Obviously, you know, the market's still still out on that and there's plenty of people with alternative thesises on that. But yeah,

I I would say that, you know, broadly I had a long conversation on the podcast with Ryan Sulkus recently. You know, he was my boss at Coindesk who and I was part of a lot of conversations early on where he went to found Misari. Msari was kind of founded with a lot of these good intentions, right? It was this idea that there were going to be all these different types of monies on the internet. they were going to compete on features. So, we needed all this categorization. We needed all this technology to kind of evaluate them. And yeah, I think that was well-intentioned and it was a it was a good faith attempt. I don't begrudge the attempt. Uh so I'm not one of those kind of Bitcoin maximists who's, you know, kind of thinks there's an ethical complaint with that. I'm just saying, you know,

after 10 years of data, it's, you know, how far have we gotten against that goal? I would say probably not that far, right? a lot of these categorizations of cryptocurrencies haven't really held up to me. There doesn't seem like a terribly large distinguishing factor. Like, you know, if I asked you to name three large classes of cryptocurrencies, right? Is that something that like most people in the space have an answer to? And I I don't think I don't think that's true, right? So, I think um you know, the net result looks like the primary uh way that the crypto market is succeeding and I think this is validated by the memecoin uh uh craze is that it's speculation, right? Like that's what people want. They can the crypto market for speculation. It's fun. It's the casino. The crypto market has sort of

leaned into this. Uh and I think, you know, with memecoins, unfortunately, like the cat's out of the bag, right? Like people know the game now. Uh retail knows the game. They know you have to be an insider. They know you have to dump on somebody else. And they're watching James Win get liquidated, uh, you know, and pumping his moon pig bags. Like that that's what the crypto space is, right? I think Dave Porto hit the nail on the head where he said, you know, I'm a long-term hodler of uh what was the name of that coin uh that he did. Uh I can't remember. I can't remember. Yeah. So, he said, I'm a long-term hodler of jail stool. Jail sto, you know, he's like, I held it for 48 hours. He's I held it for a couple days. Right. Like that's that's what the altcoin market is. And I think

that if you think about what Bitcoin treasury companies provide, it's like you the market starts to look a lot like that. Buts, and here's the butt, right? Uh, as I said about, you know, some of the investors in the space, everybody who I've known who's held Bitcoin has done well financially. And so, from that simple insight, why wouldn't that apply to companies as well, right? So, if every company that holds Bitcoin, you would expect them to do as well as Bitcoin, then you don't have to be the best company. You don't have to be the smartest person. You just have to own some Bitcoin, right? And I think that's a really powerful idea that companies can get ahead in the same way that individuals can. I think Sailor uses a lot of like highulutin language to kind of get his points across, but I think

this one is actually really profound. It's just that, you know, I you as an individual can benefit from Bitcoin as a hedge against inflation and to kind of grow your own, you know, wealth. Uh, and companies can do that and it it it protect Yeah. And it protects the, you know, bad companies as well as great companies, right? In mass in Micro Strategy's case, right? Maybe they're a great company and Bitcoin is helping them out. But you might get companies like uh a great example would be Tahinis in Canada, right? People might not remember them from the 2021 cycle, but they were a small falafel chain in Canada that put Bitcoin on the balance sheet has since expanded to 10 or 15 locations. And you know, are they McDonald's? No. But Bitcoin has, you know, dramatically helped their business

and helped them expand whereas their competitors, you know, weren't able to, right? So that's a, you know, sometimes you, this goes back to the original theme where I started. You know, I think a lot of times in the crypto market, you go back to the early ideas like stable coins weren't taken seriously. NFTs weren't taken seriously. Bitcoin treasury companies are one of those ideas that's going from being an also ran something that no one took seriously and that's why I think it's going to be so big because I I think that there's so many advantages to that market right now. In traditional finance, whales use the Bloomberg terminal. In crypto, they use Definitive, the trading terminal built by Coinbase alumni, which lets you trade across every major chain out there.

