Why Prediction Markets Are Taking Over... (Tulip King)

Welcome back, dude.

Thanks for having me. If anybody wants to know what it’s been like working for Thread Guy so far, he has us doing TA on OnlyFans creator charts. So that’s been my experience so far.

It looks like a classic short. If you flip that chart over, you’re long 50x, it looks good, dude.

It’s consolidating. It’s going to run up to $200 million. Just stay tuned.

It looks good, man. I don’t know. But, dude, welcome back to the stream. Since you last came on, a lot has happened. In the markets, you are now a team member with us at Counterparty. I haven’t really publicly talked about it that much, other than the tweet that I made. What was that? Why did you join Counterparty, dude?

Also, give us an intro if you want.

Yeah, Tulip King, newest member of the team. Happy to be here. I’m coming from Messari and was previously a stream guest.

Dude, you made a good pitch. I think you kind of said it like this is the network state. I definitely believe in what we’re building here, and the fact that you can create a high-value community in crypto in a way that you can’t do with other things. This is the evolution of the game, right? It’s not gambling, SteveWillDoIt content. It’s “get smarter, let’s win” type content. So I was like, “Fuck it. I can’t imagine not being a part of it.”

Did I give you a sick pitch?

Oh, yeah. Malcolm, too. But you were definitely on point.

I came on fired up. I was like, “Dude, we have—” Yeah, that’s awesome. It’s been a fun short period of time since you joined. I think you’ve definitely elevated everything that we do here. I’m enjoying the segments, by the way, as well. We’ll talk about it off-stream a little bit, but give us a quick intro.

I think most people who are here right now were here for your first stream, but what do you focus on? What do you pay the most attention to? What are you interested in right now in crypto? Who are you?

Yeah. Before joining this, I was leading data engineering at Messari. I helped all of our analysts with their different data needs and all that stuff.

The only thing I really care about in crypto is what’s next, essentially. Right now, I’m insanely bullish on prediction markets. I’m still a “let’s go Polymarket, the best” guy. I’m still a ZEC bull, but I have introduced a lot of patience into my ZEC thesis nowadays.

But I also just love crypto, right? I think it looks like we’re in a bear market, maybe, and bear markets are honestly some of the most fun times you can have in crypto. If you have the right attitude, if you actually love this shit and like thinking about it, and the market says, “Okay, I’ll give you 2 days,” you can think. There’s nothing to trade. Just read some good shit, talk to some smart people, and actually start to form opinions. Figure out how you’re going to win the next cycle.

Honestly, this is some of the most fun, best time in crypto. Bear markets are fun in the same way that I say pledging was fun. I don’t want to fucking do it again, but I’m kind of happy it happened. It wasn’t the worst thing in the world. At the time, it’s brutal, though.

I think the focus of the stream right now is going to be on this “what’s next.” I actually like that we did the segment today, and you worked on it. Daniel worked on it as well.

Part of the reason I like it is it sort of sets the stage for this—I’m going to use the word “framework,” but I don’t know if I need a better word. There’s a mutual consensus that we agree things are headed somewhere, but you don’t have to be long degeneracy to be long memecoins. You know, we don’t have to think memecoins are going to make it. You don’t have to think NFTs are going to make it in particular.

I think we’re also in this spot where we’re looking for this next game. I want to start with prediction markets because you love prediction markets, which is awesome. You’ve been tweeting prolifically about Polymarket, about getting back into the green, about making money.

I guess set the stage a little bit, because there are a lot of people who are interested and intrigued. They see the discourse on Twitter, they see us talking about it, but actually taking positions and turning a P&L is a little bit of a different story. How has your experience been so far, and what side of prediction markets are you interested in?

Yeah. I’ll start with a quick high-level thought. You have to be playing with shit in crypto, right? You have to be a student of what’s going on at all times.

I think Zcash rewarded people for understanding the history and philosophy, and the initial reasons why the cypherpunks were into Bitcoin. The quicker you could find a reference for cypherpunk culture in your heart, the quicker you could get long on Zcash.

Airdrops are like that. The quicker you can get to new projects that nobody’s playing with yet, the quicker and better you get paid on those things. Anytime I see anything new in crypto catching even a little bit of motion, I’m throwing money at it.

Obviously, you don’t always walk away with a profit there. Sometimes you just burn $100, $200, $1,000—however many dollars—to learn that this isn’t the thing. But the opportunity cost in crypto of not catching the thing, of thinking, “I just didn’t play with it. I didn’t understand prediction markets. It didn’t make sense to me,” in my experience, that’s not the winning strategy.

Polymarket has been catching a ton of motion. Everybody’s tweeting about it. Obviously, we’re super happy to be partnered with them, so I was like, “Time to get deep, deep into it.” It’s a ton of fun, honestly.

These prediction markets are so unlike anything else in crypto, and that has honestly made me love them even more. There’s edge, right? Trading memecoin mania—even before WIF ran and people were like, “Oh, I’ve seen Doge from way back when. I’m out on all this stuff”—or the AI agents, where people were saying, “I’m out on all this stuff,” it’s definitely still early.

That’s the takeaway I have. Now is the time to be putting in the reps. I’ve just been obsessed with trading every type of Polymarket: Bitcoin up-or-down markets, political markets, sports markets, culture markets, the war-against-Russia market that I got rugged on. You name it, and I’m in it.

I will say it’s a Jezism, which I just—I shill Jez so much I should be on payroll. The way that I talk about Jez, being a good new-thing enjoyer and participant is the most profitable strategy in crypto by far. Being early is a lot easier than being right, you know, and the good-new-thing enjoyer is where you want to be.

I think that’s one of the reasons our stream is successful: we have edge because we interview so many people that you’re sort of guaranteed to be relatively early to a good new thing, or at least know that it exists.

That’s why we called Zcash, right? On my normal day-to-day, I would have thought, “This is stupid. It’s an old coin. Everybody hates it.” I would not have put in the reps to understand what was going on and catch that first move up.

Being a good new-thing enjoyer is something I think people should pride themselves on: trying everything. That’s how you would have caught Friend.tech in the early days. That’s how you would have caught Pump in the early days. That’s how you catch everything: being a good new-thing participant, trier, enjoyer.

Are you profitable right now on Polymarket?

Finally. It took me—I had a little bit of beginner’s luck, and then I think I dug myself into a hole for about 2 or 3 weeks.

Everybody can see my Polymarket portfolio. I’m trying to do this all in public. It’s just Tulip King on Polymarket. You’ll find my portfolio.

Honestly, you have to learn how to trade these things. I was willing to take the losses and basically message somebody: “Hey, I’m playing for—I got burned on this. What do you think?” Or, “I’m taking this bet, and here are my reasons,” and then argue it like crazy.

Take the Google Gemini one, right? I basically had this long-running thesis that, because the Google Gemini release date was leaked, Google was actually going to pivot and move the date to avoid accusations. I was trying to 4D chess the markets, but I was wrong on that.

That taught me, “Okay, maybe don’t 4D chess these markets so much.” Sometimes you’re just handed a high-conviction position. Have a preference to buy with the markets, right? When should you bet with the market, and when should you bet against it? You have to be constantly taking notes.

I think as you get into Polymarket and start to learn, do you think prediction-market trading is going to—okay, there are a lot of people comparing it to the new memecoins. Do you think that framing is wrong?

Yeah. I am massively bullish on prediction markets. I think it's a structural addition to markets, and perhaps the way to look at it is: what a prediction market is—what Polymarket is—is a financial primitive, right? It allows you to create markets, post price discovery on top of those markets, and then settle and resolve the condition of the options contract, essentially.

