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All right, so it's one-stay August 30th on Tuesday big news hit the crypto industry
GBTC
the the the trust not an ETF that has been at the center of a lot of
ups and downs over the years inside of the crypto industry
One their case against the SEC which is which is notable you I think just the idea of an asset manager
suing the SEC and winning is
Something that most people probably would have thought of unlikely although
I guess in this case a lot of industry insiders did actually expect this outcome
But definitely a watershed moment people say the caveat is it doesn't necessarily mean that ETF is for sure
The SEC could have guys tried to fight back but it sounds like at this point
It's inevitable. Yeah, and it was it wasn't like the court ruled against the SEC and said, oh, yep. There's an ETF coming
November 1st
Right because of where we are in the cycle and like the crypto winter or whatever where the
The speculative excess has been totally rung out and there's not much talk about it anymore
I'm really curious to see what this means because I mean if the ETF would have come out when Bitcoin was at
70,000 or whatever wherever it peaked. Yeah, I would have I think the
The it would have been a way different scenario than where it is at 27 or wherever it is when it when it happened
There was a little bump in the price, but not a huge bump. So I'm really gonna be interested to see
How big one or multiple of these Bitcoin ETFs will be once it happens. Yeah, and
Again short term, but whatever it's it's giving back a little bit today
So yeah, we'll see definitely interesting news. All right
Don't want to step into it from the tutorial
We got into this with with the guys at Fidelity Digital assets
So with that here's our conversation with Jack and remain
We're joined today by Jack new rider Jack is the senior digital analyst at Fidelity Digital Assets
We're also joined by Vermine big deli Azari Vermine is the director of product at Fidelity
Digital assets good to have you guys back on the show
We're gonna start today talking about the elephant in the room, which was the
GBTC ruling
This is today is
Wednesday, August 30th before we get to that
Jack
Describe for us this came in an interesting time because the
The the vibes the overall sentiment
Almost apathy it feels like towards crypto. I don't even know if it's a winter or what you would call it
But it seems like there was very little going on so before prior to to the announcement on Tuesday
How would you describe maybe with some data if you have it the state of of crypto?
Yeah, I think you you kind of summed it up there a little bit. It's
Not a whole lot going on. I mean you could say that sentiment is poor, but I
Don't even know if I would say it's poor. It's just the the only people left are the people
You know that have been here for a while for the most part. You know got broadly summarizing that of course
There are you know net new faces here and there, but it's a lot of like people like to call it a PvP type environment player versus player
Where it's the same capital you know sort of sloshing back and forth alongside you know some of these protocols based on
You know small things happening in in different corners of crypto markets
But it's not you know
You don't see necessarily like a huge new use case that brings in a whole slew of new users
So what I would say is that's like kind of classic crypto market cycle and what you saw back in like
2018 after the the drawdown in the first half of 2018 from mid 2018 through
2020 it was kind of just a I don't want to say boring as the word there's there's stuff happening
Underneath the surface, but from the you know the traditional asset manager that's just looking at crypto
They're probably not spending much time paying attention to it because it's not making you know a bunch of news headlines the way that it is during a bull market
And so low low volatility
You do lose some of the correlation
During these time periods because you know traditional asset managers aren't as deep into the space or aren't paying as much attention to the space
But it's not necessarily for like great reason right because you're not seeing a bunch of outperformance from crypto assets
So it's it's kind of you know your classic bear market
Remain we have we got a question from a listener actually earlier this week
Said they've been kind of following the ETF stuff and saying hey
I've never put any money into Bitcoin or crypto before
But with an ETF coming. I'm starting to think about it more for something like my IRA and their whole thesis was
I'll read here. They said we're thinking it an ETF would be make sense because it would be considerably more mainstream
And therefore maybe entice more investors to take the plunge and possibly drive up the price
Obviously with a caveat that we never know what's priced into these things
What do you think the expectations are because obviously we saw the the stuff from the court hit and and the price went up
It didn't go baton it went up. I don't know six to ten percent or something, but
How
How much do you think how much money do you think coming into this space has been priced in or is that impossible to know
It's pretty impossible to know exactly how much isn't priced in but I think
We're theoretically the offering of an ETF does exactly what is being proposed
Provides a really easy entry point
Really efficient entry point for those that have you know existing access to broker dealers and through their advisors to retirement accounts
In today's in today's environment
Because of the regulatory frameworks you see that there are distinct providers that have been set up specifically to offer services for digital assets
So for someone to come in access digital assets they need to onboard to a completely new experience
Exchange your custodian access liquidity through them and that's just
Generally a burden or a hurdle for those to get into the space
And so I think the general sentiment is that with an ETF offering it just becomes much more seamless
You go through your traditional channels you get
With any other ETF you have the options of different types of accounts that you can access
So you have more tax advantage to accounts which generally with the optionality or seamless opportunity to access the asset class
You would imagine that more money would flow in
Um, you know in terms of exactly how much is priced in
I think it's very difficult to say it's a you know expect the market to be fairly efficient in such that you know
So much of this would be priced in by now, but I think it's just very
Difficult to say right now given what we're seeing in terms of activity
Exactly what the result will be in the price Michael. You had a number. What was it? What did you say a hundred billion dollars eventually within a certain
What was your number? Oh
So I threw out a hundred billion in the first year in Bouchune to set me straight as like dude
GLD
GLD has 55 billion dollars in assets
So maybe I was a bit optimistic, but I will say I'll also let's say let's say I was over optimistic by two
Let's say 50 billion dollars, although I don't know what how much do you guys know how much are in the ETFs in Canada?
