YouSaid · the spoken record

Vance Spencer

lines on the record: 92
first: 2023-01-06
most recent: 2023-01-06
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“That's an interesting one. It was an old randomly generated email of mine, and I just decided that it sounded cool, but it sounds mysterious, so people give a lot of credence, I think.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I don't know if I would call myself Maxie or anything like that. I've just been in this industry for Most of my adult life at this point, you know, 10 years? I'm just too old for playing around with things like Bitcoin's great, but it's not doing anything. It's not really technology. Cardano, Dogecoin, Shibi Inucoin, I actually want to go home and be proud of being in the industry and be able to point to use cases. And I think those that are actually direct headwinds to me being able to do that. And so my hope is that Bitcoin kind of ossifies between things that really, or crypto ossifies between things that really embody its values. And we kind of sunset the other ones or at least stop publicly caring about them.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“What does that mean? Like, do you have one of the good companies or do you have one of the bad companies? And obviously, I like to think that I have the former, but there's a lot of the latter in crypto as well.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Let me pull up. I mean, Jesus, there's And I'm not trying to be negative here. I just don't like things that give crypto a bad name. And I think one of the main learnings that I have from last year is that I'm not in crypto. I'm an Ethereum investor because Ethereum is the thing that embodies the values that I care about and I think also has the highest chance of a really big outcome. But I think Dogecoin is pretty embarrassing for the industry. I think Cardano is very embarrassing for the industry. These are both top 10 coins XRP is embarrassing. Ripple, a lot of the base layer chains that have very little usage and high valuations, Shiba Inu token is still worth $5 billion. There's a lot of things that are embarrassing. But, you know, we've all like, It's like saying, I'm a growth stock investor.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Now, the opposite question What do you think is a project in crypto or an asset blockchain or a crypto coin that you think is kind of the most overrated? It has still a long following, but you think it's long been disproven to be of anything of value.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“The new learning area for me is just games. And those are people that have very little crypto context. Not only do they have little crypto contacts in terms of how to build it, but they don't have a great context as to what it's useful for. And so designing new types of economic models that sit on top of Ethereum that are inherent to a game, let's say there's stuff that I enjoy working on and have a lot of respect for.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I mean, there's good, like, I respect Cosmos. It feels like they're doing really good work towards decentralization that honors a lot of the core values of crypto. There's a lot of really good application teams, even teams that are on Solana or other different types of chains. Polygon is interesting and has a really good BD team that's focused on games. I think at the application layer, that's kind of where the things that even though they're on Ethereum, like I gravitate the most naturally towards and then”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“This is a new type of market. I've never seen this in crypto. Usually in crypto, everything's just correlated to one, but because there's VC unlocks, because Wall Street thinks Coinbase is like FTX because the narrative is shifting from utility and application and adoption on Ethereum versus digital pet gold, pet rock on Bitcoin, the market is just changing drastically. And so I wouldn't say it's been a standstill. I think the market is kind of telling you where things are going.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I don't know if it's been a standstill. If you look at the June Celsius Three Arrows Lunic Collapse versus the FTX collapse, there's been a lot of dispersion. Ethereum has not made new lows. Ethereum hit 900 in June, has not gone back there since. Bitcoin hit 17K in June, has gone below that since. I think it's trading below that right now, actually. And Coinbase has just continually hit new all time lows. It's valued at less than seven and a half billion right now.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So, if there are whales who have accounts on FTX and what they thought was an asset is in the immediate sense with zero, it may get some amount of sense on the dollar in the longer term. You'd imagine that triggers some selling pressure of their other assets. Bitcoin, Ethereum, it goes down the list. We have had a rapid collapse in prices, a crash in prices, a few days around FTX, but for over a month now, it's been pretty stable prices in Bitcoin and ETH. To what do you attribute that pretty much? It's kind of a standstill. Why is that the case?”