Walmart Acquires Vizio & The ECB Challenges Bitcoin | The Brainstorm EP 37

Summary

This video covers two main topics: Walmart's potential acquisition of Vio, a budget-friendly TV line, and the European Central Bank's criticism of Bitcoin. Regarding Walmart and Vio, the discussion delves into the implications for players like Roku and Amazon in the rapidly growing connected TV space, examining factors such as market share, consumer preferences, and the importance of operating systems. On Bitcoin, the video analyzes the ECB's critiques, including its alleged use for illicit activities, environmental impact, and investment viability, while presenting counterarguments that challenge these claims. The conversation also touches on Bitcoin's most valid criticisms, its underappreciated deflationary nature, and the potential threats of quantum computing.

Takeaways

• 😃 Walmart announced plans to acquire Vio, a budget-friendly TV brand with 18 million active accounts and 500 advertising partners, to better integrate with its advertising unit Walmart Connect.
• 🤔 While Vio's acquisition could threaten Roku's shelf space at Walmart, Roku has diversified its distribution through partnerships with other retailers and its brand reputation for superior operating system experience.
• 📈 The Connected TV (CTV) space is rapidly growing, with streaming hours increasing while linear TV hours decline, and advertisers shifting budgets from linear TV to CTV.
• 💡 Key to winning in CTV is achieving scale, engagement, and monetization through first-party data and personalized advertising capabilities.
• 🌐 CTV presents a global opportunity as it eliminates the need for physical cable infrastructure, with Roku already having a larger install base than major traditional TV providers combined.
• 💻 The operating system brand (Roku OS, Fire TV, etc.) is becoming more important to consumers than the TV hardware brand itself, similar to mobile operating systems.
• ⚡ The European Central Bank (ECB) published a blog criticizing Bitcoin on three fronts: lack of use as digital money, unwise investment, and environmental impact of mining.
• 🚫 Counterarguments refute the ECB's claims, citing Bitcoin's use in underbanked regions, low illicit activity compared to cash, and potential solutions for privacy and quantum computing concerns.
• 🌍 Bitcoin's deflationary monetary policy and restricted supply over time are underappreciated aspects of its potential value proposition.
• 🔒 Valid criticisms of Bitcoin include potential privacy/fungibility issues from transaction traceability and the theoretical risk of quantum computing breaking its cryptography, though mitigations exist.

Q & A

What is the potential acquisition being discussed in the script?

Walmart is considering acquiring Vio, a budget-friendly line of TVs and smart TV operating system called Smartcast TV.

What are the key points discussed about Vio?

Vio has 18 million active accounts and around 500 direct advertising partners. Acquiring Vio would enable Walmart to more effectively connect with households across the US through its own proprietary line of TVs and integrate it with its advertising unit, Walmart Connect.

What are the concerns raised about Roku's position if Walmart acquires Vio?

There are concerns that Roku might lose shelf space for its TVs at Walmart stores if Vio becomes Walmart's proprietary TV line. However, the speakers argue that Roku has diversified its distribution through partnerships with other major retailers like Best Buy, Amazon, and Costco.

What are the key factors discussed for winning in the CTV (Connected TV) space?

The speakers mention three key factors for winning in the CTV space: scale (number of active accounts), engagement (hours streamed), and monetization (advertising and data capabilities).

What shift is happening in the TV industry, and what opportunity does it present?

There is a significant shift happening from linear TV to streaming TV. While 60% of TV time is now spent on streaming, only 29% of TV advertising budgets are currently directed towards CTV/streaming. This represents a massive opportunity for platforms like Roku to capture more of the linear TV advertising market worth $60-70 billion annually.

What is the significance of the TV operating system brands like Roku OS, compared to the TV hardware brands?

The speakers argue that the operating system brand (Roku OS, Amazon Fire TV, etc.) is carrying more weight with consumers than the TV hardware brand (TCL, Samsung, etc.). Consumers are seeking out specific operating systems for their user experience and ease of use.

What is the European Central Bank's stance on Bitcoin, according to the script?

