In this episode of The Stacks Podcast, host Patrick Stanley talks with Jeremy Welch, co-founder, former CEO, and current Advisor to Casa, which provides secure storage solutions for digital wealth (namely, Bitcoin). The longtime cryptocurrency cohorts discussed Bitcoin’s resiliency, its power to unite disparate groups, and why Bitcoin is “boring.”
Why Bitcoin?
Casa is a Bitcoin-first company. The Casa app was designed specifically to help people keep their Bitcoin wealth safe while giving them the best of both worlds: the power to control their wealth with full command over their keys, paired with the safety net of expert support whenever they need it.
So Stanley kicked off the podcast with a simple question: “Why Bitcoin?”
First: “It’s the most revolutionary technology of our lifetimes…not just for value storage, but in computing. That value storage and the value preservation, — especially with a 21 million cap — it’s just going to change the world forever,” explained Welch.
The second reason, Welch says, is how simple and “bare-bones” Bitcoin is, which gives it versatility. “We use the flexibility and key management that was already built into Bitcoin and wrap a lot of UI around it,” he said. “The technical foundations are already there, with revolutionary potential. Those two factors combined meant that it was very clearly the lead choice for us in terms of our focus.”
Bitcoin’s Resiliency
Because Bitcoin is a distributed and decentralized system that’s not governed by one single authority, Welch says it operates with a level of permission-less communications and actions that doesn’t exist elsewhere.
He says the system is “resilient,” because it can continue to operate, even if multiple parties that currently operate within it die off. “You can have parties in China, the US, and South America — you can have parties in space — all participating and using the system. If anyone goes offline, it’s not going to affect the system overall in the same way it would if your traditional bank just went offline and you couldn’t check your balance or execute any transfers.”
Welch says there will still be attacks on Bitcoin just like there are on banks. “But not only is Bitcoin more reliable just in terms of execution, but it’s also harder to attack and co-opt the system design.”
Bitcoin is Boring
Stanley said that in addition to Bitcoin being strong against attacks, it’s also a reliable carrier of information and pondered: “One wonders what use cases will come soon after hodling, as the wealth goes up.”
“That’s a great point,” agreed Welch. “I always try to boil ideas down into simple statements — and I have this thing that I’ve been saying recently, which is that Bitcoin is boring. The future of Bitcoin is boring, and that’s a feature,” he said. “It’s already awesome that it’s this super resilient system, that can survive just about any type of attack. The information transfer is unstoppable. That’s already awesome, right? That’s enough.”
Welch believes that as Bitcoin evolves, the technology will — and should — remain the same. “People will build on top of Bitcoin, but Bitcoin itself as a layer is boring. It’s simple. It’s going to stay boring.”
He says there are a few updates coming down the pike at Casa related to key signing and proving identity, but they’re being built on top of Bitcoin. “By being an interface layer that allows you to use Bitcoin better and use key signing better, we’re building better UI people can create wealth around.”
Defending Against Enrtyism
While on the topic of hodling, Welch introduced the concept of entryism, which he says is a root problem in political science and philosophy, and in organization-building.
“Once you have a community or a piece of wealth, there is a tendency for outside groups that were not a part of the original creation process and community to come in, to try and gain entrance,” said Welch. “Resisting entryism is important because it allows you to preserve the characteristics of the community that resulted in the initial innovations and production in the first place.”
Stanley related the concept of entryism to the evolution of a country like the United States, and drew a comparison. In the early days of the U.S., people were required to own land in order to vote — which he compared to hodling requirements in today’s world crypto.
To Welch saw, it begged a complex question: “How you continue to provide benefits and opportunities to the widest number of participants in a system without opening yourself up to destruction of the system from entryism?”
Bet On Balkanization
Both Stanley and Welch believe in the longevity of Bitcoin — they see it as a tech terra firma that will last for generations.
When Welch was asked how he saw the Bitcoin community evolving over the next several decades, he shared another concept he’s pared down into another simple phrase: “bet on Balkanization.” (The geopolitical term of Balkanization has come to refer to the process of dividing a region or body into smaller states or groups which are mutually hostile.)
“I think that across the world politically, we’re going to get more and more Balkanization. I think that Bitcoin is going to be one of these common threads, this common community through which people can connect and exchange. But, you’ll get different effective fiat currencies on top of Bitcoin,” he explained. “A lot of those will get adopted by these individual countries — either physical or cloud. I say ‘bet on Balkanization’ in the sense that there are a lot of fractured groups out there, but we have this shared communication layer, and that’s Bitcoin.”
To hear the full conversation between Patrick Stanley and Jeremy Welch, listen to The Stacks Podcast and learn more about Casa here.
Full transcript:
Patrick Stanley:
Welcome to another episode of the Stacks Podcast. I’m Patrick Stanley, Head of Growth at Blockstack PBC. On the show with me today, is a long time friend and Casa Co-founder, Jeremy Welch. Jeremy, thanks for hopping on today.
Jeremy Welch:
Of course, it’s great to see you Patrick. It’s… like you said, long time friend, before a lot of this stuff was going even in the early days of Casa, we’ve been friends for a while and seen a lot of this stuff grow. It’s fun to be here and I’m excited to dig in on some cool topics.
Patrick Stanley:
Yeah, cool. You’re pretty well known in the crypto space, for being the co-founder of Casa. Do you want to give kind of like a brief intro on yourself and kind of background on Casa?
Jeremy Welch:
Sure, yes. I’m a co-founder Casa, co-founder CEO. I created Casa… this is three or four years ago. Our lead products are a multisig system for Bitcoin. We have the best, the most secure system for securing your Bitcoin personally. That is multisig, multi-location, multi-device.
Jeremy Welch:
We use multiple types of hardware devices, it’s cross platform. We allow you to put those in multiple locations, to protect and self-custody your Bitcoin, but with some support. Co founder and CEO of the company until 2020.
Jeremy Welch:
I had a major family health issue actually last year, that I just needed to take some time and really invest in family for a little bit. Thankfully, we have a great team at Casa and my two co-founders, Jameson Lopp, who’s our CTO. Then Nick Neuman, who is now the CEO, who was doing product at the time.
Jeremy Welch:
They’re leading the company now and we’ve launched some new stuff this year. I formerly launched our full inheritance system, which is going to help people transform Bitcoin. Not just keep it safe for this generation, but for many generations to come, which I’m really excited about.
Jeremy Welch:
Also, some new features including Coldcard support. That team is just running on all cylinders, I’m helping advise. Yeah, that’s Casa in a nutshell. We have a long relationship with the Blockstack crew. We actually built a… I’ll just mention this just briefly.
Jeremy Welch:
We actually built an early app on Blockstack. Learned a ton about Blockstack, learned a ton about how the future of applications will be built. Then during that process, we actually learned a ton about custody, key signing, nodes, everything else. That’s what led us to build our bigger business around that.
Patrick Stanley:
Yeah, I was there for you. Constantly having these like major [inaudible 00:02:26], which eventually became Casa, which is so cool.
Jeremy Welch:
Yeah.
Patrick Stanley:
There’s a lot of interesting things in what you just said. You work with Jameson Lopp. He’s been on the podcast before. You’re focused on Bitcoin. Why Bitcoin? Why don’t we dive into some of these questions? There’re some really interesting things related to the choices you’ve made.
Patrick Stanley:
First, let’s get started with just the Bitcoin part. Casa, how I’ve been using it is like, just a way to store my Bitcoin in a way that I feel like is safer than being on an exchange.
Jeremy Welch:
Right.
Patrick Stanley:
Also, I can’t mess it up. I have someone to call in case I mess it up essentially.
Jeremy Welch:
Yeah, we wanted to give you the best of both worlds. We wanted to give you the best security possible, which meant you’re fully in control of your keys. You’re fully managing a multisig system, but also the best usability and the best support of having a kind of more client services relationship.
