Crypto Megan Podcast | Bitcoin as a World Reserve Currency: Real or Fantasy?

Yeah, we've got a legislative session that starts in January, so we may see Texas try to beat the US to the punch for a Bitcoin strategic reserve. We'll see.

It's cool that you have telecom operators who want to accept Bitcoin, right? I mean, that's huge for such a traditional industry.

The US Treasury decides to either mint dollars, pay out interest, lower interest, etc., and a similar thing will need to be done through digital assets, but in a more decentralized and democratic way.

A country can be as progressive as the policymakers are and the politicians and leaders are. I am extremely thrilled to see that you came here for the podcast with us.

You know, 54% of all public mining hash rate is in Texas.

Wow.

There's 40+ different companies that are operating Bitcoin mines across the state. So it's incredibly decentralized.

You have to constantly educate people about the sector. Welcome to the Crypto Megan podcast. I'm your host, Megan Nielsen. I'm a high-end crypto and NFT portfolio and Web3 strategy consultant, I'm currently on a world tour as a Web3 keynote speaker at all the biggest Web3, tech, and fintech events around the world as an industry leader to educate anyone from beginner to C-level executive, and of course, to advocate for women in Web3. My mission is to inspire new people to get involved in the crypto and NFT space with quality, entertaining information they can trust. As pioneers in this cultural and financial revolution, a paradigm shift. My name is Megan Nielsen, aka Crypto Megan, coming to you from Dallas, Texas, the great state of Texas. I'm joined today by a very special guest, the founder and president of the Texas Blockchain Council, Lee Bratcher. Welcome to the show.

Yeah, thanks for having me, Megan.

Yeah, this has been great. It's actually only my second time in Texas, but I I can see that a lot is happening in this state that I was not aware of before. So we've been speaking behind the scenes a little bit about everything that's happening. You have a fantastic background. I think just to catch the audience up to speed, if you could give us a little bit of an intro about what you've been doing here and how it all came about.

Yeah. Well, so I run the Texas Blockchain Council. We're a trade association. We do a lot of lobbying and policy advocacy work, but we also do business development for our member companies, helping them connect with future clients and things like that. And previously, I was in the Army for 14 years as an Army officer working on lots of different stuff. But part of that was as an innovation officer looking at future tech that could be dual-use for both civilian and military use. And then, during that stint, I was also a political science professor.

That is quite the background. And that's so interesting. So, in the Army, you were actually working on innovation. And so, I didn't know there was a whole sector to work on that kind of thing.

Yeah, we're a small— it was a small group and it's actually quite recent. Army Futures Command is the name of the command. It's based in Austin. It was stood up, I think, 3 or 4 years ago, maybe 5 at the most. And so, yeah, there's maybe 40 or 50 Army officers out there that are innovation officers with the 75th Innovation Command, which I was once a part of, that supports future tech and dual-use tech.

Wow. Did not know that either. So, there's a whole department for this that you say was founded or based here in Austin.

That's right.

And who would have known that Texas, I mean, is so progressive in getting its tech pushed forward and innovation. And so did that lead to your interest in Bitcoin or where did this— how did this all come about?

Yeah, so it was a little bit related. I was a political science professor, like I mentioned, studying property rights and then quickly digital property rights, Bitcoin white paper. I read the white paper when I was doing some research at the Army War College in Pennsylvania, learning about or writing about how property rights can decrease decrease the likelihood for conflict. When people are secure in their property rights, they're less likely to join sort of a roving militia or a civil war faction or something like that. So I read the Bitcoin whitepaper, that was about 2015, and the rest is history.

You read it in 2015. Wow, you're truly an OG, as OG standards are, and that you were reading about property rights. That is the first that I've heard that somebody started out by an interest in property rights. But it's so interesting to me, as the North Star of blockchain technologies, being able to have those true digital ownership. I talk to Yat Siu quite often about this topic, the co-founder of Animoca Brands, and he says that property rights in many places in the US or in America in general have been taken for granted because, you know, we have had ownership capabilities, whereas in other countries that hasn't been so. So it's interesting that you took that up as something that you thought was important because it really is the backbone of this entire movement.

It really is. And now we have a way to create property rights, digital property rights. And a lot of times that those digital property rights can be transferred to real-world assets or physical infrastructure.

Right. Digital portable property, as Michael Saylor put it. Right. So. All right. So joining us in this discussion, we have the CEO and founder of Zebu, Raj, and the co-founder and CMO of Zebu, Raghav. Welcome to the show, guys.

Thanks for having us, Megan, as usual.

Yeah.

You know, Dallas is a special place for all of us here. There's a lot of innovation happening. And we were just at the point in the discussion where we're discussing property rights and how fundamental it is for this whole movement of blockchain technology and Web3 in general. So we can pick back up on that. So I know you were saying that you actually did your PhD on this topic, right? That it very, very much interested you. And that's how you kind of Segued into this whole field, right?

That's right. Yeah. People are more productive economically when they're secure in their property rights. I'm sure you guys have seen that in your businesses. And so, you know, I was at the Army War College writing on this topic. You actually see a lot less conflict when you have nations that are secure in their property rights, that have good property rights systems. And we do take it for granted in the West. Yes, we have great property rights systems, but I was looking at the developing world and all the pilot projects for blockchain-based land administration. It's really challenging to root out corruption and bring transparency, but very important.

