Bitcoin and the American Experiment

Well, thank you all for being here, a nearly full theater for an issue that I think will

not only be very important for the rest of our lives.

We at the Heritage Foundation believe it is perhaps the single greatest disruptive innovation

in a positive sense in our lifetimes.

And you will see not just as a result of tonight, but work that we will be doing moving

forward that heritage's involvement with Bitcoin, our endorsement of Bitcoin as saving freedom

and flourishing around the planet is something that we're committed to starting tonight.

So thank you for being here for that.

Bitcoin, as we all know, is a free market technological revolution with a potential to replace centrally

planned currencies like the dollar and act as a backbone to a decentralized economy where

bureaucrats don't call all the shots.

Now, of course, we happen to know there's a little bit of a problem with centralization

and bureaucrats calling too many shots.

We also know that the Federal Reserve for a century has proven totally incapable of stabilizing

prices since leaving the gold standard and turning to unbacked floating money.

Bitcoin could help protect Americans since it cannot be created out of nothing.

Americans have historically had a deep distrust for central banks as corrupt and destabilizing.

This early American historian would say that they have every reason to be distrustable.

It used to be one of the most important fights in political campaigns.

As America's fourth central bank, the Federal Reserve has proven those suspicions, pressure.

The Federal Reserve has also been complicit in raising taxes on the American people through

the hidden tax of inflation, the most unfair tax of all because it's the most unequal of

all.

And it is enabled runaway spending by the Federal Government, especially during the last

two years of over-raught COVID lockdowns.

With the Federal Reserve either unable or unwilling to protect the value of Americans' earnings

and savings, Bitcoin represents a potential lifeboat to escape central planning and embrace

our country's free market, Patrimon.

There are a few more persuasive advocates for Bitcoin than the two members of the United

States Senate who will be with us here tonight, Senator Ted Cruz and Senator Cynthia Lumbas.

I'm privileged as all of us at Heritage are to count the two of them, Senator Cruz and

Lumbas as great friends.

I have the privilege of now introducing my good friend from my Texas years, Senator Cruz,

who among other things, of course, is persuasive and articulate on this issue.

I could keep you here for several minutes, waxing poetic, as I'm sure Senator Cruz would

appreciate all of the reasons that we like him and adore him here at Heritage.

But I want to preserve as much time as we can for his comments as well as for the conversation

that he and I will have with you when we have some time following this talk.

So would you please join me in giving a very warm welcome to our friend, Senator Ted Cruz

of Texas.

Well, good evening, Kevin.

Thank you very much.

It is great to be back at Heritage.

It's great to be with so many friends.

And it's great to be talking about a topic that matters.

Bitcoin and the American experiment.

I like that title.

What is the American experiment?

What are the principles that make the American experiment unique?

Innovation?

Prosperity?

Risk?

Property rights?

Freedom.

United States of America and the free enterprise system we have here has produced more prosperity,

more abundance, more opportunity than any economic system in the history of mankind.

You look at Bitcoin, the Bitcoin revolution and the crypto revolution that goes alongside

it.

It is truly a remarkable innovation derived from a white paper published online that suggested

that money doesn't have to be a government monopoly anymore.

Money doesn't have to be the exclusive province of politicians to play with at their whim and

the fun their latest endeavor to get reelected.

But rather money and value could be found through blockchain, through a distributed ledger

that everyone had access to, that nobody was in charge of.

This concept was brilliant and revolutionary.

I gotta say when it comes to Bitcoin and what comes to crypto more generally, I am incredibly

bullish.

I think it is in the process of and in the future even more so will change the world.

Now what is the attraction of Bitcoin?

What are the advantages?

There are a whole bunch.

Number one that I think is drawing a lot of people to it right now is as a hedge against

inflation.

As long as there have been centralized banks, as long as there has been government currency,

the tendency, the temptation to inflate your currency has proven almost irresistible.

In the United States certainly to Democrats but almost as much to Republicans.

I am reminded of a friend of mine who suggested a slogan for the Republican Party Republicans.

We waste less.

For today's versions, Republicans, we spend slightly less than the trillions the other

guys have tried to spend.

Now look as a cause and effect when the government printing presses go burr.

Inflation comes home to all of us.

We see the values of our savings diminished.

As there more and more and more dollars, each one of the dollars we have is less and less

and less.

Just as in any time of inflation, hard assets, assets like gold and silver become more

attractive as a hedge against inflation.

I think we are also seeing millions of people worldwide turning to Bitcoin as a hedge against

inflation.

One of the most important innovations of Bitcoin is that it's said at 21 million and exactly

21 million maximum Bitcoin, not 21 million and one.

That line promises a finite supply and at the end of the day what is money?

It's a deep and profound question and there are bigger brains in this room than mine who

can give insightful answers but money is ultimately a medium of exchange.

You think of the origins of money back in the hunter gatherer days when we had to rely

on barter, when we had to rely on you've got a sheep and I've got a chicken and I've

kind of like a sheep and you'd kind of like a chicken and so we could engage in a currency

that if I carried three chickens under my arm and gave them to you, maybe you'd give

me a sheep.

Now that worked in a limited setting but it was kind of inconvenient to carry three

chickens under your arm.

Then you had to know how many chickens is it if I want a bunch of bananas and even worse

what if it's only part of a chicken.

Barter had serious and obvious limitations and so what is money, money was an agreed upon

uniform exchange rate that if we could agree that a sheep was three dollars and a chicken

was one dollar then we could simply exchange that unit currency and know the relative

prices of one good to another.

It works when the unit of currency is relatively state.

It becomes far less valuable when government decision makers are able to devalue that

currency.

So that's one of the many appeals.

A bitcoin is the stability of amounts.

There's also an appeal of speed.

The ability to instantly carry out a financial transaction anywhere in the world instantaneously

and virtually costless.

You think about the delays and costs it can entail if you want to wire some money from

one person to the other that it could take hours or days.

Being significant costs whereas what bitcoin can be transferred instantaneously.

That poses an advantage but it especially poses an advantage for the unbacked.

Bitcoin is global.

What does that mean?

That means Europe's assistance farmer in Honduras or in Africa.

It may not have access to banking.

You may not have a secure store of wealth.

I guess if you have some money you can dig a hole in your backyard and hope no one comes

to find it.

But part of the beauty of bitcoin and crypto is it gives access to global finances to buying

and selling to transfer and value instantaneously no matter where you are.

That's remarkable.

And then there is the advantage of freedom.

There's nobody in charge.

That terrifies government decision makers.

Pause for a second and reflect why communist China has banned bitcoin.

The answer is real serious.

Real simple.

They can't control it.

They don't like something they can't control.

By the way that is the exact same reason most democrats don't like bitcoin.

Why does bitcoin make Elizabeth Warren toss and turn in twitch at night?

Because she wants her sticky little socialist fingers to be able to control every penny

and every one of our bank accounts.

