I'm sorry, but Bitcoin is not perfect.
The folks that want to fight against certain innovations or use of Bitcoin protocol are
actually a really tiny but loud minority in that they're not really having much of an
effect.
We should be very careful because it's a multi-trillion dollar ecosystem.
But if we just stop, we throw up our hands and we say, OK, we're done.
Bitcoin is finished.
Book reminder, nothing said on supply shock as a recommendation to buy or sell any investment
or product.
This podcast is for informational purposes only, and the views expressed by anyone on the
show are solely their opinions, not financial advice or necessarily the views of BlockWorks.
Our hosts, guests, and the BlockWorks team may hold positions in the company's funds or projects
discussed.
Hey, everybody.
Pete Rizzo, the Bitcoin historian on X, here with another great episode of the Supply Shock
podcast winding down.
Since the end of the year 2025, expectations were high, perhaps dashed as we end the year
and head into 2026.
Here to revisit the highs and lows of the last 12 months, we have Mr. Jameson Lopp.
You know him and love him on X, at Lopp, stirring up the conversations, also known as the co-founder
of Casa, one of the best places to hold, store, and otherwise maintain your Bitcoin, hopefully
through the ages.
Other accolades include his time at BitGo, as well as a soon-to-be-announced Stealth project.
Jameson, welcome to the program.
How are you?
All right.
Though, you know, I thought we had a hard floor at 100K, but here we are.
You want to start there?
I mean, you know, you and I have been in the space since, you know, you predate me in 2012.
We've seen these kind of Bitcoin market cycles, right?
This idea that the sort of halving has cut the supply and these halving shocks create
pricing dynamics.
The four-year cycle, is it still here?
What do you think?
I hope not.
And, you know, perhaps some of the recent price action was people trying to get ahead of it
and say, okay, the four-year cycle is about to roll over again.
I don't want to be caught with heavy bags.
But I don't know.
You know, I think a lot of things have changed, especially the institutionalization of Bitcoin.
And the real question, I think, becomes, does the different set of new entrants and investors
into the space effectively change the dynamics of these cycles?
The one thing that I know for sure is that we have not had a, like, retail FOMO blow off
like we normally have.
It has been very muted, more of a crab market this year.
And for better or for worse, a lot of it seems to be a result of politics or call it macroeconomic
conditions exacerbated by political rhetoric.
Well, there's this idea right now that the cycle was, quote, pulled forward.
The ETFs kind of went live in 2024.
That was followed by the, you know, Trump administration adopting really what will be a hard act to follow
in terms of, you know, at least verbally by the rhetoric, you know, how effusive they've been
about the industry.
You know, you can argue the actual policies maybe haven't been there, but at least they've said the right things.
They've, you know, put the right people in the right places.
What do you think of this idea that we might already be in a bear market and have been in a bear market?
Maybe, you know, the exuberant the last year was the bull market.
Well, I mean, I think we may be in a bear market for retail, like the short version of the way that I kind of see the landscape of the space is that when I go out into the world and I talk to normal people about normal things,
if crypto ever comes up, then the general dismissal is, oh, that whole thing was a scam that blew up a few years ago.
I'm not interested in it, and so that's why I say, like, we haven't had that level of retail interest.
Like there was there was maybe a tiny bump or two with some various like NFT mania a year or so ago, but, you know, nothing that really took off to the levels of what we saw in 2017.
I would say even the like the run up preceding the like FTX and credit crisis crash, even that did not get to the levels of 2017, like ICO mania.
It was its own mania in regard to just doing like a lot of leverage trading and credit and rehypothecation and such.
But then this time around, it's been even more muted on the retail side.
So it's really a question of are these big institutional players able to throw enough weight around to come anywhere near the level of call it like liquidity injection that tends to happen with the retail FOMO.
So, and I don't know, they seem to be taking their time.
It's much more muted.
And so maybe that means that instead of having the massive volatility for your cycle, we have more of a long grind.
And there's still going to be volatility, of course, but hopefully it's more of a long grind slowly upward over a longer period of time as these large players come in and take their positions.
What do you think of the idea that maybe retail just isn't coming back, right?
There's this idea that the institutions have kind of come in.
This is where adoption will happen in the passive flows and indexes and 401ks that for whatever reason, you know, the defies played out.
NFTs are gone.
And, you know, I mean, I think about this a lot, right?
This idea that financial institutions were always going to embrace Bitcoin.
It's becoming, you know, we went from Bitcoin being for hackers, then it was for drug dealers, then it was for VCs, then it was for the counterculture.
Now it's mainstream financial advisors, wealth advisors, professional services, lawyers, accountants.
Are these the new Bitcoin vanguard?
Are we merely failing to be excited about what is the milquetoast middle market of the financial world coming to our industry?
Yeah, because, you know, instead of having like the the novel DGEN cycle, whether it was like ICOs or NFTs or some sort of new token promising, you know, some new novel feature or get rich quick scheme, essentially.
