Podcast Summary
A lively and insightful conversation about the evolving world of Internet money and finance: Stay informed and open-minded in the ever-evolving world of Internet money and finance, as new perspectives and disagreements emerge in the crypto space
The world of Internet money and finance is evolving rapidly, and it's important to stay informed and engaged with different perspectives. In this episode of Bankless, hosts Ryan Sean Adams and David Hoffman had a lively and insightful conversation with Meltem Demirors, who brought data and energy to the table, making the case that everything is new again in the crypto space. While there was alignment on some macro level topics, the conversation got spicy when they disagreed on the bankless nature of Bitcoin and the role of Ethereum. Regardless of personal perspectives, the podcast is entertaining and informative, and listeners are encouraged to check out the YouTube version for an expressive and joking Meltem. The episode also featured a sponsor, Ledger, which is offering a 40% off Black Friday sale on hardware wallets. Overall, the conversation highlights the importance of staying informed and open-minded in the ever-evolving world of Internet money and finance.
Shifts in the financial landscape with the rise of cryptocurrencies and DeFi: The crypto space is undergoing significant changes, with new features like Ledger Swap and projects like Wyren disrupting traditional financial systems and shifting mental models around markets and economies.
The traditional financial landscape is being disrupted by the rise of cryptocurrencies and decentralized finance (DeFi), as evidenced by the introduction of new features like Ledger Swap and projects like Wyren. This disruption has led to a shift in mental models around how markets and economies function, leaving many grappling with this new reality. The past year has seen significant change, with the shattering of old paradigms and the dawn of a new beginning in the crypto space. However, this transition is not without challenges, as many are struggling to understand and adapt to this new financial landscape. Meltem Demirors, the Chief Strategy Officer of CoinShares, highlighted this in a conversation on the Bankless podcast, sharing data and insights on the current state of the crypto market and the broader implications of these changes. She emphasized the importance of bringing facts and data to the conversation to elevate the discussion and make everyone smarter. Overall, the conversation underscores the significant shifts happening in the financial world and the exciting possibilities that lie ahead in the crypto space.
Understanding the Intersection of Forces Shaping the Future: Wealth concentration has increased significantly, exacerbated by recent economic crises, leading to a widening wealth gap between those who own capital and those who have labor
The world we perceive is shaped by our experiences, expertise, and background, but there are multiple realities out there. To understand the future, it's essential to consider the intersection of four primary forces: technology, economic forces, cultural and social forces, and political forces. Economically speaking, wealth concentration has increased significantly in recent decades, with a small number of individuals holding more wealth than the bottom 50% of Americans. This trend has been accelerated by the crisis we've experienced over the last two months, with Elon Musk joining the ranks of the top three wealthiest people in the world. Additionally, the rotation of wealth into equities and housing prices has further widened the wealth gap between those who own capital and those who have labor. Understanding these trends and their potential collisions can help us make informed decisions and place chips on the table around potential outcomes.
Wealth gap in US: A complex issue: The wealth gap in the US is a complex issue driven by a generational divide, policy decisions, labor force shifts, and entitlement funding gaps, leading to potential social unrest and a need for alternative assets like cryptocurrency
The increasing wealth gap in the United States is not solely due to monetary policy interventions, but rather a complex interplay of various forces. These include a generational divide where older generations have captured the majority of wealth, policy decisions favoring these older generations, shifts in the labor force, and a massive funding gap in entitlements. This situation has led to an immense concentration of wealth, an unsustainable consumption pace among older generations, and a significant funding gap. The result is a perfect storm for social unrest and potential generational war. Cryptocurrency could emerge as a significant asset class in this context, as younger generations seek alternatives to the traditional financial system. The situation is precarious, with social unrest already occurring in many parts of the world, and the wealth concentration in the US reaching levels comparable to pre-revolution France.
A shift from traditional finance to a new digital reality for young people: The crypto movement represents a social and technological transformation towards a digital asset class, offering an alternative to traditional stocks and challenging the influence of tech companies and the shift towards a digital world.