By the way that's the same thing she wants in China.

Uncontrolled decentralized currency is terrifying for those who want control of currency.

You know there was a revealing moment up in Canada when you had the Canadian truckers.

By the way what a fantastic you know when in recent times have people talked about bad ass

disruptive Canadians.

I say this is someone born in Canada.

Canadians are unfailingly nice and polite.

I don't know what happened with me.

They screwed up with me.

But you look at those Canadian truckers who the eyes of the world were focused on those

truckers standing up and saying what the hell are you doing trying to force me to make

medical decisions about my life.

It's not a year day of business.

And we also saw the petty tyrants.

We saw Trudeau coming down with the force of government on those individual citizens

daring to speak out in one of the great exchanges.

So there was initially crowdfunding until Silicon Valley agreed to order the orders of government

and cut off the funding.

And basically announced it was going to steal the trucker's money.

And so in response people began contributing Bitcoin.

And there was a wonderful exchange where the Canadian government demanded of one custodial

outlet.

Hand over your clients information and hand over your clients Bitcoin.

And they wrote a spectacular letter in response which basically said the joy of an distributive

ledger.

We don't have control of it.

We can't hand it over.

We couldn't if we wanted to and go piss off.

But that's a beautiful thing.

We talk about something else which is energy.

So one of the criticisms of Bitcoin is it consumes too much energy.

It takes enormous energy to mine Bitcoin.

And the socialist of the world say wouldn't it be better if that energy were spent on something

else?

Why should it be spent on enabling people to have financial independence and freedom?

That's a terrible thing.

I actually think Bitcoin has an incredible potential to benefit us on the energy front.

Let's take for example natural gas flare.

You come out to the Permian Basin West Texas.

Incredibly productive.

You come in as far as the eye can see pump jacks.

Producing from one of the most incredibly productive reservoirs in the world.

Now on many of those instances, particularly if you come at nighttime you'll look along

and you'll see lights lighting up the horizon.

Why is that?

Because when you're producing oil typically you produce natural gas along with it.

Now that's great if you have a natural gas pipeline to capture that natural gas.

But if you don't have a pipeline you get a problem because you can't get the oil without

the natural gas coming up and if there's no pipeline what are you doing?

Well you have two options you can release it in the atmosphere which is terrible and not

loud.

Or you can do what's called flaring.

What is flaring literally lighting it on fire?

So you look at over the horizon you see flame after flame after flame natural gas being

flared.

What does Bitcoin present the opportunity to do?

And every one of those wells capture that natural gas and use it to generate electricity

that goes directly into mining with a mining rig right next to the west.

That prevents the flaring which is good for the environment and it produces value in terms

of the Bitcoin that is generating.

Now that's a win-win across the board but there are actually additional benefits beyond

that.

Because as you're engaging in that Bitcoin mining if you're connected to the grid the

more Bitcoin mining you have the greater resilience the grid has.

Listen we've seen year after year after year the frailties of the grid in California as

they have rolling brownouts and rolling blackouts predictably.

We saw unfortunately in state of Texas with a massive freeze where the grid failed and millions

lost electricity.

One way to think of Bitcoin is as a battery.

Why is that?

Because if you're running rigs mining, consuming a significant amount of electricity and suddenly

there's a weather event or some other adverse event where the total store of electricity drops.

Those Bitcoin rigs can be turned off at a fraction of a second and suddenly the energy that

was going to Bitcoin mining can be instantly available to keep people's homes or cool people's

homes or run businesses or keep the state going.

Look one of the challenges with electricity is it's very hard to store.

Battery technology went a long way to go on battery technology.

And so the grid is carefully calibrated between the electricity being produced and the demand

where you have challenges on the grid are when you have a significant and unpredictable

swing in one or the other.

There are supply drops of the demand spikes.

And if that's un-predicted that imbalance causes the challenges with the beauty of Bitcoin.

If you have a substantial amount of power generation going to Bitcoin mining when the price of electricity

exceeds the value that is being generated from mining Bitcoin at that point, those rigs

can be turned off instantaneously just like that vacuum cleaner.

But there's also a value, you know, this notion of a Bitcoin mining is a battery is an interesting

concept because it's not just an incentive to remediate pollution or even remediate carbon

emissions to pollute, get less and capture that natural gas.

But it's also an incentive for renewables.

Look eventually we will move away from oil and gas.

I don't think it's going to be nearly as soon as the Green New Deal to Teletarians want

it to be.

But there will come a time when we do.

And if you look at renewables, one of the challenges of renewables is that the wind blows in a

lot of places that are in the middle of nowhere and the sun shines in a lot of places in the

middle of nowhere.

And if you want to create assets to capture that energy, if you want to create windmills,

if you want to create solar panels, it's an enormous problem if there aren't energy

transmission lines.

A bunch of solar panels on a really sunny place without any power lines are useless because

they generate electricity and yet that you can't transfer the electricity to the users.

You think of Bitcoin mining as a battery.

You have the ability to erect windmills or solar panels.

And next to them to put mining rigs where the power being generated goes straight to

Bitcoin mining.

But if you think of Bitcoin, if you think of a battery as a reservoir of value, you turn

that energy from the sun to the wind in the capital.

Into an asset that has value, what that does is make it economically attractive to build

the alternative energy facilities in the first place.

That from the first solar panel you put up, you can start capturing value, which in turn

when you build a sufficient enough array, that it's economically viable, then you can put

power transmission lines in place.

But it gives you a first dollar and first minute opportunity to yield reward from your investment.

I think Bitcoin and crypto generally has the potential to demonstrate and to generate

enormous returns across the country.

But I also believe governments can screw it up.

I will say I have spent more and more time lately talking to folks in the Bitcoin community

and crypto community.

And I do think there is a little bit of a utopian naivete.

Well folks in those worlds who believe, you know, as Thanos said, we are inevitable.

Well maybe.

But they may have thought that in China.

Government has an enormous ability to screw things up.

And I don't know how many of y'all have your El Salvadorian passports.

But the US federal government screwing it up would be massively destroyed.

And if you look at last year when we're taking up the massive infrastructure bill, buried

within that bill was one provision that had the potential to wreak havoc on Bitcoin defining

almost everybody in the process of Bitcoin mining as a broker requiring them to collect

information on their customers even though in many instances you could not do so.

I can tell you I stood up on the Senate floor and offered an amendment to strip that provision

from the bill.

Where's the terrifying thing?

In the entire US Senate, I'd be surprised if there were five senators who could tell

you what the hell a Bitcoin is.

Two of them sent the anyer standing in this room.

And neither nobody would hire either one of us to program anything.

You know Bismarck famously said there are two things you don't want to see being made,

the law's in legislation.

The ability of the United States Congress with absolute women caprice to potentially destroy

trillions of dollars of value is terrifying.