Instead, what we're going to have is retail retail comes in because their their financial advisors say, hey, you should put like three percent or five percent of your portfolio into this new asset class.
And it's it's super boring.
It's just, you know, digital pet rock.
But it has properties that are kind of like gold and kind of like tech.
And it's like sufficiently de-correlated enough that it's it's a good diversification play.
Hmm. Well, Larry Fink's been out there.
It's in his description is a little more interesting, right?
It's that Bitcoin is you buy Bitcoin when you're fearful.
It's about fear.
It's about fear of the destabilization of the markets, about the loss of trust.
What do you buy this narrative from Wall Street that Bitcoin is a hedge, but, you know, they're casting it in these very bleak terms, right?
That you buy Bitcoin as an insurance against catastrophe.
I mean, to some extent that that's true.
But Jack Dorsey would say that Bitcoin can be everyday money.
Well, yeah, I mean, that's why I originally got interested in Bitcoin was as a hedge.
against fiat debasement.
I think, you know, that's just not a very sexy investment case for most people.
And so that that wasn't what drove a lot of the massive hype cycles in previous years.
But I think that that's that's that's how I like to pitch it.
That's how I think it should be pitched.
And I think that by the coin.
Yeah, I mean, I think it's it's better to talk about it as as a long term play rather than, you know, short term get rich quick flip it type of thing.
It's just the odd thing is that like that's not really how the market seems to price it.
Right.
It seems to be the opposite where it's treated more like a high risk tech stock in whatever the the broader markets do.
Bitcoin tends to do, you know, 10x, if not more.
So that's like the unfortunate thing is that I wish that Bitcoin was more decoupled from wider markets.
But I'm not sure that that's going to happen, especially if it really becomes more of a trad fi asset.
Maybe let's dig into the tech a little bit.
You know, there were some high hopes that the Bitcoin culture would get back to maybe a forward looking, you know, roadmap oriented developments, you know, through the bear markets, the actual bear market.
There were, you know, attempts to sort of build new protocols that seemed successful.
There was a brief revival of sort of a builder culture.
It seems that now that has been stamped out by sort of a reactionary force that, you know, wants to bend the protocol to its own proclivities.
How are you feeling about the state of Bitcoin development as 2025 rolls to a conclusion?
I think that the folks that want to fight against certain innovations or use of Bitcoin protocol are actually a really tiny but loud minority and that they're not really having much of an effect.
You know, they had an effect in the sense that they managed to capture a decent amount of discourse for a fairly significant portion of the year.
But at this point, I'm not even really engaging in it anymore because I think it's an exercise in futility.
If anything, the development of some of these other protocols has died off simply because the mania around them died off as sort of normal development and hype cycles around that stuff.
I'm more interested in long term improvements to the protocol.
So things that help enable more permissionless innovation layer to stuff.
Though, of course, that's what a lot of the drama this year was about was, you know, people using the protocol to build layer twos that others did not approve of.
But this is a permissionless ecosystem, so I expect that development will keep going forward and that a lot of these experiments will fail.
And that is sort of the nature of innovation.
You just keep trying new things until you find something that sticks.
Well, the L1 competition still rolls on right with the Trump administration came largely a wholesale embrace of the entirety of the industry.
Some would argue maybe beyond what even the industry itself thought was rational at times or appropriate.
You can think about the onboarding of something like Tron into the US into the regulated markets going public.
Binance sort of the same.
You know, there's this idea that the infrastructure of finance will live on these systems.
The Bitcoin Maximus view for a long time has been, I think, that Bitcoin will win that competition and be the settlement layer for, you know, the world.
But in the case of digital assets, you know, Bitcoin is still a smaller player, right?
The stablecoin activity is happening on ETH, it's happening on Solana.
Does it get back?
Do we get back there?
Does Bitcoin become part of that?
I mean, it seems like there's a lot of old stuff resurfacing.
I'm getting a lot of flashbacks to like the private blockchain era, banks forming consortiums, forming blockchains.
I would have expected, you know, that the infrastructure of this wouldn't be as hodgepodge as it is, right?
You think about the internet.
There's a couple of protocols at the bottom layer.
What's your take on how the protocol wars are playing out?
Organic, decentralized progress is messy.
And there's, even though I do expect that like Bitcoin will remain king for a number of reasons, mostly around its simplicity, its robustness.
You know, Bitcoin doesn't crash, doesn't have, you know, catastrophic protocol vulnerabilities that need to be patched when they get exploited.
That level of conservatism will take it a long way.
But, you know, I do have long term concerns where I think that if we want Bitcoin to truly be a sovereign asset that can facilitate that level of global commerce and sovereign holding for as many people as possible, then we need to continue to innovate.
We need to continue to make the protocol be able to facilitate more things.
