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Um, I think if the US actually says, "Okay, now we're going to buy." That's going to spur a lot of other governments to think this thing through, do they want to be hostage to the dollar, you know, and moniary policy? And, you know, no, they don't. So, put some Bitcoin in uh in your reserves. um that could in turn uh really create you know get us much closer to really very few currencies that really matter.
one of them Bitcoin. Uh I think dollar will still be you know I think the dollar especially with the stable coin movement will be the other but the emerging market currencies I think uh could could experience uh some serious downside volatility if this happens. Hey guys, welcome to Everyday Finance.
The moment of no return for Bitcoin has been reached. It has progressed from the experimental stage to a self-sustaining international monetary system following years of skepticism, regulation, and opposition. These days, acceptance, infrastructure, and the growing lack of confidence in traditional finance are more important than the dollar price.
Some are already setting themselves up while many are still considering. As governments lose control and their domestic currencies falter, emerging regions are spearheading the transition by creating economies based on Bitcoin. Institutions that previously disregarded Bitcoin are now vying for attention.
Even long-held beliefs are being called into question. Kathy would cautions that Bitcoin has undergone a significant transformation and that the well-known four-year cycle may be ending, implying that what follows may be unprecedented. This is all sounding Rod like uh like we felt the conversation was in the early days of Bitcoin or at least our early days, you know, uh when when Yes.
Uh Abby Johnson had uh uh was mining Bitcoin in her office at Fidelity and we were you know marveling and you know a lot of people were working from home and now the technology is evolving again and the convergence as you say with solar technology the convergences among technologies uh which is where we're spending a lot of time now these convergences um are going to unleash incredible entrepreneurial Um uh I think uh uh expeditions and uh I think AI as well in in the loop here is going to be very important.
Right. I mean we were talking about space data centers and maybe that's going to create space a a decline in in uh solar kind of infrastructure and hardware. I mean maybe you know Bitcoin will will benefit from from Right. Oh no question. No question. I'll take a crack and then Rod, I'd love to hear yours at the end here too.
Um I 2026 uh is in the US the midterm elections uh and President Trump does not want to be a lame duck. So I have a feeling uh that he is going to work uh with his crypto and AISAR right uh to to do a few things. one, make sure we get that dimminimous uh uh ruling through uh make sure so because you know grassroots is where a lot of what we've been talking about is going to happen.
Um but also it seems as though there's been reticence about actually buying Bitcoin for the strategic reserve. So far so far it's confiscated. uh the original intent was to own a million Bitcoin. So I I actually think they will start buying because I think this will help Trump in a couple of ways. The midterm elections, part of the reason he won uh won the presidency, I think was the crypto community.
Um yes. And uh another reason of course is his family is all in on Bitcoin and and other uh crypto assets and uh they have you know we talked about the DATs earlier. They've kind of fallen apart this year. So um I think he's got all kinds of reasons to do this but the most important one is he does not want to be a lame duck.
He wants to have another one or two productive years. And uh I think I think he sees crypto as as a path to the future. Kathy, just like I think David Sax said that it had it had to be fiscally neutral to be able to do you think they're going to budget budget neutral. Budget neutral, right? Budget neutral.
Budget neutral. The second thing that I think we'll see next year is a big surprise in GDP growth because of the OB3 and the corporate tax deductions. like our corporate tax rate in the United States the effective tax rate has dropped to 10% which is the lowest in the world for any developed country.
Uh so I think the and and we have accelerated depreciation as the primary reason you put a manufacturing facility in the US. Think this about Bitcoin about this Bitcoin miners. You put a manufacturing facility in the US uh if you start building it by the end of 28 you in the first year of service will be able to depreciate it 100% in year one not over 30 to 40 years.
So you get huge tax refunds. Uh so I think we're going to see massive growth and the deficit uh they're going to have more degrees of freedom to in which to work. Now add one more thing because you spurred another thought. H in our early days with Bitcoin, we thought we thought that uh countries would adopt it uh uh much earlier than they have.
Um and that that we could have an emerging market uh currency crisis as a result. Um I think if the US actually says, "Okay, now we're going to buy." That's going to spur a lot of other governments to think this thing through. Do they want to be hostage to the dollar, you know, and moni US monetary policy?
And, you know, no, they don't. So, put some Bitcoin in uh in your reserves. Um that could in turn uh really create, you know, get us much closer to really very few currencies that really matter. One of them Bitcoin. Uh I think dollar will still be you know I think the dollar especially with the stable coin movement will be the other but the emerging market currencies I think uh could could experience uh some serious downside volatility if this happens.
Government crackdowns were the main source of early concerns about Bitcoin according to Kathy Wood but regulators acted too slowly and the window for stopping it has closed. Countries that attempt to outlaw Bitcoin run the danger of lagging behind those who embrace it now that it has attained escape velocity because it bears no counterparty risk.
She points out that Bitcoin operates as both a riskcon and riskoff asset. As demonstrated during the 2023 banking crisis when it recovered more quickly than any other asset, the extent of early institutional adoption and the significance of Bitcoin's structure are currently underappreciated. What emphasizes that Bitcoin is a protocol rather than a technology that is in competition with other technologies.
While technologies v for supremacy, protocols are layered. While layers like lightning enhance speed and others offer anonymity and programmability, Bitcoin acts as the foundational layer that secures value. It is completely pointless to look for a coin to replace Bitcoin. Bitcoin merely needs to continue being the unshakable basis upon which everything else is constructed.
It doesn't have to accomplish everything. Why hasn't that the dimminimous uh ruling why hasn't that move forward? Why what and how will it how will it that see this is the biggest question and why I did say that about stable coins. Jack needs to get in there and and block to a lobby and say, "Hey, this this is really important for our customer base, which is, you know, tends to be very small business or low to mid-inccome people."
