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Episode 44: Pierre Rochard on Ethereum's Decline

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Is Ethereum's decline a sign of trouble ahead, or simply a shift in the crypto landscape? Let's break down the significant trend of Ethereum losing 50% of its value relative to Bitcoin over the past two years. We'll dismiss common theories like cyclical liquidity and Bitcoin ETF absorption, focusing instead on the rise of Solana and its appeal to developers. Our discussion peels back the layers to reveal the deeper issue of uncertainty versus utility in monetary assets, highlighting why Bitcoin stands strong as a savings technology while Ethereum struggles with value accrual.

Next, we dissect the uncertainties baked into traditional fiat systems, where central banks like the Federal Reserve maximize economic unpredictability with secretive policies and arbitrary money printing. This system, dependent on trusted third parties like Visa, introduces layers of potential censorship and risk. We contrast this with Bitcoin’s transparent and permissionless nature, showing how its finite supply and seizure-resistant qualities offer a more predictable and secure financial alternative.

Finally, we tackle the complexities of risk in monetary systems, comparing the US dollar and Bitcoin. Bitcoin's fluctuating purchasing power presents unique challenges, but we explore strategies to navigate these risks, such as syncing a full node or using Lightning Channels. We juxtapose the "uncertainty school of thought," which favors Bitcoin for its systemic stability, against the "utility school of thought" that sees value in Ethereum’s functional tokens. This episode underscores Bitcoin's long-term value proposition, grounded in robust monetary economics and forward-looking software engineering, promising resilience and growth for the future.

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Speaker 1:

Welcome to Block Time, a podcast produced by Riot Platforms where we take a deep dive into topics around Bitcoin, bitcoin, mining and the grid. Today, we're really going to be focused on Bitcoin and the wider cryptocurrency market and the wider cryptocurrency market. We've seen a lot of volatility this year. One particular trend that has stood out and that folks have been asking about is the ratio between Ethereum and Bitcoin. So this is the ETHBTC chart over the past couple of years now. So going from September 2022 to September 2024, you can see that Ethereum has gone down 50% in Bitcoin terms, and there's been a lot of commentary about it on X, on Twitter, within the crypto community. So I wanted to dive into this, give my take on what I think is going on here, not at a technical trading level, because I don't have any expertise on technical charts like that chart analysis chartists but rather on an economic level, looking at the fundamentals, because when we're looking at a two-year trend, I think that we can look at fundamentals rather than looking at what's going on tick by tick. So some of the explanations I saw or I've heard either recently or in the past have been around the first one about cyclical liquidity. So, basically, the idea here is that Ethereum and other cryptocurrencies, other altcoins, underperform in the bear markets because they are less liquid than Bitcoin. So when liquidity dries up, bitcoin dominates, bitcoin's market share increases relative to these other coins and they dump. This argument I don't find particularly persuasive, given that within that time frame of the past couple of years, we've seen Bitcoin go from $17,000 to $60,000. And so arguably we're not in a bear market anymore, and yet Ethereum is still behaving like we are in a bear market. So I think that this explanation lacks the data needed to substantiate it. The other part of this argument would be about the rotation of liquidity. So basically, the argument would be that Bitcoin's ETFs have absorbed a lot of liquidity and have caused Bitcoin to outperform Ethereum, so it's not so much that Ethereum is not doing well. The argument would be that Bitcoin is doing exceptionally well due to the introduction of its ETFs. This argument I also don't find persuasive, because Ethereum actually just got its ETFs as well. We saw Ethereum temporarily rally on the news of ETFs, but it has not seen the level of adoption that Bitcoin has from ETF investors, and so I don't think that argument makes a lot of sense either.

Speaker 1:

The second cluster is really around competitor dilution. So, while we've seen Ethereum really doing poorly versus Bitcoin, solana has been doing very well relative to Bitcoin, and so this argument would be that Solana is taking market share from Ethereum, and it's doing so by attracting developers. Developer mindshare is really what Ethereum has excelled at in the past, and so here the argument would be that Solana is now the cool new blockchain to build on, and so the builders are switching from Ethereum to Solana. This actually, I think, has some merit. I think that this is definitely a plausible argument, and you know, it's one that obviously, for Ethereum investors, they're probably not happy about. But I would note a word of caution for the Solana investors is that Solana is not immune to this in the future either. So there's new blockchains, new technologies that come out every week, every month, every year, and so Solana is not in any way immune to this problem of developer mindshare shifting to new technologies as they emerge, and so developers are very fickle in terms of how locked in they are on a particular platform. They're always interested in learning something new. So I don't think that there's a sustained advantage to be had for Solana in this context, to be had for Solana in this context.