And so that's where you do get into this interesting clash of philosophies and dramatic arguments around, you know, what is Bitcoin and what should Bitcoin do and what should people be allowed to do with Bitcoin?
Because every tiny little decision is going to compound over decades and centuries and ultimately shape, you know, what Bitcoin ends up being in the long term.
Well, some of this happened, right?
I mean, Tether moving the RGB protocol or at least signaling that they're going to launch something there.
You know, there is activity on Bitcoin L2s, maybe not as much as during the initial ordinals boom.
There was hope that lightning would be revived through lightning's revival.
You know, there'd be other layers.
What does the path look like for that now, though, now that the fee market has sort of died down, right?
I guess if I was to draw the narrative of this cycle, maybe, you know, if we are coming to a conclusion, there was a couple like large scale efforts from the Bitcoin community to sort of counteract and finally destroy the crypto market.
One of those was, you know, essentially the ordinals bringing over alternative assets, kind of winning different markets sort of in a competition.
And the other was the Bitcoin treasury companies essentially, you know, trying to use the regulated rails to sort of, you know, I've I've I've called the Bitcoin treasury companies, you know, they almost the candy store for Bitcoin.
Right. The same way you can make sugar into a thousand products.
The idea is that you can make Bitcoin and give it the color and flavor and the degen traders have always wanted from the crypto markets.
Where do you think these attempts are?
You know, what do you think they ran up against?
I mean, both at times were sort of lauded as essentially ways to, you know, remove the stranglehold of the coin market cap thousand crypto asset culture.
It seems like that culture has survived those attempts.
Yeah, I mean, you know, paper Bitcoin summer, whatever you want to call it, the institutionalization of Bitcoin is I think it's been reasonably good from like price and liquidity standpoint.
But the the flip side of that is that I believe that it has massively reduced demand for block space.
So in prior cycles, generally speaking, when you saw a massive increase in the price, you would also see roughly correlated increases in the price of block space, a.k.a. the transaction fees required to actually use Bitcoin protocol.
And that was because people were going to exchanges, they were buying and then they were withdrawing to self custody or vice versa.
But either way, like they were actually using Bitcoin, they were using the Bitcoin blockchain to make transactions.
And now with a lot of this activity essentially getting siphoned off into trusted third parties, major custodial providers, that demand is no longer seems to be correlated.
So that's why it does seem like the biggest spikes in demand for block space were around various ordinal projects.
But none of them seem to really create a long lasting demand for that block space.
So they were, you know, pretty, pretty quick to fall off.
And the overall transaction rates are higher.
Right.
And fee rates are if slightly.
Right.
If only on like a couple percentage point basis.
Right.
It did calm down.
Certainly, you would imagine that ordinals is a protocol among the largest buyers of block space in history.
I'm curious, like how you think about, you know, moving forward from this era, though.
Right.
Because it does seem like it was such a unique opportunity.
You know, there really was a chance to take the wind out of crypto sales, you know, with some of these projects.
I mean, you know, at times blocks were completely full.
This was this is sort of what the developers always wanted.
Right.
They always foresaw, you know, sort of this event where Bitcoin was, you know, mathematically secure into the future through full blocks.
I don't know what is your confidence level in this idea that blocks can be full into the future, having sort of seen this demand coming.
I know it was NFTs.
Right.
It was a market that is, you know, wasn't supposed to fill block space.
But what's your lasting takeaway?
Well, where we seem to be now is that ordinals, I think, have created kind of a floor for hoovering up cheap block space.
So we should generally expect blocks to be full going forward simply because these other use cases seem to be interested in using them for really cheap block space.
But, you know, the reason why I'm disappointed is because I wish some of these projects accrued enough value that they create a higher level of demand for more expensive block space.
Now, I still hold out a bit of hope for like some of the zero knowledge roll up type layers.
So I think we should be seeing in the next month or two Citria, for example, will be going live and the sort of regular operation of that second layer ought to end up buying a pretty significant chunk of block space.
So the question, of course, will be, can it then attract enough economic value to justify paying for, you know, non negligible fee rates?
And this is kind of the grand experiment just continuing on in a slightly different vein.
And, you know, fingers crossed, like I said, that one or more of these projects ends up accruing enough activity that it can pay for more than the minimum fee rate block space and get us on a better path to a long term sustainable thermodynamic security model for Bitcoin.
What do you think becomes of the efforts to fork Bitcoin?
I think they were new around the launch of these efforts.
I mean, I think, you know, I've been pretty public that I think BIP 444 now, BIP 110 doesn't have, you know, and won't accrue an economic majority behind it.
Though, you know, the folks behind it are, I think at this point, so morally incensed that they, you know, will eventually fork off.
I just don't see how they have another another option to sort of save face.
I mean, you know, usually like, you know, when you make bold statements like that, and you sort of tell other people that they're, you know, moral failures, or they're propagating evil for not taking action, you know, generally people take action.
Do you think we see another Bitcoin cash type project emerge out of this?
