Warfare, Finance, and Technology with Christopher Alexander

What if the future of warfare, finance, and technology were all interconnected? Join us in a fascinating conversation with Christopher Alexander, a distinguished expert with an impressive background in military operations, artificial intelligence, and blockchain technology. Discover how his experiences from planning information operations in Iraq and Afghanistan to instructing at the Chief Naval Officer’s strategic course group have shaped his unique perspective on modern defense strategies, including his notable work on the DARPA-funded loyal wingman program, Kratos' XQ-58 Valkyrie.

Ever wondered how cryptocurrency and blockchain tech could revolutionize our financial landscape? Together with Christopher, we explore the fundamental principles that underpin cryptocurrencies, with a spotlight on practical applications like Iggy Azalea's token on the Solana blockchain. From the historical context of money as a store of value to a comparative analysis of Bitcoin and Ethereum, we unravel the complexities of decentralized finance and its disruptive potential.

Cryptocurrencies: volatile speculation or the future of finance? We tackle this provocative question by examining the inherent value preloaded into IPOs and the shift from individual to institutional control in crypto mining. Dive into the debate on decentralization versus centralization, the revolutionary aspirations of Bitcoin advocates, and the controversy surrounding NFTs. Finally, we reflect on the evolving dynamics of the crypto market as major financial players like BlackRock enter the scene, and explore how blockchain technology is finding real-world utility beyond the hype.

Transcript

Speaker 1: 0:00

Welcome to Interesting People, the podcast where we delve into the lives and stories of fascinating individuals from all walks of life. I'm your host, justin Wallen, and in each episode, we bring you inspiring, thought-provoking and sometimes surprising interviews with people who are making an impact in their fields and communities. There's only one common thread that the world is more interesting because of them. Get ready to be inspired, entertained and enlightened as we spotlight the extraordinary. Let's dive in. We're going to get started right here with my friend, christopher Alexander, who is, if not, the most interesting man in the world. He's one of them. He's a former information operations planner defense AI operation operational how do you say that? Operational? Did you read that? It's O-P-E-S. I must have at some point? Operational how do you say?

Speaker 2: 0:45

that Operational? Did you read that I must have at some point Operationalization.

Speaker 1: 0:55

That's what it is. Yeah, I love it. Well, you're an expert in that and blockchain. Chief marketing officer, Evan Press, you worked through First Information Operations Command in Iraq, US SOCOM J39 in Mali and theE-D.

Speaker 2: 1:04

Yes, counter improvised explosive devices.

Speaker 1: 1:07

See, you should say that stuff, because it's much more impressive than C-I-E-D.

Speaker 2: 1:11

It's way too much to type my name's too long, let alone type in all that other stuff.

Speaker 1: 1:15

Well, that was in Afghanistan. Platform. Instructor for F-A-30, information operations course officer course. What is that F-A-30?

Speaker 2: 1:23

I taught tactics and planning to planners. So I did it and then I taught. What does that mean to?

Speaker 1: 1:31

a knucklehead like me.

Speaker 2: 1:33

You don't walk into the recruiting station and be like I want to be an IO guy, so it's something that you move into. In fact, they typically encourage for planners that you're in a combat arms officer, non-commissioned officer. So you move kind of laterally over into that what's called functional area I don't know if they call it that anymore. So it's like a. It's a. It can become your primary job. But you can't start there in the military, so you go through a period of training to be certified to be able to do it. So I went through all the training and then I went and did it and they don't use the those who can't do teach approach in the military. You have to do it before you teach it, and so I ended up as a teacher. So platform time means that I was actually instructing the students on how to do this stuff.

Speaker 1: 2:18

Spoke about information operations at the Long-Term Strategy Project at Harvard University, advised a CNO strategic course group. What's CNO?

Speaker 2: 2:26

That is the Chief Naval Officer. So back in the day they picked the brightest at every level in the Navy and sent them to the Naval War College for a year to study a problem. I forget the year 12, 11, 13. And that year they studied information operations. And one day I got a call and they said, hey, would you come down and talk to us? And I did. And then they said, well, would you fly to the Naval War College for our big presentation and critique? So I got to go do that.