When I offered my amendment to strip that provision, I had the wild and crazy view that we

should actually know something about the thing we're regulating before we pass the law

potentially destroyed it.

When I offered that amendment to Democrats' objectives, Cynthia and I together and several

others tried to do a second amendment that at least made it less harmful.

Again the Democrats' objective.

I would say the potential of government to mess this up and by the way the potential

of this current administration to wreak enormous havoc when it comes to Bitcoin and crypto

is difficult to overstate.

So it's one of the reasons I'm really glad Heritage is hosting this because it's easy

to wake up and by the way, how many of y'all remember Nester?

You know, Nester was unstoppable.

It was inevitable until boom, it was obliterate.

And so if we see the potential for what Bitcoin represents, if we see the optimism, we need

to be vigilant not to destroy it.

Now part of that is understanding the many policy questions and repercussions, whether it

deals with tax treatment, whether it deals with regulatory treatment, there are big and

hard new questions raised by Bitcoin and cryptogen.

I hope this panel discussion will shine some light on some of those big and hard questions.

But when it comes to something as consequential as this, I think we are well advised to proceed

slowly and cautiously with a recognition that wreaking havoc is a terrible out.

Thank you.

Senator Cruz, great job.

Thanks.

We have time for a couple of questions because we have a couple of parts to this program.

So I was going to ask you one, but I will defer to the audience if you would.

If you have a question, raise your hand.

One of my colleagues will come around with a mic.

You know the drill.

So any questions?

One all the way in the back.

Yes, ma'am, right there in the middle.

Raise your hand again.

There you go.

Thank you.

Hi, I'm sorry, TNLA Washington Examiner.

So you talk about sort of the global capacity for Bitcoin's utility, independent of sort

of price levels or any of that mattering.

I do wonder what we're seeing right now in, as you pointed out, El Salvador with the IMF

putting a lot of threats on further restrictions, further currency capacities.

We saw with Putin's invasion of Ukraine a lot of threats to try and destabilize Bitcoin

in Russia.

And obviously that's been a bull work.

But how even, you know, it's not as though universal internet access is guaranteed.

And it's not as though there aren't, there is not a regulatory code that protects countries

from ever coming under, you know, the jurisdiction of the IMF.

How does the US sort of enhance Bitcoin's utility globally when those are very real threats

to how it can be used?

Yeah, look, those are good questions.

And I will say how different governments approach it is a question that's going to play

out in the months and years to come.

With a developing country like El Salvador making Bitcoin legal tender that has enormous

upside, that potentially has some risks.

But I understand why that's an attractive policy option to a government like El Salvador.

It doesn't surprise me also that centralized banks and organizations like the IMF are skeptical

of that.

Government agency that wants control is going to resist tools that make control more difficult.

It's part of the same reason why you see there's a sizable number of regulators who don't

let cash, who despise cash.

Why?

Because cash is uncontrolled.

We saw in the Democrats build back broke bill.

They're a proposal to require banks to report on every banking transaction that exceeds

$600.

Literally when you pay your rent every month, unless any of y'all are college interns living

with seven roommates in DC, you're spending more than $600 bucks a month on your rent.

And it would require every time you do that heck soon.

It's like we're going to be that to fill up a tank of gas.

Yes there will be ongoing efforts to increase government's ability to monitor what's happening.

I think we should be resistant to those efforts.

And that's not going to be a one-time resistance.

I very much worry about the Biden administration and they're taking marching orders from the

voices in the Democratic Party like Elizabeth Warren.

That the steps we may see in the next two and a half years could wreak enormous damage.

And the only answer I know to that is, is sunlight and scrutiny and vigilance because I think

that threat is very real.

Thanks for that question as well as for your answer Senator, I know we're dealing with

your schedule and hours.

We'll take one more question before we wrap this segment.

Anyone on this side of the theater going once, going twice, this gentleman all the way

in the back right there has a question.

Go for it.

Hi, Doug Blair with the Daily Signal.

We've been hearing what brings of a digital dollar which seems to be the new evolution of

Fiat currency at least from the American central bank.

What are your thoughts on the digital dollar?

How will it impact the way we use money?

How would impact the economy?

So I think a central bank digital currency is a horrific idea.

I think it is an incredibly dangerous idea.

I think it is the exact opposite of what Bitcoin and crypto promises more generally.

I've introduced legislation in the Senate that would ban the Fed from introducing a central

bank digital currency.

Why do we want to do that?

Because for the Fed to do that, its principle value would be as a tool for monitoring our

financial transactions.

It would be an effort to reassert a government monopoly over currency.

We are seeing China going down that road for the same reason.

The reason they hate Bitcoin is the reason why it is attractive to have a central bank digital

currency that they can throw.

I think we ought to resist it.

I believe in Congress, we ought to pass legislation blocking it.

I can tell you, Jay Powell, at the Fed initially suggested some resistance to it, but in the

process of being re-nominated, he had to play footsie with a lot of the folks on the left

of the Democratic Party.

He expressed a lot greater openness to go down that road than not.

When he sat in my office, he sounded fantastic on the issue.

But somehow, when he sits and shared Brown's office, he says something different.

It's dangerous.

Let me make a broader comment about the Bitcoin community generally.

I think Bitcoin and crypto today is where Silicon Valley was 15 years ago.

15 years ago, Silicon Valley was at a crossroads.

They could have gone down the road to becoming a libertarian, leave me the hell alone,

entrepreneurial utopia.

Or they could have chosen door number two in becoming woke nanny state socialist knitwits.

Unfortunately, Silicon Valley chose door number two.

Bitcoin and crypto is at that same decision point right now.

There are people, there are young entrepreneurs who are making vast amounts of money right

now who are redefining and I look, I define Bitcoin and crypto.

One of the interesting things is I've gone through the process of starting to get educated

about this is there's a real divide between Bitcoin purists and those who are not Bitcoin

purists.

I'm relatively agnostic on that divide.

I'm an investor in Bitcoin.

I invested my own money in Bitcoin.

I will say it was interesting.

I have a weekly buy that's an automatic buy every week of Bitcoin because I believe in

dollar cost average.

I'm not smart enough to play the market if I invest the same amount every month every

week that ought to work out.

I did make a buy a few months ago of $25,000.

We had to file a senate disclosure when I did that and the press went nuts.

It was really quite amusing that, and listen, I believe in Bitcoin and so I wanted to have

a portion of our portfolio and not a massive portion but a portion of it.

Other forms of crypto, I'll confess I understand less well and so my risk tolerance is I'm

a little more hesitant to go there myself.

But I will say when you talk to folks in the Bitcoin and crypto community, it's interesting.

There are a lot of folks who a few years ago, I think, kind of considered themselves Bernie

Bros.

They were relatively a political and make love not worse out of detractive.

I think in the last year or two, watching the jack booted thugs of the statists express

unrelenting hostility to Bitcoin and crypto.