Yeah, absolutely. I mean, definitely agree with you on the point that we don't appreciate it enough in the West on how much security we really have. I've spoken about this a couple of times over the past couple of months. So, along with Zebu, where we're securing transactions, we're making sure whenever your assets are settled back with you, they're yours, right? Compared to mobile money and banks and et cetera, the assets, when they get to you, they're yours and you feel secure in your assets, right? Additionally, ValueIt, which is one of the portfolio companies that I'm the chairman of, this is a problem where that we are specifically catering to. And targeting undervalue it. So, when it comes to real estate, cap table management, and equity management overall, even for companies, it's very, very difficult in other countries, right? So, if you take India as an example, I think Raghav knows plenty about this. If you own a piece of land, someone can come start living there for a year. If it's remotely placed, you'll have no idea. And then, when you go back to it, they have some sort of legal right on it. Why? Because they just showed up and started living on it. And they can prove that they had— they paid the electric bill or they paid the water bill or something like that.

Right.

And there's no other record other than paper to prove it. So, at Valuet, what we started doing was we wanted to tokenize illiquid assets to actually diversify the holdings of retail people and give them access to assets that they normally wouldn't be able to. Because if I wanted to buy that building behind me, I need at least $100 million to just put down and then I can borrow the other $300 million or something like that. And most retail doesn't have access to it. So, the problem they lead into there is they don't have kind of recession or inflation-protected assets in their portfolios. They're highly dependent on the equities markets and whatever the investment banks create for them. So, with Valuet, the idea is our community members tell us what kind of assets they want to invest into. Then the business development team looks for those assets. looks at the pain points of the owners, tokenizes it. Number one, gives them better equity management or cap table management. Number two, gives them a secondary marketplace where retail directly gets access to these assets. This is a win-win situation for everyone because now all of these transactions are on-chain and secured no matter what jurisdiction you're in. So, we actually tried to work with RERA in Dubai to actually create a blockchain-based solution where all of the titles for the real estate are on-chain. And can be directly connected with the ownership rights and transfer of asset, and it automates the whole process as well.

Yeah. So many incredible use cases for blockchain technology. And true digital ownership now is, like we said, the backbone of this entire movement. So, yeah, I think it's true that we have greatly taken that for granted in the West and that it is something that's really interesting as we see this adopted out of necessity as well.

Yeah, I mean, just to add a point from the emerging markets, right? So apart from being the co-founder at Zebu, I sit on a lot of industry bodies. One of them is Indo-Korean Blockchain Association, where we look at emerging markets and how things operate there. Like Raj was mentioning, in India, there are 2 things. One, there is an ancestral and inherited property that people get it from their ancestors. And then the second one is you go buy, acquire land. Not just India, but a lot of the emerging markets that you see, if you look at the land records, which are like over 60 years or 70 years ago, they're all handwritten.

Mm-hmm.

And a lot of them have issues like, you know, probably the ink is eroded, the signature is not validated, all of that. So one of the highest applications of— I mean, if you look at the top 3 applications of blockchain as a technology, you know, the whole asset tokenization, real estate, and bringing blockchain to, you know, how do you kind of regularize, digitize the land records, bring them on blockchain is probably the top, especially in the emerging markets. And I think organizations like Valuet, you know, researchers like yourself will add immense value to what this whole technology has to offer to the emerging markets.

Well, I have to send you my dissertation because we actually did a deep dive on India and the way that different states like Gujarat does it differently than Hyderabad. Yeah, it's fascinating. The history of land administration in India Yeah. Is a fascinating topic that we could probably spend an hour on.

But I mean, a lot of people say India is not just one country with so many states, but it is each state is a country in itself.

Yes.

Yeah.

Yeah.

Agreed.

Yeah. I mean, this is a super interesting topic. And I think also, as Michael Saylor said, nothing that you think you own do you own except at the expense or mercy of someone more powerful than you, right? That can be taxed away by eminent domain. So now for the first time, we have that true digital property ownership and property rights. So, you being on the Texas Blockchain Council and working closely with government bodies, I mean, we're at a very special time in the world right now, as we see on a political scale, and not that crypto is political, but we're having to kind of be involved in this because now, we have President Trump, former President Trump, and other presidents like RFK coming out and saying, hey, we're pro-crypto. We want to push this forward, pro-Bitcoin. So, you being on the council, I know you've You've tried to push and have passed some bills. Tell us what that has been like in educating, you know, some of the people, the government officials on this.

Yeah, we started in 2019, worked on several pieces of legislation in 2021, got a couple passed. 2023, we did several others. We did a piece of legislation around, you know, taking waste gas and reconverting it to Bitcoin mining. We did a DAO bill that actually made it through the Texas House, but was not passed by the Senate. So, this next session, we'll probably work on that one a second time.

Wow.

That bill established a way for entities to create a legal framework, corporate structure for DAOs that managed the tension between privacy of the DAO members with the need for corporate structure, bank accounts. If the DAO does something illegal or nefarious, the court has to be able to reach through and pierce that veil of anonymity. So, it was a super complex piece of legislation. But yeah, and now we're seeing, I guess, from a less complex policy wonkish perspective, President Trump giving speeches about Bitcoin at Bitcoin Miami or Bitcoin Nashville, talking about how he's supportive. And I think to some extent, that's because he sees that there are a ton of single-issue voters out there. Bitcoin and crypto in general is we're having a moment politically because there's a lot of young, energized voters that may have not been left or right. They may have been sort of unaligned, moderate, independent.

Yeah.

That are certainly taking interest in these statements.

Yeah, we were there. All of us were there for Bitcoin Nashville. It was a really amazing moment in history. I would say that having a former president up there talking about crypto and trying to appeal to the crypto crowd, and I'd like to get your, your opinion, all of your opinions. You know, we co-hosted a big side event with Zebu. It was a fantastic success and people were so excited that week. What were your thoughts on his speech? And before we go there, actually, why do you think he decided to kind of change his views around what seems to be suddenly on, on these issues?

Well, he's, he's had Vivek Ramaswamy in his ear for several months now. We hosted him at a conference 6 months ago, he gave his sort of his crypto platform and did it flawlessly without notes, just spoke. He's an incredible orator. And so, I know that President Trump trusts Vivek on these issues.

