How Bitcoin Is Changing the Financial System | Mauricio Di Bartolomeo

26:17And a lot of those reasons was, or were there, really, we came at it from we want to solve our own problem. So who would use it? I'm not suggesting anyone go take a loan if they have no need for a loan, right? Like if you have fiat cash flows from your life and you're putting away a little bit of Bitcoin every month and you don't really need a loan, I'm not encouraging you to go take one for speculative purposes, right? But if you're a person that wants to buy a new house, wants to start a business, you know, you've built some Bitcoin. Usually you build your Bitcoin stack as a way of, it's like your rocket ship to take you from the life you have to the life you want, right?

26:52And eventually the rocket gets filled up with fuel and you're like, okay, well, the rockets here and then you're saying to yourself well now if i if i blow all the fuel in the rocket then you know i might not land where i want it i might have to get another rocket and so i don't want to let go of it so you try to and the rockets constantly get harder and harder to fill up correct correct and so the idea here is that if ever if you have some bitcoin if you're in a bitcoin standard and you come across an investment opportunity uh a way of upgrade your life experience by way of a house by way of a car by way of school pay you know a trip whatever it is that you want to do you can do so now without having to sell your bitcoin and in a potentially much more efficient tax structure yeah which is a loan versus selling so who should use this you know if you're in a bitcoin standard if you have bitcoin life life happens you know i've had people use these loans to pay for emergency surgery i've had people use these loans to buy property.

27:49A lot of people use these loans to start businesses. Many people use these loans to buy more Bitcoin or to buy things like MSDY or do some type of arbitrage between two instruments that are Bitcoin denominated or Bitcoin related. And so it really varies how people use the product. What I would suggest, of course, as always is, and this goes back to the risks of these products, is you never want to put your full stack on a product like this. Exactly. Because all of those different like things that you can spend the money on once you let the ua borrow against your bitcoin all carry different amounts of risk and so like if you're going to go and do it to speculate on some bitcoin treasury company that's probably higher risk yes um to buy more bitcoin less risk than that but maybe higher risk than buying a home or whatever um just in terms of the volatility so like if you're talking to someone who's trying to figure out like what the right loan is for them what kind of percentage of your stack do you tend to kind of think is reasonable so the first thing that I suggest to somebody is before they decide on the stack or anything like that is to run a test loan.

28:51Test loans start at Lennon at 500 bucks. You can use a thousand dollars with the Bitcoin, test the pipes, understand how long it takes, you know, what the process looks like, what the repayments are like, what the flows are like. Once you're there and you're comfortable, you can decide on how much of your stack to put. Generally, I would say to people, again, it depends on your situation, you know, not financial advice and all this stuff. But typically I would say to people between 30 to 50 % of the stack is okay. But, you know, there's people that might want to go a little higher than that. There's people that might want to go a little lower than that.

29:27And a lot of that comes back down to the risks, right? So what are the risks, right? Like, I think the two major risks are, number one, counterparty risk. So something happens to your counterparty, right? And number two, liquidation risk. You know, market volatility can result in your Bitcoin having to get sold. So there's two primary risks, and then there's ways to optimize around either one of those. For example, if you are a person that is looking to minimize counterparty risk, right? You want to minimize how much assets you have on a third party. So you're going to be looking at a loan that wants to start at a potentially higher LTV.

30:03So you're going to basically max out the LTV of dollars relative to the Bitcoin you're putting in trust or you're putting as collateral. and you're constantly going to be trying to redeem excess collateral as the loan becomes over collateralized, right? So you're going to try to always keep the bare minimum assets on the platform. The counter to doing that is that by only having always the minimum required amount in the event of market volatility, you may have to react fast, right? And so if that's you and you're okay with reacting fast, that's a way of structuring yourself. But the opposite of that That is, on the other side of that is, I'm okay with the platform.

30:42I don't necessarily think that's the biggest risk. I think my biggest risk is a sudden market move. So people that believe that or want to optimize for that, a lot of them over collateralize their loans proactively. So my starting LTV is 50%, but we don't stop you from sending more if you want to be more comfortable. I have guys that have single digit LTVs because they just don't want to ever think about a liquidation. Yeah. Right. And so that happens. but those guys are very comfortable with us as a platform and how we operate. So to them, the major risk is a sudden market move. To others, the major risk is counterparty risk.

31:19So they try to minimize that, but there's trade-offs for each one, depending on what you're trying to optimize. And just to clarify for anyone listening, the reason you say they have to move faster is because they obviously have to then add extra collateral to that loan product. Correct. And it's not to it's not to like scare people away from using a product like this. You know, we, to give you some data around this, this year we've had Bitcoin go to 110, then down to 70. That's about 35%, you know, top to bottom move. Mathematically, that would have impacted a lot, no, decent amount of our clients.

31:54What we saw was actually less than 50 basis points. So less than half of 1 % of our loan book was impacted by liquidations. Wow, that's cool. on a 35 % down move. And I think that's a testament to

32:10how much smarter our clients are getting. People understand this product a lot better now. They know where the goalposts are, right? And so they are now planning, okay, I'm going to be, if this happens, then I'm sending this. They have the safe listed addresses. A lot of them have turned on auto top up, which is another feature we've created to protect against certain down moves, which is if you don't want to have the Bitcoin be part of your loan right away, you can put it in your transaction account, which just sits in cold storage. And you turn on this thing called AutoTopUp. And all AutoTopUp does is if the market moves and your loan needs more Bitcoin, it sweeps it from the transaction account into the loan automatically without you having to do anything.

32:51And we built this because a lot of times we had loans and clients going on, you know, one month hiking trips, or I'm going to go on a sailing adventure for a month. I'm not bringing my ledger or I'm not bringing my call device. And so they wanted to have an option to respond. So we built that. Just like out of interest, when, say we have like a super volatile down move, what happens if your loan is getting close to being liquidated? Yes, great question. So loans start at 50 % loan to value. As the price drops, that LTV starts rising. So at 70%, our system starts sending you notifications to say, hey, Danny, you need to send more Bitcoin to your loan.

33:32Those notifications continue all the way up to 80%. If and when the loan gets to 80%, the system automatically sells however much Bitcoin it needs to repay the loan and returns the difference to the client. Now, in my experience, or in the times that we've been in business, the only, there's been like, I would argue there's been one or two times where that move from 70 to 80 happens in a matter of hours. and that was really the one that comes to mind was COVID. COVID was a 50 % drawdown in 24 hours, which is again why there's a reason letting us build the way it's built. And there's a reason our margin call system is designed the way it's designed.

34:13It's really for the benefit of everybody because it's how we believe the operation can become anti-fragile. You can't in a market like Bitcoin tell somebody you have this much time because we know now how much Bitcoin can move in this much time. So at Lennon, it's not a time-based requirement. It's a price-based requirement. Also, we don't ask you, when you get these notifications, we don't ask you to bring it all the way back to 50 or to 40 or to any particular amount. All we ask you to do is don't let it get to 80. At 80, we don't have a choice. So just don't let it get to 80. And so that's sort of how, that's the process that happens as Bitcoin market drops.

34:59Now, importantly, the same way we ask you for more Bitcoin on the price going down, if Bitcoin recovers and goes in your direction, you can take excess Bitcoin off the loan. And that's something that we do that I don't believe many others do. And people don't necessarily think about this, but that is a huge benefit that Ledin has. In 2024 alone, over a thousand Bitcoins were recalled from our clients from excess loan collateral to take back to self-custody. So that makes us super proud. And it's something that's super easy. You just go on the loan and you'll see the button that lights up when it's eligible.

35:34It just says redeem excess collateral. And you just click it and it goes to your transaction account. And from there, you can do whatever you want with it. But that's also to signal to people, we don't want any more of your Bitcoin than we need. Right? Like when we're asking you to top it up, it's just because we want to protect the loan. If it recovers and when it recovers, that's your Bitcoin still. So that's how that process works. And maybe we should talk a little bit about how the repayments work on Ledin. Sure. So maybe explain like the different options that people have. Yes. So at Ledin, you can always make a repayment partial or full at any time with no penalties, right?

