This week in Bitcoin- 11-1-2019- Family office trillions, crypto funds, Defi, holding vs custodians


Hello everyone this is adam meister the
bitcoinmeister the disrupt meister
welcome to this week in bitcoin today is
November the first oh yeah new month
2019 how was your Halloween everyone
strong hand long term think bitcoin is
the next Bitcoin I’m confiscating in
motion personal responsibility is the
new counterculture alright everyone you
know I’m offended by selling hello all
my elite friends it is time for this
week in Bitcoin we have a new guest on
it is david nage of archive welcome to
the show David Thank You Adam yeah I saw
your awesome interview of turd Meester
you are everyone he’s linked to below
you can check out his Twitter you can
check out our god all the time this
stuff is linked to below you’re gonna
want to know more about this dude
because you’ve got it you’ve got an
interesting story you are a former
family office investor okay so I’ve
heard about the family offices before
they deal with like ultra wealthy people
correct me if I’m wrong and I haven’t
heard about too many of those family
office people getting into Bitcoin here
so tell us about what is a family office
first of all and how did you find during
the pickle so a family office is an
entity that was created to effectively
help a wealthy family manage their
assets it stems back all the way from
the House of Rothschild back hundreds of
years ago and what we started to see in
the United States one of the first
families to have a family office was the
Rockefellers so john d rockefeller by
1904 had amassed almost a billion
dollars of net worth and some of the
people that were working in Standard Oil
were effectively managing that money for
him and he started to see some issues
like blackmail you know they knew how
much money there are colors had and they
knew they can start to pull things you
know with them and so this this entity
came about that would be away from the
corporation that the wealthy family
that would oversee their investments and
oversee a lot of their lifestyle choices
and so over the last hundred years we’ve
seen them evolve we saw them kind of go
away for a long time because big
institutions like Credit Suisse and
Deutsche Bank were taking care of a lot
of those issues for them but what we
started to see is that families wanted
to have more flexibility they wanted to
be able to get into more alternative
investments we started to see them
getting into VC and into a lot of direct
investments of the last decade and my
trip into Bitcoin came about in 2015
when one of the family members that I
was working for I actually had invested
in one of the first Bitcoin funds and a
lot of people have this beautiful story
about reading satoshis you know white
paper seeing that there was going to be
this evolution of distributed
decentralized systems that was going to
proliferate us from the dearth of
centralization and me it was more about
oh my god this was the same time around
you know you know Dread Pirate Roberts
and some of the stuff that was happening
on Silk Road for me as an investor my
first job was protecting the family
making sure that there was nothing that
was going to get out in the news about
them they want to be kept private and so
the idea is that you never want to be on
The Wall Street Journal or The Times or
any kind of TV shows and so for me it
was more a defense mechanism I needed to
learn everything at that point the time
about Bitcoin and so I spent about six
months of my life deeply immersed into
Bitcoin talking to people that were PhDs
of distributed systems that were you
know MIT and some of the other
institutions here in the United States
and then I started teaching myself how
to code now this is not necessary but I
started reading a lot of the mechanisms
that were in place and I didn’t feel
comfortable understanding them from the
kind of knowledge base that I had as an
investor and someone that really didn’t
spend enough time in computer science
when I went to college and so I
effectively started teaching myself how
to code at the same time learning about
Bitcoin and I had the realization that
the investments that were making as
family offices and decentralized
companies companies that are using AWS
and other infrastructure are liable
and we’ve seen this play out time and
time again where the centralization you
know basically as George Gilder says in
his book if you tell all the thieves
where the money is they’re gonna go
there and the same way is with day that
data is a new form of money these days
if you tell all the thieves where the
data is they’re gonna go there and so
the the promise of distributed in
decentralized systems you know to me
initially was like my goodness this is a
potential way to stave off the massive
liability that we’re investing in in
terms of these centralized systems and
so that really led me down the path
further and further and then realizing
obviously that with Bitcoin with the
center ship resistance the ability to
store one’s assets digitally and not
have a authoritarian government be able
to seize them
that really kind of also gleaned a lot
of information to me because what we
started seeing you know issues in
Venezuela we started to see
hyperinflation over the last two to
three years in certain certain countries
this became a thing to me that really
said you know what when people learn
about this that it could be absolutely
massive and that’s obviously what we’re
all in this space you know we think we
think that it could be a replacement for
gold and we think that there’s so much
possibility when there’s global macro
issues that people can go into this and
so you know I was very early into it a
lot of my peers in the family office
world were very I guess I can say at
odds with me they had heard about Jamie
Dimon calling it a scam they read a lot
of the negative headline risks and you
know the thing about Bitcoin that’s you
know both beautiful and kind of annoying
is that it gets majority the lion’s
share of press and most of that press
always starts with the same kind of
paragraph well in 2017 and q4 you know
Bitcoin hit 21,000 and then it died down
to 3,000 so obviously it’s you know just
a big Ponzi scheme and so there’s always
that kind of you know clickbait but
those that actually started to really
kind of understand the fundamentals and
there are fundamentals of Bitcoin those
that really started to understand that
you know started to change the way but
yeah you know in terms of understanding
how family offices perceive Bitcoin and
other digital assets
I’m happy to kind of glean into that as
well – yeah I actually I want to get
into what your predictions are on real
family offices pile into Bitcoin and
into the space but so today you got
interested in you were working for the
family office how did you get into arc
how did you and what is aura right so
over the time over the last three years
I started really focusing much more on
distributing decentralized systems I try
