YouSaid · the spoken record

Lyn Alden

lines on the record: 123
first: 2023-10-05
most recent: 2023-10-05
sittings or episodes: 1
sources: podcast

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“The desire for sanctions, but also desired from sanctioned countries to get dollars. This is basically a big mix that's happening right now. And I view that as partially tied to Bitcoin in the sense that this technology opens borders, not just for Bitcoin, but also things like stablecoin. So there's obviously some interplay there. But I generally view this state can exist for as long as the dollar is relatively stable. If we get to a phase in the future where the dollar has a similar type of problem where the emerging markets face today, or even like Japan's facing today, if we kind of go farther down the line, more debts, more deficits, more kind of unrecoverable fiscal position, the question is what's above the dollar, right? And so I think that's why ultimately if you use stablecoins as an important market at the current time, but one that all really is.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Issue is mostly the fact that you have 160 different fiat currencies in the world. A lot of them are failing. People want dollars. Tether is serving a need there for people, right? There's really two major stablecoin uses. One is like generally large wealthy players in like DeFi and offshore exchanges using it as their trading unit of account. And then you have the Argentina, Lebanon, Turkey. People in inflationary regimes that want dollars and that are tech savvy and they say, well, when you stable Hawaiians to get dollars. And so I view this as just like a mix of the where fiat currency find itself today, not just US, but especially globally. The demand for dollars, the reticence of regulators to work with this new technology.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“And then they get blamed for being offshore and opaque, but it's like, well, they weren't allowed to go the onshore transparent route, especially in the beginning, right? So I think that's the path dependence here is a play between new technologies, bringing services to people while existing either governments or just banking kind of closed environments. They don't want disruption, right? So they kind of have their walled garden and you have this kind of tethers of the new euro dollars, right? It's, you know, the euro dollars market's always been one of those opaque, at least semi-opaque markets. And tethers are the most recent version of them. So they are attested to by an auditing firm. They have withstood very large bank runs. They don't have the same transparency you'd get with say some of these like onshore ones. And I think basically that's mostly at the current time a regular”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“So, stablecoins in general as a transitional technology, which is basically there an extension of the dollar system right now. So it's a way for the dollar. Because there is, even as we talk about BRICS nations or dellarization and stuff like that, the people in those countries, even if certain top-down leaders want to de-dollarize, the dollar still has the strongest network effect among fiat currencies among most public. And so when you have like a black market or a street market in certain countries, it's usually the dollar that people want. And stablecoins are another way for them to get access to dollars or indirectly things like treasuries. And so IVU stablecoins is that kind of intermediate phase. And the problem is that historically in your prior points, regulators have been very reticent to either bank stablecoin provider or things like that. And so almost by necessity, you see a lot of these going offshore, becoming more opaque.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Our country is going to be a hub for this. We're going to be like, okay, we're going to embrace it. Come to us, have your business here, and we're going to be the switzerland of crypto, right? Or Bitcoin or whatever the case may be. And that's another strategy that some countries can and in some cases already are moving on. And so I think that it's not going to be a smooth world when you have monetary transitions, especially if you also have energy problems during this time, which I expect would probably be the case. So the combination of money and energy is some of the most important inputs to an economy. And if those are either changing rapidly or experiencing turbulence, those are not easy environments. So no, I don't expect it to be smooth.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Case may be in this kind of long term scenario. More and more people want to go to the exits and their ability to control all those exits, their ability to control the narrative around why you shouldn't even be seeking the exits. You know, like only bad people are seeking the exits. Don't seek the exits. That gets harder and harder to enforce as the system gets worse and worse. So I do think that there will be ongoing pushbacks. We've already seen ongoing developing countries in particular have pushback against these kind of like crypto from moving too into their countries, especially things like stablecoins. And I think we'll see similar in developed countries. But I think also it's a country by country basis. So it's kind of a game theory. Like one country wants to push it back, whereas maybe another country kind of sees the light at the end of the tunnel and they say, look, instead of going through this inevitable battle, we're going to make our hub.