The crypto movement represents a shift from traditional financial systems towards a new digital reality for young people. This transformation is driven by a social movement, technological advancements, and a desire for political influence. The contrast between this new asset class and the traditional stock market is becoming increasingly clear, with crypto offering an alternative to the "boomer bags" of traditional stocks. The growing influence of tech companies and the shift towards a digital world are key aspects of this battle for control in the new frontier of cyberspace. The power of the crypto community, with its unique language, beliefs, and culture, should not be underestimated in this evolution from the physical to the digital world.
The Digital Economy's Impact on Politics and Investments: Apple's dominance in US stock market growth highlights tech's influence. Regulation doesn't ensure investment quality. US gov't invests heavily in digital defense. Crypto challenges nation state construct, EARN IT Act raises privacy concerns.
The digital economy is rapidly growing, with technology stocks making up a significant portion of the US stock market. For instance, Apple accounted for over 20% of stock market gains over the last 20 years. However, not all investments in the regulated finance world are sound, and the status of being regulated does not guarantee investment quality. On the political front, the US government is spending massive amounts of money on digital and technological defense, with over $100 billion expected to be spent on cloud computing services in the next few years. This digital frontier is also influencing international politics and the future of the nation state, as Bitcoin and other cryptocurrencies attempt to separate money and state. Yet, there is debate about whether crypto will lead to governments banning it or if the nation state construct will survive this separation. Currently, a bill called the EARN IT Act is on the floor of Congress, which could potentially weaken encryption in the US, raising concerns about privacy and security.
Government attempts to regulate encryption pose risks: Attempts to ban encryption infringe on freedoms and create vulnerabilities, encryption is essential for privacy and security, and it's impossible to ban a mathematical concept.
Attempts to restrict encryption and privacy technologies not only infringe on individual freedoms but also pose significant security risks. During the 90s, when encryption was first introduced, the government tried to regulate it due to security concerns, but this approach backfired and created more vulnerabilities. Encryption is crucial for protecting privacy in communication, location, and transactions. Without it, our digital and physical lives could be exposed to unwarranted surveillance. The push to ban encryption is not only futile but also puts countries at a disadvantage in terms of security and defense capabilities. Additionally, encryption is a mathematical concept, and it's impossible to ban it. Instead, policymakers should focus on educating themselves about technology and its role in preserving privacy and security.
Dystopian Future of Government Control vs. Corporate Rule in Crypto Industry: Government control over assets and freedoms could lead to a dystopian future. Corporations, not governments, may rule the future of crypto. Securing physical infrastructure is crucial in the crypto industry. Bitcoin and Ethereum market highs signal economic, political, and cultural changes. Prediction: Bitcoin hits $20,000 before Thanksgiving.
The conversation highlights the potential dystopian future of governments having excessive control over individuals' assets and freedoms, as exemplified by China's current regime. Bruno's perspective is that corporations, not governments, will rule the future. The discussion also emphasizes the importance of physical infrastructure in the cryptocurrency industry and the need to secure it against potential attacks and government interference. Additionally, the conversation touches upon the economic, political, and cultural changes shaping the world, with Bitcoin and Ethereum hitting new market highs. A bold prediction was made for Bitcoin to reach $20,000 before Thanksgiving.
Managing and Engaging with DeFi through Zerion and Monolith: Zerion offers portfolio tracking and access to DeFi applications, while Monolith functions as a smart contract wallet with yield access and a Visa card for a 'bankless' life. Both platforms simplify and enhance the DeFi experience.
Zerion and Monolith are innovative platforms revolutionizing the DeFi (Decentralized Finance) space. Zerion functions as a central hub for managing and engaging with various DeFi protocols and assets, offering portfolio performance tracking, asset breakdowns, transaction history, and investment opportunities. It also enables easy access to DeFi applications like Compound and AAVE, as well as asset exchanges using an aggregator for optimal rates. Monolith, on the other hand, is a smart contract wallet with features like adding funds, yield access, and swapping through Uniswap. Monolith also offers a Visa card connected to the wallet, allowing users to live a "bankless" life and even buy groceries with crypto. Coming soon, Monolith will allow users to buy crypto directly from their bank accounts, making it an on-ramp to DeFi. Both platforms demonstrate the potential of DeFi, offering users a more flexible, yield-generating, and technologically advanced financial experience.