Speaker 1:

The third argument is really the one that I think carries the day, and it's really around the school of thought of how does a monetary asset accrue value, and this is a debate that's been going on in the history of monetary economics. This is a debate that's been going on in the history of monetary economics for centuries. The way that I would characterize it in the context of cryptocurrencies is uncertainty versus utility. So let's dive into it. First, I'm going to really explore the school of thought that I think is true on the uncertainty side and how it maps onto how Bitcoin functions, and then, at the end, I'll mention utility at a high level and why the utility school of thought is lacking in its arguments and why. You know that's essentially why Ethereum is unable to sustain value accrual versus Bitcoin.

Speaker 1:

So, to unpack the uncertainty school of thought, we start with what is saving. You know, I've often said Bitcoin is a savings technology in addition to a payments technology, and so we've got to clarify what this term means. In the traditional banking system, you'll hear people talk about a savings account right, and so it's a marketing term that has been abused, but we really have to look at it from the definition, from an economics perspective. So, first of all, the economic definition is also lacking, because what we're talking about when we talk about the economic definition, it's really the mainstream economics definition that comes from neoclassical Keynesian streams of thought, where for them, the savings is first of all a savings rate. So you receive income and some percentage of it you actually save as your savings rate, and the rest of it you spend on consumer goods. Now, if you're living paycheck to paycheck, basically 100% goes to consumer goods. But if you are being very frugal and you are living within your means, then you can have a positive savings rate From there. Either the money goes into what I would call actual savings, that is, the stock of savings holding cash on your balance sheet, or into investments into producer goods. So that's kind of the mainstream economics definition.

Speaker 1:

The definition that I prefer is the accounting view, and really the view of the Austrian School of Economics, which looks at not income but rather cash inflows, because cash inflows can be income, but they could really come from a lot of different sources. The sources of cash are operating cash flow. So this is what traditional economics would describe as income. Operating cash flow is just one way of getting cash onto your balance sheet, you also have investment cash flows. So, for example, if you sell your house, then you get an investment cash inflow. The third is financing cash inflows. So, for example, if you borrow cash from the bank or if you issue shares in the context of a corporation, then you will have a cash inflow From there.

Speaker 1:

You hold cash on your balance sheet, and the period of time of which the cash is on your balance sheet can vary, right? So if you're living paycheck to paycheck, this might be a two-week holding period, so you'll spend it down in two weeks and then you'll get another cash inflow from your salary, from your paycheck. Now, if you have a longer time horizon, you might be to have cash on your balance sheet that is, for three to six months worth of expenses, just in case you were to get laid off or any other kind of circumstance that you would come across. So then of course you know if you're really thinking about the future, you might be holding cash for years. You see this in particular with corporations. So you might see that, for example, berkshire Hathaway or Apple or any other kind of corporation, they might hold cash for years because they are waiting for an opportunity to deploy that cash in a preferred way. So all this to say that, from the Austrian school's perspective, you hold cash to hedge against uncertain future cash flows.

Speaker 1:

You can divide future cash flows into really three categories. The first are known liabilities, so these are money that you know that you owe in the future. So you might have, for example, debt and you know you're going to have to pay off that debt in six months, and so that is a known future cash outflow. You might have something a little bit less known, like a contingency liability, where you think you might owe it but you might not owe it. You know, and this happens often with litigation, so you might owe, you know somebody suing you $50 million or not. So that's a category. The second is around risky future cash flows, around risky future cash flows. So risk is where, well, we'll get into risk. And then the third category is uncertain future cash flows. So the risky cash flows are things like, for example, options and futures, where you don't know but it's going to depend on the price of something else.

Speaker 1:

Uncertainties are far more fundamental and, I have to emphasize, it's only negative uncertainty. So you have uncertainties like oh, are we going to have a natural disaster or not. Now, if that can be determined actuarially, that shifts into a risk. If it can't be, then it's an uncertainty. There's positive uncertainties we don't know if, for example, a piece of property is going to come onto the market and we're going to want to invest in that property, so investment opportunities are very uncertain, are very uncertain. So the Austrian perspective would be that cash the asset right, money itself would be the asset with the least uncertainty and that when we look at what is uncertainty, it really is about not knowing the possible outcomes and not knowing the set of probabilities in advance. So contrast that with risk, where we know in advance what the odds are and we know what the possible outcomes are, and so that's far more like playing roulette, whereas if you're playing a strategy game, you might face more uncertainty because you don't know what the other players are going to do. In roulette, it doesn't matter what the other players are going to do, you're purely playing a game of chance.

