The Harsh Realities of Getting Rich with Crypto — with Brad Mills & American HODL (We Talk Money Ep: 081)

Link to the YouTube (the timestamps are based on this): https://youtu.be/Po961gysAXo

Chris Dunn: Hey guys, welcome back to We Talk Money. I wanted to do a special episode this week because in light of all of the disaster of the LUNA UST implosion and with markets selling off and everybody kind of freaking out — there’s a lot of fear in the markets — and so I wanted to bring on some very toxic Bitcoin maximalists, some other Bitcoin OGs that have a perspective of what real money and what hard money is. And I don’t know about you guys, but every market cycle it seems like we notice newbies doing the same shit over and over: just buying into scams and the dollar amounts of these scams every market cycle just get bigger and bigger. And so I just wanted to talk about that and get you all’s perspective. Why don’t we just start by introducing you guys? We’ve got Brad and HODL on here — tell us just your quick genesis story and what you do in Bitcoin?

American HODL [1:09]: I got into Bitcoin late-2014 — like Christmas of 2014 — at the very end. I was just immediately captivated by it. It’s interesting about the trading thing: I think I would have been a degen trader just YOLOing in on all of the shitcoins if I hadn’t had market experience. And so like in college I was a day trader and I was doing really well until I wasn’t — which is the story with a lot of traders: I ended up riding $80,000 into the ground because I held the bag on this really bad biopharma stock I was trading. So my education in trading came from doing penny stocks, basically, which were the shitcoins before shitcoins — and they still are shitcoins, right? And basically when I got into Bitcoin there was this voice in the back of my head being like, Be a real investor: do your due diligence. So I started diving into what Bitcoin was and then was just fascinated — blown away. The rabbit hole was endless! And every day for the last 7 years I’ve just been thinking about Bitcoin, talking about Bitcoin, trying to figure out what Bitcoin is, watching the space evolve, and trying to help other people understand it too.

Chris Dunn: Awesome. All right, Brad, what about you?

Brad Mills [2:25]: I got into Bitcoin from — I’m wearing my old shirt, actually, my Ron Paul revolution shirt — I coincidentally had thrown this on. This thing is from 2008 — this shirt still survived. I got into the idea of sound money, Austrian economics, and things like that through watching the Ron Paul campaign and figuring out that money’s a big scam, dollars are a scam: save your money, pay off your debts — all that stuff is not actually a good idea when you have a government and a banking system built on debt and creating more money continually that weakens the purchasing power of the dollars you’re saving. So I started looking into gold and silver. And I wasn’t like HODL where I was like, Yeah I’m going to trade stocks — because I didn’t have a freaking clue about trading anything! I was just an entrepreneurial-mindsetted person. I came from a poverty background — I didn’t have an example of how to save and try to accumulate assets or anything like that. I was totally learning [off the cuff] — it was literally googling, How do I make money online? and What what do I invest in? and shit like that! So through the Ron Paul movement and then the Occupy Wall Street movement and everything, I figured scarcity [was the goal]: gold has been money all through history so I got to get myself some gold, do some property investing like Robert Kiyosaki in Rich Dad, Poor Dad, and Peter Schiff actually, too, talking about gold and the Federal Reserve and everything. So I came in through that cycle in 2011: I saw Bitcoin and I was like, Jeez, this is like Ron Paul money! This is like wet dream for a libertarian money! And I decided I was gonna put half my savings at the time — which wasn’t a lot, but I was sinking most of my money back into my Internet business — so I was gonna take half my savings and I was gonna buy: Bitcoin, gold, and silver. Because I was like, Silver and gold are money — they’ve been money all through history — but this Bitcoin thing looks pretty interesting! So I decided to do a third, a third, a third, and thankfully I did that because the silver’s down like 50% in 10 years — I’m still wrecked on the silver! I’m still holding it! Bitcoin’s up.

Chris Dunn: You did okay on Bitcoin.

Brad Mills [4:40]: Bitcoin went up, but I sold half my Bitcoin at 30 bucks — I always tell that story because I was like, Oh I’m a smart trader! This is what you’re supposed to do! I’m supposed to manage my risk — I got to take my profits. I knew Bitcoin was gonna one day go to like $10,000 — that was my number. I was like, One day this thing might be $10,000. But I didn’t understand really the full potential of what Bitcoin actually was and how crazy things were gonna get in the world. So I thought the stocks were gonna burst back in 2011. I was like, The stock market’s too high! The housing market’s too overpriced! But yeah, thank God that I found Bitcoin, because a lot of those libertarian people — we talk about this often on Clubhouse, HODL and I and a bunch of other Bitcoiners always hang out on Clubhouse — but a lot of the libertarian, Austrian economist types of people, they missed Bitcoin, so they’re just so sour on Bitcoin even still to this day.

Chris Dunn: Yeah, they got the narrative right! They were looking for hard money, they were looking for scarcity, they understood the problems with the legacy financial system, but they just didn’t anticipate Bitcoin. And now a lot of them either accepted it and are a little bit late to the game, maybe, or they just beat the drum of like, Gold is the only real money! You’ve got your Peter Schiffs of the world that are like, I am not capitulating for anybody!

American HODL [5:59]: I shared an Uber in Miami with Lawrence Lepard, a famous gold bug, Austrian guy. And I told him, Listen man, I feel bad for your generation because you guys held the torch for 30 years and then we came right in at the end and scooped you and we weren’t very respectful or nice about it, right? And he was like, Listen, I get it — I’m big in on Bitcoin, but a lot of these clients have mental models that are 30 years out of date and I’ve got to bring them along for the ride and everything. So I do feel bad for the gold bugs! It’s tough to miss it.

Chris Dunn: So we all view Bitcoin through a lens of kind of how we first got into it, right? My introduction was: I looked at it as a trading asset. At first in 2011 I thought it was a penny stock so I didn’t touch it for a couple years, and it wasn’t until 2013 that I was like, Oh this shit’s legit and it’s gonna be huge! So I went all in on it as a trading vehicle and my goal was to accumulate more over time, but I was looking at it as a way just to build my fiat base and build position sizes. So that’s kind of the lens I view it from. Brad, I know you said you sold some at 30 bucks. How do you guys view buying [Bitcoin]? Or do you mine? Do you accumulate? Do you dollar cost average? Do you not buy anymore because your stack is big enough? How do you guys think about it? And have you ever sold any more? Do you sell at all? How do you guys think about that?

Brad Mills: HODL, you should tell the story of how we met!

American HODL [7:46]: Yeah I’ll start with that: Brad’s got a lot of exposure to Bitcoin — he’s pretty all in — and so am I. I’m like 100% in Bitcoin so I do have to sell a little Bitcoin just for expenses because Bitcoin has done very well for me and I don’t have to work anymore but you still gotta live and pay for things and whatever. So I sell enough to cover expenses — that’s just the reality of being 100% in Bitcoin. But Brad was on Twitter during the March 12th bottom being like, I sold the bottom! I’m having pain in my back! Oh I can’t take it! It’s too much! And I was just like, This guy is a fucking pussy, okay? This is the exact opposite of what you want to do! You need to be buying while this guy is selling! Buy this guy’s coins! He doesn’t deserve them! He’s weak hands!

Brad Mills: I got harassed, man!

Chris Dunn: Holy shit! So Brad did you actually sell the March 2020 lows?

Brad Mills [8:42]: Okay so it’s so funny because HODL created the 6.15 meme — stack 6.15 Bitcoin to get your citadel or whatever — and so I was like, Who is this guy making fun of me on Twitter? He doesn’t even have 6 Bitcoin! He’s trying to get to 6 Bitcoin — why do people listen to him? Who cares? Because he was just some anonymous handle on Twitter that was riling up all the Bitcoin plebs. So what he was doing was creating conviction, and I was using Twitter like a diary like: Oh I know the coronavirus thing is going to come and wreck markets by 50%, my back hurts, I don’t know how to hedge properly, I don’t know how to use futures markets, I’m just going to take 10% of my Bitcoin off — I’m going to sell 10% of my Bitcoin here and then if it drops to $5,000 I’ll go back and I’ll buy it cheaper. And I was writing my thought process out and I actually was getting this crazy back pain for like a year through the bear market. Right at the depths of the bear market until about that point I was getting this back pain and it seemed like the only thing that’s causing this back pain is me paying attention to the price of Bitcoin! I guess I’m too exposed to Bitcoin? And then all the Bitcoin plebs and the toxic Bitcoiners are coming after me and I’m like, I’m all in Bitcoin! Except for I diversified into some real estate. So I just started getting hammered everywhere. And yes, I did sell the bottom because I’m a shitty trader! I actually sold near the top of that — I sold at like $9,000 before the panic. It dropped 50% and then I’m like, Oh this is going lower! Jeez I guess I was right! So I didn’t buy it back until we broke the all-time high at $20k. Once we broke the all-time high of $20k I bought like twice as much back as I sold over the next year and a half. So now I’m just like everybody else that came in 2021, right? I’ve raised my cost basis quite a bit because I was just stacking so much at the tops too! So I sold the bottom and bought the top.

Chris Dunn: Okay so was your liquid net worth outside of real estate — was it all in Bitcoin at that point? During the crash, were you mostly in Bitcoin?

Brad Mills [11:05]: No I was trying to be a smart investor, and this is my story all through since 2011: I sold half my Bitcoin at 30 bucks thinking I was a smart trader, and then I started reading all these books about trend following and risk management like What I Learned Losing a Million Dollars and all of Michael Covel’s books, Market Wizards. Started learning about risk management and algorithmic trading strategies and all these different things to try to take my emotions out of it and learn that I should just act as an investor and not as a trader, thinking in longer time frames and started following Real Vision and things like that in 2019–2020 to try to get a better perspective on how to manage my net worth better. So in 2017 — I didn’t sell any Bitcoin from that 2011 point until 2017 — I was like, I gotta diversify! So I sold a little bit — I don’t know if it was 20% or something like that I sold — on the run up in 2017, and then I did diversify outside of Bitcoin to do some property and have some cash and things like that. Because I was like, I guess I gotta do diversification — that’s what they say you should do — even though I’m like, Bitcoin is better money, I’m a Bitcoin maximalist, I opted into Bitcoin so that I could opt in to sound money. Why do I want these dollars again? But dollars are still pretty attractive sometimes. So I did have some dollars and some property, but yeah I was way too low on Bitcoin, honestly — I should never have sold that much Bitcoin. I should have bought more at the bottom.

American HODL [12:43]: I think this speaks to — in my opinion, when you’re trying to gain the most financially from these markets — there are two cardinal sins that people often mess up: one of them is not being bullish enough on Bitcoin long term. So Brad selling at $30 — obviously that was a big mistake. One of my mistakes was I reached the number of Bitcoin I thought was “enough” and I stopped stacking at $800, which in today’s day and age seems so stupid! I hate myself every day for it, right? So one of my messages to people is: never take your foot off the gas. I buy $50 worth of Bitcoin every day not because I have to but because I need to.

Chris Dunn: You’re still to this day dollar cost averaging?