I have seen that they've posted something on Block's website. I don't have the exact link, but on the last Bit Devs meeting that I went to here in New York, they uh Block does now have a page saying we need to push for the minimist exemption. I don't have the exact link. Maybe Rod, I could send it to you after.
We could put it in the show notes. Yeah, but I think that they are getting ready to do that. Um I don't I don't think this is going to be something that gets included in market structure, but I think the good news is that given that President Trump was thinking about including it in the One Big Beautiful bill, we might see it put into some other omnibus bill.
But they are thinking about it and I know and and I'll give a shout out to my my my old boss David Bailey when Trump came to him and asked him, you know, what do what do what does the Bitcoin community really want to see? It is this dimminimous exemption, this ability to spend without having to worry about tax implications.
critical in the US but um but but overall for the the for the protocol and everything else and this is why it's critical in the US what's happening around the world and um if you just think we are inside a system that we all pay 2 and a half% uh margin pay pay two% to take money exact tax to take money for through an intermediator who in money that's losing money we are all in that system and it seems normal,
right? Sounds crazy when you say it like that, Jeff. And every payment goes through the system of a tax to to centralization of money in money that's losing money. And this other money doesn't lose money and it doesn't cost anything. So what would the free market do? And then what would the free market of those people do and build incentives?
they would reduce their costs to people who wanted to pay in Bitcoin and they would give more value to that and it would just shift and so so the US has to do this to minis because if they don't they're going to lose this to to other countries and everything else that are going to just move to the free market.
Why would they move to the free market? Because we'll demand it. We will demand it. We will demand. We always look for more value. We're part of the free market. And I understand why this would be so hard to believe. If you just looked at the world as we live in today, the frame of reference that we live in.
If and just asked a question. If you had this new thing that was impenetrable, it was a decentral open decentralized secure protocol bounded by energy. But you would always lived in this other system. Then the world would ex look exactly like it should it should because that protocol it would come in layers.
That open protocol would come in layers and it would give more functionality. But we're so not used to that. We we tend to think in technology. We think there's that technology is win or take most until a new technology replaces it. So if we were living in the other system measuring a protocol that was coming in layers, we would naturally tend to there's a better there's a better technology.
There's a new one. There's a new coin that's offers more. Bitcoin doesn't offer privacy. it won't offer privacy because it would have to make tradeoffs in the base layer. So we wouldn't see the privacy coming on another layer and we would think it it had to exist in another coin. That would be normal, right?
So we did so much work at ego death before we started this to say I spent 15,000 hours trying to kill Bitcoin right to take the other other side and realizing oh my god it's a protocol it is not a technology it is protocol that's coming in layers and from that view that's why we decided to move all of our time into it and so from it now that you're building with the with all the entrepreneurs in the e ecosystem building the pro the protocol layers you see a totally different world emerging You see privacy coming.
You see, and and let's use Lightning, the original Lightning network that Kathy talked about 5 years ago. Of course, the next layer of the protocol is clunky at first, just like the second layer of the protocol of the internet wasn't. It had to be tightened like optimize, optimize, optimize as everybody races on to try to make it better in an open network.
And so that happened in Lightning. And now you have Lightning, Arc, Spark, Liquid, and and and it's and you had a payment failure rate before Lightning of a really high payment failure rate when now you have no payment failure rate. And it's now it's able to be prime time. And the same thing is happening on all of these layers at the same time.
And it's growing so fast. And they're all interoperable. And you don't have to build new technology. You just plug in a piece of somebody else's work and you're off to the races. So now what would that look like if you're funding businesses inside that? We don't have one failure in 16 seed and series A companies which in typical and what that means is they're very efficient use of capital and many of those are growing so fast and adding Bitcoin to the balance sheet each month because they're building inside of this ecosystem that's giving value as people start to understand it simplifying it making it easier driving that that value and a in a high level framework I would It would it would look what if you were in Venezuela and you just held dollars, US dollars.
You would look brilliant to all the Venezuelans that didn't. What if you were in Venezuela and you build a US dollar denominated business and provided value? It would look totally different. So, so that's what we're doing. We're building Everybody lives in Venezuela today. They just don't know it, right?
And we're building Bitcoin denominated businesses. And so and and from that view I understand I wouldn't have seen this view if I wasn't fully immersed in this view because because I would be measuring the view from a different different system. So I I understand I completely relate to people to to people uh questioning Bitcoin and and worried about it from their view because I used to be there.
According to Wood, the fastest growing regions for Bitcoin adoption are Africa, South America, and Southeast Asia. Since it addresses pressing issues, people are using it, not arguing about it. South Africans are protecting their riches while their currency crumbles. Towns in El Salvador now operate entirely Bitcoin-based economies, and refugees in Kenya rely on Bitcoin because banks do not accept them.
This change is happening and getting faster. She contends that the US is starting to shift its direction and speculates that the government may begin actively purchasing Bitcoin for strategic reserves which may lead to a worldwide competition for exposure. Meanwhile, Bitcoin infrastructure and expertise are being drawn to the US by the country's lenient depreciation laws and low corporation taxes.
What emphasizes that the majority of people have a misunderstanding of Bitcoin since they concentrate on price volatility rather than the protocol. From that perspective, Bitcoin replaces a system that continuously depreciates due to fees and inflation with a free market. Wood and Jeff Booth think the conventional 4-year cycle might be ending as institutions are joining.
Governments are adjusting and adoption is speeding up globally. The only question is who notices it in time. But the change is already underway.
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