The European Central Bank (ECB) has published blog posts criticizing Bitcoin on three fronts: claiming it is not a viable digital money due to its slow speed and use in criminal activities, questioning its value as an investment, and criticizing its environmental impact due to the energy-intensive proof-of-work mining process.

How does the script counter the ECB's claims about Bitcoin's use in illicit activities?

The script cites a 2023 report by Chainalysis estimating that only 0.34% of all crypto trading volume is used for illicit activities, including money laundering. It argues that this is extremely low compared to estimates of cash being used for illicit purposes (2-5% for money laundering alone, according to the United Nations).

What does the script consider to be the most valid criticism of Bitcoin?

The script acknowledges two valid criticisms: 1) Bitcoin's lack of privacy could lead to some coins becoming "tainted" or traded at a discount due to their association with sanctioned entities, and 2) the potential threat of quantum computing breaking Bitcoin's cryptography in the future.

According to the script, what is the least appreciated aspect of Bitcoin's value proposition?

The script argues that Bitcoin's disinflationary monetary policy, which restricts the supply over time, is underappreciated and misunderstood, especially in comparison to inflationary currencies like the US dollar.

Outlines

00:00

📺 Walmart's Potential Acquisition of Vio's CTV Platform

The discussion revolves around Walmart's plans to acquire Vio, a budget-friendly TV line with its own operating system called SmartCast TV. This acquisition would allow Walmart to better integrate its demand-side platform, Walmart Connect, with households across the US through its proprietary line of TVs. The key points discussed include Vio's 18 million active accounts and 500 advertising partners, Walmart's significant TV sales, and its existing partnership with Roku for the ONN TV brand. The potential threats and implications for players like Roku, Amazon, Google, and Apple in the rapidly growing connected TV (CTV) space are analyzed.

05:01

🌐 The CTV Landscape and Roku's Position

The discussion delves into the larger CTV landscape, highlighting the importance of scale, engagement, and monetization for success. Roku's advantages, such as its 80 million active accounts, 100+ billion streaming hours, and first-party data, are examined. The shift from linear TV to streaming is explored, with statistics indicating a 21% increase in global streaming hours on Roku and a 16% decrease in linear TV hours. However, only 29% of TV budgets are currently directed towards CTV and streaming, leaving room for growth as advertisers follow viewers. The evolving role of TV operating systems is likened to that of cable operators, with potential for app store-like revenue models.

10:03

🏆 Roku's Competitive Edge and Global Opportunity

The conversation focuses on Roku's competitive advantages and its position as a leading player in the CTV space. Despite competition from tech giants like Amazon, Google, and Apple, Roku has managed to edge them out and grow its market share. With an install base larger than the six largest traditional pay-TV providers combined and its status as the number one selling TV operating system for the last five years in the US, Roku's scale is unprecedented. The global opportunity for CTV is also discussed, as it doesn't require physical cable infrastructure, making it accessible to anyone with broadband internet.

15:03

⚡️ Debunking Criticisms Against Bitcoin

The discussion shifts to the European Central Bank's recent blog posts criticizing Bitcoin. The key criticisms addressed include claims that Bitcoin is not digital money due to its slow transaction speeds and alleged use for criminal activities, that it's not a wise investment due to lack of dividends and cash flows, and that its proof-of-work consensus mechanism is environmentally harmful. The conversation provides counterarguments, citing low estimates of Bitcoin's use in illicit activities compared to cash, and addressing concerns about privacy, fungibility, and the potential impact of quantum computing on Bitcoin's cryptography.

20:04

💰 Bitcoin's Deflationary Monetary Policy and Underappreciated Value

The discussion explores what the market may be underappreciating about Bitcoin's potential. The deflationary and disinflationary nature of Bitcoin's monetary policy is highlighted as an underappreciated aspect, as it restricts supply over time. The implications of a disinflationary asset compared to inflationary currencies like the US dollar are emphasized as a key value proposition that is often misunderstood or underestimated by the market.