I'm skeptical.
I'm skeptical that they'll actually even really be able to split the chain.
Like you, you need to have a non negligible amount of hash rate behind you to even do that.
You know, you need to be producing blocks.
And I have not seen a non negligible amount of hash rate even be interested in that debate at all.
You know, miners are generally, they're, they're like plumbers, you know, they're, they're essentially infrastructure engineers, and they're, they're putting the plumbing in place and they don't want to actually.
Screw with the nature of the network that they're plumbing.
They just want it to continue pumping out Satoshi's into their wallets.
So, you know, I, I do think it's interesting that this is, this is like the first time where kind of like legal threats have been made around trying to institute a fork.
You know, we, we did have the major era of legal threats in the sort of Craig Wright cases, but that was, that was a slightly different avenue of, of taking legal action and trying to coerce people.
And of course that failed.
And I would say that there was a lot more money behind those legal efforts than, than the sort of hand wavy legal threats that are being lobbed around with this recent drama.
Yeah, what do you think we learned from this, right?
I always thought, and I think I said this early on, that I think the risk of, you know, the negative reaction to ordinals was always that, you know, the only alternative to stopping it was through some sort of UASF.
And then, you know, I think the fact of the matter is if you actually study the course of events around the UASF originally, you know, the case that it actually played a major role in dictating events, I think was always, you know, you could have gone either way, right?
Yeah.
I've, I've, I've, I've made with support either argument.
Yeah.
But you know, the lasting idea would be that users really, you know, through UASF type constructions, it's a nice idea.
I think it worked great.
It was a nice theory and it was very useful.
I think it's pretty much debunked at this point that, that, that kind of destruction is, you know, good for these intolerant minority situations.
What do you think now that that is sort of known, right?
Like Meyers and exchanges were sort of held in check, I think by the specter of this threat for a while.
It was sort of like a nuclear deterrence.
Yeah, it's a good bluff.
Well, but now you've, you know, now everybody knows you're running the nukes off of like 1960s or a floppy disks, you know?
So, I don't know.
What do you think of, how does this change the state of Bitcoin theory in your view?
I mean, this is one reason why I would actually be interested in seeing the BIP-110 folks do a UASF because we haven't actually seen a UASF activate in practice, right?
So, right now this is all theoretical.
My general takeaway is that the threat of a UASF only really works if you have a significant economic portion of nodes that are willing to enforce it.
So, you know, the threat of a UASF only works because what you're doing is you're threatening miners to take away their money printer.
You're saying, you know, you, if you don't follow these rules, we will no longer consider your Coinbase rewards to be real.
We will no longer accept them.
We will no longer allow you to exchange them for other things.
Therefore, you must fall in line with us if you want your Coinbase rewards to actually be redeemable.
And so, since the current set of users that is basically threatening this is just so incredibly minute, I don't think that they really have hardly any quantifiable economic power behind them that the miners are just going to laugh at that threat.
I think it would certainly be interesting to see one in practice.
You know, I agree.
I think, you know, you can hearken back to the days where, you know, it was thought that, you know, through a hard fork, you know, talking about like theory going into practice.
Right. It was widely thought in 2014-15 that, you know, that there would be no split in the event of a hard fork.
Right. That minority chains would not persist.
And then there was sort of an era of experimentation around that first with the Dow Act, then with the Bitcoin cash launch that that that showed, I think, pretty concretely that that idea was incorrect, that, you know, large, you know, sizable minority chains could result fairly easily from hard forks and did.
I don't know. What do you think about, you know, what so what are the practical things that you would expect, you know, should that, you know, that activates, you know, maybe you can game theory some of this out of what are the unlikely but potentially possible scenarios?
Well, if you take the rhetoric of some of the more outspoken proponents of BIP 110, then, you know, if if certain things and certain content gets injected into the blockchain, then they will have no choice but to activate their fork.
So what will happen in that case, I expected if it was a soft fork, not much at all would happen because they're not going to have really any hash rate behind them, like maybe one or two or 3% at most that would be willing to go along with that.
And that becomes problematic because if you recall from what happened with the Bitcoin cash fork, they ended up having to change their difficulty adjustment, I think several times, because when you're when you're a minority fork, first of all, you're in an incredibly weak position to be attacked by the majority hash rate if they choose to do so.
So generally, they don't because they just don't care.
But also, it's problematic because your blocks end up taking pretty much forever.
So if you only had like 2% hash rate, I think you would be waiting several months to get to the first difficulty adjustment and block times would be incredibly long, could be painful.
Though if nobody is using that side of the chain split, then maybe it doesn't really matter.
Then there's also problems around replay, transaction replay.
So this was something that Bitcoin Cash had to do because otherwise your transactions are valid on both sides of the fork and you basically end up spending both of your tokens every time if you're not doing something really, really sophisticated like adding in Coinbase outputs that only exist on one side of the chain split.