American HODL [13:28]: Yeah it’s important for me psychologically to continue to take territory on the Bitcoin blockchain every day. And then the other cardinal sin that people always get wrong is they believe a shitcoin’s sales pitch so they lose track of what they’re actually doing as a trader: if you’re a trader, you have to be a fucking mercenary! You can’t believe the sales pitch of Terra LUNA’s going to the moon! Look at Novogratz! Novogratz is a billionaire, he has a huge fucking Terra LUNA tattoo — permanent reminder that he failed cardinal rule number two. And so I just see people make these same two mistakes over and over and over and over again, and I think if you just have a long-term mindset — even if you are trading — you have a long-term mindset, you take gains off the table, you put it in your HODL stack and your HODL stack is sacred and you don’t touch it, you’re gonna do probably pretty well over the long term.

Chris Dunn: I completely agree, man. And I’ll just pull this up: this is something that I shared I think a week or two ago. Basically, rules to not get fucking wrecked in crypto. The biggest mistake that I see — other than, like you said, people underestimate what Bitcoin can do — is they drink the fucking kool-aid and they start calling themselves LUNAtics or HEXicans or whatever the fuck it is. Once you buy into the message and you put all your capital in and you get overexposed to a shitcoin, all discipline goes out the window and it just becomes this emotional thing, and that’s why these plebs just keep getting wrecked every market cycle.

American HODL [14:56]: So I thought a lot about this thing specifically and I think the reason why is because when you’re engaging in shitcoin trading, you actually are engaging in greater fool theory and you are dumping on people that are less sophisticated than you and you’re taking advantage of people that are less sophisticated than you — in a broad sense. You’re not doing it specifically — it’s not like going up on the street and mugging somebody. But people who are lesser market participants than you that have less information asymmetry — they’re your exit liquidity, right? And people don’t really want to view themselves in that mercenary of a sense, and so they start to go, Well I’m not actually dumping on retail — what I’m doing is investing in amazing next-level technology that’s Web 3.0 De-Fi-enabled monkey JPEGs or whatever! And then they believe it and then they forget all their rules as a trader and they go, Well Novogratz is in, Pomp’s in, this guy’s in, that guy’s in — it’s going to the moon, man! — No. You failed rule number four and you’re gonna get wrecked now. That’s what happens!

Chris Dunn: Yeah and there tends to be this moral dilemma of like, Is trading evil? Or, Should you just HODL? And I guess the way that I get over that ethically is: I try to teach people. I’ve been doing YouTube videos about crypto and trading for a long long time, and I know that there’s gonna be those emotional people that buy the highs and I’m gonna sell into them — and they’re my exit liquidity. But I guess the way that I try to help is I try to teach as much as possible. But it doesn’t matter how much I scream this shit — 99% of people are still gonna do it the wrong way, right?

American HODL [16:31]: Yeah there’s a market theory that it’s immoral, actually, to let a stupid person keep their money. Some people view it that way, and I think the people that view it that way have greater success in these sorts of arenas. Cobie — Crypto Cobain on Twitter — I think he’s one of these guys. I don’t think he buys into the bullshit. And there’s a lot of other guys I could point to who do that and they have success. But the guys who start to believe it? They often end up being bag holders, essentially.

Chris Dunn: Yeah. Brad, what do you think, man — is trading evil?

Brad Mills [17:05]: Well it’s funny — I’ve said this often — I’m a FOMO Sapien, so I get it. I got sucked into the narratives early as well. When I got into Bitcoin, I came into it as an activist — I was the activist mindset: I was all about peer-to-peer cash, decentralizing banks and reducing middlemen, being able to say no and censor you. And also sound money and also Austrian economics type of things. So Bitcoin attracts a lot more people like that who typically have strong principles and ethics, or at least that’s part of their calculation — it’s an important thing for them to think about principles and ethics. Then on the crypto side during the bull run, you get a lot of charlatans and a lot of grifters and a lot of people that don’t necessarily have strong ethics or principles or think long term about things, and they’re just driven by trends and FOMO and the idea of being able to 10x your money off of an altcoin or whatever. So it’s not like they’re bad people or anything — it’s just they have a different type of mindset. And there’s a lot of legitimately principled people that come in and they actually believe the shit that they’re doing is gonna help. A lot of people that came in and build in De-Fi — there’s some real cypherpunks in the Ethereum side of things! They did believe that they were trying to build something that was going to disintermediate banks and whatever. And they’re just more entrepreneurial minded — they think like, Well I missed Bitcoin, so they fall victim to the free rider fallacy where they think like, Oh well if I’m gonna put my energy into it, I’m gonna build my own coin! So Bitcoiners don’t mix well with the crypto promoters, and I think there’s a middle ground. That’s why I honestly — when I try to warn somebody about not trading because you’re most likely going to end up getting wrecked because of the different problems with trading: it’s really hard to follow your rules even if you have profitable rules so statistically you’re just going to get wrecked anyways — but if I still have somebody that just really wants to trade, I always send them to you because you teach people not to drink the kool-aid. And that’s what we need most in these markets! When there is the opportunity to come in if you really want to put in the energy to do it — most Bitcoiners will just focus on Bitcoin education, learn what Bitcoin is, don’t even try to trade because statistically you’re probably going to get wrecked — but if you have to do it, follow somebody like you who’s going to teach them how to do it right and guide them through the bull market so that they don’t end up becoming a bear market bag holder drinking the kool-aid like most of the crypto YouTube influencer trader people, who end up just grifting from their audience and selling NFTs and ICOs and community coins and all this stuff. You actually give them some sound information and a dose of reality of what this game really is. And if you do that, I don’t think that’s unethical! I think that’s actually a valuable service to provide to people to wake them up to — like what HODL said — don’t believe these freaking technology narratives! It’s all bullshit!

Chris Dunn [20:29]: Yeah, I appreciate that. And my perspective is: even if you consider yourself just a HODLer, I think in some sense you are still a trader. If you’re a market participant, you have to understand that you’re still playing the game. Over here, on this extreme, you’ve got day traders and scalpers and people that are trying to make a living from trading — which 99.9% of those people are gonna lose money — and then over here you’ve got the people that say, I’m a HODLer, I never sell. But I’ll tell you guys one thing that I’ve seen is — and not everybody does this, but a lot of the people that I’ve seen since the 2013–2014 boom and bust and then through 2017 and then most recently — a lot of those people that say they’re just HODLers and they don’t think of themselves as market participants, they’re likely to do stuff like you did, Brad, which is sell the lows during panics. So even if you don’t consider yourself an active trader, I think it still makes sense to develop the skills and the mindset of a trader. That way, you don’t fall prey to the same shit that screws over even active traders.

American HODL [21:34]: Yeah there is a lot of value, like Brad said, in exposing the game. And one of the things to your point, Chris: I tell people who are new market participants, Listen man, be greedy — be greedy as hell — I want you to be greedy! But be long-term greedy. Don’t think about, I’m gonna make $50,000, $100,000 off of this quick flip over the next 6 months. Think: I’m going to add several orders of magnitude to my personal net worth. I want that for you and you should want that for yourself, too. I talk to Brad about this all the time: Brad exhibits tremendous activity bias, and there’s a lot of people who have activity bias in this space. It’s one of the hardest things to overcome as a human being — we all have natural activity bias. Because take it back to evolutionary biology: if you’re a small mammal on the Saharan grasslands and you see the grass move, 9 times out of 10 it’s the wind, but 1 time out of 10 it’s a predator and you’re about to die. So it behooves you to run away as fast as you can — that’s activity, right? So we all have this internal bias and in order to win long term in the markets you have to overcome this bias in yourself, or if you’re going to be a trader and you’re going to act on this bias you have to have very strict rules that you stick to and you don’t give in to your emotions, essentially.

Brad Mills [22:53]: Another thing I did too: it’s been great trying to be introspective. I started, in the bear market, getting into Stoicism — also because my wife was going through some serious health problems — so I was getting financially wrecked and potentially my wife was gonna die, so I was having a seriously stressful situation! So I was going through Stoicism and trying to be introspective and trying to think long term, and I realized that it is more like a gambling addiction to be doing JPEG flipping and ICO hunting and just low cap gem hunting and all that — some people are addicted to slot machines and playing sports betting or whatever. We had this conversation on Clubhouse the other day: some people like myself, I realized I’m addicted to that dopamine hit of finding the low-cap gem and trying to flip it for 10x Bitcoin. And that’s what I justified to myself in the previous cycles like 2014: I had also made the dumb moves that a typical person makes when they come in and try to be a trader when they should really just be a long-term investor. And I did the stupid thing like, Oh I don’t think Mt. Gox is going to go under because Roger Ver says it’s not going to go under so I’m just going to keep my money on Mt. Gox — why am I going to bother taking my money off? Then I’ll miss the dip! I wasn’t thinking of risk management, like you had up on your rules there: don’t take counterparty risk as your 5th rule, which is something that Bitcoiners learn eventually. You’re either going to learn it from somebody like you teaching it to them, or you’re going to get wrecked having your money exposed to counterparty risk or taking a stupid bet or drinking the kool-aid or whatever. And there’s definitely an element there of figuring out what your personality is. You should try to do that work to understand: Are you capable of trading? Are you capable of HODLing? HODLing through 80% dips is stressful for a lot of people! And I realized that my back pain was directly related to watching the net worth fluctuate so much up and down and going through all this stress. And this cycle I haven’t had it at all, and it’s partly because I got a little bit more healthy — I started doing back exercises to help release cortisol and stuff like that. But also partly taking that activity bias that I would have had where I would have been just staring at the charts and just watching my net worth drop, and doing other things like investing in Bitcoin businesses with people like HODL. So, focusing on, Why do I care about Bitcoin so much? How can I use that activity bias to harness it for good? I’m gonna get myself addicted to finding entrepreneurs that are building Bitcoin businesses and finding people like Bitcoin Matani in Africa [from Master Gwantai] that are translating the Bitcoin white paper into all these native African languages. So, weaponizing your activity bias and your addictions and harnessing them to do something useful and something good — my back pain’s gone! I’ve probably lost more money than I should have by not being a good trader, but hey at least I’m not trying to gamble on JPEGs to fulfill that need — whatever that need is.

Chris Dunn: Yeah there’s so many gems in what you said. One thing I want to just mirror is how a lot of people that are just getting into Bitcoin now look at us — that have been in it for a long time — and they say, Oh you guys got lucky, and whatever. But a lot of people don’t appreciate what it’s like to go through an 80% or a 90% drawdown. They’re like, Oh yeah I wish I got into Bitcoin in 2011 and bought a million coins at 15 cents or whatever, and I for sure would have held through all those drawdowns. Nah, 99 out of 100 people would have sold most of that along the way — and probably at the lows! Because imagine: let’s say in 2017 you have a million bucks worth of Bitcoin and then it goes up 20x. So you went from a million to 20 million and then it comes all the way back down to 1 or 2 million — that pain, that drawdown, a lot of people can’t stomach that. And that’s where I think risk management, portfolio theory and stuff can help people. But even then I think most people will screw it up.

Brad Mills [27:19]: I tried to time it and I mistimed it — I screwed it up! So even if you’re thinking long term and you get some of the parts of that trade right — portfolio theory, diversification, thinking long term — you cannot time everything right! You’re gonna end up probably messing it up.

