Cardano Founder: Bitcoin Market Cap To $10 Trillion As Banks Die, System Resets | Charles Hoskinson

Summary

• Bitcoin Market Outlook: Charles Hoskinson predicts Bitcoin's market cap will reach $10 trillion within the next 5 years, driven by Bitcoin DeFi and increased adoption by institutional investors.
• Cardano's Development Philosophy: Cardano's focus on a research-backed approach, rather than a "move fast and break things" strategy, aims to ensure long-term scalability and security, despite initial slower adoption.
• Stablecoins and Global Finance: The Genius Act is seen as a step towards integrating stablecoins into the global financial system, potentially leading to "soft dollarization" in developing economies, enhancing the dollar's status as a global reserve currency.
• Interoperability and Privacy: Cardano's Midnight project aims to add privacy to blockchain transactions through selective disclosure, enabling private stablecoins and other financial assets while maintaining regulatory compliance.
• Future of Financial Systems: Hoskinson envisions a future where decentralized exchanges (DEXs) replace traditional stock markets, reducing custodial risks and increasing transparency through blockchain technology.
• Cardano's Fixed Supply Model: Cardano's tokenomics, similar to Bitcoin with a fixed supply, are designed to ensure sound money principles, avoiding inflationary pressures seen in fiat currencies.
• Regulatory Challenges and Opportunities: The podcast discusses the need for regulatory clarity to facilitate the integration of tokenized securities and stablecoins into the financial system, potentially transforming traditional banking and investment practices.
• Vision for Decentralization: Hoskinson emphasizes the importance of decentralization and censorship resistance in blockchain technology to ensure freedom and integrity in economic, political, and social systems.

Transcript

I think over the next 5 years, Bitcoin is going to 10 trillion. Um, I think before the end of this bull market, Bitcoin will hit 250,000. I think Swift is going to die. Uh, and these other large systems are going to die. They just can't sustain themselves. It es and flows, but remember, cryptocurrencies is going to eat AI and cryptocurrency is going to eat medical records, and there's all these non-financial use cases that Bitcoin never will have an opinion on and never do. And so, it's kind of silly thing to say, oh, well, all these other guys will die. this online thing came out and the people who realized that that's a big deal, they survived. And then the people who didn't realize that was a big deal, they're all dead. And so banks are exactly the same. I'm very pleased to welcome to the show Charles Hoskinson. He's a co-founder of Ethereum and uh one of the most prominent uh smart contract blockchain originators. He's also developed uh Cardano uh which we'll talk about in extensive detail. He's currently the CEO and founder of Input Output, the company behind the Cardano blockchain, which is now a top 10 cryptocurrency by market cap. We'll be talking about his views on not just Cardano, but overall what the uh crypto ecosystem has in store for investors in 2025 and beyond, and his outlook on Bitcoin, which we'll get into later on in the interview. Importantly, I've pled a lot of people online on Twitter and Reddit and in my own community, many Cardano and Ethereum holders alike, what they would like to ask the founder of Cardano. And so I'll be going over a lot of user questions and viewer feedback in uh this interview. So comment below if you like to see any questions addressed uh in a potential follow-up. So thank you very much, Charles, for being on the show. A great honor to host you today. Thank you for being here. Thank you so much for having me on, David, and congratulations on all your success. Oh, well thank you. Uh it's because of really good guests like you that we've had a good program. So appreciate you being here. Um I want to start by talking about Big Picture. This is from uh a user by the name of Fetto Blind on Reddit. I mean, this is a question that a lot of people asked. I'm just using one example. What's his take on um why BTC is no longer envisioned to be peer-to-peer money rather than a store of value? We'll start there and then we can talk more about your history and Cardano. I mean, that's a very old school debate. I've been in the space such a long time. I remember the origins of that. It was Bitcoin Cash versus Bitcoin. Um and in the beginning, Bitcoin had to be everything. It had to be a domain name register. It had to be an asset ledger to issue assets on. So we had color coins and namecoin. Um, you know, it had to be peer-to-peer money. It had to be a store of value. And the challenge is that Bitcoin to be everything to everybody would have to upgrade itself to something like Ethereum. It' have to be a general purpose smart contract ledger. Uh, and that philosophical debate was discussed years ago. really it was the big block debate because the very first step was expanding the space you can do things in and then upgrading the programming languages and the accounting model to facilitate that. Uh the big blockers lost and what that meant was that Bitcoin basically became kind of a store value system which is perfectly fine because it's digital gold and the value of gold is $10 trillion and the value of Bitcoin is approaching 10 trillion and it'll get there in 5 10 years. uh so it it can live in that space but uh it that means it has to be augmented. So the compromise was first Segwit and later on Taproot and the idea is that you create a space on Bitcoin where Bitcoin can talk to other systems whether it be layer 2s or layer 1's and those other systems can backfill those things that you want Bitcoin to be whether it be a smart contract system or you know some sort of data storage system or an NFT ledger or whatever the heck it is you can do it over there. And the second part of that is allowing you to pay your transaction fees in Bitcoin and get your yield back in Bitcoin. And so as long as you can do that, Bitcoin feels like it has all these capabilities. Even though the base protocol is tremendously simple, that's just the way history worked out. Uh Roger and Mike Hearn and others were on the other side of it. I uh straddled both sides. I actually held a lot of Bitcoin Cash and Bitcoin and you know, the space evolved in that direction and it created space for projects like Ethereum and Cardano to kind of become very large and and prominent. Okay. uh you do have a uh Bitcoin thesis and we'll talk about why you think it's going to grow to uh trillions of market cap in just a minute. Um we'll talk about that later in the interview. So stay tuned for um Charles's outlook on Bitcoin and Bitcoin's ecosystem. But let's just take a step back and talk about Cardano. So you were, as I mentioned in the introduction, one of the co-founders of Ethereum along with Vitalik and Gavin Woods. Um why did you step back from Ethereum and ultimately found Cardano? Well, I mean that's something that was 11 years ago and I was only there for 6 months. There was eight founders and we all had philosophical differences about what needed to be done to build something of the scale and magnitude of Ethereum. And uh the majority of the founders are gone. There's eight of them. One is left Vitalic. The other seven we a lot of us went on and created our own blockchains. I created Cardano. Gavin Wood created Polka Dot. Uh you got Joe Luben with Consensus. said, "Well, it's not a blockchain. It's certainly a large ecosystem, mostly in the Ethereum ecosystem, but they they have other interests as well." Um, and that's fine. You know, people can have philosophical disagreements. I I thought that it would be better to start from a Bitcoin oriented view and extend and enhance it based upon ideas that had come from the Bitcoin space than try to build a completely different paradigm from scratch. uh because Bitcoin had already thought around a lot of things like how do you do accounting right with UTXO and how do you issue assets and how do you gradually improve your programmability inside the system. If you go in the other direction, then you'll end up having a situation where you do too much and you introduce a lot of security problems and then you have to go back to the drawing board and back to the drawing board and uh and actually ironically Vitalik and I were both right the success of Cardano and the success of Ethereum and the emergence of Bitcoin DeFi what we've seen is that actually the space can admit both paradigms and it's taken about 10 years to run that experiment. We've both learned a huge amount over that those 10 years and um there's a there's a ton of great software and specialized hardware on both sides to kind of facilitate these ecosystems and get them where they need to be. Um but you know Cardano is kind of the counterfactual. People often ask like what would have happened had I stayed at Ethereum. the road map would have looked a lot more like what Cardano Sans uh some ideas from Polka Dot and some ideas from Vitalic and uh maybe it would have worked out better as a hybrid system but maybe the Ethereum approach was the best approach it's hard to argue with their commercial success and it's hard to argue with the adoption but you know on the other hand there's been a lot of missteps as well so you know take it take it with a grain of salt before we continue I want to thank Private Internet Access for sponsoring this video using the internet without protection is like mailing a letter without an envelope. Anyone can see what you're sending. A VPN solves that problem. Private Internet Access or PIA is a VPN that encrypts your internet connection and hides your IP address. That means your browsing activity, personal data, and location stay private, especially on public Wi-Fi, like at airports or coffee shops where your information is most vulnerable. PIA also gives you access to content that's restricted based on location. So now I can watch my favorite shows from anywhere in the world. And you can switch your virtual location in one click and get around those regional blocks easily. It works across all of my devices. One subscription covers them all and supports unlimited devices. Use my link in the description down below to get an exclusive 83% off. That's around $2 a month plus four extra months free. There's a 30-day money back guarantee, so it's completely risk-f free. Go to piaavvpn.com/davidin link