Speaker 1: 2:52

See, when the military does stuff like that, it's always more impressive than like DVM or something along those lines. It actually means something cool. Never pays well, but I guess it seems. Yeah, you got to get out of there to get paid, but it's good. Background Private sector work where you and I knew each other, got to know each other, includes comms research in Myanmar for Coca-Cola, internal comms for a $750 million IBM IT upgrade for Etihad Airways, as well as leading agency support for Amtrak's successful request for $66 billion from Congress that you and I worked together on, and running contractor support for all executive branch communications for the federal workforce. So now your AI work included an ARPA-funded narrative analysis tools. Block comms for how do I say? Kratos, kratos, yeah, kratos, kratos. Xqv8 Valkyrie, which, by the way, I looked up. I had to look it up, but that is cool. Can you describe that?

Speaker 2: 3:44

Oh yeah, so that's the loyal wingman programmer Grelman's out of DARPA. So the idea is that it took rocket engines that was very unique rather than jet engines and they put them onto these UAVs, unmanned aerial vehicles, and then they are fully autonomous and they fly with, I presume I think, an F-35, maybe an F-22, but they fly with an F-35. And so you replicate kind of one F-35 with three drones, and it's part of something called the third offset strategy, which is you can send $10 million drones against $30 million Russian or Chinese aircraft and they can shoot down three. As long as you have a fourth, you're always going to win and it costs a fraction of what it would otherwise. So it's like an extension of economic warfare in armed conflict.

Speaker 1: 4:31

And you don't need a runway to launch those things, do you? They launch like a rocket. You can launch them out of the back of a truck kind of.

Speaker 2: 4:37

I don't actually know the answer to that question.

Speaker 1: 4:39

Well, that's what Wikipedia says. I believe it, I don't know, man, I looked it up. It's really cool.

Speaker 2: 4:45

It's actually funny. The air boss of the USS, george Washington, retired and they hired him, so he's the guy that's in charge of all the aircraft on the carrier as an admiral. I spent a day with him learning about this stuff and we talked about third offset strategy and all these things, but I never asked him how the things got in the air, so I had no idea.

Speaker 1: 5:06

There you go Wikipedia. Yeah, there you go, I'm bringing some value to the table.

Speaker 1: 5:11

Thank you for reading Wikipedia. I'm always a giver, but we're here because you are an expert now in AI defense, obviously. But AI and blockchain you speak on it regularly, you're on the Talking Heads programs regularly, people fly around the nation regularly to talk about it. And we're here to talk about, well, crypto and blockchain. So first thing and this is, we've talked about this stuff a lot, but I still consider myself totally unversed because it's you know there's more to it than meets the eye, right? So what is crypto? I'm thinking about blockchain, currency exchange, all that kind of stuff the primer for the outsider.

Speaker 2: 5:54

Yeah. So everyone they know cryptocurrency. They'll generally associate that with Bitcoin, maybe Ethereum, and then generally drops off a cliff what people have heard of and it's a form of currency and we need to have a talk about what is money, because that drives a lot of discussion about this. But before talking about that, essentially it is a form of currency. The same way you use your debit card and ones and zeros represent what's in the bank, this does something similar as a currency. The difference is it's a byproduct of something much more important cryptocurrency. It's a byproduct of what's called blockchain. So the idea of blockchain is, instead of having expensive servers, what we consider Web 2.0 and Web 1.0, instead of having these massive servers, you distribute the network over a bunch of different computers and it varies based on the blockchain. But it's your computer. You give them a fraction of your processing power and you solve an encryption problem that secures a piece of information that moves through the network. You receive a reward. It's encrypted. That's why it's called a cryptocurrency. So the really simple way to say it is this you can timeshare your car, you can timeshare your house and you can get something for it. With blockchain, you can timeshare your computer, so you have a blockchain.