Jeremy Welch:
Which comes from a more traditional custodian, like a bank or a private wealth manager type of firm. We merge those two, very hard to do technically and very hard to do from a services’ perspective. We brought both of them together.
Patrick Stanley:
Why Bitcoin?
Jeremy Welch:
Well, Bitcoin as I see it is… so two things. One, it is the kind of most revolutionary technology of our lifetimes, just in terms of the implications for computing. Not just for kind of value storage, but computing. The first application is value storage. That value storage and the value preservation, especially with a 21 million cap, it’s just going to change the world forever.
Jeremy Welch:
The second reason is not just kind of how revolutionary the technology is, but how bare bones and how simple it is, but also the features that Bitcoin already affords you in terms of multisig and key management. You can actually do a lot more with it, than you can with a lot of other systems out there.
Jeremy Welch:
We use the flexibility, the key management that was already built into Bitcoin. We wrapped a lot of UI around it. The ability again, to sign with multiple types of key signing devices and make that really easy to manage.
Jeremy Welch:
The technical foundations are already there, and the kind of revolutionary potential. Those two combined, meant that it was like the… very clearly, the lead choice for us in terms of our focus.
Patrick Stanley:
What I always admired about Casa, is kind of leading with a really like eight plus product experience. That is totally geared toward the kind of like value side of crypto, versus necessarily the computing side. Those two things inform each other, but I think the value comes first and has come first so far.
Jeremy Welch:
Right.
Patrick Stanley:
You mentioned something interesting about computing. You mentioned like, Bitcoin can be innovative for computing. I’d love to hear more of your thoughts on that.
Jeremy Welch:
Sure. We can go pretty, pretty abstract on this, if you want to. I’ll start with something very simple and maybe we can unpack that, but the Bitcoin as a distributed and decentralized system.
Jeremy Welch:
As a communication channel… so because Bitcoin know there’s no single owner or single centralized authority that runs it, controls it. There are multiple authorities who attempt to direct it or that do mining, that play certain roles, but there’s no one party that runs it or owns it.
Jeremy Welch:
That means that it affords this level of permissionless communication and permissionless action, that just can’t be found anywhere else, and so because of that, and with the Byzantine Generals Problem, that’s because of that, you can now solve these problems, like the Byzantine Generals Problem.
Jeremy Welch:
Or build these experiences, and I boil it into a very simple term, resilient. It’s a resilient system and that it’s adaptable. Centralized systems, they can be… maybe the best way to put it is, because of the top-down nature and because of the level of power you have in that system, it makes it easy for you to move very fast.
Jeremy Welch:
It makes it very adaptable, but it’s also co-optable. If you take out that central authority or you take out a central piece of that system and the system collapses, right?
Patrick Stanley:
If you could translate those things into kind of like, terms for like US news readers, how-?
Jeremy Welch:
Yes, sure.
Patrick Stanley:
How would you describe it?
Jeremy Welch:
I would put it like this. Again, the resilient piece is… I’ll just start with that. The system itself is resilient, just in the way it’s designed. It will continue to operate, even if multiple parties that currently operate within it die.
Jeremy Welch:
If you have a company or an individual, or any party that’s acting as a minor, or just a general node in the system anywhere in the world, if they go offline, that’s not going to affect the overall system state.
Jeremy Welch:
You can have parties in China participating, parties in the US participating, parties in South America, parties in space, all participating and using the system. If anyone goes offline, it’s not going to affect the system overall in the same way it would, if your traditional bank just went offline.
Jeremy Welch:
If you are a user of Bank of America, and the Bank of America computer or server goes down, then you can’t bank. You can’t execute any transfers. You can’t check your balance, you can’t do anything. You can’t access the website. With Bitcoin, as long as any of those parties are active, you can access your balance. You can do anything.
Patrick Stanley:
Yeah, so it sounds like it’s the most reliable carrier of information.
Jeremy Welch:
Right. I use that word resilient, because there’re kind of multiple layers to resilience. One is reliability, just consistency. Another is talking about not just kind of a straight reliability about uptime, but about how the system is actually architected.
Jeremy Welch:
There will be attacks on the system, just like there are attacks on certain banks. It’s just much harder to co-opt the overall system. Not only is it more reliable just in terms of execution, but it’s also harder to attack and overall co-opt the system design.
Jeremy Welch:
Again, translating that into kind of your traditional bank, not only does your bank have very firm walls, brick walls that are very solid and everything else, and not only do your servers stay up consistently, but because there is no CEO of the bank, like there is a CEO of Bank of America, it can’t be co-opted, right?
Patrick Stanley:
Mm-hmm (affirmative).
Jeremy Welch:
That’s a different level of… different type or different level of resilience.
Patrick Stanley:
I think when I look at kind of like who your target audience is, I think there’s kind of like concentric circles that people sort of give a shit, for lack of a better term.
Jeremy Welch:
Sure.
Patrick Stanley:
Or there is a growing pie of new sovereign individuals, so to speak over time.
Jeremy Welch:
Right.
Patrick Stanley:
You guys have anchored into Bitcoin. I feel like if you own Bitcoin, you care a little bit about thinking for yourself and maybe having a hedge against things [inaudible 00:09:43]. When you start to take into consideration the security of using a Casa node for example-
Jeremy Welch:
Right.
Patrick Stanley:
… to improve that experience. You’re really kind of like building something that’s on the bleeding edge, for people who understand how important it is to maintain ownership over their wealth, during the wealth phase of-
Jeremy Welch:
Right.
Patrick Stanley:
… the blockchain application of both computing and value.
Jeremy Welch:
[crosstalk 00:10:11].
Patrick Stanley:
It might be one and the same honestly, but now they’re [inaudible 00:10:15] highly overlapping. Generally, I think your framing is one that has always interested me, from a kind of like information theoretical standpoint as well. Where it’s like have this Bitcoin thing that’s just ticking and doesn’t stop.
Patrick Stanley:
It’s like a train, and it’s not written [inaudible 00:10:32] the messes very much. It’s like this reliable… in addition to it being good against attacks, it’s also a reliable carrier of information. One wonders what use cases for Bitcoin will come soon after the kind of like just HODL, as the wealth goes up phase.
Jeremy Welch:
Yeah, that’s a great point. I have this phrase I’ve been saying recently, “I always try to boil things down, into kind of really pie these simple statements.” I have this thing that I’ve been saying recently, that Bitcoin is boring. The future of Bitcoin is boring and that’s a feature.
Jeremy Welch:
It’s already awesome that it’s this super resilient system, that can just survive just about any type of attack. The information transfer is unstoppable. That’s already awesome, right?
Patrick Stanley:
Mm-hmm (affirmative).
Jeremy Welch:
That’s enough. A lot of people are looking for, “Oh, how’s this going to bolt on? How’s this going to be bolt on?” People will build on top of Bitcoin, but Bitcoin itself as a layer is boring. It’s simple. It’s going to stay boring. There is a few new things coming down the pipe.
Jeremy Welch:
A few new updates in terms of key signing, which is part of the technology that we use and we think it’s going to be used a lot more in the future. All types of key signing and kind of proving identity. A lot of things are going to be built on top of Bitcoin.
Patrick Stanley:
Absolutely.
Jeremy Welch:
The Bitcoin layer… our approach to this was, by being an interface layer to allow you to use Bitcoin better and use key signing better. If we’re building better UI, better experience around that and working with the leading edge, people that have wealth around that.
Jeremy Welch:
Those same people are also going to be the people that adopt a lot of the computing sides and information, and messaging and all those things first, right?
Patrick Stanley:
Totally.
Jeremy Welch:
We’re working with the right user group, and we’re helping push them farther along in terms of their management of wealth. That same key signing tech can also be used moving forward, for lots of other things of applications, that will be built on top of Bitcoin while the Bitcoin layer stays relatively boring and stable.
Patrick Stanley:
No doubt, Casa can be a really powerful platform, if it remains as kind of digital no man’s land. That folks can plug into, and it can be kind of like rails or whatever. I think Bitcoin really has… the story around it, I agree with you.
Patrick Stanley:
In terms of the… kind of it’s designed to be minimal, and that being a really good thing and things being built on top of it. I mean, Blockstack ourselves, are using Bitcoin for proof of transfer mining.
Patrick Stanley:
Which [inaudible 00:13:12] Bitcoin instead of burns it. It goes directly to Stack’s holders. It’s kind of like staking with Bitcoin earnings, but different. We don’t have to get into it, but-
Jeremy Welch:
Yeah, but you guys have a long history around using Bitcoin as a security layer. That was one of the key things that early on, in the environment… this is what, three years ago at least? That we were talking about, and we were learning in this space that we were starting to build as Casa.
Jeremy Welch:
We were attracted and worked with you guys, and learned a ton from you guys early on, because you’re already using Bitcoin as a security layer and thinking about what else could be built on top?
Patrick Stanley:
[crosstalk 00:13:48].
Jeremy Welch:
That led us to kind of thinking about a lot of this stuff, and then it’s awesome to see, especially the new proof of transaction stuff. I do think that there is a lot more work to be done here, and it’s great to see you guys kind of returning to that.
Patrick Stanley:
Yeah, exactly. I feel like it’s kind of weird. It’s like this cohort of like fairly high confidence contrarian builders, who are building around Bitcoin, Jack Dorsey included.
Jeremy Welch:
Yeah.
Patrick Stanley:
I’m kind of liking the gang we have. There’s a recent post from Ali Yahya, I think he’s from a16z, found this… he was talking about crypto and the internet, and the similarities and the [inaudible 00:14:24] egos.
Patrick Stanley:
As with IP, the narrow waist of the internet, designed for a consensus mechanism that places radical minimalism and modularity above all, will confer it’s parent blockchain computer with the strongest network effects and the greatest addressable market.
Jeremy Welch:
Right.
Patrick Stanley:
To me, I’m just hearing… I don’t know if I missed something, like a tweet. I’m just hearing Bitcoin bells ringing in that tweet. Kind of like… it’s kind of like a sub-tweet for Bitcoin and [crosstalk 00:14:50].
Jeremy Welch:
Yeah.
Patrick Stanley:
Bitcoin in a thread, and kudos to them for that. It’s almost like a sub-tweet to Bitcoin, that tweeted in its own right. If you think about a Bitcoin, it does have the biggest network effect. I think like kind of programming with it, has been probably the highest hurdle with it.
Patrick Stanley:
Also, doing things like [inaudible 00:15:08] sending it, I also think has been a somewhat high hurdle. I mean, BlockFi has done an incredible job, in terms of creating interest for Bitcoin holders and [inaudible 00:15:18] them.
Patrick Stanley:
I think those two things like, just leaning into HODLing Bitcoin. It’s like HODLing is a good thing for Bitcoin. You want people to HODL. It’s like, where can we create user experiences that extend that good thing? Like Casa, I think is kind of one of them, yeah.
Jeremy Welch:
Yeah, we’ve tried to… again, key management is just a really hard problem to solve. There is one way to solve it, by just abstracting it away entirely. You have these companies like Coinbase and other centralized companies, that they had a role in the sense that they brought more people into this awareness of cryptocurrencies period.
Jeremy Welch:
They also oversimplified the real power of using cryptocurrency and using Bitcoin. One of these most powerful things is key management. By lowering the bar and making that more accessible, especially around multisig, you get these really powerful security benefits.
Jeremy Welch:
It just makes you aware of what it’s like to even totally own your whole money and infrastructure. That just wasn’t possible before. Then we’re just in the early days of this whole ecosystem.
Jeremy Welch:
The exciting thing to me… I mean, you mentioned Jack and what the [inaudible 00:16:24] Square’s doing. There’s two separate… I mean, there’s pieces of that too. There’s like the Square crypto group. There’s cash app. They’re like-
Patrick Stanley:
[crosstalk 00:16:32].
Jeremy Welch:
Yeah, and then Jack himself is just super bullish around it. The mix of those, I think it’s interesting with… there’s something new going on in terms of just computing, like we were talking about before.
Jeremy Welch:
Though we’re still in the very early phases of. What excites me is that, it feels like we’re kind of back in some of the early days of the early internet or some of the early PC days, hobbyist PC days.
Jeremy Welch:
I think there’s just been a lot, there is a lot more to do. There’s a lot more work to do. There’s a lot more to come. We’re just seeing the first waves of again, kind of user experience simplification here.
Patrick Stanley:
I totally agree with that. I think we could probably wax on this for days. I think what you said was really well. [inaudible 00:17:17]. I want to just switch gears real quick and-
Jeremy Welch:
Sure.
Patrick Stanley:
[crosstalk 00:17:19] kind of random question about Casa. Given that you know everyone is HODLing, and you presumably… you can kind of like send messages though, could you get them to sort of like do governance related things? It’s just a set of Bitcoiners, and they’re voting on certain activities.
Patrick Stanley:
Whether that be the actions of the community, or whether that be like who money gets put to or whatever. Essentially, it’s an approvable consortium of Bitcoin HODLers who kind of prove [inaudible 00:17:52].
Jeremy Welch:
Yeah, that’s relatively straightforward to do. Signing messages or proving some level of HODLing. I think that the challenge there is making sure to do it in a way that doesn’t expose kind of true ownership, or sizing of ownership or that kind of thing, but it is possible to do.
Jeremy Welch:
We just thought about, there is a number of implications of what you can do from there. We’ve been narrowly focused on just this kind of security and wealth preservation initially. There’s still some more to do there, so that’s where we’re focused now, but you’re right.
Patrick Stanley:
[crosstalk 00:18:33].
Jeremy Welch:
There’s a ton more-
Patrick Stanley:
[crosstalk 00:18:34].
Jeremy Welch:
There is a ton more you can build into.
Patrick Stanley:
[inaudible 00:18:35] totally off the wall question. It is mainly asked… because I’ve been thinking about this problem. I actually brought it up with a few posts in the past. Kind of like workshop ideas sometimes on these [crosstalk 00:18:45].
Jeremy Welch:
Awesome.
Patrick Stanley:
I think they’re kind of fun to go through typically, yeah.
Jeremy Welch:
Yeah, that’s something… I mean, like proving skin in the game effectively, right?
Patrick Stanley:
Yeah.
Jeremy Welch:
It’s a really interesting concept, because to date, we’ve basically had to take people at their word in a lot of communities.
Patrick Stanley:
It’s not just that. It’s, you can have an attack on your community, like the wrong people can kind of [inaudible 00:19:13] your community or like the wrong culture.
Jeremy Welch:
Right.
Patrick Stanley:
Maybe very small stakeholders. I think this goes right back to the free-rider problem in crypto, which is like-
Jeremy Welch:
Right.
Patrick Stanley:
… it feels like something people are just not even trying to attempt, but it seems like a fundamental problem. That if solved, would potentially be pretty, pretty high [inaudible 00:19:32].
Jeremy Welch:
Yeah, 100%. This is kind of a root problem in political science, political philosophy period, organization building period. Which there is a term called entryism
Patrick Stanley:
Unpack please.
Jeremy Welch:
Entryism, so it’s about entry. It’s, once you have a community or a piece of wealth, or something worth of value, there is a tendency for these outside groups that were not a part of the original creation process and were not a part of the original community, to come in, to enter the community.
Jeremy Welch:
To have some level of cockiness or some level of demands, to then dominate that community. It’s a problem of outsiders coming in and then overtaking a community. Your ability to resist entryism is important.
Jeremy Welch:
It’s super important, because it allows you to preserve the characteristics of the community, that resulted in the initial innovations and production in the first place.
Patrick Stanley:
Absolutely, could you compare that to let’s say like the United States, so the history of United States and things that have happened?
Jeremy Welch:
That’s an interesting one. [inaudible 00:20:50] I feel like voting rights took a while to even expand outside of the core set of initial property landholders, white male [crosstalk 00:21:01].
Patrick Stanley:
Yeah, [crosstalk 00:21:04].
Jeremy Welch:
A lot of it was associated with property and-
Patrick Stanley:
[crosstalk 00:21:07].
Jeremy Welch:
… ownership. That is-
Patrick Stanley:
That’s HODLing.
Jeremy Welch:
In a sense it is. It’s a level of ownership, and a system of a very cut and dry legal non-digital system. Then that’s been expanded, but there is a level of systems… I don’t know.
Jeremy Welch:
I mean, with the US, there are questions as to how the US has evolved. Whether it will continue to survive in its current form, based on how it’s evolved. There’s no doubt that bringing in the providing opportunity to more and more people is incredibly important.
Jeremy Welch:
There’s this question of how you continue to provide benefits, and an opportunity to more and more people, to the widest number of people possible. The widest number of participants in a system, without opening yourself up to destruction of the system from entryism.
Patrick Stanley:
Right, another way to rephrase part of what you said is like, how do we make sure that whatever evolves from what we are witnessing as a nation states, malfunctioning into whatever’s new, doesn’t leave a lot of people behind or it’s like most-?
Jeremy Welch:
Yeah.
Patrick Stanley:
You always want to think about the most humane kind of like solution, and kind of take into consideration practical timelines for that and like weight them accordingly. I feel like we’re going through this big change right now where… I’m sorry, going into COVID land here, but-
Jeremy Welch:
Yeah, [crosstalk 00:22:32].
Patrick Stanley:
30% of people are unemployed. People are probably not factoring in how bad the economy really is, and really is going to become. It makes you wonder how these systems can continue to upkeep.
Patrick Stanley:
I think we’re kind of like, it’s a very taboo topic. The topic of makers and takers. It’s something that people do not typically want to talk about, because there’s landmines everywhere.
Jeremy Welch:
Yeah.
Patrick Stanley:
That is the free-rider problem for nation states essentially. Do you believe like modern monetary theory? Modern… am I saying that right?
Jeremy Welch:
Yeah, I think it’s-
Patrick Stanley:
Do you kind of believe that that is false or expires over [inaudible 00:23:17] period of time or do you buy into it I guess?
Jeremy Welch:
Do I buy into?
Patrick Stanley:
You can just print your problems away, like in [inaudible 00:23:27].
Jeremy Welch:
Oh, so this is a fascinating line of thought. I’ll offer a couple of ways to expand this and then I’ll offer kind of my initial thought about the… I think what you were talking about, the original topic.
Jeremy Welch:
What this of sums up into is the tool of capital, tool of money as a tool of governance. Not as a tool of exchange like, “Hey, we have an economy. There’s two of us that want to just exchange value or 30 of us. How has a governor of a-?”
Patrick Stanley:
[crosstalk 00:24:08].
Jeremy Welch:
… like elected an official running a government, do you use that piece of capital to actually control the kind of overall community there? It’s like one actor or one organization controlling… and the reason I’m bringing that up, is that there are kind of layers to this.
Jeremy Welch:
There are all these questions in governance right now, with Ethereum and with other cryptocurrencies. I’ve long argued… I had a tweet series around this, but I think it’s wiped. I’ve long argued that I think that Ethereum is just fiat currency 2.0.
Jeremy Welch:
That it will eventually… there’s like two scenarios, either it’ll peg to Bitcoin in some capacity, or it will continue to kind of attempt to do the proof of stake thing over and over, and over again and fail every time. You eventually reached this political gridlock that needs to be rebuild out, and eventually they have to peg.
Jeremy Welch:
I bring that up, because there are these questions around running a federal reserve type system that come up, that are mirrored in what’s happening around Ethereum and the governance and how that’s evolved.
Jeremy Welch:
That you can take directly back to the Federal Reserve of the United States, and MMT and what’s going on currently in our government. These are overlapping. The same problems they’re seeing in cryptocurrency, are problems that they’re seeing at the higher governance level or the lower… wherever you want to put it, in the Stack.
Jeremy Welch:
To sum that up, I think that this open question of governance via capital, that’s a summary of kind of what we’re talking about. There’s the validity of MMT as a tool, which is really just an extension of how things have worked in the past.
Jeremy Welch:
Then there’s this separate question of, how closely does that relate to what’s happening in cryptocurrency land? That I think is super interesting. We could go down either one of those channels. On the question of MMT, if you just want my opinion, and I’m not overall an expert on this, other than limited reading-
Patrick Stanley:
[crosstalk 00:26:17] no one’s a macro expert.
Jeremy Welch:
Yeah, but based on my limited reading around it, you’re just extending how the fed has solved problems in the past. It’s not irrational. The consequences of it I think are… so I’ll pause at two things.
Jeremy Welch:
I’ll take two positions that may be somewhat controversial. The first one is that MMT is not as irrational as some proponents have… or some opponents have made it out to be.
Patrick Stanley:
You think it’s been [inaudible 00:26:55] product positions.
Jeremy Welch:
No, I actually think it’s like they’re positioning it well, given how they’re calling it and people that have gotten traction. I don’t think it’s irrational.
Patrick Stanley:
Got it.
Jeremy Welch:
I don’t think it’s going to work. I also don’t think that their positioning and what they’re saying they’re going to try to do with it is irrational.
Patrick Stanley:
Sure.
Jeremy Welch:
The second position I’ll take is that, it’s definitely not going to work. That on a long enough time horizon, the system will explode and it’s not going to work, but there may be a period where it does work.
Patrick Stanley:
Agree, do you want to unpack your reasoning [inaudible 00:27:28] first?
Jeremy Welch:
You sounded like you had something to say, or something [inaudible 00:27:34].
Patrick Stanley:
[crosstalk 00:27:34].
Jeremy Welch:
Maybe I’ll let you dive in first, before… I’ll go back to the-
Patrick Stanley:
Well, no. I was [inaudible 00:27:39] sort of asking why you think they think it’s rational. I think extending the current tool set of what the fed has previously done, is not rational to me. I think every situation… I think the fed has turned into like an entity that responds in situations.
Patrick Stanley:
Typically, or it’s not necessarily always the best response. The short-term has become long-term at this point. We’re starting to printing more money. We have a virus attacking in US right now.
Patrick Stanley:
Bitcoin is like halving [inaudible 00:28:12] in 12 days. It just seems like eventually, the sort of clock expires on that. Eventually someone wises up, and that trigger is the beginning of [inaudible 00:28:24].
Jeremy Welch:
Yeah, so I’ll position it like this. I agree with what you said, that eventually someone wises up. Eventually that the house of cards crumbles. I don’t think that the house of cards necessarily has to crumble, as fast as a lot of people are assuming that it has to crumble.
Jeremy Welch:
I think that a lot of very smart people are looking at MMT, and are looking at current policy and are thinking, “Oh, wow. This is just going to blow up in our faces within an X amount of time, like X timeframe.” I think that it could actually work for a longer period than what people think, and the reason why-
Patrick Stanley:
[crosstalk 00:29:02].
Jeremy Welch:
Go ahead [crosstalk 00:29:03].
Patrick Stanley:
I guess my question there is, how long is enough of a time period? We were kind of discussing time [crosstalk 00:29:08].
Jeremy Welch:
Yeah. Well, I’m saying potentially a decade or more.
Patrick Stanley:
Yeah, 20 years came to mind when [crosstalk 00:29:15].
Jeremy Welch:
Yeah, I think it could actually work for a period, which is just weird to think about. I think it could actually work. Here’s why, and I think this is super important. That lot of people assume that markets are rational and they’re not.
Jeremy Welch:
That’s because a lot of people project that everyone else in the economy and everyone else in the ecosystem is rational, and cares about the same things that they care about.
Jeremy Welch:
A lot of these smart people are projecting out and thinking, “Oh, all these people that live out in the world are thinking the same thing I’m doing. When they see this money printing, and when they see this and they see these moves by the fed, they’re going to react in this certain way.”
Jeremy Welch:
That’s not true. It’s not true. We look at the stimulus checks that went out. There are a lot of people that are going to get that stimulus check. Even though for a lot of people in the country, that’s a significant amount of money. $1200 is a significant amount of money for a lot of people.
Jeremy Welch:
There is a subsection of people… and I would say that the number of people that are critics of MMT, and are aware enough of policy and how the fed works, et cetera, there is a group that $1200 is nothing to them.
Jeremy Welch:
That group overlaps significantly with… it’s the same group of people that also understand how the fed works, and how money printing works and what the long term implications of money printing are, right?
Patrick Stanley:
Sure.
Jeremy Welch:
What I’m pointing out is that there is a whole other group, of which they have no clue how money printing works. They don’t understand that inflation is going to be a major issue. Based on their income, current income levels, $1200 is a lot of money.
Jeremy Welch:
As long as that larger group, as long as they believe in the system again and as long as they start buying, and as long as they have basically… have the wool pulled over their eyes, as long as they believe in the system and they react to it, then MMT could work for a little while, right?
Patrick Stanley:
Yeah. I think that’s part of the argument for it. I think it’s sufficient to kind of take that part and continue on.
Patrick Stanley:
I think going back to what we were saying before, it’s like, MMT actually might be a good thing for the transition off of MMT. Allowing sufficient sort of like wealth generation, and value capture to happen in the digital world.
Jeremy Welch:
Yeah.
Patrick Stanley:
It’s part of the reason why when we think about where we want to be in 20 years, there are games and network effects you want to play aggressively in the crypto space, if you’re a project.
Patrick Stanley:
I also think it’s really important to understand where you want to be, where you want to start to building a competitive advantage. Bitcoin is like terra firma for 20 years from now.
Jeremy Welch:
Yeah.
Patrick Stanley:
In kind of our opinion.
Jeremy Welch:
1,000 years from now.
Patrick Stanley:
Maybe not 1,000. I think like-
Jeremy Welch:
I’m going to put money on 1,000. I’ll put a little bit coin on 1,000 years from now.
Patrick Stanley:
Whatever Bitcoin holdings you have, are doing the talking right now. Bitcoin is like the substrate for society for like 140 years. That’s like a [crosstalk 00:32:20].
Jeremy Welch:
Actually, I just want to clarify, I don’t actually have any Bitcoin lost at all in a boating accident, not a Bitcoin HODLer at all. No Bitcoin, but from what I studied at the system… but I do think that again, it’s been a resilient system. That’s more resilient than anything else out there.
Jeremy Welch:
Humans have had a very strong dependency on capital for a long time, and that’s only increased and this only increases it further. As long as… do I believe the human race in some capacity is going to be around for a long time? Yeah
Jeremy Welch:
Do I believe that capital will be around with the human race for a long 4,000 years from now? Yeah. Do I believe that Bitcoin is the most resilient type of capital right now? Yes, so that’s how that lines up.
Patrick Stanley:
Totally, [inaudible 00:33:09] is coming out.
Jeremy Welch:
Yeah.
Patrick Stanley:
I’m trying to figure out what the best plans are for how I spend my time during the Happening. Are you observing it or are you kind of like-?
Jeremy Welch:
I mean, I’ll do something. I feel like there will be a number of parties online, people hanging out their houses and posting on Twitter. I’ll of course do something around that.
Jeremy Welch:
I don’t think I’m going to bake a cake or anything, but I might have a drink, do a little toast. It’s a significant event. I mean, I think it’s on par [inaudible 00:33:46].
Patrick Stanley:
It’s like its value proposition is made every four years.
Jeremy Welch:
Yeah. Well, it’s-
Patrick Stanley:
In a major way.
Jeremy Welch:
I remember exactly where I was when space X landed that first rocket. I don’t know if you watched that, but I’m a space nerd. When I remember that, I remember jumping up and down. I was like, “Holy shit, this is one of the most significant events of our lifetimes.”
Jeremy Welch:
Just technology adoption period, and technology growth and human accomplishment. It’s just remarkable still to this day. Anytime I see one landing, I’ll flip it on and watch it. I think that the Happening is one of these events. It’s kind of similar to that of… it’s still remarkable that this thing works every day.
Jeremy Welch:
That Bitcoin works every day, and that it’s continuing to grow and the speed at which it’s grown. I mean, it’s been right out 10 years. It’s just remarkable how fast it’s become a central part of our lives.
Patrick Stanley:
[inaudible 00:34:50] I think the Happening is like a good time to do a global event, that amplifies Bitcoin’s signal. I feel like it’s the least that us as the Bitcoin community can do, to make sure that we’re not just being free riders.
Jeremy Welch:
Yeah.
Patrick Stanley:
Sorry, I don’t want to say just free riders. I want to say just HODLers-
Jeremy Welch:
Right.
Patrick Stanley:
… and net that from everything else, free riders essentially. I feel like building a Bitcoin is good, but amplifying the message I think is something every Bitcoiner should do. Maybe we can start like a holiday, like every four… maybe we can create something that’s actual for the whole Bitcoin community to do.
Patrick Stanley:
That’s super viral. Like you couldn’t avoid it, you couldn’t help it. Currently, we don’t really have that. We have some quotes for some Bitcoin… Bitcoin having stories for like some large-
Jeremy Welch:
Right.
Patrick Stanley:
… outlets right now that we were doing. What we’re realizing was like, the community at large is not really preparing to augment the signal, but the press is ready.
Jeremy Welch:
Oh, interesting.
Patrick Stanley:
Yeah.
Jeremy Welch:
Yeah. I mean, I think there is a few events, their proof of key stuff that is happening I think January 3rd, the trace started, is also another really good one. The funny one about the Happening is that, doing an event around this, I do think is important. Getting press out, getting word out.
Jeremy Welch:
People are more aware of it now, and so I do think that there is a lot you can do. You also have to be on Bitcoin time. Like how do you answer an [inaudible 00:36:29]? I mean, how do you talk to the press in terms of, “Okay. Well, what day is it going to happen?” Well, it’s not exactly day. It’s like [crosstalk 00:36:34].
Patrick Stanley:
All you have to do is say, “It’s around this day. You can look at the approximate countdown timer at this URL.”
Jeremy Welch:
Totally.
Patrick Stanley:
If they’re trying to release on that day, they can just watch the countdown clock. They won’t be off [inaudible 00:36:48].
Jeremy Welch:
Yeah, they shouldn’t at this point. It’s hard to [inaudible 00:36:53] in the future, but that’s another unique thing about it. Just talking through Bitcoin time is another interesting concept, block time.
Patrick Stanley:
[crosstalk 00:37:04].
Jeremy Welch:
It was going to be called the time chain at one point. I don’t know what the expected Happening is right now. I think it’s mid May, like May 15th. It’s looking like the estimate is the 11th.
Patrick Stanley:
I think it’s [inaudible 00:37:22].
Jeremy Welch:
Yeah.
Patrick Stanley:
[crosstalk 00:37:24].
Jeremy Welch:
I think the estimate right now is May 11th.
Patrick Stanley:
I think it’s like early afternoon, but I could be completely wrong.
Jeremy Welch:
Well, that’s also based on block time. If for some reason there is a slowdown of blocks, for any reason, a delay, it could delay it by an hour or two hours. It could have [inaudible 00:37:43]. Well, they shouldn’t at this point, because there’s been a recently [crosstalk 00:37:46].
Patrick Stanley:
[crosstalk 00:37:46] cool. Anyways, we can brainstorm things offline. We don’t have to subject people to this.
Jeremy Welch:
Yeah, sure.
Patrick Stanley:
I do think there needs to be a movement to coordinate people who are building for Bitcoin HODLers, and kind of like creating this sort of like new protected web-free [inaudible 00:38:08] internet anchored in Bitcoin. I mean, definitely-
Jeremy Welch:
Yeah, one of the hard parts-
Patrick Stanley:
It definitely [crosstalk 00:38:17].
Jeremy Welch:
One of the hard parts of that though, is that you do have security concerns right now, around anybody that holds or interacts with Bitcoin. I think that’s part of the reason why it hasn’t happened to date, but I think that there’s now an opportunity, now that you have new tools being built on top of Bitcoin.
Jeremy Welch:
Including kind of proof of transfer, and what you guys are doing. There is a bunch happening now, that I think that there is a wider spread of people that you can get involved. I think that today, the reason it’s been an [inaudible 00:38:47].
Patrick Stanley:
Totally.
Jeremy Welch:
Operational security issue, is to why I think it hasn’t been a wider push to date.
Patrick Stanley:
Yeah, and that makes complete sense. We covered a lot of stuff today. I have two more questions for you.
Jeremy Welch:
Sure. [crosstalk 00:39:02].
Patrick Stanley:
One is, what do you think Bitcoin’s role is during a time of crisis like the one we’re currently experiencing?
Jeremy Welch:
I do think that the resilience of the system will prove to be inspiring long-term. There will end up being a kind of cultural or religious aspect around that at some point.
Jeremy Welch:
I think we’re still pretty too early for that, but you do have some people that watch block time and are pretty religious about it. All right, so you have to break this down to what a crisis actually is. What is a crisis? How would you define a crisis?
Patrick Stanley:
A crisis is when people’s health or wellbeing is put into jeopardy, on some timescale that’s been like weighted properly. I don’t know, that’s my mushy answer.
Jeremy Welch:
Okay. Yeah, I think that’s fair. I think that’s fair. I think I would maybe further narrow it to a crisis, and specifically a public crisis, is a kind of mass change in expectations.
Patrick Stanley:
I mean, you’ve probably read the book Future Shock by Alvin Toffler. We’re currently in virus shock. Right, over the past few decades, we’ve essentially had median wages stagnate, people be sort of left behind. Cost of college, cost of housing go up and people’s salaries not go up.
Jeremy Welch:
Right.
Patrick Stanley:
You have a shock there, and you also have a shock with the virus in terms of expectations changing.
Jeremy Welch:
Right.
Patrick Stanley:
That’s for sure, and that’s the thing that concerns me. This has been a common thread in our discussion, of like transition periods and making sure that the shock isn’t too harmful.
Jeremy Welch:
Yeah, but what I’m putting out I think is that, was it reasonable to have the expectation that our income would continue to grow the same as our parents’ income did? Was it reasonable to expect that a global economy could exist without viruses like this?
Jeremy Welch:
In hindsight, we may find that it wasn’t reasonable to have those expectations in the first place. In a crisis, when you have these expectations and people have these narratives, that are the way that the human brain kind of latches on and survives in the world and goes through their day-to-day thing, their day-to-day actions.
Jeremy Welch:
Again, it’s just a set of expectations as to what the world is and how it works. When those expectations get broken dramatically, that’s a crisis. What I’m pointing out is that, Bitcoin’s role in the crisis, is that Bitcoin is the most consistent resilient thing, if you’re continuing to see block by block, it continues to work.
Jeremy Welch:
If you’re continuing to see that transactions are going through at pennies for $100 million transactions, at a time where the entire global capital system is facing potential liquidity issues. There’s something there. The consistency is there.
Jeremy Welch:
The role in the time of crisis is being just the same. It is boring and consistent and regular, and eventually more and more people will come to depend on Bitcoin and build on it because of that.
Patrick Stanley:
Where do you see the Bitcoin community evolving? I think it’s one thing to say Bitcoin itself is sufficient, and on a long enough timeline has certain characteristics that will have a high likelihood of happening.
Patrick Stanley:
It’s value going up, or potentially it being the sort of like reserve currency. It’s kind of like a movable object.
Jeremy Welch:
Another kind of recent phrasing that I’ve simplified, a theme that I’ve been hammering this year has been a bet on balkanization.
Patrick Stanley:
Bet on balkanization.
Jeremy Welch:
Yeah.
Patrick Stanley:
[inaudible 00:43:12]?
Jeremy Welch:
Yeah. That’s a simplification, because there is a lot to unpack, right?
Patrick Stanley:
[crosstalk 00:43:18].
Jeremy Welch:
Invest, focus, think about, bet. Then balkanization, which Balkanizes to not only separate, but kind of separate with some inherent conflict between the pieces. That comes from what happened in the Balkans. I think that… your question is, what happens with the Bitcoin community?
Jeremy Welch:
I think that the answer is kind of bundled into this phrase, bet on balkanization. I think that across the world politically, we’re going to get more and more balkanization.
Jeremy Welch:
I think that Bitcoin is going to be one of these common threads, this common community amongst which people can connect and exchange. Pay each other and engage over something like Bitcoin, you will get different effective fiat currencies on top of Bitcoin.
Jeremy Welch:
A lot of those will get adopted by these individual either cloud or regional, physical countries. Bet on balkanization in the sense that there is like a lot of fractured groups out there, but they have this commonality and Bitcoin as a communication layer.
Patrick Stanley:
Yeah, totally. [inaudible 00:44:34] describes it as like a Bitcoin is the digital no man’s land. It’s like the IP or Unix, whatever, just flows off the tongue, bet on balkanization.
Jeremy Welch:
Yeah, kind of catchy. [inaudible 00:44:47].
Patrick Stanley:
[inaudible 00:44:48] yeah. Super interesting from the nation state lens, given that some nation states have been holding Bitcoins, others haven’t. To be able to get it when you need, is some something that some will be prepared for and others won’t be in terms of having it, yeah.
Jeremy Welch:
Yeah, I maintain that Coinbase could be nationalized at some point, which who knows? Any major custodian could be nationalized. Game theory-wise, if you’re talking about kind of nation states holding Bitcoin, owning Bitcoin, there are ways to directly on it and ways to indirectly on it.
Patrick Stanley:
Sure. For sure, interesting. The bet on balkanization, you were mentioning like fiat currencies. How do you think that manifests itself in terms of like a stable coin built on Bitcoin? Or is that more so like… what are you expecting there?
Jeremy Welch:
Yeah, that would count. Again, I think Bitcoin… I think digital gold sums it up pretty well. In the same way that we saw fiat peg currencies to gold. We’ve seen fiat currencies that have been totally free of a peg, but basically enforced by political force.
Jeremy Welch:
I think we’ll see both. That’s one thing that I think a lot of people… and in terms of staking systems, staking is going to be rife with political infighting and political issues.
Patrick Stanley:
Absolutely.
Jeremy Welch:
Those will get bloody one day. Staking systems will result in bloody conflict, which is just going to be bizarre. I think that any kind of layer that’s built on top of Bitcoin the will… there will be room to kind of act like a fed.
Jeremy Welch:
You can study the rules of the fed, and the rules of kind of how a federal reserve has acted in the past. Issuing currency, shoring up and bailing out certain businesses, both in crises and out of crises.
Jeremy Welch:
Those actions can be taken in certain stable coins, and other types of currencies kind of pegged to Bitcoin. There is a lot of interesting stuff that will come out of this.
Patrick Stanley:
Interesting. Well, what are the conditions for a Bitcoin backed, stable coin, that would need to be met for someone like you to use it?
Jeremy Welch:
I don’t know. I mean, for my myself, I don’t use stable coins a ton. Just because I think that you could use Bitcoin directly, I think on a day-to-day basis. That there may be circumstances to where using… within certain exchanges, or certain games or certain applications, you may use a stable coin.
Jeremy Welch:
There will be certain groups… and I would be part of this group, that believes that I would just always convert it back into Bitcoin after the… like I would use it immediately, and I would do the action I need to do. Then I would get it back into what I would consider to be a value preserving system like Bitcoin.
Patrick Stanley:
Yeah, for sure. It’s like, you always want to settle in Bitcoin or sufficiently secure abstraction of Bitcoin. Obviously you always want to hold your own keys. It’s like-
Jeremy Welch:
Right.
Patrick Stanley:
[inaudible 00:48:04] That’s HODLing, but in a world where we want everyone in the world to be doing this. Maybe you have [inaudible 00:48:13] at Casa that are widely adopted.
Jeremy Welch:
Yeah. I mean, I think there’ll be both. I think that key management will get easier and easier to do. People will learn to manage keys, even some of the complexities. I think on the other side, that there’ll be a lot of people that use stable coins and don’t think at all about the underlying mechanisms until there’s a crisis.
Jeremy Welch:
There will be some stable coin crises at some point. Just from that perspective, when it’s used or [inaudible 00:48:41] what conditions… there is just like, build a great application or build a great system around it, to use it for a game or for something else.
Patrick Stanley:
Yeah.
Jeremy Welch:
Then it will be used. I think that always kind of converting back into Bitcoin is… for a lot of people and for myself included, will be important.
Patrick Stanley:
I feel like it’s like… okay, so if that’s true, then why haven’t kind of like Bitcoin’s denominated debit cards been successful?
Jeremy Welch:
Well, because there is a difference. Again, I think people want to… all right, so people want to save. People want to hold, and people want their value to go up. There is now a disconnect between what people think of the value, the true value of Bitcoin in terms of a per dollar basis.
Jeremy Welch:
Especially with all the money printing that’s currently happening. There’s a disconnect between what people think the true value per Bitcoin is, could be on the near term and what it is today.
Patrick Stanley:
Yeah, [crosstalk 00:49:39].
Jeremy Welch:
Until that collapses, this will be very hard. Now what’s interesting about this, is that you are getting some of these other applications… like there is a company called a Fold, that is doing some interesting work. They’ve got a debit card that they’ve just launched, that gives you Bitcoin rewards.
Jeremy Welch:
You’re not necessarily spending Bitcoin, but they just give you rewards in Bitcoin. That will have very fast adoption, because people will just take the Bitcoin and save it.
Patrick Stanley:
[inaudible 00:50:05].
Jeremy Welch:
Then you will get a case… at some point in the future, there will be this massive spike in Bitcoin price. When that happens, people will spend their Bitcoin. Until that happens, people aren’t going to spend their Bitcoin.
Patrick Stanley:
Totally. I think there is a potential kind of like period of time, for which a Bitcoin backed, stable coin will not be necessary to like… it won’t be immediately obvious that it’s necessary.
Patrick Stanley:
It as a financial instrument, might be the segue in initially… by the way, not promoting this necessarily. Just kind of thinking through how you could do this on Blockstack.
Patrick Stanley:
You could create a stable coin on Blockstack, that gives off sort of stacking rewards from proof of transfer mining. That go into a pool set or like a… or actually it’s really not a pool set. It’s like a set of people who are just sort of delegating to a wallet. They sort of own their asset, but just signaling-
Jeremy Welch:
Right.
Patrick Stanley:
… something about their asset that they own. You could construct the stable coin, with those groups of people’s assets that are self-custody.
Jeremy Welch:
Interesting.
Patrick Stanley:
Also, create like a… so it’s like, okay, you got your stable coin. You can use that within apps, but you also have a sort of annual… or like actually every 10 days, you’d have some earnings by function.
Patrick Stanley:
The stable coin can decide how often you get it. The issue I had with this… and spending a Bitcoin is like, I think there’s, as you mentioned, there’s such a bias toward HODLing it, that to spend, it is like this inertia.
Patrick Stanley:
It’s like this… I think the gravity is so steep that, that I think most people don’t fully appreciate it. I really don’t want to spend my Bitcoins. I really want to HODL them.
Jeremy Welch:
Yeah.
Patrick Stanley:
Even when Bitcoin is at a high price, I generally still don’t want to spend them.
Jeremy Welch:
Yeah.
Patrick Stanley:
[crosstalk 00:52:28]
Jeremy Welch:
It’s like, at what high price, right? That’s an important question, is what high price?
Patrick Stanley:
You mean like the person that’s holding on the longest there, is going to be potentially the most well off, I think as a series of people. If you were to break down the set of people that ever do sell, the people that regret it later, I think outweighs people that don’t regret it. I think just-
Jeremy Welch:
Yeah, but there’s this mechanism or there’s this function where, say you have 100 plus Bitcoin and it’s at a dollar per coin. Okay, so you have 100 bucks, but now say it’s $10,000 per coin.
Jeremy Welch:
Okay, now it starts to get interesting. Say that all of a sudden, it’s a million per coin. Well, the value of… if you’re in an economy, if you’re in a nation to where you can buy a really nice house for half a million bucks or a million bucks.
Jeremy Welch:
Most of those… and those people that were HODLing that currency are living in a rental at that point, a large percentage of them are going to buy a house. They’re going to finally sell some Bitcoin, but they’re going to hold onto a big portion.
Patrick Stanley:
[crosstalk 00:53:44].
Jeremy Welch:
There’s this weird dynamic to where, as the price increases, you can slice off a piece and then purchase something. Spending as a function of the economy, is going to be huge when it happens.
Patrick Stanley:
Yeah, I think that’s totally rational here. I was speaking more in an absolute sense, like sell-
Jeremy Welch:
Right.
Patrick Stanley:
[crosstalk 00:54:01] Bitcoin, and just wait until later. Or leaning toward that end of the spectrum.
Jeremy Welch:
Totally.
Patrick Stanley:
Kind of like de-risking over time in terms… or it’s not even de-risking in the context of Bitcoin. It’s more like, what you’re really doing is you’re actually just leveling up your lifestyle or creating a more heterogeneous set of investments.
Jeremy Welch:
Yeah. I mean, you’re diversifying some. I mean, you’re using the Bitcoin finally, but you’re not… that your usage of it is not deducting from its overall wealth-
Patrick Stanley:
[crosstalk 00:54:37].
Jeremy Welch:
… or power, or potential to grow even further, right?
Patrick Stanley:
Experiencing wealth or increasing the probability of more a near ton of wealth.
Jeremy Welch:
Yeah.
Patrick Stanley:
Yeah.
Jeremy Welch:
Yeah. If you were to sell today, and you would still have a big portion of your proceeds and buy something at some point. Then you are very visibly decreasing your future earnings potential, based on the way most people believe. While in the future, if you did it, then you’re not.
Jeremy Welch:
You’re not offsetting it by very much. The capital is compounding, and it reaches almost like an escape velocity in a sense.
Patrick Stanley:
Sure.
Jeremy Welch:
That happens. I mean, that happens in other areas. Think about, Jeff Bezos with Amazon stock. In the early days, in early rounds, he could have sold off some-
Patrick Stanley:
I mean, I-
Jeremy Welch:
… at some point. Now it’s worth… what is he? 120 billion or something?
Patrick Stanley:
I mean, like-
Jeremy Welch:
Now like a lot of stuff is just a drop in the bucket for him, and he’ll spend on these minor amounts. It’s unlikely that he spends the entire fortune, or just does away with the entire amount of Amazon stock, but it’s a similar compounding function.
Patrick Stanley:
Yeah. In terms of real value creation, entrepreneurs deserve to get paid out for their efforts early on. They’re really kind of the lifeblood of our whole economy. It’s actually been something that I’ve been a little worried about lately, is like essentially in the media, especially during coronavirus times.
Patrick Stanley:
I’ve noticed there’s been like a villainization of people trying to take steps that happened to have a lot of money, toward like beating the coronavirus.