25:04

🎬 Closing Remarks

The episode concludes with closing remarks, thanking the guests and the audience for tuning in.

Keywords

💡Connected TV (CTV)

Connected TV (CTV) refers to a television set that is connected to the internet and can stream online content directly from various video streaming services. In the context of the video, CTV is discussed as a rapidly growing space where major companies like Roku, Amazon, and now Walmart are vying for a significant presence. CTV enables advertisers to target households with personalized ads, similar to digital advertising on social media platforms. Examples from the script include Walmart's potential acquisition of Vio, a budget TV brand with a 'smartcast' operating system, and Roku's dominance in the CTV market with its own operating system and branded TVs.

💡Operating System (OS)

An operating system (OS) is the software that manages a device's hardware and software resources and provides common services for computer programs. In the context of the video, the OS for smart TVs and CTV devices is discussed as a crucial factor in determining the user experience and engagement. Major players like Roku, Amazon Fire TV, and Vio's smartcast OS compete in this space. The video suggests that consumers are now more attracted to the OS brand rather than the TV brand itself, as evidenced by Roku's success in selling its OS-powered TVs. Examples from the script include discussions around the superiority of Roku's OS over Vio's smartcast and the importance of having a robust, user-friendly OS to attract and retain viewers.

💡Advertising

Advertising refers to the activity of promoting a product, service, or brand through various mediums to influence consumer behavior. In the context of the video, advertising on CTV platforms is discussed as a major opportunity and driver for growth in the industry. CTV advertising allows for better targeting and personalization, similar to digital advertising on social media. The video highlights the gap between viewer engagement on streaming platforms and the advertising dollars flowing into those platforms, suggesting a significant growth opportunity. Examples from the script include Walmart's potential acquisition of Vio to better integrate with its advertising unit, Walmart Connect, and the discussion around CTV operating systems acting as 'app stores' with similar revenue models to mobile app stores.

💡Cord-cutting

Cord-cutting refers to the practice of canceling or avoiding traditional cable or satellite TV subscriptions in favor of streaming services and online content. In the video, cord-cutting is discussed as a major trend that is driving the shift from linear TV to streaming platforms and CTV. The script cites statistics showing a decline in linear TV viewing hours and a corresponding increase in streaming hours on platforms like Roku. Cord-cutting is presented as a driver for the growth of CTV and the reason why advertisers are following viewers to these platforms.

💡Market Share

Market share refers to the percentage of a market that is controlled by a particular company or product. In the context of the video, market share is discussed in relation to the competition among major players in the CTV space, such as Roku, Amazon Fire TV, and Vio (through Walmart's potential acquisition). The script highlights Roku's dominance in terms of market share, with its operating system being the number one selling TV OS in the US for the past five years. Market share is presented as a crucial factor in attracting advertisers and achieving scale in the CTV industry.

💡Engagement

Engagement refers to the degree to which consumers are actively involved with a product, service, or platform. In the video, engagement is discussed as one of the key factors, along with scale and monetization, for winning in the CTV space. The script cites Roku's high engagement hours (over 100 billion hours streamed) as a significant advantage. Engagement is presented as a crucial metric for attracting advertisers and achieving success in the CTV industry, as it reflects the level of user interaction and time spent on a particular platform.

💡Monetization

Monetization refers to the process of generating revenue from a product, service, or platform. In the context of the video, monetization is discussed as a key factor for success in the CTV space, alongside scale and engagement. The script highlights the potential for CTV platforms to monetize through advertising, similar to mobile app stores, by leveraging their position as the 'gateway' to the TV viewing experience. Monetization strategies, such as advertising and potential revenue models like app store 'take rates,' are presented as crucial for the major CTV players to capitalize on the growing market.

💡Scale

Scale refers to the size or extent of something, often in relation to growth or expansion. In the video, scale is discussed as one of the three key factors, along with engagement and monetization, for winning in the CTV space. The script cites Roku's scale, with 80 million active accounts and a larger install base than the six largest traditional pay-TV providers combined, as a significant advantage. Scale is presented as crucial for attracting advertisers and achieving market dominance in the rapidly growing CTV industry.

