Bitcoin ETFs are not in Korea yet
but everybody is waiting for it to happen
But some people worry about Bitcoin ETFs expanding to these many, many major countries
Do you think Bitcoin ETFs, spot ETFs will eventually manipulate the Bitcoin price?
I mean, any buyer manipulates price almost by definition, right?
So anytime anyone buys it, that means there's a little bit more demand
And anytime someone sells it, then there's a little bit more supply and so on
So by definition, yeah, it manipulates the price
Now, is it going to be done at the level that like
the Federal Reserve does with the stock market
or treasury interest rates or something like that?
I mean, there are arguments to be made on both sides
but I suspect not really because these are, I mean
it's possible that they start rehypothecating the Bitcoin
and selling Bitcoin that doesn't exist and stuff
But if you get, and they're talking about this right now
those are cash redemption ETFs only
So if you want to take out a hundred Bitcoin,
I think that's the trench or whatever that you have to get
to be able to withdraw from the ETF
You get cash instead of Bitcoin
But they're talking about actual Bitcoin settlement
And if that rule goes into effect, then all of that will be very obvious
You know, if they're trying to sell Bitcoin that doesn't exist
or, you know, sort of do the fractional reserve stuff
that got banks in trouble years ago,
what a lot of people suspect is going on with like the gold ETF and so on
So, you know, there's a bit of that
It's hard to tell and we don't really know,
but the volumes on these ETFs are absolutely huge and for a good reason, right?
Like price is going up
I think it's one of the best performing assets in the past year
It doubled last year, doubled this year
It's like it's looking pretty good for most people that have been in it
and, you know, people are coming around to it
So obviously there's a lot of interest institutionally,
a lot of pension funds and so on that have significant gaps
They're underfunded
and they're assuming sort of like 9% annual return for like the next 20 years
They need riskier assets except they're not allowed to invest in them
So, you know, having a Bitcoin ETF can certainly help with that
Now, how that affects Korea or other countries when they have it, I don't know
It probably depends on sort of like the public union infrastructure
and any sort of like pension plan that your country has
I'm not familiar with that at all about Korea
But if any of those are underfunded,
then I suspect that
this sort of thing would become a little more popular
because at a certain point
you're going to have to start taking risks, right?
Like if you're an underfunded pension and you're assuming 9% returns
and you've been getting six or seven,
you're going to have to do something different
And this is like the one hope for them
And yeah, who knows? We'll see
But that's sort of the role it has in the market
I don't know if it's going to be manipulating Bitcoin price
as much as just adding demand
And we know Bitcoin has a fixed supply
And the more demand there is, the higher the price goes
Right, right, absolutely
I think it's Hester Pierce, the SEC congresswoman
She's the one who's advocating for this Bitcoin redemption, right?
In-kind redemption
So everyone who purchases Bitcoin ETF,
when they sell ETF, they can get actual Bitcoin out of it?
No, no, no
The way ETFs work is that they're tied to a commodity, right?
So a gold ETF is supposed to track gold
And the way they make that track exactly is
the ETF has a certain amount of gold that it possesses
But if you have enough of the ETF shares,
and it's usually a large tranche
So it's something like, I don't know the exact number,
but 1,000 ounces of gold worth of the ETF
You can redeem only in 1,000 ounce increments, right?
So you have to give...
But that gives enough of an arbitrage opportunity to a big player
so that if the price goes out of whack,
then they'll either put in more gold into the ETF
or they'll withdraw the gold from the ETF
So that's the idea, is that there would be market makers
that create that strong link between the two
Because if they're able to withdraw Bitcoin,
not at the 0.001 Bitcoin level,
but probably in tranches of 10 Bitcoin or something like that,
a million dollars worth of Bitcoin
You have to have a million dollars worth of the ETF
to be able to withdraw 10 Bitcoin, something like that
And it's only in multiples of 10
Then that would give enough of an escape hatch
that it would be very strongly linked
and almost guarantee that it's not fractionally reserved
Yeah, I think it's almost similar strategy with the Japanese yen carry trade, right?
These Japanese rich people in Japan called Mrs. Watanabe,
they, throughout the period when their economy was so down for almost 30 years,
they have to invest in something stronger than yen
So they just used dynamics, right?