Speaker 1:

So, in the context of a monetary system, what creates uncertainty? There's two big spheres. The first one is uncertainty about how the asset is being held right, so this is really the savings technology uncertainty. What creates uncertainty here is the ability to easily seize it. So with a traditional fiat bank account it's pretty easy to have your money get seized. In fact, sometimes they accidentally seize it. They'll lock you out of your bank account accidentally because you know they got a fraud alert or something like that. Now if we look at physical $100 bills, here you know it's probably harder to seize physical money but at the same time each one has a serial number so they're able to track it that way and also it doesn't scale very well. So hundred dollar bills become very bulky. So if you're trying to move, you know, a billion dollars worth of cash, now you're opening yourself up to a pretty easy seizure cash. Now you're opening yourself up to a pretty easy seizure. Even at the border they'll say, hey, you can't move more than $10,000 worth of cash and they'll search your bags and so if you have it in $100 bills they'll be able to find it pretty easily.

Speaker 1:

The second big source of uncertainty in the monetary system, in the traditional fiat system, is the arbitrary supply of it. And here it's interesting because the central bank, the Federal Reserve, they are actually trying to maximize uncertainty of the supply. So the reason why they do this is that they don't want anyone to know what their future policy is going to be. So, for example, currently there's a big debate about whether the Federal Reserve is going to cut interest rates by 25 bps or 50 bps, or 75 bps. You have senators sending letters, you have prognosticators, commentators, all trying to guess, uh, what the monetary policy will be, what the money supply growth will be due to the interest rate, um and so, uh, you also have situations where they'll print a trillion dollars overnight, right? So, for example, whether it's to uh bail out silicon valley bank or to bail out the whole financial system during COVID or in the 2008 financial crisis, as Jeremy Powell and as Neal Kashkari have said, they have an infinite amount of dollars, and so it's really just maximum uncertainty as to what the supply is.

Speaker 1:

The other big area of uncertainty is around the payment side, and so connecting to the fiat monetary system is permissioned. You can't just set up your own Visa point of sale, right. You have to enter into a contract with Visa, you have to get Visa's permission to use their system permission to use their system and you have to sign an NDA and do KYC, aml and all of this to gain access to the payment system, and that's at Visa's level, but it's also true at the Federal Reserve level. So in order to get a FedMaster account, you have to not just meet a certain number of requirements, but you also have to be friends with them. We've seen this in litigation, where the Federal Reserve will grant a master account to somebody who might be a former employee of the Federal Reserve, but then they won't give one to somebody who is not a former employee of the Federal Reserve, even though all the other qualifications are exactly the same. You know they're honest people, etc. All following the rules. You know it really is based on handshakes and based on you know who you know, not your actual risk. So again, huge source of uncertainty here, right, that you don't have access to the fiat system.

Speaker 1:

And then, of course, the censorship aspect of it. We've seen this. We saw it with the Canadian truckers, right. So if the government disagrees with your point of view in the Canadian truckers example it was regarding COVID vaccines. So if the government disagrees with you, then they can just censor all your transactions. In the Canadian truckers example it was regarding COVID vaccines. So if the government disagrees with you, then they can just censor all your transactions and lock you out of the fiat system. So you know, and it's bipartisan, right. So in the sense that in some contexts they might freeze the bank accounts of, or they might discriminate against, gun stores right Firearms, or in other contexts it might be about cannabis shops getting frozen out. So each political wing is always trying to censor its enemies and that's what causes tremendous uncertainty in the fiat monetary system.

Speaker 1:

At its root, what we're talking about is trusted third parties, right? So trusted third parties are what increase uncertainty in this context of a monetary system. And it's axiomatic that the moment you have to trust a third party that you know they can do whatever they want because you're having to trust them, and they are the third party that you know they can do whatever they want because you're having to trust them and they are the third party Contrast that with you know, if you're just holding your own money, then you would not increase uncertainty for yourself unless you know. Well, there's really a philosophical question, if you even ever could. But you could imagine, maybe you play Russian roulette with a stack of $100 bills or something, I don't know. It would be kind of a bizarre situation to be in. Okay, so what reduces uncertainty in a monetary system On the savings side, having it be seizure-resistant.