But it gets really gnarly.
And so the short version is what I expect would happen if that group of people continues on is that they're going to keep trying things that are going to keep failing and they're going to get more and more desperate and they're going to end up having to take more drastic action.
So I would expect that, you know, they would probably end up having to do a hard fork for one of several reasons if they want to preserve their chain split and have it continue on.
So this really comes down to a question of, you know, how much resources are there really behind this particular ideology?
Like, do they have enough developers, enough infrastructure, enough economic power to actually do what you end up having to do, which is you end up having to mirror pretty much the entire Bitcoin ecosystem from an infrastructure standpoint, which is a really, really big ask.
Maybe let's switch gears a little bit. I know that your privacy advocates famously New York Times covering your disappearance from the Internet, you know, no small feat there.
Zcash has been one of the surprises of this year. I mean, I would say, you know, left for dead, kind of the unpumpable coin for the decade really enters into the conversation this year in a credible way.
Some would say that this is manipulation, sort of this is the KOL sort of key opinion leader, you know, money mill run amok, where for whatever reason, you know, large influencers were able to convince institutions to get behind this trade.
Zcash down about 50% from peak this year. But a project that, you know, started on Bitcoin in some ways, right, was originally proposed as a BIP for Bitcoin, Zuko Wilcox, certainly someone who was around the cypherpunk days.
There's been a lot of criticisms of the projects, you know, for the shielded transactions and the opt in nature of the privacy.
What is your take on the state of Zcash these days? Should people be paying attention to it still? Is it a viable project that you're looking to for insights at this point?
Yeah, I mean, it's, I think it's all of the above. There certainly were some kind of like dubious aspects around what actually resulted in the price run up and possibly like insider knowledge that institutions were getting into it.
But, you know, to their credit, there have been actual technical innovations within Zcash, you know, both at the cryptographic layer, you know, the original launch of Zcash had a trusted setup and they've redone that, I think, a few times to the point now that it's no longer a trusted setup for the actual zero knowledge cryptography that's underpinning it.
One thing that I did like, so when this all happened and I noticed that the price went up so much, I was like, you know, I know I've got some Zcash lying around somewhere because I was running Zcash before Zcash launched.
Like I was playing around with it in beta in, I think 2015 or something. And as a privacy advocate, I'm interested in pretty much any privacy project, coin, token, whatever. Like I'm interested in any technical tool that may help me and other people improve their privacy.
Like that's also why I just invested in Obscura VPN, you know, this is cypherpunks investing in cypherpunks essentially. And so the one I went around and I was, I was digging around old wallets and I ended up finding my old Zcash wallet.
It was on a Ledger and I plugged it in and I realized I actually could not spend my money and this led me down. I think I spent over a day trying to figure out what was going on. And basically like because of the, all of these many upgrades that Zcash did over the years, Ledger ended up deprecating support for like the oldest original versions of how you would spend your Zcash.
And so I ended up having to try like half a dozen other wallet software before I was finally able to actually move my funds. And as a part of that process, I ended up installing, I think one of the newer wallets and it may actually be like from the Zcash foundation, but I think it was called Zashi.
Zashi. And the interesting thing about that is that they actually built Zashi so that it only supports shielded transactions. And so I actually, I imported some unshielded UTXOs into that wallet. And it was like, we're not going to allow you to spend them. We're only going to allow you to shield them and then you can spend them. And I was like, you know what, this is the way that it should have been all along.
So there's just like another, another point that, you know, I think that the technical folks and the developers behind Zcash have realized, you know, that is, is a legitimate complaint, legitimate concern.
And so there, there have been steps that have been made, you know, taken in that direction to improve the effective, like practical privacy of the system. It was always one of my biggest problems because, you know, I know that people take the path of least resistance.
They do the most convenient things and that traditionally pretty much any service provider and even any exchange that had added Zcash support only added unshielded support. And the reason they did that was because it was basically exactly like Bitcoin, you know, it was the same RPC commands, the same APIs.
And so, you know, if you, if you support a Bitcoin, you could add in unshielded Zcash support very easily, but then asking them to also add in shielded support usually involved a lot more engineering time.
And so they just wouldn't do it. But, you know, hopefully we're at the point now and with more interest and more institutional adoption and more, more technical development around it.
Hopefully we will get to the point where Zcash, like the shielded pool of Zcash just continues growing and growing over time.
But do you still consider it, I guess, you know, a project that, you know, is worthy of Bitcoin developers spending time, you know, kind of analyzing how it's, how it's going, right? I guess what would be your advice to the Bitcoin technical community that's thinking about privacy?
Well, I mean, zero knowledge in general, I think is, it's an interesting thing and, you know, kind of related to that.
Now that's how we have, you know, some of these roll up layer twos coming along and, you know, maybe we'll even have some layer twos that are Zcash like and are actually using zero knowledge to shield the transactions that are happening on the layer two.