They borrowed with a cheap interest rate in Japan
and then they invest into something much stronger
And I think the most of the money came into the US,
the stock market
I think nobody can deny that
the reason why NASDAQ, or S&P 500 has gone up so dramatically
for the last 20 or 30 years
was because the money from Japan,
this Mrs. Watanabe,
they had to invest in something stronger than Japanese yen
So that's one of the reasons
that why the US stock market was so good
And I think the US corporations are doing the exact same thing with the dollar and Bitcoin
That's how I compare these two strategies
Yeah, I'd say that's pretty accurate
The yen carry trade wasn't nearly as profitable as the Bitcoin trade though,
because the Bitcoin trade is just,
he's just printing stocks
and using that to collect money and buying Bitcoin
And because the multiple is higher than one,
then it's kind of an infinite money glitch
And he's buying billions and billions every week
It's just absolutely insane
And he's not going to be the only one
There are other companies starting to do that
And at some point, that ball gets rolling
It's okay, we have this much Bitcoin on our balance sheet too
But right now, micro strategy is king on this score
But I mean, there's going to be competition
There already is in some ways
I think the world economy is in a really strange situation now,
because the US is decreasing the interest rate
At the same time, Japan is about to increase the interest rate
And China is devaluing their currency
And then they just rolled out this new huge plan
to bail out their economy
And there's two wars going on in Middle East and Europe
So I don't know
The uncertainty is even bigger than before
It's so big
So nobody can expect what to happen the next year or after two years
But do you still think the global liquidity will increase eventually?
Because the correlation between the two is so high, right?
The Bitcoin and the global M2 supply increase
I think Bitcoin price is going to go up dramatically
when the global M2 increases
Do you think even in Trump administration,
the US will still print money, issue the new bonds?
Yeah, I mean, I think they kind of have to
We'll see how much of a cut like Doge will do and so on
But the biggest liabilities on the US budget are,
the biggest spending things are Medicare, Social Security and defense
I mean, there'll be some cuts administratively and so on
But the unfunded liabilities on Social Security alone is like 300 trillion
And you're going to have to print, right?
Because you're not going to collect enough in taxes to pay those out,
especially as population decreases
So there's no slowing down that train unless you inflate your way out of it,
which is typically what governments do when they have obligations that they can't meet
But what you were saying about Japan is increasing the interest rate
and the US is lowering it somewhat
Well, that's taking away the Yankee trade, right?
And that was a big hole the last few years
And that was a big driver of the stock market increase in the US, like you said,
similar with China and so on
There's a lot of people there that wanted to park money
Somewhere other than China
So, they're buying up real estate all over the world
especially places like Vancouver or Toronto
-Dubai -and places like that
It's just kind of crazy
But that's been happening as a part of
sort of almost like derisking of the
putting all your eggs in like China's basket or whatever
Because I think a lot of people are kind of nervous
Okay, what happens if something really goes down?
How is everything going to work out?
And, you know, people feel that
the world, the wars that are happening right now
certainly don't help with that
And just, the amount of sort of economic turmoil that this has caused
like the Ukraine war, for example, as Europe is just absolutely insane
Like Germany, economic stagnation, significant economic stagnation there
but even places like Canada, just bad management, right?
Like, they had almost near parity with the US in terms of salaries and so on
like 20 years ago
but it's like fallen behind by a significant amount since then
So, you know, you get a bigger brain drain and everything else
Yeah, there's a lot in the world that's kind of weird right now
And I think this is why a lot of people are turning to Bitcoin,
because at least the people that understand what it's about
at least the people in the meetups that I've met in a lot of these places, they get it
They're like, okay, yeah, this is like a pristine asset that is not controlled by a government
It's politically neutral
And it's not at the whim of some central bank or somewhere
That becomes extremely attractive
I think it will continue to be so,
you know, as a lot of these fiat institutions sort of like are aging out
they're sort of collapsing in on themselves
Like there's like a bureaucratic black hole of money sucking
The event horizon is expanding
So it's just, it's getting worse and worse
So I suspect that that's going to be a big part of the next
however many years until we get on a Bitcoin standard
Yeah, 100%
I agree with you like 100%
And I think more people escape to Bitcoin to prepare for this uncertainty
And on the other side, there's the government, right?
The government wants to control people
They want to especially control the finance out of their people
Then their solution would be CBDCs, I think
I don't think US government is trying to issue CBDCs anymore,
because of the Trump administration said they would ban CBDCs
But Korean government is still exploring into it
And China has already launched it
And then they're beta testing in different cities
Europe is experiencing, exploring into CBDCs as well
Do you think CBDCs will be a threat to Bitcoin?
Do you think it's going to come out
and eventually the surveillance level from the government will be harsh, more harsh than before?
And everybody will be suffering from the financial repression
from the government because of the CBDCs?