I think it's only a billion or two. I don't know if it's a great proxy, but you got a fact check me
All right, well, so we got the news yesterday and
Bitcoin underneath popped although, yeah, not like crazy. I don't know it's five six percent
GBTC of course the discount now it's substantially. I think from like 25 to 17 or or something something there about
and
The the judges ruled three to zero. I don't know if the SEC is going to appeal
Maybe they will maybe they won't I don't know how many of this works, but
What they said was like they used words like the SEC was arbitrary and capricious and they're ruling
And then you have to treat like cases as like and of course the futures Bitcoin ETF, which currently exists
Is that not too dissimilar from the spot Bitcoin that they're wanting and then going beyond that there's a leveraged
Futures ETF, which is I mean, I just you know, that just sounds a little
A little wild to me, but be that as it may it sounds as if a spot Bitcoin ETF is on the horizon
And this has major ramifications because I would suspect
that
Pick a number 90% of all people that want to open up an account and buy physical Bitcoin or ETH or whatever
Have probably already done that right there's been like several
Speculative manias and if you haven't done it at this point
You're probably waiting for an easier way to do it because it's still it still could be a bit a bit cumbersome
So this this has to change the dynamics going forward. Do you think that the ETF is going to
Simultaneously kill demand or dampen demand for
The actual coins, but also bring more people in and if so sorry for the rambling question
And if so like where do we what sort of impacts we think this is going to have on the overall market?
I don't know about dampened demand for the actual coins. I think there's a there's an explicit
Reason why like people would utilize the spot Bitcoin ETF as opposed to
Going through the entire process you kind of named it out of all the operational and other considerations that go along with
Creating a separate relationship for a small portion of your traditional portfolio
So maybe for for Bitcoin you would see you'll flight to just a simple ETF like product as the crypto industry is trying to bring
Crypto to traditional investors rather than historically it's been traditional investors have to go out of their way
Explicitly to come to the crypto industry to make an allocation and so this would be like a huge move
Towards bringing crypto to traditional investors in a way that wasn't previously possible
But it is at the moment anyways only Bitcoin exposure here and so I think for a lot of traditional investors
Is that enough?
Pro you know, it's it's an easy way to get exposure to what makes up 50% of crypto's market cap
I think you can make that argument
But at the same time you're the ancillary
Services and offerings that custodians can offer don't exist in products and you know probably won't for for the time being
Which is you know the fact that you have proof of stake assets you have you know alternative assets that aren't going to sit inside of
These products at least at the moment anyways
remain do you think I'll use the word Bitcoin here
Not you know, let's just focus on Bitcoin for a second and not ether any of the other stuff
Can Bitcoin be an asset class if the use case that
That start of this whole thing never really materializes
And that being mostly payments use cases we're referring to
Yeah, just just self-sovere and nonsensurable
uh if people never really
Use Bitcoin in the way it was intended
Can it still stand on its own as a as an asset class for investors in their portfolios? Could it be like millennial or gen Z gold
Yeah, I mean, I was gonna say the ETF is going to be a monumental shift right in the dynamic the kind of dynamic
How people access the asset class
But Bitcoin is very much a global asset and so you think about those that do not have access to traditional broker dealers
Right, I think one of the primary use cases initially was you know banking the unbanked as well, right?