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They've issued over 9 billion in loans and never lost a single Satoshi of client funds, even during the chaos of 2022. If you're a long-term hodler, this is the move. Get liquidity without selling at milkroad.comletin spelled ldn and and I think that you directionally you're correct for sure right like is there thousands of companies you know you don't know I don't know but like directionally you are for sure correct this is this is the topic of the week the topic of the month everybody's talking about it and it is going to bring new flows in newest jurisdictions that quite frankly don't

have access to Bitcoin or don't have the exposure and there's a lot of people waiting on the sidelines and all that and I think we all go ahead one note on that I would say like a lot of people are really underestimating to like how little access there is so that's what Japan with MetaPlanet really proved right so in in with Metanet in Japan it wasn't really just that the company bought Bitcoin and became a high produc performing stock it was that the currency also had a ton of challenges like the Japan currency is down uh so that and that also you if bought Bitcoin uh as and actually held it versus buying the stock, there was profound tax advantages. So basically 30% difference, right? Exactly. And so these are kind of the arbitrage opportunities that I think those companies are going to hit and

there are going to be markets, you know, maybe it's like the Middle East, you know, you look at the list of capital markets, right? So maybe it's not even just the US, but capital markets, you know, 3 through 10, you know, out in just the world's a big place, right? Australia, New Zealand, New Guinea, like all these places, right? They all have capital markets, right? And this is why I think people, you know, this is why I'm trying to kind of get out there and say like this is a big idea. I think it's going to get really big. I think this could be the cycle defining idea because it has a lot of these attributes where, you know, this could really expand. And you may b at the idea that there be thousands of them. Uh but right now there's 200 of them. So to get to a

thousand, it just has to 5x, right? There's 200 already. Wow. I did not know there wasn't that many already. It's gone up. It's gone up pretty considerably in the last two months. Um, and this is like kind of the ramping that you usually see on kind of like something that's very exponential. I'll give you an anecdotal example. There's probably like 10 companies in Japan that have followed MetaPlanet. Um, you know, everything from like an entertainment company called Beat Holdings to, you know, there's a fash mid-level kind of like fashion retailer. Um, you know, to do we do we need this many like long-term like now? Yeah, I get it. It's an opportunity. And if you're sitting there and you're watching Sailor, you're thinking, hey, why wouldn't I go do this? I could. Well, now you're asking

me if I think this idea provides anything in the space, which is a different question. So, uh, you know, the the thing here is that companies are going to own Bitcoin in the same way that individuals do. And yes, in the long term, if you believe that, you know, we're going to a world where, you know, Bitcoin is the store of value, like every company would own Bitcoin. So, that's why this idea is directionally, I think, going to get very big. Uh, sure, is it going to become super distorted and like every bubble is going to completely blow up? Sure. Right. The ICO bubble started with the best of intentions. I remember being on the call with the consensus team when they were launching the Nosis ICO in January of 2017 and they had all these legal guidelines and it was, you know, going to be very above board and, you

know, everybody was going to there was going to be no front running and no cheating and it was a very like I it's it's crazy to think that that even happened, right? Because but you know where you're like, you know, for people who remember the ICO boom, I don't know how deep your your your folks go, but you know, this is Tasos in April of 2017. you've got seven months till Justin Sun and so yeah there is there's a Justin Sun of the Bitcoin Treasury movement you know at the end of the line but you're going to rip through I think you know hundreds and hundreds of companies until then um yeah just again like think about the idea think of the qualities that it has and again it's I'm not saying that like you know this is transformative and this is the end all

beall of the Bitcoin and crypto movement I'm actually actually just putting that aside for a second um you know I think this is where a lot of the hype and euphoria is going to be and Yeah, these second and third wave companies, yeah, they're they're probably going to overdebt, overlever. I think Max Kaiser's done a great job of, you know, getting in front of this and saying, you know, not every company is going to be Micro Strategy in the same way that not every ICO is Ethereum. Uh, you know, in fact, you know, 99% of them were not. But we're headed in that direction. I I just think that the, you know, it's a message that I think the I'd like the crypto folks to hear because I think, uh, you know, it's a market within Bitcoin that has a lot of the attributes of the markets that I think the crypto

