The ₿ Word | Live with Cathie Wood, Jack Dorsey, & Elon Musk

thank you welcome everybody to the b word I am Steve Lee the lead of square crypto and I'm here today to moderate a discussion about Bitcoin that will span from what makes it special to the um its relationship with energy it the community ethos in the future of Bitcoin I'm joined by three special guests the first is Kathy Wood founder CEO and CIO of Arc invest next is Elon Musk techno king of Tesla and chief engineer of SpaceX and finally uh Jack Dorsey CEO of square and CEO of Twitter so we have a lot to talk about today so let's get to vtalk and get right to it I'm going to start off by asking each of you a question uh which is what um what's shaped and influenced your views on bitcoin and let's start with Kathy okay Steve thank you uh well the first thing was uh our focus on disruptive innovation uh so starting in 2011 Brett Winton our director of research who I know will be on the program later um he started talking about this thing called crypto well Bitcoin at the time and it was a curiosity as we were doing our brainstorms in in research but as we learn more about this open source ecosystem uh that might fulfill the role of the the payment system that the internet neglected to build into the system not expecting Commerce we thought this might be something and then I became even more interested when I realized uh that there that that my economics would come into play as well here and uh art Laffer um my mentor from from USC and a monetary scholar uh in 2014 I asked him if he would collaborate on a paper on on bitcoin uh and he he was a bit of a naysayer at first and uh but agreed to read the paper he read the paper tore it up uh and and and from an economics point of view really wanted to understand this and he said you know I think you got something here this is a rules-based monetary system I've been waiting for this for my entire career so the combination of disruptive innovation generally economics on top of that and the huge misunderstanding out there as to what this is uh that was that was intriguing and and launched our research effort thank you Elon uh what's influenced your views on bitcoin well I've I've thought about money for quite a while obviously since the PayPal days um the uh and then like the companies that preceded at x.com which I created and confinity which uh Peter Thiel next election uh Luke Howard and others created um we combined the companies and made PayPal PayPal so I've been thinking about only for a long time um and really it's it's best to think of money as an information system uh primarily an information system for a labor allocation um and uh for practical purposes it exists in a series of heterogeneous databases they're like very different databases in uh Bank mainframes around the world uh it moves quite slowly in reality it may seems to move fast sometimes and it does with PayPal which is real time but of the vast majority of the systems out there are batch processing so the actual reconciliation may take one to five uh business days uh sometimes longer um and the you have the ACH system which is ancient and still still in operation which is allows transfers uh effectively like a check would be an ACH transfer but it's it's not secure and you've got the credit card systems which also uh not secure or be like handing your username and password to a stranger in a restaurant if you buy a meal so um there's definitely an opportunity for uh something that is uh that is better from an information Theory standpoint so um and and and there you can think about like data data on a network I think is the way to view it um what has the the most throughput what has uh the least error that lost what what crops the Furious packets uh fraud for example being a source of error um and uh a government interference in currencies being a source of error um but it's fundamentally an information system so um I think it makes sense to support something that uh improves the uh the the quality of information with which we conduct the economy um and you know Bitcoin is a candidate for that uh it is it is I think some things well um and it's obviously it's evolving and there are additional things like lightning being done on top of Bitcoin um but Bitcoin per se is mostly solving for uh scarcity um or rather solving for uh essentially um having no throat to choke decentralized uh so there's no one who can be uh coerced in any way uh to uh empty that Bitcoin account well I guess that could technically Buy on an individual basis but the system is a whole cannot um and um and it has an open Ledger uh which is also quite quite good um but transaction volume is is low uh a transaction transaction cost is high uh and usability for the average person is is not is not yet very good but has a lot of potential and I should say that like I I'm not and I apologize for taking a long time but there's there certainly is a lot to say um in general I'm a supporter of uh Bitcoin um and uh the idea of corporate currency in general um uh but as I've said publicly we're doing these people to watch out for uh crypto taking uh especially Bitcoin using proof of work to maybe use energy that's maybe a bit too much uh and and not necessarily uh good for the environment so um but on balance I support Bitcoin and I I and I'm not an investor I'm the only publicly traded stock I own is Tesla um and the only significant thing I went outside of Tesla is is my SpaceX stock that that um yeah it helped create both companies so um but apart from that uh I do on bitcoin uh and Tesla's own Bitcoin SpaceX own Bitcoin um and I do personally uh I want to go to ethereum and Dogecoin of course so okay okay thank you and we'll get into some of those issues in in more depth as well um Jack how about you what shaped your views of Bitcoin um the the network and the community I you know it's uh it's deeply principled it's weird as hell it's always evolving and it just reminded me of the internet when I was a kid and you know I encountered old Cypher punks when I was fairly young and this was a topic discussion for years I didn't touch it until 2008 when we started Square um you know we'd Elon and teams at X and PayPal inspired a lot of what we were trying to do trying to bring in more to a physical world but we encountered this crazy predatory system um that was slow that was obtuse and I think you know one of the things that we tried to do which X and PayPal also tried to do is build an abstraction layer around this complication and around this predatory nature that the financial industry can tend to be and make it work for people but when I saw Bitcoin in 2009 you see a chance to