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Does Crypto Have a Future?


Bill Barhydt

In this episode we ask one of the OG's of crypto, Bill Barhydt, to join us on The Futurists to talk the 2022 crypto collapse, the merits of crypto and blockchain for the future-world, and how crypto, stablecoins, tokens, NFTs and CBDCs will ba battle it out for the emerging monetary rails of the 21st century. We also debate who Satoshi Nakomoto was, why & 'he'; created bitcoin, and what the collapse of FTX and other exchanges mean for the principles of decentralization that the crypto community holds so dear. https://www.linkedin.com/in/billbar

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[Music] this week on the futurists bill bahad
you have two people in the United States that make the vast majority of the decisions on what your money is worth
tomorrow that's insane okay and by the way they're getting it wrong Time After Time
[Music] welcome back to the futurists this week
we are going to get into the whole crypto stuff I'm joined of course by my uh a wonderful intelligent co-host Rob
turse okay Rob hi how you doing Brett uh you know it's I'm actually in Dubai
as we're recording this today and uh which is it's uh it's pretty you know it's a big crypto Hub of course
um you know the the um it particularly Abu Dhabi has really sort of doubled down on the sort of
crypto community and there is a big crypto Community here um in Dubai a lot
I've actually got friends that have you know crypto friends that have moved here relocated to Dubai because they see it
as very pro-friendly um a space so um but uh you know I've
been here uh working with some of the big Banks and talking to Sama in in in the kingdom and stuff and um there's a
lot of really interesting energy and stuff going on here so um cool they're trying to Pivot away
from some oil right oh yeah yeah I think uh generally speaking I mean um you know MBS uh you know on the Saudi
side has this big 20 30 plan that is pushing you've got neon um you know the city of the future the line of course
um but you know as well as that you've got Qatar who's invested a ton in infrastructure for the World Cup of
course Dubai in Abu Dhabi um you know have have done some incredible things over the last few
years but there's all sort of a healthy competition between all of these players
as well as uh in this but I think um the changes that have happened in Saudi you
know that my first time to visit Saudi was was many years ago but the changes are there are
um enormous and I know you know Saudi gets a bad rap but um you know they have made some extraordinary progress over
the last few years but let's welcome our guests hey so we but before that actually actually you know before we get
to to bill um uh just uh let's let's tackle the uh the news what have you got uh on the
news from the future this week all right the news from the future
this week we selected a few headlines from the cryptocurrency world why not it's in the news and there's a lot
happening and seen relevant for today's show Sam bankman freed the founder of Ft FTX
uh that recently collapsed he's in the news again so he postponed his testimony he was invited by Maxine
Waters who's the chairwoman of the house Financial Services committee uh to testify in a house hearing on December
13th um but he can't find time to do that however he did find time to participate
at New York Times deal book Summit recently uh where he made the cryptic
statement I didn't ever try to commit fraud so we'll watch that space that story is
going to keep going on and they'll be full of interesting turns and twists no doubt about it uh one that happened today Senator Elizabeth Warren has sent
a letter uh demanding information from silvergate about FTX silvergate is one
of the few U.S banks that allows customers to transfer US Dollars into crypto exchanges and both FTX and
Alameda research and several of the related companies had Accounts at silvergate
um about 20 accounts and so Senator Warren's demanding answers about that from from the bank
um because she's trying to track down the 10 billion dollars that went missing as we as you may recall
um 10 billion dollars of customer funds were transferred from the FTX exchange to the related firm Alameda research uh
which looks like it was making Investments and playing both sides of the table and so forth so there's a real problem there and it looks like
silvergate may have facilitated that that's what the letter from Senator Warren alleges uh the pure silvergate
facilitated the transfer of FTX customer funds to Alameda
um in other news arrest warrants were sent out for terraform Labs co-founder Daniel Shin three of his investors and
four of his Engineers uh this is the group that created the cryptocurrencies Terra USD and Luna that collapsed
spectacularly a few months back and the three arrows Founders uh this is another firm that collapsed based in Singapore
these folks have resurfaced this week in Bali interestingly bali's in Indonesia
which is a jurisdiction that does not have an extradition treaty with the United States so they just happened to
be in Bali uh when everyone's trying to find these two guys three arrows has not cooperated with investigators who are
trying to find information related to the bankruptcy of that firm they're based in Singapore and three billion
dollars has gone has gone missing so three billion dollars is owed to creditors uh meanwhile those guys are
relaxing on the beach in spite of all this crazy Shenanigans uh that are happening and the
spectacular levels of fraud that have been revealed in the last couple of months blackrock's Charlie Fink says
that the technology behind cryptocurrency remains relevant for the future and he says that he says he's supportive
despite what he calls uh misbehavior by uh Sam Friedman uh Sam bankman freed
and it Reuters announced today that Goldman Sachs intends to invest tens of millions of dollars into cryptocurrency
startups uh so clearly there remains interest in the space uh despite all the hiccups craziness and Chaos that's
occurred so those are the headlines from the future yeah and now let's turn it over to our guests Bill bar height Bill
such a great pleasure to reconnect with you thanks for joining us on the futurists oh thanks Robert good to see
you Brett yeah great to be here welcome bill yeah yeah so bill for folks who aren't familiar with you and Abra why
don't you start by telling us a little bit about what you're doing what is Opera how'd you get started what brought you to that space sure yeah I'm a long
time uh technology entrepreneur uh kind of a mixed background and working in
both Capital markets as well as early internet technology uh all the way back
to early 90s and and so uh via many many uh permutations of working on payments
companies and developing more markets projects in in remittances money transfer micro Finance I I became super
excited about this this movement towards integrating software and decentralization finally into money in
the banking system which is what got me really excited about about Bitcoin when it first was launched uh you know now
over 10 years ago I can't believe it's been over 10 years but but yeah I I was working in Frontier markets on building