community finds interesting. Uh, and I, you know, part of the reason I'm I'm over at Blockworks kind of working on this podcast with them is that, you know, I would like, you know, the crypto, uh, folks, uh, you know, to, uh, you know, come with us on the journey towards hyper bitcoinization, right? I don't see the uh crypto world as, you know, somebody that I want to lose, right? In this transition, there's a lot of ways to kind of, you know, get Bitcoin, right? Bitcoin's uh, you know, just monetizing at a at a crazy rate, right? So, if you're in crypto and you're heavily exposed to crypto, you should probably think about getting some Bitcoin. Um, would I recommend a Bitcoin treasury company? Maybe not. But, you know, maybe that's an opportunity to get you in the door. uh you know yeah I mean we had a we had a very interesting

conversation with um like I I think that there's what's interesting about what you're saying is you're talking about like crypto natives and our listeners uh and for them I mean look everybody listening I'll say this every day if if you are an investor in crypto you are not holding Bitcoin stop what you're doing right now stop listening to this podcast and go move some of your assets into Bitcoin right like there's there is no reason right like why it shouldn't be large one Bitcoin before I just, you know, before I hear that. Exactly. Yeah. Yeah. Yeah. For sure. Fully fully buy into that, right? Um I'm going to leave the altcoin separate for a sec because otherwise you and I are going to start debating on that and I don't necessarily want to go down that path. Um everybody knows my thoughts, so I I want to more

focus on your thoughts. But but the but the interesting thing to me is, okay, so we're going to get all these new crypto or new Bitcoin treasury companies, right? And I think there's and it's important to say that there is there's different types of Bitcoin treasury companies. There is companies that have a sustainable revenue profitable and then they put Bitcoin on their balance sheet. Okay, that there's that type and then there's the Michael Sailor playbook which is we don't have another company. I mean, yeah, they have a tech company that they've basically pushed it into. I would argue that Micro Strategy fits the the first one, but I'd say like to your point like what you're about to see is like actually a very large innovation on the model, right? So what people That's

what I'm saying. And this is what you saw with going Yeah. Yeah. with 21 Jack Mer's, you know, kind of uh you know, going from Strike to 21 Capital uh and and and putting this out like his thesis is that 21 is going to be an operating company that releases Bitcoin products and then makes money on the products and invests that in Bitcoin, right? But you're going to see all stripes, right? And that that's kind of the thing here is uh Strive would be an example. Vivc Ramos Swami's uh group. They're going to go out and acquire companies that are cash flow positive. So they're raising money. They're going to buy those companies and then they're going to put the cash flows from those companies into Bitcoin, right? So that that's already three different models, right? With Micro Strategy, it's they have an incumbent business. They rolled over the

profits to that into Bitcoin. Now they're using debt and corporate market structure uh to you know superersize that. 21 wants to be an operating business uh and also you know proxy for their capital investors. And then uh you know in terms of uh you know the third model of acquiring companies, right? and you're you're just going to see every different variation of that, you know, and I think that uh that's one of the things that's going to really I think kick this uh model off. And um yeah, again, I sorry, is this the is this the bigger biggest driver of inflows that you see for for Bitcoin? I don't see anything else in the market currently and I would love to hear your counterpoint if there because I see the crypto industry beyond Bitcoin as like

particularly barereft of ideas at the moment. You know, there was always, you know, we would joke even in in Bitcoin that, you know, oh, if NFTTS fail, you still got DeFi, you know, if you still got DeFi, you've got identity. And, you know, there there always felt like this laundry list of, you know, deep pin or like other ac there felt like this long list of acronyms that like, you know, the crypto industry could kind of go to and just, you know, kind of roll out the next thing. Uh, and with memecoins, again, I I really do feel like it's a bit of an existential like end of the line. Do you don't you don't think memecoins last? See, I think memecoins last because I think people love to gamble and they love to gamble on attention and why why not be able to gamble on attention long term. I think