replace the whole foundation and everything that Elon was talking about in terms of ACH and the credit card Networks we're built with very different agendas and a very different time frame and it's crazy that they still exist and yeah they have scaled but they they just are not relevant to today and they're certainly not relevant to the Future especially when you consider the entire world and countries like Nigeria or Ghana or India and its inner connection with countries like the United States and Canada and all over Europe so what what really drove my thinking and drives my passion around it is like if the internet gets a chance to get a native currency um what will that be and and to me it's Bitcoin because of those principles because of that creation story because of its resilience uh because of the number of tests it's been but what what inspires me the most is just Community driving it it's it just reminds me of the early Internet it's it's the only reason that I have a career because I learned so much from people like who are building Bitcoin today and I continue to learn uh in that sense and I'm so grateful for so that's a good segue into the next question I'd like to ask you jack is you you said before the Bitcoin changes everything can you speak more to that well I just I I just think that um you know our a lot of what we experience in life um when you really get down to the to the foundation a lot of our monetary policies a lot of our monetary systems cause so much distraction and so much cost and when you get to a system where you have the potential for people to truly own it um they can verify it themselves you don't have to have trust going in you don't have to trust it at all you can verify it through source code or whatever your um your appetite is and that any particular person can help Drive the future of it and at the same time it's not controlled by any state it's not controlled by any bank it's not controlled by any Corporation um and these three parties of people who participate in the network people who mine and also the developers constantly debating uh the correct roadmap and the way forward is a beautiful thing and I don't know of many other consensus-based models that have existed at that scale for this long with this amount of success and we're still fairly early so when you know I met a woman in Ethiopia two years ago and she was trying to create the lift for for Ethiopia Elon I think I reached out to you at that time as well because she really wanted some Teslas um she still has to take paper Fiat cash from her passengers and pay all of her drivers in the same way because there's no monetary system that she can utilize there's nothing digital um and Africa as a continent is hugely interconnected from a monetary standpoint but also hugely taxed in that same way so a lot of the potential that I I see you know the internet having a native currency um helps her build her business uh in a much faster way and also if you consider something like Bitcoin existing before YouTube before Twitter before Facebook a lot of the business models that we have today would not be the same we would not we would certainly not have the dependency we have upon the advertising business model if Bitcoin existed pre-twitter and I think the amount of business models that enables the amount of innovation enables going forward especially when you can consider the whole internet instead of going country by country by country by country which you have to whenever you're doing your assignment Finance um it really just opens the aperture and that that is that is what I want to see in my lifetime is is a currency that is standard and sound for the internet that everyone can use great um a Hallmark of Bitcoin is its fixed supply of 21 million coins um Elon referenced that earlier it may be the first system that humans have created that humans cannot later change Kathy I'm curious with your background in monetary history and macroeconomics what what are your thoughts on that that type of system oh well I'll just uh I'll recount the the the story uh about art laugher and and our going through the paper uh and he said as I said first rules-based monetary system Global ever this is a a very big idea once we had convinced him of the um of the ecosystem itself uh now this is uh the role that it's playing given that the rule is a quantity rule that 21 million units is really a store of value uh role so there are three rolls of money uh store of value very important uh uh uh the means of exchange so for transactions and the unit of account so uh every good priced in terms of uh of whatever the unit is so store of value is um its primary use right now the others exist unit of account Reserve currency of the crypto asset ecosystem that's being seated a little bit towards uh stable coins right now uh but the store of value is a a very big role and means of exchange with apps built on top of uh the Bitcoin blockchain uh we think is going to become more more of a reality right now high value uh high value transactions take place over over Bitcoin uh and uh and that is a very useful role so we look at those and I remember saying to Art how big could this be and he said well how big is the U.S monetary base well today it's eight trillion dollars eight trillion dollars at the time we were talking it was 4 trillion uh so we've gone through another crisis since then um and so the store of value this idea that purchasing power will go up over time uh if demand Rises relative to supply Supply ultimately fixed at 21 million units um that's that's a very good thing purchasing power going up globally around the world and this idea that it's a hedge against a confiscation of wealth uh and that can take place in in a myriad of ways but inflation and especially hyperinflation in Emerging Markets is the primary way talk about uh just destroying purchasing power so that's a very big very big idea and I'll also mention uh deflation in some ways it's a hedge against deflation I know some people are confused that um we at ARC think that we're in a deflationary environment here in the United States if that is true the odds of a hyperinflation in the rest of the world especially in Emerging Markets uh is also true so but this deflation and we learned from 0809 there's counterparty risk associated with deflation and I think Bitcoin would be a hedge against that eventuality as well so it's a very big idea right I suspect Among Us there's not a lot of debate about bitcoin's potential as a store of value but Jack you referenced earlier uh it being or or becoming the native currency of the internet can you speak more to that and also how it relates to