Jeremy Welch:
Right.
Patrick Stanley:
That’s been actually something I wanted to get your feedback on. For me, that’s super scary. The way I look at it is like, if you’re trying to do an attack against the overall wellbeing of people in the United States, or like… I’ll just keep it [inaudible 00:56:54] as well.
Patrick Stanley:
You would want to disincentivize human creation and risk-taking, and demonize it. As well as demonize wealth creation. Now, to say we should take care of people and print cash, and like MMT style as we discussed earlier, I think is like… that’s on the table. Like, “Let’s have a conversation about it and use those tools.”
Patrick Stanley:
To demonize essentially… like the most pioneering people, I think have been standing up to the press recently in terms of the techlash. I think those people have largely been in crypto.
Patrick Stanley:
I know I’m biased, because I’m in the group. I mean, I have [inaudible 00:57:39] chamber, but that’s where I’m seeing it most loudly. In terms of trying to be kind of pro-wealth, pro-growth, pro-human happiness.
Jeremy Welch:
Yeah, so what your question at the end, say that again.
Patrick Stanley:
No. Yeah, my question was, what are your thoughts?
Jeremy Welch:
My first thought is that the techlash, if we will, the kind of backlash against tech is serving some master and that’s what matters. It serves some master. If you want to like… there are certain people, there are certain firms and there are certain people that are not criticized. Why is that?
Patrick Stanley:
Are you suggesting we fund some investigative journalism?
Jeremy Welch:
No, I’m just saying that I don’t think there is a need for investigative journalism. I think that if you just start looking around, the number of tech firms and you look at, which ones are heavily criticized, which ones aren’t? Yes, I do think that some of the tech positions or the journalist positions arrive naturally.
Jeremy Welch:
They’re just asking questions, and also signaling amongst themselves for their own kind of interpersonal value system. By like taking a big sculp of like, “Oh, I took down this big, wealthy person. Or there’s this wealthy firm with this expose.”
Jeremy Welch:
That gets you a lot of credibility in the journalism circles, right? It’s a religious function, and it’s a status signaling function to be able to do that. That’s one piece of it.
Jeremy Welch:
The other piece of it is that, some of those journalists… they genuinely care about communities, and they really are doing work by uncovering things that otherwise would not have been uncovered. There is a good side to some of that journalism.
Jeremy Welch:
Then there’s like this layer of… it’s almost like paid propaganda, or paid psychological warfare for a certain end. I think that there’s… of the techlash that’s out there, there are pieces of all of that.
Jeremy Welch:
There’s part of it [inaudible 00:59:57]. There’s part of it that’s just them genuinely doing what they’ve always done. There’s part of it that’s paid weaponized, against certain groups and certain people that they want to discredit.
Jeremy Welch:
The question is kind of who? Whom? Who would pay or deal with that? There are certain actors that go trace back up. Who owns certain publications, and who benefits from certain pieces and certain angles? There are questions there.
Patrick Stanley:
I think Amazon is well positioned to kind of like work well in the 21st century of media. Let’s call it what it is, like start upping to IPO and beyond. Yeah, so kind of good on him, for probably solving that problem for what it’s worth. Also, now kind of creating a public utility that we’ve relied upon in times of crisis.
Patrick Stanley:
There’s a lot of good he’s been doing, and no company or person [inaudible 01:00:50] as far as included the tech journalists themselves, as you [crosstalk 01:00:53].
Jeremy Welch:
Sure.
Patrick Stanley:
I think that the real thing is like, [inaudible 01:00:58] all those things, I think there’s kind of like a war over the algorithm and the distribution.
Patrick Stanley:
It’s like, if your content is being served up by Facebook or Google or Twitter, it’s a war for eyeballs and like who owns the customer? As well, and who gets to effect the narrative? I think that’s like [inaudible 01:01:22].
Jeremy Welch:
Yeah, big money war. I think it’s hard for a lot of people that haven’t been a CEO or a founder, or any kind of full executive position, to fully understand what fiduciary responsibility is, right?
Patrick Stanley:
Yeah.
Jeremy Welch:
In some sense, it’s not like Bezos has a choice. Bezos is maximizing value. I just want to point out that, there’s something interesting about that line. About like, there are very good things that are kind of done by some of these firms.
Jeremy Welch:
There’re also lines of they go down, that they have to, because it’s the way to maximize value. They may be vilified for it eventually, but they’re put in a very tough spot.
Jeremy Welch:
It doesn’t justify the spot that they’re in. It doesn’t justify their actions. It does just say that line is very hard to walk, for any executive and any person on what to do.
Patrick Stanley:
Yeah, totally. I think Amazon’s business model, I feel like leads it to greener pastures then potentially Facebook or even Google. I think Amazon is the lesser hated of the fangs. [inaudible 01:02:38]
Jeremy Welch:
Yeah, you’re right.
Patrick Stanley:
I think the most hated right now is probably Facebook than Google. In terms like [inaudible 01:02:46].
Jeremy Welch:
I would say, I think that the least hated of the group… Amazon is interesting, because the dependency on the computing side has kind of offset… yeah, getting your stuff in a day or two days is great.
Jeremy Welch:
The consolidation of access, they’re the kind of limited choice around like even in destroying some smaller businesses. The ads, the products, everything’s gotten worse on Amazon. The selection has gotten worse over time. A lot of that has gotten worse, but there’s this offset. Maybe they get a free ride, because of that.
Jeremy Welch:
There is a whole group of companies. I mean, like Salesforce is another one that’s huge. Salesforce is huge, but they just don’t get talked about much. They have a lot of data, arguably as much data as Facebook. They definitely use it, but never comes up.
Jeremy Welch:
There’s like a series of companies, that it’s kind of weird that they don’t come up and there’s not really an issue. Then there’s like, Facebook very clearly gets a lot of flack.
Patrick Stanley:
Well, Marc Benioff is like… I think one thing going on in Salesforce, is like the constant charity work they do. I think it’s like one thing that helps, and generally working… I think he works really closely with the City of San Francisco too.
Jeremy Welch:
Does he?
Patrick Stanley:
I mean, I would imagine. To get Salesforce Tower, you kind of have to. I mean, now we’re kind of venturing off into a different land here. I think at the end of the day, these companies need to mind their business. Also, be observed of, where are they being forced to go?
Patrick Stanley:
Take next steps in a direction that doesn’t add more injury, potentially to what they’ve built or they’ve creative. I think [inaudible 01:04:48] to unwind, it’s hard to unwind Google and Facebook directly. Those things will… they get disintermediated.
Patrick Stanley:
It’ll happen through a completely different way than it has traditionally happened. My sort of guess on that is, it may happen through kind of like personal individual wealth expansion and all the things related to it.
Patrick Stanley:
Whether it’s cryptocurrency or your own data or whatever. Whoever kind of makes that really easy and going forward in the future, and is there to catch that, I think is going to do really well.
Jeremy Welch:
Yeah.
Patrick Stanley:
In terms of like bringing something-
Jeremy Welch:
100%.
Patrick Stanley:
It drops the old guard.
Jeremy Welch:
Yeah. I think personal wealth, personal data, personal computing has to have a resurgence. It has to. There’s no way around it, but it has to have a resurgence. It’s a question of how, and when and why, but there is incentive for it to happen.
Jeremy Welch:
The communities, the people that do participate in that, when it does happen, they’re going to be so much stronger than any other community. There’s going to be more incentive for others to follow in their step.
Patrick Stanley:
Totally. Cool, man. Well, we’ve talked about a lot today. This was really another one of those really fun conversations and-
Jeremy Welch:
Yeah. It’s awesome, man. Thanks for having me.
Patrick Stanley:
We’ll be catching up again. Until next time, this has been the Stacks Podcast.
Jeremy Welch:
Awesome. Thanks for having me on, Patrick.