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Semi free environment when the centralized ledger is just not working well enough and people want something else, they can add frictions, but it's like this messy long-term gradual adoption. And right now, it's not just Bitcoin, it's stable coins too, because stablecoins are a technology that allowed dollars to penetrate these markets more readily than the otherwise would before this technology existed, right? So now on your phone, there's ways to get stable coins and there's ways to hold dollars in a way that were not available before. So when it comes to developing developed countries like United States to Europe and places like that, I see it generally going in a somewhat similar direction where as long as their own monetary environment is semi-workable, they can keep the rails on the cart for relatively well. But as soon as they run into their own kind of fiscal spiral, whatever they”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Financial stability and stuff, but really what they really mean is that they want to slow the floodgate out of the Argentine peso in various ways. And so they want to keep people in the system getting diluted. And in Nigeria's case, they cut off their banks from crypto exchanges and they launched one of the earliest central bank digital currencies, the Enaira. And yet the outcome of that was that the Enaira has very low adoption. And Bitcoin and other cryptocurrencies like stablecoins have higher adoption than their central bank digital currency.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“So, I think this would be a blend of those scenarios where it happened gradually over time, but it's not smooth. It's gradual but violent in the sense that there's punctuated period. It's not like one fell swoop. It's all cut off now. It's like there's various attempts at pushback. And an example is, you know, when you see a developing country get dollarized, there are various pushbacks. They say, okay, well, it's, you know, like we're going to have more capital controls to make it hard to get dollars. You might in extreme case they might make it illegal to own dollars, although usually that's not a jurisdiction you want to be in. But basically they'll add various frictions to make it hard to get dollars. And you actually see that in somebody said in the crypto world, so for example, Argentina, like in 2022, is like, okay, banks have all these new limitations on dealing with crypto. And then they say like in 2023, this is also fintech, so payment apps, they also have more restrictions on double crypto. And of course, the reasons are like money laundering.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“People are bad, but so people learn their lesson, or they learn from people who learn lessons. And so eventually this kind of wave of fraud dies down and you start to get serious entities that are say, okay, we're going to custodian your Bitcoin. We're going to make your Bitcoin easier to use. We're regulated. We're audited. We do proof of reserve, whatever the case may be. And should you not want to trust us, pull your money out, right? So only leave the money with us that you maybe want to spend and have easy access to. And if you want to go into cold storage, you know, it's a little bit of a learning curve like writing a checkbook, but it's not rocket science when you have kind of these things today.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“See them as much anymore because it takes time for both regulators and even putting regulators aside to catch up with it. The consumer public takes time to realize, no, that's a scam, that's a scam, that's a scam. I'm not going to fall off that anymore. And so the public gets more hardened against types of things. And I think crypto for the past 10 years or so has existed in this window or trusting in exchange, trusting the sketchy offshore thing. It's been in this like regulatory limbo, big money to be made. That's an environment where these like rug pulls and schemes are going to happen on a pretty high basis. But over time, people get more, like they understand how to identify scams in the industry better. They understand how to prioritize safety better. They get rug pulled once and then they vow like never again. Sometimes they even go too hard in the other direction. They're like, I'm never going to, I'm going to be like super hardcore now because they got rug pulled by Mel Gox or something, right?”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Some of these things that seem a little bit complicated now become second nature kind of like a checkbook, especially when you combine that with the ever-improving UX of the space in, say, these five-year increments when we look at it. So I think that's one answer. And then two, just due to some of the scalability limitations or due to convenience, I do still think you'll see a lot of people using custodial services. But right now, in this earlier environment, basically Having a tech background helps you understand which of these technologies has likes to them, which don't, at least on a probability basis. And then two, there's so much new kind of promises and hype and things that get rug pulled over and over again. That's like an era of the system. It's kind of like how when it became more popular to invest in equities, you started to get those boiler room penny stock dumping operations. And it took, you don't.