I actually don't think CBDCs are that close
And the reason I say that is because I'm a programmer
and I know how badly government does anything IT related
And if you think about how well a CBDC has to work
it has to be up 24-7, can't ever have any downtime
And it has to work the first time
It has to be really convenient
Everywhere that's tried a CBDC usually falls to technical problems,
user interface problems, user experience problems, and so on
Nigeria released one, like just nobody used it
because it was like way too difficult to use
And they're like, we're used to cash, cash is easier
And I've seen this, like even in other industries,
this tends to be the case where you try to digitize everything,
like put everything online or whatever
It takes way longer than you think
And it's only with many iterations and a lot of failures
that you finally get to something even usable
Like I used to work in health care, for example,
and a big thing for a long time is electronic medical records instead of paper or whatever
And you'd observe these doctors use a piece of paper
and they can go through it in like two minutes and mark up everything that they need to
And they go on to a website that they're supposed to fill in all their information
It takes them 20 minutes
There's no way that they're going to go with something that takes 20 minutes versus two
So their time's just too valuable
I suspect that's what's going to happen with a lot of CBDCs is,
governments want it, don't get me wrong
And I think it's a central banker's wet dream,
but they're not going to be able to do it because they're not that good at IT
Like you could hire really good people, I guess, or whatever
But generally, the people that a government hires to do this sort of thing,
they're not that good at it, right?
Like they get it because of political favors
or because they know the processes for government procurement
and have the right connections to get that contract
They're not actually good at making software
So, you know, I just don't think it's like, I know China's trying
I mean, they might be able to pull it off because they're very authoritarian
But, you know, the U.S. or whatever, if you saw what happened with healthcare.gov,
think, the website went down like the first day and couldn't handle more than 50 users or whatever
Like that's the level of disaster I think we're looking at with any sort of CBDC rollout
It's not going to happen
It's way too politically risky
It's going to be way too costly
So for most of the people that are going to push for it,
it's just going to be too big of an uphill battle to make happen
What do you think of the stable coins then?
Everybody wants to issue their own stable coins
We pull just issue their own stable coins
And the reason why XRP price shot up recently was because of that issue, right?
Authorized stable coins
PayPal issued their stable coins
Tether is so dominant
So some of my subscribers asked me,
Do you prefer making this dollar checking account in the bank
or purchasing Tether and storing the private wallet?
Which one do you think is a better option?
And I'm surprised that people ask these questions
I still believe owning the actual dollar in the bank account is a safer option of course
Tether is just issued by one company
But people just trust USDT as the super, super safe investment option these days
Do you have an opinion on Tether?
Yeah, I mean, I think I might disagree with you there
because in a sense, like if you hold dollars at your bank,
Yeah
they are fractional reserve banking
They lend out way more money than they have in reserve
The savings of everybody that hold money at the bank is like
10 percent of the loans that they give out
Like the reserve ratio in that case would be 10,
where you have maybe like a million dollars in deposits
and you lend out 10 million, something like that
Like that, that would be a reserve ratio of 10
You look at the reserve ratio of Tether and the assets that they have
And it's like I think for every dollar they have like a buck ten in like reserve stuff
But it's like overfilled
So in that sense, for me, the lesson of Tether is that's what a bank should be
It's literally like just like they're performing all the functions of a bank
They have 50 employees
They have like one hundred twenty five billion dollars assets on their management
And they're probably worth more than any U.S bank
Which like Chase Manhattan, I think alone employs like two hundred thousand people
Right? Tether has 50
Like that tells you how inefficient the current banking system is
that they have to have all of that
But that's because they're a protected industry essentially by the government and so on
You know, to me, stable coins are just like wildcat banks or something like that
or less regulated banks of some kind,
because they're they're doing the functions of a bank where people just want to save dollars
All over the world
Whether you're in Nigeria or Japan or wherever
And and that's that's all they want to do
And they just don't want it to be debased using their own crappy currency, which debases way faster
So let's just give us dollar
So we at least keep up better than our neighbor who keeps it in the local currency
That seems to be the main use case
Now, the bad part about Tether is that it's not that liquid
You have to you have to convert it back to U.S dollars or whatever your local currency is
And there's sort of like friction around it
So if they could solve that problem, which,
again, that's sort of like the medium of exchange dilemma for almost everything is,
you know, getting a merchant to take it is actually quite difficult
unless the merchant really wants
So, yeah, I mean, that that that's what Tether is to me
And that's what like stable coins are
And this is why like a lot of other stable coins are trying to come onto the market
But I really don't think it's going to be easy to take that mantle away from Tether
because there's a network effect
Like, if one person is willing to take Tether,
they're not suddenly going to say,
Well, all right, do you take Ripple dollars?
No, no, no
Why would I like that?
That's too much of a headache
Why would I do that?
Also, how long has Ripple dollars have been around?
Like a month, right?