Speaker 2: 7:23

The blockchain solves problems. It's a giant. It's called a ledger a giant ledger. Right, you can put anything in one block. Think of it like a giant Excel spreadsheet and then it's protected. Now there's transparency. You can see what happened, but you can't see certain aspects of it and it's immutable Can't change it. That's what the encryption is all about. So you encrypt this block and you receive a reward. That's called mining and that's where cryptocurrency is generated. Now you have this token is what the SEC says. You have to call it, unless it's something existing, like Bitcoin. Well, what are you going to do with it? Well, you're probably going to sell it on an exchange. You're going to buy something with it. And this is where people I think when they say, oh, crypto is a scam and FTX and the various exchange problems, they confuse an exchange with the technology. Is FTX? Yeah, they dealt in crypto, but they had nothing to do with the blockchain. They didn't have a blockchain that functioned as part of their exchange. That functioned as part of their exchange.

Speaker 1: 8:25

It's like when people were bashing crypto over FTX and Sam Bankman-Fried it's like saying well, when you had Bernie Madoff, the US dollar's a scam. Mike GREEN, right, Enron's a scam. Excuse me, the US dollar's a scam because Enron defrauded a whole bunch of people.

Speaker 2: 8:41

No, the dollar's a part of it.

Speaker 1: 8:43

MIKE GREEN Right, yeah, that makes a lot of sense.

Speaker 2: 8:45

So the idea behind cryptocurrency is that you get a reward for helping run the network and you can exchange that reward for sometimes on an exchange for US dollars. Sometimes they treat them like coupons, where you can buy different things with them or exchange them for services. Iggy Azalea launched a token on the Solana blockchain called Mother, and it did particularly well like $100 million $200 million market cap almost overnight. And then she announced that her telecom company that she's relaunching I guess she had one and it failed is going to accept these tokens for payment, and that's what's known as utility. So the last bit of this is utility and anyone who wants to get involved in cryptocurrency. You should not invest in something you don't understand. So go to Kraken Coinbase somewhere, set up an account and buy some cryptocurrency and see how it works before you buy any of it, shocking as it may be, don't invest in things you don't understand, and when you look at a blockchain, look at what it does, because they tell you they're very open and transparent about these things. They obsess over what's called a white paper. You can download that. The original Bitcoin white paper is still out there from the mythical Satoshi Nakamoto, which is a person or a group of people who created Bitcoin, but they said everything it was going to do. And when it doesn't do anything, that's your first warning that it's probably not a sound thing to invest in. Not that I'm offering investment advice as per instructions, but look at the utility right Ethereum. So Bitcoin, is like digital rare earth metals, we might call them. It's digital gold. That's how a lot of people treat it. So we can send money anytime, no bank fees, none of these problems. There's some fees on the network, but you can move that money 365 days a year, anytime you want. It usually takes about 10 to 15 minutes from when you hit send to the money to arrive to the other person.

Speaker 2: 10:50

Ethereum, the other thing that got an exchange traded fund approved, is a little bit different. You can build whole applications and blockchains on Ethereum. You can spin your own blockchain off of it. You could have a weather app. You could have an app, like the company I'm with works on, which looks to protect and preserve the principles of free and open society around the world. You can have NFT. There's a blockchain that puts artists' music on a derivative of the Ethereum blockchain, and the artists and the people who support the blockchain get the royalties together when the songs are played. There's infinite uses for it and it's kind of like 1988 right now. And they got this internet thing and they're really into talking about. Was it the TCP, ip protocol or whatever all that internet jargon is? That's what all this blockchain technology is about. What's exciting is people are going to say how do I use a distributed computing network to do something new and exciting? That's what we're really waiting to see and we're starting to see that emerge.

Speaker 1: 11:52

Yeah, I think that's part of the problem. Where most folks are looking at it, including me, is most of the language. Is TCIP language? Right? It's indistinguishable, completely nonsense to most folks. I mean, it means something, obviously. It clearly means something, but it's not language in terms of benefits or typical marketing or things like that. Like the internet is useful only to the degree that it's utility, right, that somebody is actually using it for something. And same thing for blockchain. While the theory, I get it and it's interesting and so forth, the only time it really actually becomes pervasive is once people are using it on a daily basis and it really no longer becomes. We're talking about blockchain. It's we're talking about Amazon or whatever it might be right, we're talking about the forces that use it.