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Invented, or the internet when the first browsers were being invented, that's kind of the user experience that we're at right now in this ecosystem. And I think when you look out five, ten, 15, 20 years, I think we still have a lot of low hanging fruit in order to have a much, much better UX. And, you know, there are people today that don't know how to write like checkbooks, right? They don't know how to write a check. And it seems complicated and weird. Like, they're like, wait a second, how does a wire transfer work or how they don't really know what's going under the hood of the dollar system? There are certain things they had to learn in certain eras that seem complicated today. Like, like, how do checks work and things like that, that we're just common knowledge back then because that's the technology that they grew up with. I think in a world where, you know, there are people that are like young teenagers right now that never exist in a world where Bitcoin didn't exist, right? And so what happens when they're 30? And so I think that.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“And you just tap into your phone in a similar way that you tap like a credit card to pay. And that's what signed a transaction. And so that basically makes it so that some degree of cold storage is one cheaper and less intimidating than basically a more complicated electronic device, for example. I think recently, for example, it's been announced that block ink is coming out with their own hardware device and their own kind of mechanism for how to make that more Apple-like, more easy to use. We're actually holding self-custody, but it's not like you don't have to be a techie to do it. One is that the actual user experience of directly interacting with Bitcoin, whether it's Bitcoin, Lightning, other types of open source stuff on top of it, that generally gravitates towards easier. And I think right now we're still kind of in this environment, like the internet before the browser was.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“I would say both. So, for example, I've been highlighting, I just had like this podcast I did, I highlighted this company called Nunchak. So it's like a software wallet. And then there's this new product called a tap signer. It's an NFC card that's a Bitcoin wallet. And so on Nunchuck, you can just hold funds there. And if you want more security, if you don't want it to be in a hot wallet, you can use this like $30 NFC card as your wallet.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“But then, of course, later you come back and it feels like you're just interacting with your bank. It just is super easy to buy. And so one is that the user experience is getting better over time.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“So I think there are two answers to that. One is, and it's ending because I was watching Bitcoin since like 2010, even though I didn't own it back then. And every time I would kind of look at it and then lose interest and go away and look at it again a few years later, the user experience is always better than the prior time. So when I looked at it at first, I'm like, yeah, maybe I should get like a gaming computer and start mining some of this. And I was like, that sounds complicated. I'll figure out next week, right? It's not like, and again, I was an electrical engineer, but I'm like, I'm busy right now. I'll look into some like online guides. I'll figure it out. And it's didn't. And then I would, you know, a few years later look at the exchanges and they all look sketchy. And I was like, I feel like I'm.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Know how you're going to store a billion dollars with a bitcoin? You're thinking, okay, how do I knock it rug pulled? How do I make transactions? What is efficient? How do I save on fees? That kind of thing. If they start to build surplus savings, then they might start thinking more about security and pulling that deeper towards them. Whereas if you're an intermediate level size person, maybe you have thousands of savings, maybe you do pull that into your own storage from time to time or pull it into at least like a deeper layer, maybe a federation instead of a single custodian. Maybe pull it into a very well audited and very well proven custodian, for example, rather than one of those faster environments. So I think the point in that ecosystem is that layers greatly extend the speed of transactions that can occur and you choose your own layer that makes sense for what you're trying to do. And you can operate on multiple layers simultaneously. So your savings layer and your payment layer can be two different layers.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“And then you have custodial arrangements that you can choose to have some of your money. So, for example, I can have an environment where maybe every quarter I pull my surplus back into my cold storage savings with one transaction, but I'm fine with leaving, say, the past month of earnings or the past couple months of earnings in my checking account type of environment on this more extreme type of platform. And so basically in that world, you choose your own layer of what makes sense to you. If you've got a developing country, you've got the equivalent of $500 worth of savings, you want to make payments, you may be not thinking of like Michael Saylor level of security here, right? You're not like.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“So in liquid, you have like 15 entities that run a federation. And you can peg Bitcoin into it. And then a liquid Bitcoin, it can settle way more transactions per unit of a time. It's also more programmable. And then you can peg out. And in order for that to fail, you'd have to have a catastrophic technical bug of some sort, or you'd have to have the majority of those federation entities steal from you. So not just one entity, but you'd have to have a majority of entities kind of group together to steal from the uses of that system. And of course, at that point, you can have legal recourse and things like that. So basically, in this kind of world that we envision here, at least as like a thought example, you have the underlying base layer, you have various open source layers on top of that that are still permissionless, still open source, still non-custodial, but that are faster and have other trade-offs.