Speaker 1:

So, for example, with Bitcoin, you can hold your own private keys right, so that could be your 12 seed phrases that you have on a piece of metal that is fireproof and floodproof, so you know that's not going to get seized by nature. And then, furthermore, you can set it up to be a multi-sig, so it could be two of three or three of five, and so now you're really making it hard for anybody to seize these Bitcoin, in particular if you put these keys in different jurisdictions, because if you put them in different countries now the legal system would have to cooperate in an international manner, which is extremely difficult, time consuming and expensive. So, even from that perspective, time-consuming and expensive. So even from that perspective, you can make Bitcoin far more seizure resistant than any other asset in the world. The second part is the monetary policy. So Bitcoin has a finite scarcity, a fixed money supply. There will only ever be 21 million Bitcoin. You've got the halvings every four years worth of blocks. So this makes it so that you don't have a third party that can just dilute you out of your Bitcoin arbitrarily. You have certainty about what the future monetary policy of Bitcoin will be In the second cluster of the payment side.

Speaker 1:

First of all, bitcoin's permissionless, so in order to access the Bitcoin system, all you need is an internet connection. So then, even in that context, you could have a satellite dish, you could be using Elon Musk's Starlink, lte or FiberOptic lots of different ways to access the internet. You can also access Bitcoin using Tor right, so there's privacy options there. And, furthermore, to create a Bitcoin wallet, all you need is just any kind of modern computing device, along with the wallet software, which is open source, which you can even write yourself, and you can generate a private key just using math and derive or rather just using entropy right, using randomness of the universe, and then you can derive a public key and an address just using math. So accessing Bitcoin is permissionless. You don't need to provide your social security number, you don't need to have a fixed physical address or anything like that. And then, secondly, it's censorship resistant. So when you go and send Bitcoin broadcast, a Bitcoin transaction, bitcoin miners are incentivized by a transaction fee to include it in the blockchain, and so we just haven't seen any examples of Bitcoin transactions being censored.

Speaker 1:

So the takeaway here is that you know, to the opposite of the trust of third parties. You have decentralized verification right, where you are independently operating your Bitcoin node, your Bitcoin wallet, without having to rely on a third party, and this decreases uncertainty. In fact, I would argue that Bitcoin is the least uncertain monetary system in the history of humanity. That said, bitcoin is still uncertain. So even though it's the least uncertain, that doesn't mean that it's 100% certain, right? Let's say it's 99% certain, or something like that. So let's look at examples. So your access to the Bitcoin network can be disrupted by nature or an adversary, right? So you could lose your internet connection and not be connected to the network. That's a real uncertainty. Your private keys could be compromised. We've seen examples of people getting their Bitcoin stolen. Now the key question here is is it harder to compromise somebody's Bitcoin private keys than to compromise, for example, their gold bars or their dollars? You know, undoubtedly yes, it is harder, due to multi-sig and encryption.

Speaker 1:

Third, you could have high transaction fees that make the system uneconomical. So we've seen examples in the past where transaction fees will go to, like, let's say, $50 per transaction, and so if you're just trying to move $100 worth of Bitcoin around, that really becomes uneconomical. Conversely, if you have too low of transaction fees, perhaps we're undermining long-term transaction finality. And you know again here, and you know with the example of the high transaction fees, the solution here is to wait longer Not a great solution. The solution for low transaction fees is to pay a higher transaction fee. Also, you can wait longer, which is not an ideal solution, but we can't let perfect be the enemy of good, right. So we're always looking at is this less uncertain than all of the other alternatives? We're not asking for perfection here. That's the Nirvana fallacy. I'll let you look that one up. Okay, so we've covered uncertainty.

Speaker 1:

Now, what increases risk in a monetary system? So one is the cost of using that system. And by risk, right, we're looking at what is quantifiable, both from a probability perspective, but also from a set of outcomes perspective, and so the cost of using the Bitcoin system. That is something that we can quantify. And when we look at the history of Bitcoin, we see that there is a bounded limit to how much it can cost to, for example, operate a Bitcoin node. That's why Satoshi Nakamoto put in place the block size limit, was to constrain that cost and to give us a boundary condition for it.

Speaker 1:

And then, of course, the second aspect of it is the loss of purchasing power. This one is really harder to quantify than the cost of using the system, although you know with the cost of using the system. Let me rewind here. Let's include the transaction fees in that right, and the transaction fees for Bitcoin have actually been more volatile than the Bitcoin price itself. We have not seen a robust system or market for transaction fee futures develop. Maybe that will develop at some point, but that's something where, essentially, in order to hedge that, you've just got to hold more Bitcoin.