What's interesting about that is, when you have that base primitive, you get a lot of other stuff for free. If I can settle a yes-or-no market, I can do all of sports betting: yes or no yards, yes or no receptions, yes or no winner, yes or no winner with a spread, right? By building that infrastructure, I get sports betting. By building that infrastructure, you get political betting.

By building that infrastructure, you get options contracts: Bitcoin above or below this price at this time, right? By building that infrastructure, you get insurance markets: is this disastrous event going to happen? You're basically just paying a premium on that, and somebody else is taking the other side.

When you start to look at Polymarket as the underlying infrastructure of binary outcomes—or ternary, because you can have these things resolve to multiple states—and then you start to realize how many other financial instruments are just wrappers on top of binary outcomes, you start to see that I don't even think Polymarket is competing with the sportsbooks. I think it is completely superseding them.

The analogy I've been using is that DraftKings or PrizePicks or whatever are like the calculator, right? Polymarket is the iPhone. You just get the calculator for free, and the insurance markets are Instagram, while the prediction and political markets are the camera, right? It's all there. It's completely new. You've completely superseded the need for all of these other types of markets. And then there's a whole other layer of implications beyond that, even.

The calculator-iPhone thing is lit. I love that. That's a clip.

You know what problem I've run into in my own personal trading? I think they're incredible for news—really, really good for news. What's going to happen? When's it going to happen? How serious is it going to be? It's better than any news outlet because it's capitalistically unbiased.

The problem I've run into is knowing what to trade. I feel like often I'm looking at these prediction markets. I bet on—I'm up a little bit on Fed chair. When will Trump nominate Hassett as the next Fed chair? But I'm kind of just reading headlines. I didn't have a thesis on on-chain buybacks on Pump.fun and consumer on-chain volume and usage going up.

I think this is the shared consensus problem for most crypto people. They're like, "I don't know what the fuck to bet on."

Yeah. I think the platforms probably need to work on discoverability. I think the end state of an incredibly interesting end state of Polymarket—and I don't mean this in a terrible way—is like a YouTube or TikTok recommendation algorithm.

It's become clear that there are going to be tens of thousands, hundreds of thousands, or millions of markets. So how do they actually surface markets that are relevant to any particular user? I would kind of like it if my YouTube algorithm somehow bled into a Polymarket algorithm that said, "Here are 20 markets you might be interested in," because it's based on stuff I consume a lot.

I love semiconductors, CPUs, GPUs, and stuff like that. If there were a bunch of markets about AMD, NVIDIA, and Intel earnings, but also whether they're going to release a new chipset on time, or what the memory connection bandwidth is on new HBM chips from AMD and stuff, I would love it. I watch YouTube videos about that stuff all day. I would love it if there were just a recommendation saying, "Hey, you might have a perspective on these markets."

I think "What markets should I trade?" is something that kind of needs to be solved by the actual platforms themselves. But then the other thing is, again, it's just so different from memecoins.

When you get on Twitter and you're a memecoin trader, your perspective is essentially that you're just a touch early to what's funny. You're a touch early to the culture. Your day-to-day routine of scrolling Twitter is the same, and then you just snipe the memecoin that comes your way, right?

Versus these prediction markets, which cover so many different things, they're touching different parts of your brain and different parts of your knowledge sphere. You have to be open to the perspective that there might be a moment where there are 50 markets that I resonate with and I have positions in all of them. There might be a moment where there are 2 markets that I resonate with and I only have positions in those 2.

For the sake of learning, I think people should actually be on these pretty aggressively. But as you feel yourself getting over the learning curve and into the comfort curve, it's probably better to be more picky.

Don't necessarily rush into Polymarket. I have a ton of positions open right now, but I haven't opened that many new positions recently because we're at the end of the year. A lot of markets go through the end of the year. I kind of have the positions I want through there, and I'm excited for January, when a bunch of new markets roll out. I'm like, "What do I think of these things?"

It's different. There's not a single information feed where you just directly say, "Oh, I saw this thing—check Dexscreener," right? You need to be more patient and more browser-oriented.

I got lost after you said, "I love semiconductors. I watch videos on that all day." That's awesome.

I love that you love that, dude.

We'll get everybody watching them. They're good.

You should send me some YouTubers who make the best semiconductor videos.

You pay a lot of attention to who else is trading and what they're trading. How are these people winning, and what strategies are they deploying?

Yeah. There are a lot of interesting strategies, and I think it really depends on the markets. The other thing is, memecoins are all kind of the same. Pepe goes up for the same reasons WIF goes up, for the same reasons BONK goes up. Is there excess capital? What's capturing mindshare?

Sports markets trade based on the probabilities of a game versus mention markets. So I think the first thing to realize is that there's no such thing as, "Here's my strategy for all of Polymarket." It's more like, "I'm sharp at sports betting," so I get into all these sports markets.

Some accounts will love mention markets. They'll have a bunch of tooling that pulls transcripts from historical Trump speeches, and then they'll run LLMs on top of those and say, "Based on past transcripts and current news events, what should my probability spread be on the mention market for this upcoming speech?"

For me, I kind of like some of the macro-political hot takes, so I mostly just read the news and bet how I think these things will resolve.

You also have to consider liquidity and the time frame on these markets. The more highly traded a market is, the more likely it is to be correct. It's one thing to bet against the odds on a $100K-volume market. It's another thing to bet against the odds on a $20M-volume market. The $20M one is just sharper.

The closer something is to happening, the more likely somebody with knowledge of the event has stepped into the market, or the more certain the outcome becomes. I'm pretty reluctant to bet against markets on short time horizons.

The number-one strategy is called bonding, where you're essentially buying stuff at 95%, 96%, or 98%. 95% is probably where people would draw the line for what's a bond.

The thinking there is that structurally, there's unnatural sell pressure in these markets. If I buy something at 20% and it gets up to 98% with a day left, I'm probably just going to close my position, because that last 2% isn't worth the black-swan risk to me. I've already made my gains, right?

I still believe it's going to 100%. So despite my personal belief that it's going to 100%, I'm a seller at 98%. The very top sliver of these close-to-resolution order books is unnaturally low.

A very common strategy is that people love to buy stuff that's at 95% and resolving in a day, or 99% and resolving in a day. One percent yield, one percent yield, one percent yield. That's how you get these P&L charts on Polymarket traders that look like they've been painted.

They’re just beautiful, right? So that’s probably the number-one strategy: just spamming these markets that are about to resolve.

It is hard, though, right? Because the black swan risk there is real. You need to put in a lot of money to make it worth it, but if something goes against you, like a government shutdown, a ton of people were positioned the wrong way.

Right? So I sold. I was one of those people who was an unnatural seller at the top of that market because I was like, “Okay, we’re a day away. I caught my gains. I’m out.” You need to get good at position sizing. But the good thing is, because these are all probabilities, you can actually just read a textbook. You can literally go read about Kelly betting and different portfolio theories for how to measure how much of your capital you should put into a position based on risk-to-reward ratios, and you can start to construct what you think is a mathematically optimal strategy for playing these prediction markets.

I think if you’re going to do that, focus on getting good at position sizing. That really is probably the winning strategy for bonding: being good at position sizing.

Do you have a position on that decision in December?

92%.

Yeah. I bought that low on the 25-bps cut.

I bought it low and I made money on this.

Yeah, yeah, yeah. We bought in low. Best trade ever on Polymarket was this trade.

Oh, and we’re going to keep winning.

We’ve got some good ones.

Good. Hell yeah. I think that one spooks me because I think the Fed hasn’t cut as much as people want the Fed to cut. My long-term perspective has been that there’s actually a lot of political pressure on the Fed not to cut rates.