I think it's startled a lot of people.

Not necessarily saying it's woken them up, I think many of them still believe that technology

is on their side and centralized fiat currency will collapse of his own weight.

Maybe it's more likely to happen if government policy doesn't screw this all up.

But I think we have an opportunity.

It's one of the reasons I want Texas to be the oasis on planet earth for Bitcoin and crypto.

You come to Texas, you come to Austin, we're saying massive numbers of people fleeing places

like California and come to Texas.

I think that is a wonderful phenomenon but I also think there's a broader need in the

community to communicate.

Look, if you value freedom, if you value the government being left alone, then maybe

it's not in your interest to support people that want unlimited government power to control

everything you're doing.

That a libertarian ethos is a really powerful, powerful approach.

But I hope Bitcoin chooses door number one and not door number two, but I think we won't

know that for another five or ten years.

Well would all of you please join me in thanking Senator Ted Cruz.

Senator thanks again and those of you who have questions that we weren't able to get

to, you just sit tight because we have another Q&A period coming up.

We go from one great senator from Texas to another great senator from Wyoming.

Senator Cynthia Alamos is another great defender of Bitcoin, another friend of mine, at the

privilege of living in both places, Texas and Wyoming.

She's a member of the committee on environment and public works, committee on commerce, science

and transportation and committee on banking, housing and urban development.

She's a leader on Bitcoin in the Senate and was one of the first public officials in the

United States to endorse this for all of the reasons we understand.

She will be joined on this star-studded panel by Michael Sailor, who's one of the most

prominent and respected voices in Bitcoin.

He's the CEO of MicroStrategy and Founder of Sailor Academy, a non-profit organization

that has provided free education to over a million students.

Michael, as you may know, holds over 40 patents and holds dual degrees from MIT and aerospace

engineering and the history of science.

Joining Senator Lemus and Michael is Caitlin Long, yet another impressive patriot.

Caitlin's a serial entrepreneur as well as founder and CEO of Wyoming's custodia bank.

After 22 years on Wall Street, Caitlin discovered Austrian economics and that led her to Bitcoin.

With a panel that features two great Wyoming women and Michael Sailor and is moderated

by my friend and colleague, Peter St. Hunch, Research Fellow in Economic Policy, you're

in for a heck of a show.

Well, please welcome them.

APPLAUSE

I think I was thrilled that we have so many people here tonight and it is an enormous

honor to have this panel here.

Three really incredible people.

It's honestly a bit intimidating.

So I'm going to jump back in or jump right into the questions here.

I have a lot of interesting things discussed today.

So Michael, can I start with you?

Why should regular Americans care about Bitcoin?

Well, the nation was founded by people that were looking for freedom and property rights.

And that's why they left Europe.

At one point, my family came from Lussur and Switzerland.

They were Palantines.

And I think at some point Protestants in Catholic Europe couldn't own a job or own property

or have a job.

And so they came to America.

And of course, the opposite is a bunch of Catholics from Northern Europe had to come

to America for the opposite reason.

So the American dream was always go west, get property, live your life, live happily

ever after.

And after we all got here to Virginia, if we were Protestant or to Maryland, if we were

Catholic or to Pennsylvania, if we were neither, but later, after we got here and it got

too crowded, everybody went west again, right, to the Great West, to Wyoming and they wanted

land.

Now the world is just full of people and you can't go west anymore.

And we can't really all go to outer space because space travels too expensive.

So where we can go is we can go to cyberspace.

And what if you want, if what you want is the American dream, you want property rights

and freedom and sovereignty, then you can move your life force, your life savings, your

economic energy, your property into cyberspace, where you might have the hope for freedom and

sovereignty and truth and a decent life.

That's the American dream.

Thank you.

Next, Senator Lomas, I'd like to ask you, Bitcoin is becoming more prominent in public policy

discussions really across the country.

What potential common ground exists between conservatives and Bitcoin?

Well, thanks for this great panel and these great experts on Bitcoin and it's lovely to

be here with you this evening.

The common ground is looking for the sweet spot between not stifling innovation but rather

encouraging innovation.

Well at the same time creating a regulatory framework that everyone understands.

The reason for doing this is if someone wants to interact between Bitcoin and the US dollar,

the US dollar and keepers of it and the Fed need to consent, need to have a way to communicate

back and forth between Bitcoin and the US dollar.

And so it is important that we have a regulatory framework that presents a light touch for those

who want to innovate in this space that do want to have some interaction with the US dollar.

And we're working on that.

Our bill in fact will be filed.

It is a very comprehensive bill.

It will be filed on June 7th.

It includes coins that are commodities, coins that are securities.

It includes stable coins.

It includes a discussion of CDBCs and consistent with what we heard earlier.

And a small nod to NFTs.

It includes algorithmic as well as asset backed stable coins.

It includes definitions, consumer protection, privacy, taxation, and several other components

of the discussion as it relates to all this using the existing regulatory framework.

So as you can see, it's a long bill.

It's comprehensive.

We've had it vetted for months.

Michael Sayler was one of our first set of eyes on it, of course, because his expertise

is longstanding.

And we want to make sure that we have lots of input before we file it.

It's going to be bipartisan.

It's been broadly vetted by people in both parties.

It's been broadly vetted by both bureaucrats and regulators, as well as the innovative

community.

So we think we're on the right track.

We hope we have found that sweet spot.

And we want to encourage people to continue to help us find the sweet spot.

So we're not stifling innovation, but we're creating a simple regulatory framework that's

understood.

Caitlin, I'd like to ask you, so how do you see Bitcoin impacting Wall Street and the

broader American financial industry?

Well, the biggest impact is going to be in the payments space.

The Lightning Network is a much better, faster, cheaper way of moving money.

Stablecoins are, as well.

And what that's going to do is massively change the liquidity needs of the banking system.

The banking, the liquidity in the banking sector has been fine-tuned over the decades

for the bank run risk that does happen.

It's pretty rare these days to have a bank run.

Banks traditionally use leverage and take credit and interest rate risk.

But they get away with that because not everybody wants to withdraw at the same time.

We have not had the ability to take massive withdrawals in real time.

The banks call your deposits demand deposits, but they're not really available on demand

because it takes a day typically, or at minimum hours, if you're using Fedwire, a day or

two of you're using ACH for you to withdraw your money.

And that time period covers up a lot of operational issues that can happen, including a potential

for a bank run.

What we just experienced with the Teraluna situation is that crypto settles very, very fast.

And that literally collapsed within the span of hours.

And so once you speed up the settlement cycle for payments in the banking system,

inherently, the banks are not going to be as leveraged as they are today.

And they're going to need a lot more liquidity than they have been sitting on historically.

All that fine-tuning of the liquidity needs of the system is going to be thrown into a

people.

This was happening anyway with Fed now coming online.

That's a $24.7365 Fed that's not issued on a blockchain.

