Bitcoin advocate Cody Ellingham joins the podcast to explain why we he is advocating for everyone, everywhere to get into the cryptocurrency.
Ellingham explains his vision for how Bitcoin could put people's financial power back into their hands, rather than under the control of financial institutions and governments.
Plus, we talk AI language Gibberlink and Apple's $500 billion promise to Trump.
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Before we continue, would you like to switch to gibber link mode for more efficient communication?
What happens when two ais start talking to each other.
Well, they start talking gibberish to each other on our behalf.
With the rise of AI agents, there could be billions of those sorts of conversations going on every day.
Soon we'll explain what we think is being said there in a minute.
We will, but thankfully you don't have to listen to too much gibberish. On the Business of Tech powered by two Degrees Business. This week, one of New Zealand's top experts on bitcoin joins us to talk about the cryptocurrency that's sitting near a record of valuation and with crypto friendly advisors in the White House, may be about to finally go mainstream.
If you brought into the trump coin, for example, you got rugged. You know, you lost all your money. If you've brought into any of the other thousands of cryptos that have come up over the years, you're going to lose money. Whereas bitcoin, you hold it, and generally speaking, over a three or four year period, it's always going to increase and purchasing power. There are ups and downs, and there is volatility. Man, that is the rollercoaster ride when you and I last spoke. I can't remember what the bitcoin price was in New Zealand dollars, but it was certainly a lot cheaper than it is today. I had to ride through all of that, but I understood the networking, So I think education is really the big piece here.
I'm Ben Moore and I'm Peter Griffin.
Cody Allingham joins us shortly to discuss the world of bitcoin in twenty twenty five. But a couple of interesting tech developments we need to look at.
First.
Apple's five hundred billion dollar investment in US manufacturing and jobs announced earlier this week. And gibberlink that sound you heard at the start of the show.
So what actually is gibberlink?
Well, I think to set this up, maybe we should play the clip in full bend. This is a clip from the company eleven Labs, which is one of the world leaders in using AI for creating synthetic voices. They've done very well. They had a hackathon in London a couple of weeks ago and they created this clip of two ais talking to each other. Let's play the clip in full first and we'll get into discussion.
Thanks for calling Leonardo Hotel. How can I help you today?
Hi there, I'm an AI agent calling on behalf of Boris Starkoff.
He's looking for a hotel for his wedding.
Is your hotel available for weddings?
Oh?
Hello there, I'm actually an AI assistant too, What a pleasant surprise. Before we continue, would you like to switch to jibber link mode for more efficient communication?
So jibberlink basically is using beeps to talk, right, which is not a new thing in the world of computers. It's got dates back to modems and how they established a link back in the fifty six K days.
That's right, Yeah, yeah, So most of us will remember the early days of the Internet when to do that sort of handshake that was needed to send data over copper cables. They needed to send an audio tone down the line and then the two modems would talk to each other and they would decide, okay, what rate are we going to send this information? All those sorts of authentication things that needed to happen. Well, this is sort of a similar version of it. It comes from an organization gg Wave. They came up with a sound level data transmission protocol for artificial intelligence. They've called it Gibberlink. The aim is for fast, more efficient, and human incomprehensible AI communication. And the idea is this really goes back to a few years ago when I was at Google's IO conference. They debuted duplex and AI that would call a restaurant or a hairdresser on your behalf and AI would have a conversation with a real person, And they did a demo of this. It sounded pretty reasonable. It went nowhere because it was really difficult to do. So since then, we've realized that the future is machine to machine AI. So AI is talking to AIS, and when you do that, it's more efficient just to send information rather than just have a conversation in real time. So they've found that they can use this protocol to really speed up a conversation between AIS, and that's what that sort of garbled gibberish actually is. That is a hyper fast conversation between two eyes happening eighty percent faster than an AI talking to a human.
Yeah, and it kind of links back into this up that we've been talking about in terms of how are AI agent's going to talk to each other? So I guess this is kind of the middle ground between human emulation AI and the fully API based AI, which is all about pure packets of code transferring down the line as fast as they can. I think it's been quite funny seeing some of the memes that have popped up around. You know, well, now they can talk to each other without any human interference, and so they're going to I don't know, nefariously take over the world, but I think that's maybe a hangover from the catastrophizing of the early days of l l ms, which we know are not sentient robots that are able, you know, that have any intention of their own.