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“And it's unfortunate, but they all kind of got burnt as a result. And we didn't lose any money on the platform. I believe we did have an account at one point. But yeah, it was a honeypot for those types of people. Specifically.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Think it was on a count of customers basis, probably more of a retail and more of the Europe and other people who wanted access to derivatives and things like that on account of customer basis. It was probably skewed more to retail on a dollar value of assets on the platform. FTX was primarily a honeypot for these large trading firms that needed access to derivatives that wanted to do different types of hedging activities for either locked positions or things that they were doing on chain. And that was really the people who got hit the hardest. You can see Galaxy, you can see Winter Mute. You can see Galois Capital. You can see a lot of the MGNR got hit. And these are all crypto native prop trading firms. Really, it was a honeypot for them. And those were the people who were also the most ardent believers in the multi-chain future, the Solana vision, the SBF is Emperor of the Universe vision.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Okay, going back to FTX, like who traditional finance, if I am a firm and you either lend me money or have a deposit with me and I go bust, you're in trouble because what you thought was an asset was with me and I'm trouble. So if I'm trouble, you're trouble. What sort of companies had accounts with FTX? A lot of individual investors, I'm sure, you don't have to name specific names unless you want to. But what sorts of companies would have accounts with FTX? Would it be hedge funds? Would it be market makers? Would it be decentralized DAOs? Or was it a pretty even balance between those three?”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“No, to me, like when I use Ethereum to do DeFi or do different things, like send stable coins to people, that feels like the metaverse to me. If you have not used Ethereum and you're listening to this podcast, go get some ETH, send it to a wallet, send it around, play with it. It feels like magic. It's one of those transformative technology experiences that you remember the first time you tried it. And it's really interesting. And to me, I don't know how people define the metaverse, but that feels like it. Ethereum feels like magic when you use it.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“On chain. And that's very similar to how I live my life. I have large chunk of my net worth on chain. I use all these decentralized financial services instead of getting mortgages or loans from a bank. The art in my house is NFTs. And I'm sure the digital artists are benefiting from that. I'm sure the protocols are benefiting from me using it. And I built a life for myself. And that's kind of what I consider the metaverse. I don't think it really has much to do with VR or AR or any of that stuff. It just has to do with, you know, financial sovereignty. I think really only blockchains can offer that, specifically Ethereum.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Metaverse, you know, it got conflated with Zuckerberg changing Facebook to meta and him building his stuff. But for me, what the metaverse is, is how can I go to a computer for free and start earning money? It is a way to, it's basically employment. People are not just going to go hang out in your metaverse because you have an Oculus and they have an Oculus and let's go hang out in a virtual park. There has to be some reason. Maybe it's dating. Maybe it's who knows. But like the most clear and present version and the most immediate source of inspiration for people to go on change is because they can make money. And I think that's actually a good thing. And our hope is that you're not making millions of dollars from playing these games, but you're doing something of value that the developer benefits from and you earn some sort of piece in the upside. It doesn't just go to them and you can start to build this life for yourself.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“To be clear, I think the metaverse, even though it's pretty ambiguous as to what it actually is, and NFTs, I think it's just like a technology standard. I think both of those things are not inherently bad. Were just really poorly defined When I see pictures of monkeys smoking cigars trading for $500,000 each, it just doesn't feel like the best use of our time or just being honest. It doesn't feel like adoption. It feels like something else.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“And if you and I were to go onto one of these games in some ways that's kind of a metaverse because we're doing a world that's not real life and we're transacting with it with NFTs. But is the metaverse different than that? And then also you said, oh, part of the reason I got a little, I maybe things were too good, got a little skeptical was like people started talking about NFTs and metaverses. Yeah, what's going on with the metaverses? And then we'll go into NFTs.