down below or scan the QR code here to get started. I will get to Cardano specific questions in just a bit. But on that note about how Ethereum would have evolved into Cardano, um what is your view on how Ethereum evolved over time? Specifically, what was your view on the merge 2022 switching from proof of work to proof of stake? Well, you know, it's kind of funny. We always thought that their proof ofstake pro protocol would have been written by Ela Shei. You know, we we were competitors with that group. So we we created Ora Boris and she created Snow White and we were neck andneck and we watched the research that they were doing like fruit chains and sleepy and these other things and we said well oh that's that's quite obviously what Ethereum is going to do for its proof ofstake protocol um and we knew that u Ming who was the executive director at the time was friends with Elaine um and so they had the relationships they had the access and they had first mover advantage and so we thought that they would adopted um Snow White and hardforked somewhere around you know 2017 2018 2018 uh to uh to proof of stake. They chose a very weird path. They did this whole Casper thing and kind of meandered for a bit and eventually they got to the merge and got it done. The big challenge with the merge is that it's a under the hood kind of sort of custodial non-lquid system. Now they've had to do all this stuff to make it liquid non-custodial and they've created assets like Lido and you know they have this weird slashing and bonding. But the biggest philosophical difference has always been you don't need to slash and bond to create a secure network. Cardano has been running for 8 years 24/7. Uh since uh 2020 we've been running with proof of stake full true oraorous proof of stake. We've never had an issue and there's no bonding or slashing and you the assets are liquid. So I think this is the biggest philosophical difference this idea that they have to go out of the way to create a lot of economic security inside the system. Um, and that was kind of the reason why they put so much extra infrastructure into Ethereum and they're now following that. Now, under the hood, there's a lot of great things to like. Um, fast FAL is pretty good. They have a pretty good idea of how to make things faster. They've done some great work on the network protocol side uh to kind of facilitate their plans and they've kind of kept up with things like the the Dank sharding upgrade and these things because they their problem is that they have a large L2 ecosystem. And so when you think about Ethereum, you're never thinking about Ethereum in isolation. You're thinking about Ethereum in Ethereum on off-chain, Ethereum on like L2s, Ethereum on other networks. And there's there's all these things that are happening. So you have to put a lot more thought into your network stack to how you do pub sub, how you do event brokering, and these other things. They've been able to keep up with it. And actually, I think the design they have now is is pretty sensible, and they're going all in on ZK. If you take a look at, you know, the next 5 10 years, the biggest advancements are no longer raw TPS or consensus or network upgrades. It's all zero knowledge and uh and they're betting heavy on hashes and they they want to get to these gigas, you know, threshold and uh the only way you're going to get there is with recursion and folding schemes and they're they're betting big with ZKVMs. Uh so that's probably a very sensible road map and and things like Casper become less relevant. You know, we were talking about high performance BFT protocols and high performance consensus protocols back in like 2020, 2021, 2022 and everybody had something like we did narwhal and tusk, you know, and we have or leos and you know, Ethereum was looking at like sharding ether. This was the Ethereum 2 road map, but that all fell out of favor for ZK. And now most people are now talking about ZK's either as rollups recursion or folding and that's their road map. Now you mentioned slash and bond. What does that mean for the audience? So, slashing and bonding basically means that if if you behave badly, you have some ether that you've locked and you lose it or you lose access to it for a while. It there's many different ways you can do these schemes and one could be a temporary loss or a permanent loss and it could be destroyed or could be reallocated to other people. And basically the idea is it creates an economic incentive for you to be an ICE actor. Um otherwise you have nothing at stake. So in proof of stake, you want to resolve long range attacks and nothing at stake attacks where if you have nothing at stake and nothing to lose, you have no incentive not to behave badly. And long-range attacks means it's quite easy to reorganize the um the chain. Um so we did a lot of work using uh some creative timekeeping and cryptography to show that you don't need to do that because the downside of bonding uh and slashing and staking this way is that your money gets tied up. And so the only option you have is to create some synthetic asset that's it's like I can't believe it's not butter. I can't believe it's not ether, you know. And so you create a synthetic asset and then you trade that you get your liquidity back. But at the end of the day, your stuff is still locked. And so if you you you have to lock it's really hard to get more than a, you know, 10 20% of your supply involved in consensus because people want liquidity. In some cases by law they have to have liquidity like if they're custodial accounts or things like that. Um, so when you have a liquid non-custodial system where you can stake without locking your stuff, then pretty much anybody can participate, which is why over 70% of the ADA supply is staked right now, but it doesn't get counted as TVL by DeFi Lama or other people because it doesn't get locked. Uh, so it's very liquid and you can move it at any time. Okay, let's move on to uh the current macro environment for crypto. This is from uh Treasury Secretary Scott Pent uh on the announcement of the Genius Act dated July 18th. So last month, he said, "Stable coins represent a revolution in digital finance. The dollar has now an internet native payment rail that is fast, frictionless, and free of middlemen. This groundbreaking technology will buttress the dollar status as the global reserve currency, expand access to the dollar economy for billions across the globe, and lead to a surge in demand for US treasuries, which back stable coins." Well, uh, first of all, I'd like to respond to that statement. And the followup to that is from a user. Given the federal governments are going to be using stable coins to keep the US dollar as the global currency, as I just referenced, what part does Cardano play in this big shift? So, uh, I was just at a round table with the Federal Reserve and it was a really nice inner industry. Uh, so two of the reserve governors were there. Um and uh I was actually with Anatoli from Salana and Sergey from chain link and uh Ilia from near and uh Brad from XRP. So it was a very nice uh round table and we had a chance to directly interact with the Federal Reserve and the Fed is trying to figure out you know what is their role, place and purpose with the genius act because traditionally the Fed is the payment regulator and they've been doing that for 120 years give or take. Um the the thing about the Fed uh is that they were kind of left out of the party. There's three primary regulatory bodies that deal with this. There's the OC, the FDIC, and the Federal Reserve. The reason this is relevant is that stable coins live in two worlds at the same time. One, they live in the web 3 world. So they they're tokenized. And we think a lot about, well, how do I get more liquidity and volume? There's over $250 billion worth of tokens that have been issued, 180 plus million transactions every month. It's a very dense, beautiful, high velocity space. But those only have value because somebody's holding an asset on the other side in the legacy world. And the legacy world, it's either at a bank or it's somewhere else and it's represented some way like as a treasury for example. So genius, what it did is it created some baseline rules of the road. But now rulemaking has to occur and they have to start talking about things like can you get a master account with the Fed or how do you ensure these or what are the custodial standards or what is the audit oversight and how do you audit these accounts and also the grading and scoring of these things. So are all stable coins created equally or is there some delta between the asset allocations between tether and circle for example where tether has admitted to have commercial paper cuz while they may appear to be a dollar they may be very different the other thing is also you'd like to augment these things a little bit for example can you offer yield with the stable coin so genius was very clear about this there was a big fight and the non-yield people won and they said you can't offer yield with the genius act. Uh that said, there's a lot of people that are starting to take a step back and say, "Well, hang on a second. Well, maybe there's some clever mechanisms where we kind of create a dual token and it's for non- US customers, they can share in the yield, the stable coin or something, and US customers just get the stable coin." And now we're starting to see blended versions like Tether is going to move into the United States with some of their stable coin and some not. But what's the point? Well, the point is soft dollarization. And there's no greater example of this than Argentina. There's $700 billion economy and a hundred billion dollars of that economy is in cryptocurrencies with the majority being in stable coins. So basically this is a place where technically the currency is the peso but what's happening is the they're dollarizing and they're trading the Argentine central bank for the Federal Reserve and without the consent of the US government it's just through the hand of the free market and people are basically transacting in dollars now through stable coins and you're going to see a lot of that happen in Colombia and Venezuela and all throughout Africa and Southeast Asia and so that soft dollarization is at war with the off yuanization of the world because a belt road the Chinese government is trying to push a concept of a digital yuan and these things are fighting in developing nations and uh and uh you know places that