American HODL [27:37]: The feeling of Bitcoin going from $69k to $29k is this feeling of like, Oh man this sucks, but it’s gonna come back — there’s a lot of interest in Bitcoin. Bitcoin’s a big thing in the world yadda yadda. The feeling of Bitcoin going from $20k to $3k was like, I’m an idiot — I’m the stupidest person on Earth. For some reason I’m holding this just because I’m so goddamn stubborn that I’m not gonna sell. I’m just going to fucking live a miserable life and everything’s going to be bad for me. That was the feeling! That was how I used to talk to myself in my head.

Chris Dunn: Oh man. Was your net worth pretty much all in Bitcoin during that time?

American HODL [28:14]: Yes. But I was still working at that time and I was earning well so it wasn’t as bad as it should have been. And I spent all of 2018 basically shoring up dry powder — here’s a classic Bitcoin story: I shored up all my dry powder, I’m talking mid-six figures sum, hundreds of thousands of dollars, and I was like, I’m ready to deploy, baby! Where’s the bottom? Where’s the bottom? At $6,600 I’m like, This is the bottom — I deploy half and then immediately get kicked in the dick: we’re down 50% — we go to $3,200 and I was like, Fuck!

Chris Dunn: I call this the line of hope: everybody was watching $6k and it was like, No it’s not going to go below $6k — oh shit!

American HODL [29:14]: It was probably 2–3 weeks before we dropped is when I bought. And then I deployed the rest of my dry powder at $3,400 because I was like, Fuck it! And I remember: I had to go for a walk around the block because my self-talk in my head was so negative I was like, That was the dumbest thing you ever did — it’s going to $1,000, you’re gonna get wrecked again. You’re a fucking moron blah blah blah. And I went for a walk and I talked myself out of it, basically. But yeah, man, if you’re not tough mentally being in these markets…

Chris Dunn: Yeah. Oh man, I can’t imagine having 100% of my liquid net worth in Bitcoin. I have a lot of conviction in it, but any time I get over 50% I just get a little nauseous. And that happens during the bull markets — those numbers get so fucking big. I look at it and I’m like, I have to sell some just to be able to sleep at night.

American HODL [30:08]: Dude, twice in the past year I’ve lost more money than I was worth a year ago. Twice!

Chris Dunn: Yeah. Exponential gains mess with you, man, and nobody really talks about that.

Brad Mills [30:23]: Yeah I mean I talk about it all the time and then HODL crucified me for it!

Chris Dunn: Well rightfully so if you sold the bottom. But hey I thank you for that: you gifted us those cheap Bitcoins.

Brad Mills [30:34]: I always say like, Yeah I’m gonna make all the mistakes in public so people can learn from me what not to do!

American HODL [30:43]: By the way I want to say that it sounded like I was making a moral judgment on trading earlier — I just want to say: I’ve done it all. I’m a degen gambler, too. My first money into Bitcoin came from a night at the blackjack tables. I made and lost $80,000 in college day trading penny stocks. I traded shitcoins on the way up in 2016–2017. So I am one of the brethren — I’m one of you, I’m just reformed at this point.

Chris Dunn: I think we all have some kind of story like that, right? Even my business partner who’s the smartest guy I know, helped grow a hedge fund from $100 million to $1 billion and then retired in his early 30’s — even he got his start in penny stocks. You’ve got to start somewhere, and most of the time it’s through learning those hard fucking lessons that you’re like, Oh! Trading and investing is actually tough! I think the worst thing for somebody is to come in to a crypto early in a bull run and then get lucky and think that investing is just that easy — those people are way more likely to lose everything during the bear market.

American HODL [31:49]: Yep. Here today, gone tomorrow with those people. I feel bad for those guys actually because their market tuition — which we all pay — is going to be much more expensive than my market tuition was. Because dude if I had a couple million dollars in some shitcoin and it happened in the span of 6–8 months, I would just be walking around thinking I was the smartest person on Earth. And then watching it go to zero I’d be walking around thinking I was the dumbest person on Earth, and that would be brutal for me.

Chris Dunn: It messes with you!

Brad Mills [32:16]: The worst part — and this is where the activist-minded Bitcoiners, the ones that want to see Bitcoin be deployed as the base layer of fair money technology for the world to really help the billions of people that live under financial oppression and actually make something for their life, to have a mission for their life — a lot of Bitcoin maximalists, Bitcoin educators and stuff, we obviously are in it for the money: we’re value maximalists. We’re wealth maximalists. We just feel like Bitcoin is the most obvious choice for that to happen over the long term and the most likely for generational gains for most people that aren’t going to be able to do it in stocks and any other investment asset. You get Bitcoiners like that seeing Gary Vee and Mark Cuban and Real Vision shilling toxic garbage like Ripple and BSV and Bored Ape Yacht Club to their millions of followers — that’s when it becomes unethical to us. And that’s when you get the “toxic” Bitcoin maximalist response which is: We’re just so pissed off that so much nonsense can be pushed out into the world. But we don’t hate penny stock traders it’s not like Bitcoiners are triggered by penny stock traders. It’s just: penny stock traders, they don’t say like, Oh yeah look at Vasectomy Corp! Vasectomy Corp is going to be the next big medical technology! I’m getting all my vasectomies through Vasectomy Corp from now on! Everybody go all in Vasectomy Corp! I’m a vasectomaximalist now! You don’t get people selling the boiler room stuff. Crypto is basically full of pump and dumps and boiler rooms and shit — it’s just LARPing.

American HODL [34:08]: I agree with Brad entirely: that is the line in the sand, I think, is promotion — when you’re out there promoting a shitcoin. Listen, if you’re trading these markets, you’re playing a really high risk, high reward game and hopefully you know that. But I’m not mad at you for that! But when you’re out there promoting — you’re drawing people into the scam — I think that’s a different thing for me.

Chris Dunn: Yeah there’s so many unethical corners of the crypto world, and that’s why I say: Everybody should start with the mindset of like, I’m a disinterested third party, I’m not a LUNAtic, I’m not going to claim to be part of any cult. And I think a lot of people prey on newbies that they feel like they missed the Bitcoin boat right because we’ve seen those headlines: everybody got hilariously rich in Bitcoin except for you, and then people like Cuban and like Elon — they have a huge audience, and they use that to say, Oh you can get rich too just come on over here. Then you get the YouTubers that are getting paid by these projects behind the scenes — it’s fucking bullshit! It’s disgusting! But on that point, I want to pivot over to the LUNA situation. Tuur [Demeester] took some screenshots of people that their lives have basically been ruined — millions and millions and millions of dollars lost. I tweeted out something — it was the co-founder of Real Vision that lost 100% of his crypto portfolio in LUNA. Somebody that’s out there apparently teaching people about the crypto world put his entire portfolio in LUNA. He says he never sold a single token, and rode it all the way to zero. That is messed up on so many different levels. Somebody like that should not be teaching or in a position of authority. What do you guys have to say about just this whole situation?

American HODL [36:06]: Not only that, but somebody sent me — there was a Y Combinator startup that was doing De-Fi whatever and they were promising investors a 15% return. And their 15% return was predicated on them going all in on LUNA getting the 20% return, giving the investors 15%, and pocketing the difference — they lost $48 million dollars straight to zero. Novograts straight to zero. CZ Binance straight to zero. There were very smart, sophisticated players in this who were all drinking the kool-aid, right? So for the little guys to get wrecked on LUNA — I feel worse for the little guys, obviously, than the big guys — but man it was just some sort of group delusion or psychosis that was going on around this specific protocol. And I’m not sure how they all believed it — it doesn’t make much sense to me at all.

Chris Dunn: But VCs like Andreessen Horowitz and things like that — they’re not putting their entire portfolio in a single high-risk play. Bitcoin, sound money — that’s its own asset. Crypto, over here, people need to understand: that is venture-level risk times a million! So people that put their entire portfolio or a large percentage in it? It’s just insane to me.

Brad Mills [37:26]: Yeah the worst thing actually HODL is that I think, in the end, Novogratz only rugged his reputation — I think he actually sold the top of LUNA. I think he actually did take the exit liquidity and took $300 million from the retail plebs that he basically had a hand in convincing that this ponzi scheme was actually legit technology. So that makes me even more aggravated that somebody like Novo can go and shill this stuff — and Remy from Real Vision and Raoul Pal from Real Vision — and all these influential people can promote legitimate ponzi scam logic and then make millions of dollars, sometimes hundreds of millions of dollars, from this stuff. And to think that they’re going to get away with that? I don’t want to live in that timeline — it sucks. I don’t want to hope for regulation, but at the same time, how can you not hope for justice to come into that? They should have recission on that! They actually should get discouragement after all that money they made.

American HODL [38:27]: This is a key point: Who’s got the Bitcoin? At the end of all this shitcoining, somebody ends up with a bunch of Bitcoin — that’s what always happens. That’s what happened with EOS: the EOS Foundation basically delivered a bunch of vaporware and they’re sitting on 130,000 Bitcoin. I don’t believe those Bitcoin were sold at market! I think somebody has them, or a large part of it.

Brad Mills [38:50]: Well what probably happened was the Bitcoin was sold in an OTC trade with institutional traders at the other end of the OTC trade. Most likely, a lot of that Bitcoin just swapped into the funds. Jump Capital was one of the people that were bailing out De-Fi. Hashed lost $3.5 billion dollars — they’re an example of one of the tier one VC crypto funds, if you want to use that term. They were big in 2017. I worked at Alphabet in 2017 so I used to actually do deal flow conversations with a lot of these guys. I used to be in these different groups where the fund managers and stuff would be doing due diligence on deals, and I remember Hashed was just making money hand over fist in all these Korean ICOs and stuff. And they ended up losing $3.5 billion on LUNA! So even in that big world of hundreds of millions and billions of dollars, even they will make the same mistakes as some noob coming in getting wrecked on some De-Fi ponzi or memecoin. Eventually you think you’re so smart, you’re gonna make a bunch of money — then Kyle Samani now is apparently some kind of trader, fund manager god, and he’s still putting out stupid threads calling the top of Solana or saying that that was never the top and just all this hopium that these guys put out there. They get lucky because it’s a manipulated market, they get easy money because the interest rates are low, they get access to credit, they take that money, they recreate the exact same thing that happened in Web 2.0 where the biggest Shill-a-coin Valley VCs are propping up these markets and creating these conditions for massive returns: they get some of these guys, these tier one people get in, they make a bunch of money, and then they think they’re smart and everybody starts to follow them because they think they’re smart too, when really they’re just as dumb as any other noob coming into the space, it’s just we’re in a bubble and it’s just bubble logic! We were in a bubble — I don’t think we’re in a bubble anymore. The bubble’s popping, I think.

Chris Dunn: Yeah market sentiment last Spring just got absolutely insane. The Spring where Elon was on SNL and the top of Doge and Cuban was saying all this stupid shit. It’s wild how fast that shifts from complete euphoria to just desperation and death everywhere. I think language matters: we’ve got experiments in crypto and you’ve got people that are basically trying to create startups — and I think a lot of people are really well intentioned — and then you have people that are obvious charlatans and obvious ponzis like Bitconnect and stuff like that. How do you decipher which is a legitimate attempt at building something and something that’s just a clear scam or a clear ponzi?