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“There's another one called Pixels, which is built on Stardust. Which is a platform portfolio company of ours for game developers, and I think they probably have like a million. And it's kind of a typical, fast casual style game that you might see on the iOS App Store. Thing to keep in mind with crypto games is that hardcore gamers hate them. They're like uniquely positioned to offend those people. But the meat of the gaming industry is these fash casual games. You know, 30 to 50 year olds that are playing games to generate some passive income, have some fun, but that's kind of about it. The games don't need to be like these infinitely deep halo style Call of Duty style story epics. They're going to be much simpler.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I think it's one called Neapolis, and it's got about 3 million monthly active users. It's a game like Foursquare, where you check in, you can become the mayor of places, you can decorate your place that you've claimed as mayor, you can steal other people's places, and the NFTs are on Solana, and people don't even really know they're using them.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“And all of these financial napalm applications. And all of the games that we see now, they're not based around this reflexive token economic loop. They're based around gameplay. And maybe the swords are NFTs or maybe the virtual currency is actually tokens on chain. But even that is enough to give games 20, 30, 40 percent better monetization. In an industry the size of gaming, that adds up to a lot.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“You get people to come for the game, and the hope is that they stay for the decentralized financial tools. The interesting things that you can do on chain, the community that's built around crypto. And that's, I think, the key here is how we make that pivot. But that thesis is starting to play out and it's going to bring a ton of people on chain. And more people on chain means more use cases, more use cases means more transaction fees, more transaction fees means the blockchains are more secure. And so there's this virtuous cycle of you add more people in and you really get a different type of state on chain as a result. And so that's what we're looking forward to to 2023, at least one thing that we are.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“And you have a lot of headwinds or tailwinds on that thesis. If you look at Apple's most recent iOS update, which removed IDFA, that really crushed an IDFA is how you track users across mobile, across desktop, across different devices for basically free-to-play advertising-based business model games. The removal of that standard really hurt those people. And so, you know, some of it is people wanting to get into crypto, some of it is people being pushed away from these Web2 platforms that are increasingly gatekeeping and taking more of their revenue. But we see more games pitches than anything. And these games, you know, the first cohort of them got funded in early 2021. And so only now are they starting to release their product, but we're seeing amazing things where people are playing these games that they love, that they think are fun, and they don't even realize that there's script on the back end. And so, again, it has not been 100 million, a billion person breakout hit yet, but we're seeing things at a small scale, which are the thesis is starting to play out.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so just if you go by process elimination, NFTs are too niche for the general public. Music as an application category hasn't really taken off in crypto. Content, I don't know if there is really a good application.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Seeing less projects, higher quality, more reasonable valuations. But things are playing out. The use cases, and that's the things that we keep our eye on. And if that keeps happening, I don't really expect this to be a super long protracted bear market. It's already been a year, more than a year. And so if it's next year, if it's 2024, I'm very confident where crypto is today just because in the last bear market, there were literally no people. There weren't even any use cases. It was hard to see the force for the trees, but now there's a map, there's a plan, and it feels like it's just a matter of time.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I mean, the last bear market, I'd put all of my money into framework and ended up living in my co-founder's parents' basement for a year, starting framework. And so I've seen how bad it can get. And you have to change your strategy when the market changes. And so whether it's distressed stuff, whether it's more liquid stuff, whether it's being more aggressive on negotiating on the venture side, those are kind of the three strategies that we run. And we are just subject matter experts in this asset class. Nobody knows this stuff better than we do. Nobody knows these tokens, these companies, these people like we do. And so that's our advantage, especially in times like today where we have a $400 million fund. We're one of the only people with cash. And it feels like we can really clean up. And so, you know, our plan is for this to be our finest hour and really take advantage of the situation like we did with our first fund. It feels a lot more measured.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“TradFi funds do love to short tether for many different reasons. I think it's mostly just personal animus against the crypto space. I don't think anybody's really made any money shorting it. But it seems like a sexy thing that you can pitch to LPs. That's my guess.