COVID happens, everybody does all the stimulus, and then you get inflation. What was the unique characteristic of the election cycle after the inflation? If you were far left and there was inflation, you lost re-election. If you were far right and there was inflation, you lost re-election. If you were a centrist and there was inflation, you lost re-election. No matter what your policies are, if there’s inflation, there’s a way higher chance than normal that you don’t get re-elected.

So why does every politician right now talk about the cost of living? Zohran, cost of living, Trump—I mean, this is the thing they both agree on. Eggs are too high, rent is too high, right? I think the political pressure that isn’t discussed on CNBC or any of the money channels is that almost every politician and their mother is calling the Fed saying, “Don’t fucking cut rates, because if you cut rates and there’s inflation, I’m out.”

Trump is a real estate guy and a political anomaly, so he says we’re going to take rates to zero. But the fact that they haven’t gone to zero tells you that there are actually conversations happening in private that you’re not privy to, and these are the political motivations of those conversations.

Think about it. He fired one Fed chair. He’s threatened to fire Powell six or seven times now, or whatever, and they still haven’t cut rates. I think rates could go down. I doubt they go down as far as people expect. I actually think there’s a huge amount of pressure to keep rates high.

There are a couple of other ones that have big volume, like “Will Bitcoin hit $120,000 in 2025?” Ninety-five percent no.

Kind of a scary one, though.

Yeah, that one’s hard. I think I’m with Ty on this: the time to be buying puts through Polymarket was when he opened the ETH short.

I had a bunch of shorts on Hyperliquid and some other tokens. As soon as the market got bad, I bought a bunch of “this won’t hit an all-time high,” “this won’t hit this price,” and “this will dip to this price.” I also have a bunch of NO positions on “Will this project TGE?” Because the market got bad, projects that had signaled an end-of-year TGE might not do it.

That’s an instance where you can bet against consensus if you diversify the portfolio. If there are 20 markets for TGE and I bet no on one of them, that will probably screw me over. But if I have a broad perspective that, in general, more projects will not TGE than people had perceived, then I bet no in all of them. I take a couple of losses, but the ones where I’m correct are low-probability events that supersize my returns.

I’m not betting against any particular market, because Polymarket is really sharp and will probably be right on most of those. But on the couple where it’s not right, my payouts make up for the loss. That’s thinking about how to structure a perspective through multiple positions.

There are also some interesting markets. One that I’m looking at is Lighter. There are two markets: “Will they airdrop by December 31st?” and “What will the market cap be at TGE, assuming it airdrops by December 31st?”

If it TGEs, it’s going to be over—I mean, they’re doing more volume than Hyperliquid right now. They’re bigger than Hyperliquid right now. It’s going to be over $1 billion.

Will it airdrop by December 31st? That’s an 85% chance. Yes. And then “Will it be over $1 billion?” is 75%. Over $2 billion is 70%. Over $3 billion is 60%. There’s like a 10% delta in that right there. You might as well take “yes” and “over $1 billion” rather than just take “yes,” right?

Exactly. Well, the way to structure that if you want a hedged bet is to assume that if they airdrop, it will be over $1 billion.

They just raised $1.1 billion. The FDV is going to be higher than that.

Right. So you buy “yes, it will be over $1 billion” on the airdrop, or on TGE, but on the other market, “Will they TGE?” you buy no. If you buy “yes, over $1 billion” at 75% and “no airdrop” at 10%, you basically spent 85 cents. If one of those is true, you get the dollar.

How do you lose that trade? Is that a can’t-lose trade?

Well, if they TGE and are below $1 billion, you lose double. When you do those, you create a grid of outcomes, essentially.

One position I had, and still have right now, is “no Hyperliquid airdrop” and “yes, Hyperliquid dips to $20 within this year.” The thesis was that I think it can hit $20 without doing an airdrop, but everybody’s concerned about the token unlocks. The last thing Hyperliquid is going to do is introduce new token supply, and if they do that, it will crash the price.

So if they airdrop and I’m wrong about that, but I’m right that the new supply crashes the price, I get paid out on that other leg. My super-win condition is essentially “no airdrop, hits $20.” My medium-win conditions are “airdrop, hits $20,” or “hits $20, no airdrop.” I only lose if they manage to do an airdrop without dipping to $20.

All of those different outcomes have probabilities and returns attached to them. That’s another scenario where I’m not even really betting on the chances of an airdrop or the chances of the price dip. I’m betting that these two markets, relative to each other, are mispriced.

Arbitrage is the wrong word, but it’s like betting on cross-market correlations. I think that’s wide-open territory, and very few people are betting with the level of intellect they should be.

Huh. I should trade this once we get off stream. I’m going to trade this Lighter thing.

Yeah, yeah, yeah. Send me the details. I’ll tell you what strikes to buy.

Let’s trade this. Yeah, this is a sick one.

Yeah, and the thing to think about there is that when you have those cross-markets, you basically want the total odds to be under a dollar because you expect one of them to hit.

If you’re buying “over $1 billion” at 75%, then “no airdrop” needs to be below 25%. Because if you pay a dollar and a penny, you need both markets to hit.

I could do “no” at 16 and “yes” at 75%. That leaves us with 9.

Yeah, because that puts you at 91. You basically paid 91, and you only need one of those to hit to make a dollar. You’ve basically bought a 99 position synthetically—

At 91.

Or 91, sorry. You’ve bought a 91 position synthetically.

Oh, that’s—

And that is why Polymarket is actually going to eat all other financial assets alive.

I probably just fucked it, by the way. Someone in the chat—the bros are about to close the only trade I have on Polymarket. I probably just fucked it. If you guys get in on this, send me some love.

There’s not enough volume. There’s not enough liquidity. My bad, Cyrus. You better—

That’s a challenge.

Yeah, you need to use limit orders. You need to be patient.

They want to fuck me on this, dude. I should have done it. I was just thinking about it live. I wasn’t even fucking—

Wow.

Yeah. The hardest thing has honestly been that a lot of these cross-market opportunities require both markets to be liquid, because you need to position in both. It’s been hard to get a lot of money into those, and I’ve had to wait with a limit order sitting and move it around a little bit.

But I think the markets will just get more liquid over time. I’m not really worried about that at all. I’m just building the skill set so that when the markets do become more liquid, I can do this even more easily.

But again, this is why Polymarket will win. When you really think about a stock price, it’s incredibly imprecise. On one hand, the beauty of a stock price is that everybody has all of these opinions, and they’re buying and selling the stock based on those opinions. But the problem is that the opinions are then lost, so the price of the stock doesn’t actually mean anything anymore.

For example, with NVIDIA, if you’re a quant at JPM, your whole job this quarter might be figuring out whether NVIDIA is Atlas holding up the world. You spend months figuring out what their earnings are going to be, and you know you’re right. But are they going to beat earnings by enough? What’s the market response to that?

I can’t just bet on earnings, unfortunately, because the stock price itself is such a crude instrument. But that same JPM analyst can get into the Polymarket for NVIDIA earnings and express exactly what they think.

Prediction markets allow you to construct completely novel, high-specificity viewpoints in the market. They’re this combination of markets that creates the highest-signal information I think we’ve ever really seen in a market. I’m not long or short Hyperliquid; I’m long or short Hyperliquid contingent on an airdrop. That just doesn’t exist in other markets.

You could be long or short Apple stock contingent on their sales numbers for AirPods or their sales numbers for Apple TV. Then your perspective is that Apple will go up if they’ve shown they can grow services revenue. But if they can’t grow services revenue, you think that narrative is actually driving the stock, so it’ll go down.

You’re evolving the mindset. It’s just going to eat everything.