Like Tether has been around for like 10 years now
It's a lot more of a brand name
and it's something that people trust because it's been there a long time
And that leads only going to get bigger as they've lasted longer and longer
So, yeah, like all these other stable coins I have I have doubts about,
like there's some weird rumors going around USDC, for example
But, you know, like Tether seems to have won that stable coin market
And I'm not sure there's really like demand for any other kind of stable coin
They've they've tried launching like stable euro or stable yen or whatever
Like nobody wants any of that
It's they just want the dollars
Right
You know, there's a really big clothing wholesale market in Korea in Dongdaemun
It's called Pyeonghwa Market
It's a really famous wholesale market
So people, the merchants come out and sell the fabrics
or even garments like jeans and T-shirts and jackets and as well
So a lot of Chinese online shopping sellers come to Korea and purchase a lot of the fabrics there
And then they import it to Chinese mainland and then they sell it to Chinese market
And from the early this year,
I heard these merchants in the Pyeonghwa Market, they accept USDT Tether
Oh, wow
Yeah, everybody, the Chinese sellers, Chinese buyers, actually
Chinese buyers come to this market and then they pay with the Tether
That's what I hear
Yeah, I guess that would make sense
because it's easier for them to interact with that rather than
because if they were to try to pay in yuan
then they would have to convert it to dollars and then convert
the dollars to yuan
That's like two round trips that they avoid just by using Tether
And if they get other, their suppliers pay them in Tether
then they can they can like actually go through
And that's kind of what international trade is mostly conducted in anyway, is the dollar
So if it's close enough to the dollar, I guess that would make sense
Yeah
So I think this will be the last question
After the martial law taking place a few weeks ago,
there are growing people who want to try self-custody for the first time
You know, the majority of the crypto investors in Korea,
they purchase Bitcoin and leave it in their crypto exchange account
But this demand for self-custody is just growing and growing
So I try to educate as easily as possible to these people,
but it's still, you know, difficult, very difficult
And people have a hard time understanding what these private wallets do
and the private key do, what the public key is, etc.
What do you think will be a game changer for the mass adoption of self-custody?
What do you think will be necessary for people to
learn the self-custody and actually exercise self-custody?
Yeah, I suspect a lot of those people are either non-technical or old or something like that
There's some barrier to that, right?
And there's probably not that many resources on how to do self-custody and stuff
And my thesis has been for a while now that, right now you have like sort of two extremes
You can leave your coins on an exchange
and that's sort of trusting the exchange
And then there's self-custody where you don't have to trust anybody
There's sort of nothing in between where
you can trust somebody that you know or something like that
So I think we'll naturally go in that direction
because I don't think everyone should self-custody
If you have a 10-year-old kid, probably shouldn't be self-custody, right?
I don't care how careful they are
They're probably going to lose their seat or whatever
Also similar with like 85-year-old grandpa, right?
Like probably not like, you know, starting to go senile or whatever
Probably not a great idea to have them, you know, self-custody either
And there's a lot of people that I think just don't want to bother
So I think what's going to happen or the way it's going to evolve,
and like to some degree this already happens is
you're going to keep it with somebody that you trust that's sufficiently technical
So I know I am that for a lot of my relatives, right?
Like my parents keep their Bitcoin with me and like, you know, I tell them,
Okay, you have this much
Let me know whenever you need it or whatever
That I think is going to be the way that you're not going to get exactly self-custody,
but at least off the exchanges, right?
You don't have to have the central honeypot
Instead, it's sort of like smaller, like little federations or something
And who knows, maybe that's like a good place for
something like e-cash protocols of some kind
where, you know, you can trade those with privacy and so on
But that seems to be, that I think will help at least have the coins not be on exchanges
and be with somebody that you trust, right?
And, you know, like for the truly paranoid, you can still go in self-custody,
given you have sufficient technical aptitude and so on
But that's where I think, you know, like especially in a place like Korea,
where you have a very trust-based culture, right?
Like you have close relatives and, like most families have like at least one guy
that's like at least somewhat technical to figure this stuff out
You know, I suspect that that'll be something that will become popular
Maybe there's a business in there for somebody
I thought it would be really amazing to have some kind of a cold wallet
that has a Neuralink feature
So it can be connected with my brain with Neuralink,
and then they can read the private key or seed phrase is imprinted in my brain
and then activated whenever I get close to the wallet, right?
It would be awesome, right?
Like the way Neuralink works from what I understand is that
you need to train it, right?
So then it sees the pattern many times and then it understands,
OK, this is what you want or something like that
So you would have to train it somewhat in like
recognizing what you want before it would do it
But I mean, like just I'm very wary ofhaving any sort of like machine part in my brain
that could get hacked in some way against me
So I get it for people that are paralyzed and don't have loss of certain functions
And it's the only way to interact with the world
But I don't voluntarily putting it in
I know how many security holes there are in software
It's just not a good idea
Take it from a programmer, don't do it
Right, right