Speaker 2: 12:37

You nailed it. So what's Bitcoin's use? It's decentralized finance. That is its use. Now, a whole lot of other things have been piled onto and expectations, hopes, dreams and otherwise have sort of formed around it, but it's a decentralized finance tool. I got money. I need to move it Now. It's technically an alternative currency and there's a whole lot to unpack there, but that's its use case. You can move money to another person safely and securely and you don't need a bank to do it.

Speaker 1: 13:08

OK, so let's talk about money, because money is everything, right? I mean I'm not being facetious, I mean it is. It goes back to Socratic thought, aristotelian thought. I mean, what do you need to be happy? Well, you need a certain amount of coin to have the luxury to think about what it means to be happy and to pursue those pursuits that mean you're happy. Money matters is the bottom line. So when we're talking about money, interests are going to be involved, right? So how does this disrupt or influence or frighten the world of money?

Speaker 2: 13:41

Well, I think, to start, there's a lot of definitions for money, and no one ever accused me of being an economist, but what I think is the most germane to discussions about blockchain technology is the idea that money is a store of value. I can't keep a bunch of chickens to barter and walk around and trade chickens all day, and that's why we started to have coins. That's one accepted theory of it, but that one is particularly useful when you think of it as a store of value. And we'll stick to Bitcoin because it gets so much more technical when you move past Bitcoin. So for Bitcoin, there's a really interesting. I think it was in the 20s, henry Ford, the original, the first, actually suggested that a future currency with a store of value would be electricity and storing electricity, and I don't know if it inspired Satoshi Nakamoto. I don't know if they were aware of it or people became aware of it afterwards, but there's an argument that is exactly what Bitcoin does.

Speaker 2: 14:45

Bitcoin requires high-performance computing power right, that's to get you know. It's called a hash, it's the encryption problem, why we call it crypto and it requires electricity for that high-performance computing. Roughly, it costs about, right now, $25,000 to $30,000 worth of electricity at between, let's say, $0.03 to $0.07 per kilowatt on average to produce one Bitcoin. It's a little more technical than that, but that's really what the number breaks down to. So Bitcoin is a store of electrical value and computer processing power, and it's not just this entirely worthless ticking meter. There's data stored. As a result of those two things coming together. That's the ledger. Those are the blocks. You can actually log on and look at the blocks that are being created on the blockchain by Bitcoin. It's pretty fascinating. I mean, it's like two minutes and then you never go back again.

Speaker 2: 15:42

So it's a store of value. It holds data and it whole. You know it takes electricity to produce it and the price I mean it doesn't correlate directly, but ultimately the price of electricity and your ability to um run the high performance computing determines whether you can mine it, which is how you produce it or not. That's what they call. Call it when you're solving these problems with what's called an ASIC. It's a specially designed processor.

Speaker 2: 16:13

So they looked at this and they said they again, we don't know who they are right Stoshi Nakamoto, maybe a person, maybe a group said all right, well, we're going to create these distributed networks and they are going to solve these encryption problems and we're going to reward people when they solve. Well, we're going to create these distributed networks and they are going to solve these encryption problems and we're going to reward people when they solve them. And then they're going to have a currency and it's a store of value. People have faith in it. They trade in it.

Speaker 2: 16:35

You can buy a house on Redfin, especially in Miami. It says in the corner takes Bitcoin. You can do a straight Bitcoin transaction. So I think it checks a lot of the boxes for a fiat currency, except it's not produced by a government. And, of course, what defines fiat currency is that it is produced by a government and you have faith that that government's going to be around to support that currency. I guess, actually, we never really get to the end of that statement what a government's going to do exactly, but you believe the government's going to be around and therefore the currency is going to be stable.

Speaker 1: 17:09

Well, I mean, it almost gets back to trade right, because you've got an evergreen set of chickens is what you got, and someone's going to value your chickens. They just don't die. It's not dissimilar to gold or any other thing of any kind of value. It's just it's, you know it's. It's a little easier to transfer in it.

Speaker 2: 17:28

Well, so yes, and this is where to me, I mean, this is where it gets really interesting for the, the more survivalist minded crowd apocalypse Now we have to have an apocalypse where you still have electricity.