Okay, give me one more Polymarket take, and then I want to talk about crypto.

The other take isn’t necessarily a take. It’s more like, you tell me what’s more interesting. I have a take on whether it’s gambling or not, and then I have a take on bounty markets.

I was going to ask you why DraftKings is going to zero. Give me the bounty-market take.

The bounty-market take is super interesting. This has to do with throwing the dildos onto the WNBA court or Brian Armstrong saying everything in the earnings call.

The way to think of it in that context is that the prediction market actually facilitated the bounty for making the event happen. What the prediction market for Brian Armstrong saying these words is telling you isn’t what the chance is that he’ll say them. It’s telling you: if he says these words, what’s that worth?

If you’re the guy writing his script, you might sneak something in there or cut something from it. If you’re him, you might say it. Because the prediction market is an economic engine that creates incentives, it has an impact on the event. The two actually balance back and forth.

Take the WNBA example. That’s an outcome that’s extremely asymmetrical. There are 20,000 people who can throw something onto a basketball court, and what, 20 people who can try to stop that from happening in the building? The probability is asymmetrically in favor of people throwing something onto the court, but the market should start to price that in.

I’m not going to be able to get away with it. What the market will do is say, “Throwing it onto the court costs me $20,000 in legal fees and a lifetime ban. My total personal cost is $40,000, as I assess it. I need to be able to make more than $40,000 by taking the position and throwing it in there.”

But the market can price that in. What the market settles to is equilibrium. The market finds the strike price for making this event happen. It’s essentially created a bounty for making things happen.

That extends beyond silly little things like basketball games and earnings calls. It extends to political markets. An example I have in an article I wrote is: if I have a 0.5% chance of becoming mayor and I buy a $5,000 position in that, my payout is $1 million.

I can buy 20 $5,000 positions, hire 20 people, and say, “You now own these shares in the market, and if we can get me elected, these will pay out $1 million.” I’ve bootstrapped my campaign using $100,000, with potentially $20 million worth of payout.

Think to yourself: I could probably make some progress politically with 20 real killers on my team. The market is financing the value of making something unexpected happen right now.

You can create joint ventures. This is why Polymarket is such a beautiful financial instrument. This is actually how stocks started: the original equity structures involved people financing voyages and expeditions.

That financial venture only existed for the duration of the voyage. You would put money down to fund the voyage, and whatever spoils they brought back, you’d get a share of. The origin of a limited-liability venture is a time-duration thing, just like a Polymarket.

You’re creating a temporary company: if our cohort of people can make this thing happen, here’s our payout, and if we can’t, here’s the amount of money we put down for that chance. You’re going back to the days of the original voyages and the East India Company.

This is a financial primitive that we’ve seen before. It’s just on-chain now. It’s fascinating.

By the way, I don’t know what happened to the Discord camera or why it was doing that, but I fixed it on the overlay. That was one of the sickest examples I’ve ever heard. The mayoral thing is like—

Yeah.

You basically just give a bunch of call options to all your employees. If you can get me elected mayor, you’re going to make $1 million. That’s crazy.

Yeah. There’s one for Thread Guy. There’s the question of whether Thread Guy will hit an all-time high in mindshare.

I’m just chilling here with you for company ideas, but what if we were to take a position in that? If we as a team are long Thread Guy—if we’re long your mindshare going up—and we pull that off, we don’t need a sponsor to pay us. We don’t need chat to pay us. The market pays us for making something we want to happen.

The possibilities are so interesting.

All right, the problem is that it doesn’t have enough volume, dude. By the way, the odds are progressing.

Really high.

Yeah, dude. They must have heard Tulip King joined, and they’re like, “Oh—”

Dude, they’re stupidly high on me winning.

Buy Yes at 83.

See, I bought Yes at 15 cents. I was like, “Dude, of course.” What do you mean? I’m betting on myself. I knew I could make it happen.

Can I ask you a question? We have the same amount of time in the day, and at this point, we spend a lot of time on the phone. I probably talk to you for a couple of hours a day. When do you do all this thinking? How are you doing this?

I’m just always thinking. I like walks. I like vibing. I like to just—you know, I’m a chill guy. But I just like to think.

I’m obsessed with all of this: all of crypto, all of the coordination mechanisms, and the future we’re building. What are the implications of all of this stuff? I’m just never not thinking about it, I guess, would be my answer.

All right. I want to start with a tweet.

Let’s do it.

Cold Blooded Shiller tweeted this at 3:52 a.m.:

“Stop thinking late. This year, 2025. Gold, plus 60%. Best year since the 1970s. Silver, plus 104%. Best year since the 1970s. NASDAQ, plus 20%. S&P, plus 16%. And BTC, minus 7%. And Ether, minus 25%.”

To that, you say it’s been a tough year.

It has definitely been the worst cycle we’ve ever had in crypto, just literally by the numbers. We went over this on yesterday’s stream, so everybody can watch the VOD if they haven’t. Bitcoin underperformed gold, the benchmark, and altcoins didn’t even set a new all-time high without stablecoins.

So, it has been the worst market ever. The phrase I’m just going to keep hammering home is: nobody said it was going to be easy, right? I think you can explain both of them, but it’s probably worth saying that Bitcoin is in its own narrative with its own reasons, and altcoins are in their own narrative with their own reasons, too.

It’s been brutal, dude. So what do you think happens from here? More broadly, what is your general view on where we are, why we’re there, and what happens next?

Yeah, I think on the Bitcoin side—do we have screen share running? Let’s see.

Do we have that?

You can screen share.

Okay, let me try to pull something up really fast, because I think there’s a chart that everybody needs to process for a little bit.

Okay, here we go.

All right. I can give him the hyper-bear thesis. Okay, never mind. I’d have to restart Discord to get the stream share going.

But I think if you look at a table of the largest assets in the world, there’s gold at basically $30 trillion, Nvidia at $4.4 trillion, Apple at $4.2 trillion, then Alphabet, Microsoft, silver, and Amazon. Number 8 is Bitcoin at $1.8 trillion.

Everybody should wake up for a second: we are in the major leagues, right? Nobody cares about your friends buying Bitcoin. Nobody cares about hedge funds buying Bitcoin. I don’t care if Multicoin is buying Bitcoin. I kind of don’t even care if Saylor’s buying Bitcoin. Look at the chart. He’s not really moving that thing anymore, right?

When you’re in the top 10 assets on the planet, you are officially in the major leagues. The last game in town is the sovereigns, right? We’ve already gotten BlackRock. We’re one of the largest BlackRock ETFs. They’re already making the most fees off of it. They’ve already added it to their model portfolio. We’ve already done the institutional adoption curve, right? We need sovereign nations now.

I think the timing just beat us, right? Russia invades Ukraine, and they freeze all of Russia’s foreign exchange reserves. If you’re another country at that moment, you’re thinking, “Oh, shit. I don’t really like this whole dollar-exposure thing anymore.”