payments and and remittances and and other basically Financial products in
places like Mexico Philippines Haiti Central America Southeast you know other parts of Southeast Asia India uh even
China and and and basically you know was running into brick wall off the brick wall you know dealing with the incumbent
Banks who were disincentivized to work with the bottom of the pyramid or even the lower middle part of the pyramid for
that matter uh to Regulators who you know you've seen the memes lately probably oh well they'll check the 600
transaction from venmo but you know the the Senators can basically you know invest in whatever they want with no
disclosures et cetera et cetera so so it's it's like that but like times a million right so everything you do has a
roadblock regardless of who you're trying to help uh even if you're a non-profit we I wasn't running a non-profit we actually had a nonprofit
arm as well but but it doesn't really matter it's just roadblock roadblock after roadblock so when the Bitcoin white paper came out
you know I I had been part of the cipherpunk community in in the 90s that had looked at Myriad
um uh you know e-money schemes and the Holy Grail question for e-money since the beginning was can you eliminate
centralized trust and end or solve the double spend problem which is really part parts of the same problem the
double spend problem was basically can you um can two people have a copy of the
same money or key in this case and and and not have both people be able to spend the same money which is the double
spend problem right because it's so easy to copy a digital file on the internet right basically the internet's a copying
machine exactly so that's the problem that's the core problem people forget that they were trying to solve that that you know things like digital gold back
in the 1990s it's a long time ago well you had you know there were there were some of these formative cryptocurrencies
even if you discount things like Al on Mars and so forth you had QQ coins in China you had second life with Lyndon
dollars they were Proto Proto crypto you know in those days yeah exactly but they
all basically had some component of centralized trust in the system with an off switch and that's right test for
decentralized systems right I look at it like uh bittorrents right you know they asked the uh riaa where the off switch
is for BitTorrent and they will tell you there is none and and suing people doesn't actually manifest an off switch
and and so but like I said that was the Holy Grail If you eliminate the double spend problem you've also eliminated the
off switch in theory and and and we thought that problem couldn't be solved and I think in hindsight I know why we
thought the problem couldn't be solved once you see a viable solution and that is you know Bitcoin is is clearly not
created by an academic because you the idea of using every computer in the world to create a decentralized solution is is
orthogonal to the way any academic would think right it's not there's nothing elegant about it it's the most inefficient transaction processing
system ever devised by man but it turns out if you want to solve the double spend problem you have to rethink your
requirements right which is why we have this argument now between proof of work and proof of stake and all these other Technologies because what what really
matters is decentralization and and security when it comes to eliminating uh
centralized trust and which which ultimately usually means governments essential Banks and things like that so
when I saw this after having hit roadblock after roadblock for all these years for the different projects I was
working on even going back to my Netscape days when you worked on SSL if you understand how https works even
though it's an encrypted connection the trust actually rolls uphill meaning there's settings in the browser to
determine whether or not that that secure connection you have is truly secure and there's what we call Root
authorities you know which sounds very ominous at the top of the chain that
determine who you trust so even with encryption on the internet for how you process credit cards you're actually
trusting someone in that kind of encrypted connection some higher authority a higher authority that's
exactly what it's so it's a hierarchical system it's baked into the Internet it's also the way DNS the same thing again
even in yeah but DNS is highly essentialized highly centralized it
Remains the ultimate attack Vector for for the internet so this idea that you
could have money that the more it got used the more decentralized it becomes
the more previous Trend more secure earlier transactions actually become was
was mind-blowing to me like how you know like I said it was so inefficient in how
in its design relative to you know centralized databases that it was obvious that no academic would ever come
up with this but it turns out that it's the only solution that we've ever been able to come up with and and may actually be the only solution to the
problem anyway I was all in and I said this has got to be the future of money and then the question becomes around it
what's the future of banking right because because on its surface what Bitcoin does is eliminates the need for
trusting a central bank to make the right decisions trusting governments and central banks to create money out of
thin air eliminates the need for us to have to use gold rocks as as the basis for a trusted monetary system
Etc et cetera et cetera but around that that money we've built a banking system right most people have no idea how the
banking system works right they're questioning crypto but then you know ask the average congressperson what a repo
is in in a bank and how money markets actually work and you probably get a blank stare right and and so then the
question becomes okay can we do better right and you've probably heard your audience probably heard these acronyms defy uh obviously now everybody knows
what a stable coin is and and these things are basically being built out via this equivalent decentralized stack to
replace now the banking system the same way Bitcoin is is proposing to uh
completely change money on its hit some things let's recap a few things
because you covered it off a lot that's quite interesting um the first thing is the banking system is highly centralized and we see
evidence of that all the time for instance uh the sanctions against Russia that the United States imposed you know
even the United States government can basically decide to cut a country off from the banking system over the country
in 12 hours that's right and so there's an example of decentralization now you know a lot of folks might support that
people who are supporters of Ukraine and so forth but it does illustrate the kind of risk in the global system yeah that's
not the country can make that call that's right um the second idea there is that we often hear a Bitcoin um and
blockchain in general the blockchain that under underlies the Bitcoin but not not just Bitcoin all the blockchains
that use um proof of work we often hear the complaint that they're inefficient that they're grossly inefficient right