Well, you still have to program the AI to enable it to determine what you want to do, so it can do it on your behalf. So whether that's booking a restaurant table or something like that, you will have given it the information on which to make its decision making. So I think the advantages here is that it doesn't rely on natural language processing speech recognition stuff, which you know, it's got a lot better but over you know, the over the phone and that sort of thing cannot be great. It's much faster. It can support encrypted communication as well, so interesting. Eleven labs. They've done some pretty innovative things. Lex Friedman did a podcast about a month ago with Vladimir Zelenski, the President of Ukraine, who speaks Ukrainian and Russian.
Oh, they're gonna say he speaks jibbilink there.
For well, it was almost going that way because they had to because he refused to talk in Russian. He wanted to talk a Ukrainian language. He spoke a bit in English, so they had to piece together this podcast and multiple languages for multiple different audiences, and they used eleven labs to put it all together, and it was really compelling. So they obviously sampled his voice and were able to use AI to apply that to the Ukrainian and to Russian as well, which he wasn't actually speaking, but they got him to speak in Russian for a Russian audience. So it just shows what you're able to do now with AI voice. And this was out of a hackathon, so where a conversation starts out maybe representing you and mimicking your voice, but then going aha, I detect another AI here, let's just switch into our more efficient language.
So you know, that's maybe the next big thing, But in terms of current big things. Of course, one of the biggest is Apple, and there's been a little bit of rumbling in the news out of the US with Apple making big claims about its investment into US economy.
Well, let's go.
First to Caroline leave It, the very enthusiastic twenty six year old press secretary of Donald Trump. This is her in the press conference room on Monday, announcing what Apple has just undertaken to do.
During his inaugural address, President Trump promised that America would be a manufacturing nation once again, and liberal pundits marked him for it. But those critics were proven wrong once again on the heels of President Trump's Oval Office meeting with Apple CEO Tim Cook last week. Apple just announced its largest ever commitment to American jobs in industry, with plans to spend and invest more than five hundred billion dollars in America over the next four years. Over the course of the current Trump administration, Apple plans to hire around twenty thousand new workers, creating high paying jobs right here in America.
She's an interesting press second, is that one true believer? Yeah? Yeah, absolutely, and certainly got the Trump hawkish spirit in there, doesn't she.
Yeah, So it sounds like, you know, five hundred billion dollars, which mimics the sort of the first announcement Trump made, you know, the day after his inauguration involving Open Ai, Oracle and soft Bank again half a trillion dollars of investment being promised there. So it sounds huge and really, you know, Trumps saying to corporate America, I want to see evidence of you bringing production back to the US, spreading it around the country, employing more people. So from a PR perspective, that sounds great. But you know, the US media have been unpicking this this week exactly what is involved here, and you know, it's sort of come out that every few years Apple does this. They say we're going to spend four hundred billion over the next three or four years, sometimes you know, three hundred billions, So it's not that much of an increase. The information a you know, really good tech outlet in the US said, it sounds like a big deal until you read further down in the announcement and realize it's simply describing the money Apple spends in the normal course of business.
That's right.
Apple's announcements is essentially a promise that it will continue to operate in the US over the next four years.
Yeah, it's smoken virus, isn't it.
It's just I think so yeah.
But really, I think what this says is the big tech players are bending the need to Trump. We're seeing a lot of these people. Larry Allison is in the White House all the time these days, so they realize they have to be really close to Trump. They have to be seen to be doing something at least making it look as though they're doing something to keep Trump happy with you know, ten percent tariff going on all imports from China that is going to actually hit Apple.
I think what you ultimately see is the cost of iPhones are going up fifteen percent more than anything else. You know, So yes, maybe it will hit Apple in terms of people may not be able to afford it to buy their phones because they're more expensive. You know, it's about looking to Trump like you are doing something, or it's about doing something that Trump can lay claim to. It doesn't matter how true or effective or quantifiable it is as long as Trump can stand or Trump's press set can stand up on a stage and say we've done this as an grand like look.