Yeah. Right. So, you’re thinking, okay, the entire system has basically been the US buying all of our [__] and shoving Treasuries down our throats. That’s basically how it’s been. But we’ve been kind of happy to do that because the US is in charge. They’re starting to flex their power a little bit. China’s ascendant. Russia seems to be holding its own against the support system of NATO. I’m not really sold on perpetual allegiance to the US anymore. So now we’re in the position where the sovereigns are marginal sellers of dollars and Treasuries for another reserve asset. The problem is size, right? You can’t sell trillions of dollars of reserve assets into Bitcoin when it’s only $2 trillion. It’s simply too small. It’d be like aping a microcap [__] coin; you’re just going to lose it all on slippage. So, at this moment in time, when the sovereigns needed to move away from dollars—and still are—the only thing they could buy was gold. It was the only asset large enough to absorb that large of inflows. Gold has other advantages: it’s private, it’s quantum-resistant, and central banks are more comfortable with it. Nobody wants to be a hero. But at the end of the day, we’re in the major leagues, competing with gold, which has been the greatest asset in all of human history. It was kind of inevitable that there would be a cycle where we underperform gold. It wasn’t going to be as easy as every four years, here’s your up-only chart. I think it’s okay that we underperformed gold. But I think we need the world to develop more, and we need more smaller nations buying Bitcoin and lifting up the boat. El Salvador is a small enough economy to store reserves in Bitcoin that it bids it up a little bit. Then maybe you get more Latin American countries, some African countries, and smaller Asian countries. You get Thailand, Myanmar, Singapore. You basically stack your way up the chart. It’s just going to take time, though. I think we have multiple cycles ahead of us still. What do you think it’s going to take for that to start?

Yeah. My forward-looking catalyst here is stablecoins. I think this is basically the same thesis Arthur Hayes, Luke Gromen, and everybody else has: if the sovereigns are not buying our Treasuries, so the sovereigns are not buying our debt anymore, the US still needs somebody to buy this debt so rates don’t rise and we don’t have a debt death spiral.

God bless stablecoins, because stablecoins buy Treasuries and then issue dollars on a near one-to-one basis. I don’t know what the fractional-reserve banking ratios are, but I can buy a dollar’s worth of Treasuries and loan out more than a dollar as a bank. The GENIUS Act says that if you buy a dollar’s worth of Treasuries, you can only issue a dollar’s worth of stablecoins.

It’s less capital-efficient, which is actually what the government wants, because they want the buyers of their debt to be capital-inefficient, such that they have to buy a lot of that debt. I think the government is going to shove stablecoins down every bank’s throat. The private sector seems to be doing it of its own volition, but I think the government is really going to push to make stablecoins broadly adopted.

I can see it hitting $5 trillion to $10 trillion worth of stablecoins over some period of time. My bet is that those surplus stablecoins then get cycled into Bitcoin, and that’s our catalyst. The biggest thing I’m looking at for Bitcoin is the acceleration of stablecoin issuance.

I think the current number, around $300 billion, is really disappointing and really small. Larry Fink is talking about stablecoins; everybody and their mother is talking about stablecoins, and we don’t even have $1 trillion of them yet. What a joke.

$306 billion.

That’s nothing. What I’m looking for is stablecoin supply to pass $1 trillion, $2 trillion, and $3 trillion on an accelerating curve. That’s when I think you see Bitcoin start to get bid up higher. As Bitcoin gets bid up higher, larger and larger sovereigns can come in, custody it, and buy into the Bitcoin reserve system without eating a ton of slippage.

Really, I think it’s going to come down to stablecoins.

Okay, I want your take on how you’re positioned, and then I want to talk about Hyperliquid’s bear case and work backward. Give me a take, even for the chat: how are you positioned? What’s risk-on? What’s risk-off? What are you looking to position in or out of?

Yeah. So, right now I’m probably like, well, Zcash is now down. I’m probably somewhere around 85% Bitcoin, 15% Zcash. I think you actually need to use Bitcoin now.

Oh, no. Never cash. Zero cash.

Zero cash.

Yeah, yeah, yeah. I mean, other than my Polymarket account, I guess. My Polymarket account is all leveraged. I’ve borrowed against all of that because, again, I love crypto, and I’m still using the same strategy I talked about last time on here.

I’m about 20% to 30% of my net worth in crypto, as always. I love this shit. But yeah, I’m 85% Bitcoin, 15% Zcash, and I don’t know, 20%, 30%, 40%—maybe less, maybe 10%—in Polymarket. The Polymarket account is all leveraged, and that’s it.

It’s good. My P&L is up. I’m a good trader, so we’re up so far.

But if Bitcoin gets cut in half and everything else gets cut down 90%, you just have no capital to bid anything.

Yeah, I guess so. But we have coins circulating around. I can move money around as needed to keep flexibility. If something comes up, I can always get creative.

But I don’t recommend other people do this. It’s definitely a me strategy.

You have a counterparty, so that works.

Yeah. If this dude goes to zero, I’m crashing on your couch. Grab that Monad plushie wherever it is. I’m going to cuddle with it and cry myself to sleep.

Okay. Do you have any plan to not be 100% all-in? At what point do you—

Yeah. I think when Bitcoin wins, right? This is actually the beauty of having an absolutely delusional long-term view. I know Bitcoin is going to win. Every trend—government, technology, social coordination, everything—tells me that Bitcoin is going to win, which means I can actually just be maximally long until it wins.

I don't see any point in not holding what is going to completely rewrite the social contract. When Bitcoin becomes money, we will have separated money from the state, the same way we separated religion from the state and rewrote the social contract. We're going to separate money from the state and rewrite the social contract. It's crazy to me that anybody who can be in crypto doesn't have at least some amount of Bitcoin long. If Bitcoin wins, we're golden. If Bitcoin doesn't win, all my crypto was going to zero anyway.

Does any part of you feel like Bitcoin has run enough and then the risk-reward is marginal from this point? A lot of people feel this way, dude.

No. You'll know Bitcoin has won when society is different. The win condition for Bitcoin is essentially flipping the dollar. Whatever M2 is, whatever M3 is—pick your favorite money-supply measure—when there's more outstanding value of Bitcoin than there are dollars to buy Bitcoin, that's probably when we've won. According to that, I think there's still 100x left.

You're kind of a lunatic, dude. This is why I got off the stream, Malcolm. We need to hire him right now. I need to hire him today.

Okay, let's do this. Let's jump ahead, and I want to jump backward. Give me your Hyperliquid bear thesis.

I get a lot of flak for this, so I'll preface by saying that I like Hyperliquid.

No, stand on it, bro.

No, I stand on this shit.

Don't worry, I'm going to get pretty bearish here. Everybody's right that Hyperliquid is a great product that makes a lot of money. Jeff and the team are awesome. The way they push value back to token holders is awesome. It's great. The vibes are immaculate.

The unfortunate reality is that I just think DeFi is cooked. Crypto is open, permissionless, instantly settling assets on distributed networks. The other thing is that we've already seen how easy it is to create new networks, so there's also no network effects. Sure, Ethereum can lock in a bunch of capital, but Solana can bootstrap with the Solana token, and it's just nipping at Ethereum. It's not like Solana is flipping Ethereum, but the existence of Solana is 100% suppressing the price of Ethereum.

Then Solana's saying, "We're going to be the on-chain Nasdaq. We're going to be the on-chain everything exchange." And then Jeff comes along with his little server. We all VPN into it, we all trade shitcoins, and now there's Hyperliquid just nipping away at Solana. It's like, well, I thought Solana was the everything exchange. What's going on with Hyperliquid? How have they bootstrapped with the points program and the token?

It feels a little bold to say that's it, this is the last one, and nobody's ever going to bootstrap another perpetual exchange. Nobody's ever going to bootstrap another DeFi primitive using tokenomics. That doesn't seem like a very realistic conclusion to me.

The conclusion you do reach is, "Oh my God, okay, crypto works. Tokens have solved the cold-start problem, which means you can always spin up a competitor." Once I've spun up a competitor, all of the money in my current competitor is a bearer asset that settles instantly. Click—there go all my funds.

This is what happened to dYdX. This is what happened to Synthetix. That's where all the money was. That's where all the volume was. That's where all the users were. That's where the most liquidity was. That's where the market makers were. Where are they now?