So those that do not have access to traditional financial services products
Accessing Bitcoin as an alternative really as a store of value. So we're to maintain that value outside of
put a local currencies
So in that that use case still stands firm, right?
So the same people would not have access necessarily easily to this ETF product, right?
There's not just the US ETF. There's been one lunch in Europe now
One can't there's some in Canada as well
So I think there will be more and more products available on a global basis
But hey the use case still stands. I think people will continue to hold this the spot physical
In dematerialized Bitcoin
Um, and you to think about it for you know, real use cases
So if you do want to use it for payments use case
I think that we we haven't seen as much activity. I think as expected early days of Bitcoin
But it's still a use case and then you know in terms of really store of value on a global basis
I think you know that these is still stands
Finance people are so stuck at the past because we still call it a coin and we still call it physical
Shouldn't it be called digital Bitcoin?
Exactly. Yeah
Just to add to some of what Ramine was saying with Bitcoin. There's basically two use cases, right?
It's censorship resistant payments
And it's an aspiring store of value asset
There's only going to be 21 million of them and it's ruled by you know
This decentralized governance process that would have to determine that there should be more than 21 million coins
And like that's not in you know the the broader consensus interest
So the those two properties still exist even if
You know spot Bitcoin ETFs become large holders of Bitcoin and that's the way that
Investors that live in large developed countries
Allocate to the space, right?
Maybe they allocate not because it's a this censorship-resistant payment network
But because it's a you know store value asset and the way that they get access
To that is via you know an investment product with a you know a custodian on the end that they're you know trusting
But that doesn't take away the fact that
People in emerging countries can utilize it as a payment network or can utilize scaling technology on top of it
And so just because you know one of the value propositions is more important to a certain set of investors
Doesn't take away, you know the other use case that exists
And that's a really fair point not you know as as an American we forget that not everybody has
Legal level of reserve currency in their pockets. So that's a really really
Good and often overlooked point
There is a great irony that one of the largest holders of Bitcoin in a couple of years could be
A large traditional financial asset manager, whether it's you know iShares fidelity whoever
So I don't you know whatever um well, it's not the result of
Those people looking at existing payment providers and saying like oh, this is so much better for payments
Right, it's more the result of hey look at global sovereign debt levels and look at what the likely outcome is right is our
You know, it's fiscal policy going to become more restrictive
Are we going to have austerity and less spending or are we going to have
Debacement in a central bank that monetizes debt over time
You know if you think that that's more likely then maybe you look at Bitcoin as this this aspiring store of value asset
And I think that's the framework that most large investors that are looking at the space
They see the value prop through that potential store of value asset
Well, if if Bitcoin has an ETF approved
I would assume the Ethereum ETF would not be too far behind
and
The way that it was always explained to me is that Ethereum is is kind of taking the
Building blocks of Bitcoin and building on it and it was kind of like this is
If you could have invested in like the internet when it was first started like the network of it
You're investing in like the computer network or however it is
however you want to describe it
Where do we stand in terms of Ethereum?
Because it does seem like Bitcoin is kind of pitch and hold into this store of value
You know censorship resistant all that and Ethereum was supposed to be okay
We're going to build on that and now you can do something on this network
So where do we stand with Ethereum these days?
So I think again, and we probably mentioned this before is Ethereum
Added this idea of smart contracts and programmability
That we could have other use cases outside of simply peer-to-peer payments and potentially being you know
This alternative monetary system that can serve as a store value and
With it comes this you know whole idea that if you can build applications on top of it
Could we you know put other assets on top of this network and create you know more transparent banking and financial markets infrastructure or could we
Decentralize some of the you know the idea of like content ownership on the web you hear this idea of like web 3 and and
Taking out you know sort of the middleman in some of these situations. It is necessarily more speculative
Especially today given that you know if you want to bring real-world assets onto these chains
The regulatory environment hasn't really given you a lot of clarity and reassurance that your token is a claim on a real asset
Right and like large capital can't really interact with these networks necessarily on chain because of you know certain KYC AML laws that you don't factor in the fact that if you
Interact with a decentralized application. You could be interacting with
You know somebody money laundering or something like that, right? I mean it's an extreme scenario
But that prevents a lot of you know would be allocators or users of these networks from using them
And so with ethereum what I like to say is like it is a a technology platform
It is necessarily more speculative in its use cases at the moment
It's also five six years younger than bitcoin
And so we have to kind of think about it from a timeline perspective and where bitcoin was five or six years ago
Because that's kind of where ethereum is at the moment
And then that changes you know sort of the risk reward outcome, right?