American HODL [42:00]: So there’s this article by Michael Bitstein called Everyone’s a Scammer and I think it’s informed a lot of the discourse around Bitcoin and how Bitcoin maximalists interact with the larger crypto space. And I’ve been hearing this feedback lately where people go, Well the Bitcoin maximalists — they just call everything a scam! Yeah they called Terra LUNA scam but they call everything scam — everything’s a scam to them. And it’s to your point: How do you differentiate? What I would say is I would soften the phrase, Everyone’s a Scammer with the phrase, No One is Better Than Their Incentives. No one. I’m not, you’re not, Brad’s not. So you have to ask yourself: What are the incentive mechanisms that are baked into this protocol? What are the incentive mechanisms of these founders? What are the incentive mechanisms of these market participants? And I think if you can think from first principles and ask yourself those kinds of questions, you will come to a much better understanding of what is real or is not real. I’m not going to give you a list of what are real crypto projects or not, but I am going to tell you: You need to look at the incentive structure behind every single project, and then you’ll draw your conclusions after that.

Chris Dunn: So don’t trust what somebody tells you or when they’re giving a powerpoint — look at the incentives and say, Well if they were going to rug pull or if they are trying to pull a fast one, what does that look like? And basically have an adversarial mindset.

American HODL [43:23]: Absolutely. 100%. There’s a phrase that the VCs use: the reason they like to play in this space is because of “short time to liquidity”. That is a VC phrase that means, I’m about to dump on your ass you stupid retail sack of shit. I don’t care — you’re my liquidity, bitch! That’s what they’re saying when they say “short time to liquidity”. Listen, when we used to build Facebook or Twitter or whatever, we had to get locked in for 10 years and we were along for the ride and we were illiquid the whole time. Now we’re not illiquid, and if we think the project is failing we just bail on it — we cut bait and we walk away and go on to the next thing. So be very concerned about the short time to liquidity aspect of some of these “VC-backed projects”. It doesn’t matter if a16z endorsed it — they still have the same broken incentives as everybody else. Sometimes we like to talk shit about the Fed, but I think if you put any of us in Jerome Powell’s seat, we would do the exact things that Jerome Powell is doing because those are the incentives of that mechanism and we’re not better than that. I’m not good enough to override those incentives and neither are you or anybody else. And so just ask yourself: What is driving the behavior here? And if you can ask yourself those questions, you’re going to come to the end result pretty quickly.

Chris Dunn: Yeah well said. Brad any thoughts?

Brad Mills: Yeah I like that and I think to be fair there’s strawmanning on both sides. On the Bitcoin camp there’s a lot of yellow belt maxis, as @bigmarh likes to say. I love that term because the yellow belt maxis are the people that came in at the bottom of 2018 or whatever and they were just fed all this awesome information that was forged with diamond hands from people that were holding from $20,000 down and they had all this great information to give and then all these people that maybe lost some money in shitcoins were like, Oh well I’m gonna check out Bitcoin now. And I think a lot of people that came into Bitcoin Twitter are actually left-curvers that would just have fallen into the BSV cult or Ripple cult or whatever cult — it’s just they got lucky and found Robert Breedlove or somebody instead, to read their work instead of going and reading some other influencer’s work. So there’s definitely a fringe element of that and they’re very loud and they call scam on everything. So they really don’t understand what a scam is and that doesn’t help with discourse because then that taints the perception of Bitcoiners from the crypto people — who, with as many fringe, dumb Bitcoiners as there are on the Bitcoin camp, there’s the opposite I think with altruistic, well-intentioned people. I think the well-intentioned, altruistic people are the fringe minority of crypto — honestly! I think the majority of people in Bitcoin are those financial activist-minded people that are not trying to grift and extract as much value as they possibly can from you, and the majority of the participants in crypto are those types of people — they get attracted over to that. But there is this fringe group of people that — maybe it’s 2%-3% of the people building projects on Ethereum — are cypherpunks! They’re actually legitimate cypherpunks or they’re just entrepreneurs that are misguided or don’t understand what they’re building and the incentives of the premines and things like that. And I think it’s good to talk to those folks because — this is relatively unknown, but — in the last bull run it attracted a whole bunch of builders to come in and some of them did ICOs and some of them were trading shitcoins and some of them were starting crypto funds or whatever. And then as the bear market showed us everybody was naked here and all these utility coins are valueless and tthe narrative of MV = PQ and Fat Protocol thesis and all this crap the VCs were trying to feed everybody for a year and a half — it was all bullshit! And the token holders had no rights to the leftover Bitcoin in the treasury of the company — token holders got totally fleeced and everybody started realizing, Wait, this is all bullshit — Bitcoin is where the value is! And most of the people that came into Bitcoin during the bear market — people that ended up becoming Bitcoin’s best thinkers in 2020, 2021, 2022 — were forged in getting destroyed in their shitcoining in 2017. And one of the great examples of that is Galoy Money: Nicolas Burtey was the founder of an ICO in 2017 and he realized in 2018 that actually Lightning Network is the bleeding edge of crypto — building on the Lightning Network is the bleeding edge and it’s going to have the most impact on people’s lives. It’s where he ethically should spend most of his time. And he ended up abandoning his ICO dreams or whatever — he realized that was not the right path forward — he reconciled that, he started focusing on the Lightning Network, and then he ended up building the Bitcoin Beach Wallet and supporting that whole project. And the Bitcoin Beach Wallet ended up becoming the impetus for El Salvador adopting Bitcoin as legal tender! So you can trace that back to this one thing where this guy was excited by the shitcoining ICO thing — came in, did it, realized this is not the right thing I should be doing, I should go over here and focus on Bitcoin — and boom! El Salvador adopts Bitcoin and it becomes one of the biggest, strongest network effects for Bitcoin as money in the developing world. So I’m super excited for the next few years, even though this bear market sucks. They say, You can’t have diamonds without pressure, so this pressure of the bear market is making people challenge all these stupid narratives they’ve been getting force-fed by the VCs and some people on Wall Street and people like Real Vision like Raoul Paul and Remy getting rugged on Terra LUNA — a lot of people that were smart, macro thinkers went in and just threw a .eth at the end of their name and started analyzing De-Fi because, I guess if Raoul Paul and Real Vision are behind it, then yeah it makes a lot of sense! I should start doing it! So now I think this bear market is actually good. It’s going to like pull all the pants down of all these people — the tide’s going to come out and they’re going to say, Wait a second — there’s nothing there! And then some of them are gonna make their way over to Bitcoin.

Chris Dunn: Yeah I think I’ve seen you’ve been tweeting about that recently: bear markets create Bitcoin maximalists once you understand that every implosion cycle — most of the bullshit goes away — and then people realize what’s left is the Bitcoin foundation of sound money. And yeah sometimes you have stuff that sticks around for a long time, but most of the stuff is gonna fail and die and go away over time.

American HODL [50:27]: Totally. Coinbase had a Top-10 recommended coins or something 6–8 months back — since they recommended those coins to their users, the average is down -37% against Bitcoin. So everybody has perverse incentives in this space, and the truth is that the best way to build an economic machine that flows more Bitcoin to you is to do a shitcoin scam, unfortunately. That’s not always going to be the case, though, and eventually that’s going to stop working and the most profitable way to build an economic machine that brings Bitcoin to you is going to be to build on top of Lightning or to do things that actually matter in the world. And we’re seeing that happen now — it’s very exciting! So I think everybody who’s been around — Chris you probably have this feeling too — if you’ve been around long enough, you know that one day alt season is not gonna come. One day it’s gonna be over — but we don’t know when that is! Is it next cycle? Is it the cycle after? Is it the cycle after that? We don’t know, right?

Chris Dunn: Yeah I think there will always be people trying to develop and trying to get rich and launch stuff either legitimately or in a scammy way, but after the 2017–2018 implosion I was like, Okay alts are dead, ICOs are dead. And then when Ethereum started waking up and it got back up above $300 and the De-Fi shit I’m like, Oh wait there’s another narrative here: it’s NFTs, it’s De-Fi, right? So yeah I don’t know — maybe the next cycle there will be another wave of bullshit that happens and maybe some of it will be legitimate or maybe people will just tend to focus on Bitcoin. But I don’t know. I am excited though for the adoption and the fundamentals of Bitcoin. I actually tweeted out: what questions do you guys have for the interview I’m going to do today? And most people just want to know where’s the bottom? When do I buy? Shit like that. People just want you to hand them on a silver platter when to buy, when to sell, how to get rich quick. But if we can zoom out from price for a minute and just assume that Bitcoin is going to keep trucking along, what I’m most excited about is the adoption at sovereign levels. I don’t think retail is going to drive the next cycle — it’s got to be bigger. It’s got to be government. So what do you guys think of that? What do you think is going to drive the next cycle? And what do you think is the most important thing happening in Bitcoin right now?

American HODL [53:03]: Yeah I think the Lightning Network is the most important thing that’s happening in Bitcoin right now because all this FUD that we’ve been hearing for years and years about Bitcoin’s not fast, Bitcoin is not efficient — these people have clearly never used the Lightning Network. When you use it, it’s a game-changer. We already have the first unicorn that’s been built on top of it which is Strike — what Jack Mallers’s been doing with Strike. And there are many more unicorns coming. David Marcus, who was doing the Facebook Libra project, has abandoned all that and he’s now doing a Lightning-focused startup. And so there’s just a lot of energy heading in that direction — there are big funds investing in that space, and there are really interesting new technologies and things that it enables, etc. So yeah I’m really bullish on Bitcoin as a medium of exchange and I’m really bullish on like what you said Chris, which is further nation state-level adoption, corporate adoption, sovereign wealth fund adoption, pension adoption, hedge fund adoption, etc. The meme, The institutions are coming has been around since 2013 when you first entered, and I think this year or probably 2020 it finally became true — the institution actually came! But all they did was dip a toe in the water. We have less than 1% institutional adoption currently. So we don’t even really need a central bank to start stacking in earnest yet — we still have the institutions: they’re going to take us to the next order of magnitude up. And I think all of us remain extremely long-term bullish on the price of Bitcoin. For the audience members who want to know where the bottom is: I think $25,000 was bottom. Brad is more bearish than I am — we might sweep $25,000 again and that might be an opportunity.