are a little bit off the beaten path and that's really exciting because it means you can now have a direct financial relationship with those consumers in those markets. So if you're Microsoft and you're dealing with Sri Lanka, you don't have to go through 14 hops and three forex conversions and other things to get to the local money and deal with the local person in the local bank. They can just simply pay you in a dollar back stable coin. You have peer-to-p peer relationship and it's feeless or near free for fees. The velocity of global commerce then is going to increase. So what this means is you're going to see a huge expansion of the category overall. So you're going to grow from hundreds of billions to trillions of dollars of stable coins issued and you're going to see a localization of stable coins. We're going to have flavors that are regionalized either a subbrands that are a big brand like Tether is doing with USD or uh there just regionalization stuff and uh great markets that provide liquidity here and there. Now, this only works if there's great regulation, there's great auditability, cuz the minute that a stable coin fails, it creates catastrophic consequences to the faith and credibility of the system as a whole. So, the hope of genius was to begin the regulatory conversation. Uh, but by no means is it done. And to be frank, the Fed does need to be brought in a little bit, if anything, just because of their traditional role in payments. And they've been left out because of CBDC concerns. So, they kind of have to work it out. And it's a very difficult situation. We in industry, we're already talking about it. And one of the things we talked about in the round table is this idea of algorithmic regulation. So you can actually have smart contracts and they are public private partnerships and they handle things like freeze and sees and KYC and AML and other compliance concerns and they allow for liquidity across nations and cross networks but some modicum of control in the secondary market. Uh so it's a challenging very deep situation but it's one of the fastest areas of growth and it's also going to get complicated by uh the fact that large companies like Google and Microsoft and Apple have very strong incentives to come in because they lose tens of billions of dollars every year to transaction fees and banking costs and forex fees and they have customers in pretty much every country and three billion people. So they would much rather cut out middlemen and they already have the payment rails in many cases the licenses to do this. Um, and then it's also complicated complicated by the legacy banks now wanting to come in like JP Morgan's going to come in and others are going to come in and they have a lot of blockchain infrastructure waiting to do this. They just have been waiting for a regulation to give them the ability to do so. And now that genius is there, there's rules of the road for them to begin the process. But it's going to take several years of rulemaking for all of this to get completely sorted out. And there's still a lot of open questions and everybody's just trying to figure out how to put the pieces together. I wonder what's going to happen to the future of custody and um custodial services with the expansion of stable coins and adoption of stable coins. Do you see the government issuing in in America? I'm talking about the government of the US issuing something like uh what El Salvador did uh for their citizens, which is a governmentbacked wallet. Um you know, ultimately what is what are people going to use for holding their stable coins? Nice if the Fed could just directly issue treasuries onto a blockchain. The minute you do that, then it solves tons of custodial problems because then you can hold the treasuries as a reserve for the uh for the stable coins and the stable coins could then trade. uh but it gets a little too close for comfort for CBDC's but there's got to be some way with the real world asset side of the house because one of the things that's missing and hopefully we can start the process of getting it in with clarity is we have to have a conversation of how do we handle tokenized securities in general in our industry and allow them to trade like cryptocurrencies one of the reasons why nobody wanted to be securities in the cryptocurrency space is many of your security lose all liquidity can't trade on Coinbase can't trade on Binance and so you are at a massive structural liquidity disadvantage over all the commodity elements that are trading on the exchanges. So, a lot of people got deeply concerned and they said, well, you know, we can't we can't go down there. Above and beyond the fact that compliance is impossible because you don't have as an issuer usually the uh necessary information to file a disclosure because you just don't know what's going on in the network. You couldn't if it's truly decentralized. So, but there's got to be a way to kind of figure out how to bridge that gap and create a tokenized security and then that solves starting a lot of these problems about stable coins and liquidity because it starts taking treasuries out of the and dollars out of the local banking system and it puts them completely into the cryptocurrency system. And if they're in the cryptocurrency system, I can do proof of reserves because they're on a blockchain and you can see that. So your custodial risk completely goes away and you can start treating stable coins like real dollars because they're backed by functionally debt of the US government which is what the US dollar is backed by and you can even add privacy to it if you want to. So in lie of that uh which I'd say is probably about five years out to seven years out at the current progress we have because you have to pass clarity you have to do the rule making it'll take two to three years minimum for rule making for clarity and for uh for a genius cuz many of your listeners might not know this but when you pass a law that's not the end it's the beginning the law has in it like this agency shall this agency shall and so what they have to do is get together and say what is our interpretation of the law and then they issue guidelines to the regulated actors Well, fundamentally, how is how how is what you're proposing now different than a CBDC, which Trump said he will not do? Well, it's not because it's just debt issued on chain. A CBDC is your nation's currency and they have monopoly over it. So, they say, "We're going to put a dollar on chain. It's our dollar that we've issued. It's backed by the face and goodwill of the United States. It's not a debt instrument. It's like when you hold a dollar, you can't go and get it for something else." When when they issue a treasury, they're saying that's a that's a security. You buy it just like you would anything else. and actually uh you know it has an obligation for them to pay you a coupon in in dollars. So so you get the government out of the minting business and you just get them into the security business and they let the industry do the minting side and the minting side can be under any privacy regime. The big concern that people have with CBDC's is everything you buy is tracked anytime your money can be frozen and in any time you can be targeted for political reasons or otherwise. If you just issue assets and they're an open market and anybody holds them and you hold them like you would a security and then you can put them in smart contracts to create another asset, all of those things are going to be under various different regimes and in fact many cases lighter touch regulation than the current system because the current system you have banking regulation which is the heaviest regulation possible on the legacy side and they have some sort of cryptocurrency thing but because you have to bridge them they require you to put freeze and season and KYC stuff and all these other things. And it gets pretty messy when you actually start looking at it. And what'll end up happening is it's already occurred. Law enforcement will just start pulling that and they kind of can unwind the tape and know everything you've ever done since the beginning. And they can do it with much less constitutional protections than they could if it was done with algorithms. Uh cuz you can you can many cases not have those requirements. So it takes time you know and we're we're trying to sort all this out and as I said rulem is there but remember treasuries are just one class of security at the end of the day there's many uh fixed income securities that you can put on there's all kinds of uh complex uh derivatives or there things that you can put in and we already kind of sort of have those with the DeFi space they're just not called that but they are and and so we need to rewrite those rules a bit and and acknowledge that you can have a decentralized security and you can use the blockchain as the mechanism for settlement, clearing and disclosure. As long as that's the case, you can get rid of the broker dealer and you can go from T2 to T0 and you can actually have a proper end to end uh global market for this stuff and then you get rid of traditional stock exchanges and kind of move the dexes and then what the government will do is just say well regulations smart contracts and so if you want to be compliant with our particular regime or for these particular assets then you have to use this smart contract to and settlement is compliance. So when I send you it, the transaction doesn't clear if I can't comply with the regulatory regime of that asset. Sorry, what what do you mean? Back up a minute. What do you mean? Uh traditional stock markets will change. Uh what what does the future look like exactly? There's no reason to have centralized exchanges. I just think about how preposterous it is. It's like there's it's the ultimate trust me bro situation. And they're like, "We're all just going to give our money to this guy over there and then we're then we're going to trade like imaginary tokens that are that aren't that money against each other and just hope that that guy is going to settle us up after it's all said and done. We're also going to hope that that guy's not going to peek at the ledger and trade against us and manipulate the market and give us fake data feeds and other things like that." So, so it's trust me bros is that's why Dexes are so nice because the blockchain is the bro. And so there you you you have an honest ledger. You have an honest order book. And you kind of know where the the uh