My thesis for Hyperliquid is essentially that they just don't have a sustainable moat. The one thing I will say is that everybody should be insanely happy about this. The entire point of crypto was to make finance free. The whole point of crypto was to democratize all of these financial primitives as base infrastructure of the internet.

I don't want to live in a world where your bank makes any money. I want you to just have banking on the internet for free. I don't want to live in a world where Hyperliquid is taking basis points off every swap. I want to live in a world where Hyperliquid is just offering the swap feature for free.

The best social outcome of crypto—and this is what the cypherpunks wanted—is actually finance just becoming a free human right. I think Hyperliquid will go to zero. I think Uniswap will go to zero. I think Ethereum will go to zero. Solana will go to zero. All of these DeFi plays, these DeFi infrastructure plays that have no moat and haven't shown the ability to actually set new all-time highs—the market's already agreeing with me if you're paying enough attention.

The best thing for society is actually for them all to go to zero and for it to just be free to custody, swap, and transact any digital asset you want. That's the world I want to live in, and I think we're going to get there.

Okay, okay. I have a couple of pushbacks. Some of them are FUD, and some are my own. He's typing some in the chat. You know I love Hyperliquid, and I love the HYPE token. It's the only thing I say I want to buy.

To your first argument, I don't think the argument is sufficient that, because somebody else could launch a good token, I'm not going to buy it. Just because token B could exist, I'm not going to buy token A? Of course token B could always exist. There will be Ethereum, then Solana, then a million other chains. The existence of something new doesn't mean the existing thing is inferior or worse. The existence of Lighter doesn't invalidate the Hyperliquid thesis.

This is where you can be practical and be an operator. I've longed Hyperliquid a couple of times throughout the cycle because you can think it's going to go up, because they're first and they're early, and because the competitors aren't ready yet. Candidly, it's also because the market isn't as willing to be as extreme as I am.

I don't think everything necessarily goes to zero. It's more that these things, in my opinion, have a terminal value of zero because eventually somebody will launch the competitor. When Hyperliquid is the only game in town, when it's ripping fees, when it's crushing it, and when it's being an awesome team that gives money back to the token holders who have bet on them and supported them, you should be long.

But we're at the end of that cycle now. A good perpetuals DEX isn't impressive technology anymore. Look at the insane number of perpetuals DEXs that are coming. Some of them are doing RWAs, and some of them are doing stocks. Lighter basically said, "Fuck it, we'll make it free."

We're at the tail end of that. I struggle to see what Hyperliquid does to keep its moat now. It's not that Hyperliquid wasn't a good trade that shouldn't have been taken. It was a good trade that people should have taken. It's just that the trade is over now, the same way the DEX trade is over now.

Okay, there's one more. This is a FUD comment. I think it's a fair philosophical thought on everything in DeFi going to zero. It's twofold. One, what would secure the network if transactions are free? And two, why would anyone ever build anything if the product is free and open source?

A couple of things. On what will secure the network, I think there will be—now I'll walk myself up from the zero price target for all these things to a grocery-store price target. I essentially think these things will have incredibly thin margins. Whatever resources are required to operate the network, secure the network, and keep the updates rolling, you need to pay people to keep those things happening. The protocols can demand essentially a maintenance fee, probably with some amount of premium.

This is in the terminal state. Aave is a good example. When you buy a token or use a protocol, you're also relying on that team to keep the oracles updated and accurate, keep the risk ratios in place, and keep the asset-listing and selection process good. Aave offers a continuously running service in DeFi, the same way that Hyperliquid does.

Zero gets you the clip, right? The takeaway is that it'll be closer to grocery-store margins, in my opinion, than real DeFi margins.

As for why anybody would build, you can still make money by being first. Pump.fun made a gazillion dollars in a couple of months. I honestly think what they should have done at that moment, when it seems they've kind of run out of good ideas, at least for now, is say, "Okay, we raised a G. We raised a decent amount of money, but we made gazillions of dollars. We're done. We're going into maintenance mode. People can keep using the product, and we'll keep making money from users as they are. If you are an investor in us, here's your share of the profits. It's been a hell of a good adventure with y'all." Alon would still walk away with hundreds of millions of dollars.

That strikes me as sufficient financial incentive to do anything, right? So you can still make money in this worldview by being the first to offer a primitive or a feature and, candidly, getting it while it’s good, right? You can charge any margin on a product when you’re the only one offering that product, contingent upon people wanting to use it, right? And this goes back again—if you’re a student of the game, you can see these things.

Let’s go back to the joint ventures of people going on sailing and Polymarket joint ventures, where the company only has a duration of the market time. I think that’s where crypto goes: you have a bounty for yourself or a raise, and you say, “We’re going to create this product or service, and we’re going to be first to market with this. Before anybody can catch up or beat us, we’re going to make money for this window of time.” It’s just not going to be a perpetual business, right? A crypto business makes money for a year or two, or 6 months, right? And then it winds down, right?

You can do that because your margins on these things, when you are the only game in town, are extreme, right? So think of forming 2 companies that don’t need to last forever, because that’s the historic pattern of company formation anyways: short-term ventures, right?

Then the final note that I’ll make again is that, because the smart contracts are hosted on-chain and in theory there’s no opex, once I deploy a contract on-chain, I don’t have to ever spend any money on it, right? You don’t actually need there to be a profit incentive. You just need 1 person for 1 second to be motivated.

Take Uniswap. They now have their fee for the protocol, right? Somebody right now could launch the Uniswap smart contracts with zero fees. All they need is the motivation and the personal drive to click the deploy button once. Then, once they’ve launched it, it’s out there; it’s on-chain. Eventually, on a long enough time horizon, the market would settle to those contracts because they’re just cheaper and more efficient, right?

It’s kind of like Linux. Once I write the Linux operating system and post it to GitHub, that code is everywhere. I only needed to be motivated by open-source freedom fundamentals up to the point of clicking deploy, right? So it’s asymmetric, like throwing things on the WNBA court. You just need 1 person to be motivated for 1 second to do it.

The 1 thing about being early is that you’re correct for Pump.fun. It was a fundamentally new vertical that didn’t exist before.

Yeah. And they managed to build a better product, right?

Right. Right. So the other thing you can do is just go and build the better product. And I actually would say to anybody in the comments or something like that: a win condition for Hyperliquid is that, if they continue to improve the product and it continues to be better than all of their competitors, then, yeah, totally, they’ll keep making money, the token will keep going up, and it’ll keep being a good thing.

But you have to ask yourself, “Okay, how long can they really push the needle on making perps as good as possible?” Their competitors are already coming in with zero-fee solutions. How long can they keep pushing things? But if they can, they’re obviously smarter than me and better at perps than I am. If they can, the token should keep going up.

Yeah, but that’s good. Again, this is the point I’m making: this is actually the outcome we all should have wanted, right? You make money in crypto by either (a) continuously making your product better than everybody else or (b) making a new product that nobody has ever seen before.

There’s no such thing as a rent-seeking project in crypto. It’s too competitive. Money moves too fast. It’s too easy to copy. It’s too easy to bootstrap. You cannot be a rent-seeking primitive in crypto. As soon as the protocol starts to get stale and feel like it’s rent-seeking, the piranhas are coming.

So that’s good. That’s better for all of us, right? Hyperliquid will either become free or it’ll keep getting better. Great. I’m happy. I just don’t need to hold the token.

What do you think happens when Lighter launches? Also, what’s up with Vlad?

I don’t know. Which are we talking about—Robinhood Vlad?

No, no. Lighter Vlad.

Yeah, go ahead. Go ahead.

Everybody in crypto is just slapping at each other. Again, it’s so competitive. I don’t know what’s up with that. I think Lighter will probably teach people to stop fetishizing market makers.