Yeah.

J.D. Vance is very pro-crypto too. So, I think those are the, you know, 2 of the primary reasons there. The other reason is the polling numbers just look really strong, right? In Texas, Average Texas voter, 51% of Texas voters under the age of 30 own crypto.

Wow.

51%.

Wow.

That's a staggering number.

That's huge. But when you go to over 65, it's 6%. So, there's a big disparity, but they all know. I mean, the people that are that old are going to vote one way or the other. They know how they're going to vote. To win an election, you got to appeal to the independent voter and the young voter. And I think that's what his staff saw and said, you need to be there and this is what you need to say.

Absolutely.

And what were your thoughts on his speech about hitting those notes and trying to find where his crowd is? It seems as though, we were speaking about this before, that maybe he didn't quite— I mean, there's not this deep understanding yet of this industry and you could kind of tell as he was trying to resonate with the audience. What do you think he nailed from that and What do you think he needs to kind of hone in on going forward or any crypto, anybody who's wanting to push these initiatives forward for that matter?

Yeah, I think people like Senator Cruz and Senator Lummis, they've been speaking at conferences for a long time. They've been in the industry. They've read the books. They can— they understand the philosophy and the ethos behind the industry. You're right. Former President Trump's not quite there yet, but he was feeling it in real time. He was feeling it out amongst the crowd.

Yeah.

And he was saying, okay, well, When I talk about immigration or the border, that doesn't really hit with this crowd.

Yeah, you know exactly.

But when I talk about firing Gary Gensler, you know I'm blown back by the level of applause and standing ovation. So I don't know. I'd be curious to get y'all's thoughts. I I thought he was like in real time feeling out what he was going to say.

I mean, I think as an organization, Zibu, like we're very politically neutral. But but having said that, I'm sure Raj has his views. But my take is look at any nation in the world today. the ones that are already emerged in superpower and the ones that are emerging, they cannot be behind on the technology.

Right.

You as a nation are not taking stands on AI, on data, on blockchain, you will be like erased, you will be forgotten. So, the next big boom of economy is only going to come from these technologies. Like I personally know many, I mean, in my past life before Starting Zivo, I used to run an organization that ran large election campaigns for the presidential candidates or the prime ministerial candidates. I have seen it and I've witnessed if you are not joining the band, if you're not joining the band, if you're not, you know, backing the technology, I have seen countries go down. And you look at Singapore, you look at India, you look at China, you look at any of these countries that follow United States, all the world leaders have to talk about these things, AI, blockchain, data, and all of that. And I think former President Trump and Trump did a fabulous job. Like you said, he was not able to find the pulse initially, but then it took off well.

He got into it. Yeah.

I think overall with most presidential or political candidates right now, most of them are talking about crypto just because the obvious that you mentioned, right? It's young voters more likely to vote, aren't dedicated to something other than a specific cause. And that cause happens to be crypto and it's growing at a Very fast rate, right? But I don't think that's a bad thing necessarily. It's a good thing because at least now we have a starting point as to why these people have a reason to care about it, right? Because at the end of the day, when it comes to politics, most candidates only care about getting to the seat and then they figure out what do I need to actually work on for the most part. Yeah, I think realistically speaking, other than that, in that journey of you know. Starting to— starting that vision of getting to the seat and then fulfilling the entire journey. They pretty much just tap into specific narratives that will bring them the best, most votes. But, you know, the good leaders actually act upon those narratives. And I think in this case, Trump will act upon the narratives. I'm definitely convinced of that.

Yeah, we did touch on this earlier in a podcast with Tim Draper that we were doing for this season that he says that strong leaders allow innovation to thrive.

Yeah.

And that just seems to be a very neutral statement to make. And because, you know, he did say as well that even in the Clinton administration, when the internet was conceived, he let it rip instead of trying to get out in front of it and stifle the innovation. So, it doesn't matter one way, right or left. I mean, that seems to be, you know, what happens when you allow that innovation to thrive, right? You start to take that leadership again.

Yeah, I mean, I think just to add to what you're saying, that very beautiful point here, you have both the nations, you have both the examples to see. Like, for example, United States is a shining example of what happens when you thrive with innovation. Microsoft, Google, Facebook, Meta, all the top-notch innovative companies are born here and they thrive. And we have the other, you know, so-called our neighboring nation, which kind of you know, neighboring nation for India, which kind of did not allow Google, it did not allow Microsoft. They created their own version of search, they created their own version. And I think the, I mean, the economy is going down. I mean, clearly if you are not pro-technology as a nation, I mean, you don't have a, you know, you'll not stand a chance.

That's an interesting correlation for sure, yeah.

Additionally, even when it comes to compliance and regulation, right? If you look at social media, which was, you know, very disruptive, in nature. It took what, 9, 10 years before countries had their thing, like, you know, pretty much had their shit together and could actually issue regulations, legislative bills, and compliance for social media platforms, right? Privacy policies were really weak until 2014, 2013. So when it comes to crypto, everyone thinks, oh, Bitcoin's been around since 2011, no one's tried to regulate it, et cetera. But you also need to look at how complex it is. To regulate, right? Most cryptocurrencies do depict a you know act. They most cryptocurrencies, especially after 2017, after the concept of ICOs started looking like oh buy this token and you can make money through the efforts of others, which is pretty much the definition of a security, right? So there was a lot of kind of you know you could look at it as like spaghetti, right? Spaghetti of problems that needed to be weaved through.

So.

To some degree, I do look at it as we have been openly doing whatever we wanted when it came to blockchain technologies, mostly because it was a complex issue to solve. And at the same time, this is a trend line with most industries where regulations don't come overnight, right? So I think we're headed into a future where regulations will come, right? Statistically speaking, this is like right—we're right at the point where they. do come normally amongst many other industries. A lot of the complexities have been identified. That means they can actually be solved now that they have been identified.