💡Streaming

Streaming refers to the process of delivering multimedia content, such as video and audio, over the internet in a continuous flow, allowing users to consume the content as it is being delivered. In the video, streaming is discussed in the context of the shift from traditional linear TV to online platforms like CTV. The script highlights the increase in streaming hours on platforms like Roku and the corresponding decline in linear TV viewing hours, driven by the trend of cord-cutting. Streaming is presented as the future of content consumption, enabling personalization and targeted advertising opportunities for CTV platforms.

💡Branding

Branding refers to the process of creating a unique name, design, and identity for a product or company, with the aim of differentiating it from competitors and establishing recognition and loyalty among consumers. In the video, branding is discussed in the context of CTV operating systems, with the script suggesting that consumers are now more attracted to the OS brand (e.g., Roku) than the TV brand itself. The success of Roku's branded TVs is cited as an example of the importance of branding in the CTV space, as consumers actively seek out the Roku experience and user interface.

Highlights

Walmart announced its plans to acquire Vio, a budget-friendly line of TVs with an operating system called smartcast TV, enabling Walmart to better connect with households across the US through its proprietary line of TVs and integrate it with its advertising unit.

Vio has 18 million active accounts and around 500 direct advertising partners.

Roku has been hedging its risk by announcing its own line of first-party TVs and diversifying its distribution channels beyond Walmart.

Branding and operating system superiority matter for consumer preference, as evidenced by Roku's popularity and better user experience compared to Vio.

The shift from linear TV to streaming is happening rapidly, with global hours streamed on Roku up 21% and Roku Channel up 63%, while linear TV hours were down 16%.

Although 60% of TV time is now spent on streaming, only 29% of TV budgets are directed towards CTV and streaming, indicating a large gap to be closed.

The opportunity in the CTV space is not just to cannibalize the linear TV market but also to leverage the personalization and targeting capabilities of digital advertising.

TV operating systems like Roku, Vio, and Amazon Fire TV are now in a position similar to cable operators two decades ago, acting as the gateway to the TV viewing experience and operating app stores.

The European Central Bank (ECB) published a blog criticizing Bitcoin on three fronts: it's not digital money, it's not a viable investment, and its proof-of-work consensus mechanism pollutes the environment.

The report claims that Bitcoin is mostly used for criminal activity and money laundering, but the data suggests it's only 0.34% of all crypto trading volume in 2023.

The most valid criticism of Bitcoin could be its lack of privacy and potential loss of fungibility due to transaction traceability, leading to a scenario of 'tainted' or discounted Bitcoin.

Another valid criticism is the potential for quantum computing to break Bitcoin's cryptography, but there are potential solutions like forking to a quantum-resistant system.

The least appreciated aspect of Bitcoin is its disinflationary monetary policy and the impact of restricted supply on its adoption as an asset and currency.

The Market discounts budget TVs as commodities, but Roku's success shows that branding and operating system superiority matter to consumers when choosing a smart TV.

Scale, engagement, and monetization are key to winning in the CTV space, and Roku has advantages in all three areas with its large install base, high engagement hours, and first-party data for targeted advertising.

Transcripts

[Music]