36:09There's three primary ways of repaying your loan. You can repay it with a wire transfer or cash. you can repay it with stable coins, or you can use Bitcoin collateral. You can sell part of the Bitcoin collateral to repay the loan. Importantly, that option to repay with Bitcoin is available. It's not available in every market. It's available in most markets, but not every market. It's just a regulatory thing. It's a regulatory thing. Yeah. But the primary ways through which people repay the loans most often is cash and Bitcoin, right? Now, stable coins, I use stable coins in cash sort of inter-exchangeably.

36:45But partial repayments are very easy to do directly on the platform, especially with stable coins. Because with stable coins, they're in your transaction account. We deduct them. We apply it to the loan right away. With wires, you have to notify us that you've sent the wire. We have to wait till the wire arrives. Once it arrives, it gets booked. And then it flows to your loan numbers. So stable coins are really becoming, I would say, a material rail for disbursements and repayments. but that said the most popular way to repay the loans is through Bitcoin and people use that when Bitcoin rips, people take profits, right?

37:22Like a lot of our guys took loans when Bitcoin was at 50, they see Bitcoin at 120, they have to sell a fraction of what they put initially to repay it and they just want to be done and we see people close loans when market goes higher, right? And we also see people open them when markets go lower. So those are the three ways that most people repay. Yeah, that makes sense. And then in terms of rates, like what do you see happening with rates in this market? Because like historically rates against Bitcoin have been relatively high. There's obviously kind of a flaw set by the quote unquote risk-free rate.

37:53Like how low do you think they can drop? And maybe it's worth also saying what they're at the moment. Yeah. So our rates right now are, by the time the show goes out, it'll be 12.4 for custody loans, which we're very happy that we have the most competitive rate in the market for no monthly interest payment loans, which by the way is the only type of loans we do. We don't even give you the option to make, and you can make them, but there's no contract of it, like a let in that forces you to do them and that punishes you. If you don't, you can make them voluntarily. No one's going to stop you from doing that, but you're coming to us because you want cash and not sell your Bitcoin.

38:27The worst thing we can do is ask you for cash to make those payments. Now, some companies do this because it allows them to show a much lower APR because you don't have to include the cost of financing those monthly interest payments into the loan. So they try to like, you know, tuck the fee over here or give you this option over there to make it look like it's cheaper than Lennon. But in fact, when you add all the bells and whistles, it actually works out. 99 % of the time Lennon is the best cost for that type of product. So that's something that's for anyone looking, you know, run the numbers, right?

38:58Like if you run the numbers, most often you wound up at Lennon or at least you have to get asked questions and read the fine print. It's very important for you to read the fine print. So where do these rates, where can they go? I think they're higher than I would like them to be right now because I think there's an information gap between how lending against Bitcoin is perceived by big institutions and how lending against Bitcoin is perceived by the Bitcoiners, right? Bitcoiners are saying it's the world's best collateral. You know, you over collateralize, it can be sold at any time. like we get it.

39:33That's why we built Gliden. It's a great product. Now that said, you have to get the banks equally comfortable with that. And they haven't been doing this for seven years, right? They're leaning on us. Like we talked to a lot of these banks and we actually borrow from banks. And so when they're talking to us and we tell them, you know, they ask, what's your default rate? And we're like zero. And they're like, what? 0 % default rate? You've never had somebody not pay a Bitcoin back loan. But no, we've never had someone not pay a Bitcoin back loan. Like the liquidation engine has worked when it has had to and everyone else has paid the loans because they want their Bitcoin back.

40:10This is natural. So to them, it's a, they're very interested and they're trying to price the risk around this. And I'll give you another interesting analogy. So my business partner, Adam, co-founder of Leren, he's the CEO, I'm chief sales officer. He comes from renewable energy financing. So he was financing big solar projects when they were basically pretty new. And some of the questions that these big pensions are asking were, how do we know the solar panel is going to last 10 years? How do we know it's going to generate this much energy? How do we know these pieces aren't going to break? Because they don't know the flow.

40:45They haven't been around. They haven't seen how these things are built, what they do in the wild. And so there's always this learning curve when you're trying to bring capital in to price a particular risk. Something that's relatively new. Correct. So I see banks coming in. They are already here. They're not coming. They're here. Banks are slow because every time they want to launch a new product, it's just a committee after committee after committee in red tape. But they're working on it. And I think they're going to get to a point where they're going to understand that lending against Bitcoin is better than lending against real estate.

41:21It's better than lending against stocks. Because it just is. Like we know it is. Because it is. And so it's really just a matter of time, right? And so I do think that these things can tighten the spread against Fed funds. So what I look at is all interest rate markets dance to the beat of the Fed funds rate. So there's always Fed funds rate. A structure of an interest rate is the Fed funds rate plus premium, right? Or the premium for that particular asset. So for us, for Lennon, you're sitting at around 600 basis points over Fed funds, right? But interestingly, the spread over FedFunds today is around 600, right?

41:59When we started lending, we started lending in 2018. Rates back then, I believe, were in like the 2 % range. Our rates when we came out, I remember still, was 16%. So we had a 1 ,400 base point spread, basically 14 % spread over FedFunds, because that was what our lenders demanded from us to fund those types of loans. Today, that spread is down to 600 basis points. So it's been cut by more than half. More than half. So I expect the next two years that cuts by half again. And where does it land? You know, there's people, if we assume that we continue living in this duality of fiat and Bitcoin, I don't think Fed funds goes away as a benchmark to price rates.

42:46I think that survives for probably another decade or so. And so we're always going to be looking at FedFunds Plus. Where that sits in the plus, I would say anywhere between 100 basis points and 300 basis points, that's probably where it lands. I do wonder if it's almost like it needs to go through another bear market to prove that the Celsius, BlockFi, FTX thing was a black swan event, not what happened in a bear market. It's a really good point you make. And when you are going through a bear market and you're just an observer, right, you have many questions, right? Because all you can make is assumptions.

43:21You don't know what was happening behind the scenes. But when you go through a bear market as an operator, what we saw, in fact, was the opposite. For us, you had a collapse in the asset prices. Let it have zero defaults. The collateral did what the collateral is supposed to do. So for me, for us, it actually reinforced our view that Bitcoin is the future of asset-backed lending. But for others that don't have the nuance and the vantage point that we have, it can be perceived as, no, you don't lend against this thing. Right? One of the most challenging things about rebuilding trust in the lending industry was the fact that there were so few survivors.

44:03Right? Because it was a really difficult conversation every time we sat down with whoever, whether you're a prospective client or someone else. And they said, what did them do differently? And we're like, not that much. They weren't doing what we were doing. They had no risk management. We actually were doing what we said we were doing. They were just saying things that they weren't doing. Yeah, it was just fraud. It was fraud. So when you look at that and you say, you know, we were doing things right, but one, two, three, four, five, six guys weren't. And so it's really hard to make this narrative that it's not that the apple is bad.

44:40It's like there were six bad apples and the rest were good. But people say, well, there's got to be something wrong with apples. Right. And so it took years to build back to where we are today. And was that on both the buy the borrower and the lender side of it? Or was it particularly on the lending side? As in the people that are giving you the dollars? I would say it was more the borrowers because the lenders always understood that we, you know, they either had the Bitcoin that we would pledge. It was in their custody. They never felt at risk per se, because they always had the option to liquidate the dollars, right?

45:14They might've asked us for a higher interest rate, you know, because they could. And because there was a lot of liquidity that left the system. So it just got repriced higher. so they could make better returns at the same risk. So they did for a while. So it wasn't necessarily from the lender's perspective because the lender was secured, but it was from the borrower's perspective because they wanted to understand how did Leden survive? Because don't forget, we were seen as the little guys. We were seen as the smaller lender, right? The guys that did a Bitcoin only, the boring Canadians, they would call us, right?