Speaker 1:

Ok, so the other risk in a monetary system is the purchasing power, right? So is the dollar value going down or is the Bitcoin value going up? Now it's a risk for Bitcoin to go up in a positive sense. Right, risk is not always about are you going to lose money. Risk is also about is your purchasing power going to increase, and something we've seen with Bitcoin is that you know one of the risks is that Bitcoin's purchasing power can increase so rapidly that it can actually increase too rapidly, and then you get a drawdown after that, and so we've seen that happen repeatedly. Now that doesn't happen with the dollar right, so the dollar just loses, let's say, 2% to 10% of its value every year, and so, in that sense, the dollar is actually less risky than Bitcoin is. I would argue, in fact, that Bitcoin is the riskiest monetary system. So you have to hold those two thoughts in your head at the same time. It's the least uncertain monetary system and it's the riskiest, because the meaning of those two words is so profoundly different.

Speaker 1:

Okay now, the good news about risk is that you can insure against it. So how do you mitigate or insure against the cost of using the system? Well, you've got to start syncing a full node, right? So if you start syncing a full node today, it will cost you less in the sense of how long does it take to do initial block download, which is downloading the entire blockchain, the entire history of the ledger, all the transactions Today. That's about 600 gigabytes. So start your engines today in order to catch up. One could imagine that maybe in the future, we'll find ways to speed up syncing a full node, and that's not theoretical, because, if we look at the history of Bitcoin, the syncing of a node has actually gotten more and more efficient. So there's definitely opportunities for improvements there from a software engineering perspective, but nevertheless, the way to mitigate this risk is to start syncing one. Today, one megabyte gets added every 10 minutes, so the longer you drag your feet, the more megabytes you've got to catch up to.

Speaker 1:

The second risk is on the transaction fee side, so I mentioned you know you can hold more Bitcoin to mitigate the risk of high transaction fees, but the other part of it, too, is that you can open a Lightning Channel. So a Lightning Channel is like an options contract that you can't really trade. It's an illiquid contract, but it gives you the right, but not the obligation, to move Bitcoin on a Layer 2 in a payment channel by anchoring a transaction into the blockchain today. So the idea with Lightning Channels is that you open and close them during periods of time where there's very little demand for on-chain transactions, and so transaction fees are low, and then, when transaction fees are high, you leave your Lightning Channels alone from an on-chain perspective, but you can still send payments on the Lightning network instantly at a very low fee without touching the chain while you wait for things to slow down on-chain to transact there. There is a trade-off, obviously, that you can't move large sums of money in Lightning channels. So if you're moving more than $100,000 worth of Bitcoin, you'll probably still have to be on chain, but if it's less than that, then you can probably find ways to move it on Lightning.

Speaker 1:

Third, the exchange rate risk. Here you know, this is an area where you can hedge right by buying Bitcoin derivatives. So when we think about whether to hold Bitcoin or not as an asset, we have to look at the fundamental uncertainties first, because that is why we hold money, that's why we hold cash. It's to hedge against uncertainty, and so you want to hold whatever has the least uncertainty, because then you can go out and hedge the price risk right. Any of the other risks, you can hedge those. So even if Bitcoin is very risky, you should still look at it from the perspective of what are the systemic uncertainties, not what are the price risks. So to hedge uncertainty, you'll hold your own private keys, you run your Bitcoin node and then to hedge risk buy, put options, you sell futures so you can get the best of both worlds. If you are very risk averse, you can still Hold Bitcoin and hedge your Bitcoin position in purchasing power terms to protect yourself that way.

Speaker 1:

Now I would argue that you should work on being less risk averse. I don't know if you've got to find a therapist or meditate or something to embrace risk so that you can reap the rewards of that embrace risk so that you can reap the rewards of that but nevertheless, from a fundamental economic perspective, this is actually the correct way to look at it. And so all that nets out to Bitcoin being the best savings technology. Okay, so that's really the uncertainty school of thought of you hold a asset as cash in order to minimize uncertainty, and that's why Bitcoin has increased in adoption and that's why we see continued interest in Bitcoin.