hello everyone and welcome back to

episode 37 of the brainstorm today I'm

joined with Andrew Kim and David puel

we're going to be going over Walmart

potentially acquiring Vio as well as the

ecb's campaign against Bitcoin but first

let's start with Walmart acquiring Vio

potentially acquiring Vio Andrew why

don't you te this up for

us sure so last Tuesday Walmart

announced its plans to acquire Vio which

is a budget friendly line of TVs um well

it offers a a line of budget friendly

TVs and a operating system known as the

smartcast TV and this would enable

Walmart to more effectively um connect

with households across the US um uh

through its own proprietary line of

TVs um and more tightly integrate that

with its native uh demand side platform

uh Walmart connect which is its uh

advertising

unit yeah it's interesting that Walmart

is getting into this space um the

numbers here on viio at least Vio has 18

million active accounts and around 500

Direct advertising Partners this is what

was disclosed in the press release um

and Walmart is one of the largest

retailers in the country and sells a

significant amount of televisions each

year and they have made other

Partnerships in the space notably uh

Roku and their on platform so Walmart

runs a brand of TVs called

ONN and they use roku's operating system

to power that obviously that is now

being called into question and I think

Roku and the story behind Roku is being

called into question by many but I

wanted to ask you Andrew what are your

thoughts there I have some opinions here

so let's let's go back and forth uh just

what you think uh around the Potential

Threat of Vio and Walmart now entering

in the CTV space not just for Roku but

also Amazon Google Apple you know this

is a very large industry and growing

rapidly and it's you know clear why

Walmart wants to have a more significant

presence in the space but what are your

thoughts yeah I mean I think when Roku

first announced its line of as first

party like labeled uh TVs back in I

guess January of this or or sorry

January of last year was it yeah yeah

yeah um like it it basically signaled to

us that Roku is like properly hedging

and already thinking about hedging its

risk to any single distribution partner

right and Roku is on the shelves at

various uh large L distribution Partners

such as you know Target Best Buy Costco

and um while Roku has historically

depended on Walmart for the distribution

of its budget friendly Smart TVs in the

past uh Roku is in a much better and

more diverse Diversified position than

before so from a shelf space uh

consideration I think um it's okay right

I mean yes like Roku might lose shelf

space to Vio in Walmart but um it also

come uh begs us to ask begs third party

distribution uh platforms to ask now

that Vio is no longer an agnostic TV

right it's now tied directly to Walmart

will will they carry it will Amazon

carry Vio will will Target carry Vio

right um because it would put them in

direct competition while favoring direct

competition on its own platform um and I

guess on the advertising

side scale matters right Roku has 80

million active accounts um

Vio um chugging along at 18 million

which is still you know impressive scale

with a lot of data and I'm sure um

Walmart was attracted to that but in the

aggregate I would imagine that most

advertisers are very much interested in

continuing to reach the Roku household

so I think even from an advertising

perspective um they're going to be okay

yeah and it's I think you brought up a

few interesting points here one just on

distribution and you I think you're

correct it was January of last year at

uh CES where Roku began to announce

their branded line of first-party

televisions and that was originally in

Partnership exclusively at Best Buy now

they've since expanded that and so those

first party televisions will not only be

sold in Best Buy but Amazon and Costco

as well so they are you know hedging

their distribution risk in branding

their own televisions building their own

televisions and then Distributing

through other major retailers um and I

think you're right to say that you know

one thing that has uh always attracted

us to this story around Roku is this

idea around the Switzerland uh and being

that party within the CTV space that

isn't tied to any single um you know

large tech company or major retailer so

when you when you talk about you know

Vio might gain shelf space in Walmart

but they're likely to lose out in Target

and Amazon I can't you know that that is

actually how the the space has shaped up

today where you know Amazon Fire TVs are

not sold in other major retailers

because of the threat that Amazon

imposes on them from a retail

perspective generally so there is that

kind of awkward Dynamic at play between

these retailers and their you know sole

Solutions in the space I think when we

look at at the story and what is really

important to winning in the CTV space

and this is something that's you know

largely talked about it's you need scale

you need engagement and then you need

monetization and we look at you know who

has the largest scale today it's not

viio it's Roku Amazon Fire those are the