Speaker 1: 17:42

It's going to be amazing, this apocalypse that we're going to start describing here. It's going to have electricity, the cloud. It's going to be amazing, this apocalypse that we're going to start describing here. It's going to have electricity, the cloud. It's going to have a lot of pretty advanced tech for this apocalypse. It's not what I grew up on on dystopian movies.

Speaker 2: 17:53

Well, you're going to need electricity and you don't necessarily even need the internet. I don't know, that would depend, but I'll explain why. So it's going to be tough to pull your sled full of gold bullion on it and fight your way through downtown Los Angeles to get to, so when you're like, how do you have portable wealth? And again, which apocalypse are we talking about? Emp goes off.

Speaker 2: 18:26

I don't think a lot of Bitcoin is going to survive in electromagnetic pulse, but if you have a collapse of a currency or a government, for example, that's where it would make sense. But you can actually store. I have one sitting on my desk somewhere. In fact, sometimes I lose it and I get really disturbed because there's a lot of money sitting on it. It looks like an old-fashioned memory stick and it's a cold storage wallet. It holds all the cryptocurrency. You could hand it to someone and they could give you cash for it. You could actually technically trade offline.

Speaker 2: 18:53

But ultimately and this is where detractors always get this messed up when they talk about, like Senator Elizabeth Warren talking about oh, it's fraudulent. You need a bank to change the Bitcoin back to the alt currency, wherever it's going to happen. You cannot launch you virtually, with rare exception. You cannot launder cryptocurrency without a bank being involved, and so somehow we managed to miss that. Every time we talk about cryptocurrency and terrorism financing and everything else, but so you have this portable wealth and the real protection on the less spectacular zombie apocalypse side is an inflationary hedge.

Speaker 2: 19:32

And so, like in Argentina, where what did they have? Like 200% in a year or some unbelievable number People were, as soon as they were getting their paychecks, they were buying Bitcoin and holding the Bitcoin until they could get to the bank. They were buying Bitcoin and holding the Bitcoin until they could get to the bank, and that was saving their paychecks over a weekend where, I think one weekend, they had like a 22% from Friday to Monday inflationary increase. So in incredibly unstable environments, it's a godsend because it's relatively inflation proofproof, with an exception If the price of Bitcoin crashes while you're holding it against the inflation. Well, you do the math you could lose out RAOUL PAL, but in that case, it's like any other valuable item Everything is volatile.

Speaker 1: 20:21

Everything's valuable until it's not.

Speaker 2: 20:23

DAN MOREHEAD. I will say, though, for all of my defense of blockchain, cryptocurrencies are incredibly volatile, and I think that's what makes them so attractive versus the stock market. You get these IPOs everything's baked in. You've gone through round after round like nothing takes off anymore because it's been plotted, planned and accounted for. I don't mean that in a conspiratorial way. I just mean things come to market and they're properly valued because it's a process.

Speaker 1: 20:51

And the value is primarily preloaded before launch right.

Speaker 2: 20:54

I mean, that's just the way that again getting back to banks.

Speaker 1: 20:57

That's how iBanking works. That's how these things work. It's just the nature of it.

Speaker 2: 21:02

Again, it's not illegal, it's not a conspiracy. It's just how it works and in cryptocurrency you have a ton of volatility and, of course, when you move to these meme coins and things, I like the fact that they introduce people to cryptocurrency and how to teach kind of literacy for it. But I think that they are susceptible to a lot of market making and very problematic. When you hear about rug pulls and all kinds of stuff pump and dump stuff that's typically done with what's called a meme coin and a meme coin is we were talking about utility. It's something with no value. Like the Dogecoin, it's another blockchain's coin that's been reskinned. It's like it's like a baseball card and sometimes people really want to buy those and if you're lucky, you buy them when they're cheap and you sell them when they're high. But but boy it's. It's crazy. Someone bought, I think, nine thousand dollars worth of this Iggy Azalea mother meme token and I think they made $3 million.