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Cowboy stuff in the past probably, you know, and that was, I guess, in their opinion, in service of bootstrapping the ecosystem and the use case of Tether. But I tend to think at 70, 80, 90 billion dollar stablecoin scale, you've had that cleaned up. And I think they have. That's at least my guess.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Tether is another one I used to think a tether truther, you know, it's gonna blow up all this stuff. I've just seen it go through enough stress tests and, you know, in June or whenever three arrows happened, they did like an 8 billion redemption within 12 hours or 24 hours. And that was the first really big stress test that I saw that it made me feel very comfortable with it. And the retestations aren't perfect, but I kind of take them for what they're worth knowing for a lot of people in crypto that they are able to redeem Bitfinex and Tether and actually get USD redeemability into their bank account. So I'm not too concerned of them. Do I think that they probably did some”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Tether's on ETH. Okay, got it, got it. So while we're talking about FUD, what do you think about Tether? They release attestations, but they don't haven't released an audit. I feel like if you and I were made a stable coin and everything was up to snuff, you and I probably would want to release an audit to let the world know that we're, you know, everything's good 100% good to go, right?”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Me look. And for people that are out there, if they ever want to look at Ethereum. Use cases and where the burn comes from or whether revenue comes from ultrasound.money. On a daily basis gives you a really good idea. And so today, OpenSea is the number one consumer of Ethereum gas. Uniswap is the number two. Transferring ETH is number three, and then Tether is six or seven. So it's actually a good, pretty good dispersion in terms of use cases. Would like to see those 10 to 100x higher in terms of the aggregate ETH spent, but that's kind of what the crypto economy looks like.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Is it a bottom? We don't know, but it feels like there's been enough pain where if you look at the 2018 fractal, same thing. Had the big collapse earlier in the year, we kind of hung around at the same level and then in December, November. At that point, the miners capitulated in 2018, but at this point it was FTX. But it looks very, very similar. And so that's at least the hope.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Have $64 billion in a cold wallet. CZ is generally good for the money. I think there's like a weird translation barrier between the East and the West. Like seeing him on CNBC and they're kind of asking him these like potentially somewhat misleading questions and he's kind of like messing up his answers just because there's a little bit of an accent there. I don't think he's actually in any sort of trouble. Maybe by bit, you know, that's another one. A lot of retail Southeast Asian exchange, we don't really know what the state of their reserves is, but all of the big ones have been taken off the table.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I do think the obvious ones are Genesis and DCG resolution. I mean, I've actually been impressed by how specifically Gemini has handled that with Hula Han Loki. They're putting together a thoughtful plan. They're being very transparent and public about it. Like I'm hopeful that that gets to a good resolution. Seems like grayscale is kind of off the table in terms of being wound down and distributed. And that was like a big thing that was scary a week or a month ago, just because that's 10, 15 billion of cell pressure of Bitcoin and ETH coming to the market if that has to happen Still, a lot of lenders that are kind of like coming out of the woodwork, raising their hands saying, yep, I got killed too, but those are the smaller ones, a lot of Asian ones as well. I'm trying to think. Binance, I don't think is insolvent.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Let me put the converse to you to explain it. If Ethereum price had stayed the same. Amount of ETH spent per day had declined to 80%, then it would be five times higher in terms of its price to fee valuation ratio.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So, the answer is that the price has gone down from $4,900 to $1,200. Meanwhile, the amount of ETH spent per day. And so call that an 80% decline And the amount of ETH spent per day has also gone down. Probably about 80% as well. And so on a relative basis, those two should net out. The price is 80% lower, but the amount of ETH spent per day is also 80% lower. And so maybe it's a little bit over on a daily basis, but generally it's reset within the same type of valuation band as it was before”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Yes, but that also means that they use ETH less the lower it goes. So my question is, is ETH, even though the price of ETH is a fraction of what it once was at the highs, is it now more, quote, highly valued, has a higher valuation than it was at the peak of $4,800 per ETH?”