two major players um then you look at

engagement if you look at the engagement

hours on Roku it's 100 billion plus

hours streamed um so this is significant

scale and significant engagement and

then you're talking about uh first-party

data and the advantages that come with

it from a monetization angle so I think

the story really you know makes sense

once you have all three of those and

then just understanding the backdrop of

the CTV space this is still a very nent

space um if you look at some of the

numbers we were given and I'm going to

read these off so I don't get any of the

figures wrong but one you have this

shift from linear into streaming

happening at the current moment and it

has been happening at a more more at a

at a faster clip since Co um so we've

heard about cord cutting and now we're

starting to see advertisers uh follow

through as well but during the fourth

quarter um when we see uh Global hours

um streamed on the Roku platform that

was up almost 21% and 63% for the Roku

Channel but if you look at linear TV

hours that was down almost 16% on a

year-over-year basis so from engagement

standpoint you're seeing this share

shift but then when you look at the

amount of dollars being spent in these

individual ecosystems one you have 60%

of TV time now happening on streaming

specifically um but only 29% of TV

budgets are directed towards CTV and

streaming so there is still this large

gap that needs to close between where

the eyeballs are and where the dollars

being spent are and I think that's

really important to understanding why we

think this space is so attractive long

term the you know the linear TV Market

is a 6070 billion a year industry and we

believe all of that is Tech is going to

flow over into the CTV space but because

CTV is built on digital rails it allows

you to personalize like social media

companies it allows you to Target in a

in a in a better fashion more more

personalization better targeting

everything that comes with digital

advertising is now being built in the

CTV space so not only is the opportunity

just to cannibalize all of the dollars

being spent in the linear TV space it's

what can you take beyond that into the

digital advertising space so growing

market share as a whole I think is the

longer term opportunity and we think you

know just to to to settle this and and

and give kind of the the cohesive

narrative the TV operating systems Roku

Vizio Amazon on fire they now sit in the

same position that cable operators sat

two decades ago where they were the

endpoint Distributors for Content that

means they're the gateway to your TV

viewing experience and that is a very

powerful position to be sitting in

because you can operate like an App

Store so we think Roku Amazon Vio

they're going to be operating app stores

and they're going to have similar take

rates that we see in the mobile app

ecosystem but that's now going be ported

over into the television ecosystem and

so it's a extremely attractive

opportunity long term obviously there's

a ton of risk moving pieces very Dynamic

space as we're seeing right everyone

wants a piece of this pie because the

pie is growing so quickly and it's a

massive opportunity from advertising and

from just influence being in the

household being the primary screen in

the household outside of the mobile

phone is extremely important and so

that's why you're seeing retailers like

Walmart want wanting to have influence

here and Amazon and Google and and and

apple and it's you know an interesting

uh you know case study here Roku has

been kind of the Underdog Story

throughout this because you've had Tech

giants like Amazon Google and apple

breathing down roku's neck since the

beginning of the story and yet Roku has

been able to Edge all of them out and

actually grow its market share um you

know since its founding and now it's in

80 million households and it's the

number one selling TV operating system

for the last five years in the US and

it's install based and this goes back to

the whole you know portion on scale it's

larger than the six largest traditional

payv providers combined that's you know

we're talking about unprecedented

numbers in terms of television

distribution in the US but this is also

a global story right the difference

between uh over-the-top or CTV is you

don't have to go around the country

laying cable to enter into homes it is

just you know you're if you're connected

to Wi-Fi Broadband you're instantly you

have access to everything that CTV uh

offers so it's an extremely uh uh large

opportunity because it's not just uh us

it's it's Global as well I know that was

a

lot no no I think you raised really

great points all throughout but like

branding matters right I I I hate that I

feel like the Market discounts budget

TVs as like a barebones commodity but if

you look at roku's advantage and

leadership as seen in the um sales

figures right number one in three

countries um it it shows us that

branding matters the Roku brand is very

much UB ubiquitous right and um it's not

as if consumers are completely

nonchalant about um purchasing about um

deciding what kind of smart TV to