Speaker 1: 22:06

So there's a distinction between the speculative crypto right and the more institutional crypto, and I use that term actually intentionally because there's like it seems again from the outsider's perspective, that as things get real value, actual value, billions of dollars and trillions of dollars of value that they move out of the kind of wild west and I don't think centralization is quite the right term but they move towards a mean of acceptance, right, so you start off kind of in the wild west where people are panning for gold, and then there's value in it. So you have industrial interests that come in, and it's not just my computer, that's mining. That doesn't really do much. When you're talking about Bitcoin or the larger ones, right, you need an industrial moneyed group of people or organization to go out and actually make real money out of that. Now, right, it's changed, it's no longer down to the individual in a meaningful way.

Speaker 2: 23:08

Well, it's funny that you use the term centralized, because that's right now. Whoever Satoshi Nakamoto is, the hackles have raised or they're spinning in their respective graves. They actually talk about decentralization, and this idea of decentralization has this sort of libertarian and narco bit to it that might seem a little bit laughable. And then it is a almost deadly serious issue with the SEC and a few other government entities, because whether or not a blockchain or a cryptocurrency represent or is adequately decentralized determines whether it is a security or not. And so the SEC has said that most of the time, they're horribly inconsistent with how they're applying the rules. But they have said blockchain, I'm blockchain, bitcoin is a commodity. Other cryptocurrencies are a security because there's more centralized control. So the spirit of blockchain is oh, we're decentralized, it's all a community effort, it takes a village, whatever all that stuff.

Speaker 2: 24:19

And what they want to do is they want to see Bitcoin become the coin of the realm in every country in the world. They want to see it replace fiat currencies and like all kind of revolutionary ideas. Like the practical implementation after that magic moment when everyone just uses bitcoin hasn't really been mapped out, so it's a little bit like uh, uh, when, uh, when the when the soviets took over, they just knew that they needed to distribute a lot of stuff to people and it was going to be great and then off it went. So they generally don't get past that. But they really are a threat because if you think about it you know elites from certainly at least Roman or pre-Roman times and everywhere in the world have controlled finance, politics and art, and I think that's why the NFT vitriol has just gone off the charts. Just the deep hate of these non-fungible tokens where people are paying hundreds of thousands of dollars for a 64-bit ape. That's like smoking a cigarette. It looks like a Nintendo 64 character from the 80s, not my idea of art.

Speaker 1: 25:32

Yeah, but we've both been to Art Basel, right? I mean, art really is in the eye of the beholder, so let's talk about that tension between what makes art, what makes value and the threat.

Speaker 2: 25:46

I would love someone to be holding that banana that was taped to a canvas, that was $100,000 and give a lecture about how blockchain NFTs aren't art. Now, I do appreciate there are certain principles of art and that banana arguably was. They would have thought about how it was framed on the canvas and all that, but what it really speaks to, I think the vitriol comes from no. New York City determines what things are worth, whether you get charged extra fees for sending the money in a hurry and they're the tastemakers. And Bitcoin doesn't just challenge that. It actively and openly rejects it all the way back to, as I mentioned before, the white paper, the obsessor of these things. It's literally like a Word document If you don't have one, you're not serious. It's the weirdest thing. So I think that's the real threat and keep in mind that again, satoshi Nakamoto was deeply disturbed by the financial crisis and the I was going to say exchange-traded funds, but of course not the mortgage-backed securities and derivatives and everything that occurred in the 08-09 financial collapse. This was a response to that. It was kind of like the Occupy Wall Street people, but they were competent and actually accomplished something, rather than just lived in a tent and said America sucks Wall Street. And this was their response. And I mean, they spent 10 years, 13 years, in this battle to be recognized, and in January it was late January, maybe early February, but this year, when the Bitcoin exchange traded fund was approved by the SEC, they basically got the US government stamp of approval and they became recognized.