right now, don't get me wrong, there everything that you said earlier around the the the the bad actors and the way that it is being done is going to get washed out. But I just I think long term that I I I I think memecoins stick in a different I don't think we're gonna call them meme coins. I think it's going to be a different type of format, but speculating on attention I don't think goes anywhere because why wouldn't I think Dogecoin has lasted, right? Like so, you know, I was there for the early innings of Dogecoin and Jackson Palmer and kind of the original founding of the crew, but I think the you know, I like to say that we really we really don't know much about Bitcoin and cryptocurrencies, you know, after even after all these years, right? This is still an experiment. We're still

learning things. That's a good point. It is still an experiment, but not Bitcoin. I don't think Bitcoin's experiment. everything else. One of the things that I like to say if you if you let me set it up is that, you know, I think we know Bitcoin is different and decentralized and we know that it's money and we know that it works. That's like kind of one. And then we know that every other cryptocurrency, no matter how terrible it is, uh has some uh you know, it's useful as a you could transfer value with it. So even the worst, you could go down to the bottom page of Coin Market Cap, you could put a $100 into Fartcoin 2020 and I could send that to you wherever you are right now. So there's a so there's like a minimum viable utility to any cryptocurrency and even ask

myself as a Bitcoin maximist I will I will freely admit that this is an unsolved paradox there's a minimum value to any cryptocurrency the question is you know well what is that what is that worth right there was this idea in Silicon Valley I think early on that and this really kind of was the 2017 era thesis right is that they saw kind of networks like Facebook and Uber as sort of you know networks that were val you know given value by the participants and essentially they saw you know, cryptocurrencies as a way to distribute that value more equitably. I don't think that thesis has really played out. I don't think you can say that like cryptocurrencies are, you know, their valuations represent their network effects. I think that's a bit of an overstatement. I, you know, again, you look a lot of these coins, you know,

a huge percentage of the supply is a liquid. They're very thinly traded, but I concede that they work on some microscopic level. I, you know, I just don't think I don't know where that goes. And I think that I look at the Dave Portoi, you know, experiment. Well, I I see that as beautiful. I actually thought that was a joyous moment because I'm sort of like, okay, well, this is just obviously and pumped up. Fun as well, right? This is what the crypto system optimizes for. Like, this is, you know, when you actually turn attention into a zero- sum game uh and you actually force people, you know, because this is all about, you know, what does Bitcoin do? It allows you to kind of put your money somewhere and preserve it over time. And so if you know crypto becomes a hot potato game where you're

constantly ripping you know uh going through your capital like one of the moments where I really fell out of love with crypto was during DeFi summer you know where I went to bed and then I was like oh like I'm actually like afraid to go to bed because like I don't know what like the actual value of my portfolio is going to be in the morning and you're like how does that scale you know? It's like you're like how does that how is that a real like what's the utility here? Like and then this was so you would this is a deep cut. You remember Andre Cron like when he was like in his like sequence of like launching coins that like you know were really hot. I don't even know if he's still relevant anymore but he had a this is a developer. He had a sequence of coins

where essentially you know everybody was so high on this guy that he he eventually just like launched a GitHub page that had no coin. he went to sleep and he woke up and found that people had scraped the the code and launched it and then just deployed it without him knowing about it and then run up the price and it had already dumped and the time that like he discovered it and then so this is where I think like you know you have to think about it's like okay well cryptocurrencies like sure you could value everything in the world with a token that's technologically possible but then there there's the idea of like you living in that world and like how that would actually you know what that would actually be like and And again, like from my moment as an end user, you know, after being here for like 12