Brad Mills [54:48]: So Chris I just sent you a DM on Twitter — do you want to bring that up? I was working on a couple of charts yesterday and the day before. I finally got my hands on a TradingView account! So this is what I was thinking about — and HODL by the way I like everything you just said, I completely agree with — and this is why I wanted to show this chart because Bitcoin’s narrative has never changed: Bitcoin’s narrative is money. Bitcoin is money. Bitcoin is a store of value. It’s a decentralized peer-to-peer cash system. It’s a protocol for transferring value in a decentralized way, an open source way. An open system of transferring money. It’s always been about money! Bitcoin has always been about decentralization, government resistance, censorship resistant cash, free speech money, store of value — it’s never changed. Ethereum always needs new narratives! So the ICO bubble made Ethereum have this massive run-up in 2017 because it was like, Oh well we’re programmable venture capital, disrupting venture capital, utility coins, MV = PQ — they came up with all these narratives and that actually accrued significant value to the Ethereum asset and the crypto markets in general because of this flawed logic that utility derives value in the other coins. And then that got completely eroded in the bear market of 2018–2019 when we realized like, Oh that was stupid — that was dumb! That’s not actually what gives them value! Bitcoin has value because it’s money. And then you go back to the Bitcoin one and the bear market was there because unfortunately a lot of the value of Bitcoin — you get a lot of market participants in these bull markets that buy Bitcoin because they’re like, Oh it’s Bitcoin and crypto! So they go into crypto — they have some Bitcoin — they’re like, Yeah we love Bitcoin! Bitcoin’s money with digital gold! We like that! But it’s boomercoin so we’re gonna go because blah blah blah narrative — and all these people that come in, they lower the financial IQ, and the hand strength of the Bitcoin HODLer base gets weaker when you get all these participants that don’t understand what they bought and just FOMOing up the price. So in all the different cycles, Bitcoin has lost value when it’s basically the reconciliation of the previous narrative of crypto — people realized that was stupid. So De-Fi, NFTs and all that added significant value to Ethereum’s market cap this year. They had to have a new narrative — they got the new narrative and it gained significant value, but it’s already popped! And it was elongated by the double bubble they had of De-Fi and NFTs and then the memecoins as well — it was nonsense just like in the traditional markets with meme stocks. So I think Ethereum’s going to lose 90% of its value from the top of as we realize that, Yeah maybe having a $200,000 JPEG isn’t a smart financial decision, and maybe having an ICO rebranded to a yield farm ponzi scheme is not a smart financial decision — it’s still an illegal security, there’s still policy risk, it’s still 100x overvalued. So I think Ethereum is going to lose a lot of its market share, and so is the rest of crypto. And unfortunately, because you have people like Terra LUNA buying 30,000 Bitcoins to try to sustain their ponzi scheme and you have a lot of these people that came in thinking JPEGs were were valuable and that De-Fi utility coins were valuable, they’re going to be selling their Bitcoin and I think it’s going to be a mixture of what I’m just laying out now and what HODL is talking about and what you’re talking about, Chris: more and more people are gonna still realize Bitcoin is money! So as these narratives for crypto change, it’s like — what is it? Is it programmable money? Is it a mutable smart contract? Is it De-Fi? Is it ICOs? Is it NFTs? Is it DAPPs? Is it Game-Fi? They all need some kind of new narrative to make the bubble happen and then it just evaporates as people realize it’s all bullshit. Why do you need a blockchain? You need a blockchain because it’s decentralized money. It’s a store of value and it needs to have long-term credible monetary policy like Bitcoin. It needs to be decentralized and resistant to governments like Bitcoin. Nothing else is like Bitcoin! So I don’t think anything is going to drive the next bubble except more and more people just continuing to realize that Bitcoin is money, and that’s why I’m actually kind of excited — it sucks to see my net worth dropping like this, but — I’m excited to see a repeat of what happened in the last bear market was: we got more people like HODL and coming out and being influencers to propagate sound Bitcoin knowledge. Michael Saylor came out of the freaking 2018 bear market. More Michael Saylors, more HODLs, more Breedloves! That’s what’s actually pretty exciting about, unfortunately, getting my net worth nuked! On the other side of this, whatever the bottom is — maybe it’s $25k, maybe it’s $20k — whatever it is, think about it in 5–10 year time frames and Bitcoin is just still going to be marching on towards global reserve monetary asset.

Chris Dunn: Yeah man I’m just so immune to price drops now. I don’t know I guess I’m just a salty old bastard that price drops — I’m excited for it! I reframed it from a negative thing of like, Oh man I’m sad my net worth’s going down to like, Oh this is another buy opportunity! This is another time that I can actually build my position size even larger than I thought I could! So I think it’s all about framing. But as far as price predictions — because I know this is what everybody really wants — I’ve started scaling in here but I’d be really excited if we got back below $15k to $12k. If we did a full retracement of the prior bull cycle? That’s where I’d get really excited and start selling my soul to buy even more.

American HODL [1:01:31]: Let me ask you this question, Chris: Do you think cycle theory was murdered in the past two years? Or do you think cycle theory stands?

Chris Dunn: Oh man. In a way it’s a self-fulfilling prophecy so it works because of that but also — and the counterpoint there is — it becomes a crowded trade. Everybody had the laser eyes and was so focused on $100k — that became a crowded trade and that’s why we got that second bull trap at $69k. It just got too overheated and everybody was focused on stock to flow and was convinced that that was going to happen, and that’s why I think the market is is punishing the way it is — in addition, obviously, to crypto imploding, which is definitely putting bear pressure on the price. But it works — narratives and self-fulfilling prophecies work — but only over long periods of time, because the market’s gonna trap and punish people and have stops set too tight and stuff like that. What do you think?

American HODL [1:02:36]: I think it’s dead — and I’ll tell you my reason why. I used to be a very strong proponent of it. I think we saw the stock to flow model just [drop] off a cliff. It was always a meme model or whatever anyway, but it’s totally been discredited now.

Brad Mills: Stock to flow was the citadel meme before the institutional investors.

American HODL [1:02:58]: Exactly. We didn’t get the parabola — so without the parabola, I don’t think it stands to reason that you get the 90% drawdown! So that’s why I feel fairly confident calling $25k as the bottom. Now, this is a video that people can pull it back up and make me look like an idiot — which I’m fine with, that’s okay! But I’m just not seeing what we used to have. I think it’s different now because of the size of this asset class, and I think we’re much more macro-dependent than people in Bitcoin and crypto want to think. And we tend to be really myopic because for a lot of us young guys this is our first major financial market and so we know it inside and out, but we don’t know macro that well — we have some vague ideas about macro but we’re not really sure what the headwinds are. So I think we’re much more dependent on macro factors than we have been in the past, and that’s what is driving us. I think cycle theory is just a dead meme at this point.

Chris Dunn: Yeah I think as of right now the bigger narrative that is absolutely driving price is the stock market. I hate to say it but Bitcoin’s price has been lockstep with the Nasdaq, and as of right now it’s still a risk asset and it’s just been following so damn closely. Granted, as of today it’s holding up while stocks made a lower low, but the tracking has just been uncanny — and that’s not necessarily a good thing. I want to wake up and be able to run data that shows that Bitcoin is moving independent of the stock market. I use this analogy that if the crypto party is like a rave and all the altcoins are the people high on drugs and Bitcoin is the DJ — it determines when the music stops — well the Nasdaq is the fire marshal that determines when the party’s over and the Fed is like the mayor who decides if the party goes on! Because Bitcoin was born at the bottom of the GFC — Bitcoin’s only known a bull market in stocks. And so this is yet to be seen and I think this will be the bigger test for Bitcoin.

American HODL [1:05:16]: Yeah so my base case is that the stock market is a national security priority and that they cannot throw us into a great depression or a great recession again. And I think the Fed is playing with fire at the moment and they’re creating demand destruction — they’re trying to destroy some of the wealth effect to create more productivity in the economy. And you can only push and pull on that so far before you break something. We are at risk of them breaking something, but I also think that there’s going to be a hard pivot in the opposite direction, and there will be more monetary stimulus in our immediate future. There’s a paper I would point everybody towards: it’s called The Great Monetary Inflation by Paul Tudor Jones and it outlines that we’re going to have this increasing amount of monetary stimulus — these ideas are all over the place: Jeff Booth talks about this in The Price of Tomorrow that there’s going to be an ever increasing amount of monetary stimulus, and hard assets are going to perform the best in that environment. And in the paper, Paul Tudor Jones — Wall Street legend, billionaire guy — he ranks Bitcoin as the fastest horse in that race. And I agree with him — I think Bitcoin is the fastest horse in the macro backdrop, and I agree with what you said, Chris, that I view shitcoins like Bitcoin derivatives. Shitcoins are Bitcoin CDOs! Synthetic CDOs. CDOs squared — they’re just absolute pieces of shit.

Brad Mills: CPOs! Collateralized Ponzi Obligations.

American HODL [1:06:46]: Right. Extremely high beta. And if you want to do it, do it — but know that you’re in the riskiest environment of all time.

Brad Mills [1:06:56]: HODL you also talk on Clubhouse sometimes about — going back to what I was saying about the bear markets building Bitcoiners — bear markets do create a lot of Bitcoiners, and then Bitcoiners create bull markets and then bull markets create shitcoiners and shitcoiners create bear markets. And it loops around and around. But every time that cycle happens it creates a stronger HODLer base and it creates more conviction. And I think one of the reasons why I’m not having much back pain at all this crash is because of things like Clubhouse and, as we talked about, weaponizing my activity bias towards helping further Bitcoin adoption rather than just sitting there on Twitter doom scrolling and being like, Oh no! So that helps. But also being able to go on Clubhouse and chat with all of our friends on Clubhouse — some of the Bitcoiners, we’re all working through the macro stuff. Having those conversations has been super helpful, but you often talk about the conversation that Stan Druckenmiller had with Paul Tudor Jones about his decision?

American HODL [1:08:10]: Stan Druckenmiller called up Paul Tudor Jones — they’re both Wall Street legends and shit — and he basically goes, Do you know that when this thing went from $20k to $3k that 87% of people held onto it? So you have an asset that’s gold-like but that builds on top of all of gold’s flaws that is interesting to the new generation in a way that gold is not, and the HODLer base are religious zealots. That was basically the quote he gave to Paul Tudor Jones. And it’s true! Listen, I’ve said this before: Bitcoin for me ends with a zero. Either fiat is gonna be worth zero or Bitcoin is gonna be worth zero, but either way I’m riding this thing into the fucking rocks, and I’m either gonna be poor as fuck or rich as fuck — there is no in between for me, okay?

Chris Dunn: Oh man, you’ve got thicker skin than I do, man. I don’t know, I think you could do both! I think you could get rich as fuck with Bitcoin, but also — if it goes to zero — not be destitute. I don’t know, maybe I just need to man up more and just be like, Fuck it! I’m selling everything else! I’m just gonna only have Bitcoin!