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“And so it's this weird Veblen money good where the more expensive it may be, it reflects the bullishness of the space, maybe explains all these emergent applications, the higher the price of Ethereum, the more people want to spend it. And you can say that that's a good or a bad thing, but it is reflexive by definition. And that is, I think, what I look for in a lot of things in terms of how big of a market can this get to. What is the level of escape velocity needs to achieve to really get there? For Ethereum, it doesn't actually look to be that high because people spend more ETH the higher it goes. And again, that's probably a reflection of more of a bull market than anything else. But the point still stands.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“If I can hold Ethereum, use it as money and earn yield on it from everyone else using it, that is something that does not exist in traditional technology today. I did a study. We have a lot of engineers on our team, and all of this data is open source, and it updates everything 13 seconds every time a block is confirmed. So it's really cool. You can see financials in real time and look at it. And the question I had was, Higher the Ethereum price, the less people should want to spend. That makes sense, right? But actually what I found was the opposite and what I said before. When Ethereum was at $5,000, $4,900, whatever, people were spending $10,000 to $15,000 Ethereum per day. When the price is lower at 1.2k, people are spending 2 to 3 to 4 to 5k per day.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So this year Ethereum will do probably about one and a half to two billion in revenue. And I'm just like looking at my chart over here. That puts it at, you know, and it fluctuates based on. The spend of ETH per day. That's at least how I think about it. I think about it on a daily basis. And so some days when NFTs drop or games launch or things are more bullish, you're going to get like, you know, four or five or six thousand ETH spent at 1.2K per ETH. Some days the price of ETH will rise. And so the revenue will rise even more. And so it's pretty volatile, but it's trading it around $150 to $200 PE on a general basis. And is that expensive? Yes, it is. But the promise of Ethereum is a new type of computer, a new type of money potentially, that's extremely leveraged towards this digital economy that's building on chain. And so you kind of have to make a judgment call on whether to pay for that or not, whether that's too expensive for you or not. But the point is that it has access to this new market of becoming money. And that is why, you know, in my mind, it has such a valuation premium.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I'm not a doomsday prepper. I don't have the coin and gold in my basement. It's just like not how I live my life. And I think that's where crypto is going. It's going to more of a pragmatist, less of an ideologue type of market.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I'm not asking you to buy a cup of coffee with Ethereum. I'm asking you to use stablecoins. And when you use stablecoins, you pay the network gas. When you pay the network gas, that becomes a transaction fee. When Ethereum has more transaction fees, the security of the network gets even better. There's lower inflation. People earn more yield for holding Ethereum. And so I don't know if ETH is money. I think it's more like an internet bond where if you think of all the transaction fees and the sources of security that are keeping the network up, it's people that are sending stablecoins, sending remittances, using DeFi, using NFTs. And at some point, if we have bad inflation enough where we all need to get guns and provisions and we're using Ethereum as money, I think that's okay. That's certainly not the world that I'm kind of gearing towards. I'm a technology guy. I see people, developers building applications. I see new emergent behavior. And I see this thing generating tons of free cash flow at basically 100% margin. And that's what gets me excited.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“They do, and that's what a lot of the industry of the futures and Bitmacs and that stuff was created to do is allow Bitcoin miners to hedge, but Bitcoin miners don't hedge. They're kind of playing the same directional games as everybody else where a Bitcoin that they mine for $5,000 is going to be worth $100,000 someday. And so you have that. And I think the other thing that I think about is it looks like real estate to people in a strange way. I have this physical asset that I put in the ground and I turn it on and it generates yield and it pays for itself and I can pay down the debt. But it's just not like that. And the crypto industry is not stable enough to invest in. Like the real estate industry is in, you know, even today, core scientific filed for bankruptcy. And you look at all these miners and what are the first things that they start to sell when things get bad? It's their Bitcoin. And then they start to sell their machines. And then they try to keep the lights on. And then they all fire for bankruptcy. And this is like the third cycle we've done this.