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“You know, instead of having your Bitcoin in like cold storage, you're basically in hot storage, but it's non custodial, right? So, so far there's been very limited numbers of people that lose Bitcoin on the lightning network because it's more of like instead of a big centralized sort of honeypot, they can get taken, it's more like you can have individual channel issues and things like that. But basically you're making these smart contracts in order to send value over very quickly. And so you can scale with that method. But then in addition, you also have things like cash apps. So in Cash App, for example, any Cash App user can send Bitcoin basically for free, I think, to any other Cash App user. And you're just using Cash App's Ledger, right? And so on some sense, you have to trust Cash App, but then of course Cash App could do things like proof of reserves. You can also, there's liquid, which is currently not really well used, but I think it's a model of thinking about this.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“We have a breaking into various layers. And you saw the underlying base layer that's like your gold and fed wire combined into one system. So it's both the units and it's the ability to settle those units and verify those units. On average, it's a 10 minute plus transaction time. And as you pointed out, you're limited to roughly what FedWire currently does, which is a pretty large number of transactions, but not big on the global scale. And then you have higher layers on top of that that are able to process a lot more transactions and then settle back to that. And so Lightning, to clarify, lighting is not a third party. Lightning is another open source technology. All it is basically two of two multi-sig channels on top of Bitcoin. And so unless there's a technical bug, there's no custodial risk that you're taking on by using Lightning. You're taking on some degree of”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“So, I think the most direct comparison is Bitcoin to FedWire. So if you look at the FedWire system, it's a settlement system in the United States. It settles, and this is not like a typo, one quadrillion worth of gross settlement volumes per year.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“And with Bitcoin that has even zero supply in place, you know, slightly more price deflation than you have in gold, something by like an additional 1.5% more because you're comparing zero to an average of 1.5%. And so in that world, most things on average get cheaper over time, not necessarily every single year. But as long as civilization is advancing, as long as technology is getting better, you'd expect most things to, or at least some things to gradually get cheaper when it's nominated in your Bitcoin.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“That's old, right? So that type of thing has really weighed down the CPI basket. So inflation is this spectrum that exists where some things we can't make anymore of, something we can make some more of and some things we get exponentially better at making. And so in that sort of world where either of gold or bitcoin is money, most things generally get cheaper over time versus those things, right? So If you look at say gold price and oil over the past century and a half, it looks like a big zigzag line, right? Whereas if you look at oil priced in dollars, it goes, you know, it's got these occasional huge bursts in the new plateaus and another burst higher. It goes up, it goes up like a hundredfold over 100 years. And that's because the underlying unit. And so when most things are kind of equal to down versus gold over the long arc of time.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“But we can build more of them, or oil. So oil is challenging again. It takes a lot of infrastructure and resources to get. But we do get better and more productive at finding and extracting oil over time with shale being an obvious example. And so those types of things generally went up not as fast as money supply growth, but they went up faster than the official CPI ratings. And then there's things we got exponentially better at making. one gigabyte of memory, for example, storage. You know, I used to be excited when a computer had 256 megabytes of RAM, right? And so as we've gotten way better at electronics, anything more is law related, software, offshoring, industrialization, a lot of those things were outright deflationary. We just got exponentially better at making them. So like what is the cost of taking and storing a picture today compared to what it costs, you know, even when I was a kid.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Time, most things should get gradually cheaper when summoned in Bitcoin. You know, as an example, over the past, say, since 1960, US money supply growth has been about 7% per year on average. And when you look at, say, what has inflation done, right? So things like water frowned properties or fine art generally went up roughly in line with the money supply growth because these are finite things. And so as we made more monetary units, they went up at roughly the same price in terms of price. Now it's a bumpier path. You know, there could be bubbles or depressions in those assets. But over multi-decade stretch, that's roughly the rate that they grew at. And when you go down to a little bit less scarcity, things like gold. So gold was growing at about 1.5% per year as far as estimates can tell during that period. And median houses. So houses are an energy intensive, labor intensive thing to build.