But of course I have no expectation that that technology is ever going to make it into Bitcoin layer one, at least not anytime soon and probably never given the just difficulty of making major consensus changes to Bitcoin.
And, you know, one of the biggest problems I think with privacy coins, privacy networks in general, well, there's a couple.
One of them is that just most people don't care about privacy.
That's a very difficult sort of concept to get across people to actually value.
Usually people don't value their privacy or their security until it's too late and something has gone terribly awry.
And the other reason why I don't think we'll see that technology on Bitcoin is because it tends to break the auditability of the actual money supply.
And so that's, you know, sets kind of a sacred aspect of Bitcoin that I don't think many people would be willing to give up and even in exchange for perfect privacy.
So as you go on down to the year and thinking about all that happened, you know, what are your expectations for 2026?
It feels like there's a lot of fatigue in the market, right?
Just amongst the old timers and even amongst some of the new entrants.
Do you think 2026 is going to be a year of activity?
How are you kind of planning and positioning around 2026?
I guess my optimistic take is that, you know, there may be like a lull in the institutional markets and the plays around it, but that we're still in the early innings.
So, you know, for example, it was just, just, I think this week when Vanguard finally bent the knee nearly two years later after exuberantly exclaiming, you know, we will never allow our clients to have access to Bitcoin ETFs and related stuff.
And so, you know, that's the type of thing.
It just takes time for new entrants to become more comfortable with this sector.
You know, the way that like each cycle happens is that there tends to be a new cohort of adopters who are adopting Bitcoin, usually for a new set of reasons.
And so now that we're getting more into the TradFi space, it takes time for narratives to be formulated from this new cohort with their new perspectives.
And then those narratives matriculate through the ecosystem.
You know, you could, I think it's fair to say like Michael Saylor is probably the, the, the leader of the new narratives when it comes to the institutional TradFi adoption.
So he's kind of like the thought leader and he's spewing out all these new things and he's, he's printing these new things.
I call them suit coins, you know, these new financial products that are all built around Bitcoin in novel ways.
And, you know, as long as those are successful, what's going to happen is like the rest of the TradFi ecosystem is going to be looking and saying, hey, is there money to be made here?
Like, should we be taking these ideas and riffing on them and, and, you know, making them our own and, you know, continuing to grow adoption in that way.
Yeah, I have also positioned Michael Saylor as sort of the figurehead of the Bitcoin movement.
It does seem that the model that I've used is we have these kind of leaders who emerge in Bitcoin and they have these utopian visions, right?
You sort of have, you know, you think about Gavin Andreessen, right?
He wanted to mainstream Bitcoin through the existing tech ecosystem.
He thought that sort of Bitcoin could hit the escape velocity of like a Facebook or a early tech Uber type project.
And just sort of, you know, scale and grow in a certain way through that way, right?
Sort of one of the utopian visionaries, maybe in a mere talkies.
Saif Adina Mooth, Michael Saylor seems to have the most regulatory compliance sort of view of how Bitcoin can be mainstream, right?
And that he's not proposing technical changes.
He sort of creatively aligned Bitcoin with regulatory infrastructure.
How do you think about that?
Do you think that we're going to see continued work on this thesis?
And, you know, what do you think of this particular agreement that he has?
Yeah, I mean, I still tend to subscribe to the idea that, you know, Bitcoin is a virus of sorts, a mind virus.
And that it tends to mutate and evolve as these new entrants come in and they fall down the rabbit hole and perhaps they bring new perspectives to things.
And once again, like that's how adoption increases is someone takes, they ingest a large corpus of the Bitcoin culture and narratives and whatnot.
And then they kind of riff on it and they make it their own.
They inject their own knowledge and perspectives, and then they go out and evangelize that to their peer group.
Right. And I think with Michael Saylor, you know, what I think maybe a lot of people missed is that in 2021, we think of him as the vanguard of the cycle.
But I think he was really good back then at just sort of mainstreaming a lot of, you know, really what was happening at the blogs and grassroots levels or the counterculture of Bitcoin type.
He really seems to have now, as you said, assimilated Bitcoin and now he has his own vision.
But his vision is sort of to integrate Bitcoin buying into passive index products and to sort of use the regulatory system that has been sort of unfriendly to the altcoin environment to sort of create, you know, going back to this candy store,
this idea that you have, you know, a thousand types of digital credit instruments.
Have you looked at that market?
Do you get a sense for, you know, I mean, obviously they're running into, you know, hurdles now where they're facing kind of scrutiny from indexes.
There's reticence for some of these capital pools that really, you know, see Bitcoin on the balance sheet is almost worthless.
S&P sort of treats Bitcoin on the balance sheet almost as a hundred percent liability, which is different than the treasury companies themselves, which almost see Bitcoin as, you know, worth more than the current price.
Any thoughts on how this plays out? I personally think it's the most fascinating area of the space currently.