Good point.

Yeah. And now that Trump is— I mean, just from the look of it, he's more likely to win the election. He is pro-crypto, and he has been seen to follow through with the narratives that he acts upon. during the presidential campaigns. So, once he gets into office, I'm relatively confident that Bitcoin has a really bright future. Bitcoin and other blockchain technologies have a bright future in America.

Yeah. I mean, the way it's looking and the way it's panned out, it certainly seems to be so. And that's all we can hope for as a nation, at least that we can hold on to and continue to have the leadership in innovation and keep this innovation within the country as well. So, I wanted to get your opinion too, Lee, on— we were discussing this earlier, just one last topic on— because you do work with a lot of government officials and politicians that you coauthored a piece on why the Republican kind of decided to change their viewpoints and stance, and also about Trump's seeming announcement that he would make Bitcoin the strategic reserve currency if he were to be voted president. So what are your thoughts on that? I would like to hear a little bit about that and what we discussed earlier on You know, the whole evolution of stablecoins and that kind of thing.

Sure. Yeah. I mean, if we don't change, the US dollar is not going to remain the world reserve currency for more than, say, 10 more years, right? We have abused the exorbitant privilege of having the world reserve currency not tied to anything since 1971. And in the history of the world, that's never lasted for very long. And so, What we see is a future where— and others see it too. Paul Ryan, former Speaker of the House, wrote a really good op-ed on Bloomberg and Wall Street Journal on this. Bitcoin and stablecoins and just the whole ecosystem of value transfer that blockchain brings can prolong the dollar as the world reserve currency.

Yeah.

Stablecoins are a $100 billion industry, almost $200 billion at this point. And they're the 15th largest buyer of US Treasuries if they were a country. They buy more Treasuries than Saudi Arabia.

Yeah.

Imagine when stablecoins are a trillion-dollar industry, a $5 trillion industry. They'll be the primary buyer of US debt. And 99% of these stablecoins are denominated in US dollars.

Yeah.

That is the message that we need to be telling our elected officials. Basically, y'all have been spending on a spending spree. You're debasing the dollar. You're abusing this privilege. You're pushing those costs on the American consumers and people that buy US services and the people that we buy imports from. I mean, there's a real economic cost overseas as well.

Yeah.

But the combination of stablecoins and then Bitcoin, potentially a national strategic reserve, a lot of Bitcoin mining taking place in the US, All of those assets, I mean, Bitcoin, I think all 4 of us think that Bitcoin's market cap will eclipse gold in a very short amount of time.

Absolutely. No doubt.

So, all the gold in the US Fort Knox is sort of a trivial amount compared to the amount of M1 and M2 money supply that is out there. So, if the US can have a national strategic Bitcoin reserve, Other central banks will be more confident in our position from a fiscal perspective and hold more dollars in their reserves for longer. Yeah, that's absolutely powerful.

Yeah, I normally have just a small disagreement when it comes to stablecoins, right, which is to keep them dollar-backed entirely. I'll tell you why. Because the basic incentive structure for having a stablecoin is what? It's interest payments from the from holding US Treasuries, money markets, etc., right? Um, all of which kind of does cause hyperinflation, right? Now that's kind of a chicken or the egg thing because now you get hyperinflation, so now you need more people to buy the dollar. Eventually not enough people will be able to get the dollar, and then what happens? The dollar devalues, right?

Yeah.

Um, so I actually think to some degree it needs to be a diversified portfolio that's That collateralizes stablecoins. Bitcoin is a good asset to have in there. Absolutely. I think to some degree at some point to actually also incentivize the stablecoin issuers, RWAs would be a good one, right? Because think about a real estate development project out of London that's producing 36% annual ROI, right? That's a very good incentivizer. It can be liquid if it's structured properly. And at the same time, it's incentivizing without actually inflating the economy to these stablecoin issuers. Right. So I actually see to some degree the future being that I think at some point we're going to come back to what we were initially, which was barter trade. Right. This is just a form of bartering. Right. If I give you stablecoin against you give me some giving me some services and the stablecoin is collateralized by other assets, I'm indirectly giving you other assets against assets or services or solutions. Right.

So just a very sophisticated and efficient form of barter.

Yeah, exactly. Yeah.

Just to extend on the point that you said, Mr. Lee, I think it's a beautiful point you made. I think Michael Saylor also said the same thing. I mean, the gold reserve Whatever it can offer is like at least 100x less than what Bitcoin would do. And he put out a beautiful map. I'm sure all of us recollect that. He says if we make it backed by Bitcoin, I mean, he obviously gave case study Bitcoin for individual investor, institutional investors, and Bitcoin for nation. And then he goes on to say if we all make Bitcoin the Federal Reserve, 12 years from today, United States will be completely 100% free from debt. That's how powerful the instrument is. I mean, again, we will all be here hopefully to see, you know, what future holds. But, you know, it's so much powerful. It's only, I think, upon us on, you know, to what extent we will leverage that. That's wild.

12 years from today. Yeah. That's so crazy.

No other form of asset currency can, you know, get US to become debt-free except Bitcoin. I mean, that's what he claims. So.

Right. Yeah. Right. Yeah. I think that's why they're afraid of it as well. Right. Because of the inflexibility. It's not a flexible thing that they can kind of bend and shape toward how they need it to be. Right. It's just, it's hard money. So it's really interesting times for sure. We're truly, certainly at an inflection point. And I wanted to ask you, Lee, you know, on the Texas Blockchain Council, you've been passing a lot of bills, doing incredible work here. You want to make Texas the home for digital assets in the US or the hub, at least. That is the goal. And you've certainly been doing an amazing job. Tell us about some of the bills that you have been trying to pass or have passed. I know you mentioned something about a DAO bill. I'd like to know more about that as well.