maybe how uh institutions think about it um yeah I mean like um just a simple example if I happen to be in Ghana and my family is in Nigeria uh currently I can take anywhere from and I need to send money back anywhere from uh 10 to 30 percent off the top just to send that money back whereas if you just focus on the worldwide remittance problem um Bitcoin solves so many so many of those problems today instantly uh without having to go through any intermediaries or any slowness or complicated systems at a corporation or a state uh created so I think um you know having having sound money with that is separate from the state is the idea uh having a completely verifiable by everyone including the state including corporations including individuals including developers who want to build on top of it is quite powerful and that's what keeps it secure and strong and um I think that's you know we we need we need more of that which is why this one of the one of the reasons why this conversation is so important is as entities come into the space um it's not just buying an asset and holding on to an asset and treating it as an investment there's something special that created this and something precious and something very unique um which has to be protected and we need to do whatever we can to help our Thrive as well Elon I'm curious your opinion on this you mentioned earlier uh about bitcoin's throughput or the importance of throughput um maybe some concerns around Bitcoin uh can you speak do you do you think Bitcoin can become peer-to-peer cash um well Bitcoin does have a fundamentally a fundamental scarcity limit at the base layer um that's designed in um that doesn't mean you can't have some Layer Two System Theory like lightning um and standard lightning is doing well in in some small countries um there's there's some question mark as to whether you need a money transfer license um just a debate as to whether that's needed um given that it is not open Ledger um so it's there's and that's that's a whole separate debate of course um but Bitcoin but Bitcoin by itself simply cannot scale to be the monetary system fluid at base layer but with a second layer this is possible depending upon how that that second layer is implemented um and yeah as part of why I think there's there may be some Merit um to uh so something that may seem silly like like a theory like like Dogecoin um I think ethereum also might like some like the three the three things I I own outside of SpaceX and Tesla uh it also obviously there's a neural linking boring company but but of any significance are um Bitcoin by far and then some ethereum and some Dosh um so you know if if the price of Bitcoin goes down I I I lose money I'm not sort of you know um you know I might pump but I don't dump so uh you know it's not a case of um I I definitely do not believe in in getting the price high and selling or anything like that um so and I would like to see what coins succeed um uh I think there's there's some Merit to cons this is not a slam book or the summer to consider considering uh something that has a higher Max transaction rate um and lower transaction costs and kind of seeing how far you could take a single layer Network where the exchanges act as a de facto uh second layer um I think you can probably take that further than people realize and and as uh bandwidth increases over time uh latency decreases uh SpaceX and starlink is actually playing a role in this um and I think long term people will probably have you know access to uh worldwide access to gigabit level uh connectivity at low latency and so at low cost and so then you know your base layer could do a lot of transactions if you take that into account um so yeah but but like I said but Bitcoin with the layer 2 system um so they could scale to do a vast number of transactions uh same goes for ethereum about the um scaling at the layer one the the concern from you know the past five years of debate in the Bitcoin Community is that that would sacrifice too much of decentralization and hurt the censorship resistant properties of Bitcoin um I'm curious if you know what are your thoughts on that are you sensitive to that and are you concerned about losing some of the special properties of Bitcoin or or another cryptocurrency by scaling at layer one yeah I mean these things are helpful to like use the physics tools of thinking and say you know scale up scale down and see if it still makes sense so if scaling up the transaction block doesn't make sense why don't you scale it down and have it be uh you know so that somebody you know with a laptop from 2008 can still run a Bitcoin node one slow down oh you want to start down well maybe maybe you're at the wrong number then there's actually people there's members in the community that do want to slow it down but but I understand it's silly um the the reality is like the Irish person is not going to run um a Bitcoin node so this is this is uh and and and Bitcoin you know uh it was a lot of clever ideas but uh you know these parameters were set and I were in 2008 or something uh remember 2009 um and there's like there's been some improvements uh since then but but not a lot so um you know it's sort of like if the they're still in 2008 they were still a non-trivial number of people on modems so um you know now now it is it is quite common to get uh 100 megabits connection just for a house something some houses have gigabit connections so um and that trend is obviously in the direction of higher bandwidth and lower latency um and if somebody else doesn't do it Sterling certainly will so I have high confidence that uh you will be able to maintain a decentralized finance system while still having a much bigger blockchain AKA ASCII text text Ledger um hey hash Ledger um you can make the hash Ledger bigger without suffering from decentralization as of the average connectivity improves obviously one idea would be to run of or to put a the claimful node in in Starlight terminals that way more people will be be running uh actually I have run this by the team at one point um I had this idea which is kind of off the wall but uh like let's say you need a a little space meter um and normally your space heater would uh just be pure entropy um but what if that space heater was also a you know Bitcoin ethereum Doge Mining Node uh pick your currency um and so then you'd be heated up and uh you would also mind uh you know your crypto uh and have connectivity in one I love that idea yeah I mean rather than running a space heater absolutely are there any other um you know so you're drawn to Dogecoin a little bit are there any other gaps in Bitcoin that you see that cause you to be