I mean, I think it's just going to take time, but they're like, ultimately, everyone will bend the knee, right?
I think most people are skeptical of Bitcoin when they first learn about it.
And that's no different whether it was when Bitcoin was a hundred million dollar asset or now as a two trillion dollar asset.
Like, you know, history doesn't repeat, but it rhymes.
And so the new cohorts will have to go through the same phases of skepticism and they'll be sitting on the sidelines.
And usually it's the price, right?
So usually eventually people look at it and they realize, wow, I've really missed out on a massive opportunity by being overly skeptical and not doing my due diligence of trying to understand where the actual value is in this system.
And then, of course, some people are going to be permanently skeptical and just get saltier and saltier as Bitcoin continues to grow.
Well, I've thrown us some projections.
This year was a year of a lot of firsts.
You know, I want to get your thoughts and we'll kind of rifle through some quick questions to see your predictions to the year ahead.
This year, we saw a central bank buy Bitcoin, the Czech Republic, probably the first to buy Bitcoin directly, at least the central bank itself.
Kind of initiating and then going through this process.
More central banks buying Bitcoin next year.
Yes or no?
I mean, I think the game theory plays out that, you know, one domino falls and then the rest pretty much have to follow.
So it's only a matter of time.
You know, I feel like even the European central bank has put out a few somewhat positive things about Bitcoin lately.
That doesn't mean that they're going to start buying it.
But, you know, they're definitely looking at it.
They're looking to see what their peers are doing.
And, you know, ultimately the game is very simple.
Central banks are going to print money.
And so they're all competing with each other over that.
And, you know, nation states know that they need to have at least some hard assets as well.
So I was I was mostly surprised like when El Salvador adopted Bitcoin because it was a much larger country than I expected to be an initial adopter.
And obviously a lot of people are watching it.
And I'm sure the the folks in El Salvador are talking to their peers as well.
I'm a little surprised we haven't seen any other countries in Central or South America that have followed suit.
But I feel like that's only a matter of time as well.
There's certainly plenty of renowned individuals who are traveling around through those parts and spreading the gospel.
I'll put you down as a yes more central bank next year.
About 400 companies publicly listed companies now around the world have some Bitcoin on the balance sheet, some digital assets over a thousand next year.
I mean, that seems totally doable.
I think the the primary downside, at least of where the market is right now, is that you don't necessarily want to be seen as a Bitcoin treasury company.
You know, the market, I think, is still valuing operating businesses better than just, hey, we're sitting on a pile of Bitcoin.
So, you know, the thing that strategy has going for them is that they are able to do a fair amount of financial innovation because they have access to a lot of markets.
But a lot of the sort of followers on of the treasury strategy plays don't have that same level of access.
They don't have that reputation.
And they're they're going to be struggling a lot more to to convince the market that, you know, the Bitcoin that they have on their balance sheet is worth more than its notional value.
Like, what are you going to do with that?
I think it's going to be the the main question that the market asks a lot of these companies if they don't have a significant operating business with revenue.
So, I think it's a Washington, D.C., market structure bill spin and development in the United States Congress since 2020 fits and starts.
I mean that with a pun because I think it was the infrastructure bill FIT at one point.
It's coming.
Administration keeps signaling market structure.
Do we have codified rules for crypto assets?
Which ones are securities next year in the United States?
I mean, that seems like a big ask.
My position for a long time has been that most crypto assets are unregistered securities.
It's a really gnarly issue.
And, you know, one of the many times that I got canceled was back around 2020 or so because I was involved with INX, which launched the first SEC registered digital security token.
And it was very difficult for me to explain to a lot of people that, you know, I believe that, you know, this is the right way to go about doing this because securities exist for a reason.
Like a lot of it is shareholder protection, right?
And pretty much any crypto token out there provides absolutely no rights or protections to the holders of the tokens.
So I think it is a good thing to have some level of protections around there or at least to explicitly write out what it is that the issuers of the token are promising to people rather than just a sort of vague, hey, if you buy it, maybe you'll get rich, wink, wink, nudge, nudge type of thing.
But from like a market structure perspective, you know, I'm not really I'm by no means like a financial guy.
I'm a developer.
And so the thing that's more interesting to me is getting protections for developers codified.
I've been working in the space for over a decade now, and it's always been just a little bit nerve wracking because technically things could change and like what I do could be considered a crime.
And I'm watching some of the cases of various software developers that are actually being charged with crimes, even in the cases where they're not actually controlling people's money.
So, you know, that's the type of thing that is more concerning to me that I would like to see more protections around is like it.
It should be very clear that as software developers, we should be free to write whatever code we want, and we should not be responsible for how that code is used.
Just like how any tool maker is not responsible for the misuse or the abuse of their tools by someone who buys that tool.
Coming to the end of the cycle, maybe FTX, Luna, these are sort of the things we're associated with the 2021 drawdowns.