what people don't realize is that's not a mistake that's not a blunder that's not a side effect that's by Design that's baked in that's the security
model that's intentional or that inefficiency makes it incredibly impractical for someone to try to hack
the whole network and that's why they've been very secure but there's a Bitcoin blockchain hasn't been hacked you know
Robert there's a corollary to that watch Ray dalio when he wrote his book about the changing World Order and principles around that uh published the video on
YouTube where he talks about how the military-industrial complex basically supports the reserve currency now I
would posit that the military industrial complex is infinitely more inefficient uh than Bitcoin in terms of you know
pollution money spent uh I read a report that says for this is like the umpteenth audit of the Pentagon where 70 of their
assets remain unaccounted for and we're talking about trillions of dollars right and and most of it is supposed to be
accounted for in in one building and they still can't find it right and and so I would posit that this is a move
towards uh you know less inefficiency than the military industrial complex but
it exists for a different reason right and I think you know I think in addition to transparency let's let's add that
because every every transaction that's on the blockchain can be audited which you can't do with the Pentagon right the
Pentagon to be audited and you know the these flaws exist in the financial system
today I mean um if we look at money laundering as an example um you know money laundering exposure is
is massive and um even though we spend billions of dollars a year trying to
stop money laundering the entire Global Financial system is only successful at eliminating about one percent of money
laundering globally so there are some serious functional problems even with
the fact that it's a very mature system and yet people have implicit trust in
that system because it's centralized because banks have Charters and the Central Bank looks after it but there are serious flaws in in the existing
system and let's remember what the money laundering is about money laundering sounds nice you're cleaning money that's good it's dirty clean it up but
is it funds terrorist groups it funds arms deals it funds drugs it funds the funds also no activity Behavior human
enslavement yes and cash cash is the primary vehicle for that now you know a
lot of the criticism for for Bitcoin and crypto is that it enables that but the
reality is that the global banking system and you know real estate in cities like London and Dubai New York go
an essential part of that but Bill I do want to ask you um this question I know I know you're a
big fan and I do want to get into the remittance function um you know and where Bitcoin sits in
that because the remittance businesses is a massive um issue for financial inclusion and
other things as well um but you know it has become clear over
time if you read the Bitcoin white paper and the intent of Bitcoin to be used as
a means of value exchange uh you know we we don't hear a lot about Bitcoin as a
means for Value exchange and simple payments we hear a lot more about the value the future value of Bitcoin and
it's become speculative so um you know a part of the problem is I don't know whether this is a design
floor or just you know um the nature of of humans but um you know it's potential to be really
a revolutionary payments uh um platform and and digital currency has
sort of been Twisted a bit because now people are so speculative in in their relationship to to bitcoin but do do you
think that um there is a way that we can solve that problem or over time is it just going to
become more trusted you know more less volatile so that the speculative element
disappears so so I actually believe that we're already on the right path as it
relates to bitcoin and maybe some competing Technologies within the crypto sphere in 1976 it is obviously predates
the internet predates Bitcoin uh by extension uh Friedrich Hayek wrote a book called The denationalization of
money and the idea was what would happen if you took governments out of the Fiat
money printing game this was after we were off the gold standard and Fiat was basically valued based upon whatever
perception or value the public decided to give it give to it and if you look at
that book it has basically a game plan for what would happen and Bitcoin is
basically playing out that game plan to the letter he predicted that money would
be hoarded if it was Private right with a fixed float because it would be so valuable right because there would be no
way for any Central party to just arbitrarily print more you know we have the meme in the in Bitcoin world and the
printer goes Burr there's no more Burr right uh and it would be hoarded until
such time that it was so valuable that it made no more sense to hoard it anymore
right and I believe that's what's playing out here there's only 21 million Bitcoin but it's it's subdivisible out
to eight decimal places so you really have to think about the individual Atomic units of Bitcoin at scale which
are these satoshi's and at scale you know you have basically billions upon billions of these satoshi's but that's a
fixed amount of Bitcoin which is going to become so valuable at some points eventually the
early holders right are going to loosen up the purse strings and say it makes no sense for me to to hoard this until and
take it to the Grave it doesn't make no sense okay now hang on hang on hang on Bill I'm sorry to bust in here but we've
been hearing this now for 12 years about Bitcoin right there's a limited number it's a fixed amount it should be the
hardest currency in the world and it's a hedge against inflation it might not be a medium of exchange that people are
using every day but it definitely has long-term value as a store of value right we heard that message many many
times well this year we've had record inflation and by all accounts Bitcoin should be soaring in value
so a few things let's stop so first of all it's I think it's something like four to five x actually more than 5x
where it was at the trough uh before you know the inflation started but even that is is irrelevance to me okay bitcoin's
price is moving as an exponentially growing asset no difference than Amazon
did right if you basically plot on a log chart its price from the whenever it
went public in the late 90s to today okay prices had multiple 70 plus percent drops
that is not the point the point is why is it an exponentially growing asset now and what is it becoming
okay I don't claim that Bitcoin is an inflation hedge today I claim that as it
becomes hoarded it's a valuable increase to the points where nobody thinks in dollar terms anymore because the dollar
becomes irrelevant as the sound money it has to happen it's happened to every other fiat currency in history and
you're printing your way to uh you know irrelevancy and and so this is an
exponentially growing asset whose adoption is growing faster than the internet did itself in the 90s on the
promise that it is going to become hard money at scale and that is clearly right
what happens to something that has a fixed float it's why it happens with Collectibles and arts and baseball cards