Whenever that does come online, especially it's targeted for next year, but it keeps

getting pushed back.

We'll see.

But when that does come online, the banks are going to have to sit on a lot of cash.

And that's not what they're doing now.

And that is a massive change.

Now if you overlay stablecoins and start overlaying non-dollar payment instruments like Bitcoin,

that changes a lot of things.

It's going to be a period of a people in the banking system for sure.

I'm glad you brought up Luna because I was actually going to ask you that later.

So the Luna collapse was one of the largest in the history of the cryptocurrency space.

But of course, Bitcoin and Luna worked very, very differently.

So people who are using the Luna collapse to question Bitcoin itself, how would you respond

to that?

Bitcoin is in a different universe.

Burn it all down.

That was a Ponzi scheme.

And there were people out right calling it the anchor protocol, specifically, a Ponzi

scheme in our industry.

And a lot of folks were very outspoken against it.

I don't speak about specific protocols, but I do talk about the staggering amount of

leverage in the Bitcoin markets.

Wall Street tried to come in and financialize in a bad way this asset class.

And we have seen Ponzi schemes, we've seen scams, we've seen it just outright too much

leverage on an asset that's negatively convex where that leverage really can't be hedged

away.

You will see counterparty failures.

And my attitude is burn it all down because Bitcoin will be the phoenix that rises from

the horizon.

And you don't need to leverage your Bitcoin.

Burn it all down, the phoenix will rise.

I love it.

Michael.

Next to you.

So this is on hard money.

Hard money, as you know, was a constant through most of our nation's history.

Since the application of the gold standard in the 1970s, the dollar has had no hard anchor

against inflation.

Can Bitcoin help the US return to that era of sound money?

Yes?

Mm-hmm.

Okay.

I get more.

I think once you, if you think about money as economic energy and you think about

a currency as the fluid through which the energy moves, then gold, if gold was your money,

and if the gold supplies expanding at 2% a year, then that means the half-life of the energy

and gold or the half-life of gold money is about 35 years.

When that inflation rate drops to 1% a year, if you could do that, the half-life becomes

70 years.

But the, in fact, the long term inflation rate of Bitcoin is zero.

So the half-life of money and Bitcoin is infinite.

It's immortal.

It's not twice as good as gold.

It's a million times better than gold.

And ultimately, this is all about fixing the energy balance and the civilization.

You know, if you had a family of athletes in every month, a bureaucrat showed up and they

took a pint of blood from everybody in your family and then you went out and you ran

marathon, you wouldn't do it so well.

And if they kept coming every single month, that would be bad.

And if they kept coming every week, that would be really bad.

In fact, that's what inflation is.

We're just sucking the oxygen out of your blood except inflation is sucking the energy

out of the currency.

And so if you, we sort of had semi-hard money, but the reason that the gold standard

work was the economy grew 2% a year and gold inflated at 2% a year and everything kind

of stayed constant.

If you had really hard money and you grew, you grew the money supply 0% a year and the

economy grew 2% a year means everything you want would get 2% cheaper every year of

your life and you could literally save money and wait and in 10 years, you could buy much,

much more with the same money.

So Bitcoin solves the problem theoretically in the right fashion.

If the civilization starts to adopt it as a primary treasury reserve asset, it's like

saying, no, this month you're not going to get to bleed a pint of blood out of me.

I'm keeping all my blood.

And for anybody's an athlete, you just consider whether or not you would prefer to be an

athlete not getting blood to death or whether you would allow some politician to keep sucking

a pint of your blood out of your body whenever they want.

It's just really horrific performance problem.

We've got some super metaphors going here tonight.

Appreciate it.

I love the way engineers speak about Bitcoin.

Michael, it's got such a terrific perspective.

Senator Lemus, I'd like to ask you another question.

According to many polls, inflation is the biggest issue for Americans today and by the

way, that's cross party, which is very rare for everybody to be afraid of the same thing

at this.

How do you see Bitcoin fitting into the inflation discussion?

Well, the great thing about Bitcoin is it's limited supply.

There will only be 20 million Bitcoin ever mined.

Every four years, they cut the number of Bitcoin being mined in half.

The algorithms get more and more difficult to solve.

And every 10 minutes, there's a few more fractions of a Bitcoin mind.

So it's on a steady path.

The last thing about fiat currency is on a steady path.

The government can print more money, willy-millionly.

And we do, as you know, when I first arrived in the U.S. House of Representatives, January

of 2009, we just crushed the threshold between 9 and 10 trillion in national debt.

And now we're over 30 trillion in national debt.

And there's no discussion in the U.S. House or the U.S. Senate about repurposing other

money to meet the needs of today.

For example, the bill that we just passed last week, sending $40 billion more to Ukraine.

It was not money that was repurposed from excess COVID money that hasn't been spent or

coming from another source that hasn't been spent.

It's new money.

It's new money being printed.

And we're doing that every week with every bill.

The rest of that, we're guaranteeing that the U.S. dollar is going to be everywhere

to try and solve every problem and hold less and less value while it's doing it.

So the fact that a Bitcoin portfolio is immune from all of that makes it, as Michael

Saler just said, a million times more stable.

No one controls the levers of Bitcoin.

Bitcoin is going to play out mathematically exactly how it was designed in the white paper.

And it's predictable.

Nothing about what the Congress is doing is predictable, except for the fact that we're

going to print more money than we take in.

Our value, our dollar is going to be worth less and less all the time and that nobody cares.

And they're party.

Both parties are responsible for this.

Thank you.

And speaking of both parties, Caitlin, I'd like to ask you a question.

The Fed is considering issuing a China-style state-run currency, Senator Cruz.

That's a excellent remark about that earlier.

The question I have for you is that one of the justifications for chasing a CBDC is that

we have to keep up with the Chinese.

And this is, indeed, coming from both parties, unfortunately.

Given you spoke earlier about payments, if you could go into a bit more detail, why Bitcoin

makes that sort of thinking unnecessary?

Well, it's a private sector version that will inherently hit network effects a lot faster

than any government version.

It will probably take them years, even if they do try to get it out.

And then will people actually use it?

These are network effects businesses and the private versions are getting there and

building network effects faster.

There is an important point about privacy where I would disagree with Senator Cruz, not in

his concept.

It's in the reality.

None of us have any privacy whatsoever today in our financial transactions.

And so it is a misnomer to say that a CBDC would give us less privacy than we have today.

It would just put it out there more openly that we have no privacy in our financial transactions.

The difference is, if the Fed itself were to issue a CBDC, it would directly have access

to all of those transactions.

But if you, I'm starting a bank, I see how this works.

There is zero privacy because law enforcement can get every transaction ever done by any

of us at any point in time.

And they don't even need probable cause to do that because they'll just ask the banks.

The banks are regulated.

The banks are graded on how cooperative they are with their regulators.

So what do you think the regulators are going to do when a regulator calls and says, I want

XYZ's financial transactions?