you know the attack vectors are. And it's a sec it's a cryptography problem not a regulation problem. So why exchanges are among the most regulated actors by design because you have a custodial risk, you have order book risk, you have front running, you have so many different things that can happen there. Um so regulation tends to follow what can go wrong. So, the sooner we can get those types of structures into dexes and get those dexes to be upgraded a little bit, uh, the better for everybody because then you don't have custody risk. You don't have order book issues or any of these types of things. The other thing is that exchanges have enormous amounts of power right now in the in the cryptocurrency ecosystem. So, when you're a new project, in many cases, exchanges will charge you millions to tens of millions of dollars to list. When you're a debt, you don't pay anything. People just trade it and you create a market for it. So that's very predatory because you end up having a situation where the supposedly objective people who are supposed to be neutral are now picking winners and losers based upon who's paying them large sums of money to list. That's not a situation we want to be in as an industry. So Dex is the more we can do as an industry to move in that particular direction, get people comfortable with it, the the better for everybody because then you remove that tendency to create issues. Could you could you imagine if only like three people could ever give you a bank account and they go and say, "Well, I'm sorry. You have to pay me a million dollars to get a bank account and the bank account's the only way you can make payroll or any of these types of things." That's literally where we're at as an industry. There's only a handful of these powerful exchanges and they control all liquidity. I I I've talked to several DEX founders um uh during my interviews and the consensus is that yes, in the future there will be a less reliance on banks. There will become redundant financial institutions. But if everyone starts using Dexes for example, just hypothetically, won't they become the next bank? I mean, won't there be calls for governance to be around Dexes and more standardized protocols and more uh standardized um uh uh regulations that will basically force them into the pathway of becoming the next bank. Yeah. But the problem is that the medium is too permissive and porous and um also many of the regulations were designed to resolve things that blockchains don't suffer from. you don't have custodial risk, you don't have transparency issues, you don't have disclosure issues cuz blockchain does all that for free. And you move to intrinsically a T0 and you're also dealing with the actual asset as opposed to dealing with a synthetic asset. So when I trade Bitcoin on Coinbase and trade it for ADA on Coinbase, I'm not trading Bitcoin and ADA. I'm trading their version of it and the person who receives my Bitcoin is hoping that they will be able to withdraw the real the real thing at some point. But there's no guarantee of that outside of the regulation, faith, and goodwill of those actors. Now, I know the Coinbase people, they're very good people, and they're tightly regulated people. So, they're probably going to do it right. But the challenge is that we've had hundreds of exchange failures and um you give too much power to these people. So, Dex is you don't have any of those risks. You're trading the actual assets. And the the payment system is the blockchain. The disclosure system is the blockchain, the record keeper is the blockchain. And you can even have dark pools if you want and you can use that with privacy enhancing systems as uh smart contracts. So you can keep things private but you still get uh disclosure in that uh it you know that things were done fairly cuz the chain ordered it. So it's just an intrinsically superior paradigm. The other thing is is is is the market wants to be liquid and they want 24/7 global liquidity. When you do exchanges, you're intrinsically geotagged. you're stuck in America or you're stuck in Japan and it's hard to get foreign customers because what you end up having to do is for every country you trade with you have to build basically a mini bank in each of those countries and comply with an enormous amount of regulation. Dexes don't care. So even if people try to regulate them because the markets are open and this technology is open, it's much much more difficult to uh to uh install a draconian regulatory regime to that. And what'll happen instead is you move to algorithmic regulation. So you use smart contracts and use proofs on the wire and DIDs and these types of things and settlement is compliant. So you so it'll you can't deposit in the DEX unless you've you've selectively disclosed something to some relevant party that's in your geography, but it'll be different for each user based upon the origin of funds uh that come through. But the minute you're in the deck, you swap, then when you withdraw, you withdraw and nobody can stop that inside the system. And this is what we mentioned to the Federal Reserve and you know this is what we've talked to a lot of different regulators about is you know how do we move to algorithmic regulation and to enable T0 into massively uh massively lower compliance costs. So what is the future for traditional banks once stable coin adoption becomes mainstream? Well the banks that adopt the stable coins will make a lot of money and the banks that don't um will go out of business. You know it's just like new media. You know, if you create a website and you have an you have a you a Twitter account and all these other things, maybe the New York Times will do pretty good, but nobody's going to read your paper paper anymore. You know, the old people will, but the young people move over. So, you have to stay up with the technology. And the problem with banking is they got good gig. You know, they kind of created a monopoly for themselves. They kind of regulated into a wall and they have a model and a way of doing things. And just like news media had a model and a way of doing things. They had subscriptions. It's the best thing in the world. like Pearson would a little, you know, 12-year-old ride his bike and throw a paper at your door at 5:00 in the morning and you'd go and pick up your paper at 6:00 a.m. with your coffee and read it. That was their business model and it worked really well. And then suddenly this online thing came out and the people who realized that that's a big deal, they survived. And then the people who didn't realize that was a big deal, they're all dead. And so banks are exactly the same. Um there has to be interoperability and there's emerging payment protocols like X.42 402 Coinbase created um with Google, you have um you know modifications the open banking standards uh that have been proposed and pushed but ultimately the the the interoperability is going to have to be there and I and I think Swift is going to die uh and these other large systems are going to die. They just can't sustain themselves. There's too many downsides. There's too much legacy complexity and at the end of the day there's an enormous amount of trust and lack of consumer protection. If nobody believes me and the bankers are like, "Oh, well then go to your bank and try to send a wire." You notice how many times they try to talk you out of sending a wire and how many disclosure forms you have to file. Well, there's wire fraud. Have you checked your account? Terrible system. Exactly. So, so let me let me get this straight. I I can use like multi-IG and ledger devices and all these things to have tons of security and it's super easy for any consumer to do that. Well, you could be a multi-billion dollar financial institution and and you have to put in all these bells and whistles and even still you have some guy call you after you've sent a wire saying, "Did you really send that wire? You know, I need to know everything about the transaction to verify that's a wire or else we're going to put a freeze on it." That's just a broken system and it can't survive when its competitor is used just, you know, tap your phone with trusted hardware in your Google phone or your iPhone and you just use your fingerprint. We know it's you. Well, people are concerned about privacy on stable coins and here's a question from a user on X stake with pride is a username. How can the Cardano partner chain Midnight I add privacy to stable coins? So what Midnight does is it gives you computational privacy back. We call it rational privacy. So you take two things together. You take a smart contract system and the smart contract system then you combine it with an identity system and you embed within your private smart contracts DIDs and then you create what's called a selective disclosure regime. So you basically say, who gets to know my business? Maybe it's just me. That's what Monero and Zcash do. It's just me. It's disclosure of one. Or maybe it's my brother and I, or maybe it's my brother and my mom and dad and I, or you know, maybe it's my business. Uh, like maybe it's my HR department. Whoever you disclose with, that's the person who gets a transparent transaction. And then it's private for everyone else. Once you have those primitives in play, you can reconstruct any financial asset into that paradigm. You can deploy a private stable point. You can deploy a private security. You can do private trading on a DEX. And uh it's public to those you're disclosing to and it's private otherwise. So here's a great uh hallucinating example to make it real. So all the time people track uh addresses for exchanges for when people deposit withdraw money from exchanges and they kind of get a sense of inventories and other things. Well, what if you could withdraw and deposit to an exchange anonymously? He said, "Oh, Charles, you can't do that. But what about the travel rule? They have to comply with the travel rule. Well, what if you have selective disclosure for travel rule compliance to the requisite agencies, but everybody else that's private? Then nobody can ever see the things going in and out of Binance or in and out of Coinbase as an example and track those things. This is very valuable thing. Well, that's what Midnight seeks to do is that we've built a whole stack of technology um and we created a smart contract system called Kacina. We built it into a privacy stack called Plonc and uh in Halo 2. So Plunk is the arithmetization and Halo 2's proving system and it basically gives