The Crypto Dream

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Zachary Karabell (ZK): What could go right? Unless you have been otherwise engaged, disconnected from the web, living on a tiny island without satellite communications, you have been aware of the vertiginous and sudden rise of Bitcoin, both as a social phenomenon and as a financial phenomenon. That has led to questions. Is it a bubble? Is it not a bubble? What is going on? Are digital currencies the wave of the future or the fad of the present? In order to shed some light on this, I’m talking now with Wences Casares, who is one of the early apostles of Bitcoin and the founder of a company called Zappo, which is a wallet and storage for your digital currencies. Wences has started several businesses, including one of the first internet services in Argentina, which he started in his twenties in the 1990s and sold for a tidy sum to Banco Santander.

He now sits on the board of PayPal, but for the purposes of this conversation, Wences really is a true visionary for Bitcoin. He believes that Bitcoin is not simply a digital innovation for currency, but a potential vehicle for the democratization of money and for the facilitation of global commerce and prosperity in a way that doesn’t depend on governments and banks to facilitate. That may of course end up being a vision for the future, or it may end up being one of the many dreams that people have had that goes unrequited. Either way, having a conversation about Bitcoin without reference to Wences Casares would be a shame. And so we are going to have that conversation today.

So, Wences Casares, you are now at the epicenter of one of the most debated and talked about phenomenon of our day, which is the rise of Bitcoin and cryptocurrencies. Although, you and I have been talking about this for five years, and you’ve certainly been involved in this for somewhat longer, even though this is pretty much virgin territory for everyone. So just as a general and beginning softball question, what do you make of all this frenzy that has suddenly erupted? Did you expect it to happen now-ish, or eventually, and what’s going on?

Wences Casares (WC): No, I had no clue when it was going to happen. Bitcoin is one of the most interesting experiments going on right now. But it’s still an experiment. And I think that, as an experiment, it has a chance of failing, and that chance is not trivial—probably as much as 20% chance of failing and being worthless. But I also think that it has a higher than 50% chance of succeeding. And if it succeeds, it’s going to be worth more than a million dollars in less than 10 years. So I’m not surprised by this because this is how we would eventually get there. Having said that, there’s a lot of risk that it doesn’t happen.

ZK: So, when you talk about a price—I’m always curious about this; a lot of people throw out price points for Bitcoin—how does one assess an eventual price? Because you hear a lot of people going “Bitcoin could go to $40,000 a coin by the end of 2018,” or “it could go to a hundred thousand,” or you just threw out a million. Where do you come up with a potential number?

WC: I think that if Bitcoin succeeds it’s going to be worth at least a million dollars per Bitcoin. Because a scenario in which between succeeds is a scenario in which Bitcoin becomes the first global and political standard of value. And today, the only political standard of value we have is gold. And it hasn’t been very important financially for at least a hundred years. And we are using the US dollar and the euro and yen to a lesser degree as standards of value. But they’re very political standards of value. So if you were to replace all of that for a truer political standard of value, the value of all gold above ground is about $7 trillion. The value of global money, M1, is around $60 trillion. A million dollars of Bitcoin would be $21 trillion. So more than gold, but less than money. And it’s consistent with what we have seen so far. Now, that would imply about 2 billion people using Bitcoin.

ZK: So people throw out these arguments, right? “Here’s why Bitcoin isn’t a currency. There’s not enough transactions. It’s not a good store of value because it’s a volatile.” How do you respond to those complaints, criticisms?

WC: It’s like saying in 1994, “the internet is not going to work because I just waited three minutes for my picture to download.” If you’re looking just at that moment in time, you’re missing the movie and where these things are going. Eventually pictures are going to download faster and eventually you’re even going to be able to see video. Eventually you’re going to be watching home movies on the internet. But this is what makes sense for Bitcoin today. In fact, Bitcoin cannot be a global standard of value and a global standard of settlement if it’s only a couple of hundred billion dollars. Global trade needs a lot more than that. It needs a few trillion dollars. To exaggerate, if we have a currency that only has a hundred dollars worth of that currency, you cannot accommodate a thousand dollar transaction. The same is true for… a global standard of value needs to be in the trillions.