Focus on the bigger picture in crypto: Instead of infighting, crypto communities should work together towards a future where cryptos play a bigger role in society. Recognize the value of criticism and attach a timescale to debates for productive conversations.
The crypto community, specifically the Bitcoin and Ethereum communities, need to focus on the bigger picture and stop the infighting. The extremists in each community can dominate conversations, but they do not represent the entirety of the community. Instead of fighting over details and market share, we should work together towards a future where cryptocurrencies play a more prominent role in society. The Bitcoin community, in particular, should recognize that not everyone shares the same level of extremism and that a more inclusive and moderate approach will benefit the entire industry. Additionally, attaching a timescale to debates and recognizing the value of criticism can help foster productive conversations and improve our collective understanding.
Stay open-minded to new ideas in crypto: In the rapidly evolving crypto world, staying open-minded, learning continuously, and remaining adaptable are crucial for success.
Being open-minded and willing to change your perspective is crucial in the rapidly evolving world of cryptocurrencies. The speaker emphasizes that Bitcoin, as the dominant asset, holds a unique place due to its extensive knowledge base and deep intellectual gravity. However, other cryptocurrencies, like Ethereum, may take more time for people to understand and place in their mental models. The speaker also acknowledges that there have been and will continue to be worthless projects in the space, but as resources and narratives develop, some of these projects may gain meaning and value over time. Ultimately, it's essential to stay curious, keep learning, and remain open to new ideas and possibilities.
Beyond Market Price: Understanding Ethereum's Value: The value of Ethereum extends beyond its market price due to the recursive relationship between capital and production in the crypto industry. Traditional fundamental analysis may not fully apply, and it's important to consider diverse perspectives.
The value of cryptocurrencies, such as Ethereum, goes beyond just their market price. The speaker argues that the recursive relationship between capital and production in the crypto industry can lead to projects with seemingly high valuations. He also emphasizes that the obsession with price in the industry can be limiting and that the mental model of valuing assets based on traditional fundamental analysis may no longer apply. The speaker expresses his personal view that he doesn't yet view Ethereum as a store of value like Bitcoin, but acknowledges that this could change in the future. He also stresses the importance of having diverse perspectives and influences to broaden one's view of the world.
Exploring diverse perspectives on decentralized currencies: Engaging with differing opinions can lead to personal growth and new insights, even in discussions about decentralized currencies and the role of intermediaries.
Engaging with diverse perspectives, even if they challenge our own, can lead to personal growth and new insights. This was exemplified in a discussion about the "bankless thesis" in crypto, where two individuals held different views on the role of intermediaries in a world of decentralized currencies. While they may have presented the idea differently, the core concept was the same: the desire for individuals to have control over their assets and transactions without relying on intermediaries. However, it's important to recognize that our current mental models and cultural context may limit our ability to fully embrace new technologies and ideas. It takes time for humans to adapt to change, and it's essential to remain open-minded and flexible as the world evolves.
A shared vision for a decentralized financial system: Bitcoin and Ethereum have the potential to create a decentralized, intermediary-free financial system. Ethereum offers the infrastructure Bitcoin needs to scale, and innovative finance and cryptography solutions are emerging on Ethereum. The ultimate goal is a self-sovereign, bankless society.
Despite ongoing debates about the scalability and potential of different cryptocurrencies, there is a shared vision for a decentralized, intermediary-free financial system. Bitcoin and Ethereum, in particular, have the potential to achieve this goal, with Ethereum offering the infrastructure Bitcoin needs to scale. The coolest innovations in cryptography and finance are happening on Ethereum, and it makes sense for Bitcoin to join the Ethereum ecosystem. Uniswap, a decentralized exchange on Ethereum, is a prime example of the interesting and groundbreaking possibilities of this ecosystem. While there may be disagreements on the specifics of how we get there, the ultimate goal of self-sovereignty and a bankless society is a shared one.
Exploring the Excitement and Challenges of DeFi: DeFi opens new possibilities for financial applications, but investors should understand its risks and engage with it in a well-rounded manner, focusing on technology and people.