years, it's like I don't really use any crypto products outside of Bitcoin. You know, I've used stable coins for a few things. Um, you know, I've experimented with this stuff, but the idea that you like the largecale consumer public, you know, would want to live in a state where they're like constantly in fear of their their value depreciating, you know, on like a minute to to hour level. Uh, just like how could that possibly scale? And I think like Pump Fund kind of showed that that was sort of the to me it felt like the end of the line. It was sort of like okay well this is this is actually what that system uh prioritizes, you know, because when you actually do turn everything into a coin, you know, this is the whole Coinbase thing. Coin coin it. Um everything is a zero sum speculative game where you're

trying to get, you know, advantage over someone else. And the thing that's nice about Bitcoin and maybe this ties in the Treasury companies is that's pretty absent, right? Like I know that no one is going to I know that most people in Bitcoin are not going to sell their Bitcoin. Uh I know that some of these companies are going to raise a lot of Bitcoin and puke out these Bitcoin. Uh but I know that's not really going to affect me like as a as a hodler, right? Like uh and I don't have the anxiety of that. And and part of what Bitcoin, I think, is solving for is the anxiety of this over financialized system where, you know, the person who's just living their life and trying to save has to become this, you know, sophisticated technical gambler like just to pay for their house and car and things. And I

see crypto as sort of exacerbating uh the stuff. And so when I see, you know, folks like who I used to kind of be at Bitcoin meetups or Bitcoin, you know, uh, events with, like, you know, maybe like a Brian Armstrong, like talking about like hyper financialization of, you know, media and art and and things like that, you know, uh, that's not something that I'm interested in building. Um, nor do I think we'll have a Yeah, I I mean I think that like you bring up an interesting point which is a conversation that I have had a little bit recently, not a ton, uh, but which is will we ever get a a massly mass adopted crypto app? Like will we ever have a chat GPT of crypto? We used to think that, right? We used to think, yeah, we're going to come out with a

crypto app and it's going to create it's going to everybody's going to come in and use it. I don't know. I don't know if we're going to have that anymore. I do I do believe that a lot of people will use blockchain when they're doing various forms of financial transactions and they won't even know in the long term. And I do believe very much in a lot of the the ability of blockchain to bring better infrastructure to our current financial markets such as the NASDAQ, right? Great stock exchange. I'll throw you a bone here in terms of like where I think the crypto uh networks are going to be interesting with the treasury companies. And there's going to be an interesting overlap here that people haven't really noticed, I think, is that uh the tokenized stocks, right? So, you're you're looking at a

lot of the crypto exchanges are going to get into tokenized stocks, right? So, they're going to be able to take an Apple share and a Tesla share, run it on a stable coin rail, and then that means that, you know, someone in Africa or someone in, you know, El Salvador could buy access to Micro Strategy. Okay. So, well, now who's the perfect vehicle for these tokenized stocks? The bit, I would argue the Bitcoin treasury companies are actually the prime candidate. And I think you could actually see an interesting merger there where these kind of worlds combined where you know you actually do see Bitcoin treasury companies tokenized moving on crypto rails. Right. I I think like you know the stable coin I think stable coins are you know so you're saying like you know nobody's used crypto like stable coins are fast become and will become Yeah.

Yes. I I just mean like one one killer app killer use case for sure. stable coins definitely like it's runaway, right? Like it's it's still so being sort of in like the old spirit where you know with and I remember this from the 17 era where it was like you know somebody was going to make an Uber or Facebook some some that's what I mean kind of crazy concoction a mass exactly a massly adopted app that is used by everybody that uses crypto and you know whether it was going to be ticketing or art or identity or I don't know those that was I I'm with you that I don't know there was like thousands of possibilities and I would argue that like you people who have spent a long time in crypto. You should be like there's a winnowing of that field,