or whatever you want we're just doing this at global scale with a system that can actually be
transferred without the need for middlemen that's never happened before but the idea you're saying that if we
zoom out and look at the long growth curve from from 2009 to today okay
there's occasional drops and actually historically this isn't even the biggest crash that Bitcoins had it's the oh it's
not just crash percentage-wise it's not and the long curve continues to grow and you're saying that's an exponential
growth chart so so hang tight holders no hurdles it's hodlers those are two
different issues right right I'm not I'm not saying that the price should be this or the price should be that I'm saying
that the exponential adoption is happening independent of the price the
money supply the changes in money supply are what map the exponential adoption to
the actual growth in price and that's been true since the early 90s
so so Rob uh Bill let's let's we've got to expand on this a little bit I you
know I do want to you know bring back you know this is an interesting debate but
um where does this get us to this is really you know what we we're going to talk about but let's um how about we uh
do the quick fire around have a quick break and we can come back on that basis and talk about the future of digital
money overall because I think that's what we've got to get to that's the problem that Bitcoin is trying to fix so
how do we get there you know in the end but um let's uh if you if you're ready
for it Bill we're going to give you the quick fire around here we go
uh what is the first instance of Science Fiction um that you can ever recall being
exposed to Star Trek yeah I think uh growing up in New York City there was reruns of Star
Trek on late at night and when I should have been sleeping I was probably watching like you know on a black and white TV all episodes of of Star Trek
and I was all in I was hooked I was like this is unbelievable um this is the future that I want and you know I want to be on that ship go
and exploring the world and I want I want all those gadgets in my bedroom basically in the meantime yeah yeah well
you know it's funny isn't it the communicator the flip phone you know a lot of those things Alexa and Siri and
you know the computer yeah there's a lot of analogies there um is there a futurist or entrepreneur
that you CA you uh can as as being very influential in your life many
um a lot of them your audience wouldn't even know because you know now I'm an older guy but but you know I mean I worked with Mark Andreessen and Jim
Clark as a kid and and that was awesome I mean they you know Mark Andreessen was younger than me
um and and you know there were so many talented entrepreneurs that I work with in the early days I mean if you look at crypto there's a few of us from an
escape days that are CEOs or crypto companies now uh Brendan I hit the brave runs the brave browser Mike belshi runs
bitco um you know I'm running Abra of course and uh and and so just since then
there's been so many people that have that have you know touched me and and and whatever whenever you know you're
basically dealing with with nonsense and crap that that invariably happens in in Market at Cycles there's always an
entrepreneur that that manages to re-excite me somehow and the last few years you know just looking at this kind
of decentralization movement and some of the the developers you know just follow the developers in my world right who's
coming out of MIT and working on the next the next big project in this kind of global movement towards decentralization whether it's you know
ethereum or Solana and some of the other competing now Aptos and some of the competing projects in the crypto space
that are getting phenomenal entrepreneurial talents and but yeah I mean in in my life there's been probably
dozens of people that I can you know sit down and think of that have had a dramatic impact and significant
influence on my life excellent now um of course the show is about futurists
so is there anyone that you can um who do you think from a futurist perspective or a forecasting perspective
has been particularly good at making predictions about the uh you know I I am a big believer in
kind of this whole movement towards uh Singularity and and the growth of exponential tech and and Moore's Law and
and kind of being pretty damn accurate and predicting that and I've I've come to rely on that and put disbelief aside
and so you know folks like Peter diamantis and and Ray courtswell have been very instrumental in kind of
enabling me to accept what I intuitively believe and it's at some point it's just that like to the early discussion Star
Trek it sounds like science fiction like so in the early 90s it was very obvious to me that Moore's law was going to
enable things like smartphones and and you know little video handheld uh phones
that you would carry around with you and and and everybody else it was science fiction but you have to suspend the the
disbelief part of Science Fiction and just do the math and and those are trending like people like Peter and Ray
have been very instrumental in my life in terms of enabling me to suspend that disbelief to to just do the math
all right and a special one for this week last question who is Satoshi Nakamoto
so I I did say that I don't think that Satoshi was an academic or at least the
the primary developer I don't think it was one person I think it was a group for different reasons have you heard the
theory of the four satoshi's the secret it sounds like the Samurai and no I I haven't heard the theory of
the forest ocean it's a Brock Pierce told me this so you know Brock of course so um you know and and he he well we you
know we should get into this after the break or offline but idiots yeah yeah he's made that argument that you know
Hal Finney had the private key and that's why none of satoshi's Bitcoins I think how funny was genuinely brought in
right before right after the white paper so I don't think he was the original ideator of the idea of of blockchain and
Mining and you know the individual components but I do think and that he was heavily involved in rewriting a lot
of the original code into CBS which I think pissed off as a non-academic I think Satoshi was probably older and and
probably came up in in the assembly and and if you look at the way uh the op codes for for Bitcoin work it some of it
reminds me of the old kind of Pascal P codes and stuff like that this was clearly somebody who came up through the assembly world and not somebody who came
up through Modern functional programming um and and so that's interesting interesting Insight so so
um but I do think that there's some Communications that are inconsistent in terms of being one person so yeah no I
agree there's different flavors have come in there yeah and listen that's that's that's great thank you for your
your answer let's have a quick break and when we come back I want to get into the future of digital money and what you
know let's let's play that how do we get to the full potential of what we've been talking about with cryptocurrencies like
Bitcoin and now um you know the emergence of cbdc's and so forth you're listening to the futurists we'll be