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“So right now, Bitcoin is in an early phase of its adoption. So when it goes from, say, 0.1% of people own Bitcoin to 1% of people own Bitcoin, and then it goes to 10% of people own Bitcoin, you get that hyper deflationary force, right? So the value of every individual Bitcoin and overall Bitcoin market cap sky goes up exponentially, let's say over this past 10-year period. And so price is dumb and in Bitcoin collapse, but in a world where Bitcoin's bigger, right? If it starts to approach its total addressable market, maybe 40% of people own Bitcoin. It's one of the major currencies it's used and it's kind of now slowly settling at that like a high level, that like plateau of adoption. You no longer have that kind of exponential move upward. Instead, basically you have a scarce unit and as technological production gets better over time.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Terms, your standards are living are up 10%. Would it be your wages would go down 50%, but you're actually flat in real terms? Or if you actually, if your wages didn't go up, you'd say, hey, I'm twice as my life standard of living have gone up twice as much because I'm just owning this incredibly inflationary deflationary currency.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so now I want to go to a potential weakness that I'm sure you've thought a lot about, which is let's say, so the inflation rate of gold was 1 to 2%. That's how much new gold was mined out of the ground. So stock to flow ratio of 60 or 70. Bitcoin, it's much less and it's getting much less with every halving. So there's only ever going to be 21 million of them. And let's say the adoption rate in this world, you remember, of Bitcoin, you know, in year one, there's X numbers in year two. It's 2x in year three. It's 4x. So Bitcoin users double every single year. So the deflation rate effectively would be 50% every year. There would be negative 50% inflation rate. So would it be now in these days if inflation is 5% and you get a 15% raise, that's good at real time.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. You could still have partial insurance where you say, okay, if you get a weird outlier case where your bank alone fails, you still have insurance schemes to insure banks. And you see that today with Bitcoin where you can have like, you know, insurance against thefts and hacks and stuff like that. But you can't have a bail of the whole system when the underlying unit can't be printed, right? So if you look around and you see all these banks are fraction reserved and they're all using a unit that nobody can make more of, that's super dangerous, right? So the combination of the supply growth, like the scarcity of that underlying unit, and then the speed with which it can be pulled out and the ease with which it can be verified and self-custody should that be chosen, all basically affect the how long you can build a fractures or banking system on that without it breaking.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“In a digital world, you can pull your money out faster. So I think even in the fiat currency system, the average liquidity needs of a bank are higher now. And then if you combine that and you say, well, like your bank, there's no printer there should it fail, right? So for example, I feel comfortable holding money in a bank as long as it's under the FDIC limit because I know that there's like a 99% chance that that's not going to nominally go away because there's a printer there, right? Whereas I would feel far less comfortable holding Bitcoin in a fractional reserve bank knowing that if this is basically a leveraged bond fund and if this bond fund fails there's no there's no savior there. I'm not getting my Bitcoin back”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. You just have to go to the bank and they could even do tricks like counting out your coin slowly to delay how You know, like only so many people can go to physical location and get their and get their money out.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“And then, in addition, gold was still growing in supply depending on the era by one to two percent per year during the gold rush. It was upwards of 6% annual supply growth in the United States. But basically, you still had a positive growth rate, which means that the underlying base layer is still increasing. And so that, again, prolongs the duration of which you can kind of get away with making these mismatched claims of what you're doing with the liquidity. Whereas if you have a unit where on a Sunday night you just pull it out and you can get like an 80% bank run, not like, and we saw this to some extent with Silicon Valley Bank. I mean, part of why these things happen was because software APIs and things like that allow bank runs to occur a lot quicker than they used to.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Because if so, part of why gold could be fractured reserved for so long is that it was slow and bulky. So people didn't want to, they'd rather have their banker take care of it for them. They didn't want to deal with it themselves. Even that 1875 book I referenced, Devon's like, most people wouldn't be embarrassed to be caught with large amounts of gold because it's just like, you know, it's just, it's not something they want to deal with. Different coins have different imperfections and be worn and wear and tear and stuff like that. It's just giving the banknotes, right? And so in that environment, gold was not pulled out frequently enough. And so it allowed for multi-decades of this abstraction to grow and grow and grow until you get like a 1929 environment, right? So these slow speed of gold is what allows it to be paperized for a longer period of time.