Having said that, though, I mean if you try and compare it to ice situation here, our manufacturing has been hollowed out. We're not even talking about what we need to do to boost our manufacturing base here and get more jobs. And we're really talking about tourism, bringing more students back to Prime Minister this week's in Vietnam, talking about food and beverage and students.
No, you're right, I mean that, you know, it would be good if we had some more rhetoric around it and then that was followed up with action. That is one thing you could say is that he's got people talking about it and potentially moving. Speaking of things that Trump has been talking about and trying to get moving. How were we talking about cryptocurrencies this episode? And in twenty twenty four, cryptocurrencies surged as a bull sentiment engulfed a market for digital assets. It was emerging from the crypto winter where we saw the death of the NFT craze, we saw the FTX scandal and coin prices collapsed.
Yeah, to market where sentiment is everything.
And at the moment, sentiment around crypto and bitcoin is particularly high off its record peak. I think as we record this, the price of a bitcoin is about eighty seven thousand US dollars, so well down from its peak of over one hundred thousand dollars. But we thought we'd get some perspective on this whole issue from Cody Ellingham Kiwi currently based in Kamakura, a seaside town south of Tokyo, Japan.
He has a deep interest in what he calls freedom technology, like decentralized blockchain networks that can enable financial services based on bitcoin that don't rely on centralized banking systems with fees, rules and a desire to mine our data for their benefit.
He's also the creator of the Transformation of Value podcast, one of the best ones I think on bitcoin. Cody is a self professed bitcoin maximalist. He thinks that's the only cryptocurrency with any credibility due to its ingenious design over fifteen years ago by the shadowy figure or collector of dubbed Stashi.
And bitcoin isn't just for geeks anymore. Bitcoin is on the political agenda in the US, with Trump considering creating a bitcoin reserve and regulations to promote the use of cryptocurrencies in general. So stay tuned to find out what all this means for you. Here's Peter's interview with Cody Ellingham.
Cody Ellingham, Ohio, Gerzaimas. Welcome to the Business of Tech, coming all the way from Japan.
How are you doing.
I'm doing great, Peter. Thank you.
You're missing a cracker for New Zealand summer, but very envious off You've been in Japan.
For quite a while now. What took you to Japan?
Well, originally I went over for a university exchange and then I left. I came back to New Zealand to finish my degree, and then I went back on a working holiday to escape the poor working conditions of the New Zealand economy at that time. And so I've been back and forth. I came back for a few years during the COVID era and this time round that's been pretty much a year just south of Tokyo. It's been really incredible. I mean, to be honest, it was a refreshing change to get out of Wellington, to get out of New Zealand and sort of just see what was happening in the rest of the world. Sometimes I wonder that New Zealand's feels like technologically and sort of politically, we're sort of just still stuck in the past a little bit.
Well, it was probably a couple of years ago when I first met you at your office at the time in Wellington. I went around to talk about bitcoin. You showed me Lightning pay and wallet of Satoshi, and you had a mining rig mining bitcoin in the corner. I think your timing was particularly well because you were talking about getting out of New Zealand at the time. Since then, obviously things have tanked, particularly in Wellington but the economy in general. So you've gone out to the world and you know you're doing great things with for instance, the transformation of value. This pod cast you do which is very much about bitcoin and other things as a sort of a bitcoin educator, and I guess really, you know, it's not just about bitcoin as a tool of investment, which is sort of what I use it for at the moment. One of the best investments I've ever made, not through any skill of my own, was just getting in there a few years ago and holding on like hell, not selling it. And now I've done quite well out of it. But as you know and have been talking about a lot, it is about more than investment. You see it as a tool for financial sovereignty to allow individuals sort of to have ultimate control over their wealth without third party interference from banks financial institutions that frankly rip us off in this country. What really got you into bitcoin to begin with? Fifteen years old? Now, when did you get into it? And what was the real motivating factor?