There's there's probably more risk embedded in it because the use cases are more speculative
But also at the same time that could you know have a you know higher pay out rationally
Yeah, I think just sad on that you'll pick up the use case for bitcoin is bitcoin versus
Ethereum is a foundational technology that creates a decentralized
Computing network essentially where you can build the use cases on top of it
Right, so the collection of these decentralized applications then create value in the network
And so it's dependent on the the delivery of those use cases the proliferation of those
And so I think we're seeing some interesting use cases come to life now
But it has been a little bit slower seeing most of the activity in world really defy activities
So decentralized financial applications
Tokenization of money with stable coins. I think there's a number of use cases that have been
Have been looked at but but it has taken some time
And so as as Jack mentions right the foundational technology is out there
They're continuing to upgrade that technology in order to make it more scalable
To really think about the future use cases and make sure that the the platform itself can handle those
But there's more work to do the platforms I've done and I don't know if it ever will be you know quotable done
But the more we see use cases build on top of it
The more use there will be of the network and therefore kind of the value grows of the underlying technology
DeFi has not I don't think it's correct me from wrong taken off to the weight to the extent that people might have hoped
uh also interesting to note that
Mastercard is hitting an all-time high right now visa is not far behind so the traditional
payment rails have you know, they're they're fairly entrenched and I think it's going to be
Maybe more difficult to disrupt than then people might have thought
As far as the ethereum stuff goes and and the smart contracts and the legos which was a good analogy
um
Do you think a lot of the wind was sucked out of that space because of the proliferation of AI
Just in terms of where capital and talent is flowing these days
Yeah, I mean, I think talent has been driven out of all kind of spaces towards AI right
I think you see some evaluations and the activity from some of those AI-focused companies
um
And yeah, I think there's just a lot of excitement there
It's truly foundational technology that could change the way that we live
I think just like it has any other industries. It's it's impacted blockchain
Developers. I don't know that I would say that it has a direct impact specifically to DeFi that I've seen
And let's jack you have any data that that says differently
No, I I don't but um what I would say also is while crypto is easy to look at
Price volatility because it trades 24-7 365
At the same time these are like
Networks that are trying to take core primitives that exist in centralized finance
And then recreate them in an on-chain transparent way that anybody can get access to and when you say like
What's sustainable like ultimate success of DeFi? It's in my mind anyways
50 years from now
We have a more transparent financial system
Where you know anybody can get access to it or they could go through a third party to get access to it
But underneath the surface the entire system you know operates in a you know a more fair
Transparent way and so if that's the ultimate goal like
Sure, we are always going to measure things on on the surface of where do prices go and what is usage over a you know
Six-month time period, but you're not going to change the entire you know financial services industry and the way that people interact with it over
You know one two three year time horizon and like if we go back
You know uniswap 2018 Ave same time period like the core primitives of DeFi of trading borrowing and lending
The the true adoption of like stablecoins in any meaningful way
It was in like the 2017 to 2019 time period and so those have existed for like four years
With the idea of like making up a more transparent version of the existing financial system without true like regulatory clarity
It's just the big picture is of like what could make this sustainably successful won't happen over the micro
612 months it will happen over the you know the span of 10 20 30 years if it's successful
We talked to both of you almost a year ago now. I guess it was last fall
In Boston and you were saying listen and the crypto winter
I think it already kind of be gone or least the pretty nasty bear market and you said we're seeing an Exodus of people
From the space that they're they're coming in and fidelity is trying to bring some of those people in
Where do we stand in terms of of of that in terms of
People becoming available interesting smart people in this space that are kind of for grabs
We've done a lot of hiring in the last
Few years
So we've grown pretty substantially in the in the digital assets base of fidelity
Yeah, I think we'll what we saw is that the market was incredibly tight for a while right through kind of the
The bull runs that that happened. I guess it was about two years ago now
It was very difficult to bring people in I think there were a lot of new ventures that were starting up
There was a lot of excitement will be saw though is it
We you know that that changed a bit and we were able to do a lot of hiring
We've been able to get a lot of talent for outside in the in the market
And then also what I'd say is even internal to fidelity as years have passed people have been able to explore this space
Themselves and build a level of expertise such that when we bring them in and bring them into the digital asset space
They come with a level of knowledge that
They're able to gain on their own, but you know, it's very valuable to us
And so I think just as time has passed
You've seen that you know, it's there's just a greater population of folks that have actually dealt in the space
There are a personal level or professionally. I think it's been a little easier to kind of find find that talent in market recently
Of course, yeah, so fairly tight, but has has become a bit more favorable
Can we get back to Jack you were talking about earlier the case for Bitcoin on the macro front
I think it's really interesting and the interest expense on our debt
I think is going to exceed if not already exceeds the our defense spending budget, which is
You know a ludicrously large number
So
Whether there's debatement in their currency, which of course there always is like to me just
that is a reasonably
objective ball case for
For an alternative store value like like Bitcoin and yet
You could never really draw one-to-one conclusions like oh Bitcoin is up today because people are afraid of the federal deficit
Like it's very difficult to draw those direct lines
But are you surprised at how Bitcoin has been acting over the last I don't know a couple of quarters
Not necessarily because if you look at like what's the traditional store value asset if we call it cash or if we call it
Fixed income instruments they've arguably become more attractive over the past you know six 12 months, right?