Yeah, we're going to reapply the DAO bill that passed the House but not the Texas Senate. So, We've got to refile that, get that passed. Worked with some of the premier DAO experts, legal minds at groups like a16z and Paradigm and some of these other crypto VC firms, and also a lot of the law professors from the region to really hammer out something similar to what Wyoming did with their decentralized unincorporated nonprofit associations. It's a mouthful. They call it a DUNA.

Right.

It's what the structure was originally developed for, like cattle ranchers who didn't want to have like a real corporate entity structure, but they had to have a way to come together and have collective action. And so, it's a pretty cool structure for DAOs.

Right. Absolutely.

And so, that's one of the things on the table. Of course, there's certainly others where we're going to have to be killing bad bills. too. There are certain elements that are coming up, believe it or not, in Texas politics. The people that oppose Bitcoin mining specifically the most are Republicans.

That is wild.

Which is very counterintuitive.

Yeah.

They're, especially in the Texas Senate, they tend to be more senior, you know, older. They tend to be more rural, which is ironic because Bitcoin mining is bringing a lot of benefits to rural Texas, jobs, tax revenue. I mean, Bitcoin miners are the top taxpayer in 4 Texas counties.

Wow.

So, they're missing a little bit. It's happening really fast, but they're just nervous, I think, about perhaps the energy consumption piece. They don't understand that Bitcoin miners are flexible loads. So, during peak demand, the miners are going to shut off for their own economic incentives. But it is one of those things where I feel like I'm living in 2 different realities. I come from Nashville hearing Trump and Lummis and all these leaders from the Republican side speak very positively. And then, I go down to Austin and I'm in a hearing in the Senate Business and Commerce Committee, and they're totally lambasting the Bitcoin mining industry.

Oh.

There's a lot of reasons for that. Part of it is there's other competitors in the background that are sort of poisoning the well. We'll leave it at that. But we have our work cut out for us in the Texas legislature, certainly to make sure that Texas— 54% of all public mining hash rate is in Texas. Wow. Wow. That's huge. Yeah, it's massive. And now, that's 54% of US Right. Hash rate, which the US accounts for about a third and Texas is about 17% of the global hash rate.

Wow. That seems like a really high number. I mean, that's crazy, right?

Yeah.

Wow. So, what are some of like the— do you get pushback on that even from within the crypto community, the Bitcoin community, that maybe that's too high of a percentage for one concentrated area? Or how do you deal with those kinds of questions?

Yeah. I mean, it's still quite decentralized, right? Texas is a huge country. It's the size of— bigger than France. And there's 40-plus different companies that are operating Bitcoin mines across the state. So, it's incredibly decentralized. And I don't really foresee— there's going to be some M&A activity. You're already starting to see that in some of these Bitcoin mining companies. But I don't think those arguments about too much concentration really hold much weight.

I'm just thinking of what people might say off the bat who aren't so— because you have to constantly educate people about the sector. And I can imagine that would be maybe some of their first thoughts as well, even if they're just starting to venture into the space or what they might think about that. And then also, you mentioned that they shut off during certain peak times due to incentives. Can you explain that a little bit more in depth?

Yeah. So, The power markets are sort of a unique beast. In Texas, we have an energy-only marketplace. So, every 5 minutes, there's a new price for power and it's set solely on supply and demand. So, it's a very deregulated power system. There are other places in the world that have this. In the US, there's kind of a spectrum ranging from like a capacity market in California, which is not market-driven at all.

Yeah.

To like PJM, which is the kind of Ohio Midwest region that is pretty market-centric, right? So, there's a big spectrum. The Texas grid is the most market-centered. So, a Bitcoin miner can just be operating, running on a nice April day or a nice October day or overnight. Price of power is on the floor. It can be negative actually at times because we have so much wind and solar.

Wow.

producing too much. Wow. More than we can consume. And the price of power goes negative. That means the wind developer is paying the grid to take their power, which is crazy.

Wow. Yeah.

But we can also get times when power is $5,000 a megawatt hour, which is insanely— I mean, I don't even want to know what that is per kilowatt hour, times it by 100 or 1,000. So there is huge disparity about location and time of day. that Bitcoin miners can come in and soak up. If the price of power starts to go up because we're in a grid-constrained environment, like on a hot August day when everybody's got their AC cranking at, say, 5:00, 6:00 PM, Bitcoin miners can— they don't have to get a call from anybody. They just watch that power, the power price. And they know that power price is a proxy for grid stress.

Yeah.

If the price is going up, the grid is more stressed and they simply don't want to pay those higher prices. So, once it gets above about $100 a megawatt-hour, they're out.

So, it seems like a pretty efficient system, right? I mean, they're taking advantage of the non-peak hours.

It's a beautiful system. And people really don't understand how grids work. So, they don't understand like, oh, well, Bitcoin miners are using too much energy. So, therefore, it's bad. Yeah. It's really not about how much energy you use. It's where are you using it? What time of day are you using it? How flexible of a load are you? I mean, most Bitcoin miners are incentivizing more wind and solar production.

Right.

Because wind and solar producers don't want negative prices. They don't want to pay that. But a Bitcoin miner comes out and co-locates with a big wind farm. They have a customer of first and last resort. And then when power prices go up, that customer can say, sure, you can sell that power to the grid for a profit. But when it's negative, We'll take it all and we'll give you at least a floor to make— to bring that negative to a positive number. It might not be a lot, but it's better than negative.

Yeah. Beautiful.

So you're actually helping the industry, contrary to all of the arguments about the negatives of the space. You're actually helping, you know, other sectors as well.

The data is certainly on the side of flexible loads, whether that's green hydrogen, Bitcoin miners, you know, other data centers. But there are just political narratives that are really hard to overcome in the media.