One of the most common arguments for Hyperliquid is that it’s the most liquid, right? Which is cool and everything. I don’t think people realize that retail comes first, right? Market makers don’t see a new market and say, “Let’s go make the market on this market,” right? Market makers see retail trading on a market and then they say, “Oh, retail is uninformed flow. Let’s go make the market on top of retail,” right?

I don’t know the exact splits, but just to make up a number to prove my point, it might be the case that 10% of volume on Hyperliquid is retail and 90% is market makers, right? But that 90% is entirely contingent on that 10% of retail volume that they’re profiting from. If that 10% of retail volume goes somewhere else, that 90% of market-maker volume is just going to pack up and follow retail, right? Because they make money off the uninformed flow.

This is why, even after Lighter or edex or something like that has not had a lot of users and is doing very little volume, all you need to do is capture a small amount of retail volume from the existing product to bring the market makers over. And what does retail love? Zero-fee trading.

So I think Lighter is in an incredibly strong position to capture a lot of volume from Hyperliquid.

I know a lot of people who are using it. I haven’t actually— we did use it on stream with Daniel. I used it once. It was really smooth. But I’m still just trading everything on Hyperliquid. It’s just so buttery, bro. I don’t know how.

It’s so buttery, bro.

All right. I want to get a couple more takes from you while I still have you. I won’t keep you too much longer. On the topic of short-long degeneracy and sort of being short individual games but long the curve broadly, what’s the next game? What are we waiting for at this point?

We’re kind of in this weird chop intermediary period. We had Zcash, which I’ll ask about after, but there’s not really that much happening. MetaDAO stuff is kind of interesting, but there are no millions being made there. What’s the next game in town, in your opinion? When is it going to come?

Yeah, I don’t know. It’s hard. Obviously, we already talked about Polymarket prediction markets. It’s worth remembering that when Uniswap launched, you got all the pool-two farms, you got Yearn, and then you got Compound, which relied on being able to liquidate your positions on-chain. Then you got forks, staking LP tokens from Uniswap V2, and stuff.

When Uniswap V2 established itself as a dominant liquid market, a bunch of primitives were built on top of it, right? So I do actually think you can expect that with Polymarket. As more crypto people get into it, the markets become more liquid, and, candidly, people just learn and understand it better.

I don’t know what it will be, but I’m looking forward to whatever clever kid comes up with financial primitives and integrations on top of Polymarket. I think that’ll be super interesting. There will probably be some really good tokens to long in that basket of new primitives.

I think if we just get closer and closer to the social stuff, right? Zora doesn’t feel like it’s it, but it feels closer than Friend.tech was, right? And Fantasy Top. I actually think Friend.tech was low-key kind of cooler than Fantasy Top, but some people would say Fantasy Top was a step above Friend.tech. So maybe the next social thing—somebody finally gets it right.

Somebody will get it right.

Yeah. I think some of the DePIN stuff is half to a quarter interesting, right? GEODNET is the biggest RTK network in the world now, and farmers use that to steer their tractors, right? Helium is expanding like crazy, and the foundation seems to be pretty aligned with token holders right now.

I think those things are really hard to buy and hold. It’s something I always stare at but never actually buy. I think something like Telegram is actually incredibly interesting. It feels like I can feel myself getting nerd-sniped, but I’m staring at that a lot.

But you just have to be patient. Nothing is clear yet, to be honest—at least from my perspective.

I like the Telegram thing. I wish the Telegram thing were always interesting to me. I don’t know why it’s so—

Right.

Because we’re all on it. Yeah,

We’re all on it, and they have a blockchain. Pavel got—or sorry, not Vlad, but Pavel, right? He got debanked and arrested in France. He’s a Bitcoin whale. He’s crypto-aligned, you know? So there’s something there. I don’t know if the token’s going to actually go up, but there’s always something interesting there.

What do we do with Zcash, bro?

Dude, I had my ultimate bear post where I was like—

Don’t say it.

Called. Gold star for the next couple years.

Zcash is actually just a Bitcoin hedge right now, right? There are legitimate privacy concerns for Bitcoin. There are legitimate quantum concerns for Bitcoin. Zcash seems to have solutions for both of those. Zcash seems to have the right character and cohort, proof of work, and Bitcoin tokenomics. It’s got the right moneyness components, distributed holders, right? It’s shown that it can rally, capture mind share, and create ZODL culture, which is kind of essential, right? MAD is probably a little too locked into the S&P, but I’m sure he holds some Zcash.

I think you need to look at the old Bitcoin charts, though, and accept the fact that Zcash might just be running the Bitcoin playbook. Open up the ancient scrolls of Bitcoin price action in the first 2 cycles. The ancient scrolls tell me Zcash can go as low as 150.

Dude, why would you say that?

But hey, to everybody here, I was live-tweeting this entire trade. I live-tweeted when I got in on it. I live-tweeted when I traded the position at the top. We were on that one.

I basically had a killer trade for me, sold half, and then the other half is just in cold storage now, right? Because that’s what you do with Bitcoin. You just cold-store and you just wait, right? So, yeah, Zcash, maybe it bounces back. Maybe it’s on an accelerated Bitcoin timeline because people know what to expect. That’s a fair perspective. Or maybe it is just on the Bitcoin timeline, and it’ll hit 150, and then you wait for the next halving.

Okay. So, the last thing I want to ask you about is you have 110% of your net worth in Bitcoin, and you popped into our team chat today with an article about quantum and said, “I’m actually concerned.” Which is concerning when 110% of your net worth is in something.

Yeah. What do we think? No, I’ll be honest with chat: I’m struggling right now. I’m holding Zcash as an actual hedge to the now entirely legitimate possibility that quantum is an existential threat to Bitcoin.

It looks like there are soft forks that can solve privacy, which is awesome. I think Ordinals—there were a couple of days of Ordinals where fees in Bitcoin were greater than block rewards—that would actually solve your security budget, right? If fees were greater than block rewards, the security budget wouldn’t be a problem anymore.

So soft forks can fix privacy, and continuing to slowly add programmability, whether it’s [alanes?], Ordinals, OP_CAT, or BitVM2, continuing to add basic programmability improvements to Bitcoin—I actually think that will solve the fee problem and the security budget in the long term. But quantum—I have not read any proposal for solving the quantum resistance of Bitcoin that does not involve a hard fork.

Can you explain the quantum risk? No one’s been able to say anything other than “fast computer.”

Yeah. It’s essentially like, you know, computers are 1s and 0s, and quantum computers are like 1, 0, or both at the same time. Basically, what it lets you do is create probabilistic outcomes. One of the things that it also lets you do—and someone could correct me, and I could be wrong here—is it basically lets you factor numbers, right? The way numbers are factored is essentially the core math of encryption.

So it cracks the core math of encryption, right? You can break the signature curves that basically hide private keys behind public keys on Bitcoin. You can crack that and basically give it a public address. A quantum computer can do a probability snapback and give you the private key for that public address—or we think that it maybe will be able to.

The problem is that SHA-256 is 256 bits wide, right? Or bytes, or something. It’s basically the width of the number in computer space—1s and 0s. To do SHA-256, you need a computer that can hold a number that large, essentially. I’m simplifying it, right? But you need a computer that’s wide enough. All modern computers can just crunch straight through that.

With quantum computers, if you can only create 2 quantum bits at a time—2 qubits—then you can’t do SHA-256. You can do SHA-2, right? Basically, the math has already been proven that a quantum computer with sufficient logical bits can crack the signature curves and get you Bitcoin private keys. It’s just that no quantum computer has enough bits at the same time to hold the algorithm and do the math.