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“You know, credit still exists. There's still a need for credit. People still have liquidity needs. It's just that the speed and the fact that Bitcoin has zero supply growth makes a lot more risky to hold in a fractionizer environment than dollars and then even riskier to hold than gold, right? So as an asset becomes both faster and with less supply growth, the riskier it is to fraction reserve that unit.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Basically, it just means that the bank's loans are backed by capital that has a similar duration or basically the same duration or higher. And so you're not making two kind of contradictory promises about liquidity where you're promising liquidity, but you don't have it in liquid assets. Instead of saying liquid deposits are in liquid assets and illiquid deposits are in illiquid assets that can potentially earn a higher return. So I think in that type of world.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“But then instead of having 100% of those assets ready to go, they say, well, I mean, in practice, no more than 10% of these people are ever going to want to pull back at once. So we can take most of these deposits and lend them out in less liquid things, even though we are making a promise of total liquidity to these people. So it's inherently a fragile probability-based model. Whereas if you instead had a bank that was duration matched, which is you say, okay, you can do demand deposits. And if you do, we're going to hold 100% of those demand deposits in the underlying, could be gold, could be Bitcoin, whatever. In Fiat, it could just be cash, like at the central bank ledger. And then if you want to get yield on it, you can do a certificate of deposit. You can lock up capital for year, two years, five years. And we're going to lend that out to earn interest.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“They can make loans. I think in that world, credit still exists. I just think fractional reserve credit is far more dangerous. People often assume that if there's no fraction reserve banking, there's no credit. But all fractions are banking is deras and mismatching, right? So you're double counting money. You're telling, so in a fractional sort of system, depositors put in money and are told that these are demand deposits. You can pull these out anytime during banking hours.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“But instead of being at the core of the system, they're on the perimeter of the system. They're able to go to the Bitcoin network, work on top of it, offer services based around Bitcoin, but they can't print Bitcoin. They don't control Bitcoin.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Is that in the gold era, gold was this decentralized base layer? So it's this nature's ledger. You can mine it, but no one sets the rules of gold. Gold is gold. And so the financial system was built on the perimeter of the system, not the core of the system. But eventually, because the telegraph and other telecommunication technologies came so prevalent, financial institutions were able to kind of overtake that system, become the core of the system. And then eventually when they dropped gold entirely, you know, central banks and banks now are the core of the system. They run the base layer. They are the source of money creation and they are the controllers of the system. If you have that Bitcoin or Bitcoin type of world, it almost brings back that gold world, but in digital form, where banks and entities still exist in various ways.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“That's why I don't think it'll be physical gold making a comeback. I mean, I think if you, let's say in a world where Bitcoin fails and then eventually fiat currencies, as we know them fail or run into just kind of unrecoverable inflationary spirals, where it's just like every year is like another round of double digit inflation or something, you would see a return of gold, but there's no way where gold is like, like you said, there's no way you're just bringing gold an airplane to fly around and pay for your European vacation. So you probably have a recreation of this. You'd have like a reset and a recreation of the system, probably based around gold, but then they probably would fractionally reserve it.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Don't there's no way to do it, so encryption and open source tech gives us it's like in many ways this kind of recent boom bust cycles in the crypto market has been kind of a recreation of the wildcat era. And I think that going forward, the market solidifies towards things that are more sustainable, things that are more robust, either full reserve federations, proof of reserves, these types of things that I think make more sense because if you don't choose those methods, you're likely to get wrecked. Whereas if you do chose those methods, you reduce your probability of getting wrecked. And of course, the taking self-custody of your coin is like the least wreckage approach as long as the underlying protocol itself holds up. But that's still a fairly small share of users.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“You can federate custody so you're not trusting a single entity, but you're trusting an established group of entities. There's cryptographic proofs that you hold reserves that you say you do. And both of those techniques, for example, have limitations. Like, you know, a federation can still fail. More parties have to fail than one party, but it's still fallible. Similar, you know, proof reserves can't prove proof of non-liabilities. So when you prove how much assets you have, you can't prove a negative that you don't have a liability that's like off the books, for example. But that still is better than just having a black box where you don't even know what's there, right? So in the free banking era, how do you audit the bank of, you know, such and such”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Then gets up a notch again. But as long as it can retain his characteristics, it's still this attractive item out there where you can say, well, there's this global ledger. It's open source. You can bring money anywhere in the world with an internet connection. It has zero supply dilution. People gravitate towards it. And I think it's going to anytime you try to fracture reserve it, you're very likely to run into breakage within a number of years. And that's not to say you can't have custodians, I think full reserve custodians can still operate in that world. If anything, they would have to because you need additional layers of speed and convenience. But this is a world where now we have things like”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, or at least that as people choose their own monies, they'll gravitate towards what makes sense for them. And in the current environment, a lot of developing countries will gravitate towards dollars. But I think as the dollar approaches, and this is again, this is not like a next year story. This is a long-term story playing out, but as our debt crisis and our ability to manage this central ledger eventually goes directionally similar to a lot of these emerging markets, we have to look in a similar way that Argentinians gravitate towards a dollar. What do Americans gravitate towards or what do Europeans gravitate towards as countries, as currencies like the dollar and the euro themselves start to have those problems? And so I think Bitcoin is one of the answers. And again, there's like a set of probabilities here. So it's like, can Bitcoin remain secure and decentralized? If it can't, then it gets voted off the island in terms of things that people are going to gravitate towards. I guess goal.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so I actually was wrong. I thought you want, you know, in the 1920s, there was pound sterling, but it was backed by gold and banks extending and creating bank deposits or printing money that was constrained by how much gold was in the vault. Ultimately, the gold at the Bank of England. And likewise, a wildcat bank, if in the 1840s, if there was a bank of Florida and someone came up here, I might give them 80 cents on the dollar. Every bank had their own currency. And that was backed by gold. So I was sort of making a speculative bet. Does this bank of Florida even exist? I mean, in some cases, they didn't. There was a fraud. And bank failures were exceptionally common during that era. So you're actually, you want to go much beyond that. Because in the golden, you know, one of the Golden Ages of money, there was fractional reserve banking. I mean, if there wasn't, no banks would have ever failed. You say, no, actually, nothing is tied to Bitcoin. The currency itself is Bitcoin. That's your view.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“Always around, but it really became the norm in this telegraph, you know, kind of telecommunication enhanced world because nothing other than centralization and abstraction was sufficient to solve Gold's slow movement problem in this digital world, right? And I think that's, we have a different set of problems or a different solution set in a future world than we had in this past 150 years.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“You know, I think someone would have to be somewhat foolish to hold a fraxy denominated exposure to Bitcoin rather than to hold Bitcoin directly. Fractional reserve can work if you're in a constant monetary dilution, right? So if you have a flexible base layer of money and your industry that you get on your assets is less than the rate of money supply growth, you're probably not going to get nominally defaults on. You're just going to get it diluted over time. Whereas when you're in an environment where the underlying unit is very scarce, whether it's gold or bitcoin, fractal reserve systems will break eventually because there's a lack of constraint between how fast claims can grow versus how fast the underlying can go. So I don't really if you fracture reserve as the method to solve the system. If anything, I think fracture reserve was born.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT
“So, in these countries, they get forcibly dollarized, you don't see the country deciding, okay, we're going to increase our dollar reserves. In fact, part of the reason they're in that situation is because they can't. They're often running trade deficits or they have an ability to, they have an inability to accumulate reserve capital. And so in those cases, it's not that their countries are backing themselves by dollars, it's that people are just choosing to use dollars, either direct dollars or it's almost like a free, like, you know, stable coins are kind of like a rebirth of a free banking era. They would say stablecoin issuer XYZ than trust my local government in its own currency, right? So they're both taking on dollar risk and counterparty risk from the intermediary to actually hold the collateral for those dollars.”
2023-10-05 · Forward Guidance · Lyn Alden: The Monetary Order Is Broken · IDENTIFIED FROM THE TRANSCRIPT