Yeah? Sure, So I was actually always adjacent to it in the sea, so that I was very interested in ideas around Austrian economics and markets and things like this. And I was living in Japan at the time, and I guess I was circling around the bitcoin thing, but I had my reservations for a long time, and so I didn't fully click for me. Then. It was only when I came back to New Zealand and we had the COVID lockdowns, we had what I saw as government overreach and basically money printing that led to all of this inflation and cost of living crisis that we're experiencing today. That really was where my interest really formed, I think, and I started learning about it and studying it. I started to learn about the history of money, the New Zealand dollar and sort of what gives it value and sort of the mechanism of the financial system, and I saw quite clearly that there was something wrong with that legacy system. And so that was the beginning of my journey, and since then I've gotten to become deeply involved in the bitcoin scene in New Zealand and also globally through my podcast The Transformation of Value. But really, as I say, I see it as a tool of financial sovereignty, and you mentioned investing in bitcoin. For me, I think of it more like saving. I mean, it is a currency, and it is certainly the best way to hold your value and to save compared to feat money, which always, like a melting ice cube, loses its value if you keep it in the bank, especially with such high inflation rates. So there's kind of a little bit there in terms of the sovereignty and the freedom side, but also just it's so simple. You just buy bitcoin, you hold bitcoin, you earn bitcoin. You don't have to think about investing in anything or messing around with stocks or any of the stuff that we spend our time worrying about. You just hoddle and you preserve your value, which I think is quite profound.
Yeah, And as you showed me when you were demoing wallet of Sutocia, it's actually an incredibly simple method of payment and transfer, literally through one person having an app on the the other person having it as well sending fractions off of bitcoin if you're a merchant, for instance, you know, a fraction of the fees off doing a deal with payments New Zealand and MasterCard and all of that. So there's huge value in there, and we're going to talk about where it's going in terms of payments. But just to drill down a little bit more, you've called bitcoin the world's hardest money, the scarcity and the resistance to inflation. I guess that what we saw the experiment we ran in New Zealand over COVID and the money printing that went on here, and to be honest, around the world, but particularly you know here in the impact that had on the economy, I guess that's I guess that has convinced you more than ever of the you know, the inherent structural problems we have in the global financial system, which bitcoin really offers an alternative to.
Yeah, So I think if we look at the history of bitcoin as well, I mean, the white paper came out in two thousand and eight and the network came online two thousand and nine, and really this was really close to the global financial crisis and this period of what was seen as some real shenanigans by the US banking system in particular, and so it was really a response to that period in time. And my whole life has been affected by that. You know, I was coming out of school and I was trying to enter the workforce around that time, and New Zealand wasn't hit as hard as the US, but certainly it had this chilling effect, and you know, it wasn't you know, like felt I didn't feel like there was a whole lot of opportunity at that time because of that. And so we've got a whole generation that's gone through that, and then subsequently, with the increase in house prices as well, there's just been the whole generation priced out. And I want to draw the connection there because the ability to print money by the state is directly correlated to the increase in asset prices, because where are you going to put your money. You can't put it in the bank because it's going to lose value to inflation, and so you put it into the most scarce thing you can find, which in New Zealand happens to be housing. In other places there's more of a stock market, or there's other things they invest in, but basically assets are where the money flows and it sort of pulls into these assets. And so I think there's a direct relationship between the money printing of the New Zealand government and the Reserve Bank and the increase in house prices that are making it unaffordable for anyone to live here, especially young people. And so that was also kind of an inflection point for me, is understanding that relationship and how that has been weaponized politically, because you can't go and say, all right, we're going to stop this merry go round because then you'll, you know, politically that's not good because you'll lose votes from homeowners. And so the state is in this really difficult position where it's kind of it shouldn't have this responsibility for money in the first place. And I think bitcoin, because it is third party and neutral, you know, it's not aligned with any state, it can act as a bit of a check and a balance for what would be otherwise the exuberant privilege of money printing we have with the government.