Speaker 2: 27:38

And I think they're really struggling right now. Like you know, there's that famous saying from the French Revolution all revolutions devour their children and the OGs set everything up and when you think about it, they were laughed at, they were persecuted in some cases, and now there's a decent chance that a presidential election, a few points in one direction or other crypto could be a factor. If you'd even asked me that four years ago, I would have thought that was ridiculous. And so they're at the big kids table and these are folks that show up to major conferences wearing wizard hats and sunglasses, on stage to speak, and I was in I don't know what one of these big things in Miami and these guys were coming up there talking about like demons and giving out Tic Tacs. I better be careful. I don't want to name anyone here, but I turned to this former SEC attorney who was our blockchain's legal counsel and I said Goldman Sachs is going to eat these people alive.

Speaker 1: 28:46

It's like the weed folks when they went legit. Yeah, it's a similar community, but isn't there an internal threat to that too? I mean, if you're part of a rebellion, it's the same thing as when you're a kid You've got your favorite band and their punk band and they're awesome, and then they get a record deal and you hate them because they sold out.

Speaker 2: 29:25

Yeah, I haven't seen that. I think maybe they're still taking the victory lap. So I think the issue becomes that catalyzing moment hasn't happened yet. They're a little worried because BlackRock owns a lot of Bitcoin. Now they own a lot of it.

Speaker 1: 29:50

And really the only ownership you get is by buying it as a little guy. You're not setting up your laptop or your gaming computer and creating Bitcoin. Industry is doing that.

Speaker 2: 30:05

Yeah, it is big business. It's a $20 billion industry. There's, I think, five publicly traded companies. They just mine Bitcoin and they are large industrial operations. Tens of thousands, hundreds of thousands of these mining units. There's like 700 megawatt facilities that are-.

Speaker 1: 30:28

How many megawatts does it take to run your average city?

Speaker 2: 30:33

Every time I look this up I get weird numbers, but I think 50,000 people use like a megawatt, two megawatts, okay, so there you go.

Speaker 1: 30:42

That's a significant amount of pull.

Speaker 2: 30:45

Yeah, and that's the environmental critique is they're using all this power and it strains the grid, which AI does because, by the way, it's the same technology as high performance computing. Both of those consume power. But what is in the white paper for Bitcoin is the creators wanted to see innovation and what happens is, every four years it's written, it's coded into the blockchain the amount of reward you get for mining is cut in half. That's why they call it the halving. We just went through another halving and so it's a built-in pressure on demand. Demand keeps getting cut, half and half and half and half and half every four years, which means new money entering the exchange that you can buy keeps getting reduced and reduced. So you have this incredible supply side pressure. We've been saying demand, supply, supply side pressure, and then demand now is increasing.

Speaker 2: 31:42

Retail investors haven't entirely come back to buying it yet, which is what's interesting this demand and this price action that's taken it from the 19,000 low. Well, was anticipation of and approval of the ETF. It's trading like it's 66, 70. It's been trading sideways for a while. That's largely the so-called smart money from Wall Street and the likes coming in. So when retail investors come back, that's when you're likely going to see an even bigger, a lot more price action. But you have diminished supply. You have increasing demand. That only works in one direction, unless there's a total, complete lack of faith in Bitcoin anymore and the like. I just don't think BlackRock makes bets on things that aren't going to exist in a few years. They tend to put a bit of time in.

Speaker 1: 32:38

But it changes the dynamic right. I mean, when it began, it was in many cases it was alternative, it was rebellion, it was putting faith outside of those institutions that had failed a large population. When you talk about the banking crisis, I mean the institutions that a lot of people viewed as having failed them was not just Wall Street, but also government were working hand in hand. On those things, I mean, there's a broad sense of being let down. You go to these other items, you invest in them, you invest your time, you make some money and so forth, but over time, they're seen as valuable and, as all things that are seen as valuable, they become dominated by the truly wealthy and truly powerful. So how does that tension work out in the end?

Speaker 2: 33:21

Well, I think what's interesting for the Bitcoin crowd is even when they're anarcho in there, the word capitalist is always there. They're capitalists. Even when they're anarcho in there, the word capitalist is always there, they're capitalists.