So, for Bitcoin to get to the trillions, it has to go up many, many times from where it is today. And if it has to go up a lot, the only healthy way for it to go up is with a lot of volatility. Imagine if I am right, it’s going to go to a million dollars. Imagine that it went from where it is now to a million dollars. It has to go up 50 times or more. Imagine that he went up 1% every week. It would be a matter of time before… first, if the price were stable, the currency is too small. It cannot accommodate global trade. So it needs to grow as people come in. If it’s going to grow in a stable manner, it’s only a matter of time before people are saying, “Hey, this thing is awesome. It goes up every week. We should mortgage our house and put all the money here.”

And one great, great thing about Bitcoin is that, today, most of the money that people have in Bitcoin is money they can afford to lose. I don’t know almost anyone who has an amount of Bitcoin they cannot afford to lose. And that’s not because regulators are brilliant or because people are wise or because the companies do a great job. No, the only reason people are not putting money in Bitcoin they cannot afford to lose is because of volatility. We can thank volatility for that. So from here to a million dollars a coin, the more volatility, the better. Of course, once you have something that is in the trillions, volatility will also decrease, right? Volatility is like a little boat. If you and I are in a little tiny dinghy, I can close my eyes, and I can tell what you’re doing—you went to the bow, you went to starboard—just because I feel the boat moving. That is the currency of $200 billion. A little flows in and out, and it jumps up and down in price. But if we’re in a cruise ship, I can close my eyes and you can do all you want, jump up and down, go to the bow, go starboard, port, and I have no clue what you’re doing. That’s the currency in the trillions, right? We will get there. But right now, volatility is our friend. I think that one of the riskiest things that could happen to Bitcoin, and one of the most likely ways it could fail, is by people putting an amount of money they cannot afford to lose, collectively. That can easily create a panic that can drive Bitcoin to close to zero.

ZK: In the midst of this volatility, you also have a proliferation of alternate digital currencies. What’s going on here? I mean, are these trees and branches attempts to create alternate pathways that you think are going to fail? And if you think they’re going to fail, why will they fail versus Bitcoin succeeding?

WC: I do think right now that most other cryptocurrencies are going to fail. It’s just like at the very beginning of the internet, there were other protocols that competed with the internet: X.25, Frame Relay. People thought that we were going to use the internet only for email and web, but that for applications that needed a lot of bandwidth, like video, people thought that we were going to use X.25, or for applications that needed very low latency, like voice, people thought we were going to use Frame Relay. And in reality, the incentives are such that delayed transport is only one protocol, and it’s the internet. And I think the same is true for value. If you have to set the value in any shape or form, it’s most likely going to be the Bitcoin blockchain. It has more users. It adds in any given month more users than all the other thousand cryptocurrencies have added in their entire history. It moves more money every day than all of the currencies put together. It has more hashing power than all of them put together. It’s really hard to replicate those network effects.

ZK: So you think it’s a superior software and technology, as opposed to some of these others that claim that they’re superior and have more usability, more flexibility.

WC: No. No, Bitcoin is not superior. In fact, most other currencies are superior, technically. They were all launched after Bitcoin, and it would be a little silly to launch something after Bitcoin that is not superior to Bitcoin. Why would you launch it? But that’s not the point, meaning, email is not a very good protocol; even if you and I can come up with a better protocol, it was not designed to do what we are doing with it, to manage the amount of email that we’re managing, to manage spam, to manage the attachments. You and I could come up with a much, much, much better email, fairly easily. But it would be irrelevant, just like it would be irrelevant to come up with a better Bitcoin.