drawn to towards dojo oh I think um um I mean I think there's there's um there's a doge has uh the Dutch Community I think has uh some irreverent obviously and uh is uh has great memes and loves dogs and I love dogs and memes and um uh it doesn't take itself too seriously um and um you know I think the you know there's there's a there's Occam's racer which is the the the the the simplest ancestors the most likely uh it's a summary of Occam's razor the simplest answer is the most likely one then there's a friend of mine came up with a variant on that that the most ironic outcome is the most likely one um and then I have a variant on that which is the most entertaining outcome is the most likely one so if that is true then the most ironic and entertaining outcome would be that the cryptocurrency that was started as a joke to make fun of cryptocurrencies ends up being the lead the leading cryptocurrency that would be the most ironic outcome Jack what are your thoughts on that um is Bitcoin resilient enough to overcome that I think it's resilient but also I think like you you find I mean that's what attracts me to the to Bitcoin in the first place is the irreverence um a lot of that a lot of that uh a lot of that just brings it forward and and you know at first go it it makes it a little bit inaccessible but as people get into it it makes it more accessible and more spreadable and um I I think I I absolutely think the resilience is there um I I think it's important to have fun as well and anyway anyway folks can express themselves I think net goes back to the main idea of like how do we how do we create a native currency for the internet any anything that goes towards that path like that's whatever whatever whackness or fun we can have along the way that's going to make a lot more enjoyable and it's going to make a lot more people want to use it I'd also point out there's nothing stopping someone from creating a Bitcoin wallet that has that's like fun and has memes has dogs that's possible as well um great let's move on right now at this point um let's move on to the next topic which is Bitcoin and energy it's a really hot topic um that lots of people are talking about um let's start with uh Elon you've been vocal on this you've uh you've said that I mean you said many things about it um you've also said that uh Tesla will resume payments in Bitcoin payments if the renewable energy is approximately 50 and and sort of looks like it's on a positive future Trend um what do you think the state of things are with respect to that yeah so I I do think that um it there appears to be a positive trend um in the energy usage of Bitcoin uh actually part of this is due to the drop in bitcoin price um so um I mean what I observed or what I thought I was seeing um there may be some disagreements on this but uh from when uh Tesla announced that it had acquired Bitcoin and was doing Bitcoin transactions there there was a massive run-up in the Bitcoin price um and also a massive increase in the amount of energy used to mine Bitcoin um and I think the you know I I I understand renewable energy quite a bit I mean Ted Ted Tesla does solar and is uh interacts with a lot of wind generation uh through our mega pack because you know basically to store energy from wind and from solar so we're pretty plugged into the renewable energy industry um and there's there's just no way that you could basically double or triple the amount of energy in such a short period of time with Renewables you could shovel coal that fast and so I was like look this is this is too sketchy Tesla's mission is accelerating uh the adventure sustainable energy um we can't be the company that does that and also um not do appropriate diligence on the energy usage a Bitcoin so um so all I did was I said look we're going to suspend Bitcoin transactions for now we're not selling any Bitcoin nor am I selling anything personally or nor is SpaceX selling any Bitcoin um again I would emphasize SpaceX Tesla and and I own Bitcoin uh uh I I also own a little bit of ethereum and Doge but the companies just own Bitcoin and the Bitcoin that I own is worth much more than the ethereum or Doge so clearly if I'm uh you know if these actions negatively affect me financially if I was purely financially motivated then I I would I would not uh Express those reticence about Bitcoin energy usage um now the it looks like Bitcoin is shifting a lot more towards Renewables um and a bunch of the um heavy duty coal plants that were being used unequivocally being used this is not a question mark um have been shut down especially in the channel so uh I think it's probably uh I I wonder a little bit more diligence um to confirm uh that the who could confirm that the percentage of renewable energy usage is most likely uh a sort of matter about 50 percent and that there is that that there is a trend towards increasing that number um and if so then Tesla will resume Bitcoin uh accepting Bitcoin uh yeah so I think we want to just do a little bit more diligence on on I think but most likely the answer is that Tesla would would resume accepting Bitcoin most likely yeah may I ask you a question um Elon I'm not quite sure if you saw the paper uh that square and Arc did together on um making uh Bitcoin mining a part of a utility uh you know a broad-based utility ecosystem whereby you know the overage from sunshine or wind uh uh Powers the Bitcoin mining machine thereby uh enabling uh the proliferation of Renewables uh to a much faster extent or at a faster rate than otherwise would be the case what do you think of that well the problem is that in order to operate um so-called mining or hashing rigs in order to operate a bunch of hashing rigs uh uh you if effectively you have to run them 24 7. um which means you need base load uh you can do that with uh solar and wind Plus Battery but if you only did it based on solar wind overage uh your um your your hashing regularization would be much less so you'll be at a disadvantage Hydro or geothermal are great for as renewable means I'm also a pro-nuclear I think mononuclear power plants are safe contrary to what people may think um so um I really think it's possible to make a very very extremely safe nuclear I'm talking about fission you don't need Fusion um and then of course Fusion you just got that big Fusion reactor in the sky called the sun it comes up every you know every day um so uh but I think a combination of solar and wind plus uh stationary storage uh will get you that uh base load so you can run uh hashing 24 7. okay okay Jack I'm curious you you've stated that Bitcoin incentivizes renewable energy that's what we're talking about now do you have any