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welcome back to the futurist this is part two with our guest this week Bill bar height from Abra and Bill you know
one of the things I want to make sure we cover is abra's business what you actually do at Abra and I think the way
to set that up is to talk a little bit about the remittances businesses uh one one thing I was surprised to learn when I lived in Asia is how much people
depend on Western Union and similar services to send money back home for instance a huge percentage of the
Philippines many of those people work in other countries and they're every month they're sending money back home
but candidly Western Unions are rip-off and this is an inspirational idea for people who want to disrupt an incumbent
company that's highly centralized that takes too much for a service that they offer talk a little bit about the
remittances racket sure so so money transfer is definitely uh one part of
our business we actually have a retail business a private banking and institutional business and I'll I'll
start off addressing the the remittance question which was some of the things I was working on before we started Abra
and yeah so to your point uh there are a few large centralized players that have basically cornered this Market over
multiple decades uh the Western Union MoneyGram and then there are a few kind of upstarts that have tried to take uh
pieces of that Zoom which become which became part of PayPal and remitly which is a standalone company and but they're
you know single digit percentages of the overall Space versus the the two large incumbents uh and and some banks offer
uh remittance Services now but the idea is that somebody who doesn't have a bank account or doesn't want to spend 50 60
on wire fees or have the money take three to four days to get there via Swift uh settlement based settlement
process can go to a retail store a hand the person behind the counter some money fill out a long form show their ID and
based upon so some internal systems at um at Western Union another window let's
say back in Mexico could be visited by the same family member uh or a member
from the same family uh with a pickup code and that store tenda would basically hand out the equivalent of the
250 dollars in in cash in pesos and that's the huge fee that they take off the top yeah right minus the fee uh you
know or the fees added on top depending upon how you do the transaction and in the background what Western Union is doing is they have
banking relationships all over the world and they're using those relationships to do settlements with these retailers
every day and so that the retailer is handing out cash temporarily and then Western Union
is making them whole minus the cuts that they have to pay them for handing out the uh cash in the first place so let's
say that you hand out 300 they may reimburse them 305 or something like that and the five dollar being you know
a fee for basically effectively they've lent Western Union money for a few hours while the customer has picked it up
until they pay them back okay now there's actually a lot of hands in the pie here that I have to get paid there's
Western Union there's the retailer there's the banks in the middle uh in some cases there's correspondent
networks and so there's a reason why the global floor on remittance prices in
extremely competitive markets is somewhere probably around three percent
ish and then in in less competitive markets and parts of sub-Saharan Africa
for example Michael the fee could approach you know 10 yeah which is an incredible amount of money and and it's
all about competition but there is a floor because of the number of hands in the pie who won't participate for free
okay so so clearly in order to optimize those fees you need to eliminate these
hands in the pie there's no other way so the more hands in the pie you can eliminate the lower the fee should get
right so so Bitcoin solves a couple of these problems because you can do transfers peer-to-peer right without the
need for the banks but the question is how do you get the Bitcoin in on the send side and how do you get the Bitcoin
out on the receive side and this was one of the ideas that we had for Abra because in theory most people sending
money have a bank account even immigrants okay it's the recipient that does it okay so if you could use
something like ACH in the U.S to buy the Bitcoin send the Bitcoin and then use
the same cash window to effectively get the cash out which amounts to selling the Bitcoin you've eliminated two out of
the three hands in the pie right in theory so so anyway so so we've played with Myriad versions of this we
have you know hundreds of thousands of consumers in the Philippines and Mexico and Central America and parts of
Southeast other parts of India that Bangladesh that now use this to do
everything from going to a window to buy stable coins that they send to other people that they then use to buy Bitcoin
and speculate as savings uh because they they see that as a better savings model than trusting their Banks right a lot of
the countries that we deal with have consumers who've seen their banking systems fail and confiscate their cash
so they end up using Abra as kind of an off-the-grid savings account I've heard
that cases which is super interesting yeah I've heard that sometimes people don't want to be paid in their local currency if they're doing you know
International work like on fiverr.com or something they'll they'd rather be paid in some stable coin yep and then we have
our private banking business which actually is the fastest growing part which is not only in the US but even in developing markets where people are
using Abra to now invest in cryptocurrencies uh do large transactions where they need to send
money around uh but in particular we're helping a lot of wealthy clients we have
kind of large Staples celebrities now that use Abra to manage crypto manage their wealth so one of the things I love
about what we've built is we have super wealthy people using the same app used
by foreign
enabler for all of this um and and for different reasons right some people are speculating some people
are sending money some people are doing payments some people use it as their bank accounts and and we don't care and
then we even have an execution alarm and that service is the likes of the the goldmans of the world there there have been some uh recently the big scandals
have occurred around uh the exchanges right so that's the point where we go from crypto from the crypto world into
the Fiat money world that's that's the exchange point does Abra compete with the exchanges are
you like an exchange or are you due to a different function so exchanges have what we call an order book which basically takes a bit in an ask and Maps
a buyer to seller we don't run an exchange we don't run order books we actually route orders uh so it's more
like the the fxc custody yeah yeah so we more like the FX window at the airport they're using different banks to do your
exchange and since we use different exchanges to Route those transactions so if you want to buy Bitcoin for cash or
if you want to swap your Bitcoin to ethereum or your ethereum to you know BSC binance token Abra will do that by