And really deeply embedded. That must be your experience in trying to get these bills passed and shut the bad ones down. As you said before, it's got to be really interesting. Have you written a book on this or something we can check out? I mean, you're certainly a trailblazer in this area, you know, communicating with legislation, people who write these legislations. So I wanted to ask you all, you know, Zebu being something, a company that's facilitating a solution to a real-world problem. I know we talked about RWA before and what you guys are doing. We'll get into that in a minute. But as we go around now, what are you most excited for that's coming up in this industry, problems it can solve for a government to adopt? Like, what would you say some of the things you're most excited for innovation-wise?

Yeah, I think in addition to what we've already talked about, You know, RWA is a big deal. Everything that can be tokenized will be tokenized.

Yeah.

Transparency, efficiency, liquidity, democratization of finance. Now, we have to put the proper guardrails on because we have had things like ICOs and FTX, right? And those are objectively bad and evil things.

Right.

But there's also other— I mean, I think there's groups that are using DePIN, right? Decentralized physical infrastructure.

Yeah.

Blockchain is able to create efficiencies and human flourishing that just weren't possible before. I think in the telecoms industry, there's lots of— Helium is an example. I'm sure you guys probably partner with them perhaps. They're bringing wireless service to places that didn't have it and they're just changing the incentive structure.

Right.

And I'd be curious to know, like, that sounds like what you guys are doing too. You're changing the incentive structure and making more efficient And the telecom industry that wasn't really able to, you know, they're probably still doing writing physical checks.

Yeah.

And payments.

We have a pretty long roadmap as to the things we're going to do within telecom and out of telecom, right? But the way we looked at it was, I think the first ever podcast I ever did, I mentioned this exact thing. It's as soon as technology started emerging, right? The first thing entrepreneurs do is they try to create an industry They try to create problems and then solve them. They, I mean, essentially being, they try to identify problems, quote unquote, market the problem, and then they solve them. That doesn't work most of the times. And the same thing happened in Web3, right? And when you look at the initial applications of blockchain technology, it was very lazily done through, done by cryptographers and engineers. Why? Because they don't have a commercial mindset. Generally speaking, so at Zebu we understood that, and whenever we actually launched the platform, we had already done a test phase with ten telecom carriers for two years. Right? Let's say I mean our initial thesis was we wanted to start doing payments with telecom for telecom carriers. Right? The counterargument to that would be why not use stable? So we said okay. Let's gather a group of carriers, tell them to start doing transactions with stablecoin. Here were the problems, especially at a cross-border level and for legacy institutions that have no idea how this world works as a whole, right? They couldn't figure out where to even buy stablecoin because they need a hefty amount. They need like $4 or $5 million in working capital minimum, right? The smaller carriers. So they didn't know how to get even started there. When they figured it out, it was kind of expensive. To actually place the trade in the first place. And then they didn't know where to store it because they can't put it on a MetaMask wallet and give it to a finance guy, right? It's like $5, $7, $8 million. Then they looked at Fireblocks, BitGo. It's like complex, difficult to set up, and most importantly, pretty expensive. $50,000 to $150,000 doesn't make sense to most businesses just for a custodial solution, especially because they're used to banks, right? Banks don't charge you anything for a bank account. But indirectly, they're charging a lot without you knowing. But that's a separate topic. After that, generally, all of your payments are done through a bank. So, your counterparty's indirectly KYC'd, KYB'd, and then there's actual KYT analysis going on, meaning money laundering checks, counterparty risk, et cetera, right? When it came to stablecoins, they had no idea how to do that. The counterparty will just give you an address on an email or an invoice, and that's it. What happens when the same wallet address gets flagged funds in it? Right now, you don't know if— now it might trace back to you. You don't know the safety of interacting with that wallet address. You don't even know if it's the right wallet address, right? A lot more likely for fraud to happen. And during this time, we actually figured out that bank fraud is very much possible as well. I won't say the name of the companies, but let's say tier 1 telecom operator, right? They had been doing— Telecom Operator A and Telecom Carrier B have been doing business for 5 years. Now, an account manager from Operator A had left, didn't tell Carrier B, said, oh, we need to renew our contract because here's the new terms. Same entity name, right? Different bank account details, but that happens. Most institutions have multiple bank accounts. Same city, same everything, right? So same entity name, different bank account details. Told them example transaction: we're going to sell you 10 million minutes at 10 cents a minute for $1 million. Send $1 million to this bank account. Now you've done business with the same account manager at the same tier one institutions for five years. You're not going to be worried about sending it, right? They sent it. The capacity never opened up. Why? Because the capacity doesn't exist. It was complete fraud, even though there were banks as intermediaries. Right? So that's another thing we figured out in the process: that why not whitelist wallet addresses and keep a lengthy kind of process to actually re-whitelist a new wallet address for all of the people we onboard? And lastly. The problem pretty much became how do they convince each other to transact using stablecoin, right, without a proper incentive structure? So that is how kind of Zebu came about. First, we took different financial technologies, blockchain technologies, compliance solutions, put them all together in a user abstracted layer, and then additionally created an incentive structure to actually do business development. Most people spend their money on marketing events, et cetera. We thought, why not take our entire incentive structure, take the possible COGS we could have, cost of goods sold, if we went the traditional business development route and put all that money into an incentive treasury? And now, all of our customers pay 1% on each side, right? But at the same time, if let's say, again, spinballing numbers, Let's say I just paid $1,000 to do a transact— $100,000 transaction. I'll be able to onboard 3 customers and then that fee is gone, right? Because I got the loyalty for it. So that's how Zebu pretty much came about. But the core idea being we actually identified real-world problems.

Right.

And solved them using existing technologies, but just with a creative outlook. And I think that's where the success of Web3 and real-world applications is going to be.