Speaker 2: 33:34

And yeah, they're ideological, but they also like Louis Vuitton duffel bags and McLarens, and so there's a group and, by the way, you always know when you're talking to a real whale, as they call them in Bitcoin which is a big money guy or gal. They say Bitcoins plural because they were around when you would get multiple. Actually, I think the first blocks were worth like 50. So there's a famous thing it's called Bitcoin Pizza Day. It just passed. Somebody has paid a bounty. I don't know if it was even officially done, but someone ordered a Papa John's pizza. I can't remember. It was like a $12 million pizza if you still had the coins today.

Speaker 2: 34:18

The guy who did it never really talks about what he did after that. So I think he has a lot more coins, but he's like, hey, it was a proof of utility, I was really excited to do it and, no, I don't regret it and I don't think he's impoverished. So I think that's part of why he doesn't regret it. But there is a core I can't say core, I'd be speculating. There's a group of people I've definitely met two or three of them and these are people with millions, hundreds of millions, maybe billions of dollars, who are like no, I'm going to hold on to this, because one day Bitcoin is going to trade at a million and it's going to bring down. One day Bitcoin's going to trade at a million and it's going to bring down government. It's going to change the world. It's going to do all this stuff. And they are like the true believers, they're not malicious, they're not looking to replace it with anything, which is kind of the alarming part, because I don't think they know what happens in a vacuum of power. But they want to see this new dawn of man and this whole nine yards it's like an Ayn Rand novel and I don't know what else kind of all rolled together.

Speaker 2: 35:19

But if BlackRock wants to come in and buy stuff and fill their bags, as they like to say, I think they're a little bit concerned. Now I'll tell you the two places they are concerned is that BlackRock owns so much of it that they can start market making. Or when I say BlackRock, I'm not speaking for all the ETFs, not necessarily just BlackRock. The other concern is could someone gain control of the mining? There's only like a couple million left of Bitcoin to mine and it'll keep going all the way to, like, I don't know, the year 30 something, just getting smaller and smaller and smaller the amount you can mine. But if someone were to gain control of the mining hash rate it's called like they could lock up the rest of it and that could create supply problems and a bunch of issues. And so I think the revolutionary minded folks because they're not revolutionaries, they're not threatening anyone and not trying to do anything illegal to overthrow a government but those guys, I think that's what they're worried about the most.

Speaker 1: 36:18

What else is interesting about this? We're wrapping up in a minute In the world of crypto.

Speaker 2: 36:24

Well, Solana has gone from like 20 bucks to 170 in a year, something like that and they're a real rival to Ethereum and I've heard rumbles, read rumors that there may be a Solana exchange traded fund.

Speaker 1: 36:44

Are there other cryptos that have that same degree of utility that you spoke of with Ethereum? That it's actually building blocks to create other items?

Speaker 2: 36:52

Yeah, and they compete with Ethereum. There's Avalanche Cardano. If I miss one, I'm probably going to get nasty emails.

Speaker 1: 36:59

It's just examples. It's not an exhaustive list.

Speaker 2: 37:03

Yeah, there's probably seven or eight, and then there's ones that just have different types of utility that are really interesting, but those are the big players. And Cardano, a lot of Polka Tezos basically look on the side of a Formula One car and they're probably there. If they're the big one, california I think it was Polkadot might be Tezos. California put their DMV records on that blockchain, really, actually the historical ones, not current active ones. But yeah, like there, they are saying it's the devil and then they're making deals and storing it on blockchain because blockchain is so much cheaper than traditional data storage. You kind of wonder if they know that, though that it's on the Tezos blockchain. Yeah, they do in this case.

Speaker 1: 37:46

I know exactly what you're saying Right, the purchase officer really know what they're buying. They canceled it and clawed the money back.

Speaker 2: 37:52

It's just called the cloud tube. Yeah, they canceled it and clawed the money back. That's what you've ever heard of before it never happens.

Speaker 1: 38:00

All right, Louis and Chris, it was great to have you on man, Appreciate it and thanks. We'll talk again soon, Thank you. Thank you for tuning in to Interesting People. I hope you enjoyed today's episode. If you like what you heard, be sure to subscribe, rate and review the podcast on your favorite platform, and don't forget to follow us on social media for updates and behind-the-scenes content. I'm Justin Wallen and until next time, remember that the world is more interesting with you in it.