right? like we've we've kind of watched it go because our you know look I was in 2015 I remember being at the you know Bitcoin conference of Chicago and Vitalic got up there on a whiteboard and he was like you're going to have to centralize this and this and this and he had his little quadrants you know and you're he's like you're going to have the centralized messaging and you're going to have decentralized uh you know websites and you're going to have the centralized domains and you know he had this whole little checkerboard thing and and you know there was this feeling that there was like this infinite amount of possibilities that I would say I think I I've watched the market sort of invalidate You know, so a good friend of mine, Ryan Culkus, I think I mentioned I did the podcast with him. I mean, you

know, he thinks that regulation is the barrier to that and that with regulation, you'll see that unlock. I'm not super confident in that, but you know, I'm willing to be wrong. Uh, you know, maybe there maybe it is just regulation that needs to be unlocked, but I look at the amount of ideas, right? Like, you know, how many ideas are still on the board? Like even Melton Demurs gave a really great speech at Digital Asset Summit, you know, talking about compute and like, you know, we've got to find a way to bring crypto to compute. And I'm sort of like, okay, well, what's the core idea here? Does this mean like what are you searching for? You know, because at the end of the day, it's like computers are proof of work is like you're just using energy on computers. Um, I also used to like that

idea. I used to think that like maybe there would be different computing resources and maybe those could be kind of tokenized in different types of currencies, but we haven't seen that. I don't know. Again, I'd like to I like to say that um you know, people who aren't familiar with, you know, are more familiar with the more aggressive forms of Bitcoin maximalism, I would just say like I came to Bitcoin maximalism through like originally being open to most ideas and then just like over a decade or so just seeing, you know, most of these things not play out. And that's pretty normal, right? Like that's normal in most industries. And I think that you know what you're seeing is essentially you know it took 30 years from Bitcoin you know for the for people had the ideas for digital cash back in the 1980s right yeah what there was how many how

many bitcoins before there was bitcoins right there was probably like four or five that failed didn't right is there some thing that's 30 years down the pike on a crypto where you know it clicks and you know something happens like I'm not I I'm not going to discount that that's a possibility I'm just you know my observation here is you know seeing kind of these waves of of cycles where, you know, everything was going to kind of be a crypto app and then everything was going to be tokenized and then the banks were going to run everything and then the banks didn't run anything and, you know, Bitcoin has just endured and and kind of gone up over time, you know, response to that. Uh, so yeah, I mean, look, I mean, I'm always and and I think you really need to separate Bitcoin from the rest of crypto

now, right? Like I mean in a way it always has been Bitcoin and altcoins but I think that everybody and I think people in crypto understand that right Bitcoin is is that's been a recent change. Yeah. I feel like since 2021 there's been a big change in that and that's something that I've really felt and why I've wanted to kind of have more conversations with people in the crypto space because I feel like there used to be a lot of adversarialness and I think a lot of that was from the crypto companies who really did see themselves as displacing Bitcoin and I think now that that has gone away. You know, I'm I'm pretty pro, you know, the idea that other cryptocurrency networks might try to, you know, uh bring their technology to Bitcoin in some way. I don't think they're guaranteed for that to work, but

uh you know if I was them um I would be thinking about that, right? And I think you've seen some Justin's or Charles Hoskinson start to you know what would my platform look like if it was built on Bitcoin. Uh you know again I take the directional approach of just at this point I expect Bitcoin to be the settlement layer for sort of everything. Uh and so I expect everything to come to Bitcoin whether that's companies or alts you know kind of layer twos on Bitcoin. Uh it just makes sense, right? Because as Bitcoin goes up in value, it's like the incentives to get Bitcoin just become so much bigger and now you're watching like nations get pulled pulled in and the network effect is just running away, right? I mean, again, it's, you know, I wrote my first article when Bitcoin was $50, you know, in like

my lifetime, I've seen, you know, I could have for a for what would have cost me like a couple meals, I could have bought years worth of my life, you know, that's just staggering amount of growth, right? I at Bitcoin Vegas, I did a fireside with uh Chin Wang, founder of F2, who's you know, grew up in western China, you know, poor, you know, put himself through school, like dropped out and then now is like, you know, he's paying for his own personal like spacecraft like into the Earth's orbit, you know, he's the first human because of Bitcoin because he was a bit early Bitcoin miner, right? like uh because he's a billionaire, a self-made billionaire from western China who now is helping Elon with space exploration, funding it and then piloting missions.