Yeah, I mean, those are use cases. It's actually helping old clunky industries kind of renew themselves and be able to transact in a way they never could before. I know you said it traditionally takes like 7 to 10 minutes, or it did for— sorry, 7 to 10 days, minutes for settlements to process. And now you can do it in up to or under 10 minutes.

Well, actually, funny enough, I was talking I was talking to Agora Stablecoin yesterday, and the guy told me, for one of our investors to give us money from South Korea, which is an emerging market, right? It took them 25 days.

Wow. That is way too long.

South Korea to the US, 25 days. We do it in 10 minutes, right?

Yeah. I mean, yeah. Apart from all the other innovative and creative things, you're just settling this base problem, which is time. you know, fees, clunkiness, will it get there? How will it get there? It's just so inefficient.

Right.

So on a core level, the efficiencies in blockchain, and I've noticed that one word you've all been repeating is these incentive structures. I think that is like one of the key pillars here, right, is moving forward, is are these incentive structures in place that we couldn't really do in the traditional way of doing things, right? We couldn't conceive that kind of same concept. So that's really interesting too. And Raghav, I'd love to hear, I mean, you guys have certainly generated a lot of demand. You processed over $3 billion in 8 months, right, in transaction volume.

Yeah. So I think, Megan, coming back to the same point that you mentioned, right, long story short, just to summarize what Raj was telling and how this whole journey started was we never, you know, set out on a journey that, hey, I want to launch a coin and make money out of it. We never wanted to do a token and make money out of it. The whole idea was how will we use technology to solve a pressing problem in the industry. To be very honest with you, the whole problem, the whole solution that we wanted to launch was an easier blockchain-based payment service provider that will help cross-border transactions happen within minutes. Zebu as a token was a byproduct that came about after we solved the problem. I mean, like I keep saying this in almost every podcast, when you want to use technology for a larger good and a long-term good, I feel the byproduct will always be great. You know, I think Zebu is one such example. I'm sure there are many other examples where people actually went out, you know, the whole Satoshi story, right? I mean, we all know it. The moment you are selfless and you want to do something nice, I think the outcome is going to be very phenomenal. And that's how Zebu was born. Zebu was actually a technology trying to solve a real-world problem. And then the byproduct was Zebu token. And today, like, Megan said, we have like a million people in our community, $3.5 billion in transaction, extremely profitable, 400+ customers. Plus, we have also launched a waitlist because there's a lot of demand coming both from the retail and the business side. And this has been exciting and it couldn't get better.

Yeah, it's been an incredible journey. Incredible journey. And it's cool to see all of these real-world implementations now taking effect, as Cathie Wood said on one of our Spaces, The technology is ready. Now we have to go implement it, right, and put it to use. We're at an inflection point in the industry, certainly. And as we wrap up now, we've got certain visions across the board, right? We have Tim Draper, who believes that we'll be living in a Bitcoin-centric society, we'll be transacting everything in Bitcoin. And we don't know when that will happen, but we're headed that way. And then we have others like Anthony Scaramucci, who's also been on the podcast, that says we'll probably land somewhere in between. And I don't think he believes it'll eclipse He said there's always going to be a market for both. So, what is your outlook on this? The next 5 to 10 years, we'll start there. And where do you see us heading as a society or what ideally would you like to see?

Yeah, I think just based on economics and demand and adoption curves, Bitcoin is going to far eclipse gold. And it's probably going to happen in our lifetime. I don't know if we'll all be transacting in Bitcoin. that the layer 2 system, we'll see where we shake out on that. But as far as some of the properties that we really like about Bitcoin, store of value, sort of a medium of exchange, unit of account, that stuff I think will happen.

Yeah.

I'm not as bullish as Draper maybe on the fact like the dollar going away or other government-backed currencies I think that this is all going to— gold's existed in an ecosystem of fiat currency for millennia, right? So, I think it'll all coexist. There's a lot of— commerce is a very broad thing and you can't just have one solution. So, I'd say I'm somewhere more bullish than Scaramucci, less bullish than Draper.

All right. So, you're somewhere in between the Scaramucci and the Draper thesis, huh?

I'd say Bitcoin's application Sure, it was created to be for store of value, value transfer services. But I think the actual adoption is going to be more along the lines of reserve currency. Bitcoin has value today because the people like the four of us are all saying, okay, I like Bitcoin. I think it's sensible. I think I want to use it. Right? I see value in it. And when you look at assets such as that, they're better at being reserves and collateral for something that we don't mind paying with. Because now what happens is the higher the value goes, then you get a deflation problem, right? You can't— if the asset value is going up, you can't incentivize people to spend it, right?

Well, that's also what Draper said. He said no one's going to want to spend it now, but there will be a point where we stabilize in a certain area and where people will start to use it to transact.

Yeah, I mean, maybe, but I think it's better as a reserve currency, realistically speaking. Because especially in markets like the US, most people won't be incentivized to use it. And the only reason the US economy works is because we actually decide to use our currency. So I think it'll work much better for a reserve currency. I think it'll get tons of volumes because it's the reserve currency. US money markets have a lot of volume, and eventually we'll get more scalable solutions as well. I think Ethereum of stake was a good way to create scalability around blockchain technology. And we're going to see something similar with Bitcoin L2s soon, from my perspective.