additional thoughts on that yeah I mean every everything that uh that Elon said and Kathy Kathy mentioned but um it it's also incentivizing a lot of innovation and in Just Energy space and just like looking at unused energy um there's a there's a company called uh Great American mining that caps the methane flares on oil fields to power their their Rigs and you just imagine and you mentioned nuclear Elon as well and just imagine all the unused energy that is just being wasted every single day um and being able to get that energy and convert it converting it into a secure sound money system for the planet feels like a worthy trade-off and and that's the sort of incentive that I think is is most powerful is like how do we reuse what is being currently just dumped on the ground and wasted and and not considered and how do we do that at scale and I think that's a that's a bigger conversation that I think is is missing um but I agree with with everything that Elon has said and also um you know the paper we put forth I I'm curious if any of you have thoughts on how the industry what the industry can do to accelerate this the transition to renewable energy and like Elon specifically could vessel energy your startling play a role well um I think Tesla can play a role or I mean Tesla's um uh literal like reason for existence um I mean the reason I've I've put so much of my life energy into Tesla which is a lot um in fact it's I would say that I've had some some pretty tough life experiences and Tesla's responsible for probably two-thirds of all all personal and professional pain combined just to give you a sense of perspective there um so this is a hella hard situation um but we we do solar commercial solar soil retrofit as well as the solar roof and we make a consumer battery packs called powerwall for houses and small businesses and then the utility scale which are gigantic these we've done now a number of of gigawatt hour installations like that's a lot that's a lot um and and a lot of them actually have been for load leveling the grid but mostly they are um and and combined with like big so like the one the first really big one we did which is um 100 megawatt installation in Australia uh that's actually helped stabilize a huge portion of the South Australian grid um because it's able to react so fast in fact at first um except they've got the billing system in Australia that I think works at the sort of millisecond level and we're operating at the micro a second level so it was it was operating so fast that the measuring system couldn't see it but um so so Tesla's certainly doing doing a lot to um uh enable Renewables especially when solar um uh and in fact the limiting factor for us right now is cell production so we we need to both internally uh get out the Tesla internal internal battery cells produced as well as increased Supply from suppliers um and we generally when I talk to our suppliers and they say what how many cells would you like us so how many cells can you make um you know because sometimes they're like concerned like worse how's they're going to compete with them on sales I'm like no no if you want to make the cells Be Our Guest it's just that we need a crazy number of batteries um and they need to be done it also needs to be mined and produced and manufactured in an ethical and environmentally sound way so um you know Tesla we really do aspire to be the good guys like you know to be a company that that people can can believe in that doesn't mean we don't make mistakes but that's what we're trying so um yeah but I think generally um a hydro especially existing Hydro is is good for mining uh geothermal there's lots of places in the world that have geothermal energy um and um you know like nuclear is also good um so um yeah I think just just just I'm like I'm and like as I said earlier the expectation is not like that the the energy production must be pure as a driven snow but it it must uh it can't be using it also cannot be using the world's dirtiest coal which was for a moment there um so um you know that's that's just difficult to for Tesla to support in that situation so I think um I know but I do think long-term renewable energy will actually be the cheapest form of energy it just takes it just doesn't happen overnight um but as long as that there as long as there is a conscious and and determined and real effort by the mining Community to move towards Renewables then obviously Tesla can support that that's great um Kathy we've been talking a lot about energy but many institutions are facing questions around bitcoin's relationship with ESG um can you maybe speak a little bit more to what what is S and G in ESG and how Bitcoin might support those sure so e of course is environmental s is social and G is governance uh and there is a massive movement uh afoot in the institutional World especially uh to embrace uh ESG and and make sure that their asset managers are are doing the same uh so if if you we've just talked about environmental and I I really do believe uh that Bitcoin will be uh much more environmentally friendly certainly than traditional gold mining or the traditional Financial Services sector in many ways it already is uh and it's just going to uh get better that way in terms of social I know that um many institutions when they are thinking of social they think of diversity and Equity pay equity and all of that uh but uh if if from our point of view the disruptive innovation point of view social is uh much more than that it is saving lives of course autonomous technology that would be another topic for Elon but in this case uh allowing at access to payment technology as Jack is is saying everywhere around the world without friction if you and just back to the remittance um example I think uh if if I've got these stats correctly you know there are certain countries in the world that are dependent incredibly dependent on remittances for you know GDP uh to uh Tonga 37 El Salvador which just deemed uh Bitcoin legal currencies 24 Nepal 24 and I think the remittance industry globally and roughly 700 billion uh so uh saving people these agreed just fees you know think about it you're paying anywhere from eight percent to to as Jack said 30 percent of your hundred dollars that you're sending back to your family uh that is uh social responsibility I I would submit as is just the uh economic empowerment that Bitcoin will enabled we've talked about that already uh and I know that uh Alex gladstein is going to be talking later about um you know the 4.3 billion people in the world who are Hostage to authoritarian regimes or the 1.3 billion who are living in a double digit and and triple digit inflation if