not to necessarily call them blockchains
because I think that is a a meme and a
kind of a pigeon hole that really
doesn’t do them a lot of services and so
I started looking at that more as a
theme and the last family office I was
at unfortunately you know it was a
situation where there was some interest
but a case in point we were going to
build a supply and logistics company
where we had two parts of that we had a
point of sales business then we had an
RFID technology a label company and I
wanted to build it on a publishing I
would have liked to obviously do it on
Bitcoin but it not that’s not
necessarily what it’s built for and
unfortunately you know they went to use
a private train now talking to them
about the differences between private
and public chains you know a private
chain in my opinion is no better than a
school you know SQL kind of database it
really you know there’s the words a lack
of kind of congruence on that and so
what happened is I started to you know
put on these conferences they called fo
two five six I put on two of them so far
first one I had about 120 family offices
come the second one we did in April this
year had about 150 family offices come
and the first one after the first one I
left so energized that there really was
interest amongst my peers now that I
decided to say you know that it was my
time to spend a hundred percent on that
on Bitcoin and other digital assets and
so around October of 2018 I opted to
leave I spent about four months of my
life meeting a lots of different fund
managers and projects in the space after
meeting about 60 different funds I
became really concerned by the lack of
what I would consider fiduciary
responsibility and management
a lot of them were investing heavily in
Bitcoin which is great but you know when
you’re trying to diversify an investor’s
risk you need to potentially you know
think about things aside from this one
asset yes I’m as people know if they
listen to my podcast I’m a massive
Bitcoin believer but at the same time
I’m also an investor and I believe and
diversifying one’s risk because God
helped us you know if Bitcoin you know
gets taken down somehow you know it’s
good to have a few eggs in a basket you
know to protect your downside risk and
so I actually started writing a lot of
medium I started the podcast called base
layer and the first article that I wrote
that really seemed to resonate with
people is that that 90% of the crypto
funds were going to fail and I stated
that those funds were going to fail
because they didn’t necessarily adhere
to fiduciary responsibilities their
sizing of positions was wrong their risk
management was non-existent their
governance was non-existent and so all
of that writing and the podcast kind of
led me to the folks at arca archa
is a digital asset management firm we
have about three different current
strategies in place right now if people
are familiar with some of the
traditional finance kind of mechanisms
like Blackrock Blackrock is a big
holding company and under Blackrock you
have all these different strategies and
my opinion is that there’s you know it’s
good to have different strategies in
this space right now
you know obviously we believe heavily in
Bitcoin as I said before but it is good
to look at some of the other spaces it
gives you information that you would not
otherwise have and so you know as it
goes we have a liquid fund that is run
by a fellow who used to be a trader on
Wall Street for about 15 years he has
created everything from equities to
casino bonds he’s very thoughtful about
the space he started a thin tech company
about five years ago and his developers
were mining Bitcoin and that was led him
to his kind of Bitcoin moment our CEO
and co-founder is the C is the
co-founder of a big financial company
called wisdom tree wisdom tree is a
publicly traded company
it has about 60 billion in assets under
management he built it with his brother
back in 2000 and that has been a
fantastic success and so his dick coin
moment came a few years ago too
he left that company he started another
startup focusing around cannabis I never
touched the plants but he was building I
have to say that he was effectively
helping the infrastructure of build of
the plants in the buildings with the
grows and JP Morgan or his bank at that
time basically said you’re working in
cannabis we’re gonna shut down the
account and so this is a situation where
as he started getting payments and
Bitcoin and you know that was his whole
moment that this is not something that
could be really shut down and as I said
you know it’s censorship resistant and
so they founded the company about a year
and a half ago we have our asset mat we
have our fund which is invested you know
in Bitcoin and some other different
digital assets which I you know can’t
necessarily talk about but then we also
have an opportunistic fund which does
things in more venture capital and then
we have financial products that we build
on block chains and so there’s a few
different things that we’re doing right
now it gives a diversified flavor to the
in the entire space okay now I’m a guy
who’s not big in the diversification
when it comes to a cryptocurrency that’s
why I’m the bitcoinmeister I think I I
do like that you say 90% of the funds
will fail and you’re just saying your
fund is of an excellent level and it
will not fail and I think of course most
of the funds out there they’re
diversifying for the sake of
diversification into all sorts of
nonsense
there’s a lot of nonsense out there and
so I would love that
I won’t disagree with you on that by the
way you at the beginning of the show you
brought up the Rothschilds and the
Rockefellers like in one sentence found
that like button for that all the
conspiracy theorists were going crazy
when you said that oh they’re going wild
right now because you said there’s two
kyudo on YouTube I know you’ve got an
awesome pod
link to below of course everybody check
it out but when you bring up Rothschilds
and Rockefellers it just stuff it drives
me it drives the dimmers crazy but but
going back to me up you cannot you said
you can’t mention the altcoins you have
interests in or can you allude to any
and reasons why because there definitely
is a top-tier outfit there’s no only a
top tier out there and then there’s the
Joker’s and the icos miss can you talk
about that a little bit I would say the
way that we can frame that is basically
that we see there’s a taxonomy in the
space right now there are different
sectors in the space right now there’s
an emphasis on infrastructure and one of
the things that we also feel pretty
strongly about is that the layer of
adoption or the level of adoption that
will come will also come from gaming we
see that as a big place and talking
about gaming in term in terms of
adoption of Bitcoin and other digital
assets you know it’s going to be
interesting in 2020 here in the United
States that the viewership of eSports is
going to dwarf about three professional
leagues including the NHL next year
alone and so there is a massive I think
there is somewhere in the range of about
a billion people in the world to play
games on a daily basis you know as
someone as a father I see my kids go on
our phones go on their pad iPads and
play these games and in those games you
have in-game currencies and so there is
a whole generation being primed for
mobile digital currencies and you know
it takes its really upon us right now
and I spend my time educating kids about
this to where we need to educate our
kids about Bitcoin you know if it’s not
in their vocabulary by a certain point
in time it is a disservice because that
will be their future the future
societies will rely on these types of
censorship resistant you know type of
digital assets and so you know for us
you know that is a really big focus area
and also as many people say you know the
infrastructure you know getting faster
you know
we always talk about being more
performant you know the people outside
of digital assets in the crypto box
always talk about transactions per
second so can we get to be more
performant can we also look at things
like NF TS some people are really taking
a hard look at that and I think there’s
a lot of interest especially from family
offices you know when talking to them a
lot of them investing arts a lot of them
invest in more illiquid assets like real
estate and the the promise of being able
to have liquidity in those assets you
know far exceeds what they would really
you know they’d know about right now so
for people that don’t know a lot of
family offices who invest in these
things like art or buildings you know
there comes a point in time where they
might need to get some liquidity you
know yeah they might have hundreds of
millions of dollars of billions of
dollars but sometimes you need liquidity
to do things and so when you have an
asset that is fairly illiquid you have
to go to a secondary broker and that
secondary broker basically just says
okay you know give it to me you know I
know you’re gonna come to me and I’m the
only shop in town and they’re gonna take
advantage and they’re gonna you know
basically take them from you know a
pretty good amount of money they’ll be
able to find a buyer on the other side
but again you know they’re gonna lose
some of that capital to that secondary
broker and so the the possibility of
having open markets without having this
intermediary this rent seeker in the
middle is something that family offices
you know when they start learning about
it more and they are starting to could
be very interested in about and so again
there are different areas aside from the
Bitcoin my opinion and you know I’ve
spoken about this publicly is that
bitcoin is the store of value it is a
programmable money it is something that
will transform our lives that gold you
know in terms of what I talked about my
kids you know my kids and the future
generations will not have a relationship
to this legacy hard asset that you know
our grandparents always use when the
peroneal poop hit the fan you know our
kids will not know that they will know
about these in-game currencies they’ll
know about things that are digital and
mobile devices and so it’s my opinion
that you know Bitcoin serves that and
that is a massive
massive massive market to serve but in
my opinion you know Bitcoin should do
what it’s good at and I don’t think that
you know the Bitcoin community and I
might be wrong and I’m happy to hear
from them but I don’t think they want to
get into these things like you know
smart contracts and I don’t think they
want to get into you know creating the
web 3.0 but I think you know it’s a
disservice to really not look at the
technology and look at distributed and
decentralized systems as a technology
and say you know what we can fix things
that are wrong in web 1 and 2 there’s a
lot wrong in web-one and – yes we’re
using zoom right now and zoom is
probably relying on AWS and you know
what you know I used you know Google
Maps in San Francisco last night when I
was going to a thing for San Francisco
blockchain week and Google now knows
none I’m in San Francisco and they
probably know where I went
and they’re probably selling that to
somebody else anytime that you use some
of these services you basically are the
product and I think that there’s going
to be a massive emphasis on privacy
going forward we’re seeing that overseas
with GDP are you know that passed a few
years ago and it’s been in effect we saw
40 attorney generals here in the United
States start probing Google about their
data usage and privacy issues I think
privacy is going to be a massive massive
emphasis for society going forward that
we’re going to want to hold our digital
cells that we want to be able to own our
digital cells that if someone wants to
know about what we’re doing they should
incentivize us and so these are some of
the themes I think that will start to
play out but again Bitcoin in my opinion
has to be amazing an exceptional it is
already at what it does and there is a
world outside of that that can exist I
think we started seeing you know 7 and
17 and 18 that a lot of people had this
whimsical kind of you know fairy tale
dream about some of these things like
you know dentists and all these other
coins and all this other stuff you know
I I think that you know there’s a world
where you can have practical pragmatism
where there’s actual real use cases for
some of these you know different
applications and so I think that kind of
falls into what with
about the world all right very very
interesting stuff there I want to go
back to your origin story again you were
at the family office and your family
office peers or other family offices
back in 2015 they weren’t in the Bitcoin
that it wasn’t their thing but pastor
there started to be a flow of family
office money into the space is it going
to get larger I mean what is the
potential here these these are
incredibly wealthy funds so what do you
see what do you see this a timeline you
know I think it’s been a disservice that
there’s been this meme the institutions
are coming the institutions are coming
it was a little too early to say that
there are family offices who have been
investing in this for the last five
years that coincide with some of the
institutions that have been building it
like fidelity fidelity has spent the
last five years investigating Bitcoin
and we saw them launch their qualified
custodian platform this year focusing on
Bitcoin and so the institutions have
been focusing on this for a while now
family offices yes there has been an
appetite but I think what we’re starting
to see right now is you know it was the
scam then it was the all-time highs of
you know 17 and then it capitulated when
it was interesting when I threw my first
fo 256 in September of 18 there was
actually interest people were saying
okay it’s been you know kind of in the
sixes it seems to be stabilizing there
was a narrative that the volatility over
the last nine years has actually come
down comparable to the equity markets
and people were really interested in
then we saw what happened you know with
going down to the threes that moment
when I went down to the threes was
pivotal because a lot of family offices
kind of washed their hands of it I said
okay maybe it’s just too volatile right
now it’s not really for us and that is
also a factor of them not understanding
the as I said the fundamentals of what
the coin is you know there’s a lack of
understanding you know to this day in my
opinion you know there is what I
consider a Bitcoin having an identity
crisis so the people who know Bitcoin
and you know married
they know it as a store value they know
it as the centuries of persistent hard
money they know about it as the future
but a lot of people who are reading the
news you know read about it as a
speculative asset you know there’s also
the possibility that Bitcoin could be a
hedge to global macro you know calamity
which we’re starting to see happen all
across the board and so for family
offices it’s been this moment of they
don’t have clarity about what bitcoin is
what kind of a service it functions in
their portfolio do they put it into
their venture bucket and we’ve seen that
a lot of family offices of the last year
or two have been struggling with do I
put it into venture and do I have the
same type of risk and return profile as
a venture investment and obviously you
know what we’ve seen is that that’s not
correct that Bitcoin has a very
different risk and return profile versus
their traditional venture investments
and so for them it’s where do I put it
and I’m gonna there’s a story I’ll tell
anecdotally so I spoke to a big family
office about three or four months ago
and they’re the patriarch of the family
spoke to their chief investment officer
who called me and he said you know we
want to get into Bitcoin because of this
idea of Bitcoin as schmuck insurance
there has been this narrative of the
last year’s Chavez all quality from
social capital kind of pen this about
2013 or so that bitcoin is schmuck
insurance if the world falls to hell in
a handbag you know it’s good to have
Bitcoin because it is something that’s
completely uncorrelated to all the mess
that’s being created and so they called
me and they said okay well how do we do
this and so that should signal to people
how do i you know a family office is
calling me and asking me how to get
involved in Bitcoin so the the the very
idea right now that there isn’t a clear
path people still don’t know how to get
involved in it I think tells me and
tells just tell other people that it’s
still really early and so I walked them
through you know basically based on how
much capital they want to put into
Bitcoin if it was a certain threshold I
said you know it’s probably best to just
do it yourself go to a coin base or go
to one of the exchanges out there
more regulated and you know there’s a
higher you know ilk um get a treasurer
or ledger and you know you know write
your twenty four seed and that’s it
you’re done if you want to go higher you
know it starts to get a little
uncomfortable for the family office
professional you know having you know
effectively a USB stick which has you
know a lot of money on it potentially it
could be very uncomfortable and I think
you know it was shared that this is a
very uncomfortable kind of feature for
other people obviously this idea of not
you’re not a key is not your Bitcoin I
get but you have to you know flip it to
the other side if you’re responsible for
someone else’s money it could be very
uncomfortable having that you know in
that fashion if it’s not your own and so
we talked about you know some of the
platforms out there like the fidelity is
like the Gemini’s like the Anchorage’s
of the world and so it was a process you
know it really it depends on how much
money they want to put into the system a
lot of them I think I’ve seen a lot of
the CEOs of family offices the chief
investment officers have been investing
personally in their own personal
accounts into this so they’ve started
their own coin based account they’ve put
in whatever kind of money they want to
put into this just to get a feel for it
and I think that’s really important it’s
the feel how does this feel what does it
do how do I move funds around and so you
know for people that are trying to
understand why family offices might not
be jumping into this you know with both
feet it’s because they’re dipping their
toes they’re trying to get a sense of
this they’re trying to see how it feels
they’re trying to see you know again do
I really want to have potentially a lot
of my clients money on a USB stick where
I have to try to hide it in a safe and
write a 24 C character phrase and if I
maybe miss one of those characters or it
smudges you know from the pen that I use
I might not be able to you know kind of
recoup that those assets I know it
sounds hard for a lot of people who
weren’t you know obviously you know dead
set bitcoiners which I get
again we have to take you know kind of
we have to put ourselves in their shoes
it’s not you know our capital it’s not
your capital that you’re putting to work
it’s somebody else’s and if you mess it
up and you lose those you lose you know
the seed or you can’t recover you know
the keys you’re basically putting
yourself at risk of losing your job
you’ve given a real life perspective on
the controlling your private keys aspect
of Bitcoin their traditional investors
they’re going to freak out thinking
about three million dollars worth of
wealth on a stick it’s just I guess it’s
hard for them to get used to that it’s
especially if it’s not their own yes
yeah so that is why we are seeing more
and more Bitcoin controlled by its
custodians like my third parties people
are not going the trace Mayer way the
Adam Meister way and controlling own
private key it’s a greater share of
Bitcoin is now ending up at these type
of businesses and this meant this
benefits
I mean ARCA you invest for other people
you you’re controlling people’s people’s
wealth I mean they very well I mean your
clients could just go out there and buy
a Bitcoin and put it on a trace or
easily if they wanted to but like so
what type of people come to our cut I
mean are they just totally from the
traditional mindset of traditional
finance mindset it’s people who
understand that there’s something
happening here but understand that to be
in this world it’s 24/7 365 you know you
cannot just kind of haphazardly go into
Bitcoin and some of these other digital
assets and just call it a day you know
we saw over the last few weeks alone
especially regulation we saw you know
telegram have their emergency SEC filing
you know basically saying stop
everything we saw you know the CFTC
oppai and basically is saying that
aetherium is not a security we saw some
other thing
happen recently you know basically is
stipulating that regular the regulation
is definitely becoming an issue and for
our family offices I want to make a very
specific picture here they are investing
in real estate they are investing in
hedge funds they are investing in
equities they are investing in things
like royalty streams from music there a
full layer of things that they are
investing across the spectrum and so
with Bitcoin and other digital assets
you and I both know that it really is
something that you need to dedicate a
lot of time to you can’t just kind of
set it and forget it per se you need to
know what’s happening in the market you
need to know what’s happening in the
news you need to know what’s happening
with the regulation and for a lot of
people that are talking to us say yeah
you know what we want to have exposure
to this when I have exposure to Bitcoin
and other digital assets but we just
don’t have what we call bandwidth this
is a popular phrase and family offices
called bandwidth bandwidth basically
means I don’t have time I don’t have
time to understand you know the stock to
flow ratio of Bitcoin I don’t have time
to understand you know some of the
regulatory things that are happening
within Bitcoin um but I know that I want
exposure to it and I want people that I
can trust that have you know basically
and invested and have run and have
experience with asset management of
other people’s capital and so that is
why people talk to us because we are
very deep believers in this space at the
same time we’re also very deep believers
that you know when someone gives us
capital to invest that it is a huge huge
responsibility and so you know having
that understanding and having that
really be as a as a guiding principle I
think is a reason why people come to us
I agree with you you know I I I
completely understand that not your
coins you know not your key is not your
Bitcoin you know terminology and
narrative I get it
but again you know it is incredibly hard
for people who are constantly being
judged every single day about their
performance
and if they are getting involved in
something that is considered a highly
risky asset such as Bitcoin and you know
even if it performs well but if they
have some sort of an issue getting those
assets you know it is something that a
lot of them feel very uncomfortable with
right now and so again it is not their
own assets it’s somebody else’s money
that you basically investing on behalf
of and so it is a really different
trajectory for a lot of people on the
bandwidth issue I I would differentiate
between Bitcoin and the rest of them I
think Bitcoin can you can treat it as a
savings account and just forget about it
all the others though that there is a
lot of drama involved there are all
sorts of changes there are times that
you’re going to have to dump and you
have to get rid of some of these things
and you know I’m gonna kick back for a
sec I’m gonna kick back for a second so
when we saw Bitcoin basically up 30
percent in the last week you know
everyone’s like well how the heck did
that happen you know when we’ve seen
Bitcoin you know have weekend’s where
it’s gone down 10% all of a sudden why
did that happen again you know it’s
something yes I agree with you it’s kind
of you know something that you think
about long-term it is something as a
store of value but it is volatile
obviously as I said the volatility has
come down over the last nine to ten
years and I know that we’re actually
celebrating that the whitepapers
anniversary today as we speak but it you
know the volatility does still exist and
again if you are an investor on somebody
else’s capital at risk and one of your
assets goes down by 20% in the matter of
three hours you have to basically
explain to them why that happened and if
you don’t know why that happened because
you don’t have time to understand why
that happened you’re not in the telegram
chats you’re not talking to the OTC s
you’re not you know involved in the
ecosystem if you don’t know why that
happened and you’re just trying to you
know basically read a Bloomberg article
or Forbes article to try to come up to
speed you’re really not doing your job
you know you you put it in a you put it
in a better
perspective there I’m coming from the
you know sovereign individual
perspective I’m I’m managed for me it’s
you know personal responsibility I
manage everything that’s mine and I but
again you’re coming from the perspective
there are all these people they have
other people manage their stuff and it’s
got to be managed perfectly and they
don’t have the time to worry about that
stuff
I see you’ve got a point you’ve
definitely got a point there I I live in
the world where you know I can could
control all my asses and everything but
some people there their use of
traditional finance where they’re used
to other people managing their stuff and
it’s just that’s the way it is and it is
it is a full-time job
there is similarities between you know
the family office world and you know I
say air quotes our world we’re all very
concerned about OPSEC about you know you
know you know you know a lot of us are
very careful about that you know anyone
who’s had you know their phone sim
jacked or anyone that has lost you know
any kind of bitcoins from a you know an
exchange hack anything that’s happened
family offices are also incredibly
cognizant and obviously very concerned
about appropriate operational security
they you know they have a significant
amount of wealth and again this is why
they have that layer of privacy they
don’t want to be in the news they don’t
want to be you know you don’t want to be
able to search on Google and just find
that person and know where they work or
where they live that’s why there’s
layers and layers of kind of staff there
to family office to kind of keep away
from the family itself and so you know I
think there are similarities between you
know the Bitcoin world and the family
office world but again you know the
people that are actually pulling the
strings that are making those
investments that are you know going and
buying Bitcoin again as you said if we
said a few times
they’re not buying it for themselves and
they’re buying it for somebody else and
so with that becomes a higher threshold
of responsibility that just a lot of
people don’t understand yeah very good
point down that like button everyone
we’re getting a really unique
perspective here I like it a lot
well you alluded to the the people that
manage other people’s funds they had to
and
sir this past weekend why did it go up
by so much and you knew they were
serious about China their theories about
Libra and I’m gonna ask you about Libra
real quick what are your thoughts on
vibra really succeed and will it be good
for the space I have no idea if it will
succeed I think what we’ve seen is that
there’s been higher scrutiny because of
obviously Facebook being involved and
hearing the US government you know there
are fear there are powers that be that
are very unhappy with Facebook and about
some of the things that they’ve been
involved with in terms of data and
privacy I think at the end of the day
what we’ve seen is that the ecosystem if