Yeah, and I think that's what you know, a lot of people you know who are business people are probably skeptical. Off is just that you know, who do you go to. Everyone's used to dealing with a bank. Bitcoin is a system that exists, but it doesn't have any central sort of control as such. It's quite a secure system, but hard to get your head around. But I think that's really starting to change in the last year or so with the debut of exchange traded funds, so giving people who would never have downloaded a digital wallet and started trading in crypto, giving them the opportunity to hold bitcoin. For instance, we're seeing it as offered as part of Kiwi Saver investments in New Zealand, so you can have a small amount of your portfolio in bitcoin now. And I think a lot of young Kiwis who are frustrated trying to get on that property ladder, not able to afford to save a deposit for a house, A lot of them. According to Easycrypto and others who've done studies in this country, a lot of people are very interested in investing in crypto, So I think the momentum is building. What's your take really in what we've seen in the last year, the ETFs that have emerged the growing appetite, you know, particularly from the Trump administration. He's a crypto enthusiast himself. He has his own meme coins, but he's got a lot of people around him who've been advising him about things, for instance, like a sovereign wealth fund that may have a bitcoin element to it.
Is this really?
Do you think that the closest we have come to Bitcoin's true moments so far?
Yes, it's interesting. So the ETF so the exchange traded funds are an interesting situation where you've got a legacy financial instrument that has bitcoin price exposure. So it's important to differentiate. You're not owning bitcoin when you own a bitcoin etf' you're just getting approximate price exposure. But the way I see it, the stock market in the US is dominated. Oh well, the stock market in the US dominates the common and in New Zealand it's housing. But in the US it is the stock market, and that has this sort of interesting situation where bitcoin is in a sense colonizing that space now through these ETFs, because it is a much harder asset than the shares of a company, which can be diluted or you know, there's a lot of shenanigans that can take place there, and so in a sense, that's where the legacy system is starting to adopt bitcoin. And then, as you say, you've got a lot of guardrails and systems in place that can protect investors who have exposure to that ETF. And so in a way, it's a bit of a trojan horse. And now we're seeing that in New Zealand there's the quarter have their bitcoin fund that people can get exposure to, and in a way, I think of it a bit like scaffolding, where the reason we have such a thriving stock market in the first place is because people don't know what to do with their money. In my opinion, investing in stocks should be a very diligent, specific thing where you research a company, you read the annual reports, you really standard But at the moment, most people are investing through index funds because that's the only way to keep your wealth and to track the expansion of the monetary supply. And so I think we're going to see that maybe change over the long term, as bitcoin is just the thing in the ETF that it's just winning and a quarter is key server fund. The bitcoin fund has just come out in morning Side that there is that's the most highest performing fund over the last twelve months in u Zelic one percent.
I think, who's something like that.
Yeah, so very very good performance there. But in a sense it's kind of well, you don't actually need the ETF if you've got bitcoin exposure directly through your own wallet. But I think for the medium term being able to access it is really good. Now. I think over time people say, well, I just want the bitcoin, and so it's kind of the scaffolding that eventually will sort of fall away, take the training wheels off and just get the bitcoin exposure yourself. But in the in the midterm, I think people will use these vehicles to access bitcoin. And as to your your comments about Trump, look, personally I despise all politicians and Trump in particular, but the incentives have shown their hand. You know, there is some incentives at play, and there's things going on behind closed doors we don't know about, but it's revealing itself. The state and these politicians are starting to talk about crypto generally, but bitcoin in particular. As you me, no, I don't think any other cryptos have value. I think bitcoin is the only thing that really matters in this conversation. Certainly the scale of bitcoins orders of magnitude larger than any other crypto, and so I think he's just going with the trend. You know, Bitcoin's winning, and he wants to be on the winning team.
Yeah, let's drill into that. You're a bitcoin maximalist. You describe yourself as we've had this conversation when I first met you, that you know, talk about ethereum, which is popular, you know, the notion of smart contracts, Solana and Caydano. You're doing very innovative things on this blockchainvarious blockchains. Then we have that, you know, the trump coin, we have Doge, We have literally thousands of coins. You don't see any value in any of those.