routing to different exchanges or if you want to use your bank accounts to buy and sell crypto we integrate with
different banks who basically process those transactions and convert the cash to stable coins for us so that we're
only holding the stable coins not the cash and then you know we have a lending business which will allow you to park uh
Bitcoin and then borrow against it for example which is is we have customers all over the world from that from super
wealthy folks to people who you know may have saved up a thousand dollars worth of bitcoin don't want to sell it but
want to borrow fifty dollars this week right um and and and so basically all kinds of
banking functions now uh that are centered around the crypto model if you would consider Abra centralized or
decentralized so as a company there's no such thing as a decentralized company right so we're we're a company so
obviously we're centralized we have an off switch um and an on switch mostly we're
generally on because we're open 24 7. but but we use decentralized technology
to enable the services we provide to Consumers and businesses in other words
we use D5 in some places to generate yield we use D5 to process loans in some
cases but we also have C5 versions of lending and and yield and we use Bitcoin
and ethereum rails to also move money around and and so it's a it's a central
is the banking entity that uses crypto decentralized rails to enable the
services we provide okay uh bill I I want to jump into look
you know in this conversation you've talked a lot about the rails you've talked a lot about the um the functional
disparity in the system the need for decentralization and so forth but what's
the core problem um with Fiat currencies um you know beyond the cost of sending
them from a functional perspective in the world we're moving to over the next
20 you know 50 100 years what is the functional deficiency in fiat currency
that that crypto and and stable coins or these variants might might solve sure so
so basically the global banking system is as complicated hubspoke network of
central banks in different countries with you know large Banks connected to them in smaller Banks via correspondence
connected to the larger Banks and and moving money around basically forces you to move from outside of the wheel into
the center spoke then settling via another correspondence to another Network in another country and so moving
small amounts of money for for example cross-border is effectively impossible right because the cost of moving between
those Hub and spokes if you're moving from in between networks in other words going from the US to Germany is
untenable okay so so that's that's number one number two is even if you're
doing a micro transactions every country has its own system usach UK has faster
pay Mexico has spay Eurozone has all basically variants on the same thing
which basically allow you to push money um in most cases from your bank account into some other accounts either for a
merchant or another consumer the US has a pull version of that as well but most countries do push because it's more
secure and and and but they're all incompatible which is why you end up with venmo and PayPal and different
mobile money scheme teams in in different countries so so there's no commonality in any of that we still use
checks and then this is right but that but that's a problem with the piping right the the transmission Vector it's
not a problem you know there's not a floor in the design the monetary system is it a floor in
money so money and banking have their own sets of problems okay the biggest problem with Fiat money today is
centralized control right meaning meaning you have two people in the United States that make the vast
majority of the decisions on what your money is worth tomorrow that's insane okay and by the way they're getting it
wrong time after time right so if you look at what's happened the last few years they've basically have been
manipulating interest rates and the overall money supply right to try to control and manage an
economy and at scale it doesn't work that's why we have these 80-year debt cycles that Ray dalio has been writing
about meaning by definition two percent inflation it sounds and sound like a lot but that is a crazy number over the
course of the lifetime that eliminates the vast majority of the value of your money that's the problem with the monetary system yeah what I'm also
describing are the problems with the banking system so as I said I think that Bitcoin and the idea of a deflationary
cryptocurrency solves the problems of the monetary system I think that smart
contracts the promise of ethereum uh other competing Technologies to ethereum solve the problems with the banking
system those are two different things okay right the money doesn't have to be Bitcoin it doesn't have to be dollars it
could be gold rocks but the problems with the banking system remain and so so
this so happens that decentralization can enable the solution to both problems and some of this infrastructure right
right it's not ready for Prime Time some of the some of this infrastructure when you say the banking system uh you know
it may be in an efficient it may be inelegant it might not be compatible but it works versus uh the piping for the
the crypto world it's still a work in progress and that's why we see these periodic flaws well I'm going to take a
little bit of exception to that talk to people in Venezuela talk to people in Argentina talk to people in Turkey talk to people in the Ukraine talk to people
in Russia the banking system and the monetary system neither of them work in those countries okay people are adopting
crypto in these markets because they have no choice right well go look at the the writings from the the human rights
Foundation that has been covering this and actually making donations to help people get into the system as basically
a backup to the fact that their governments are confiscating their money that they can't do cross-border
transactions right we we have employees in the Ukraine who were basically stuck and the only way they could transact was
with crypto and and so it's not just about what works for us if we're trying
to ACH a thousand dollars in the U.S of course that works okay but we're also the people who run the system right and
there's 140 countries that don't run the system right so yeah so the view from outside the United States is going to be
significantly different than the views in the U.S system of course but then how did how did El Salvador go so sideways
right they lost 60 million dollars on their attempt to make Bitcoin a national currency okay so those are two different
things right so so let's break it down El Salvador is unique in that they're one of the few countries in the world
that actually used already the dollar okay so they didn't have to turn off an internal monetary system and their the
people of El Salvador are very skeptical of their dependency upon the United States to do the right thing for their
monetary system okay now they still are a dollar-based system that hasn't changed what they
said is in parallel we're going to run a test to use Bitcoin as a parallel currency