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Why we like East, and it's borne out by the transaction fees. ETH right now has no inflation because it is so used and it burns enough ETH to keep it at neutral. Bitcoin has four percent inflation per year, minor capitulation is the biggest issue in the industry right now, and it's just crushing the Bitcoin price”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So, I think to do a non exhaustive list of Bitcoin problems last year, the first one, and really the only one that I care about is just the lack of transaction fees. And the lack of transaction fees has no connotation of whether Bitcoin is good or bad. It just has a connotation towards people using it or not using it. And people do not use Bitcoin. You can see it in the adjectives that are used to describe it, you know, huddle or put it away in cold storage and never touch it. Or this is like money for the next thousand years. Like Saylor would say, it's just a culture of dormancy and not using it. And if you look at Ethereum, stake it, swap it. You can use it for NFTs. It's the internet money of crypto. It is an internet bond that generates yield. There is so much that you can do about it. And the community is building new apps and new front ends and new ways to use it.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I mean, yeah, it's. The weird part about Bitcoin and why we, you know, the fund has really never held Bitcoin in any meaningful capacity is if you get Bitcoin, what can you do with it? You can't stake it. How can you get a loan against it? Well, you need to send it to some centralized counterparty and get them to send you dollars and hopefully your Bitcoin comes back someday. If you have wrapped Bitcoin, at least you can put it in DeFi and make productive use of it. You can do different things. You can generate yield with it. You can get a permissionless loan against it. Really, Bitcoin became this. I want to say toxic asset, but it just became where all of the problems really started to occur, especially because the GBTC trade was so levered. And yeah.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Yield on stable coins being high during a bull market makes sense to me because if everyone wants to get leveraged long Bitcoin, they could borrow at 8% and 10% and that can be a profitable business. But in a bull market, it doesn't make sense to me why Bitcoin would generate 10% because to me, the reason that you borrow something is to short it. And who wants to short something in a bull market?”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“This was not a feature of the last cycle. The idea that things like Block Vi and Celsius and Voyager could quasi-act as banks because of some weird exemption around digital assets and rehypothecate and do fractionalized banking. And they had terms of service, which people thought that they were just depositing into like a Coinbase style exchange, but instead it was your property now belongs to Celsius and we can do whatever we want with it. Surprising that we got torched by that in retrospect. I think there was some hope in the industry that these things were better managed generally, but I think the incentives were so skewed to lend and get yield and get returns that the industry kind of got ahead of itself.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“That is a great question. So The funniest part is, and we were very vocally anti Celsius and there's a lot to unpack there. We don't need to get into it right now. But basically their CEO would go on CNBC and say things like, you know, you can stake your Bitcoin with us. There is no staking for Bitcoin. Bitcoin is a proof of work system. It does not endogenously generate yield. And so the question is, how was he getting yield on that? Well, there's a few sources of native yield for Bitcoin. You can lend it to someone who goes off and takes the risk to create GBTC trades or shares. And, you know, if they're lucky, they time it right or if they're unlucky, they kind of get blown out. They probably got blown out lending Bitcoin to people who did that. The other one is just lending it to people who would sell it for dollars and then who would go buy other assets. And then you're short synthetically Bitcoin that you owe customers and your long other assets or your long discredit agreement.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“They blew up pretty good. And then there were other CFI lenders, centralized finance lenders, where you could earn yield. And then I don't think this is a big feature of the 2017 bull market. Didn't hear yield a lot back then. But in 2020 and 2021, it's all about yield. Oh, you buy Bitcoin at $10,000. It goes to $60,000. Vance, that's great. But that's just the beginning. You can stake your Bitcoin and you can get paid 10%, 20%. And then there were protocols that were paying 80,000%. I mean, I still don't understand how these things generate the yield. So I guess there's two buckets. One, the palpably ridiculous DeFi yields and how that worked. And the second one is ridiculous, but at least you could seem like it's a totally different model of 10% yield that actually ended up causing more destruction than the openly ridiculous yields. But yeah, I guess let's start with that. When Celsius said, oh, you can get 10% or 15%.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT