Trace Mayer INTERVIEW | Bakkt - Bitcoin - Smart Contracts

Welcome back to the kinds of report I'm Mihail time to return to our conversation with crypto mogul tres mayor tres welcome back Oh got to be your max all righty so let's get back into what we were discussing about backs which is this new New York Stock Exchange initiative they're doing deals at Starbucks and Microsoft it's really you laid out early on going back to when Bitcoin was 25 cents there's seven network effects to be aware of as we head toward world domination for Bitcoin and we're well into those seven network effects and so let's focus on back for a second they are going to open the door to possible financialization now financialization is part of the network effects some are fearing that this will give Wall Street away to thwart the progress of Bitcoin as they do in the gold market with rehypothecation your thoughts I'm just not worried about it at all I mean what's the worst that they can do sell a bunch of Bitcoin they don't have and fail on the on the contract to somebody right that's I mean no the worse and and what's that going to do it's going to suppress the price which means that people are going to be able to buy more Bitcoin at a lower price so whoever gets stuck with the the failure to deliver you know or or get stuck with the contract where they can't deliver the Bitcoin well they're gonna take a loss but whoever bought the Bitcoin at the lower price will get the game let's talk about naked shorting for a second so with naked shorting the wall street is essentially selling stock or selling futures contracts that they're printing at the same time that they're uncollateralized they they're not backed by anything and if a price if something like gold goes up and they don't want it to go up they can flood the market with sell orders from of naked short sales of contracts that they are printing like you would print a fiat money these are fiat orders and it's been proven and documented that this goes on all the time you know I I'm a consultant to Gadda I've been involved in their stuff for over ten years so I mean I'm very thoroughly aware of what's going on right the gold antitrust action committee and I mentioned that because I'll link to this and we'll get another 10,000 views anyway but with Bitcoin that is not the case because really this Woodsworth the naked short seller in a huge way because the hot allure blast result has control of the private keys number one so you could unmask take delivery of those keys you can't do in gold because it's cash delivery and nobody has the manners and it's so much more expensive I mean look at look at Germany when Germany decided that they wanted to be a hardware of last resort and said give us 800 tons of physical gold how much did it cost to move all of that to transport it to verify the quantity and the quality of it every day 20 billion dollars plus a Bitcoin gets melted down and recast into new UTX o--'s verifying the quantity and the quality with a hundred percent on every transaction you can move a hundred million dollars a Bitcoin for 10 cents right and so I mean you can't do that with gold does Wall Street even understand the liability that they are potentially opening themselves up to or are they just going to stumble into this get burned and then learn the hard way I sure hope they don't understand it you know because I'd love to skin them well that's what's happening right now as they try to position themselves into this market they're very sloppy in the options market and for Trude traders you can scalp them all day long as they move into its second idea and this is more of a contentious idea I want to get your thoughts on it it means it's possible if worse comes to worse or if there's an open warfare between the hot lers and Wall Street it's possible to fork them we can fork yeah yeah I brought my fork along as a pillow explain how that would work a little bit yeah so I mean there's several different ways that that happens one is when the fork happens they don't if you don't have the private keys you don't get the fork you know so like what happens if your coin base and you've got in your supposedly holding a whole bunch of Bitcoin and then Bitcoin cash comes out and all your customers are like hey you have to give me the Bitcoin cash and you might actually have a legal duty to do it because otherwise it would be unjust enrichment or some type of fraud or whatever right like how are you going to deliver the underlying and then what happens if there gets to be a little bit of squeeze on the underlying just for the fun of it right so so Wall Street can we have pasca at all they want because at the end of the day they can get forked yeah they can get forked if they fork too much they'll get baked on back I mean that they're really in a difficult position because how do they acquire a position in Bitcoin you know and 50,000 bitcoins isn't cool like hundreds of thousands of Bitcoin now that's cool but but like 50 thousands not and so if they think that they're gonna come and play in this space and they're gonna bring the rules from the old system where you're settling into something that's not limited and amount strictly uh-uh that's not gonna work you're playing with a new technology here and the hardware's of last resort in a lot of ways I mean they're not just a freight train they're like a glacier I mean you're gonna like how do you like you're just gonna get effortlessly pushed out of the way by the hot Oilers Oh excellent point now you've just returned from DC where there was some CFTC hearings related to Bitcoin what can you tell us about what you saw yeah so I attended the technical advisory committee meeting it was broadcast open to the public also the new commissioners are very interested in Bitcoin stuff the virtual currency subcommittee took up a vast bulk of the time and they're trying to figure out mainly you know of course there's the MAL kyc issue but the really big issue is custody like how do these institutions custody large amounts of Bitcoin and you know we we had a lot of those that we were building at armory but for whatever reason like you know we didn't I didn't continue to fund it and part of that you know I would say was hey if Wall Street and institutions want to buy Bitcoin they can build their own custody solution okay speaking it keeps the price down so I acquire more Bitcoin in the mean time so like why built the custody solution so I mean they're really kind of in a pickle yeah well they are going forward so Gemini