now my opinion is it was too early to do that given all the things we talked about earlier around technology adoption
migration towards private money I understand why they did it I think it's very interesting test but if you look at
the Playbook that I was talking about earlier it's too early so I I actually it would not have done this but they did
it already it's fine now they chose to also speculate on the the value of of
Bitcoin versus the dollar that may actually turn out to be the smarter of the two bets at scale I realize you you
know you comment notwithstanding that the price has fallen but but if you actually look at the value of a
deflationary asset when an end or an exponentially growing technology combined with the fact that it's valued
in dollars where the money supply historically only goes up right that's why stocks go up in value over time in Mass right right is because
the money supply goes up it's got to be a good bet at scale unless something breaks in the technology I realize in
the short term that it doesn't look like a good debt but that doesn't matter because they don't seem to need the money right now so they should be holding it for 15 years anyway
but anyway I just focus on the future because we're right at that point now where we're talking about governments experimenting different opportunities
outside the United States um Brett you know the well you know the Central Bank digital currency
development we know talking about here it is it you know is even though that is
programmable money even though it can be used for underpinning smart contracts potentially and things like that which
is a a big key part of automating the world supply chain Automation and and so
forth improving cross-border trade seems like it's still going to be fraught with these functional issues of the systems
that you have right because if you have lots of different geographically based cbdc's you get the same difficulty you
have in the current system you know particularly for Forex and so forth however there is a lot of conversation
now about Regional CBDs you see China doing a partnership and a bridge between the Hong Kong monetary Authority and and
the Central Bank in in China for creating a bridge so so it could be that
we see these pan Regional cbdcs emerge and for from a wholesale trading perspective it would give these central
banks some continuity and it was solve many of the problems you're talking about so when we talk about this future
world smart contracts supply chain mechanics and so forth where is the
advantage um that that crypto and and these and these tokens have versus
um what's emerging out of this the Central Bank uh prototypes of cbdc okay so there's three things you need to
understand in my opinion about this idea of a central bank-based digital currency and and and the first point that I would
make is relative to where we are today as a planet we are in a late stage debt
cycle unless this time is different versus the last 700 years we are in a late stage debt cycle and Bretton Woods
was the whole idea to the that to the victor goes the spoils and the Victor was us and we defined a new monetary
system that system slowly fails once you reach the peak cycle which we reached in
the 60s okay that was exacerbated by Vietnam which is why we came off the gold standard and many smarter people
than myself have written about it at the end of that debt cycle the world is forced to take sides
because the bomb markets start to break debt becomes untenable right and the bond markets are
invariably what lead to these world wars and new debt Cycles follow the money now it just so happens but that's point one
is that we are in a late station exactly and and but but independent of Central Bank digital currencies the
world is forced to choose sides settling oil and rubles uh you know looking at that China basically forcing
other other training Partners to use the digital Yuan et cetera et cetera 0.2 is that it just so happens that the
technology for creating these Central Bank digital currencies it now exists at the same time that the world is being
forced to two sides which is something we didn't have before in previous debt Cycles okay now that's interesting
because it makes it much easier in many cases for non-us trading partners to be
pushed by China into this using this currency for settlements but hang on why shouldn't China do that they're going to
be the biggest economy in the world they from they they already you know in terms
of um you know the financial system um Chinese Banks um have twice the tier one capital of uh
banks in the US they have twice the assets of the banks if you're looking at the global banking system it's all China
right they've got the largest uh fintech the largest wallet ecosystem um you know alipay and 10 cent WeChat
Bay do twice the volume of all the plastic card schemes in the world right so if you're looking at the future of
banking it's in China it's not in the US the US has already lost that battle sure so so that may very well be true and I I
agree with most of those points and but the point the point the most important Point here being that the world is going
to be forced to take sides regardless it just so happens that we have this new technology happening at the same time and if I'm China what you're saying
makes perfect sense as an American I have major concerns with this but as an American I have major concerns but
America has done the same thing 100 of the world that's the whole idea of the victor goes to spoils that's the whole
idea of the military-industrial complex was to use navy ships to make sure that the money basically maintained its value
because the Commerce could continue to happen that was the whole idea of all of this that's and as an American I accepted that that there was no other
way and we exported democracy and and that was the the price for all of this that's why we police the world I totally
get it but that leads to point three which is what is going to happen vis-a-vis this adoption because there's
two end games well okay so the first end game for cbdc's is basically like it's
an interim solution because all you're doing is putting a a very pretty uh cone
of paint coat of paint on a dilapidated house because it doesn't prevent them from
increasing the money supply another 100 fold which is what they're going to do whether it's paper money electronic
settlement via the FED cbdc's in your smartphone it makes no difference the money supply is just going to continue to explode all that all this does is it
says okay the FED can make payments directly into people's bank accounts they can monitor what you're doing which
is a big concern right they can't do that with ethereum but they can if they make their own
blockchain for this stuff right they can't do that with paper money that's a big concern but again
this third point that I want to make is it's just an interim solution because the money system is breaking anyway
whether okay so so this gets to the heart of it this is the futurists after all so then let's go big picture 50
years out right you know um you know what does it look like how has this system resolved itself if you were I