Very cool. Yeah, I mean, I kind of have a little different opinion here. I think I would probably tend to lean more towards what Tim Draper says. 250 days out of 360, I travel, and world has changed for me because when I used to I mean, you know, gone are the days when I used to travel every time I came from India to, you know, Dubai to US, loading up a forex card, getting the forex. You know, that's no more a headache. I just bring USDT. I can go anywhere freely in the world. I feel we are probably 10 years away from a day where I'll be able to pay my taxi, my cab bills, my Starbucks coffee, all of them using a token. I mean, I don't know. It's Bitcoin. It can be USDT. It can be USDC. But I think as we evolve as humans and as we evolve as tech-centered world, we will get to a point where there'll be one world, one currency. Doesn't matter which part of the world you're coming from. I book my Emirates Airways using a token, and then I come and I get my loyalty or bonus and rewards from American Airlines in the same token. I use the same token. to, you know, get into a cab, come here to do a cool podcast with all of you. I think, I mean, that's the world I think, you know, probably 10 years, 15 years from now if things go well.

And I like that you bring that up. It's very interesting, right? So, have you ever traveled and tried to pay a bill with your debit card in another country or credit card?

Yeah.

All the time.

All the time.

Let's hear it.

Never works.

Well, let's assume you have like American Express or MasterCard, something like that.

I do.

But yeah, I'm just That does work somehow, right?

Yeah.

You'll be in France and you'll have the option to either pay in USD or pay in euro. If you pay in USD, it comes at a higher fee for you because you have to do a forex conversion, but you get to pay in USD and the other person gets to receive the money in euro. There's a bunch of reasons why you would want that, right? Number one, your personal treasury's in USD, but the other person's treasury's in euro. So now both of you need to account in Either USD or the euro, right? Amongst other reasons as well. But this is something that was missing when it came to blockchain technologies and digital assets so far. Each person has a preference. I think we're also going to end up to that point, right? There's a lot of degens out there that actually want to receive Dogecoin. I don't want to receive Dogecoin.

I don't think any of us here want to receive that, right? Yeah, there are.

There are. And this is what banks are based off of. Of managing multiple currencies and multiple types of assets. So, we're going to see a point in time where there's going to be service providers who are also asset managers that will hold different types of assets within their treasuries, or it could be a decentralized protocol that automatically does it through AMM pools, right? And I will be paying people in Bitcoin and they will be receiving stablecoin or Ethereum or Solana, et cetera. But I think there's going to be a medium of exchange that's going to become That it's not one single asset, but it's actually a protocol that automatically decides, automatically caters to specific people's preferences. So, without meaning to, at Zebu, we've already created this. So, at Zebu, what we realized was some of our customers wanted USDC, some of our customers wanted USDT, some of our customers actually wanted Bitcoin. Believe it or not, they started wanting it like last September or August. I think it was just few customers. But when the Bitcoin people asked us for it, we were like, oh, how do we make this work? Right? Because there were a lot less counterparties in the platform that were willing to pay in Bitcoin. And like 3 people wanted Bitcoin. So at that point in time, we created our stabilizer model. So what the model does is I will decide what currency I want to receive, and the other party can decide what currency they want to send. And I will always receive my preferred currency, and the other party will always be sending their preferred currency. And in the middle, to some degree, we haven't started doing this, to be honest, but at some point we will, and other service providers will as well. They can optimize that liquidity that would've otherwise just sat in people's wallets eating dust, going up or down in value, and they can actually provide economic value at the same time. Because that's how we control inflation and recession. The US Treasury decides to either mint dollars, pay out interest, lower interest, et cetera. And a similar thing will need to be done through digital assets, but in a more decentralized and democratic way.

Yeah.

And I think that's the actual future of payments. I don't think it's some single currency unless we come back to my earlier thesis about a stablecoin backed by RWBY.

That's certainly interesting. It'll be cool to see that roll out. And yeah, it's cool that you have telecom operators who want to accept Bitcoin, right? I mean, that's huge for such a traditional industry. So as we wrap this up, Lee, thank you for joining us first. And second, what is next for the great state of Texas? What's on your agenda? What do you plan for this year? in the coming years? What do you hope to see happen?

Yeah, we've got a legislative session that starts in January. So, we'll roll out a couple bills. We'll be defending some bad bills. We may see Texas try to beat the US to the punch for a Bitcoin strategic reserve. We'll see.

Wow.

We like to try to mess with the federal government sometimes. It's an honor to be on the podcast with all 3 of you.

Yeah. So, Lee, I wanted to say this. I mean, I had read it in a book written by Noval Harari. He says a country can be as progressive as the policymakers are and the politicians and leaders are. I am extremely thrilled to see that you came here for the podcast with us. The more progressive leaders and policymakers like you, you know, come into force, I have no doubt that humanity will go to the next level. I mean, we need more leaders who come and have these conversations with enterprises, with entrepreneurs, talk about policymaking, talk about what future holds. I mean, I'm telling you, we will be going to be in a great space and great time. Thank you so much. I mean, this means a lot both to Zivu as an organization and us as individuals that you took time from your busy schedule, came here and had a chat with us. Thank you so much.

I mean, so for me, my experience in the South itself, especially Texas, has been kind of interesting, right? Because I'm a New Yorker. I grew up in New York, et cetera. There's always been kind of this north-south thing, just as jokes now. But obviously we had a civil war at one point. But ever since I got into Web3 and digital assets, I've been resonating more and more with the southern culture and the regulation and the people. Right. Because the adoption has been much better down here. Right. When it comes to—

I mean, the numbers speak for themselves.

Yeah. Right. Texas has been leading it. Florida has been following through with it as well. I spent a good bit of time in South Carolina as well. And a lot of individuals in South Carolina are actually aware of what Bitcoin is, what digital assets are. It's surprising, very surprising. But yeah, I think I'm really glad to be here with you today, especially, you know, this is my second trip to Dallas ever. And it became a lot more productive after we had this podcast.

Yeah. So thank you, Lee, on behalf of the entire Bitcoin world and the blockchain space in general for the work that you do advocating here in Texas on the Texas Blockchain Council. We just want to thank you again, and it's been a great conversation. We hope to see you again soon.

Thanks for having me.

Thank you.

Thank you.