ZK: Part of the challenge, of course, is Bitcoin has become the catchword for a whole series of different innovations or mirages that have evolved in this space, including, at the time that we’re talking, the sort of “financialization” of Bitcoin. What I mean by that is the launching of different financial derivatives and futures contracts, and of course there are all these—which I don’t claim to understand—initial coin offerings, right? Maybe you can give us a moment of like, what exactly is in initial coin offering?

WC: It’s related to Bitcoin, but it’s separate, right? An initial coin offering is a digital token that anyone can issue. You and I could issue a digital token, and we can decide the properties for it. And we could say that, in order for people to listen to this podcast, they have to have one of our tokens, otherwise they cannot listen to it. And the ICO, initial coin offering, is the moment where we first release those tokens to the public.

ZK: And what do you make of all of these? I mean, does this fall into the category of lots of people just throwing stuff out there, sort of the equivalent of a mid-1990s, there were 27 search engines.

WC: Time will tell. I feel like that’s the case. I think that most other cryptocurrencies and most ICOs will fail, will go to zero. With so much experimentation, you know, there’s hundreds of cryptocurrencies, or hundreds of ICOs. Uh, I wouldn’t be surprised if there’s a couple that find something interesting. Uh, I wouldn’t be surprised if some of those interesting things are then adopted by Bitcoin and developed on top of the Bitcoin blockchain. But right now, to me, it’s hard for me to… I can articulate why Bitcoin could potentially have value. I can’t yet articulate why other cryptocurrencies or ICOs could have value. And that doesn’t mean… It could very well be my fault. I’m not saying that that means that the ICOs or the other cryptocurrencies don’t have value. It’s just that I haven’t gotten to the point where I can understand why they would have value.

ZK: And then, how quickly is the adoption of Bitcoin by merchants and people who want to transact? How quickly has that been moving? I know a couple of years ago there was actually, there were stories and there was some discussion of some car vendors and real estate, you know, people who were beginning to allow for payment in Bitcoin. I haven’t heard as much about that. That just may be my own ignorance/that the focus has been entirely on the price movement and the investing frenzy. But how quickly is actual use adoption happening globally?

WC: Payments are not really, especially merchant payments, are not very relevant for Bitcoin adoption. Bitcoin is moving around $800 million a day, same amount as PayPal today. But most of that money is moving across borders. That’s where Bitcoin competes really well. I did this experiment, and we sent a thousand dollars from Palo Alto, California to Sydney, Australia. We sent a thousand-dollar wire transfer, and then we sent a thousand dollars inside a FedEx envelope. And the FedEx got there before the wire transfer, which is ridiculous in the 21st century that that’s the case, right? And this is Australia. I wasn’t sending to Indonesia or Turkey. So most of that money that Bitcoin is moving is money I have to move across borders where Bitcoin can compete really well. It doesn’t really compete… if you can pay with a credit card, you’re much better off paying with a credit card. If you can pay with PayPal, PayPal is much better. It really competes where you have no options or very bad bank options.

ZK: And is that where you see the future, or is it going to become much more of a use case, meaning you’ll be able to walk into a vendor, whether it’s a car company or a restaurant, and pay with obviously a portion of a unit of a Bitcoin?

WC: I don’t see that happening very much, but we are speculating here. We don’t know, right? Anything could happen. My sense is that Silicon Valley is waiting for the killer app of Bitcoin to believe in it. And Wall Street is waiting for the payment app, payment usage, to believe in it. And I think Bitcoin is likely to succeed before any of them see any killer app or payment usage. Because I think if Bitcoin succeeds, it’s going to become a global standard of value coupled with a global standard of settlement. And a global center of value is hard to understand, especially if you’re sitting in the US where the dollar has worked quite well forever. But it’s ironic… which was your ancestor who came to the US, Zachary?

ZK: My great-grandfather in the early part of the 20th century.

WC: If we wanted to compare how much your great-grandfather paid for their first cabin or house or apartment when they came to America with how much my grandfather paid for their first cabin when they went to Patagonia—for example, if we wanted to compare how many square footage each had, it would be a very straightforward comparison, right? Your great-grandfather had a cabin that was 2,500 square foot. And my grandfather…

ZK: Yeah, that would have been amazing. But, anyway…

WC: Yeah… 1,500 here in Patagonia. But it’s easy, and it’s straightforward. Now, when we go to value, we have no choice, but to make some… we need to adjust it to compare prices in different times and different geographies. And the adjusting is always somewhat subjective, right? And we take it for granted. Yeah, that’s the case, but that’s as ridiculous as saying, you know, we do not need to adjust the square footage. Why do we need to adjust value? And we need to adjust value because value today is political. If they both had paid in gold, which is not political, it would be a super easy comparison—my grandfather paid 30 grams or your great-grandfather paid 50—but it isn’t. But we’re not there. And we haven’t been there for almost a couple hundred years. And it is a good thing for the global economy to have a nonpolitical standard of value. And gold was that for a very long time. But it hasn’t played that role.

And Bitcoin adds to that something almost magical, which is a nonpolitical standard of settlement. So it’s not only a standard of value that no one can mess with or change, but it’s also standard of settlement that no one can mess with. And it’s open for everybody. Today, any settlement network requires that you be a bank. If you want to be part of Visa or MasterCard, only banks can be part of Visa or MasterCard. If you want to be part of the ACH [Automated Clearing House] clearing network in the US, only banks can be. The Fedwire? Only banks. SWIFT [Society for Worldwide Interbank Financial Telecommunications]? Only banks. Sapphire in Europe? Only banks. And the banks take their time to do this and their expense. And it’s quite inefficient. That’s why a FedEx envelope with a thousand dollars gets more quickly to Sydney than a bank transfer.

And in the case of Bitcoin, it’s an open settlement network. You can participate, I can participate, any company can participate, any bank can participate. And if China is at war with Russia, any Chinese person can settle with any Russian person despite their countries being at war, on a Sunday at 2:00 AM. That’s… we’ve never seen anything like it. It really changes the world for good and forever. It’s a leap in the democratization of money. I imagine a world in which, whenever you ask for the price of a currency, and you say, “what’s the price of the New Zealand dollar,” or the Norwegian krone, or the Turkish lira, the answer is always in bits, fractions of a Bitcoin. “Oh, it’s 1200 bits,” or 1700 bits, or 2000 bits. And when you ask for things that are traded internationally, commodities and other goods, you say, “What’s the price of aluminum?” “X bits.”

And I would imagine that when someone from Kenya is trading with someone from China, they don’t use the euro, which doesn’t belong to either one of them, or the Kenyan shilling, or the Chinese currency, which is just one of them. They use a neutral currency that has neutral, nonpolitical value, and that they can both use to settle. I imagine that, when that happens, you look at the central banks of the world, and the one thing they will have in their reserves, more than gold and more than dollars, will be Bitcoin. And banks around the world, in their tier 1 capital, they will have more Bitcoin more than anything else. And these companies, banks, will use that to keep value and also to settle. And all of that can happen without having any single, killer application, any single, retail payment use.

ZK: So this raises the question of, at what point, if ever, do sovereign governments begin to view digital currencies, and Bitcoin in particular, as a threat to their sovereignty over fiat currencies, right? The appeal of gold for people in the past 50 years has been a distrust of fiat currencies, of governments issuing paper money based purely on the trust and faith that they’ll honor the commitments that that money, you know, the words on that paper suggest. Bitcoin is another potential sort of non-government store value. But governments don’t particularly like things happening, when it comes to the financial system within their borders, that they can’t monitor, control, regulate. That just tends to be what happens. So how can Bitcoin evolve much more without governments beginning to go, “Hey, wait a minute,” you know, “we’re going to treat this as a currency that we regulate,” or “we’re going to treat this as a financial instrument that we’re going to regulate.”

WC: Yeah. It could be that all the governments in the world get together and agree that they’re going to criminalize Bitcoin. They do not have the power. That’s amazing about Bitcoin, that even if all the countries in the world decided to eradicate Bitcoin, they cannot eradicate it. But what they can do is criminalize it. They can say “any citizen of my country who touches Bitcoin will go to jail,” for example. And if that was done globally, Bitcoin would only be used in the shadow economy, in the black market, et cetera, et cetera. That could happen. And if that happened, Bitcoin wouldn’t be successful. It definitely wouldn’t be a million dollars a coin. So, that’s one of the many risks, and it’s totally possible.

I think it’s more likely that, for a country like the US, just like the internet destroyed a lot of value and created a lot of value, but net-net it created a lot of value, and net-net it helped the US more than hindered it, I think that the same is true for Bitcoin, that the one country that can benefit the most is the one that would also be losing the most, and net-net would be making a big difference. No other country can benefit more from the globalization of commerce and finance, and is prepared, and has the size. And no other country compares to the US and in how it took advantage of the internet. And for the same reason, no other country can take more advantage of Bitcoin than the US. And for smaller countries, it’s an easier choice, right? Do you wanna rely on a currency that is controlled by one other country, or do you want to rely on a currency that is apolitical? So I can see both things happening. I could see this going the way of being criminalized by governments. If I had to bet, I think it’s more likely that governments are going to take advantage of it.

ZK: And they’re going to take advantage of it by… Again, that’s… I mean, it is an interesting question: What happens with the dollar versus Bitcoin? And you raised that earlier in our discussion.

WC: I think the dollar lives, and it remains the currency of the most powerful and richest nation on the planet. But right now it’s the currency of the world. And that doesn’t really serve the world. The world would be much better off with a nonpolitical currency.

ZK: So you have an interesting vantage point at Xapo, in that, you know, you see a lot of transaction data, you house a fair number of coin. Where do you see this going globally, in terms of, are the recent moves—the 2018 moves, the 2017 moves in Bitcoin—are those global, are they mostly in the US? There’s a lot of uncertainty about what’s going on in terms of China, obviously the Chinese for the past two or three years, wealthy Chinese, have taken advantage of Bitcoin for their own wealth preservation/getting some money from mainland to offshore, which the Chinese government has certainly responded to, right? So where do you see this?

WC: Bitcoin has gone up in price from 9 cents, which is one of the first recorded prices, early 2011, late 2010, to many thousands of dollars now, in only five very discreet rallies. Most of the time, the price of Bitcoin is going nowhere or down, but you have had these five rallies in which the price went up a lot; often, orders of magnitude. And each rally was slightly different, and each rally was a little more widespread than the previous rally. And this rally is definitely a global event and a somewhat institutional event, meaning it’s the first time we are seeing, um, institutions, family offices, companies, uh, buying Bitcoin. Not yet banks, not yet central banks, not yet hedge funds or mutual funds, but a lot of other types of institutions are for the first time buying Bitcoin and buying Bitcoin in very large amounts. You know, in this one rally, we are seeing lots of purchases of five, ten, a hundred, $200 million, which we had not seen in prior rallies.

ZK: Security and usability and ease, I mean, it’s still, you know, it’s not the easiest thing to transact. Your analogy earlier to try to download a picture in 1994 on the internet and waiting three minutes and wondering if you were going to get disconnected, and all those… figuring out how to use and store and preserve…

WC: Yeah, I am, you know, I am part of the Bitcoin industry, and I am therefore partly guilty for that. And I think that’s where we have a lot of work to do. It’s really hard to use Bitcoin today, or it’s not as easy as it should be. And it feels a lot like the internet before the browser, right? When you had to use Unix screens to get any information. It was complicated. It was slow, it was arcane, and Bitcoin to some degree feels like it’s there; maybe, you know, maybe not for some basic things, but as soon as you want to do something more complicated, like send from one place to another, or turn it into another currency, or things like that, it’s hard. But we have come a long way. And today you have a number of companies that make it safe, and that wasn’t the case years ago. Today you have a number of companies that are very well run, very well capitalized, that make it very easy for you to keep your Bitcoin safely. And increasingly the number of companies that in some countries make it very easy for you to acquire Bitcoin, and to sell Bitcoin. So we’re making progress, but there’s a lot that needs to be done.

ZK: So it’s funny, when we talked about this a while ago, one of the things that was most compelling about your vision, and indeed the vision of a lot of people for blockchain and for Bitcoin, was a world where too many people either didn’t have access to banks, didn’t have access to credit systems or payment systems like PayPal, didn’t trust in the integrity of the government that was issuing a fiat currency. Obviously you had an experience based on your own background, growing up in Argentina, where the government constantly messed with the value of the currency for their own political purposes. A lot of people accuse the United States and the Fed of doing the same thing with the dollar, even though Americans roundly deny that they’re doing anything like that. So there was a sense of a digital currency that was globally functional, that was not issued by government, that allowed for peer-to-peer transactions, not mediated by a bank, could unleash a degree of global commerce and global connectivity that was equally as visionary as some of the early visions of internet and technology. Do you still feel that in light of everything that’s going on?

WC: I do. Yes. And in fact, I wouldn’t be doing what I’m doing if I didn’t feel that way. I grew up in Patagonia, in the southern part of Argentina, and while I was growing up, I saw my family lose everything three times. The first time because of a massive devaluation, the second time because of very, very high hyperinflation, and the third time because the government confiscated bank deposits. Every time it had to do with the government somehow messing with the currency or the banks or both. And I saw how much my family suffered with that. My memory of that, of those events is not an economic memory. It’s an emotional, sort of social memory. I remember what it did to my parents conversations and to their mood and their anxiety, to everybody around us. How it hit the poor more than the rest, how there were some people who were fortunate that they could either buy real estate or have a bank account in other countries to protect themselves.

And the poor couldn’t do any of that. And the government and the bank took most advantage of them. And I forever thought that technology was going to solve that. But really, so far, it was a big disappointment what technology has done for basic financial services. The basic checking account today operates the same way that it did 30 years ago. You can access the same functionality with at-home banking, but that’s not much of an improvement. And the ATM card works the same way as it did 30 years ago. And so that’s the credit card. It’s really sad to see how little progress we’ve made. And the percentage of the global population that has access to a basic checking account and a basic debit card is the same percentage that it was 20 years ago. So it sounds like, if we have to depend on banks to get the rest of the population a product that can really help them, we will be waiting a very long time.

And Bitcoin is the first time that I see something that can really change this forever. And that’s what motivates me to dedicate the rest of my career, my reputation, and most of my capital to help Bitcoin succeed. Because nothing would make me prouder than to be able to tell my grandkids that I was part of a large group of people who collectively helped Bitcoin succeed. And that was the biggest leap in the democratization of money we have seen in a very long time, perhaps ever. And because of that, I can imagine a world in which what happened to my parents when I was growing up cannot happen again, where people can say to the government, “be responsible in what you do with my money, with your national currency, with the banks, because if you don’t, now I have an alternative. You cannot take advantage of me. I have options. I just need a cell phone and I can protect myself.” I think that’s a much better world.

ZK: No, it is a great vision, and hopefully a vision that guides how these things are going to evolve. I do wonder about the question that’s been raised recently, which I had not been so attuned to, about the energy consumption of Bitcoin; kind of one of these unintended consequences of the proliferation of a technology, which, you know, you have the vision of what this can provide, but I hadn’t been as attuned to the sheer server power and energy consumption costs of mining Bitcoin and transacting it. Is that going to change with computing power increasing? Is that an issue you foresaw, or is it actually not an issue the way it’s been reported?