Because cash isn't trash if it pays you know five and a quarter percent give or take
and inflation is
I don't know three percent over the past year
I mean that's a that is a positive carry on your cash position
Whereas before it was you know you were getting paid nothing on cash and inflation was you know one and a half two percent
And so it was it was a drag on your portfolio right it was a melting ice cube as you know some in the Bitcoin space
Would say and now that's not necessarily the case in the short term
But again you you mentioned this whole idea of like okay
What is interest expense become right and when does that start to become problematic and who's going to buy all of that debt
That's the big picture that again on a micro you know six 12 month time period sure can we you know paper over
Larger interest expense. Yes, but it becomes problematic on a five and ten year time horizon if we're rolling over all of this debt at far higher rates
With you know debt to GDP at a hundred and twenty percent the only other time you you had that in us history
It was post world war two which was a period of financial repression and negative real interest rates
Well, Jack you've I know you've written a piece in the past trying to value Bitcoin
Do you take things like real interest rates into account because that's always kind of been the thing I've heard for gold
Is if real interest rates are rising that's bad for gold because gold doesn't really pay a dividend
Obviously there's always other other variables and stake here
But is that something that that makes sense to you if real interest rates are rising that that would be
Should be bad for crypto at least a headwind I guess
Yeah, so there's sort of I would argue kind of like two elements here, right?
There's the macro things that like ultimately Bitcoin's not controlling
That's like the extrinsic variables and then there's the the intrinsic variables of like Bitcoin itself
It's supply schedule. There's only 21 million and then you know, there's a it posing itself
Based on its monetary properties against your traditional monetary assets fiat currencies
Fixing come instruments gold's precious metals and if you if you look at like the adoption curve
This is what I you know talked about a road about in in the piece on valuing Bitcoin
We know Bitcoin's supply schedule is inelastic or irresponsible to changes in demand
Right, it just follows along. It's it's 21 million supply curve that halves every four years. It's issuance rate
It's supply or it's demand curve looks like a technology adoption curve like cell phone adoption
Like internet adoption
You're in had done some work on this a couple of years ago
Other folks in the space as well and it still does look like that
But the rate of adoption if we look at like address growth has decayed during this bear market
That's kind of what you would expect right because it's very cyclical you have like above expectation rates of adoption
When prices are up and then you have below expected rates of adoption compared to prior technologies
When prices are down and so the the long-term picture of thinking about valuing Bitcoin is supply and demand
Sheerly and then you have this short-term variable of changes in the macro environment which at the moment
I would argue is a headwind and actually
I believe urine has done some stuff recently where he's trying to tie in
Real changes in interest rates or real interest rates alongside the adoption curve
So like putting those two variables together
But those are like the primary drivers right of whether Bitcoin is attractive as an alternative store of value
And then over time whether you know the technology is being adopted
Yeah, I think I think it's interesting because the paradox that is causing
Uh
debt to increase is also what might be driving investors away from Bitcoin
If you can just simply collect five plus percent on your cash
Uh, that's a really attractive alternative to the ultimate alternative store of value
Yeah, no, I would totally agree. I think the the place where I think that
Starts to break down is is that sustainable over the long term
And I would argue it's not without like a central bank potentially monetizing that that in it
You know in a roundabout way right you couldn't you know if you have QT at the same time as you have rising interest rates
Which we have had at the moment right and it's very micro
612 month period of time can you do that for five years and with the system so highly leveraged
I guess I would make the case that there's a high probability that you won't be able to right that the the phrase of like something
Will break right or some sort of policy change will have to take place
And when it does what will it be right will it be lower interest rates will it be
Quantitative easing like all of that plays into the idea of this alternative store value
If if you see dovishness would probably perform well and the argument is a leverage system is necessarily more fragile
To like any rate of change in like monetary and fiscal policy
And so at at some point here like is there a high probability that you can stay hawkish for the next five years
I would argue know in which case that is kind of the pitch for for investing in bitcoin
Again, anything can happen of course, but I think if you look at the probability and likelihood of outcomes
It probably favors at some point easier monetary policy
So you guys recently talked to a friend of ours Tyrone Ross on a webinar about some new solutions for advisors
And I think that's been one of the hurdles for
Advisors is just finding trusted partners. What can you tell us about that?