Speaker 1:

Now let's contrast that with the utility school of thought, which is really what Ethereum has embraced, which is this idea that you buy a utility token and then you hold that utility token, and so that's what creates the demand for the asset from a balance sheet perspective. And you hold it not in order to hedge against uncertain future cash flows, but rather you hold it in anticipation of being able to spend that token on system-specific functionality for the utility consumption of the token, that is, that there would be no other way to access this utility other than by spending the utility token, which you have to have been holding on your balance sheet in order to spend it. So, to give you a concrete example, you know they'll say that, okay, well, on Ethereum you can buy this NFT and you have to spend ETH to buy the NFT. So this receipt for artwork, you're buying a receipt. I don't know why you would want to buy a receipt. I always try to throw my receipts in the trash because it's not the useful thing. It's the artwork that'd be useful, but I'll leave that to the connoisseurs of receipts, the receipt collectors. And so you have to hold Ethereum in order to buy receipts. And then you know that you can't do that using $100 bill. You can't use it, you can't do that using Bitcoin, and so you have to hold Ethereum.

Speaker 1:

So the first problem with this school of thought is really the kind of. Probably the critical problem is the velocity. So, while it is true that you can't buy the NFT receipts using Bitcoin directly, what you can do is you can hold Bitcoin until the last minute and then you can flip into Ethereum and flip into the receipt into the NFT, and you can do that in a fraction of a second. And so there really was no reservation demand for Ethereum. There was no sustained holding period of the asset, and so the asset's value would trend towards zero, and so that's kind of the velocity problem with the utility school.

Speaker 1:

The second is that it doesn't hedge uncertainty. So if we look at all the uncertainties relating to Ethereum, they are strictly greater than the uncertainties of using Bitcoin. So Ethereum fundamentally has more uncertainties than Bitcoin does from a systemic software engineering perspective. So if you're trying to minimize your uncertainty in order to hedge against that, you would inevitably use Bitcoin. In order to hedge against that, you would inevitably use Bitcoin. There's all of the other cryptocurrencies that try to compete against Bitcoin. The way they do that is by differentiating themselves, by increasing the uncertainty of the system, of their cryptocurrency system, in order to acquire some kind of feature right, some kind of utility feature, and so it's really a very strict trade-off that they are embracing in order to gain adoption through this utility thesis.

Speaker 1:

The third problem is the lack of interoperability. So, for example, you can buy NFTs on Ethereum. You can also buy NFTs on Solana, but there's not interoperability between them, and so then you are reduced to a state of barter. This is something that you see even within the Ethereum. You might have a utility token that is for trading other utility tokens. It's very recursive and circular, but bear with me. Well, now, you have to essentially, barter in order to accomplish anything. So imagine a world where, in order to buy bananas, you have to have banana tokens, and then to buy raspberries, you have to have raspberry tokens, and you can't buy bananas using raspberry tokens.

Speaker 1:

Okay, so this whole mode of thought is a way of trying to restrict how you are able to use money, in order to create arbitrary categories, in order to pump up the value of a particular token. So that's the utility school, and I think that this is why Ethereum really and, frankly, all the utility tokens in the cryptocurrency world are either already struggling versus Bitcoin or are going to struggle. The only way that they get adoption is through the people adopting this erroneous school of thought that they believe it long enough to buy and hold the asset, but then it has to somehow materialize. It has to somehow materialize, right? So, ultimately, a faulty narrative can only sustain the value of the token for a time window. It can't be indefinite.

Speaker 1:

Eventually, it falls apart, and so that might be what we're seeing today, and it's certainly, I think, the strongest argument against Ethereum and against really any, not just any kind of cryptocurrency, but even the US dollar. You'll hear people say that the US dollar has value because you can pay your taxes with it. So they've reduced the dollar to this payments utility token for taxes, and it suffers from all the same problems that Ethereum does, where you could just hold Bitcoin and then, on April 15th, you sell some of your Bitcoin in order to convert it into dollars, in order to pay your tax liability, and you don't hold any dollars for any sustained period of time, and so if everybody did that, the value of the dollar would go to zero. And so you know, in the fullness of time, perhaps that's what we'll see TBD right, we'll see.

Speaker 1:

Maybe next episode we will confirm this hypothesis, but that's kind of the long-term fundamental thesis for why Bitcoin has been accruing value for the past 15 years and will continue to do so over the coming years, decades and centuries. So hopefully you found this deep dive into Bitcoin's monetary economics and how they relate to the underlying software engineering interesting, and you'll share the BlockTime podcast with your friends, family, co-workers and professional contacts, as always. If you have any questions, feel free to reach out and send them in. Don't forget to subscribe and leave a five-star review on your favorite podcast directory and we'll see you in the next episode. Thank you.

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Pierre Rochard

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