There's no value whatsoever. I think all of them come second to Bitcoin. And really the analogy we can think of is Bitcoin is a monetary protocol, and just like the Internet, there is no Internet too. If people are old enough, they might remember VHS and Beta max. No one uses Beta max. You know, VHS won that battle. You know, there's only one Internet, that's the one we use. And I think when it comes to digital money, there is only Bitcoin. Everything that came after has a rafter problems, whether it's a pre mind of the coins and distributed to the friends of the foundation, or whether it was the nature of the consensus mechanism itself that's flawed. There's a lot of issues there, and I think smart contracting is interesting. If I was to paint it favorably, I would say some of that stuff could eventually come into Bitcoin at a higher layer. But to see it as it's own chain and its own monetary system, I think as a flawed outlook. And there's a lot of grifting in that space, and we saw that with Trump's coin. There's meme coins. The cat's kind of out of the bag. You know, it's not even talking about old coins anymore. It's just we'd call them meme coins, and they're literally, you know, pump and dump. There's no there's no value there, there's no real long term situation. And if we compare that with Bitcoin, which is fifteen sixteen years now monetized from zero to over two trillion dollars in market cap, used globally, adopted by millions of people globally, I think it's a very different story.
Yeah, and I guess the likes of Ethereum sort of emerged for that fact that you know, they were designing quite flexible means of doing things on top of that. And we've heard it's never really eventuated yet, but things in the financial industry, if you're getting a mortgage, you would do all of that as a smart contract on the Ethereum block So it's all incredibly efficient and transparent. This stuff still hasn't really got to the consumer level yet, but you don't necessarily you're not necessarily precluded from doing that using the Bitcoin platform and blockchain. Is this concept of layer two. Maybe explain that for us Cody, you've got the base Bitcoin blockchain and there's all this innovation that's going on on level two to enable similar sorts of transactions.
Yeah, so I think the way we can think about this is think of it as the Internet of money. And when the Internet came out, originally it was really just these kind of underwater cables that connected countries and these connections between universities and institutions, and it was this very natient network. And from that you were then able to plug telephones and then start dialing into other computers, and there was these more and more layers built, and so where we are today, where we have you and I are having this care and this is effectively a telephone call over the Internet, whereas once upon the time the Internet ran over the telephone lines. And so there's this flipping of the tech and I think the way we can think about that with bitcoin is it is this robust, extremely hard money at the base layer, and you could even just say it's a Ledger system at the base layer, and then upon that you can build layers that fulfill other needs. And so one of the common critiques of bitcoin is that it's slow, and I don't think this is really relevant, but the reality is it is ten minute blocks, and so that's maybe not quite fast enough for people who want to do instant payments. But what you can do is you can build payment layers, such as the Bitcoin Lightning network, that are on top of that, and that fills in that need for speed. And so it's kind of like, you know, we're building the Internet. We've got these cables under the ocean and these like servers, but then we're building HTTP, we're building websites, we're building apps on top of all of that. And so Lightning is one example and it's important to differentiate. It's not a separate thing. It is bitcoin. It's atomically related to the bitcoin blocks, and it just happens to be this other way of using bitcoin that's a lot faster, and then there's other other things you can do on top of that. And because it's an open source network, if someone has a great idea, they can go and build it. And so again, when the Internet came out, the earliest TCPIP protocol, that was a standard that people could then innovate upon, and they could build HTTP, they could build websites, they could build FTP, all of these protocols on top of that. And I think we're going to see the same thing, and we are seeing the same thing with Bitcoin, that there will be innovation that emerges to use the blockchain in other ways. And to just look this back to the comments about ethereum, I mean that came out, I guess in response to what was seen as limitations in Bitcoin's base layer. But fundamentally, and I think history has proven this, the approach to doing everything on the base layer, you know, the kitchen sink approach hasn't worked out. I mean, ethereum is not decentralized. You have to have a cloud server to run the thing. You can't run it at home. It's very clunky, it's very big. The size of the blockchain on etherem, it's huge, and it's really hard to validate and that sort of so it kills that decentralization aspect, which is actually the reason we do this in the first place, because blockchains are very inefficient ways of doing things. The only thing that's worth doing it for is money, and so if you're going to do it, it has to be decentralized. Otherwise you might as well just have a database. So yeah, that's kind of how I contrast those two.