you are moving assets if you are
creating Bitcoin you know most of the
trading involves using tether to go in
and out of different exchanges they use
a stable coin I personally believe that
a stable coin is good for the ecosystem
because the unit of exchange you know I
as I said before Bitcoin in my opinion
is a store value I think spending your
Bitcoin on a coffee is ridiculous I
don’t understand why people would want
to actually do that it’s like literally
taking a gold bar and chipping it and
giving it to Starbucks I don’t
understand why you would want to
necessarily do that and so the idea of
having a digital asset that has a lot of
the earmarks of distributed in
decentralized systems that has you know
the features I understand why the idea
of a stable coin actually presents
itself to the market you know it would
be interesting to be able to see that
you know whether it’s Libra or there are
other ones out there there’s ones that
are backed by other digital assets like
aetherium you know there is dye there is
some others out there I think it’s
interesting in seeing you know to see
this evolve
I think this market needs to have a
stable coin succeed I think it also you
know let’s you know we’ve said it all
before Facebook has amazing reach as a
distribution channel there are over two
billion daily active users on that
platform
and I think a lot of people got really
stuck on Libra but a lot of people just
have not spent a lot of time on calibra
which is the wallet I think if you are
able to effectively give two billion
people a cryptographically powered
digital wallet I think that’s probably
interesting and again you know the way
that we’ve talked about it at ARCA and
the way that I believe about it is that
you know the whole Libra calibra thing
is a massive distribution opportunity
for us all and so I think that is you
know that’s really the way I think about
in terms of you know the whole stable
coin Libra kind of discussion all right
let’s uh let’s move to a topic that’s
based on the name of your show actually
baselayer right that’s the name of it
now you you interviewed her and prove
the and again it’s it’s it’s linked to
below and at times you since you
actually became a coder at one point
there’s a lot of technical aspects of
Bitcoin and do you feel that and we
talked about the base layer and then
we’re gonna build a second layer third
layer fourthly and we can get into all
that I find that stuff fascinating but
when we get into these technical
complexities do you think some of this
is holding back adoption and interest
from family offices from larger
institutions because it’s just it’s an
overload of information they’re like I’m
never gonna be able to understand you do
you think there’s a better way of
communicating with traditional finance
people yeah again this alludes you know
this as I said you know Bitcoin at this
moment in time is suffering a little bit
of an identity crisis or as I wrote I
wrote a recent paper it’s a 24 page
paper and kind of a primer for family
offices and institutional investors I
kind of said that Bitcoin and you know
some other digital assets are going
through what I call the tween phase you
know they’re not a toddler anymore
they’re walking they’ve been running and
they’re not teenager yet and so they’re
right in that middle phrase right now
where they’re trying to figure out you
know you know for us that are in this
base we kind of know what the coin is
already to us but others
outside of this box is it a store value
is a replacement for gold is it a global
macro hedge is it a consensus network
and obviously you know in terms of base
layer in terms of it being a consensus
network you know unfortunately you know
I think some of the legacy providers out
there have done a very good job with you
know marketing against it by you know
focusing on the three transactions per
second you know a lot of people don’t
understand that the three transactions
per second in the ten minute lock times
you know people consider that a bug you
know two people who actually understand
Bitcoin that’s actually a feature it’s a
security feature and so you know I think
in terms of layer one and layer two
layer two obviously you know with
lightning you know having the promise of
faster transaction time to be able to
create state channels anything in above
those layers I think is quite
interesting I don’t necessarily think
that you know the complexities of layer
two or things like taproot and mass and
some of the dips that are coming into
place really are dissuading family
offices I think you know the big
dissuasion has been this marketing
effort about focusing on the three
transactions per second you know
everyone says that it’s slow and that’s
really just not you know if you’ve if
you’ve worked with Bitcoin if you’ve had
Bitcoin if you you know move it around
from a wallet to other things you’ll see
that the the transactions per seconds
are actually pretty damn good these days
and so you know I think that’s been
probably the biggest disservice is that
this three transactions per second means
that it’s slow and that you can’t use it
can’t use it for payments I think
there’s been a fairly negative marketing
effort on that and I don’t think any of
the layer two solutions like lightning
or any of the complexities of any of the
other further layers in terms of
scalability or in terms of governance
really kind of dissuade people okay I
want to look at a bigger bigger picture
here we were talking about government’s
before regulations
economic collapse do you see we just had
a rate cut in the United States and
where do you see this going guys there’s
so many people that are just like
gleefully awaiting some type of economic
collapse I I’m not that type of person I
think we’re about to enter an incredible
gold
that does not mean that you don’t need
to have everything fall apart to enter
this beautiful golden age that we’re
about to enter but uh that I think but
and I I think big coin cryptocurrency
can be successful without it taking over
the world without Bitcoin becoming the
world reserve cryptocurrency I’m not a
believer in hyper Bitcoin ization
what are your thoughts on this do you
see how the huge economic collapse do
you see a golden age ahead of us do see
world reserve currency for Bitcoin so I
have been reading Jared Diamond’s book
collapse which I recommend other people
taking a look at it’s about how
societies collapse and it’s a historical
chronicle about how certain societies
have collapsed and in there he talked
about this idea of normalcy creep or
creeping normalcy how you know over time
we start to become really adjusted to
things that in the current times BAM we
would say wait a second that’s wrong you
know he talks about you know in Montana
that he would go there and the 1950s
it’s a snow-capped mountains and you
know you’d see that and then he didn’t
go back for like forty years and all of
a sudden those snow-capped mountains
were gone and everyone was like oh yeah
it’s it’s normal everyone who lived