not more um saving them from the destruction of their purchasing power certainly is a noble social goal so we expand social to be much more than uh the traditional ESG community and then on governance you've got the transparency of the ecosystem uh you know uh it's completely transparent unlike uh the opaqueness of financial systems and the toll takers in uh the traditional Financial world and I think a huge part a part of governance in the Bitcoin ecosystem is the are the Bitcoin core developers now uh before I met them and I've had the pleasure and the honor of of meeting uh many of them uh you know that was that was a part of this ecosystem I didn't understand but actually getting to sit down and talk to them uh I if I if I uh have a learning curve need it certainly is on the technology side but in in terms of talking to them about economics economic theory failed monetary regimes uh historically they know economic history many of them better than anyone I've ever met so that gives me a great degree of confidence that you know they they do believe they they're on a noble Mission they could be paid a lot more than they're being paid right now if they worked at Google or or Facebook or or some of these other areas but they've chosen you know um this sense of purpose for a noble goal and uh they have incredibly strong technology backgrounds uh so as well as a good understanding of economic history especially monetary uh history and it gives me a great deal of comfort as I think about the governance of the ecosystem uh much much more so than I I think we would find in other Financial ecosystems uh and just to give you an example of that I think two years we were talking about a parent I mean not a parent there's a big debate about reorganizations I know in the ethereum that at work right now well we saw the the poor Bitcoin developers and others at work uh back in 2019 when binance tried to reorganize uh in order to uh reclaim seven thousand uh Bitcoin that were hacked and they just wouldn't allow it so we've already had some very good tests of the Bitcoin ecosystem including developers uh so that would be my answer thank you and it's a great transition to the next topic area which is Bitcoin ethos and what is bitcoin ethos I mean Bitcoin was born as open source and it's very transparent and there's also a staunch defense from the community around decentralization and a lot of the core principles of Bitcoin um so let's talk a little bit about that and what makes it special Jack um square has done a lot to support open source Bitcoin uh can you tell us a little bit about what square has done and what advice you'd have for other institutions looking to follow in its footsteps yeah I mean I was I was very skeptical of Corporations when I was a kid and I'm still skeptical of Corporations today and you know as we've used corporations to be you know they've been great great vessels for what we need to do and the idea is that we needed to bring to the world but um you know Bitcoin is not that and when we were considering Bitcoin and House Square intersected I was really concerned with um how we don't disrupt the community in a negative way how we promote what is amazing about it and how we help it grow in that way in the way there wants to so we created your team Steve which is square crypto which is hiring open source developers to work on whatever they want and whatever they think is most important to help Bitcoin um we created an organization called Coco which we gave up all of our crypto funds so that the community can use them in defense against trolls and um some some crazy characters we won't name and um we continue to find ways that like following that Bitcoin path we're going to create a hardware wallet we're probably going to do a lot more in Hardware um everything that we do in the space is going to be completely open source from the hardware design um to the software um taking in the community's push and we're building a developer platform as well in the same open development open first um and uh completely transparent so I think as institutions or companies like ours consider getting in the space um I think contribution back to the community is important Tesla did this with accepting payments for Tesla and finding security holes and improving the stock and as I said before we can't just see this as an asset that we own and and an investment vehicle and this was something that has the potential to change everything and make the lives of everyone in this planet better and some small maybe Marginal Way but um those margin those margins will be meaningful as they compound over time great um Elon you've tweeted before that any wallet that doesn't give the user their private Keys should be avoided at all costs um can you tell us more about why is that important and and you know how does it what this relationship with decentralization well it's difficult to say that if you uh own crypto in an exchange and the exchange does not give you private Keys it's not clear that you own anything I mean if if there's something if that exchange breaks or is hacked or uh you know um or or is subject to the seizure by the government or something like that uh you you don't your group your crypto is gone um so in order to actually have a properly a decentralized finance you uh which I'm a fan of um I think it makes sense uh then you you have to own your your private Keys um and you should be the only one who has your private keys so if you're the only one who has the private Keys then then you own it um if you if someone else has your private Keys effectively they own it too um and you you're the security of your crypto is then dependent upon them or any entity that can affect them so uh yeah um I I think what Jack's doing sounds like a good idea to have um you know a hardware wallet that uh that's that's the only thing that contains your private Keys um I think that that's like in in terms of sort of empowering the people which I very much believe in then I think you want to have people have the their own wallets and uh and be the only ones like that uh that have the private keys does that wallet so so called wallet the other side of the of the crypto laughs I think we'll see an emergence too of new solutions that um use multi-sig uh like like with a two or three keys where the the user has two keys and then you you get assisted custody by having an Institutional hold a third key can be a good good solution as well yeah um well you can just put your private key in in something that has dual access or or voting access as a application on an existing Network right um so the Bitcoin Community is is known for staunchly defending