Okay, so basically what you’re saying is that it’s a compute problem. It can do it, but—

Yes. Yeah. Yeah. The logic is there, right?

So you’re telling me no one’s built something strong enough to do this yet? No one has it?

Yeah. So the problem is—

It’s not concerning. Is this real?

Yeah. It’s low-key kind of real. Quantum computers are basically playing with quantum states, which is essentially incredibly excited electrons and atoms, depending on the topology and architecture you pick. Those are wildly unstable.

You have the observation problem of Schrödinger’s cat, right? It’s alive and dead until you open the box. Think of it like when you bump the system—when your quantum chip touches reality—you lose the quantum state. It’s kind of like hot potato. I can do 1 hot potato, I can do 2 hot potatoes, but when I have 3 hot potatoes, I’m going to drop 1.

With quantum, you’re juggling the hot potatoes, right? You need to design the computer so it can juggle all of these hot potatoes at once, and you need to be able to juggle enough to do the SHA-256 calculations.

So what’s our timeline on this?

I don’t know. I’ve been reading—I think Nick Carter reached 2035 as his suspected date. I don’t know if I agree or disagree with that. I haven’t done enough personal research to have my own timeline yet, but Nick Carter is a smart guy. Until I do enough research to have an opinion, I’ll just quote him and say—

Okay, so I have to go get a quantum guy on stream, right? This is crazy.

Yeah. And so then the problem is you can only solve old coins with a hard fork. I can take my Bitcoin private key and move it, or I can basically create a new address with a new signature format, and that signature format can be quantum-resistant, right?

I can have a non-quantum Bitcoin address and convert it to a quantum Bitcoin address, and a soft fork can do that. But the problem is I need to transfer my non-quantum Bitcoin to a quantum Bitcoin address.

So what are you going to do about Satoshi’s coins? There’s a million coins sitting there, right? If quantum is invented and everybody moves all their coins to quantum addresses, but say Satoshi is actually just dead and nobody can move those coins to a quantum address, somebody can hack them. The first person with a powerful enough quantum computer can hack them.

That’s why all of the proposals are like, “Okay, do we need to hard fork Bitcoin and basically take all of those coins and move them to a quantum-resistant address?” But that’s confiscating his coins. This is the fear: Bitcoin works because nobody has confiscated your coins and you’ve been able to trust the system the whole time.

But if the Bitcoin ecosystem coordinates to a hard fork, will the monetary value of the current Bitcoin blockchain actually move over? If Bitcoin has shown me that it can do a hard fork, do I actually trust it anymore? Because now, why not do the next hard fork? Therein lies the problem with quantum.

There’s no solution?

There’s no solution, at least right now that I’m aware of, that solves old coins without a hard fork. And that is a philosophical—

Okay, well, we have to figure this out, dude.

We do. We do. Literally, we do. Yeah.

Dude, you have 110% of your [__] net worth in it. What are we talking about?

Well, I’m hedged. I’m hedged with Bcash. I might hedge some more. I might hedge another 10%, dude. My whole net worth’s in it. It’s scary.

Yeah. You don’t seem that scared. Realistically, you’re like, “The world’s going to end, but I’m not really reading about it right now.”

Well, here’s the thing. I think it will be a huge, huge, huge deal, but I know it will be a huge deal. So I’m like, okay, again, nobody said it was going to be easy. If we are trying to replace gold, and gold’s quantum-resistant, we have to figure it out.

Maybe the path is like, look, maybe [__] it. Maybe Bitcoin does the soft fork for quantum addresses. Everybody who has Bitcoin and doesn’t want to get stolen from moves it to quantum addresses. The quantum computer is invented, whoever invents it gets all of Satoshi’s coins, and we just have to live with that now.

We just have to live with this person having all that Bitcoin. Maybe they dump a huge amount of it. Bitcoin goes down like crazy, but now we're past the quantum hurdle, right? So maybe this happens, right? Maybe we do quantum, Bitcoin goes down 90% in a day, and then it's back to number-go-up-only, right? And maybe that's good because, again, I still know Bitcoin is going to win, right? I can actually—again, the delusional conviction—I can stomach a 90% drawdown in Bitcoin. I'll still be here, right?

This is the thing. This is one of my favorite sayings, right? I won't ride Ethereum to zero. I won't ride Solana to zero. I won't ride Hyperliquid to zero. I can—I'll ride Bitcoin to zero. I will. I'm that much of a believer. I actually care about crypto changing the world that much, right? You have to believe in something. So maybe that's how it goes. Maybe it doesn't, right? I'm still working on my opinions, but that is an unfortunate but acceptable outcome for me.

Yeah, that's kind of like God. When we get off stream, can we do some quantum reading, dude?

Dude, I'll send you some.

This has to be a local bottom. It's got to be near 90% in an hour. We have to be near the local bottom, dude. [laughter] We have to—

No, but 90% in an hour in 2035, you know? You've got some time. [laughter]

Okay. You're awesome, dude. I'm going to go find a quantum guest, obviously.

Right.

Someone clip this and send it to Nick Carter. Say, "We want you on stream, please."

Is he the one? Well, I mean, I've been reading his—he's been doing a series on—

He doesn't follow me. Why doesn't he follow me?

Nick Carter, you've got to fix that.

Nick Carter, I've had guest after guest come on stream and scare us with the threats of Bitcoin going down 90% in an hour because of quantum. Please come on the stream. Please educate us. Please give us a bull-porn open invitation, my goat.

And he has a proposal for how to fix it. It is a hard fork, but he wants to basically hard fork—I think he wants to take Satoshi's coins and put those back as block rewards, basically just add those back in as future issuance. That's sensible. Again, you have to get to the hard-fork thing, but Nick, this is your chance to shill. If you're trying to win hearts and minds for your proposal, this is your chance to win some hearts and minds.

I would potentially back it.

Also, it's time to get Martin Shkreli. Martin and I have beef. I've got to squash it, dude. I've got to squash it. I've got to squash it. You're the GOAT. Thanks for coming back on. We've been on for a while. This is a lit episode. Is there anything you want to recap, end on, rehash, or leave the people with?

Dude, I'm just here to shill Counterparty. Everybody, pull up the stream five days a week. That's my only show now. It's Counterparty.

What did you think of the segment this morning, by the way?

Dude, good, good, good. I think we're dialing it in.

It was pretty good. It's better than yesterday's, right?

Oh, for sure. Yeah. And it's only going to get better, right? I'm pretty confident in us.

I think the way to get through chop is to just get really smart. So that's like segmented day. Form our takes, form our worldviews, flesh out what we believe, why we believe it, what that means from a speculative perspective, what we buy, what do we buy, and how do we buy it. I thought the segment today was lit. I enjoyed it.

Yeah. And you want to know what? You need to be able to learn when the coins go down 80%. Not saying they will, but you need to know which ones are the ones to buy, right? When everything's down 80%, there are 3 of those things you should buy. But what's your actual mental framework for buying those 3? That's why the real money is made in the bear market: preserving your wealth, getting smart, buying bottoms, or buying confirmations of uptrends. I made most of my money last cycle in the transition from bull to bear or from bear to bull, more than I did at the peak of the bull.

This is what I want to do next, even for myself and for the chat: What do I want to buy? When am I going to buy it? How are we buying it? On the majors, the short-term stuff just pops up, right? Good spots pop up.

You just take shots.

But the big stuff can be more thought out and more planned. Also, April, let's get smart, episode 1: quantum computing, Dave. I'm going to go track the next quarter for next week, maybe.

Yeah, we have the debate tomorrow, by the way, at 1.

That's going to be good. I have to study for this, I think.

Yeah, we got you.

Say less. TK, you're the GOAT. Much love.