there and saw this every day was like oh
it’s normal it’s completely normal and
so there’s this idea of normalcy creep
that I think is affecting you know the
market right now where you know the Fed
you know you know cutting rates
adjusting the repo market we’ve seen
them inject billing billions of dollars
over the last few weeks injecting into
the capital markets and everyone say oh
it’s fine it’s normal
no it’s not normal this is not normal
operating procedure there is obviously
something you know wrong from my
perspective and I think my colleagues at
Arco share it too is that when you see
you know billions of dollars being
injected by the US government by you
know effectively printing there is
something wrong and we don’t know what
that is we don’t know if that’s a bank
we don’t know if that’s something
systemic but it is not normal operating
procedure
we’ve just unfortunately I got into this
normalcy creep over the last decade with
tarp and the bailouts that it’s
normal operating procedure too many
people that’s not true and so I think
that is something that we’re definitely
looking at I’m very interested in this
this this data statistic that there’s
three trillion dollars of debt by
corporations that is on the verge of
being downgraded to junk for those that
don’t know institutional investors like
pension endowments and you know retiree
plans typically are not allowed to old
hold debt or assets that are deemed junk
and so that can also cause massive
problems I think you know if you kind of
widen the scope breaks it we’ve seen
Boris Jones and have massive issues
trying to get that passed we’re seeing
them continuously you know kick the can
down the road about that it’s
interesting I had a great conversation
with Rob Powell who hopefully many that
the coroners know because he’s been
doing great work you know with a coin
and you know we were talking about
Germany
you know Germany is effectively in a
technical recession and so you know
we’re seeing lots of spots and we saw
what happened with Chile just a week ago
when I was with Dallas with with her you
know you know trains were being lit on
fire because it’s then the issue is
happening there and hyperinflation
throughout some of these countries is
prevalent I just spoke to someone who
works at maker who is in Argentina what
he’s talking about the yearly inflation
rates and how the peso is becoming less
and less valuable there these are all
things mm-hmm that we in the Bitcoin you
know own camp and in digital asset world
we feel and we know should really
translate to people saying okay it’s
time to adopt bitcoin this is something
where I can put my assets in a place
that’s not going to be you know
effectively you know hyper-inflated by a
government that’s just printing paper
excessively but I think there’s a
massive education gap still I think
people in Chile the people in Venezuela
that have it started obviously waking up
to it but other countries that have
experienced hyperinflation or that are
experiencing political unrest they still
don’t know that bitcoin is a place where
they can go and put their assets and
safety that will not be you know
censorship resist
that will not be you know as I said you
know affected by hyperinflation by you
know the country’s government printing
excessive capital I think we’re still
early because a lot of people don’t know
of it as that particular tool in their
box well I think you mentioned normalcy
creepy
before I think in a lot of these
countries it’s just normal to have
hyperinflation now that’s just the way
it is so why even look into it it’s a
big point why do you even try to
discovery it’s gonna be Tim yeah yeah I
I think I just don’t I mean I won I’m
curious if you think that Bitcoin can
become the world reserve currency I do
not think it I uh I think governments
will always come up with some digital
easy to use form of cash that will
please the masses and just the proactive
people who understand censorship
resistance who under who know about
insurance who you know know about
inflation they’re the ones that are
going to discuss they’re the ones that
are again that are gonna be the Bitcoin
I don’t think Bitcoin will be for the
average Joe on the street I I don’t
think I think they’ll be comfortably
known to reality yeah I think and also
the rails and the rams to get into
Bitcoin you know for the mess you know
out there I think you know a lot of them
don’t really understand how to do it as
I said I spoke to a family office who
has hundreds of millions of dollars in
assets and they didn’t know how to do it
if they don’t know how to do and they’re
sophisticated investors and you have
someone in you know Slovenia who is
making a thousand dollars a month you
know who might be experiencing
hyperinflation or has experienced
hyperinflation you know over the last 20
20 years if you know the sophisticated
investor doesn’t know how to do it as
asking me how to do it you know to your
point you know the average person
throughout the world is experiencing it
or that the 1.6 billion that are
underbanked in the world you know it’s
again we have to make you know it is a
marketing effort we all have to talk
about it
I have breakfast every week in New York
with a bunch of folks you know whoever
wants to come and I say the price of
admission is that you have to go and
talk to people who do not currently own
Bitcoin who do not are not in this
ecosystem you have to talk to them you
have to bring it up every single day I
buy a cup of coffee or you know I buy
something and I ask the retailer again I
don’t want to spend my Bitcoin but I ask
a retailer you know would you accept
Bitcoin if you could and you know time
and time again you know they’re like you
can I could do that I had lunch in
Dallas you know before I met up with her
and we we had lunch and you know the she
the waitress came by and she said you
know here’s your cheque and I said well
you know is it possible that I can pay
in Bitcoin she’s like you can do that
it’s these awakening moments we need to
awaken people I know there’s always the
kind of the memes on Twitter about being
woke I think we need to get away from me
and we actually need to do the hard work
we need to talk to people we need to
talk to people that are outside of our
box I’m here in San Francisco for a
blockchain week is great hanging out
with people who are in the space already
but it’s really important for me to talk
to people who are not in the space who
don’t currently have Bitcoin I think if
we do that in a concerted effort over
the next year or two I think that will
start helping adoption further it tell
me a little bit more about these and I
saw you retweeted or tweeted out some of
these breakfasts that you had in New
York so so what what is that all about
you you announced it on Twitter then
people just show up or what’s with
Channel it’s basically you know I’ve one
of my friends from a while back used to
his family had had a house in Michigan
and they were teachers and this is like