Yeah, I think as as we talked about just just earlier in the pod
About ETFs. What we've heard from advisors is that one of the biggest hurdles for them to to provide services for their clients is an easy access point
And so as I mentioned today
Any advisor that wants to give their clients access they need to go and open up a new relationship
With the custodian
Or exchange
And be able to kind of offer these services which is completely discrete from managing the rest of their portfolio
There's not integrations with aggregated reporting services etc
And so what we've done recently is this summer we launched
Fidelity crypto for wealth managers
And so fidelity for crypto for wealth managers is essentially an integration of the fidelity digital assets
Platform that we've been running since 2018 and distribution of that through the fidelity institutional well-skate platform
And so what that offers is that
Clients of the fidelity institutional that have access to the well-skate platform to manage their clients portfolios and securities
The brokerage can now open up an account through that portal to fidelity digital assets open up an account that allows their clients to
To make allocations to to Bitcoin to ether
And to really access the platform that we built and have been running for for years now
And so the big the big play here is that we want to give our clients optionality
And so what you can access fidelity digital assets directly or you can access it through fidelity crypto for wealth managers through your well-skate
portal
But it's really an aggregation right so allow our clients to have you really an easy way to access the products
And it aggregate that experience across their entire portfolio their managing
What sort of integrations exist with uh with an advisor's tech stack?
Is are there any at this point that they know we know direct integrations with the advisor's tech stack
Uh, we're working on or working on is
integrations with reporting solutions that they likely use which um, so I think that that will come in time
But otherwise you know direct integration all services through uh through well-skate
You guys are hosting an event on September 19th talk about your latest research report ethereum investment thesis ethereum's potential as digital money
And a yield bearing asset what can for people that are interested in tuning in is that for is that for fidelity clients only or advisors only or who could access that
I think as far as I know anybody anybody can uh access it
I think we're you know sort of posing the event intended for advisors
But you know anybody that wants to is able to to sign up for that
So maybe this goes against my thing about the real interest rate and how gold doesn't have a yield
So maybe just explain how how ethereum could be a yield bearing asset then
Yes, so last year last September ethereum transition. I mean, I guess that's almost a year now feels like yesterday
uh ethereum transitioned from a proof of work network kind of similar to how bitcoin operates with with miners
That are involved in the governance process to a proof of stake network in which
Anybody who has 32 eth or wants to you know delegate a portion of their eth to somebody that can create a you know around 32 eth lot
Can stake those ethereum and earn a yield for helping run the network essentially secure the network and
Ideally decentralized the network if you know enough people are are running
validators themselves and
ethereum becomes a yield bearing asset because if you think of
Miners in a proof of work network. Well, how do they get paid they get paid through an inflation subsidy on bitcoin's network
And they also get paid through transaction fees when you know people want to transact if a lot of people want to transact
There's only so many transactions
That can fit inside of a single block and so fees rise as there's more demand for block space and fall as there's less demand for block space
Similarly on this end instead of paying the miners for
For allowing you to transact on the network you pay you know who's in charge of the governance process
In security of the network for ethereum now under proof of stake. It's the validators
So it's people that are staking their eth and so ultimately
Eth has become a yield bearing asset where if you hold eth you have the optionality to stake the asset and earn a yield
For doing so and that yield is directly correlated to you're the usefulness of applications on the network and the number of users that are actually
willing to pay fees to transact on the network
Jack and me and this was great as always. Thank you so much for coming on. We appreciate the time
We'll link to the event in the show notes some research stuff in the show notes. Thank you. He's my peace bed