us fully programmable private smart contracts. And we wrote a beautiful programming language called compact which is based on Typescript. And Compact basically gives you the ability to write JavaScript like code to build private smart contracts. And you embed within them your disclosure requirements. And if you have none, it's a private fully private. If you have some, it's to whoever you decide in the smart smart contract design. This allows you then to capture regulated business and start thinking about what a real world asset would look like in a highly regulated regime, but have the liquidity and appearance of a cryptocurrency asset. And this also allows you to add privacy to other assets like Bitcoin or Ether because what Midnight does is it has bridges uh to seven ecosystems, Bitcoin all the way to B&B and beyond. uh Ethereum, Salana, Cardano, XRP, and you can basically send your assets into that ledger and use them as fuel to power the smart contracts of Midnight. So, Midnight doesn't have to use its underlying token, Dust, uh to power things. You can use Bitcoin or Ether, other things. So, that means it's an extension of your infrastructure. We kind of built it for hybrid applications. We have a public side and a private side. So if you want to upgrade your decks to trade securities, you could build a regulated DEX that's private on Midnight as an extension of Uniswap. So you have regular stuff going on in Ethereum and then you have the private stuff going on in in Midnight. And multi-chain signatures give you the ability to just, you know, sort the whole thing out. So there's just a lot of stuff there that we we we we tried to think around and we thought that was the only way to expand cryptocurrency because the thing is like we got stuck in this trap of of of like a winner takes all and uh and network effect and uh you know fastness like my protocols a little faster than your protocol you know like SW a little faster than Aptos and Apto a little faster than Salana and that's really not where growth is going to occur. it's going to occur. Who's going to create the bridges between the legacy world and the web 3 world to allow the legacy world to begin moving into the web 3 world in a safe and effective way? And they have invariance that they can't change. They can't change bank secrecy act. They can't change GDPR requirements. They can't change broker dealer regulations. Maybe they can over a 5 or 10 year period through massive amounts of lobbying and industry participation, but they can't change it today. So you need something where they can program those things in and have an algorithmic representation of them and then they can then use that to touch Ethereum and touch Bitcoin and touch Cardano. And by the way, for non-financial use cases as well, there's HIPPA for health records. How would you build a system to broker the movement of health records between different things? I can't have a blockchain based system where you know that John Smith is going to the urologist for his gorrhea. I can't go do that. That's not exactly like uh you know something somebody would sign up for. So probably needs to be private. But on the other hand, it needs to be immutable and timestamped because John Smith needs to know that unauthorized people can't have access to his accounts and he needs absolute certainty that uh that uh his accounts have not been tampered with and people have changed things inside the council. Maybe somebody changes that paternity test and Mory Povich comes out and says you are the father. you know, you you probably really want some guarantees that if you take a paternity test that it is what you say it is. So, you need immutability and you need timestamping. You need auditability inside that system, but you need privacy at the same time. And so, Midnight also covers those non-financial use cases which are so valuable for supply chains, medical records, uh land registration, as well as the financial use cases like private stable coins and these types of things. Is AI going to bypass some of this though? I'm just pointing out a real life example. YouTube is now launching AI age verification in the US which will automatically detect users over 18 regardless of what you've inputed manually. So I mean I don't they say that and how are they doing it? They're doing it with very sophisticated cookie schemes and browser fingerprinting and probabilistic models but the real way that you get true verification is through an oncreds and dits. And so you can use AI to probabilistically understand things and where and when that makes sense that's fine. But it's not an access control system. And so uh DIDs what they do for you is they give you the ability to definitively prove you are somebody to somebody who cares. And then with zero knowledge technology you can prove it to the rest of the world and they as long as they trust that group of people the root of trust then you know that you're dealing with a real person. As an example let's say you had the passport system. Well, if we have passports as dids, then you have a zero knowledge system. You can prove you're a US citizen, but you don't have to show your passport to do that. You can prove you're a credit investor, but you don't have to show how much money you have. So, it's a much more general thing. But age verification is certainly an attribute we all care about. And uh the porn industry is desperate for this because they're having to blacklist entire states like Texas and Utah and others because of these age verification requirements. And they're looking for some technology to do that. And so I think this is this is awesome because also it changes compliance from a game of being like a data warehouse packrat where you have to store giant amounts of information and you know in your basement hope to God that you don't need it and file suspicious activity reports to gave it 21 questions. Can I do business with David? All right. Well, here are my questions. Question A, yes, no. Question B, yes, no. Question C. And you go down and after 5 10 15 questions, either you get to yes, I can do business with him or no. That's what I mean when settlement is compliance because as part of the clearing function you'll run that game zero knowledge proofs will be generated. It'll collect those proofs as a chain of evidence and then once it passes those proofs it either decides to settle or not settle. So the other thing that's happening at the same time is the intent revolution. So intents are partial transactions. You tell us your intent. It's not send this thing in Ethereum this exact amount of blah. It's more like I want to trade five bitcoin for USDC at best available price. Now notice something. I didn't tell you the price. I didn't tell you the settlement time. I didn't tell you the network. I didn't tell you the mechanism of settlement. I just told you my intent. What I want. This is where AI is very powerful. And there's uh great blockchains like Near that are looking into this. And there's Anomia and others. But basically the idea is like AI will figure it out or some automated system will figure it out and build that transaction for you. So your intent is kind of like what you want to do then somebody fills in all the cream filling and then processes the transaction and maybe it was Cardano that was lucky and got that transaction with one of our dexes or maybe it's Ethereum or maybe it's Salana but we got that you know with this and so the the world is moving to an intent world because that partial transaction for game of 21 questions is regulation. I have an intent to do business with unis swap. here's the stuff I want to do business with and then there's going to be a challenge response protocol saying well to do business with us you have to answer these 14 questions with zero knowledge proofs and if you can attach all those proofs or somebody on your behalf can attach those proofs like your KYC organization like Acuant or something like that then the transaction settles and then the transactions built as the composite of all those things the value the cryptographic signatures but also the zero knowledge proofs now on the other side what do I have I don't know who you are. I don't have your personally identifiable information. I don't know anything about you. I just have zero knowledge proofs. That's it. And I have some transaction data, but I'm in full compliance because embedded within those proofs is some way that a regulator could unravel uh you know the root data and verify that those proofs are correct. Well, going back to Cardano development itself, some people in the Cardano community are a little bit frustrated at what they perceive is slow pace of development. And here's a question specifically from a user on X. His name is Jonathan Strange. Why has Cardano focused so heavily on a researchbacked approach rather than the move fast and break things approach? What were the downsides to this approach? And I guess to add to that, the upsides, pros, well, the this the irony is the research actually is pretty fast. It's the engineering that got really slow. Um, so so we've published over 250 papers and it probably take another 10 years to implement all those papers if we wanted to. So we're really good at writing papers and going through the peerreview process. That's not the limiting function. Like I'll give you a great example. We we we published Orworth Genesis back in 2018 and we just rolled it out this year into Cardano. So the the historical bottleneck was the engineering side and there was a variety of legacy reasons for that. A no one had ever built these types of systems before. So we were very conservative in the design and we chose very specialized tools like Haskell uh to to do these types of things. But now that we've built up, you know, large domain of experience and we've created a large open source project, what Cardono has turned into is actually one of the fastest moving in terms of development uh projects around. Uh and a great example would be that while Ethereum took till 2022 to do the merge, we actually did our proof of stake in 2020. So we we beat them by a few years and uh we're speeding up in terms of our ability to interoperate with other systems, launch other blockchains that are connected to Cardono like Midnight. Um, so we're now a full AVS system as of next year. Uh, you we've added zero knowledge support very rapidly and so every year we're just like getting major upgrades to the system. It's just it took a while to get