This Is the Vision for DeFi Built on Bitcoin

Joe Weisenthal (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:19)

So Tracy, you know, it's been obviously an incredible year for crypto overall, for Bitcoin, for a bunch of things going on, Ethereum, DeFi, NFTs, et cetera. But I feel like in some sense, some of the narrative enthusiasm has moved away from Bitcoin, at least feels like it in the last few months.

Tracy Alloway (0:42)

Oh, absolutely. I mean, part of this, I think part of this is because obviously you and I are in financial journalism. We're talking with people who are in the financial industry quite a lot, but it feels like the enthusiasm from traditional financial players, you know, I'm thinking bankers and traders, that has squarely moved on to DeFi, to things like Ethereum, to places where there seems to be a lot of innovation and a lot of changes happening around what you can actually do with the technology and with a wider pool of crypto. Whereas like, I gotta say, the Bitcoin maximalists, sorry, you got me going now, but the Bitcoin maximalists are sort of like, they've turned into the gold bugs of the traditional market, right? Like everyone kind of makes fun of them a little bit.

They seem a little bit old fashioned and they're kind of just like watching while all this new stuff happens around them.

Joe Weisenthal (1:38)

Yeah, that definitely seems like the popular narrative. Obviously, there's a lot of adoption overall or interest in Wall Street. And I think the story is like, yeah, Bitcoin's cool and it's a good, it's a store of value. And if you worry about inflation, then buy it. Or if you're an emerging market, it'll hedge against currency collapse or something like that.

But if you want to do anything that's sort of very familiar to people on Wall Street, like trade derivatives or create things that resemble equity or debt or anything like that, then they're all super hyped on building on Ethereum or Solana or something like that. That is sort of where the zeitgeist is right now, I would say.

Tracy Alloway (2:15)

Yeah, absolutely. I guess you could boil it down to an open question of whether or not crypto is sort of outgrowing Bitcoin and whether or not you can have this massive crypto slash finance ecosystem that's built on an asset that's ultimately supposed to be relatively static and in limited supply.

Joe Weisenthal (2:34)

Right. And I think there's actually two things, and we're gonna explore them today, but there's two things that I think. One is there is a perception that it's harder to build on Bitcoin, that it's not, because it's designed to do one thing, it seems very, very well, which is be this secure store of value.

It's not easy to build on. That's one perception. And then I think there's a question of, do people want to build on Bitcoin? Or do people want to trade on something? It's not obvious to me that a lot of the DeFi stuff, and earlier in the week, we talked to Tom Schmidt about yield farming and all that stuff and automated market makers. It's not obvious to me that the people in the Bitcoin world want those things, whether there's really an appetite or an interest for all that speculation and trading.

Tracy Alloway (3:24)

Yeah, totally. I mean, it goes back to the sort of gold bug analogy that I was just using, right? But I think it's also about who those people are and this idea that Bitcoin is very, very decentralized. It's not led by any single person. So even if Bitcoiners decided to make changes to the overall structure of Bitcoin, which they've done previously, but it becomes very, very difficult to reach agreement. And then it becomes very, very difficult to actually do.

Whereas with something like Ethereum, you kind of have a figurehead in the form of Vitalik, who can help with some changes and help the thing actually adapt and get to the place where people agree that it wants to be.

It just feels like two very different communities.

Joe Weisenthal (4:09)

Definitely so. So that is the sort of perfect setup to our guest, because we're actually going to be speaking to a Bitcoin maximalist, Bitcoin, not crypto.

And she's also a believer that all of these things, all this DeFi stuff that people are hyped about, that it will eventually all be built on top of Bitcoin and that it is more than just a digital rock or that it's more than just digital gold. And so we're going to sort of like get this perspective. Like what is like, okay, like we sort of, a lot of people accept that Bitcoin has the store of value properties.