Bitcoins principles um some sometimes it can be rude and aggressive but I think what what it stems from is just a um a desire to not have um wealthy or powerful people or institutions uh negatively impacting Bitcoin or or sort of changing the rules in favor of of them I'm curious to hear from each of you what role you feel like you and your your own institutions your own companies um what role can you play in Bitcoin and how do you how do you positively impact it without having these negative drawbacks um Kathy maybe start with you sure uh yes well Arc um has uh stood for two things democratization and transparency uh democracies it were the closest you'll find to um Venture Capital Fund in the public Equity markets and I kind of feel that uh bit I mean that Bitcoin or we have uh bitcoin's DNA from that point of view uh so uh what one of the things in terms of democratization is education we uh have um one of our our missions values is to educate and I do believe that um that some of Yasin almandra's white papers yasin's are lead crypto analyst uh who's worked very closely with you Steve on on this conference um are are helping helping the cause we've done uh and not only for retail investors uh we've found that we had to to do a bit more when it came to institutional investors just because of the way that they invest and uh you know the way they they like to receive information so um uh just like in our investments we've been uh the retail Community has been more attracted to us first and now the institutional Community is is coming along so I I do think our transparency of research especially in the social World social media pushing our research out uh to for free to anyone uh is is part of our our way of of helping the community and I do think encouraging and this is something that Jack just said um uh I would encourage the support of the Bitcoin uh core developer Community as I said uh before it's it's amazing to me having gotten to know some of them you know how strong their sense of purpose is here and uh so we'd like to be a help of making a helpful in making that happen as well that's great um Jack how about you how do you view your own personal role and and the companies you run I I think my my own personal role through the companies I run is um to really push for more decentralization like everything that we intend to do with the wallet um being non-custodial building a developer platform focusing on non-custodial Solutions uh on the Square side is important um being completely open uh development in open source but I also think it's important on the Twitter side as well um my biggest Focus right now is on a decentralized social media protocol um we're calling it Blue Sky it's super super early but we've learned a lot from what makes Bitcoin Bitcoin and why that's important I've learned a lot in that sense as well and um I think you know just continuing to to push on that thread and show it with our actions every single day in support of of this community that's that's taught me so much and I think will benefit so many people and but let's run focus on what about letting uh uh Twitter um advertisers pay in crypto yeah I mean um I think enabling anyone I mean it as you know Elon like um if if we had Bitcoin or native currency for the internet before Twitter started like it just creates so many different business models that we want to have to be so dependent upon advertising generally and I I I do believe that you know that we have them any form of payment uh that um they want to use we should be able to take so absolutely but I'm more I'm more focused on like how do we create economic incentives in the network itself without having to rely on Advertising yeah it's just the the money has to come off of the the the in the crypto so-called coins the hash strings have to come off the and get translated into real products and services so the more uh sort of off-ramps there are to reality Services even at the institutional level although I mean there are certainly many small advertisers on on Twitter um it seems like like accepting Bitcoin maybe maybe some other cryptos uh for uh advertising payments on on Twitter would be supportive of of Bitcoin 100 and also looking at just general Commerce um [Laughter] sorry what Elon I was asking Jack if he's going to do it can we get a product announcement today um Elon how about you um you know you you obviously you're a big personality on Twitter um what are your thoughts on your your role and your company's role in um in Bitcoin and sort of preserving the ethos um yeah I mean I I generally think uh we should do things that uh benefit the people as a whole and uh increase the probability of the future is good so you know I think it to me it just it seems self-evident that we should kind of um take these set of actions most likely to make the future good um and I think probably um probably uh you know crypto or you know at least some of the cryptocurrencies uh will make the future better most likely it's not you know I always think of these things in terms of probabilities um but I think it's probably better for uh there to be a prosperous Bitcoin ethereum Dogecoin maybe some others in the future um and uh and I think it can have an empowering effect uh on for for individuals um and um increase the power of the individual relative to government it really you know if you think of government government is just a corporation in the limit so sometimes some people are like against corporations but for government it's like guys government is just a corporation in the limit it's the biggest corporation of all and it's got a monopoly on violence so if you don't like corporations you should really hate government there you go all right let's we got about um we'll we'll try to wrap up in 10 minutes so let's move on to future of Bitcoin um so Tesla and square have both put Bitcoin on the balance sheet uh Kathy I'm curious to hear from you what advice would you have for other institutions looking to put their coin on their balance sheet well I guess the first uh piece of advice is uh you know just make sure and I actually learned this after um uh after both square and Tesla put Bitcoin on their balance sheet you know the the Bitcoin is being treated as an intangible asset and so we need to get fasbi to reconsider this because with an intangible asset if the asset goes up in price it can't be marked up on their books but if it goes down it must be marked down so uh you know there's some asymmetry there which is uh you know we need to change that given give them what we believe um uh Bitcoin is um and I do believe if uh uh I'll harken back to something well it was either Elon or Jack said um you know think about it uh you know you you take away the boundaries the different currencies just think about how explosive growth could be and how wide reaching take taking the friction out of the system could be so I would encourage corporations to think about that that this ability to do business anywhere in the world ultimately obviously you know where where uh you know Paving the way here uh that's certainly a consideration it also will serve as a hedge against uh inflation especially as as I mentioned earlier there are a lot of emerging markets that are suffering from uh significant inflation in other words the the purchasing power of those populations is uh is going down so they are going to migrate to to bitcoin and other ways to preserve purchasing power uh and again uh being able to sell to them in that kind of currency would be very useful it also suggests once again this idea of deflation I think is going to be a real thing there's going to be good deflation caused by by Innovation so demand will boom because that there's going to be bad deflation because so many companies out there have not been enough investing enough in Innovation their products are going to go up obsolete as you know and they're going to be stuck trying to service the debt uh that they piled on because their their shareholders wanted profits and wanted them now you know so they leveraged up to buy back their shares and pay dividends and they so so I think that's going to be the source of bad deflation and counterparty risk and we learned from 0809 that counterparty risk can be devastating almost cataclysmic so a hedge against that as well I think uh would be another reason to do it Tesla's Bank balances in Europe have negative interest rate it drives me great yeah I mean technically if you if you've got like two percent inflation on one percent interest you're technically minus one percent uh return uh but nonetheless it is just it is quite annoying to just see your bank bank balance drop in real time in Europe it's Europe has negative interest rates this is insane it is crazy I believe Ray dalio said uh buy Bitcoin and not Bonds so there you go yeah um Jack you've talked about design being an underfunded area in in Bitcoin uh and and Elon earlier mentioned you know usability could improve a lot I don't think anyone's gonna argue with that um what do you see as the future of how can design impact Bitcoin yeah I mean I think that the Bitcoin network is is beautifully designed as a protocol in in the way it works I mean it went after a single problem and it it doesn't absolutely um astounding way but I I think the the end points of people getting into it is still a little bit confusing so I think the more energy we spend on on wallets um and making sure that the wallets are simple and accessible and they're non-custodial uh as well um but I think the best the best example of this is that I know of is probably this world called Moon um and it's just simple straightforward it's a great it it does an amazing thing with a key management um that you know my mom and friends knew that Bitcoin can understand uh does amazing in storage and it also has a very clever implementation of lightning so you can use it in a transactional way without having to think about it um just with QR codes in a way that makes sense so more work like that I think really brings us forward great um let's wrap things up with a final question for each of you um I guess what what is your hope for Bitcoin um what how it can impact the world um let's see Elon do you wanna do you want to start with that so what's your hope what's your hope for Bitcoin um well my my hopeful um I guess crypto in general uh is that it can improve the efficiency of the information system that we call money um so if the core efficiency of money is improved and the um and money has less error where like I said error is like in any kind of government interference or fraud or anything like that uh this will naturally lead to uh basically a better standard of living and more power to the to the individual which I very much agree with okay Kathy yeah and I would I would um segue from what um Elon just said is you know money has powerful Network effect uh uh qualities and uh so you know we talked about ESG earlier I think that uh uh of course that aspiration having you know the uh this money be the best from an ESG point of view that's that's really talking about solving some of the world's problems right now which we definitely want to do but I also am very excited about this idea of network effect and the convergence of blockchain technology and artificial intelligence um from a a technology point of view uh I think you know think about the internet in the earliest days we couldn't imagine what was going to happen but the but the impetus to growth uh was was pretty incredible so I am looking at uh you know the this rules-based monetary policy you know making uh for better lives around the world as we've just said but I'm also looking at the technology itself and the convergence between blockchain technology and artificial intelligence uh you know to to uh change the world in ways that we cannot imagine right now solving even more problems but creating more opportunities as well which is the history of technology and disruptive innovation Jack what's your hope for a Bitcoin oh my hope is that it creates world peace or helps create world peace I mean Elon Elon said it earlier like it we we have all these monopolies of violence and the individual doesn't have power and the amount of cost and distraction that comes from our monetary system today is real and it takes away attention from the bigger problems some of the some of the bigger problems that Elon is trying to solve like it just to a multi-planetary Humanity all these distractions that we have to deal with on a daily basis take away from those bigger goals that affect every single person on this planet increasingly so so I it it may sound a little bit ridiculous but like you you fix that foundational level and everything above it improves uh in such a dramatic way so I it's it's can be long term but but my hope is my hope is definitely peace that's fantastic well I'd like to thank all three of you for um giving us your time today it's been fantastic conversation thank you to the audience for tuning in um the b word is uh not just this uh discussion but we have a lineup of incredible speakers and content so I encourage everyone to check it out thank you very much all right thanks thank you all

Channel: ARK Invest

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Length: 66min 3sec (3963 seconds)

Published: Wed Jul 21 2021