There was an unmasking of a government official a couple of years ago.

What happened when that unmasking took place was that every financial transaction that

he had ever done and every ping of his cell phone was now available to those who had unmasked.

And why is that?

Because all that data is collected on us already.

And so I don't think a CBDC makes it any worse.

It just puts it out there for everyone to realize.

Thank you.

Michael, I'd like to ask you.

So Senator Cruz has some comments on Bitcoin energy.

As you know, that is a common criticism, Bitcoin's impact on energy.

What do these criticisms get wrong?

And specifically criticisms that are based on a sort of proof of stake versus group of

work type model.

Well, I mean, the first principle is that Satoshi's invention of Nakamoto consensus gave us a fair,

equitable, ethical mechanism to create a digital commodity.

If I wanted to create a block of digital energy, people say, what is Bitcoin black backed

by? Well, it's actually backed by energy.

In fact, an encrypted energy or a SHA-256 digitized energy.

And there's $20 billion worth of Bitcoin miners that are protecting and creating that energy

right now.

If you replace all the semiconductors and all the energy that's creating the Bitcoin and

protecting the network with imaginary validators and imaginary nodes, you get imaginary

security on imaginary asset.

And from a legal point of view, that becomes a security, which is a problem legally.

But from a practical point of view, it's no longer a scarce commodity.

It's a plentiful security.

You end up with 20,000 copies.

And then everybody that creates one breaks off and creates another one.

Because why wouldn't you just keep creating copies of something which is easy to cut and

paste?

So the fundamental premise of Bitcoin is I use energy and semiconductors in order to create

something, a block of digital energy, which will last forever, which is immortal, indestructible,

which you can move at the speed of light.

We're digitizing energy.

The reason that the energy usage is not a bad thing is because for the most, first of

all, it's really digital energy.

You're feeding in a tenth of a percent of the civilization's energy to create something

which will last forever, which is indestructible, not that much.

When you think about it, a tenth of one percent of energy to create something which could

be the basis of the entire financial system of the world.

But the second reason that it's not really a problem is the tenth of one percent of

the energy is all marginal stranded waste energy that you couldn't really use for any

other purpose anyway.

It's basically wholesale stranded energy.

Generally paid for it like two cents a kilowatt hour.

And if you study energy, you know that the retail rates for industries and people are 10

to 20 cents a kilowatt hour.

The entire network is running on a thimble full of energy at the edge of the grid that nobody

else wants.

And we're recycling that stranded waste energy into digital energy which will last forever

and move at the speed of light and you can build any number of beautiful elegant things

on top of it with no friction.

And so why wouldn't you want to do that?

Yeah, the financial system uses something like 10 to 20 percent of all the energy in the

world.

So right, of course.

Senator, like to you, the last question, what are the biggest things lawmakers and regulators

need to get right about Bitcoin?

And what do you think are the biggest pitfalls that they risk?

I'll start with the biggest pitfalls.

The pitfalls will be to over regulate and to not leave space for innovation.

Caitlin Long mentioned the Lightning Network.

Right now, you can use Bitcoin as a means of payment.

But a year ago before the Lightning Network was fully lit up, you couldn't.

I mean, that's how fast this innovation is occurring.

This young guy named Jack Mathers with Strike just executed a deal with Amazon.

So you can put your credit card in a machine as the pay or the pay, which is like Whole Foods.

Gets that money instantaneously because it's converted to Bitcoin.

And if they want to convert it back to US dollar on the other end, they can.

But the point is the float is gone.

They're getting it at lightning speed.

And so the friction that Michael Saylor just explained is kind of gone from the banking

system.

So when you think about all of the benefits to our current banking system of that friction,

allowing them to transact during that frictional phase of transacting, financial costs amount

to 7.5% of this nation's GDP.

Unbelievable.

Some of that's going to be taken out of the system.

And those values are going to be to the person paid or to the peer to peer transactors,

such as the son and daughter working in the United States that are sending remittances

to the mother in El Salvador.

She doesn't have to pay the transaction fee to Western Union.

It's sent on the phone.

It comes on the phone.

She can begin buying groceries immediately.

That's the kind of thing that our regulatory regime needs to protect, to allow these kinds

of innovations to occur without over-regulating them.

So I think the risk is to over-regulate and to assume that what we know today about

the capabilities of the distributed ledger are just in their earliest stages.

And that what can happen with this is going to be so transformative that we can't even

envision it right now.

Then you lay on top of it what Ted Cruz said.

I think he was being generous when he said last summer there were five senators who understood

this and recognized the problem with the definition of broker.

That's a much more generous number than I would have used.

So what we're trying to do is educate our colleagues about the message that was delivered

earlier by Senator Cruz, the message you're hearing now, and both Michael and Tatlin have

been instrumental in sitting down with members of the U.S. Senate in small groups and just

taking them through this little by little.

Because conceptually it's so different from what we're used to that it's hard for senators

to wrap their head around it.

And then to try to figure out how to regulating something that you can't see or touch is a

challenge for them, for us.

And so, but the advantages are if we get it right we get this framework right.

There are people in other countries who are trying to get this right at the same time

we do.

There are people in Canada, in England, in Australia, in Jordan, and other countries

all over the world that want to get this right.

And they recognize the types of game-changing transformative global interactions that can

be taken advantage of if we get this right.

So I think the good news right now is that there's a small cadre of people who may

not understand the mechanics of it as well as Caitlin and Michael do, but we understand

the political freedom and the potential it can bring for humankind if we get this right.

And there are people of goodwill who want to get this right.

Who want to be the political Satoshi Nakamoto who say this person got it right or this

group of people got it right, let's not mess it up.

Thank you.

I would like to open it up to questions.

Okay, first hand us off.

Eric Peterson.

Eric Peterson, the Pelican Institute.

You talked a little bit about the terror luna collapse and it doesn't really matter for

Bitcoin, but as Senator Lomis I think would realize is that these sort of large collapses

where people lose a lot of money, create a call for government action.

How do we make sure that there's a difference in understanding between different kinds

of coins and sorts of products and they're not all regulated in the same way or that

one product failing doesn't cause undue regulatory burns on another kind of product.

Is that for me?

Let the markets decide.

The market did a pretty darn good job of the leverage flush of what happened in terror

luna.

It's tragic, of course, that so many people were taken in by that, but it's not going

to happen again.

There are others who are trying to offer 40% annualized yields on their stablecoin and

they're not getting network effects.

Let's put it that way.

I think the best thing that our industry can do is call out those kinds of bad behaviors

ourselves to the best extent possible as many in the industry did.

Will it be used for regulation?

Yes, unfortunately.

And that's why Senator Lumas' bill, I think, is so important to because it does make

the distinction.