Brad Mills [1:09:26]: Either I’ve evolved beyond where Chris is right now or Chris has evolved beyond where I was 3 years ago — it’s one or the other! Because I’ve given up on the idea of trying to balance my cash position and all that shit, but it may be also because I’m Canadian — so we had this freaking Emergency Act thing happen recently that did scare the shit out of a lot of Bitcoiners and entrepreneurs. Not even just Bitcoiners! The fact that you can have a government seize bank accounts and threaten to seize bank accounts based on what you posted on Twitter or a donation that you gave to a political thing? That’s insane! So it’s a little different for me maybe because I imagine if you’re a Russian millionaire right now or something like that, you’re like, I don’t want to be sitting in cash — I need some Bitcoin! Because that’s the only thing that’s censorship resistant. And to that last point as well: the only thing we know going forward — whatever policy decision the Fed makes: if they let us go into a great depression or if they have to hard pivot and print $10-$20 trillion dollars to rescue the markets — whatever ends up happening, it’s 99% certainty that there’s going to be more censorship, more control over your money, more power grabbing. And eventually it could lead to straight up Chinese-style social credit scores and digital CBDC’s. So Bitcoin is just going to be more and more important as we go on in this environment. If we get sanity back into government policy and stuff, maybe it won’t end in a populist uprising, but it looks like it’s trending towards unrest at some point. And globally — everywhere — freaking Sri Lanka right now is a perfect example of what happens when food shortages start and they don’t have enough gas, and that everything’s too expensive. There’s that quote like, People are only a few days away from turning into zombie mobs? That’s not the quote, but it’s kind of true: if they don’t do something about it, it’s gonna turn into chaos. If they do do something about it, it’s gonna just kick the can down the road again! And eventually there’s going to be more and more control over your life — the government’s going to have to try to grab more and more control of your life — because it’s going to eventually get out of control if they just keep printing money to stop these problems. So Bitcoin is just going to be increasingly more and more relevant in this world where people are losing trust in their institutions, losing trust in banks in Canada — and all the Russians are losing trust in banks everywhere because they’re targeted right now — you lose trust in the news, you lose trust in the president. Everybody’s losing trust in all authorities, and Bitcoin is the perfect money and the perfect collateral for a post-trust world. Whether it’s you and your bread, egg guy or whatever, or one central bank and another central bank — it’s the same cost to run a node and validate the transaction, anybody can do it, and that makes Bitcoin, the network, the perfect post-trust monetary network, and Bitcoin the asset the perfect collateral for a post-trust world. So hopefully the Fed doesn’t screw things up and send us into a depression, but either way, Bitcoin is going to be more and more important I think as time goes on. And maybe that’s why I’m okay with taking some of that — I’m doing the barbell strategy a little bit: I do have some cash set aside to buy the dip if it comes, but I’ve got a pretty small barbell! I’m not benching like you or HODL — I’ve got a little barbell here with a bunch of Bitcoin on one side and a tiny bit of cash on the other side. I’m going to use that cash — it just makes me feel good! If the drop happens I’m going to buy up the Bitcoin.

American HODL [1:13:27]: This is my barbell: this side is Bitcoin, and then on this side I’ve got guns, whiskey, ammo, and prescription pills.

Chris Dunn: Well ammo has outperformed everything over the past couple years, so that’s a good investment!

American HODL [1:13:41]: Right, because — in my opinion — either we are going into what Brad described and that entire system is going to come crumbling down on itself at some point and we’re all going to live very terrible lives. Which, if that is the case, sure — plan for that eventuality, but don’t stew on it all day long. Or, we’re moving into the Jetsons-style future where Bitcoin is the engine of innovation that kickstarts global GDP and suddenly — okay, this is how I talked with my buddy Rob Hamilton about it, who’s a Bitcoin founder: basically if Bitcoin just makes the world 2% better per year compounded over the course of 20 or 30 years, suddenly we’re in a much different environment than we found ourselves in originally. And you have to think to yourself, Well what if fiat makes the world 2% — 2% is the stated inflation goal — what if fiat makes the world 2% worse every year? Well since 1971 — we’re 50-some odd years on — I think that we can see what the compounded effects have become! And so for me that’s the big thing that’s at the heart of Bitcoin, and why I’m willing to seed it with not only all of my capital but all of my time and just put my entire life’s work and energy into it, because I’m really excited about the future that Bitcoin can bring for humanity. All Bitcoin has to do is decrease malinvestment. If it just decreases malinvestment and we get capital going in the right place? Because basically every dollar that bounces around the world creates distortions, and then all the other fiat currencies are derivatives of that distortion — they create even greater distortions. Bitcoin is signal-clearing: it’s pure economic signal bouncing across the world. Because if you miscalculate in Bitcoin, guess what? There’s no bailout for you — your Bitcoins are going to flow away from you and they’re not so easily going to come back you. So people who are bad capital allocators in a Bitcoin system get punished. People who are bad capital allocators in our current system get rewarded — it’s ass-backwards. And so just decreasing malinvestment and getting innovation back on track? That’s the key to an abundant future. And it’s either that or we’re taking on the zombie hordes with AR-15s. Those are the only two [endgames]!

Chris Dunn: I’m an optimist, because if things go to shit — who cares anyways? So why not be an optimist! And I like that idea of: if Bitcoin can improve the world just a few points a year, what does that look like? And when I look at what happened to you guys in Canada and how they — whether you believe the trucker thing was cool or not — you should not be for financial censorship! I think about the fight that’s about to heat up with CBDC’s and fiat and then Bitcoin. And I just think that Bitcoin is the ultimate Fuck You to authoritarian governments. I had an American friend who had been living in Myanmar for a long time, and when the coup happened, he was screwed — his bank accounts were locked up and all that. And I sent him some Bitcoin and there was a local peer-to-peer transactor, so he was able to get fiat in Burmese kyat. He was able to take the Bitcoin, go down the street, give the guy the Bitcoin, he got kyat, was able to buy flights, get his team out of there — so I love those examples of real-world shit where Bitcoin literally saves lives or gets people out of really bad situations. I want to try to do a better job at highlighting stuff like that and maybe doing interviews. I don’t know — if you guys know anybody who’s doing that type of work or helping people get out of really bad situations, I think if we shine a spotlight on that, that could pull a lot of the crypto get-rich-quick people over and be like, Oh this is what it’s really about!

American HODL [1:17:46]: The Human Rights Foundation who Alex Gladstein works for is doing more of this than anybody. And it’s great to see because look at the Russia-Ukraine conflict: you can find Bitcoin on both sides of that conflict, which not only shows I think how useful Bitcoin is, but it also shows that Bitcoin is now a major player in the world — that there are global conflicts that Bitcoin is on both sides of.

Chris Dunn: Do you guys think that CBDC’s are going to be a thing or are they going to just peter out and not really be able to compete?

American HODL [1:18:22]: We’re going to live with CBDC’s — they’re absolutely going to be a thing. Your dollars are already basically digital anyway so it’s not that big of a jump for them. I do think that eventually the stablecoin market will be controlled by the big banks with the treasury as their proxy and that’s how we’re going to see these things. If you’ve read the ECASH Act there’s a lot of lip service to privacy, but then there’s a lot of weasel words where they can totally undo your privacy. They’re going to try and trap us in a central bank digital currency system because it enables them to do the move from Ferris Bueller’s Day Off where they take the Ferrari out all day — that’s economic stimulus — and they have a great time, and then they run it in reverse, because they can steal from you more easily if you’re trapped in their system. So we’re all going to take haircuts on things, we’re all going to have negative interest rates, there’s going to be bailouts all over the place — it allows them different levers to do modern monetary theory where they can send money to this portion of society but not this portion of society, etc. And so yeah it’s a useful tool for authoritarian governments and you’re going to see them proliferate. And luckily in America, at least, we have a voice in pushing back against it, and I think we should be really really active in that arena to make sure that the CBDC doesn’t become something that we don’t want it to be. But ultimately, UBI is an inevitability at this point — and that’s the reason the vast majority of people will accept central bank digital currencies, because they’re going to be gifted free money.

Chris Dunn: Right. Yeah China’s already done that and most people will be like, I don’t care what kind of money it is if it buys me shit and the government gives it to me for free! I don’t care — I know I’m giving away my freedom in a way, but yeah.

Brad Mills [1:20:09]: Yeah I don’t have much of a thought out position on CBDCs, honestly. I just don’t follow it as much as other folks, maybe because we’re not talking about it as much in Canada? The government’s not really talking about it too much. Most of that action’s been in the US with those different proposals that the US has done. China obviously they’re gonna do it, but I’m sure we’ll just follow whatever the states does! We’re either just following what the states does or we’re a petri dish for the United States where they’re like, Let’s see what happens when you raise interest rates! Do it in Canada first, and then they’ll go, Oh the housing market didn’t blow up? All right let’s do it over here. We’re a petri dish or we’re just following along — it’s kind of silly.

Chris Dunn: Oh man. All right I got a couple of questions on Twitter maybe we can hit some of these. Somebody was asking: Is it actually possible to have a decentralized algorithmic stablecoin? How can they defend against whales that play the long game to manipulate price? I don’t know — do you guys have any strong opinions on stablecoins if it can work or not?

American HODL [1:21:15]: I don’t think it is possible to have a decentralized algorithmic stablecoin that has long-term value proposition. I think you have to have a central governing body or a trusted third party ensuring the peg. And if you don’t, people will gamify it and it’ll go to zero. It’s pretty spectacular that Terra LUNA went to zero because usually shitcoins slowly trend to zero over time — this one just blew up right in the face of everybody which was crazy! I’ve never seen something quite like it before. So no you have to have a central governing body backing the peg.

Brad Mills [1:21:49]: I actually think it’s possible to do it in a way that’s conservative, but it’s more like the CDP model — like MakerDAO type of model — but you do it on a Bitcoin-only basis where it’s just collateralized by Bitcoin at like 5x overcollateralization or something like that, and then it mints a Bitcoin-native BUSD or SATUSD or whatever, that is pegged to or targets a dollar based on oracle prices or something like that. And Tether’s actually working on that. They’ve got this thing that they’re building called the OmniBOLT layer which is going to be a Lightning Network oracle for algorithmic stablecoins. I think it’s possible — the reason why UST blew up was because it was literally a ponzi scheme! I was in a crypto Twitter spaces probably a week ago and they were just coping hard — they were like, Citadel did it to us! The bankers don’t want us to have decentralized money! and all this shit and I was like, Guys — it literally was literally a ponzi scheme. And they’re like, You’re just a maxi! You’re using toxic language! I’m like, No it’s actually the dictionary definition of a ponzi scheme! You cannot get paid 20% for absolutely nothing and expect that that’s not gonna blow up, because eventually it grows so big that the amount of money that has to get paid out is too great and it blows the whole thing up. And then when people start to realize that they’re not making money anymore, they pull all their money out, and if there’s no door to get out of, the whole thing goes to zero — and that’s what happened to it. So it can be done, but I like to think of it more like Bitcoin is the stablecoin: eventually it’s going to be $1 million or $10 million a coin or whatever, and at that point when it’s a global reserve asset, a global reserve currency, sats are going to be the stablecoin! So that’s the other way we get to a stablecoin with Bitcoin is: sats become worth a dollar each.

Chris Dunn: That would be the ideal situation, wouldn’t it? All right next question: if governments were to regulate a big part of crypto, what regulations would be welcomed to the healthy growth of crypto? And what regulations would straight out hurt it? A lot of people don’t realize: there are already a lot of regulations around fundraising and stuff — at least in the US — which is why a lot of the ICOs and shit that’s launching today they actually exclude US citizens.

Brad Mills [1:24:32]: Celsius is a big one! Celsius is one of the other extremely risky ponzi schemes to be in right now — you should probably not be in Celsius because Celsius is flagrantly violating many laws. And they’ve been kicked out of the UK, they got fired by Prime Trust as their broker dealer because they were doing too much rehypothecation, they lost money with Fireblocks as a custodian, they lost money in BadgerDAO, they barely escaped losing $500 million in Terra LUNA, their CFO got arrested for being part of a financial fraud, Celsius makes people sign Red D forms when they buy OTC, they’ve been selling OTC to Americans for a long time — OTC for people who don’t know is over the counter — they just sell you large chunks of Celsius’s shitcoin, so clearly they know it’s a security! They wouldn’t make you sign a Reg D form if they didn’t think it was a security. So Celsius is down like 90% since last summer when I was warning people it was gonna tank and go to zero, but I really think they should just make people sign a Rug D form and just get it over with because they’re eventually going to get rugged anyway.