mean obviously we're experimenting with all of this now but what is the end game is it self-sovereign currencies that
combined with soft Sovereign identity you know you know how does this all wash out what the futurist head on I'll give
you my take on money and then I'll give you my take on on banking I think for in terms of existing monetary systems the
vast majority of Fiat currencies are going to fail you've got 150 I think 135 of them will be gone within 20 years
that I'm not exaggerating I think that's fair once it happens it's gonna the cascading effect it's gonna be like whoa
what happened all right you're going to end up with dollars Euros uh maybe Yen
uh pounds um you might even get the Deutsche Mark reintroduced if the Eurozone falls apart
and and obviously the r b and and and countries will be asked to take sides as
part of this fourth turning that I think is coming and that will be for mostly for ephemeral transactions meaning that we
have to settle the transaction somehow but for actual storage of wealth none of
these currencies are going to succeed because they're inflationary by Nature you need a deflationary asset at scale
with the fourth turning which is what we did post Brett Woods we needed deflationary currency so we created one
and collected all the world's gold in order to do that well now we don't need to do that because Bitcoin gives us the
same effect I don't know if it's going to be Bitcoin but it is going to be a deflationary digital currency I don't
see any other way out I kind of be it why can't it be a carbon coin which prioritizes the environment over
actually monetary value maybe but it has decided we come up with a different value exchange it couldn't it could be a
competing technology all I'm saying is if it has to solve the problems that I'm describing because okay either it
doesn't either it solves the problems I'm describing or this is the first time in hundreds of years that it doesn't
and then on the banking side I believe that Banks which are closed more than
they're open are moving towards a global decentralized always-on system with no
off switch where all of these Myriad Regulators are going bye-bye there's no way it's going to be just AI based
incorrect AI but but blockchain all kinds of global settlement systems etc etc I totally agree with you there
and and that's going to happen faster than the other part with the monetary systems
let's talk about a computable economy that's one of the things that some folks have gotten very excited about with the
Advent of cryptocurrencies the idea that you can now have visibility into all the transactions and thereby compute an
economy a radical concept I don't really know if I have my brain wrapped around it but I'd be curious to hear your perspective about the long-term
implications of that as more and more transactions move into the cryptos well it's just a smart economy needs smart
money right it needs a programmable what does that mean to put some substance behind it oh okay so so you have to break it down right so the the challenge
with crypto markets this year have been that the decentralized technology has
worked flawlessly the centralized entities have been a disaster that's right so centralized entities
rehypothecate and and if you go back in history to the banking problems of the last 30 years it's been leveraged right
and rehypothecation is the process for enabling The Leverage an essentialized entity meaning you meaning you're
borrowing borrowed money effectively or effectively that's what FDX did right well there's also fraud there in terms
of actually moving money around but you're but you're basically taking collateral and reusing the collateral it's too kind of two two sides of the
same coin and and so the idea of of these this D5 model is that if you
eliminate If you eliminate the centralized entities and I I say that knowing that I'm one of them that in
theory that rehypothecation or over leverage it can't be stopped but you know it's happening whereas with
long-term Capital Management I've heard stories where all the largest lenders to ltcm didn't know that they were all the
largest lender to ltcm and they were reusing the same damn collateral over and over again right this is exactly
what happened this year with three arrows and you know collateralized dead obligations exactly
because it sounds a lot like the same thing that has nothing to do with crypto that has to do with centralized actors
trying to manipulate the system to use leverage to make more money when when
the government is printing money right and and so the promise of is we can't
necessarily stop that but we can see that it's happening all right well listen um in the interest
of time we have run over and I'm respectful of your time Bill but I I just want to ask you one final question
30 50 years out big picture futurist this time not about crypto not about the
banking system um what makes you bullish on the future if all of these you know obviously
clearly painful elements are coming with this conflict between China and us and these collapse of these systems you know
what makes you um really positive about the future of humanity over the the emerging decades
honestly it's technology I think we're we're approaching this this I this convergence is happening which is
amazing to me that it's happening at the same time that we're basically nearing the end of this debt cycle meaning that
we're less than 15 years away from reaching a singularity moments in in
computational capabilities where computers will be able to solve problems in in ways that we never thought of and
we have no idea yeah with the implications of that are because we we can't solve those problems and so we're
about to enter an age of artificial intelligence and combined with decentralization and democracy which is
spreading now a little bits are off right a little bits are off I just don't see that ending poorly I actually see it
ending really well and and well I'm I'm the I'm of the abundance and posts this
post-cosity you know theory on this as well I know Robert and I've had this conversation on numerous episodes of the
show but um I I think AI is going to usher in incredible benefits for Humanity because
of all those things you talked about Bill it's it's look it's great to chat with you again very Lively
um conversation and uh thanks again how do people uh follow you know you
personally and keep in touch with what you're doing at Abra yeah sure so I'm Bill bar Heights on Twitter try to be
reasonably active even though I have a day job you can also follow Abra Abra Global on Twitter and obviously you can
sign up for abra.com and you know we want to be basically everybody's One-Stop shop for basically you know
buying access to crypto moving money around whatever whatever it is you want to do we want to we want to basically
help you do it super well bill it's been a great pleasure having you on the show you've given us really good answers to
some complex questions you clarified the matter for me thanks for that thanks for joining the futurist this week and I
want to give a shout out to the folks that work on the show Kevin hirschhorn our engineer and producer Elizabeth Severance who's also a producer and the
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