And that's just like it's just what an incredible story like right like what what an insane thing to happen to someone. You know, I was talking with him and I was joking and I was like, you know, if you lived a hundred lives, you know, even you lived a thousand lives, like I was like, you're like on the high score. It's like, how do you top that? You know, it's like you if I was if I'm Chin Wang, it's like I don't want there to be any alternative realities. Like this is just the one, you know, it's like you you got your high score and so yeah. So, let me let me let me ask you this for last question before we wrap up here because my producer always yells at me when I go over 40 minutes, which I do every single episode. So, here we are

again. Uh attention goes down, Steve. Uh, but it's just so fun to talk with educated and very intelligent people like yourself talking about Bitcoin. We we have the Bitcoin Treasury Company explosion that's going to happen. I buy in. It's going to happen over the course of next few months, particularly with market structure bill, which you think August roughly. Well, we'll see. Right. As we speak, Elon and uh and the Donald are uh are look like they're having a bit of a divorce, right? So, uh who knows in Washington, right? I just I I personally don't put that much faith in, you know, the uh democratic governance system of the United States of America.

I think it is a uh it's a hard thing to wager a bet on. Okay. So, let me let me let me let's not go down that path. Uh let's let me let me position it as this that the Bitcoin treasury company strategy is going to grow. It's going to bring new flows. A lot of people around the world and jurisdictions don't currently have access all these things. It's going to bring new flows into Bitcoin. As a result of that, Bitcoin is going to have most likely great price action throughout the rest of the year. Whatever happens in macro and whatever Trump does aside, because I can't predict that, my question to you is where does it go? Does this is there a risk of this bubble bursting in a

significant way? Yeah. Do you see Bitcoin? And the one I the reason I'm asking is that I just I just did a uh an interview with Mark Yusco earlier this morning actually and he was talking about how he still believes that there could be a Bitcoin winter similar to past Bitcoin winters. And that's what I can't decide. Like I think we will get pullbacks. Look, Bitcoin is a volatile asset. It's still relatively uh I mean it's a growing asset, but it's not gold. It's not 20 trillion asset. So, there's still going to be volatility. Do you think that we're we're ever going to see the pullbacks that we've seen in the past, the the winters? Actually, I wouldn't even say pullback, the winters that we've seen in the past, or do you

think Bitcoin has graduated beyond that? I think there's always winters, right? And there's winters because just the natural market sentiment of people is to get, you know, overexuberant and then to hit some fever pitch. And yeah, there will be some points, you know, whether it's six months or a year from now where Bitcoin is, you know, euphoric. It's at some crazy all-time high. And you know, um, look at the historical pattern. I think in 2013 it's like an 83% draw down. 2017 is like a 79% draw down and 2021's like a 73% draw down. So let's just assume the historical curve, right? Let's just say we get a 60% draw down or a 50% draw down. Well, what does that look like? Uh, well, in an environment where like you have tons of companies that own Bitcoin and are overleveraged with debt in order to buy them and you

know, you have governments that are owning Bitcoin and have spent money to acquire that. Um, yeah, I think that looks pretty serious. But yeah, I don't know. I think that, you know, Bitcoin is, you know, crashing to infinity, right? It's it's going up and up and crash is, you know, uh, again, it's like they the crashes of yester year are just like almost comical now, right? I mean, I panic sold all my Bitcoin and the 2013 China ban, you know, from a thou and it dropped from $1,000 to $600 overnight. I remember going to dinner, you know, I lost 40% of my money and you know that's uh you know but at this point like the during this conversation the price could have down gone down $400 and like neither of us would have cared, right?