the what takes a long time to build this stuff yeah well that they're building it like Gemini for example the Winklevoss twins in New York they've got custody services they're offering plus a reinsurance they're gonna start insuring these deposits as well these bitcoin Holdings is that's it that's a big that's part of the network effects right oh yeah that's that goes right into financialization because you need insurance on the DC and assess and and they talked about that you know right now the insurance at the tack at the SCF GC meeting like the hot wallets they usually get insured to it most maybe like 50 million warm wallets five hundred million and cold wallets like two billion so even right now like the the insurance companies are playing in the space but large amounts of capital are not here I mean we're talking hundreds of billions of dollars that's when things start getting interesting right they've also Gemini's up also created a stable coin that's compliant with new york laws so your thoughts on these so-called stable coins what do you think they're i mean it's crazy who's New York to think that they can let somebody issue like Federal Reserve notes on a blockchain and have that not be counterfeiting under federal law meaning yeah like federal law preemption issues you've got all different countries like there's a Chinese stable coin like coming out on Finance or okay coin or something I there's definitely a market for it look at tether but you know it's there's just a whole lot going on there you have Chinese exchanges that don't want an AML kyc compliant stable coin in some cases so it's you know see you know China is China going to go from being wary and concerned about Bitcoin because it's a decentralized technology in a very centralized economy to being a country that starts to see it as a strategic reserve and as they do battle with the US dollar and could that set off like a almost a space race of countries mining to create strategic reserves going forward could you see that happen yeah so supposedly there are some African central banks that are actually starting to hold Bitcoin they're doing it through things like open dime China specifically I think they're gonna get caught flat-footed again just like they did with silver you know and they lost 78 percent of like with that transition so I think I think India and China you know banning Bitcoin exchanges in India like clamping down on the entrepreneurial process in China the Great Firewall like I think they're just same song second verse there he had hit flat-footed again the Chinese during this first and silver standard they had in 30 sembly yes so they were the last to basically D monetize silver and move over to gold and as a result they they're the ones left holding the bag just like Africans holding gold glass beads or you know whoever holds the inferior technology I mean Stone Age didn't end because of a lack of stones like we're in a new age now and bitcoins here and there is nothing on the horizon with anything close to these network effects right let's talk quickly you know as you mentioned nothing like it but the alt coin market Tom Lee a funded strat points to certain sectors of emerging commodities platforms privacy exchanges stable coins so he's he's separating this market into these different categories altcoins your thoughts I mean they're just getting obliterated why because almost all of them have no use case then a lot of them are built on top of the theory on who's been able to sink in aetherium full node from scratch anytime recently I mean it's just absurd like the lack of scalability there and then you've got root stock and maybe I cos I saw start getting done on root stock via Bitcoin and so I think in a lot of cases these I cos have way overshot and then corrected and and you know and then when that safety and liquidity starts to dry up people will need to cash out in order to get into something more stable and so we've seen a lot of the capital flowing out of the I SEOs into theory amout of aetherium into Bitcoin or dollars and but if the next big bubble has ICO or whatever bubble is taking place on Bitcoin be a rootstock you know like what's what's a what use case does aetherium have and the way on that that would be a big zip oh I'm draining us Antonopoulos Bitcoin yeah buddy of Mines well known Bitcoin man I spoke to him the other night and he said that he thought smart contracts were impossible on Bitcoin trace mayor your thoughts well I mean we got multi signature going on like P to SH no I mean smart contracts are definitely possible it's just how do you really want to do it and like block stream just launched a liquid which is a side chain you know I when Adam back announced side change there was a there was a meme like and suddenly millions of altcoins cried out and then there was silence so you know what we can do so many of these things on side chains and then you got interoperability and since it's you you've got bitcoin impregnated into it you've got a poor on what the thing can be worth because you can always take it out of the side chain back into the main Bitcoin but you stand this argument that you can't do you know smart contracts on Bitcoin for all the reasons you just said yeah and then with a whitening network you know an HDL sees like so we got a whole bunch of stuff that's already happening there it's how complicated you want these smart contracts to be in Bitcoin scripting language is much more narrow as opposed to like a theory um's but that's for security purposes I mean you you can build an insecure layer on top of a secure layer but not vice versa and bitcoin is the secure layer and aetherium is not look at the dow look at the scalability look at the full nodes being sunk from scratch it's a real problem right so people say that unless your own a node you're not really fully Bitcoin supportive you know is that something you would agree to well I I kind of phrase it is if you want to choose to be a first-class Bitcoin citizen you run a full node and do your validation and you hold your own private keys if you want to be a third class Bitcoin citizen like hold your coins on mount docks we see what happens to people that are third-class bitcoin citizens they get obliterated you know and that's because they're not taking the security seriously if you have five dollars a Bitcoin put five dollars a thought into securing it if you have a bunch more put a bunch more thought into securing it change mayor Howard Hughes a big claim. Thank you thank you so much max!