45:51We didn't have stadiums. or credit cards or big sponsorships. So it was always, why did these Wall Street, you know, what was it, Sequoia backed firms going under and you guys didn't, well, because they were being wildly irresponsible. They took a very basic business model and they just put it on steroids and started adding risks to it and then they blew up. but collateralized lending has been done for centuries well. It can be done responsibly. So it wasn't an issue with Bitcoin back loans. It was an issue with poor risk management and excessive risk taking and fraud, straight up fraud in many cases, lies, right?

46:39So that was a challenge to kind of build back out of because it took time, it took proof of work, It took being in the market, right? And now that trust has been rebuilt and there's this new sort of convergence around the idea that you don't sell your Bitcoin, it can be done responsibly. You can borrow from a company like Ledin. You have groups like Cantor saying they're coming in. And so it gives people this air of, okay, the kids have left the room. The adults are now offering loans. These are responsible people that aren't putting themselves in the position that the last guy is dead cop. why would they ever do that, right?

47:18And so people have now regained trust in this asset or in this product, and also on the idea that you don't sell your Bitcoin. And not surprisingly, you're seeing a lot of people jump on to try to offer these lending products now that the product market fit has been clearly validated and companies like us have been doing this for seven years trying to build trust and that this can be done responsibly. So a lot of people are not trying to enter. I'm not saying that it's I'm not trying to say everyone's going to be a bad actor but I'm starting to see a lot of the things that we saw in the early days like token launches lack of proof of reserves and so I encourage people to ask the right questions to demand proof of reserves as a basic standard and to stay far away from anything with a token I mean we've seen this movie too many times 100 % And so it's funny.

48:12It reminds me of a conversation I was having with Alex Leishman from River just while we were at the conference before. And he was like, we were talking about like the important things for him at River and what they've done. And he's like, it all just comes down to just, just don't fuck it up. Like just the one thing you have to do is make sure customers are secure, safe, Bitcoin doesn't get lost. Like these are the things. And it's like, it's another story. Like I think in Bitcoin more than almost anything, slow and steady often wins the race. And rather than just trying to kind of snatch the market when it's not necessarily there, which I think what kind of BlockFi and Celsius did by just trying to pump their numbers with everything that happened at 3Rs Capital, lies and fraud, everything mixed in, like they fucked up and you just kept going and didn't fuck it up.

48:51I remember now that you say that, a funny story. So when we were going through the collapse of all these lenders, right? Like we had people at Ledin, you know, obviously they were being hurt by BlockFi. They had assets in all these other places that weren't being allowed to withdraw. And so we had people withdrawing from Ledin. And when people ask me, at times I remember people would call me and say, Mau, are you guys okay? Do I have to withdraw my Bitcoin? My answer was always withdraw your Bitcoin and bring it back. Yeah, just do it. Just do it. Just do it. We will process your withdrawal. Once you're comfortable, bring it back.

49:27We'll be here. We're not going anywhere. So just do what makes you feel comfortable. And people was like, I appreciate it. Many of them actually didn't withdraw. A few did. Just hearing that's probably enough. Yeah, a few did. But the point is, when I was going through this, I remember, you know, everything's on fire. You know, clients are calling me, you know, worried. I'm talking to my parents. My dad's my mentor, and I talk to my dad quite often. And so I called him, and I was basically laying out what was happening. And he goes, so let me get this straight. He goes, the five guys that were always ahead of you because they were bigger and louder and printing money are dead.

50:06and i'm like yes it's like you're the only one that survived i'm like yes he's like son you're going to go to the top all you gotta do is not fuck this up just don't fuck this up you you've been given a massive gift right and to your point all we need to do is do one thing and do it right and not overcomplicate what it is that we do. The more bells and whistles we add to the product, the hardest for me to explain the risks to you, to an investor, to a regulator, to whoever you are. So we're making our business deliberately that simple because that simple is easy to understand and easy to understand things make you feel comfortable, right?

50:57Our clients are brilliant people. The more transparent we are with them on how everything operates and where we see the risks and the things that we've built to protect against them and tell them, listen, the risk here with you is liquidation at 80%. Plan for it. The more upfront and transparent you can be with the clients, investors, regulators, everyone, it's going to land better. It's going to make you move faster. Yeah. And the coolest thing is this is a product that rich people have been using forever. It's just now you can do it with Bitcoin. And then the coolest thing about that is there's no credit checks.

51:31There's no, it doesn't matter where you live, well, as long as you're operation in that jurisdiction, it doesn't matter what color you are, doesn't matter what gender you are, doesn't matter what religion you are. This is just a completely agnostic thing. People talk about financial inclusion, and this is an abstract term that Bitcoin, you know, some people in the Bitcoin circles love, but most people don't really attach it to any concrete things. It's financial inclusion, it's warm, fuzzy feelings, but you don't really know what it means. At Latin, it means that Miguel from Lima in Peru can get a loan at the same rates as Miguel in Lisboa, Portugal.

52:08In the past, issuing loans was very uneven and unfair because I couldn't underwrite your assets in Peru the way I could underwrite assets in Portugal versus the US. It was just very different. Even gold in a vault in Venezuela. It's very different than gold in a vault in Switzerland. So like there was no real uniform asset that would allow me as a lender to treat you the same. Bitcoin does. And one of the things we're very proud of at Leten is we offer the same rates to everyone we service. And that goes for loans from$500 to hundreds of thousands of dollars. and that makes people feel incredibly empowered to be able to say I can use a product and I know I'm getting the same rates as someone in the US or as someone in Europe not only that it's a product that is being used by people like Michael Saylor or it's being used by you know very wealthy individuals and these you know treasury companies etc like it's the same structure not the same terms always, but it's the same principle, which is long, hard, short, weak, right?

53:21You're long a hard asset, you're short or borrowing a weak asset. And I think it's no different than a mortgage. Like a mortgage is a lever short on the dollar. And it's made people a lot of money. So it's just bringing technology, financial technology that's existed for every other asset into Bitcoin. It allows the guy in Bangladesh to do the Michael Saylor playbook with his own Bitcoin. And he's not got the capital markets to tap into, but he has got his Bitcoin. Exactly. And obviously, like I mentioned, like obviously the terms and the scale that Michael can access is, you know, God bless him.

53:54It's awesome. Yeah. But other people have the same need and they don't have a publicly traded company that can issue a convertible bond. Right. They have the Bitcoin, which is their credit worthiness now, and they can post it to a place like that and get world class service, world class rates. They can't do that with their local home. They can't do that with their car. They can do that with their local business. And so I think that Bitcoin is going to become the cornerstone asset of most portfolios, particularly outside the US, because most people outside the US don't trust their local banking system.

54:29They don't want to use local banks. They want to use something international. And Bitcoin allows you to do that with a lot, with a very little friction versus what had to happen before, which was you have to fly to the And so I always say, go to the US, open up an LLC, buy a property, deal with the US bank. That was very cumbersome. That's going to cost you more than 12%. That's going to cost you a lot more than 12%. You know, I joke with my, like I say this myself too. Like my job doesn't feel like a job. Yeah. Right? Like I do what I love. And I never really feel like I'm working. Even when you're up at midnight, still grinding away, it's not work.

55:07My wife sometimes, I remember she told me about the beginning, early days of Leden, which we were six guys and I was very obsessive about my work. And I would spend my weekends, all my weekends, all my nights, just grinding away for Leden. And I would use my weekends to write the newsletters. And my wife was, one day she pulls me aside. She's like, baby, I'm a little worried. She's like, you used to have hobbies. like you used to have friends, like now you're just sitting here and you just write. And I'm like, you know, what do you do for fun these days? And I was like, what do you mean? The newsletter.

55:47I love writing the newsletter. Yeah, I wanna see, I'm in the same boat. Before I, well, I've had a kid as well, which changed things, but - Oh, congrats. Thank you, man. But like I was, I would go surfing three or four times a week. I think since I started the podcast and obviously with the kid, I've been like once in the last six months. those hobbies just go I didn't know you served you need to come you need to come to Cayman I used to have a surfboard company did you? yeah yeah yeah way before my fiat life what like making surfboards? yeah I brought them in well I used to make manufacture them in China and would bring them into Venezuela I've done some I'll try and find a picture I went through a period where I was like hand shaping a load of boards no way yeah this was way back I don't actually know if I'll even have it on the phone let's see I don't know you guys are blessed with amazing surf totally that's uh we're like 40 minutes from the gold coast like an hour from the sunshine coast like nice insanely good waves um where were we at oh i want to talk to you about the banks sure because like you said they're not coming they're here yeah they're all going to look at doing this stuff i think they're going to make a lot of mistakes in sort of the early days of these loan products that they'll inevitably offer like i'm sure they'll all be re-hypothecated maybe they'll do in a way that they can cover, who knows.

57:01But what do you think that's going to do for the lending market in Bitcoin? I think it's going to open optionality for people. I think it's going to, the main benefit of this whole thing is going to be driving the cost of these loans down. Driving the cost of these loans down makes them exponentially more attractive because your hurdle rate for what you want to do with that cash, the bar that you have to clear, drops significantly, right? Like if I tell you a borrowing against your Bitcoin costs you 12%, you know, are you going to do it to start a business that has some uncertainty to it? You may not know, but if I tell you the cost of borrowing against your Bitcoin is going to be five or three, then that risk becomes a lot lower because you might have enough saved up to cover the interest and the repayments and you might feel comfortable and you might want to do that.

57:51But the drop of the cost of these loans is going to make them exponentially more attractive and more useful for people. And they'll be able to use these loans for more things, right? That's, I think, the first thing. Second, I do think that there's going to be a world where you're going to have the option to borrow with the rehypothecation option. You're going to have the option probably to generate Bitcoin yield as well, which we used to offer at Lettend. And there's going to be the people like us that just want to focus on keeping your Bitcoin safe in custody at all times and lend you on that.

58:27And that's going to open the swat of options for people. Everyone's, you know, adults can make their own decisions. You know, I 100 % like this is something I had Jet Miles on the show, I don't know, a month or so ago. And he was talking about what they're doing at Strike. And like one of the things I said in that show, which I firmly stand behind is I don't even have a problem with rehypothecation. As long as everyone is entering an agreement knowing what the product they are entering is, I don't particularly care. People can do what they want with their money. I wouldn't use it. I want to use a service like Ledin for this.

58:57But I don't care that that exists, and I'm sure it will come back at some point. Yeah, I'll give you a couple of funny anecdotes. One of the challenges I see with these types of products is that even though you were very upfront about the risks with people, And I say this because when Lennon started offering the two options, custodied and standard loans, where it was basically non-rehapothecated and re-hypothecated loans, we offer both. I thought, as a Bitcoin company, no one would touch the re-hypothecated loan because now that this option is available, everybody should flock to this one. Naturally, my non-rehapothecated loan has a higher interest rate than the one where I was able to lend some of the collateral.

59:43Daniel, it was incredible to see how many people just flock. They just see the 2 % lower rate, whatever it is. They just see the delta on the interest rate. And it doesn't matter how much you try to hammer the difference and highlight the risks to them. They will go for the lower rate. That's one also, I mean, that plays into the fact of why we're getting rid of it all together is because. And even though people will tell you a lot of times they understand, yes, don't worry, in the back of their minds, they're basically saying, but that's never going to happen, right? Like there's no scenario in which this would happen.

1:00:19Like even though we've been through BlockFi, even though we've been through Celsius, even though we've been through Voyager, there are still people out there that say, ah, I'll take the risk with the extra 2%. And frankly, I think that those options again will pop up again. and with people like the banks and maybe not necessarily maybe that maybe some banks will maybe some other uh lenders that are you know crypto native will try to offer this too um there's a lot of risk when you are lending bitcoin uh in any way of shape or form that's why we got rid of all bitcoin lending at leten one of the big reasons um because you know you're lending an asset that can be reprinted, right?

1:01:02They can be FDIC insured. You can make a backup within the area. There's no backstop to somebody if you lose Bitcoin, right? And so I think there will continue to be these types of yield products. There will continue to be these types of rehypothecated products. There will be losses in these products, again, down the line. That's why we want to have no role and no participation in any of those. But I think it's inevitable, right? It's an inevitable part of a free market, right? Like people will put that option out. Some will use it. And eventually, I don't know when or how or how bad it's going to be, but there will be an event where some people took too much risk and that gets reset.

1:01:45It's just like growing and pruning and growing and pruning. It's just a boom bus cycle. It's just part of the fiat system we live in, right? And you can't have the booms without the pruning process, right? And I would argue that lending is an example, right? Like we had the first boom with the first boom of any lenders at all, which was right around the time ourselves and chain BlockFi sales, he was like, we were the first batch, right? Of lenders. And there was product market fit, it was clear, we all skyrocketed. Then there was a massive pruning down, right? Now we're starting to see the next wave of growth.

1:02:24And now it's not BlockFi, but the characters have changed. Some of the characters have removed and the new people are coming into this part two of the movie. But we're going to see that too. We're going to see a bunch of a tide lifting all boats. Then oceans will retrace again. You'll find out who was swimming naked, who was taking too much risk. So I think that we're going to see this pattern again. And that said, I think these products will continue to find a reason to exist. How many people have won the lottery? There are a few. How many people still play the lottery? A lot of them. It's just because the trade has historically failed doesn't mean there's not going to be people trying to line up to do it again.

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1:05:55But the other thing I wanted to talk to you about, last time you were on What Bitcoin Did, not Mr. Obnoxious, we were talking about the elections in Venezuela. Yes. And it was right around the time. I think it was like the week before the elections actually happened, if I remember right. Majuro obviously won again. Well, won again. Obviously rigged unfair elections. But give me the update. What's kind of happened since? Because in fact, let's start with, you should tell the story of running away from Venezuela or your brother running away from Venezuela, because that's crazy. Yeah, no, happy to.

1:06:28So I'll give you the background. So I am born and raised in Venezuela. That's where I found Bitcoin. And that's where, well, that's where I experienced hyperinflation and authoritarianism. And my family, it wasn't really me, it was my youngest brother, and my dad found Bitcoin in late 2014, early 2015. and we started mining Bitcoin. And in Venezuela, back then, there were these very horrible capital controls. It was illegal to buy dollars. People tried to store their wealth in non-perishables, like cans of tuna, car, tires. But then the government started coming out with these hoarding rules. So you couldn't have more than four extra tires per car.

1:07:15You couldn't have more than two cars to your name. You couldn't have more than, you know, if you were found to have too many plastic chairs, believe it or not, people stacked plastic chairs, they were considered to be hoarding. They would be seized. Don't tell Pierre Richard.

1:07:30So it was in this really dark moment. Also, Chavez had just died and we had lost the... well, the regime had determined that they weren't going to allow democracy to thrive in Venezuela again. So maybe just to give you the sequence of events, Chavez dies in 2013. That triggers a new presidential election early 2014. That's the election that a lot of us went to vote. I've told this story a few times and apologies if anyone's heard it before. But when I flew down with my now wife, a lot of the planes that were coming into my Katia, which is our main airport, where guys all wearing the freedom hat, which is a Venezuelan flag, and everybody wearing white, which was the color of that movement at that time.

1:08:19So everyone was coming from anywhere. So that was a period of hope. Yes. You could feel the hope. Honestly, you could sense it in the air. If it had been a fair system, we would have won. The numbers were there. I saw it, at least in my hometown, where I had seen the previous elections, by the way. In the past, I will admit, the first few elections that Chavez won, he won them democratically. He was popular. Yeah, I'm not going to say the guy took him. The first few were democratic, 100%. This one, though, was not. And you could see it. It was in your face. They made a point to show us that they didn't want us there anymore.

1:09:02And after that election, that night when they announced that they were going to keep the reins, that they weren't going to basically allow for a recount, a lot of people that started a series of protests, which I partook in. And that was a protest where they, well, it wasn't the first time, but one of the few times that Maduro brought real guns to shoot down protesters. And they were trying to make a point. So people I know went down on that protest And that was the moment that triggered hyperinflation, that triggered the wave of mass migration, because people basically gave up. They lost hope.

1:09:40They said that they were holding on for the election. When the election went the wrong way, everybody was just forced selling everything and liquidating everything. And so that's the context in which my family finds Bitcoin, like six months after that event. And it was because my youngest brother was reluctant to leave the country. and so he wanted to stay and do something in the country. So he pitched my dad on mining Bitcoin. My dad sends me the white paper. I said, subsidize energy, subsidize internet. The output is globally sellable. Seems like a good idea. So my brother gets to mine, starts doing very well.

1:10:15We start helping a bunch of other people mine in Venezuela and 2017 rolls around. And in late 2017, I'll give you the story. Actually, I don't think I've said, I've broken this down before, but to give you the context, Maduro and the cronies had a system whereby the people that were doing the bad deeds, the guys that were going out with the real guns at the protests, the guys that were doing his dirty work on his behalf, he needed to get them paid. He needed to pay them and they needed to earn well. So in some cases, and this is known, I mean, don't take it from me, fact check it, but The Venezuelan army basically is a drug trafficking ring, right?

1:11:01And so some generals have rights to some border crossings and some - That doesn't seem hard to believe. Well, there you go. So that trade keeps some fed, but it wasn't enough. He needed to basically get more things. So I think in 20, the first one was El Dacaso. If you Google, anyone listening can Google El Dacaso, D-A-K-A-Z-O. El Lacazzo was in December, which is when things start getting heated because Christmas comes along, you have money for gifts for your kids, you have a crappy Christmas. So Maduro, every Christmas, would basically get a private company that had a bunch of inventory or that had been getting dollars from the government to import things and would say, oh, this company is, we're granting them dollars at a preferential rate.

1:11:47They're bringing the goods and they're selling them at the fair market rate. So they're basically arbitraging the exchange rate we give them to bring the goods with the real market of dollars. So to paint a picture, the government says the dollar is two bolivres. The real market says a dollar is 10 bolivres. So these guys were buying dollars for two, bring the goods, and then price the goods at 10 bolivres per dollar. So Maduro would say, and everybody was doing this, by the way. It wasn't just that. Of course, yeah. Maduro wanted to make an example. And not only just make an example, he wanted to satisfy his cronies.

1:12:25So this was a national chain. They had stores in a bunch of countries. So he basically goes and says, on December 20th, there's going to be a fire sale in all of these stores priced at the dollar rates that we gave to them. Basically like 90 % off everything. Flat screens, fridges, microwaves. denny it was but just empty party like you you could see people walking around with like flat screens and their things and like radios over here washing machines because presumably they know they can sell it a week later of course this was really just making taking a private company and hitting and basically making up making a piñata out of it and just banging through their inventory to the populism yeah populism through and through so that was 2014 2015 he did this with like a shoe company.

1:13:13And so everybody got free shoes. 2016, I think he brought pig from Brazil. He brought a bunch of pork and gave people pork. 2017 rolled around. Nobody had brought shit because they knew what was going to happen. So you make sure your shop's empty around Christmas. So basically, 2017 rolls around and he's basically thinking, okay, I'm sanctioned. You know, I can't tap into the bond market. Hyperinflation is running wild. So everything I print makes my life a lot more horrible. So I need to find a way to get some money or some free things that I can then give to my cronies. Right? December 2017, Bitcoin was dripping, remember?

1:13:58So everybody was talking about Bitcoin. And now all these tokens are starting to take a hold. So Malura comes out with two great ideas. He looks at the import records for 2017. He's like, who's Bitmain? because this keep coming, right? It's like Bitmain, Bitmain, Bitmain. Like myself, a bunch of other people were ordering miners after miners so you could see in the invoices when the packing lists, you know, this machine or this company was sending a lot of things to Venezuela. So he's like, what's this Bitmain thing? It's like, oh, it's Bitcoin mining equipment. So wait, wait, is that the uncensorable thing?

1:14:33And it's like, yeah. And they're here? Yeah. It's like, okay, we're going to get some Bitcoin. So he gets two grandiose ideas. First one is, I'm going to create the Petro. Yeah, which was backed by Venezuelan oil. Did you read the fine print? Of course not. The fine print says, the Petro is backed by a barrel of oil, some grams of gold, which is another natural mineral we want, or we have in Venezuela. And the last but most important one was, or any other currency or commodity the Venezuelan government deems appropriate. That's where they got you. Of course, he knew this was going to fail spectacularly, but that he still tried to trade mirrors for gold with people saying, hey, I'm going to sell you this.

1:15:20Are you dumb enough to give me your Bitcoin? That failed. But his other great idea was to create a miner registry so that people could voluntarily register and tell him mining Bitcoin. In 2018, he starts, obviously the mining registry failed spectacularly too, because nobody in their right minds would go and tell the guy that's trying to kill you of course not what you're doing but he knew these things he knew these both of these were going to fail in 28 at late 2017 early 2018 he starts making a petrol road show so he starts making this sequence of events across the country and the sequence of events across the country he's parading a6 he's parading a6 and gpu rigs even though the petrol was proof of stake the petrol was never meant to be mined but he was bringing a6 around the country and every time he would stop at a different city he would say did you see this?

1:16:10This is what an ASIC is. This is what it sounds like. This is how much Bitcoin it makes. This is how much electricity it uses. This is its heat print. This is its sound print. By the way, did you know that if you disconnect it and put your wallet, you can start making Bitcoin? It's a brilliant device. And then he's like, this over here is a GPU rig. This one has graphics cards and it's quieter, but still uses this much energy. This is how much this one makes. Similarly, take it off, put your address, off you go. He was giving people a blueprint to come after the miners. Not surprisingly, weeks after, we started getting some surprise visits in the facilities.

1:16:47Myself and a bunch of people in the industry, they were utility reps, they were municipal reps. And we all knew we had suspicions. Weeks after, they started coming with guns and demanding machines and demanding money. and january 18 i think it was they get to my brother's facility they bust through the door like a swat like team with like long guns there's a picture i can send it to you so you can link it in the show if you want but they basically show like two guys with guns standing next to 17 a6 and two fans you know like it was a massive drug bust um and so they start trying to extort my brother.

1:17:28My brother wasn't at the site, but they quickly got a hold of his contact information, basically start calling him and saying, you give us the money and the machines and we don't throw you in jail. Jail for what? We're not doing anything illegal. Well, they start making up these charges, these fake charges. So it's 8 p.m. These guys are hounding my brother and they start threatening him saying, hey, listen, we know where you live. We know where your kids go to school. We know what your business is. You have until tonight to come up with the money.

1:18:02And my brother, with his wife and two kids, late at night, makes the decision to escape and go to the border and use the Bitcoin he has in exchanges and in his ledger to basically leave and build a new life. And now to do this, we live dead in the center of the country. To do this, we have to get to the Colombian border, which is nine hours away. it's a very treacherous road in the most dangerous country in the world there's no fuel so it was a huge family effort, we had family that lived along the way in San Cristobal and Merida and they drove to the highway with fuel so that he could fuel up his tank with pimpinas this is a true story, without him having to leave the highway, because he didn't have much time the guys, the extortionists were calling my dad, saying, we know you're going to make a run for it tonight, we're going to shoot we're gonna basically send out a warrant so you can't leave the country holy shit so my brother has against the clock in fact he went to a border crossing point that is so remote in the jungle that is not connected physically to the infrastructure so the point was that even if they did try to get a message out that night it wouldn't have been fetched uh by the time he got there so he got there he crossed i remember because i had to pay with my we didn't want to use any of So I used my Canadian card to pay for his hotel night in Cucuta, which is the border town.

1:19:25I still remember the call he made when he was about to go through the border crossing. Because that was like, you got there, but... That was the crucial moment. That was the crucial moment. I mean, I still get goosebumps because he was crying. Like, and I was with, like, I couldn't understand why. He's like, I'm taking my wife and two kids and I might not get out. So he goes, luckily 20 minutes later, he calls me from the other side. It's like, I made it. We're good. We brought the Bitcoin with us. The ASICs, they took. The Bitcoin, they could never touch. And from there, my family, my brother, my family, my parents, because we were all Bitcoiners at the time.

1:20:06A lot of us, most of our wealth wasn't Bitcoin. From there, we were able to rebuild our lives. I had already had started Ledin at the time. Lennon was just off the ground. Actually, my family was one of my first clients, actually. So shout out to my dad and my brothers. And a bunch of my friends, actually. They were my first clients. And I remember some VCs at the beginning. They would ask us, do you guys have any clients that are not Mao's friends? So that was always like a thing that I had to work through. Because I spent a lot of time mining. And a lot of our first clients were like friends and family.

1:20:41But anyway, that's how my brother was able to get out. And that's why I had understood the value of Bitcoin before when I was in this capital control environment. My brother was selling it at the free market rate. To me, that was like my big unlock is, oh, my God, this thing allows money to go to its happy place. This thing allows people to keep their savings, the value of their savings in a political asset. That was, to me, the biggest thing. Then I saw it work in the most extreme circumstance I think I've ever experienced with my family. After that, man, Danny, there's no speech you can tell me about Bitcoin that's going to make me think that it's not going to work.

1:21:27You've lived it. There is no argument you can give to me today outside of some quantum thing or perhaps something that's outside of my specialty in the technical realm. as it's designed today, with no any other changes, no more changes needed to the protocol, it did the most important thing we've ever demanded from it or wanted from it. It worked. To me, when people ask me about other assets, and like, what do you think about this? What do you think about that? Should I buy this? Should I buy that? I'm like, I don't have an opinion. I don't want to have an opinion. I have an opinion on Bitcoin.

1:22:14I've seen what it can do. Because of that, I don't think there's a price you can put on it. There is no top. Because what it can do has no price. Right? And so that to me was the, once that happened, I mean, I already loved Bitcoin. But when that happened, I knew I wasn't going to be able to do anything else with my life. And that was the sort of escape story that in many ways shaped a lot of my views today. I mean, we can talk about Venezuela today, but that was how we got out. I think it's hard for anyone who's not been through that. I've certainly not been through anything like that. I get it.

1:22:56I know that's what Bitcoin can do, but to live through that is insane. It was the biggest testifier. you know like now but mind you there was it was still early days like um you know it was very unlikely for them to say oh do you have bitcoin on you right like as he was trying to leave it was more so has is there a warrant out like will will they try to take him unfairly um i didn't i wasn't really worried that they were going to find the bitcoin and take the bitcoin from him because that just wasn't in anyone's radar at the time. Yeah. But the fact that they knew he was mining Bitcoin, like it must have been at least somewhat on the radar.

1:23:39Oh, if they had fired the warrant, like him and the Bitcoin were going. Yeah. Right? Like it wasn't, it was a binary outcome. Yeah. But that said, it wasn't just the fact that he was able to cross. It was because Bitcoin was the only thing that allowed him to make the decision to leave. Because he knew he could rebuild his life elsewhere. Correct. Yeah. Without it, you would not have made that decision. I know many people. You're then just a refugee. That have been in that same situation, and their only solution is to sit down and negotiate with some assholes and to take whatever terms they're giving you.

1:24:17And it never ends, because when an extortionist asks you for five and you give them five, they'll come back for 10. They'll come back for 15. They'll come back for 20. And so I know people in these situations. In fact, in Venezuela, they're called, it's funny, I don't know if people know this, but in Venezuela, They're called vaccines. Vaccines are referred to as the payments you give to the mob or the gang, the local gang, because in Venezuela, there's no police, right? Police doesn't protect you. So what will happen is you have these local rings of Tren de Aragua, or, you know, you've heard of Tren de Aragua as like the big sort of organized crime thing that moved to the U.S.

1:24:55But equally in Venezuela, there's like there's these gangs, right, that control different parts of a city or a city. And as a business person, they come to your store and they say, hey, Miguel, how's business going? great okay this month's vaccine is a thousand dollars and what is the vaccine a vaccine is we will ensure nothing happens to you but what happens if i don't pay it something will happen to you we don't know what happened to you miguel or to your store you want to take that risk and so people live in this constant threat and not only that like i had people where like they have to pay one gang but then the next gang comes and they're not demanding a vaccine but no but i already paid these guys like different groups we need one too they're not going to protect you from us and so it becomes this racket right so even being able to leave the country even being able to entertain the idea to go and rebuild somewhere else and by the way it wasn't it wasn't just bitcoin by the way i want to say this because i think it's important for everyone to know this Everyone listening to this show, if you already have Bitcoin, God bless you.

1:26:09Go get a second passport. Go get a second passport.

1:26:17If and when your country goes to shit, the first people that close the borders, ironically, are your neighbors. It becomes, and now once your country is tagged as a failed state, forget visas. Forget a visa. you're done you're cooked that passport throw it away i i haven't used my venison passport probably over a decade it's shelved somewhere it's useless so it's it's a combination of having bitcoin having passport maybe having some cash to be able to move uh over that's your plan b right like but bitcoin is an integral part of that decision and today i i still you know talk to a lot of my friends that are still there um a lot of them have bitcoin but they choose not to leave there's always many reasons why people so much choose not to leave some people have older relatives that need them to be close by uh some people inherited their dad's business they don't let it go.

1:27:22There's many bells and whistles around that decision, but that was our experience, or that was my family's journey leaving. Luckily, myself and my other brother and my dad were all on vacation when they raided Danny's facility, so we all just stayed out of the country and never went back. But he was the only one that had to go through that grueling trip to get out. It's an insane story. I've heard it before, but even hearing it again, it's insane. You say that like, obviously there's different reasons why people stay. Is there any hope that there is like a fight that can be fought there in terms of fixing things?

1:28:02I really wanna say yes. Like, I really wanna say yes. Like I really, really do.

1:28:14I was asked this the first time I was ever on Peter's show. I think it was 2018. And it was about Venezuela. And it was myself, Giancarlo, and Alejandro Machal talking about Venezuela. And at the end of the show, he asked all of us what we thought would happen. And I still remember what I said today. I said, there won't be a democratic solution. If ever there is a change, it's because guns were drawn, and there was a big fight. And the blood was spilled, and that's how change came about. I don't see a democratic way out for Venezuela. I don't. In the same way I don't see a democratic way out for a place like North Korea, and a place I don't see a democratic way out in a place like Cuba.

1:29:02I believe this is probably gonna get like one of the spicy takes, but my spicy take is once you combine a communist regime with the military, you can't get them out of power. And I'll explain why. It's a matter of incentives, right? There's obviously cases of the militarized right, and there's cases of the militarized left. I would argue that the militarized left is much harder to remove from power. And I'll explain why. The militarized left is supporting things like free everything, free school, free house, free food, free gut, you name it, it'll be free. Even if it's shitty. Yeah, exactly. The quality is terrible, but it's free.

1:29:52Nobody cares. It's just fucking free. Yeah. Right? Whereas the guys on the right are usually the guys that want to start a business, buy an asset, get educated, right? Outside of the public indoctrination centers that they have, they call schools. the right tends to think more optimistically in their ability to build and effect change and their options whenever you have a cohort of the right that starts gaining some strength the militarized left starts brings out the guns and just go boop boop boop all you have to do is shoot three or four kids over here on the right immediately what do you think their parents are They're gonna say, son, you're educated.

1:30:38You speak two languages. We have some money. Get out. You can literally go anywhere. Just leave. Just leave. Just like my parents told me. That's exactly what my parents told me. And now my friend, a lot of my friends. The right opts out because it can't. The left cannot opt out. so if you have militarized right even if you have the militarized right if these guys come out in numbers with guns the guys that aren't in the military and the right they're going to say well great i'll leave you guys fighting over here i'm going to go build in the free world because i don't need any of this i don't want my kids getting shot so i'm out so the the people that have the means to rebuild an economy also have the means to opt out they're the first ones to do this because they can the left cannot opt out because they don't have the same number of resources they don't have the same options they don't have the same optionality all they have is fight all they have and then the reason they're willing to die for change is because they have nothing to lose the right typically has something to lose and so they choose to not fight And that's why I think you have this dangerous cocktail in a place like Cuba, North Korea, Venezuela.

1:32:06These are militarized left of center governments. These things are as immovable as a government can be through democratic means. There's just very, it's very hard. So as like the makeup of the people who are actually living in Venezuela now, how many people are sort of semi-vocally opposed? I know you can't be too vocally opposed without getting shot, but like how many people are unhappy with the current regime? If you believe the polls from most recent election, 70 % of the country. Okay. 60 to 70 % of the country would change governments if given the chance. The problem is that they are, like I'll give you the example of the most recent election, Maria Corina Machado, when we were chatting about with Peter.

1:32:56Maria Corina won. The numbers are there. They're out in the open. What did he do? So one of my uncles was sent to jail because he provided one of his pickup trucks to assist in Maria Corina's campaign. Insane. He was sent to jail. He broke out like four months after he got sent. He broke out? Well, he negotiated a way out and basically left the country. He didn't like escape. It was like a coordinated escape. And similar to like Lopoldo Lopez's escape and a few other political prisoners, like there's, basically they're saying, we'll let you out. Never set foot here again. Right? And so people take the trade.

1:33:40So I had friends. So this is another, it's just a story just to make an example. Maracorina was doing these stops across the country, these rallies across the country, like any politician does. In Barquisimeto, which is my hometown, one of my friends invited them to come eat at the restaurant for free. They came to the restaurant, they ate for free. The next day, his restaurant was shut down for a month for some bullshit rule. So they make it very clear to you that if you oppose us, we are going to come after you. and even though and this is one of the most frustrating things to me during this whole thing which is going to exemplify what i'm telling you you might i might you might hear me say yeah no danny 60 70 of the country is against them and you're like but why why would you hear anything why why why aren't more people saying something the reason while this while this whole thing was happening of the most recent election you know i was flipping through all social media just to see what people were saying.

1:34:46And you would hear tweets from people or I would see posts from people, particularly in Instagram because Twitter was quickly banned in Venezuela. And people had these posts about like, you know, let's go fight for a recount. Let's go help Maria Corina. This is unfair. They're stealing our elections. And I kept seeing a really interesting pattern, which is all these posts were done from Venezuelans outside the country. I was looking at the accounts of my friends that I know are in the country. not a fucking peep of course and so i went to them because i i couldn't i couldn't hold it in i i messaged a couple of them and i had this call and i told him i told one of my buddies what the fuck like if anyone we are the ones that should be saying something why are you quiet And he goes, I have a restaurant.

1:35:39They just shut down Mariana's restaurant because she allowed them to sit there for a month. She's broke, man. I don't want to lose my restaurant. And the other guy was like, I don't want to lose my farm. I don't want to lose my this. So they're in it. You all become part of this parasitic thing. they govern through fear and that's the other thing that i think bitcoiners kind of brush away is this idea of the monopoly on violence that a government has and the fear that it will instill on you if they want to decide you're a target i know a lot of people say it's like they're not I'm gonna come after my Bitcoin.

1:36:27I'm never gonna give them my Bitcoin. I'm like, man, have you ever had a SWAT team put a gun to your face? And I'm not talking here where there's like a sound legal system where you're gonna, I'm gonna take you to court. We don't have that. If somebody pops you in front of your house, Venezuela. There's no recourse. Good luck. Yeah. You're popped. That's it. So in a place like that, when you have somebody come to your door and say, hey, oh, do you have some Bitcoin? We heard you have some Bitcoin. Here's the proof. You don't want to give it to us? Here, come here, sweetie. Is that your daughter?

1:37:03Come here, sweetie. I'm giving that Bitcoin straight away. Immediately. I'm like, give me your address right away. Here it is. Here's my wallet. I've been robbed at gunpoint. I grew up in Venezuela, of course. I've been robbed at gunpoint several times. And not once have I considered not giving them what they want. My Bitcoin means nothing if I'm not around. What, I don't know what movie a lot of these people are watching, right? And it's also pretty cool to say something like, you're not gonna get my Bitcoin, I'm gonna take you to court when you're in a place like America. None of us have that luxury outside America.

1:37:43Nobody has that luxury outside America. So you're popped or you give them the Bitcoin. It's that simple. that's why people die trying to come here right like it's a worthwhile trade it's a well worthwhile trade it's absolutely worthwhile so anyway so what what is the potential path then like is the idea of like pop like the population rising up against the government in any way likely like military coup or do you think this thing just drags out for another decade and keeps going i think the At the risk of speculating, I think the most likely outcome is a military uprising. Right? It is a change of the guard and the monopoly of violence.

1:38:31Right? Like, it's not democracy that's holding him there. It's the monopoly of violence that's holding him there. so the most likely way i see this change is a military uprising that shows that a significant fraction of the venezuelan army is willing to die to get them out because don't forget what you're asking these guys to do by the way there's like bounties on all these guys's heads in the u.s right so what you're telling them to do is here let's hold an election and if you lose you're going to jail forever that's what's happening to them if they lose the election what do you think they're going to lose the election they're never going to lose the election so they're always going to find any trick in the book to keep the control and not go to jail so that's why to me the only feasible way out is armed conflict within not externally from within you know you could argue is it supported is it enhanced it will always be supported inevitably but that doesn't really matter it's not it's not the financial support as people yeah and and now the other part of that is because the social fabric of the country is so broken like all of the productive class has left venezuela everything that's there now is either a parasite or brainwashed or somehow in cahoots.

1:40:01So it's really, it's not just toppling. It's keeping the democratic base that's smart enough to not bring them back. But I assume a lot of people would go back to Venezuela if it looked like there was real change. I used to think that. I don't anymore. Why do I say that? When you leave Venezuela, there's two types of people that leave Venezuela. There are the people that leave Venezuela and say, I'm going to make it outside of this country regardless because I know being there is a dead end. And they make it work. They will grind until they build the life they want abroad. I will include myself in that camp and a few others.

1:40:46There's also another group of people that will go to the U.S., get a visa, start working away, realize how hard it is to actually be a self-sustaining adult in a place that doesn't give you free things. And then they'll say things like, my quality of life here sucks. I don't have time to go to the beach. I don't have time to... And then they go back. So the people that are going to go back, like I'll give you an example. And the people that can't cut it. Exactly. The people you really want to go back, they made it out. They made it abroad. What are they going to... Why? Are they going to roll the dice again?

1:41:25I'll go visit. You know, like, Like we'll go visit, we'll go help the rebuilding, but we're going to wait for some certainty before you go and bring a dollar or my daughter or my son. Like I'm going to wait to have to see a lot of change to make me feel comfortable that we can go back and set roots again. Like, yes, I want to rebuild. Yes, I want to take the country back 100%. But I also know that a lot of what I miss is not what that is today. I miss a moment in time. It's nostalgia. Yes. I miss a moment in time. I know that the country that I left is not the same country that's there today. And it's never coming back.

1:42:04I mean, you can say that about like England in the early 2000s when I was growing up. That's never coming back. Exactly. It's just a way more extreme example of that. Exactly. And so now there's big trade-offs, right? Like, what if I'm wrong? Like, well, what if I'm right? And then what if I'm wrong? Like, what if I'm right is, oh, great. We rebuild. I was able to build a country. I get this new sense of purpose. I love this place. But what if I'm wrong? I brought all my assets back after wasting my life abroad to build all of this just to have some lunatic in a sombrero take it again? Like, I'm not going to let that happen.