Uh and so that's just a very you know that's just the thing about Bitcoin, right? It's we'll see these market corrections of course because that's just what always happens. Uh I don't think there's anything different about humans. Look, it's the you know the top when everybody is saying this time is different. Like that's the top when everybody's saying this time is different. Like that's the top. Every top that I've seen, you know, you go back and you look at the indicators. I like to post on Reddit. I kind of, you know, do my daily posts of like, you know, things that happened in the past. And one of my favorite is like, you know, the top indicators. It's like Jimmy Fallon with, you know, Paris and they have their little million-dollar NFTts. Oh, here's Katy Perry and like she's showing off her like crypto. Steve

Aayoki is getting in there and goes on. Yeah. You look at the you look back and you're like, oh, like even myself, right? Uh, I remember in December because, you know, I think we've, you know, we've gone up a little bit since December, but I remember, you know, earlier this year being like, man, I was at Michael Sailor's house hosting a live TV event and I was like, how the hell did I not sell some Bitcoin? Like, what an idiot. Right. Right. That is such a top signal. That is such a signal. as yacht and he's showing he's got you know 100 foot screens playing memes of himself like as like from the movie 300 and and I'm looking I'm like I'm like how like man I'm like I'm an idiot like I've seen so much you know it's like I've seen so much over these years and I

still I'm sitting in it and I'm like that you couldn't tell that was a top you idiot but it's like now so this is my future self going back to my past self being like you know what the hell is wrong like seriously you know you're watching like people eat lobster tails and just you know like walk around with just you know, fists of prime steak and you're just like, no, you just like you couldn't you just couldn't call that a top, could you? You just like had to you had to you and it's very hard to call it a top because you're a genius in that moment and you're there and you're special. Yep. I was like, it's happening now. I was like, here we go. I was just Yeah. Yeah. Exactly. Bitcoin. Yeah.

Bitcoin loves to do that. But yeah, I don't know, man. I as I'd say I've gone on and on and it's uh you know my new prediction well I will say I'd say uh Trump is the new top so every time you see Trump do something so the conference top Trump was their memecoin dinner top Trump was their inauguration Trump was their top Trump's the new top in the same way that Sailor and Blly were the top in the 21 cycle Trump's the new top so that's why uh that's my I'll I'll buttress the end of this with saying this goes back to my no new all-time high before market structure I think uh Trump's the new top, you know. So, we we'll hope he buys the top in the same way his uh his predecessors did, but we'll see. Yeah. Well, so stay tuned in

everybody because uh it's a it's an everchanging world in crypto and in Bitcoin, and if you're not paying attention, things happen fast. And if you don't want to pay attention, the the big take that I have from from all of this, and the thing I keep saying to not just people in crypto, but more people outside of crypto, too, is like if you don't want to pay attention, just buy Bitcoin. Then you don't have to pay attention. Well, our number one export is entertainment as well, you know. So, keep listening to the Milk Road Show and check out Supply Chalk if you like Rizzo because he's got a great show over on Block Works. Before we wrap, I got to remind you guys all that none of today was investment advice. I'm not your financial adviser. Rizzo is not your financial adviser. You should only

invest what you're prepared to lose. You should always take time to think before you make investments. Rizzo, thanks so much again for joining us today. Thanks for having me, Jay. Thanks for tuning in, y'all. Have a wicked awesome day. We'll see you back again tomorrow. As always, if you liked today's episode, please hit subscribe and make sure you follow us so you don't miss out on the next one. There's also a link in the description to our free 5minute daily newsletter where we simplify crypto for you while making you laugh. And if you're willing to step up your crypto investing game, we're going to also leave a link for Milk Road Pro. You get access to our portfolio where you can see exactly what we are buying. This is your number one resource to help you invest successfully in crypto. One final

note, this show is for educational purposes only and nothing we say is financial advice. Investing in crypto or any asset is risky and you should never invest more than you can afford to lose. Thanks so much for listening in my friends. Have a wicked awesome