American HODL [1:25:44]: On the topic of what regulations are harmful and what regulations are hurtful: honestly — this is probably an unpopular opinion but — I think having to register as a security is helpful to the space because it will clear up a lot of things that are outright ponzi schemes. I think an example of something that would be hurtful would be carbon taxes on proof of work mining — I think that’s hurtful. Or I think clean block mining would be hurtful. I think a wealth tax is is harmful to crypto in general to both shitcoins and Bitcoin — this is something that’s been proposed from the Elizabeth Warrens of the world, the AOCs of the world recently. So yeah there are a lot of things that could potentially happen that could be draconian and really set the industry back, and hopefully we just remain politically active. A lot of the regulators just straight up don’t understand what’s happening and we can do a better job educating them.

Chris Dunn: Yeah. I was really excited a few years ago for STOs — security token offerings. I knew it wasn’t a huge revolution — it was more like evolutionary, but it seems like that’s kind of fizzled out. I was really hoping that we were going to have a lot more tokenization of different types of assets by now, but I guess people just want fucking JPEGs instead.

American HODL [1:27:01]: I’ve been saying that I think that the next shitcoin bubble is going to be based around identity, and I think that’s a key part of the security token thing that’s been missing up to this point. So I do think we’re going to see a wave of security tokens next cycle, and there’s going to be a wave of identity solutions next cycle people will be very excited about.

Brad Mills [1:27:19]: Me and HODL have a stake bet on it. I’m not going to let you slip in security tokens into the identity — that doesn’t count.

American HODL: They’re interconnected, Brad — they’re interconnected.

Brad Mills [1:27:31]: No way! You can’t have it! I’m actually working, Chris, on getting security token stuff done. I’ve invested in MERJ Exchange, which is an ATS-licensed Seychelles exchange that does trade Liquid tokens right now. And I’ve been working with Blockstream and multiple different companies — and my buddy James Wallace has this company DIGTL and I’ve worked on him for hours, many hours, two years, three years in person, on the phone, trying to convince him like, Look, it’s Bitcoin and security tokens — that’s all it is. It’s not Bitcoin, altcoins, illegal securities, CBDC’s, whatever — he’s just as passionate about securities as we are about Bitcoin, so he was really passionate about digitizing securities, but he didn’t understand the blockchain. He thought the blockchain was just a thing that you could digitize securities on, and it took him a while but he eventually came to my line of logic — I had to take him through all the different scammy bad logic grifty things that are happening in blockchain, because, really, there is no need for a token! tZERO doesn’t need a token — unless it’s a security token! The security blockchains don’t make a lot of sense, so that’s why Liquid Network makes great sense for that use case, because in the next 10 years, in the next decade — as the regulators do come in and there is less and less financial or regulatory arbitrage opportunity just to go print shitcoins, make $2 billion dollars, and pay a $20 million dollar fine and not go to jail — obviously a bunch of people are going to do that! That’s why we had a16z raising hundreds of billions of dollars pumping it into De-Fi securities — they’re illegal security tokens and they’re mostly yield farming ponzi schemes, but the regulators haven’t acted yet. But I do think the way it’s going to evolve is — whether or not it’s the market figures it out or the regulators force this, but — digital securities makes sense and it will happen on something like Liquid Network where there’s no shitcoin so there’s no regulatory risk. Just like how Block-Fi didn’t get shut down by the SEC — they just got regulated by the SEC. And because they didn’t have a Block-Fi token that you could gamble on, they didn’t get super-scrutinized. Celsius, Nexo, crypto.com — all these companies that are doing the same stuff Block-Fi was doing — are probably not going to get away with it as easily as Block-Fi did because they’ve all got this other layer of things. They’re not just breaking one securities law — they’re breaking all the securities laws! So I think the Liquid Network and just doing it properly with no policy risk makes the most amount of sense — if we’re ever going to get there. But it’s not sexy to buy a tokenized real estate trust on a blockchain — that makes sense. We’re not in a world where investments make sense! So beyond that path, we have to get to that point where Bitcoin is growing in the world at 2% a year fixing malinvestment like HODL was saying. Once we get into that paradigm then it will make sense to have digital securities because your money will be digital and it won’t be just FOMO investing driven by the Fed’s policies of easy money and artificially low interest rates — it’ll be logic: we’ll be back into value investing and we’ll be back into investing in things that make sense. And at that point it’ll make sense to have things digitally.

Chris Dunn: Well said. All right let’s do maybe one or two more questions — I know we’ve been going for an hour and a half so we can start to wrap this up. But somebody’s asking about thoughts on Vitalik’s proposal to insure cryptos like FDIC?

Brad Mills [1:31:27]: I didn’t hear about that. I mean I saw Vitalik was criticizing Ethereum — there was a thread that he made where he was criticizing Ethereum. Is he maybe confused a little bit?

American HODL [1:31:40]: Thinking through the FDIC thing — the way FDIC works is you just print more money and then you cover deposits. So if shitcoin had the ability — which they all do because they have active management teams — to just print more money, then sure I guess you could technically say it’s FDIC insured but it’d be FDIC insured in your shitcoin! It wouldn’t be in dollars — there’s no way.

Brad Mills [1:32:05]: Yeah FDIC is a scam too. It’s a confidence game. Warren Buffett has more money than the FDIC does — it’s crazy! Because some of the big banks in the GFC were going to fail and they didn’t have enough money to cover the failures in the FDIC so they decided to just rebrand it as socializing and taking over Fannie and Freddie whatever. When the shit really hit the fan, there wasn’t enough money so they had to print money and bail out a bunch of banks! So really the money printer is the FDIC insurance, like HODL said. The FDIC is just like you said, Chris — a confidence game.

American HODL [1:32:59]: Yeah I do think that Bitcoin insurance is an area in which I’m bullish. I think we’re gonna see more insurance plays in the Bitcoin and crypto industry going forward. Because it doesn’t make much sense that you have maybe a $1 million dollar house and it’s insured and then a $20 million dollar Bitcoin position that’s uninsured — that doesn’t make a lot of sense! So I think we’ll see those kinds of products come to markets too.

Chris Dunn: That’d be nice. Yeah to be able to sleep better at night.

American HODL [1:33:29]: Peace of mind. Those of us who do self-custody — we feel pretty good about it! We’ve gotten our skills up over the years at storing cryptographic secrets. But always in the back your mind you’re like, Did I fuck something up?

Chris Dunn: It’s scary sometimes!

Brad Mills [1:33:45]: HODL and I are investors in a Bitcoin insurance company — we’ll keep you posted when they want to start being more public.

American HODL: Brad, I was trying to shill my bags and make it seem like I was impartial! Come on, man!

Chris Dunn: Pump it! Come on, we’ve got this short liquidity cycle! Let’s go!

Brad Mills [1:33:58]: Yeah it’s a short time to liquidity! There’s going to be an insurance coin attached to it you can buy in a pre-sale — we’re going to mint some NFTs that you can prove you have the insurance. No we’re not doing that!

Chris Dunn: Will you guys give me equity if I do a YouTube video on it?

Brad Mills: Yeah we’ll give you $50k worth of the coin.

Chris Dunn: There you go!

American HODL: We’re just VCs on it so we’ll have to talk to the founders.

Chris Dunn: All right last question and we can wrap it up: are exchanges that offer high leverage like 50x or 100x bad for the long-term growth of Bitcoin?

American HODL [1:34:29]: This is a philosophical discussion. There was a discussion between Sam Bankman-Fried and Caitlin Long where she was taking the position that it is bad and then he was taking the position that, No it’s good because it increases price discovery. I think that the problem with the high leverage longs — and by the way, the average amount of leverage on an exchange like BitMEX is 23x — that is fucking insane. That’s insane that that’s the average. So anyway, I think that the problem with these high levered longs is the cascading liquidations. So when you take out this level, boom it triggers the next, boom it triggers the next, boom it triggers the next. And because the price comes from the margin in Bitcoin — meaning there are only so many coins available for exchange so it’s not like you’re trading on the value of all coins in the world, you’re trading on the value of coins that are freely available at market at that time — it can cause a lot of volatility in the price. And I think that it makes us seem like a much more immature asset class than we actually are, so maybe in that sense it is bad. But I’m a free market guy so it’s like, Fuck it — if you want to go 100x leverage and get licked within 10 seconds, be my guest! That’s your decision — I don’t care!

Chris Dunn: Yeah it’s one of those catch-22s because as a trader I love it because it increases volatility. I don’t trade with that high of leverage but I that it exists because I profit when that waterfall of selling happens — I know how to identify it and take advantage of it. But most people that trade on leveraged exchanges lose — almost all of them. And I don’t think people realize that. Everybody has the gambler mindset and goes there and gets overleveraged and doesn’t understand margin and how to protect yourself. So 10–15 years ago the forex markets were huge and everybody was launching forex bullshit. And we saw what happened in those exchanges behind the scenes: a lot of the forex brokers — because there wasn’t a centralized exchange, all the brokers were making their own order book — they were trading against their customers and stuff. So the same shit’s happening in crypto. And that’s why I say: People should just stay away from the lower liquidity, lower volume futures exchanges. And if you have to trade them, do it on low leverage. You’re not going to get rich quick — you’re going to blow up.

American HODL [1:36:58]: You’re getting hunted by whales — that’s what’s happening on those exchanges. It’s just a really tough game to play, especially if you’re the little guy, so be careful.

Chris Dunn: Brad are you gonna start swinging size on massive leverage?

Brad Mills: Yeah there is an exchange actually Kollider that’s a Lightning Network-powered exchange they allow you to do massive leverage but it’s on like $50 bets. It’s not like you’re gonna put your whole portfolio because it uses the Lightning Network and there’s a maximum size of liquidity that you can deposit into the account. So I still don’t recommend people to even use that because it’s basically just like pulling a slot machine. And I actually was an LP in Adaptive Capital and they blew up on BitMEX so I lost some money when BitMEX got stop hunted — they got stop hunted! Pretty much what HODL said is what happened on BitMEX — they got liquidated. I think BitMEX is a bucket shop — at least they were, they’re not doing it so much anymore, but — they basically hunted Adaptive’s position, or some market maker.

American HODL [1:38:04]:Bby the way Chris do you remember the Adaptive story? Were you following that at the time?

Chris Dunn: Not closely. I remember seeing headlines and stuff but it basically imploded, right?

American HODL [1:38:13]: Yeah I think it’s instructive and I’ll just go through it real quickly for anybody who doesn’t know it: it was being run by this guy Murad Mahmudov who was considered one of the smartest guys in the room — incredibly smart young kid — they had all the right people in, they had all the right strategies, all that kind of stuff. And they blew up in the March 12th correction because no one saw that coming — no one.

Brad Mills: I did! I just sold the bottom, that’s all.

American HODL [1:38:43]: I think it’s just very instructive because these guys essentially blew up at the finish line — they fumbled at the goal line right before the big bull market. And that fund size would have been low 9-figures probably at this point, but instead it’s zero! And the reason why is because they were overlevered and they hadn’t planned for unknown unknowns. And when you’re HODLing, these things don’t happen to you. So for me — yeah I took a serious punch in the dick on March 12th and I remember having a whiskey and I came inside and I told my wife, We’re about to get stupidly rich — that’s what’s going to happen next, because I knew the response that the Fed was going to create to the events that just unfolded. And I just think if you’re not building for redundancy — if you’re not covering your downside — you’re just purely gambling and I don’t care how smart you are or who’s in your fund or what type of names are associated: you’re being a degen, for sure. Cover your bets.