WC: I think that… I mean, it’s true that Bitcoin consumes a lot of electricity, and the amount of electricity Bitcoin consumes will only go up. Without other commodities, the price determines the production, right? If all of a sudden the barrel of oil goes to $200, we start pumping oil of places that it’s more expensive to pump, but now it’s profitable. So if the value of oil goes to $200, production increases because we pump from other places that we couldn’t pump before. In the case of Bitcoin, production of Bitcoin is always the same; it’s fixed. So if the price goes up, what happens is we just mine more. And so, basically, if the price goes up, the amount of electricity we spend to mine Bitcoin goes up. So if I am right, and the price of Bitcoin one day goes to a million dollars per coin, the amount of electricity that we are going to be spending, it’s going to be inordinate.

I think that net-net, we are better off. I think that that’s not something that we are spending for nothing. We are spending that electricity to have a ledger system that nobody can control. If we wanted to be efficient with energy, I would look at a lot of things before I looked at making this more efficient. There are a lot of other things that are more inefficient and we’re not getting enough in return. So I do think that it is a fact that Bitcoin burns a lot of electricity. It will only burn more if it succeeds. I don’t think that’s a problem because we are getting more value than what we’re spending.

ZK: And of course, that energy could be provided by renewable sources just as well as it could be provided by coal or other carbon sources. So there’s that as well. And, you know, that’s an interesting question of usage. And that does lead to the other thought, which is everybody talking about Bitcoin as a bubble. Bubbles are misunderstood in my view, in that the pouring of excessive amounts of capital into something new is often what allows them to become much more commoditized. So yes, there was a railroad bubble in the 1870s and 1880s, and most people in that early stage of investing in them lost their money, but we still… that capital went and built railroads, and that became an incredible source of productivity. The same thing about fiber optics and the laying of the infrastructure for today’s global internet. In the 1990s, a lot of that was excessive at the time. But what’s the correlate for Bitcoin? Meaning, I understand that bubbles can be—even if they’re poo-pooed and seen as inherently foolish and negative while they’re happening—they can actually be the germination of something extremely productive. How does a potential excessive amount of capital into Bitcoin help the future of it? You know, because it doesn’t have that tangible… it’s not an investment in X that then leads to Y, the way railroads or fiber optics work.

WC: Only time will tell if this is a bubble or not. Nobody knows. We can all speculate, and we can try to be as educated as we can, but we are speculating. And if it’s worthless in the future, this will have been a bubble. And if it’s worth a million dollars, it will not have been a bubble. Generally, to define something as a bubble, you have to compare the value of it against its intrinsic value, right? You compare the price of a house versus how much you get for renting it. And if you have to rent it for 150 years to get the money back, someone would say, “man, maybe that’s a bubble,” right? And same thing with a company or with a bond. The problem with Bitcoin is that it doesn’t have any intrinsic value. Zero. It doesn’t have earnings. It doesn’t cover a coupon. It doesn’t have any… we cannot eat it, we cannot use it for shelter. It has zero intrinsic value. Just like gold. The best forms of money have always had zero intrinsic value. And as such, it can go up a lot because it’s not bounded by fundamentals. But it can also go to zero. And as such, it’s very, very hard to say what’s a bubble. If we all agree that Bitcoin is going to be worth more, if we all pay more for it, it will not have been a bubble. If we all one day wake up and say, “this is ridiculous. This is a worthless token, and it should be zero.” It will be zero. And it will have been a bubble. Time will tell.

ZK: Well, that is absolutely true. It’d be fun to have this conversation again in a year, and then in two years. I’m sure we will have it… it will be good to have it on record and on call. But I think for anyone out there, if you want to figure out what’s going on in the world of Bitcoin, starting with Wences Casares is probably as good an option as any, particularly given the noise and the confusion and the buzz and the hype and hysteria. Wences has been thinking about all of this for years. I’m sure you’ll keep thinking about it and try to shape the future of these digital currencies of blockchain and Bitcoin with integrity, hope, and vision, which is about all that we can ask of anybody. So thank you so much, Wences, for talking with me today.

WC: That’s very kind. Thank you, Zachary. It’s always a pleasure talking with you.

ZK: I’ll talk to you soon.