the foundations right. The other thing is that was a lot of firsts. Like we were the first liquid non-custodial staking system, but we were the first extended UTXO system to add smart contracts to uh UTXO. you know in the in the Ergo was also there, Nervos was there, but we were like the first at scale like $30 billion and people actually doing real things. We were the first to implement color coins at the base protocol level with the Cardono native token standard. Uh so because these things were first, we actually had to figure out the development model and it took quite a bit of time to build all those toolings because it's not a onetoone match with Ethereum. You can't just go and deploy an EVM smart contract on Ethereum on Cardano. You actually have to do it differently. Now the advantage is that long-term we have enormous scalability potential with these things because we have local determinism. What happens on your computer is the same thing that happens on the global network. This is not the case with Ethereum or any other system. It's a very rare property in distributed systems but we have that which means also we have a much stronger layer 2 game. So when you start getting to payment channels, state channels, roll-ups, these types of things, they work much much better and faster on Cardono than they would on other systems. So these are trade-offs and locally what it meant is we were slower out the gate for many things and it hurt our DeFi ecosystem and a lot of adoption and interoperability. But longterm once you get past those hurdles, you start having a takeoff velocity because you bet on a the right paradigm long term. And what's cool is you see that with Bitcoin DeFi where we fit with Bitcoin really beautifully almost like two molecules and docking with a with you know like a like a receptor. They're just clicking into each other. Um whereas it doesn't work very well with Ethereum and Salana as examples because they are a different accounting model and they have a different security model whereas we can clock together because of the design assumptions that we made. Well, you know over the next 5 years where's the majority of DeFi growth going to be? Is it going to be Ethereum continuing to 10x every year? Or is it going to be all that dry Bitcoin that institutions hold wanting a yield going in and creating yield? It doesn't take a meaningful percentage of Bitcoin before you have more TVL than the market cap of Salana. You know, that's Bitcoin DeFi. And it's easy to do because you only have to get like seven or eight financial institutions to start deploying their Bitcoin uh because they now they hold so much of it into the DeFi markets. and they're going to do that where they can still preserve the security of uh Bitcoin and pay transactions in Bitcoin. So, uh so you know, we'll see what happens in the next 5 or 10 years and I and I'm very comfortable with the bets we've taken and the velocity I think is exactly where it needs to be. It's a good mixture of now moving fast but with a lot of rigor that's behind it and it's also polyglot now. So, we have Rust and we have Go and we have TypeScript and Haskell in the ecosystem. So, we have a lot of that legacy stuff, but then we have now the mainstream stuff, but we figured out how to do the mainstream stuff and not break the system, if that makes sense. Uh, the same user, Jonathan Strange, had a question about the um the philosophy behind the fixed supply. So, Cardano's tokconomics are similar to Bitcoin with a fixed supply. What was the thought process for that? He said, on top of well, of the top 10 crypto, when you don't count stable coins, BMP, coin, and XRP, etc., Bitcoin and Cardano are the only cap supply tokens. What was the thought process behind this? I I mean I that's what I believed in. I was I was a big fan of Ron Paul and goldbacked money and the whole reason you have goldbacked money is you can't just turn on your money printing press and print as much as you want whenever it's convenient. I mean if you want a wild graph take a look at the US money supply over the last 20 years it's like kind of flat kind of flat kind of and then 2008 and then later you know with co goes way way up. You're like holy what just happened and everybody's like why are homes so expensive? Why are cars so expensive now? Why does it feel like I'm getting poorer, but my my my paychecks are the same and my taxes aren't going up, but yet I can't buy as much. Look at shopping carts in 1990 versus 2025 of what you could buy with $20. It's inflation destroys you. So, you know, a fixed monetary policy is awesome because then it organically deflates over time. Um, and you know that if you are going to be part of that ecosystem, nobody's going to show up and debase your money and you want sound money. So, Bitcoin taught us that. Cardono in many ways is a spiritual successor to Bitcoin. You know, they are UTXO. We're extended UTXO. They had color coins. We put them at the protocol level. We based our proof ofstake protocol on proof of work when we when we uh were designing security properties called the GKL15 model. So, we also wanted to inherit the monetary policy. Now, Vitalik was thinking much more like computational fuel. Uh, and he was saying, oh, you know, like fuels like oil, you can always go drill some more, you know, these types of things. And so, it could be variable. You can have inflationary periods and deflationary periods. The problem is then you introduce a really complicated thing. You start inviting the conversation of monetary policy into your governance. And then you you start having like hawks and doves. And there's some people saying, for the good of the ecosystem, why don't we, you know, increase inflation? And you have other people say, "Well, for the good of the ecosystem, we need to keep it constrained." And then you're just fighting every year about your monetary policy of of where to take it and what to do with it. Whereas, when you're in a deflationary monetary policy, you you can't have the fight. No one is walking around saying, "Let's change the Bitcoin emission rate. No, there's no path in Bitcoin to make that happen and have more than 21 million bitcoins." And there's no path in Cardano to change the monetary policy of Cardano. What you see is what you get. You can optimize around that. So you could disappear for 20 years and come back and it's the same ADA supply. Another way to look at it then, Charles, if I if I may add, perhaps then you looked at Cardano as money at the onset instead of something to build applications on because you can point to the fact that developers are favoring Salana, Ethereum, so on and so forth for building layer 2 over Bitcoin, right? Yeah. And the other thing is you can always invent a fuel token and back it by sound money or use it with sound money. It's a lot harder to take a fuel token and turn it into sound money. Uh, and so you start directionally where you have safety and security and you work your way to utility. And as long as you have a community that's willing to wait that time, you don't lose anything. If you go in the other direction, it's really really hard to conjure that. Like I don't think, for example, Bitcoin would be Bitcoin and survived if they tinkered with the monetary policy. If they said, you know, let's because not a lot of people got in early and Satoshi got too many coins, let's do 30 million Bitcoin instead of 21, let's change the mining emission rate or something. Bitcoin would have died if that uh if that happened. Well, let's uh finally segue into Bitcoin itself. Uh this is a user on X. Everybody literally asking questions he has already answered or questions they know how he will answer. Ask him his thoughts on Michael Sailor and I guess by extension the Bitcoin treasury companies that are um becoming more mainstream right now. Well, anytime you can increase liquidity and get more people into the cryptocurrency space, that's intrinsically a good thing to me as long as it's done in a responsible way and it's done with good governance and good regulation behind it. So, there's a world of difference between you buying a Bitcoin and having it in a non-custodial wallet you control and buying a Bitcoin as a regulated product uh through an exchange and there's some third party that's holding that. Um, so I don't have anything against DATs or for DATs. I think that they're a mechanism. Um, it's more of are there the appropriate controls in and are these structured in a way where you're not creating a synthetic asset that's decoupling from your act underlying asset. This was my biggest concern in El Salvador with Shivbo wallet. So back in 2021, we actually traveled El Salvador. I met with Boule and we spent some time there and we brought the coalition together that ended up creating Shivbo, Alpha Point and these other people. But I I bowed out. We decided not to take the deal. One of our biggest concerns was that we didn't think that there were appropriate controls connecting the Shivbo Bitcoin to the actual Bitcoin in custody and we wanted US regulated entities to audit that is you trade Shivbo in a centralized sense. It's like trading those Coinbase dollars or those Coinbase Bitcoin. It's like well that only works if you trust people. So if you start engineering financial products where the share price is different than the underlying asset that's a problem because the only value of that financial product is the underlying asset and that delta between the two is a bubble and that can create a problem. So, uh, you have to be careful of these types of things and you have to be, uh, you have to make sure that you walk into it with both eyes open and you only invest in in, uh, these structures when you, you think that there's long-term viability, uh, behind them. So, Michael's been phenomenally successful and he's created one of the greatest mcguffins of all time to acquire Bitcoin. Um, I he's starting to approach Bitcoin levels of Satoshi. You know, I I I was actually one of the largest uh small holders of Bitcoin for a brief period of time way back in the day. People forget that when we did the Cardano sale, um the Cardano uh raised in yen, but it was converted to Bitcoin for uh for transparency. In fact, our audit reports just about come out here and it's going to show the addresses, but we had 108,000 Bitcoin that was raised for Cardano. So, after it was all converted. So, so you know, it was at $250 and $700. uh but now today's prices that'd be like $14 billion or something like