purchase once they step into a store and

uh we agree with the notion that even if

Walmart um you know significantly

decreases shelf space allocated to Roku

uh in favor of Vio consumers will

continue to look for Roku uh operating

systems and it's not just a branding

issue it's an overall operating system

superiority issue too right and that the

Roku experience um is unmatched I think

um with respect to how uh smart other

Smart TVs operate and I would encourage

listeners to just search up Roku versus

Vio go to any subreddit and you will see

that

people um by far prefer Roku over Vio

because of all the issues that smartcast

has presented whether it be connecting

to external devices um uh doing um uh

like AirPlay or or all these different

Services right or or or compatibility

with different streaming apps as well um

it seems as though Roku is um at a much

larger Advantage from a uh just

technical perspective as well so I would

imagine that with this acquisition

Walmart is inheriting a lot of tech debt

to consider um and I mean we'll see how

they execute

but I think they're in in a much more

disadvantaged position than um I guess

initial Market reactions would

warrant yeah and I think you bring up a

very interesting point and this is I

think where we'll end and move over to

David um because I want to be mindful of

everyone's time it it is it is our

thesis that the operating system brand

so the Roku OS smartcast uh Amazon fire

that now carries more weight with

consumers than the television brand so

the OEM Partners so tcls the high sense

the sharp Phillips Samsung and some of

these have their own operating systems

built in right Roku has its own first

party but then it also works with third

party um that is a shift that we think

has been taking place and is going to be

where you see the real share shifts and

winners is at the operating system level

it's the consumer seeking out as you

said Andrew seeking out the operating

system not the television right they

want the Roku Opera system they want to

see Roku City they want that ease ofuse

navigation uiux that comes with a Sleek

operating system that is what we're

we're going to see it's you know it's

it's been played out in Mobile right

people are very attached to the IOS

operating system um you know maybe it is

also the hardware elements to it but it

is mostly the operating system and we

think that's now playing out in CTV so I

think yeah that's a it's a it's a very

important point for for everyone to

understand because this isn't what was

happening in television before it was

you know an entirely different space but

this is now we're bringing television

into the digital age so um David we're

we're GNA kick it over to you tell us

what's going on with the ECB they're not

fans of Bitcoin what what's up with

that yeah so last week the European

Central Bank

published The Last of a series or the

very least the second of um a series of

blogs criticizing Bitcoin and its core

value

proposition um it kind of regurgitates

the last block post from November and in

essence it it bashes Bitcoin in

by in in three dimensions you could say

the first one is uh claiming that

Bitcoin is not uh digital money because

it's slow

uh and in addition it's used mostly uh

or at least that's the spirit of the the

block piece it's mostly used for

criminal activity and money

laundering then number two Bitcoin is is

not a viable or a wise investment given

that it has no dividends no class

flows and uh if comparing to other

Commodities it has no uh it's a

non-productive asset right and number

three

Bitcoin the the consensus mechanism of

Bitcoin proof of work meaning the mining

the mining use of electricity to protect

the

network um the hash rate uh their claim

is that this pollutes the environment

and will continue to do so at an

increasing rate into the

future uh given the historical um rise

of hash Bitcoin hash rates um over the

last 15 years

um the post was highly uh excoriated and

and debunked on on Twitter it got one of

the you know the permanent commentaries

on on the original tweets correct

correct it got one of those uh pretty

much

citing um you know contrarian sources

perhaps even more valid sources on their

overall claims uh and it also goes to

one of our own

Publications published in mid

2021 uh it's called the bunking common

Bitcoin myths we already kind of address

um exactly this and and a few other um

talking points that most Skeptics have

done um on bitcoin

historically um just to give you a a

high level of the way we at ARC see

those uh you know the counter claim to

to those initial uh points given by the

ECB uh first off we we believe that

Bitcoin is a Still Remains a censorship

persistent Network which is pretty

essential especially in developing

nations that have no access to to the a

proper back banking system and to

Stronger currencies like the

USD

um tackling the the topic of fistic AC

ity as of the report of 2023 by Chain

analysis uh it's

0.34% uh of all crypto trading volume

it's used estimated to be used for

illicit activity including money

laundering um so in review that's

extremely low especially if you compare

it to some estimations of how much cash