in the 50s and 60s and you know they
would basically just have what was
called like salon style kind of
get-togethers they would invite other
teachers and musicians and artists and
scientists and everyone would just come
by and drink some wine just talk about
their respective fields and I think
that’s super super interesting and so
with the breakfasts that I do it’s
basically anyone who wants to come by
you can talk about Bitcoin you can talk
about digital assets you could talk
about economics you can talk about
politics you can talk about art you can
talk about sports you can just come
talk about something interesting so we
can all learn something that we didn’t
know about before you know it’s great to
you know obviously communicate on
Twitter it’s great to talk that you know
talk you know being chats and telegram
but the interactions that we have
together is so much more important
face-to-face and so I think that is one
of the reasons why I decided to do it
about four weeks ago and I have to say
honestly the things I’m learning you
know just you know the two days ago when
I hosted it last we were talking a lot
about China we were talking a lot about
dcep they’re their digital asset and
just the you know you think about kind
of levels of thinking and I think Howard
Marks talks about this a lot in terms of
second little thinking you know there
there are different layers striations to
the way that we think a lot of us just
do layer one where we just know
something or we think we know something
and that’s it but those that are really
highly accomplished in their field
whether it’s an investor whether it’s a
scientist whether it’s whatever it may
be they think beyond the first layer
they think beyond to the second layer to
the third layer what are the
implications of the implications and I
think one of the things that I enjoy
with the breakfasts that we’re doing is
that it makes me and others think about
other implications aside from what we’re
reading about every single day all right
people
if you’re in the New York area follow
him have people showed up that you don’t
know who they are
beforehand most of them yeah also oh
people because there are New Yorkers
definitely watching this show right now
follow him check him out all right
finally you brought it up at you said
you guys are talking about China what
are your thoughts a lot of people were
saying because she said that they like
blockchain now that’s why be the price
pump what do you see the future of
cryptocurrency
in China do you actually see the people
buying Bitcoin or being stuck in G coin
over there right I think one you know
it’s interesting David Marcus and
Zuckerberg actually said this in
testimony that if we the United States
don’t really get ourselves in gear that
another country is going to take the
lead it’s interesting I used to do you
know work within sustainability
some technology emerging technology and
if you followed what China has done in
terms of renewable energy they have
really spent considerable amount of
capital to become the leaders in that
space and also an AI and robotics and so
there are places and technologies that
they are definitely taking a lead on and
I think it’s you know there are people
that are concerned from a defensive
posturing that it’s almost becoming like
a space race who’s going to be the
leaders of this new world that’s being
founded in digital assets encrypted
cryptographically powered technology and
I think a lot of people are concerned
that China is going to take the lead I
think you know in in in theory it’s very
interesting to see you know what we’ve
seen over last few at in the last few
days apparently all mentioning is
negative mentioning zuv mega blockchain
have been removed from websites in China
I think at the same time it is a
communist regime it is centrally
uncontrolled I think you know a lot of
people out there have some concerns that
if you have a centrally controlled kind
of you know regime of their type that
them issuing their own digital currency
could be both interesting and also
concerning I think there’s pros and cons
to both sides of those I think it’s too
early for myself and others you know
especially my colleagues to necessarily
you know make an opinion about that but
I think it is very interesting that
we’re starting to see sovereign nations
you know aside from the United States
which apparently I was is still you know
kind of trailing I think it’s
interesting to see other sovereign
nations take the lead and really see
that there is something you know they’re
there all right now one bonus question
is we’re at the end of the show here in
terms of countries out there eventually
one will make an announcement or it will
be figured out that one country out
there will be the first one known to
have been buying Bitcoin
and that country will end up in a very
good position give any theories on where
that country might be whether what what
country that might be and why they might
do it I don’t but I hope I have some
sort of resonance
there that you know I didn’t know about
that I was a part of that country you
know that you know somehow you know am i
you know in my genetics that I’m somehow
you know disposition you know disposed
to being a part of that country so I can
obviously take some residency there as
well too
okay so tell us where ever one can find
you to say anything you want anything
that anything that was left out here the
floor is yours so you can follow me on
Twitter I’m pretty active and I tried to
share a lot of my mind share about that
my office is another you know Bitcoin
another digital assets you can find me
at David J nage
so David J nage I have actually become
you know I’ve removed a lot of the you
know the kind of you know a lot of
people use kind of other names and
things like that I want people to find
me so you can find me there I also have
the podcast baselayer you can find that
on iTunes or Spotify or stitcher or any
of the podcasting services that you like
it’s called baselayer we’ve recorded
about 100 shows thus far and so yeah
those are the two places you can find me
awesome everything will be linked to
below David thank you very much for
being on the show today really unique
perspective I love this family office
thing and I hope they all wise up and
pour a bunch of money into Bitcoin this
is come on family offices this 1% what’s
1 percent of your net worth
dudes cup seriously you could end up
being 10 percent in a few days
afterwards I mean that bit that’s that’s
the logic there that that’s how I would
uh market it today check tip it out he
is linked to below everybody remember
this week in Bitcoin is every Friday
right here on the bitcoinmeister Channel
I do a new show here every single day
saturday is the beyond Bitcoin show okay
found that like binary button subscribe
to the channel I’m Adam I should
bitcoinmeister the disrupt meister
shabbat shalom see you tomorrow
everybody have a good time thanks again
David
bye

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