that. It's an incredible sum of money. So there is kind of a moral hazard when you have such a colossal amount of an asset in one hand or one entity and you know a small perturbation or issue can create a problem. So what you try to do when that occurs is make sure that the level of scrutiny increases proportionally with the overall holdings and uh the regulatory structures we have right now are not really as good as they need to be to deal with that and unfortunately Bitcoin has no recourse. U but you know what we've been there before uh people forget Mount Gaus I remember Mount Gaus and we survived that and people forget Silk Road. I remember Silk Road we survived that. Okay so we can afford a collapse of a DAT. we can afford uh 100,000 Bitcoin being stolen or $200,000 Bitcoin being stolen. Bitcoin is so resilient and strong. It's just um these things aren't Bitcoin. They're synthetic representations of it that are traded on exchanges and they don't have to be on par with it one to one. Uh so whenever that occurs, be very careful if you don't lose the reins cuz that horse is going to run away real fast and you're not going to catch it. It's a lot faster than you. Would you be ever opposed to the idea of a Cardano treasury company concept? It's inevitable and actually it's much more significant meaningful because there's also staking and governance rights with Cardano. You don't have any of those rights with Bitcoin. So, uh you have a different set of problems. So, you still have that issue of of losing the reins letting the horse run away. But then also what is the governance policy of the debt? I'll only support a DAT if a DAT has a means of decentralizing governance, meaning that the community has some sort of say or control uh over the uh the tokens governance. That's where I draw the line cuz I don't like the idea of one entity centralizing 10 20% of the supply and then participating in governance and some unelected group of bankers has a perma vote on uh on where Cardono goes. That would be very problematic, you know, for the system. So, I think they're nice in that they they you know, because what's a 70-year-old grandma going to do if she wants to be part of the ecosystem? Is she going to go install a wallet on her her non-existent cell phone and, you know, figure out how public key cryptography works and self custody and this stuff? It's like, no, you know, give her assets where she can call her broker or something and do that. So, I kind of understand the point of that in the demographic you're dealing with, but we as an ecosystems have to deal with the moral hazards of these types of of situations. Then there's some technological innovations and there's social innovations that can be put through. So DATs and Cardano are inevitable. If I had to predict, I'd say we'll start seeing them within 90 days to 180 days. Um and uh there's going to be all kinds of flavors that come through and we'll see debts probably from midnight as well. It's very profitable for people to pursue these things. It's just you have to do them with the right wisdom and foresight and if you do then they can be very beneficial to the ecosystem. What's your view on companies adding layer twos on Bitcoin to add a yielding staking feature to generate yield versus something that natively generates yield through staking? So, uh that's like Babylon for example and David Chi is the inventor of that and he's a very good friend of mine. He actually is part affiliated with our lab at Stanford um the blockchain lab we have there and they've done a phenomenal job. I it's called an AVS system, actively validated services. And the whole point is that you create some asset or you have some asset that has some real value behind it. And then you can repurpose that asset to basically provide security to another system. And it solves the bootstrap problem because you all the time want to launch something, but when you launch it, you're very fragile and everybody has a strong incentive to try to break you. So if you can borrow security from another network and put that security onto your network, uh then uh then you have the best of both worlds. You get to do something new and you have total control over that thing, but you have a high security basis for that. And I'm old enough to remember the merge mining days of Bitcoin where they they would merge, mine, and mine multiple blockchains at the same time with proof of work. So uh what Babylon's doing or any of these as systems as layer 2 to Bitcoin with Bitcoin staking is a very similar concept. they've just kind of proof of staked it. Now we formalized that concept with a paper called minotaur and that turned into um IGEN layer and then Midnight uses Minotaur at its core to show what's called multi-resource consensus. So you can put multiple consensus algorithms together because the problem with AVS is handoff. I want to use Bitcoin to bootstrap my network and I'm prepared to pay the Bitcoin holders a fee to do that. But I don't want to use Bitcoin forever. I want to launch my network and have my own consensus. So, how do I hand off between a borrowed consensus and an endogenous consensus? And Miniur has a solution for that. It allows you to link proof of work and proof of stake and other things together into one ledger and you can change the ratios between them. You have a view on Bitcoin and we'll wrap up here. You have a view on Bitcoin's uh price uh uh towards the end of uh 2027. uh what's ultimately going to drive the price upward and adoption? Well, the DATs have brought retail, sovereign wealth funds are buying Bitcoin. US government holds 212,000 Bitcoin. It's uh it's pretty crazy when you see it. So, I think over the next 5 years, Bitcoin is going to 10 trillion. Um I think before the end of this bull market, Bitcoin will hit 250,000. That's kind of the the flag I've put in the ground for the ceiling of it. And the big driver is going to be Bitcoin DeFi. you know, minute you can get yield and do stuff with your Bitcoin. Uh, it's kind of like I say there's the gold mine and then there's the gold. Right now, the gold lives at the gold mine. Well, the gold doesn't have to live at the gold mine. The Bitcoin network is the gold mine. It makes gold. You can take your gold and put in the jewelry shop and the jewelry shops Cardano or Ethereum or STAX or you know these types of things. Well, the minute you can do that, uh, Bitcoin gets a yield. Bitcoin gets a yield. It's a very attractive instrument because it's limited downside relative to all these other experimental things and it has equivalent upside in many cases to other tokens. So the networks that facilitate that are going to be do very well because they're going to get a ton of TVL. They're going to get a ton of transaction volume. And the thing is under the hood, it creates consumption for their tokens because people are paying those transaction fees in Bitcoin, but it's it's inevitably has to be consumed with ADA or near or whatever. Uh so it's like tourism when you go to the Caribbean and you know you swipe your credit card, you're paying in US dollars. They get the local money, but that tourism benefits the local economy. So, Bitcoin is going on tour and it's going to leave the high population, very wealthy country and they're going to go to the Caribbean and Hawaii and all these other places and those are different blockchains and they'll do cool things. They'll consume cool things and they go back home after they're done. So, once you're done getting your yield on your Bitcoin, you go back to Bitcoin and uh and you go back to your house. So, uh that's what's going to be the key driver of getting Bitcoin over 10 trillion because then structured financial products can offer yields there. they could be uh sliced and diced by Wall Street to be very safe and scored and rated and then people just by proportion start including it like they do gold in their IAS and their 401ks and these types of things and so the rule making will let you do it. The minute that clarity is passed and all the rulemaking comes in, Bitcoin will be treated like any other financial asset from purposes of investment and taxes and at that point um you'll see a massive flow of money into it because it's a hard asset like gold is. Well, once Bitcoin reaches $10 trillion, is that the rising tide that lifts all boats? In other words, are all other cryptos going to follow or can you see Bitcoin dominance just continue to rise uh back to uh pre2021 levels? Here's a bit, you know, it es and flows, but remember, cryptocurrencies is going to eat AI and cryptocurrency is going to eat medical records and there's all these non-financial use cases that Bitcoin never will have an opinion on and never do. And so, it's kind of silly thing to say, oh, well, all these other guys will die. It's like, okay, so where am I going to go build my medical record system? And doesn't decentralization matter? I call EPS, economic, political, and social. So, so, so I can't do any political or social things. Like, how do I build a competitor to Facebook and have a decentralized social network? I want to do this in Bitcoin. It's an absurd thing. Uh, you know, so, so no, you're you're going to have other standards and you're going to have an internet of blockchains. And I say this as an OG of OGs and I was in it in the very early days of Bitcoin. and I was the founding chairman of the Bitcoin Foundation's education committee. I mean, I understand a lot about it and I love that community and ecosystem and there's a lot of value they have, but they chose to be sound money and the minute that they chose to do that and be a store of value, they have to go win. And winning means Bitcoin has to flip gold and then it'll become the premier store of value for the entire world. Winning doesn't mean that Bitcoin is going to be a replacement for Meta or replacement for the Google search engine or you know the private medical record system of the world or the largest decentralized exchange in the world. That's not what winning means. Winning means you flip gold and you are the premier digital asset to hold. And so I think the world is quite compatible with Bitcoin achieving that. But then all these other people doing these things and oh by the way Bitcoin forces the blockchainification digitalization of things and becomes an alternative banking stack you know indirectly because it everybody has to start wiring into it and once they're in they're into the rest of the network as well which are far more capable and programmable. We have um this adversarial nature in the blockchain space and there's this maximalism and all these people float around and it's just so disheartening at times because you know we I'm trying to do real things. I we published 250 papers. We we every day wake up, write code, and we want to solve hard problems. And if I find my network is 5% more decentralized, I'm 5% happier. If I find out I have another million users, I'm a million users happier. You know, not because token price goes up, because we are getting people into a world with integrity and a world with principles and censorship resistance and transparency. So, I'd like to believe that we're philosophically aligned with Bitcoin. So why should it be sum zero where if Bitcoin is to achieve great heights that's only at the expense of our growth especially when Bitcoin's playing a different game? Are they going to change your block time from 10 minutes to sub-second blocks? Are they going to go from proof of work to different consensus algorithm? Are they are they going to allow you to write like super complex smart contracts easily and have lowcost settlement and these types of thing? No, they're not going to do that. Why should they if they want to be the premier storage of value for uh for the world? Just like does gold have to wake up and pretend it's silver? Does gold have to go into your gas tank and let you drive your car? You know, gold can be gold. Sure. Okay, I'll end here. So, what are you working on these days? You you mentioned you're, you know, currently researching a lot of different things. Just give us some of the projects you're engaged in and uh what you expect to accomplish in the next uh year or two. What can we look forward to, Charles? Oh, huge huge inroads in interoperability with a lot of different systems and we have some phenomenal partners there like Near for example. Um and uh so a lot of lot of just unfinished business of fixing broken windows getting things talk to each other. Um we're doing a lot of protocol upgrades for Cardono like the governance was a huge lift. We went from federated system to a fully decentralized governance system uh with onchain government even in a constitution and things like that and that was like two years of my life getting that done and getting that put together. So, we're real excited to bring that to bear and to watch that fully realize itself. Um, including a full-on chain treasury with 1.8 billion ADA inside of it, which is close to $1.8 billion. We're almost a dollar parody there. So, just a lot of stuff like that. Um, in the nonweb 3 side, I I'm a bison rancher, got a buffalo ranch, you know, they haven't killed me yet, but there's a few hundred running around. I also run a healthcare clinic with my dad and brother over in Gillette, Wyoming. We have 15,000 patients and 40 providers. So, we do a lot of work with uh healthcare, especially rural healthcare and stem cells. So, it's a very um diverse life these days. And I did this lovely 5-hour interview on Sean Ryan show. If you guys want to see like the totality of all of it, I'd highly recommend that episode. And you if you have a weekend to spare, you can see the totality of what we're working on. Well, somebody asked you, I've been following you since 2018. I see you as a spiritual seeker. Do you ever see yourself dropping out of crypto and shifting your main focus onto your spiritual practice? Well, you know, I'm in crypto. It's like everybody says, they have that meme with the Indian guy in the gold shirt. I'm in it for the I'm in it for the technology. I'm I'm in crypto for the spiritual side, for the philosophical side. And it gets lonely, man, cuz I go to all these conferences and everybody's about the money and they're about the connection. I I'm like I get along very well with some of the old G's in the space because we were all in it before there was any money. And uh I'm still there and I'm still tilting at windmills like Don Kyote. you know, we say, "Hey, you know, can we be more decentralized and hey, can we get power of the people and push it to the edges and get all the non-custodial wallets?" So, uh, why? Because it's the moral thing to do. I want to live in a world where the economic, political, and social systems of the world are, uh, fair and decentralized and they don't have single points of failure. And we have trust and honesty. Again, reality is falling apart. If you haven't noticed, we can't trust each other anymore, can we? It's like, oh, Trump wins, oh well, the election's rigged. If Trump loses, oh, the election's rigged. You know, FBI, we we all we if your president's in, you love him. If your president's out, you hate him. It's the same institution. I'm sorry. You can't have institutions that every four years you go from we love them to we hate them. I I mean, I wasn't too long ago you had everybody on the left saying the NIH is the most credible organization in the world and we all should get our vaccines and everything's great. And now they say we can't believe anything coming out of the NIH because Robert Kennedy is there. I'm sorry. I can't live in that world where there's no anchors and institutions of objective reality. So, we need systems to keep humans honest because we're no longer capable of doing it ourselves, especially with generative AI where you can create a fake video or a fake picture of anything you want and within just, you know, 2 years to four years, it'll be photorealistic and perfect. So, you can't believe your ears anymore. You can't believe your eyes anymore. So, we need some system to rebalance society. So, this is where I am at and there's no way I'm going to leave. I I I'm on the horse. I'm riding. It's It's getting harder every day because it keeps getting faster and that horse gets meaner. But there's You'd have to shoot me to get off the horse because I have a front row seat. I'm riding towards the future of humanity. Within the next 10, 15 years, we're going to completely rebuild our voting systems, our economic systems, our social systems to blockchain. And the winners and losers and the paradigms that win and lose are going to completely decide the future of humanity. And the rest of us as spectators, you you're just going to have to accept the consequences of winners or losers. So we could have CBDC's and financial ponopticons like the People's Bank of China is doing with the digital yuan. We could have completely free money like Bitcoin or ADA and uh and have it be completely uh private with human rights embedded inside of it. There's no law of physics that says it has to be one way or the other way. It's social consensus based on who wins through market conditions. So why you guys name when I get off the horse and say let somebody else figure that one out? I I want to be in this race because I want humanity to be liberated from all that. Well, this is this is a perfect segue to my final question. I'll let you go, Charles. This somebody asked uh this is a great question. I saved this for the last. Uh somebody asked the future of crypto. Um I'll just get the exact wording. So in the future, uh yeah, how does he imagine the world? This is from a user on Reddit, MX Karum. How does he imagine a world where there is full crypto adoption controlled by the governments or controlled by corporations that manage to convince us to relinquish our keys in return for protection or controlled by whales the 1% kind of a dystopian take on all three scenarios but who would trade liberty for security desire deserves neither and will lose both never ever trade liberty for security you have to have liberty and we can't trust people to give it to you either comes from God or from algorithms those are our two options okay and uh God God hasn't been giving us very much lately, so the algorithms are going to have to make up the diff. Uh so so I I'm in the game and uh I want to win. I want the forces of decentralization and censorship resistance and freedom of association and commerce expression to win. And there's a collections of blockchain technologies that will make that happen. And there's collections of technologies that won't. And there's no guarantee it's going to go one way or the other. It is everything to do with how people buy things uh where they store them and ultimately um the decisions they make and the agency that they take. Everything in the modern world is designed to rob you of agency. The news robs you of critical thinking and an opinion. Banks rob you of self-custody. You know, uh the central banks rob your money of its value. It says a dollar, but they kill the dollar's value by debasing it. All these things are pale similacra of their true intended purpose. And uh and so you got to be skeptical and you got to take a step back and put your time and faith in systems that by their design can't fail, by their design have integrity, and then build back up society from that. If we're unwilling to do that and we trade convenience for it, well then we'll lose and we'll end up creating a dystopian panopticonal hellscape that makes Claus Schwab like hard every day, you know. But I don't I don't want to live in that world, David. I want to live I want to live in a world where we have freedom and liberty and basic human rights. So uh so by 2035, we'll know. And it'll come down to what's in the legislation. It'll come down to what technologies win and it'll come down to what systems dominate. And I can't tell you, all I can tell you is that I'm in the race and along with a few other good people and we're all fighting hard against people who are also in the race who are not good people. Well, uh we appreciate uh you and uh what you've done for the community for blockchain and cryptos and uh we hope you continue your good fight. So, thank you very much. Charles, where can we learn more from you? Where can we follow you in the meantime? Oh, my Twitter, IOHK Charles or I guess X. No, it's hard. I want to call it Twitter, man. I know it slips out of the tongue. It also you can say I tweeted. You can't see I exed. It does a little bit little bit strange, but um they say it's an X post. Like why would you give up a tweet? It's like Yeah, but what is the actual verb now? Do we just say I posted on X? It's a little bit Yeah, exactly. It's just like what are we doing? I can talk to you for hours, Charles. That was honestly a very good conversation. I hope you had fun and thank you for coming on the show. Thanks, guys. Cheers. Thank you for watching. Don't forget to like and subscribe.