Despite the challenges and risks associated with DeFi, it has opened people's eyes to the possibilities of building innovative financial applications using blockchain technology. The memes about DeFi reflect its excitement and hype, but also highlight the issues and concerns. As an investor, it's essential to understand DeFi and engage with its products and services to have a well-rounded perspective. The technology behind Bitcoin and other cryptocurrencies should not be overshadowed by personality and tribalism. Bitcoin is just a technology, and individuals should focus on being people first and foremost. The ongoing evolution of the crypto space requires an open-minded and adaptive approach.
Differing Perspectives on Crypto's Future and Institutional Involvement: Respect differing opinions on crypto's future, acknowledge potential inconsistencies, and recognize the role of institutions in the space while acknowledging potential risks.
While there are differing perspectives on the future of cryptocurrencies like Bitcoin and Ethereum, it's important to respect each other's views and recognize the hypocrisy in calling for permissionless financial innovation while also advocating for financial regulation. Meltem, in the discussion, expresses her disagreement with Pomp's perspective that Bitcoin will overtake Ethereum and build its own DeFi ecosystem, citing fundamental challenges. She acknowledges Pomp's ability to generate hype and respects his consistency. Meltem also emphasizes the importance of understanding and recognizing one's own inconsistencies and working towards more consistent world views. The conversation also touches on the role of institutions in the crypto space and the importance of recognizing the potential dangers of institutions holding large amounts of crypto. The discussion ends with a reflection on the future of cryptocurrencies, acknowledging both what one might hope for and what is more likely to happen.
Institutions Turning to Bitcoin as Alternative Investment: Amidst low interest rates and rising inflation, institutions are exploring Bitcoin as an alternative investment, relying on established financial institutions and technology for ease of entry.
As we navigate through a world of zero interest rates and increasing inflation, people are seeking alternative investments to preserve their purchasing power and potentially earn returns. Bitcoin, with its growing liquidity and robust infrastructure, presents an attractive option for institutions looking to allocate significant capital. However, the practical reality is that institutions are unlikely to abandon their traditional systems and manually manage Bitcoin holdings. Instead, they will rely on established financial institutions and technology to facilitate their entry into the crypto market. The shift towards Bitcoin as an alternative investment is a response to the current economic climate and the limited options available for earning returns in a world of negative yields and inflation.
Shifting Power to the People with Cryptocurrencies: Expert predicts Bitcoin at $150,000 and Ethereum at $25,100, encourages involvement, open-mindedness, and advocacy for encryption and better representation in government to build a more inclusive society.
We are living in a time of great change, where governments are losing control and the power is shifting to the people. This trend is leading to a more decentralized world, where cryptocurrencies like Bitcoin and Ethereum are playing an increasingly important role. Meltem, a leading expert in the field, predicts that Bitcoin will reach a price of $150,000 and Ethereum will reach $25,100, but she is not attaching a specific timeline to these predictions. To help facilitate this new, more egalitarian world, Meltem encourages listeners to get involved in whatever capacity feels comfortable to them, stay open-minded, and advocate for policies that support encryption and better representation in government. Ultimately, it's up to each of us to embrace the changes coming our way and work towards building a more inclusive and open society.
Exploring consensus requirements in crypto: Stay informed on specific consensus requirements for various crypto protocols, aiming for a bankless financial system while considering challenges and risks.
Consensus in the crypto community can be achieved through various means depending on the specific protocol, and it's important to stay informed and prepared for different requirements. Meltem and David had a productive conversation about the potential shift from a 50% to 51% consensus, but it's essential to remember that the threshold can vary. For instance, some protocols might require 66% or even 80% consensus. Meltem and David also shared their agreement on the overall "bankless" thesis, aiming to remove intermediaries and banks from the financial system. However, becoming fully bankless can be challenging, especially in America. For those interested in further exploration, Meltem shared some slides and links to presentations in the show notes. It's important to remember that the conversation was not financial advice or a solicitation to buy or sell securities. Crypto investing comes with risks, and it's crucial to do thorough research and consult professionals before making any decisions. Despite potential disagreements, Meltem encouraged open communication and finding common ground, emphasizing the importance of engaging in respectful discussions. Overall, the conversation highlighted the importance of staying informed, being prepared, and working together to build a more decentralized financial future.