Chris Dunn: Nobody’s immune, man. How many fall from graces have we seen in this space, right? I come from the futures market so I’ve seen massive disasters. I was doing this shit in high school and just to see the egos and the dick measuring contests and all this stuff that happens in crypto — and it’s usually the people with the biggest egos that fall the furthest!

Brad Mills [1:40:14]: That Do Kwon guy, man, he was posting some seriously egotistical toxic shit to his own investors! The only other guy in crypto right now I think that’s as bad as him is Richard Heart with HEX.

American HODL [1:40:32]: Stay humble and stack sats. Listen, I called $25k as the bottom — I’m fully prepared to look like a total moron for that call. Fully prepared.

Chris Dunn: Yeah that’s all right, as long as you have skin in the game! People that are throwing predictions or talk shit about Bitcoin — I’m like, Short it! If you put a position on, I respect it — if you are just blabbing it’s like, Go away!

Brad Mills [1:40:59]: Chris what was the craziest thing you think happened this cycle that you didn’t see coming?

Chris Dunn: Obviously the LUNA implosion is probably the most extreme example of just people losing their ass so fast — I think that’s probably what caught a lot of people off guard and what cost people the most amount of money. Outside of that, the craziest thing that happened — I guess something I was disappointed in is seeing Elon and guys like Mark Cuban pumping Doge and shit like that. That to me was just disgusting. Those are the things that stick out — what about y’all?

American HODL [1:41:44]: I knew about Bored Ape Yacht Club in the very very beginning: I had a friend who was like, Dude! Bored Ape Yacht Club! This is amazing! And I was like, Monkey pictures? Hard pass. And it went to like $500,000 for a monkey picture! I could have never seen that coming or the cultural phenomenon that it became or NFTs in general. To me it was crazy that NFTs took off because I actually have a fundamental understanding of how the technology works and I was like, Yeah you don’t actually own shit! All you have is you have a receipt that points to a picture of a monkey. People are willing to pay half a million dollars for that? I could have never seen that coming.

Chris Dunn: I think NFTs are fun and it’s cool and whatever, but as an investor they’ve just gotten crushed and this is just another example of the madness of crowds. How people will throw hundreds of thousands of dollars at a JPEG — I just don’t get it.

Brad Mills [1:43:01]: Yeah I agree I think the craziest thing that happened this cycle was pretty much a combination of what you two just said: it was just crazy seeing Elon Musk shill Dogecoin — to see that guy be such a genius and so smart in all these other areas and working for something meaningful like getting Starlink to help people in research facilities in Antarctica to get the Internet and help all these people in rural America or whatever. Seeing him work on all that stuff but then just be so clueless about Bitcoin — and not just be like, Oh it would be funny if Doge was the currency of the world, but to actually be engaging with the Dogecoin people in a serious way and being like, Yeah we should just raise the block size 100x, having the same stupid conversations. We already went through this!

Chris Dunn: Yeah guys we’ve been there — that’s old news!

Brad Mills [1:43:51]: Yeah we solved that problem! The Lightning Network exists! So seeing that happen and then seeing the JPEGs go wild Brad Mills: I mean I was into JPEGs back in the Rare Pepe days so I kind of understood the idea of digital collectibles and stuff like that, but I never thought that we would get to this point where literally all the major influential celebrities you could think of were doing JPEGs. It’s the craziest thing! I think we’re gonna look back in history at this and see like, This was the stupidest thing!

American HODL: Digital decadence.

Brad Mills [1:44:28]: This was the dumbest bubble — digital decadence, perfect HODL: it’s the digital decadence bubble of just nothing! It’s literally like what the WEF says: You will own nothing you’ll have no privacy and you’ll be happy about it! You’re literally owning nothing! And you’re so happy about it! And it’s on the Ethereum blockchain!

Chris Dunn: If you look at the Garyvee hustle world, there always seems to be a flavor of the year, like the latest biz op. One year it’s dropshipping, next year it’s garage sales — which by the way I think is actually a good idea if you’re dead shit broke, but — this year it was NFTs, and you had all these little solopreneurs launching their own JPEGs. And I saw so many videos of guys that had a following — they’re in the health space or the dating space or whatever, they have a little audience — and they’re like, Guys! We just launched this NFT! And then you hear the way that they sell them on their livestreams — they’re using securities talk of like, Oh yeah the guys that went out and they bought on day 1, they’re already up 50%! You should go out and buy two! And they don’t know what they’re doing, I don’t think. They’re pumping shit! They’re promoting it as a security!

Brad Mills [1:45:41]: They literally put on the website on some of these things: [It’s] a good investment — you’re going to make money! I’ve literally seen them where it says, 10x your investment! Buy our NFT!

American HODL [1:45:50]: I knew we were at peak NFT when I was just at the local diner that’s close to my house — just a regular place people go to get eggs, it’s 20 bucks for breakfast — and I’m sitting with my wife having omelets or whatever and the guy next to me is bragging to the girl he’s with about his NFT drop or whatever and I was like, Oh no! And you know what’s crazy, man — Chris, you probably had this experience — when I was new in Bitcoin like end of 2014, early 2015 when I first got in, I started telling people about it and I was so excited I couldn’t shut up and I just told everybody and I was the crazy guy in the bar parking lot screaming about the Federal Reserve and all that kind of stuff. And everybody told me I was stupid, I was a moron, I was an idiot, this and that yadda yadda. And then what’s funny is: fast forward to today — it’s the same people who are now all in on pictures of monkeys or Terra LUNA or this shitcoin or that shitcoin who are also telling me I’m stupid! Oh, boomertech! Bitcoin’s old! It’s slow! It doesn’t make any sense! It’s inefficient for the environment! Whatever, right? And it’s like, Dude, you’re the same exact person from seven years ago! Nobody ever learns — it’s crazy.

Chris Dunn: I call it the nocoiner dilemma: in a bull market people are like, Oh Bitcoin’s too expensive! I don’t want to buy here and be the dumb money! And then in a bear market they’re like, Oh well it’s too risky — it’s crashing — I don’t want to buy now. And then in the next market cycle they justify it by saying, Well I could have bought lower in the previous market cycle so I’m going to wait — I have that price bias — so I’m going to wait. And then people just end up waiting waiting waiting and just never taking the leap.

Brad Mills [1:47:32]: I am though experiencing more people in the last two weeks in my friend group — just friends, family members, whatever, coming to me after the price dropped saying like, Hey I want to learn about Bitcoin now. And that is unique! I’ve never experienced quite that in the previous bubble pops — usually it was all FOMO and then people didn’t know why they wanted it. It was price driven and when the price came down they just forgot about it. They’re like, Yeah well I don’t want Bitcoin anymore, like you just said, Chris. But now with inflation going up and the price of gas continually going up and all this craziness happening in the world, I do think that people are fundamentally starting to realize the money’s broken and Bitcoin is money — it’s been money since the beginning. The more and more successful people that people respect get into Bitcoin — even though some of them shill JPEGs and ponzi schemes — Bitcoin does seem to stick. It seems to be having more of a breakthrough moment now. I don’t know, maybe it’s just the high inflation or something, but I’m getting more people coming to me being like, Yeah I want to start learning about Bitcoin now.

Chris Dunn: Yeah. If you think about it — our generation — we haven’t really known inflation. We’ve only seen decreasing interest rates and we’ve only known, for the most part, bullish markets and falling rates. And for the first time people are realizing like, Oh shit! Covid, trillions of money getting printed, rates going up, inflation — these are real world problems that previous generations have had to deal with. What’s the solution? And people are realizing I think — and this is great — that Bitcoin, like you guys have alluded to, is the best option we have! It’s even better than gold!

American HODL [1:49:25]: Totally. Here’s the big idea — if I was gonna leave everybody in the audience with one thing, I would leave them with this — : Humanity has only had two monies. Gold, and then Bitcoin. If you think about all the fiat currencies, they really run on a shadow gold standard, and for a while they ran on an actual gold standard. And so Bitcoin is humanity’s next form of money, and it’s basically just a digital version of gold. Gold was fantastic at storing value throughout time, but it was not good at sending value throughout space. Then you had fiat currencies which were amazing at sending value through space but not sending value through time. And now we have Bitcoin, which can send value through time and space! This is why it’s such a next-level monetary technology. And if you transported yourself back in time and you found yourself in 700 BC at the monetization of gold and you just started hoovering up all the gold you possibly could find and you were hoarding it, people would think you were a fucking whack-job! They would be like, Why don’t you get chickens or goats or something useful man! What’s with all these shiny rocks you’re collecting? You’ll see — you’ll see! You would have been seen as a quack, but then later you would have been seen as a visionary, and I think it’s very similar to what’s happening now. And once you really understand the principles behind Bitcoin and what a next-level computer science breakthrough it actually is and you start to really deeply get it at a fundamental level, you start to realize like, This is the biggest game-changing technology we’ve seen since the invention of the printing press — this is a really really big deal. And the same way the Internet reshapes society — Bitcoin is going to reshape society in an even greater manner. And that’s the big idea: Get your hands on as much Bitcoin as you possibly can, because we’re about to live through this transition.

Chris Dunn: Here, here. Well said, man. Brad any final thoughts?

Brad Mills: No that was perfect, let’s end it on that!

Chris Dunn: Cool. Awesome, where can guys reach out to you if they want to connect?

American HODL: I’m usually on Clubhouse all the time just talking shit, so if you want to hop on that app — it’s fun! We have good Bitcoin conversations on there. Brad is on there often. And we just shoot the shit, talk about the day’s events and Bitcoin, whatever. It’s a good community-focused learning apparatus / entertainment venue. I’m just @HODL on there.

Brad Mills: I’m also on Clubhouse quite a bit. Twitter: @bradmillscan. If you want to listen to my podcast: Magic Internet Money Podcast. But yeah Clubhouse — just go follow Cafe Bitcoin on on Clubhouse and I’m in there a few hours a day at least! Just be prepared though — there’s some toxic maxis in there! So if you come in there expecting to have a lovefest and you’re about to ask about latest shitcoin xyz — not everybody’s so patient! Just be forewarned! You’d have to find me! If you find me, I’ll have a patient conversation with you!

Chris Dunn: Yeah cool well guys thanks for taking the time to hang out and chat today. I think this was really productive and again I just really hate seeing people get wiped out, and if I can do anything just to save one person from losing their life savings, then all this shit was worth it. And you guys have a lot of experience and you’ve seen all the same stuff that I’ve seen and I think it’s probably valuable for newbies to hear this. And hopefully people will learn the easy way and not have to fucking lose everything.

American HODL: Totally. Yeah and I would just say to the audience who’s primarily traders: draw a dividing line down your investing life and trading is what you do for work day job hobby whatever it is for you, and then investing is something you do for your long-term future self. And take your profits from Bucket A and put them in Bucket B and hold them over the long term. Don’t use your entire stack to trade, because that always usually ends in disaster!

Chris Dunn: Oh yeah. Yeah we talk a lot about different capital buckets: having long term, short term, and follow your own risk tolerance.