And as you know, not all cryptocurrencies are created alike among the things that also

happened within the last 30 days was the coin base concern that if it went bankrupt,

but the Bitcoin within coin base actually belonged to the owners of coin base, not to

the people who were having their Bitcoin custody by Coinbase.

So we all need to understand, not your keys, not your coin, not your keys, not your coin.

If you don't have the password or whatever you want to call it to get your coin, then

it's not your coin.

And these are the kind of things that we're all learning in real time as they play out

and that need to be, once again, contemplated within a regulatory framework, but not regulated

to the point where it's stiples innovation.

And it's going to be tough because there are frauds out there.

There are scams out there.

And I worry that people can flate all cryptocurrencies and they're not all created alike.

I would add, I think that the Tararolina collapse is going to be good for the industry.

It's going to accelerate good regulation.

Not all regulation is bad regulation.

If you go to CoinMarketCap, there's 19,500 crypto's out there and there's massive confusion.

And a shakeout in the industry would be advantageous because the average mere mortal doesn't have

time to study 19,500 cryptocurrencies.

And there is a bona fide large demand for stablecoin that's safe and transparent.

And it's been difficult for legitimate institutions like Caitlin's Bank to issue those stable

coins because there's been a regulatory deadlock in DC.

Like people know they need to do something, but there was no urgency to do it.

And I think now this is front and center at Treasury and administration and in Congress.

And I suspect that whatever kind of clarity was going to come is going to come faster

because now there's a reason to accelerate the pace.

And I mean, some people think like Bitcoin benefits from anarchy or lack of regulation.

That's not true.

In fact, I think Ken Griffin said this last week, the CEO of Citadel, he said, he said,

the entire industry deserves clarity.

We need to understand what's a security.

We need to understand what's a currency.

We need to understand what's a commodity.

And if the SEC does this or gets to go to the CFTC and issues some guidance, tier one firms

like his Citadel, Goldman Sachs, JP Morgan, they can all start to get involved.

And then what we'd like to see is everybody want to play in the industry, big investors,

bring money into the industry.

And then the banks, you might have seen David Sullivan was on CNBC a couple of days ago.

And they asked him, do you custody Bitcoin or crypto?

And he said, no, no, we can't.

OK, well, there's a little, can you as a bank custody it?

Can you not as a bank custody it when I talk to the CEOs of publicly traded FDIC, I see

it insured banks that they go, we can't issue stablecoin.

Our regulator won't let us.

So at the point that there's more clarity, I think the banks will get involved, the investors

will get involved, lots of people will get involved.

And of course the bad actors and malicious scammers will get squeezed out of the industry

because not all these things are alike, they are very different.

And the general retail population, they don't have a choice between taking a stable coin

from a bank or a stable coin from an organization that ETFs disclose their holdings every day.

Right?

And how about every week, every month, every year?

Right now, 70% of the stablecoin in the market, there's no disclosure, even in a year of

precisely what's backing it.

And the market wants a trillion dollars worth of this stuff.

Everybody wants it, I can't get it.

And the banks that could provide it aren't allowed to offer it.

And so we're kind of in this kind of deadlock.

And if it took the tarot loan and blow up in order to unstick that, I mean, it's bad for

them, but it will ultimately result in an industry that's more mature and more functional.

For all the gnashing of teeth that the bank regulators have done over this, the Fed has

been sitting on custodia's application for 19 months with an actual proposal to issue

a digital dollar in the form of a digital cashier's check.

And when we applied, our application said that processing may take five to seven business

days.

It's been 19 months.

So I would pose the question directly to the Federal Reserve, why have you sat on this

when the scams have been allowed to take place?

And it's not right to look at it and say, well, this needs to get into the regulatory

perimeter.

They have had the actual ability to have this inside the regulatory perimeter for 19 months.

And the scams that have taken place in that interim period of time, it is an interesting

question.

We'll never know the answer to would they have been proliferating had their been an

actual approved version of this.

I'll throw out another interesting factoid I haven't spoken about publicly since my bank

decided to apply to become a Fed member bank to try to accelerate the regulatory oversight.

We are literally planning to hold a dollar eight cents in cash on deposit at the Fed against

every dollar of deposit in our bank.

This is as safe as we possibly can be.

So we decide to become a Fed member bank.

The Fed removed that language from the master account application about processing five to

seven business days, two weeks after we applied to become a Fed member bank.

That's what we're up again.

That's astounding.

So you would be much safer than Wall Street indeed.

Far safer.

Yeah, a dollar eight cents for every dollar of cash deposited, which means that we could

survive a bank run because remember these things settle within minutes, right?

And so what I said earlier about needing to sit on liquidity, we are literally the most

we're proposing to be the most liquid bank in the United States.

But that's how you how you make sure that you don't trip over the crypto risk into the

mainstream financial system that is not designed to handle it.

And I do worry because there are now hundreds of banks and credit unions making loans against

Bitcoin.

And the loss given default if the custodian is hacked on those loans is a hundred cents

on the dollar.

So the regulators are not wrong that there is a potential for this to bleed into the financial

system.

There are safe and sound ways to plug the two together.

And that's what the state of Wyoming set up.

And then the bankruptcy risk with Coinbase Wyoming designed a specific custody regime to

solve that very problem.

But we've been blocked by the Fed.

And among the things that has to happen, and I believe will happen as part of this, is

the absolute lack of responsiveness and transparency at the Federal Reserve has got to change.

We applaud reminded me that Senator, we do have to let you, she, Senator had a previous

engagement.

Please give the panel a hand.

And you guys are going to stick around for a little bit longer if that's okay.

Do we have, I'm certain that we have a lot more questions.

Yes.

The eventually will.

And do you think it's going to continue to grow as, I mean, you pioneered this with

micro strategy and we've seen it with mass mutual, we've seen it with Tesla.

The first order challenge is that the current accounting is toxic.

Toxic and prejudicial, right?

It's indefinite and intangible accounting, which means if you buy it, you can only market

down, you can never market up forever.

And the toxicity then it obscures your balance sheet, but it also filters into your PNL.

So that's kept most conservative CFOs from wanting to pursue it.

FASB has got a project to review the accounting for digital assets.

I think if FASB actually implements anything looking more like fair value accounting, that

would be a big, a big, auspicious thing.

I think after that, the second order issues are if the SEC approves a spot ETF, if Treasury

or someone gives FDIC banks or any kind of chartered bank, a state chartered bank like

Caitlin's Bank, they build a stable coin, that will accelerate the industry.

I think if the SEC regulates the crypto exchanges as national securities exchanges, that will

actually accelerate corporate adoption.

I think if they mandate full and fair disclosure for all the unregistered securities that

are trading in the crypto industry, like the loonies and the terrorists just melted down,

it will shake out all of the garbage that will accelerate a flight to quality and to

Ken Griffin's point.

There's just a lot of public institutional investors that they won't touch it because

it's like you're slimed by association with the garbage.

Bitcoin is backed by $20 billion worth of semiconductors and hardware and energy.