you Dollar Cash is used for elicit

activity me you know you you have the 2

to

5% uh estimated by the United Nations

for money laundering and that's just

money laundering not um other um illicit

activity and other like much more um

aggressive

estimations like the one um I believe

it's um a Harvard Economist called

Kenneth rof he wrote a book called The

Curse of cash uh where he by the process

of elimination calculates that up to a

third of the Dollar Cash in the world is

used for illicit activity where at the

very least just uh non- kyc activity

right meaning you know tax avoidance etc

etc so by any standard um we think the

claim is quite um

unimpressive and uh a little bit

disingenuous

interview David I want to ask you we

actually we had youen on a few weeks

back and we asked him this question

which is you know we hear a lot of these

um common Bitcoin myths and you know

these uh these criticisms of Bitcoin and

the network of th those out there what

do you think is the most valid and then

how would you debunk it um like in your

opinion what is the most valid criticism

of Bitcoin and then how do you respond

when you hear

it that's a great question and

the I think two the top two that have

some validity but on a longer term basis

one is um Bitcoin is not private private

enough therefore it may lose fungibility

meaning since you can track the

transactions quite accurately you know

elliptic and Analysis have such an

infrastructure and know how of how to

track um elicit or any activity in the

network for forensics and onchain

archaeology at an given time

um the there's a scenario where

increasingly so some of the Bitcoin may

become quote unquote tainted or um Can

can be traded at discount because it has

been touched by an entity in Russia or

Iran or North

Korea um now uh perhaps the counter

claim to that is you would have an a

scenario where you would have that

discount or perhaps like um byoc Market

globally where you have let's say us

allies or unsanctioned entities trading

with each other at a normal price and

then sanction Bitcoin we call it like

poison Bitcoin trading in its own e

ecosystem uh between the entities that

are sanctioned by the us or something

like that or uh even in addition to that

you have what is considered consider the

poison Bitcoin perhaps losing some value

and staying dormant at the end of it and

therefore subtracting from the total

Supply and and um establishing through

time a little bit of Supply shock that

makes it so that incentives since that

Bitcoin is pretty much tainted for all

time or at least until the US releases

the sanctions it becomes dormant and

therefore not traded and it's subtracted

from the total circulating Supply that's

one and the one is uh Quantum Quantum um

potentially breaking um encryption now

this is a topic for a much longer

discussion but in essence the claim is

you know Quantum is going to

be um successful in Breaking bit Bitcoin

cryptography um now there's two vectors

for uh for attacking um for Quantum

entity attack in Bitcoin one is uh the

proof of work mechanism or the mining

uh side of things um in our view that's

very unlikely given the the extremely

high amount of hash rate that Bitcoin

has today and most likely will continue

to have into the future um but even even

on top of that there's mechanisms when

you can enhance proof of work um

into to have more resistance again uh a

Quantum minor the other part is more

worrisome meaning the elliptic curve

that is embedded in the signal scheme of

Bitcoin living um by some estimates

above 20% of the supply including the

satosi coins uh and unprocess

transactions um vulnerable to a Quantum

attack now that's also we expect a

little bit down the line into the future

and on top of that you can also solve

that in which the network could Fork um

we have enough time for that and Fork

into um a system that is quantum

resistant um meaning instead of using

elliptic curve as your cryptographic

security you use hash based or lce based

most likely hash based um public

cryptography to protect the network um

against that sort of attack and then

we'll we'll end on this question I want

to flip the prior question on its head

what do you think is the least

appreciated or what does the market um

miss when understanding the potential of

Bitcoin so what is the least appreciated

value that Bitcoin holds in your eyes

today um I know it's a popular aspect of

Bitcoin uh but I I still think it's

underappreciated which is the the

monetary policy of it uh it's

deflationary this inflationary quality

and the way it keeps restricting Supply

from the from the system um over a

period of about you

know 30 40 years or so um I think this

has impact in the asset and its adoption

that people just keep Mis

misunderstanding uh to a great extent um

they have no notion on how a

disinflationary asset compares to an

inflationary one especially as a

currency um like the the US

dollar interesting okay David Andrew

thank you so much and everyone that has

listened tuned in watching on YouTube we

appreciate it as always uh that is our

show Sam will be back next week um but

thank you everyone