The infrastructure of the Bitcoin digital asset economy, is it more mature?
Is it less susceptible to sort of these leverage type drawdowns or large disasters?
Is that what you're looking for to signal the end of this cycle potentially?
Is that is that still in play?
I mean, I think there's always going to be boom and bust cycles and that one of the major drivers of those will be people taking on too much risk and then getting wrecked.
So I think that that's kind of just human nature and the nature of markets in general.
So I don't expect that that's going to stop.
You know, even if you consider that maybe most of this activity will move into like regulated arenas and stuff.
I mean, the same thing still happens, right?
I mean, 2008 happened and that was in a supposedly like highly regulated financial sector.
So like these these ecosystems are so complicated that I think there's always going to be loopholes that people exploit because they see a financial advantage.
And then they either may not see or they may just completely discount the risk that they are then injecting into the ecosystem as a result of whatever activities they're participating in.
Last question. Big story this year.
Block payment terminals turning this on around the country.
Current data suggests 2,000 to 3,000 merchants maybe have signed up, started accepting Bitcoin.
Bitcoin obviously they're throwing, you know, the incentive programs behind this to get users out and activating these merchants.
More than 10,000 next year.
Do you think that merchants start activating, start accepting Bitcoin widely, at least in the United States?
So in the past, you know, there were no shortage of people who went around and basically held merchants hands to onboard them into using Bitcoin for their payment systems.
And almost none of those really withstood the test of time.
Um, I would say often because a, it was a completely separate payment system.
So that had a bunch of friction and you had to like train your employees on it.
And then, uh, they would not get enough volume of people coming in and actually requesting it to continue maintaining and training employees.
So as there was turnover at the, the retail merchant, then the new employees just wouldn't even know how to do it.
And so eventually it would just fall out of disuse and, um, no one would even know how to accept the Bitcoin.
So, uh, hopefully with this just being integrated into the square payment terminals, that won't be as much of an issue.
Uh, there shouldn't be as much friction, but are, are people then going to come in and start spending Bitcoin a lot more?
I think that's the real question.
And I think there is such a massive disincentive to sell your Bitcoin.
If you've been around long enough and, uh, you, you hold the memories of the Bitcoin that you spent many years ago for, you know, trivial things that, uh, you would not be interested in paying like 10 X or a hundred X their actual value on in a sort of lost appreciation.
I, I still, I just don't think that Bitcoin as a first world payment system is anywhere near
like the top of the interesting use cases.
Now, maybe in other countries where they don't have the same level of, uh, financial system
integration, I think it's, it's more interesting and more likely to get adoption from people.
Uh, you know, people who are, uh, hard to come by the dollar or any similarly stable form of Fiat may be more interested in Bitcoin simply to preserve their wealth.
Final, final, what's the biggest risk to Bitcoin in 2026?
I think the biggest risk is, is, is always been the same thing, which is apathy, uh, and complacency.
Um, you know, people basically saying, okay, you know, Bitcoin has won.
We don't need to continue to improve Bitcoin.
It's working great as it is.
Um, you know, don't touch it, ossify everything.
And I think that, um, it's very easy to, to fall into that camp, especially if you've been in Bitcoin long enough that it has been very financially rewarding to you.
Um, you know, you, whenever someone, uh, you know, a sins to the point in their wealth that they go from having not much wealth to having a lot.
You know, once you have a lot to lose, of course, you start being much more fearful.
And maybe you think about diversifying or in the, in the case of Bitcoin, you just become more fearful that someone is going to break it because ultimately it is a technology.
And so that's like one of the things that I've been harping on for several years is that yes, Bitcoin should be very conservative.
We should be very careful because it's a multi-trillion dollar ecosystem.
But if we just stop, we, we throw up our hands and we say, okay, we're done.
Bitcoin is, is finished.
Um, then that leaves us open to a number of weaknesses, failures, and, and ultimately leaving a lot of potential growth and improvement on the table.
Whether we're talking about, uh, you know, scalability or privacy or, uh, you know, innovation via other layers.
There, there's many different potential paths forward for Bitcoin.
But if we choose to take no path forward, then I think we should expect that ultimately something will change in the world.
And Bitcoin will either, um, become just too hard to use or something better will come along that, uh, solves some problem that Bitcoin can't facilitate for one reason or another.
It's like, I'm sorry, but Bitcoin is not perfect.
Uh, and so I'm, I'm a developer and I, I, I want to continue improving, uh, upon this thing that, uh, I think can be far better than it already is.
But of course we need to be very careful in how we go about doing that.
Jameson Lopp, blog.lopp, lopp.net, L-O-P-P, uh, appreciate you coming on the podcast.
Uh, where can people find out more about your work in 2026 and beyond?
Well, find me on X at Lopp, uh, or check out Casa at, uh, C-A-S-A dot I-O.
Appreciate it while you're there.
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For now, this has been Supply Shock, a Blockworks podcast.
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