1:42:42And that mindset is true for many people that have been successful abroad. The only guys that are going to be the first ones on the plane there are the guys that are just like aching for a change. Being out there has been so grueling and hard for them. They just never found a way. And again, I consider myself incredibly fortunate because I did my university abroad. I had a network of friends and contacts that I could lean on when I had to build my professional life. So it's easy for me to say or easier for me to say, oh, yay, you know, I made it out. But that's also because my parents were very brilliant and invested in me to be able to go do all these things.

1:43:23But that's not to say most people are equally as prepared to have the opportunities that I've had. And so the sad reality is that immigration happens top to bottom. There's a saying in Venezuela when the immigration crisis started, the saying went, the first ones to leave leave on a plane they leave with investment visas student visas you know they they leave at a top notch you know they they take their pick you know they they leave with means and purpose the second group to leave are you know you leave with a work offer you know a little bit more of a humble beginning you you know you you might have to save up to pay for the flight and when you get there you might have to stay with a relative to kind of get off your feet that's like the second batch.

1:44:11The third batch can't even afford a suitcase. They're walking across the border and demanding social services no matter where they go. So the sad part is like these first guys will never likely come back. A decent chunk of the second ones will come back. All of the bottom of the pyramid is going to be coming back. And so can you rebuild the country you have without the most productive guys that were at the top? Absolutely not. Absolutely not. And like people in capital are very risk adverse, right? Like if you've already built wealth, if you're already successful somewhere else, are you really going to come back to like the maybe?

1:44:56It's just a risk that you wouldn't be willing to take. It's a very hard proposition. I'm not saying, maybe I would do it. Listen, like I have to see how everything happens. And nobody wants this place to change more than I do. I was just having a chat with Leopoldo. I started to stay close with Alex Latzi, and Maria Corina, and their team. Everyone doing work changed this thing. And I commend them, because if there's something that takes courage in this world is to be a Latin American politician. You have to be not just courageous, almost delusional to be a Latin American politician. People say, oh, entrepreneurs are crazy.

1:45:26I'm like, talk to a Latin politician. That balls.

1:45:34They inspire me. every time there's a venezuelan election i tell myself i'm not going to get excited this time every time i get excited i support i chant i cry i fucking send money i do whatever i can to help and it always ends in the same result i don't think i'll ever ever stop getting excited i don't think i'll ever stop trying to support it but i also um i try to check myself with this because it's also one thing it's like i can make that decision now maybe my wife's smart enough to make the decision now what type of life am i going to give my kids they're not making the decision they're falling on top of mine and they're fine now they're in a great place i bust my ass off to get to where we are today what if we go down there and something happens like is that is that the place i want to leave them at is that where i want their network to be forged there's a lot of stuff at play and that's why i think it's so hard to think about if we just change it it'll all come back i'll give you the example of what's happening in new york like new york just like just had an election last night a lot of people are shocked yeah i'm not that shocked frankly but what's going to happen in new york now most likely it's not just new york it's just using an example is the people that he's going after i.e the guys that he wants to raise taxes on are in right now if you were to google like i would welcome you if you go to google right now and look, Google Trends, Florida real estate in the state of New York, I can almost guarantee you that those searches are up through the roof.

1:47:09When Petro won, and I track this, I track this actually every time an authoritarian wins. So when Petro won in Colombia, Petro's like the crazy left or center guy that won in Colombia a few years back. I immediately went a week after and I saw, what are the search interests or trends for real estate in Miami from Colombia? Through the roof. vertical. So what's going to happen is people are going to say, okay, well, great. You guys pick this guy. Rich people leave. See ya. I'm going to go move to Florida. Maybe we'll come back. But then they'll build the life in Florida. Their kids will have their friends in Florida.

1:47:43Their house is beautiful in Florida. Weather's nice. Oh, you know, Bloomberg's back in New York. Should we go back? We're already here. It's pretty nice. It's so beautiful. My kids don't want to go back. So it's like it's not that's the other thing moving isn't easy it looks cool it look you know people think it's it's fun it is i've moved many more and many more times than i thought i would in my life it's never easy when you have to bring the whole shabazz with you especially as your kids get older very very difficult people want predictability routines like you you value that and so I think to change Venezuela, we need some type of, they need to lose the monopoly on violence, one way or another.

1:48:37That's number one. And then once that happens, there needs to be almost like a path to bring everyone back, the productive class back. And in some ways that may even be harder. That might be harder. A lot of it, I mean, life's beautiful and unpredictable in so many ways. I think I still have hope that, I don't know when, but at some point in my life, in my later years, I will be sitting in Venezuela, retired or whatever, you know, might be much older by then. and I'll be looking around and all the money that I'm hopefully going to make with Bitcoin and all the business and everything that I'm building, I couldn't think of a more worthy goal in life than to bring democracy back and to bring free markets back to Venezuela.

1:49:38Because

1:49:41i i just i i feel like it's better for not just venezuelan this is better for the world like absolutely if i hadn't been able to leave if my brother hadn't been able to leave maybe there i don't know if there would be a letter like would there be a letter i don't know would any lender have survived in 2021 i don't know maybe it would have been a total collapse of all lenders in 2021 right or and so life i love this movie the butterfly effect you know like Little change here has massive implications across. I think if we were able to bring the smart people in Venezuela out of this authoritarian regime, the same people in North Korea, and same with people in places like Russia, Ukraine.

1:50:22Right now, you have brilliant people in conflict areas that are just rotting away. All that potential is just sitting there. Why? And that's also why, again, again, I'm not allergic to politics. I think some Bitcoiners are sort of, no, politics, we're gonna end the Fed, end this, end the government. I'm like, I don't think we end every form of government. In fact, I think we need to lean into the government to change it. I think Bitcoin is used to make government fair and more transparent, but I don't think it replaces it. I don't think it ever can replace it. So I think we need to be, that's why I love coming to DC.

1:51:00Because to me, I'm like, first of all, we were never welcome here until this year. Now they wanna talk to us. we'd be foolish not to take that opportunity yeah be foolish and so again my people might disagree with my take which is it's informed by some of my life experience it's i mean it's a massive shame what's happening there um fuck i don't know what to say i think maybe we end it there that was an amazing interview thank you no thank you man listen i got goosebumps more than once during that i'm gonna give you i'm gonna i want to end this off with a positive note because i know maybe some Venezuelans are listening to this and feeling discouraged by what I just said.

1:51:37That's the last thing I want. I would like to say to the people listening to this that what happened to me and my family, you can do this too. You can opt out. Right now, there might not be a path of change internally. There is a path out. I gave everyone, or not, I gave my, use my story or our story as a blueprint. And if anyone's listening and has questions, message me. My DMs are open. My email's open too. I would love to help you think through how to get freedom. Bitcoin enables you to do that. You can do it. Si se puede. Yes, you can. It's so refreshing to do an interview where like Bitcoin is talked about as freedom money again.

1:52:27Like Bitcoin is freedom money. And I'm so sick of like all this, just people only want to talk about the financialization of freedom. This is what Bitcoin actually does. Without this, number wouldn't go up. Yeah. Number goes up because of what it does. When you understand that, the price becomes irrelevant. Yeah. And I think that's why I love the work Alex Gladstein is doing, the work the Human Rights Foundation is doing. They asked me what the best favorite, my favorite Bitcoin conference is the Human Rights Freedom Forum in Oslo. because you get to hear from people doing things. They put me and my story to shame with some of their stories.

1:53:06I feel embarrassed when I'm listening to some of their stories. You think this is hardcore? Go talk to Roya. Roya will make you feel like you are the, like you have no courage next to that woman. So thank you for bringing these stories out the light. And yeah, man, let's keep building freedom money. Let's fucking go. Thank you, Mauricio. I really appreciate it. That was great. Yeah, my pleasure, man.