Then, you know, yo-yo coin number 97 was ginned up in the basement of some dude in some place

that is located behind a tornado.

You just don't know who that is.

And so if you're a mainstream investor, the Charlie Mungers and the Warren Buffett to the

world, they're not going to dig into this.

They're just going to read something and they come to a very quick conclusion.

Make it or not, people with less knowledge than you have more money than you.

And the market is dominated by them.

So you want to see more corporate adoption, right?

You need the FDIC, the Fed, Treasury, the SEC, CFTC.

They all need to move forward.

FASB has a big role to play.

The only good news here is everything I just named is highly predictable.

It will happen.

This question of does it happen in six months, 36 months, right?

60 months, right?

And you have to decide.

Okay.

Do we?

Yes.

Thanks very much.

Jonathan Milton, Silvergate Bank.

Question for Mr. Sailor.

Along the lines of the previous question, I'm thinking on a geopolitical perspective.

If the United States adopts to you that Bitcoin is relevant 100 years from now, what are some

suggestions that you would make for America to be a winner out of that?

Is it specifically the accounting to the Fed by Bitcoin, something related to mining,

with the group of policy folks I mentioned in your business perspective?

Well, I mean, first item I'd observe that everybody had the ability to harness fire, right?

And then along comes electricity and then we put energy into a barrel of oil, liquid

energy, and anybody could have actually harnessed the power of liquid energy.

But the nation that did was the United States.

And although he's demonized many, many years after his death, John D. Rockefeller was the

reason the United States and Standard Oil was the reason the United States became the world

leader in liquid energy.

And liquid energy gave way to electromagnetic energy.

We got good at that and along the way we harnessed air power.

And then after that, atomic power.

And now, atomic power, air power and oil had some impact on the United States success

throughout the 20th century.

So this is digital energy, right?

This is the ability to project power in cyber space.

And it's the consequence of the U.S. is similar.

Do you want to have the most cyber power and the most space power and the most air power

and the most nuclear power or do you not?

And like how do you do it?

You mine it, you own it, and then you build the banking operation, right?

What you've got is a bunch of energy.

You want to move it at the speed of light.

You want to borrow against it.

You want to lend against it.

You want to transfer it.

You want to create more of it.

You want to upgrade it with layer two and layer three applications.

And the reason that this is a no-brainer for America is because ultimately it's American

companies and American investors and American banks that are in the best position to harness

and take advantage of this if we don't write some other country will.

And we didn't talk about it much.

One of the important things about Bitcoin is it delivers conservation of energy to cyberspace.

And what that means is you can actually instantiate matter and energy in cyberspace.

And if you want to create a wall in cyberspace you need actual energy to create the wall.

And so what that means is that the future of cybersecurity and cyber warfare is going

to be about maneuvering energy in cyberspace.

If you don't have it it's not having satellites and the GPS system or not having air superiority.

You will lose control of your airspace, your country is getting bomb back to this stone

age.

So this is really critical to the domination and the security of America in the next

hundred years.

And the way you actually benefit from it is just harness it.

Use it.

Own it.

Understand it.

The single most significant Bitcoin is the single most significant geopolitical decision

was China's decision to ban Bitcoin.

The question is really is the US going to shoot ourselves in the foot and do the same.

There are certainly people who are pretty outspoken who are trying to do the same.

Do we have a question from the side over here?

I've neglected.

Yes.

You really respect a lot of the work you both have done.

It's been pretty incredible to be on this journey for a little bit with you.

So thank you.

Just wanted to dig into the geopolitics a little bit more in the juxtaposition between

the CCP and some of us are looking at the Belt and Road initiative.

You have infrastructure, energy, ports, payments.

So the digital yuan.

Do you see Bitcoin as kind of western values wrapped up to kind of come and counteract

that a little bit around the world?

Yeah.

I do.

I mean China has a tendency to put a bunch of stuff behind the great wall of China.

So they banned Google and they blocked Facebook and they blocked Twitter and they blocked

all sorts of western technology.

We saw the Western-N-European United States spin up one ecosystem that was wrapped around

American values, the English language, the dollar and US technology.

And that's a very powerful system and that probably dominates whatever four or five billion

people.

And then the Chinese have about two billion people in the China net and they built their full

stack, their language, the C and Y, their currency, their values, their law, their technology.

I think that Bitcoin has the potential to be adopted by anybody but in countries with

weak property rights like say Cuban North Korea, it's anathema because I don't want you

to own anything.

And China is not quite as weak property right as North Korea but it's much weaker property

rights than say Western Europe or the United States.

And so they have this love hate relationship with it and ultimately they can't get comfortable

with it.

So most of that has slipped away and in the past two years I think Bitcoin has become

entrenched as a very strong layer in the western net.

And I think that the die has cast there.

I don't think that I think the Chinese had a point where they could have grab control

of it and I think they lost control and now they'll never get it back and that's been

good for the West and it's going to cost them a trillion dollars or trillions of dollars

because of the mistake of dismissing it.

But I mean history is full of examples of empires that they reject some new technology

to their detriment.

Outstanding.

Do we have a question over here?

Yes.

Hi.

I'm with Heritage Foundation.

Do you believe that the infrastructure of, I guess the internet being built on blockchain

technology will render some of these big tech companies like Amazon Web Services, Google

Cloud and all of those big tech companies that dominate the web infrastructure do you think

that they will render them useless or will they adopt to kind of using blockchain technology

to further run their...

That's a great question because I tweeted out maybe a year ago that Bitcoin was going

to hack Silicon Valley.

Bitcoin was going to hack big tech and it's happening with Jack Dorsey.

Right?

I mean he really is moving away from the centralized model to embrace the decentralization of tech

and I think the same is possibly happening with Elon Musk and we're just going to see

the dominoes fall because the centralized model pisses off half of the users, right?

If you start canceling people and it's an infrastructure issue as well.

There are two single point of failures in the Bitcoin ecosystem, one of which is cloud

services that so many of the intermediaries are really running on a very small number of

cloud services and the other is banking, US dollar banking.

There are really only two banks that service this industry.

It's deemed a high risk industry by the US bank regulators and so behind most of the intermediaries

that you see in this industry is one of two banks and so I do worry about those potential

single points of failure but to your original question, yes, it's going to continue to hack

big tech and Jack Dorsey was just the first to recognize that.

A lot of us are hopeful about Elon.

He's accepting Bitcoin again.

He says because it's renewable.

Well, Twitter tips is becoming a really important rail for remittances and you can use the Bitcoin

Lightning network on Twitter tips to move money to any Twitter user around the world for

free and instantly right now.

I think it's one of the many payment services that you can choose on Twitter tips but my

hunch is that Elon's not talking about that.

That's what's really going on in his mind.

He wanted to figure out how to hack payments.

He started his career at a press assessor to paypal that merged into paypal and then