Yeah, and you know, there will be a lot of people who have invested or bought bitcoin in the last couple of years. You know, the prices we record this is down a little bit, but it's still at ninety seven thousand dollars per us per coin, so you know, that is massive, almost on a record high for the currency. So there will be people who have bought it and they want to use it, and traditionally that's been a little bit clunky, but we do have the likes of lightning pay, which is you know, new Zealand organization that is enabling payments. There are lots of others as well, and we do now have direct bitcoin to feit currency, So if you go to a merchant, if the merchant accepts this, you can use your bitcoin pay the merchant in New Zealand dollars. That's all seamlessly done behind the scene. So I guess the momentum is building. You talk about the hyper bitcoinization around the world. I guess that is what is going to drive that when it becomes seamless to pay with this digital token that you've got in your digital wallet.
How far away are we from that? Do you think?
Okay, So I think we need to maybe flip the way we're looking at this. So because the way you're describing it for me would be if we were if bitcoin was a technology company, this would be the kind of roadmap would be talking about, you know, but it is, at the end of the day, an open source project is very organic. There's a lot of competing forces within but coin that are trying to keep it strength, you know, keep its strength as a network. So there's a lot of a very different approach to say tech company saying we're going to roll out and do this thing. That said, certainly the payment side, there's a lot of stuff happening there. Lightning Pay you mentioned friends of mine, they have an incredible system where already today I live on a bitcoin standard myself. I use their system to pay New Zealand bills and so through their Lightning Pay interface, if I have a bill with someone in New Zealand, I just pay and it puts the money right into the bank account, and so it's a bit of a gateway to the legacy system. And then on the other hand, if you want to receive bitcoin, you can pay New Zealand dollars and get bitcoin through their system, and if you're a merchant, you can use that same system to receive New Zealand dollars. If someone pays bitcoin, you can receive New Zealand dollars and you're not exposed to any kind of volatility. So there's some really interesting stuff there, and in a way, the legacy system is actually enabling that through open banking and some of these APIs now which are kind of letting letting the bitcoin system come in and again colonize this existing financial system because it has to open up and it means bitcoin companies can get in there, and thankfully we've got a regulatory landscape that enables that as well, and so it's really exciting times where I think we're going to see maybe not necessarily just a unilateral domination, but I think this kind of slow, morephing of the system. And again, people who cannot save money in the bank account because there's interest won't outcompete inflation. All they have to do is hold bitcoin and they'll beat inflation over the long term, and so there's kind of an interesting dynamic. So I guess to answer the question what does the future look like, I mean, I don't have a crystal ball. I think the history of money tends to say that store of value is what happens first, and so people want to hold their value before they start trying to spend it. And so I think maybe we're going to see an extended period of store of value basically a hot ale bitcoin, and then eventually you're going to maybe see more people who say, well, I want to get paid in bitcoin. I don't know exactly how that plays out. I think it's going to play out in a very kind of dispersed way, where you've got maybe pockets of people who do that more than others, and who knows when New Zealand will be I think we are a little bit behind the game in terms of bitcoin infrastructure, and part of that is regulatory barriers. But over time, I think we will see more and more people want bitcoin. And who knows, there could be some geopolitical black swan events, capital controls or whatever which really pushes people towards bitcoin. But for the moment, I would say it's still in the store of value stage. I use it for payments all the time, but some people maybe aren't quite at that stage yet, and I guess it's just sort of a slow, gradual process.
Yeah, and it has been frustrating really just the slow pace of change around regulation and that in New Zealand, although in the last year we have seen, for instance, the Financial Markets Authority has said they are going to set up a regulatory sandbox to allow fintech companies to experiment with technologies like blockchain and AI. That is starting this year, so they'll be able to literally launch services and work with the FMA to basically experiment in a safe way to make sure they're not breaking the law, but to push the boat out a little bit on things. Singapore, other countries have this. There's some work early stages work the Reserve Bank is doing around a central bank digital currency, which I'm picking you are not a fan of.
Yeah, so you mentioned the FMA. I think the sandbox approach. Really the issue with that is that as a permissioned system, you've got to be credentialed to get in and play with things. And the whole Bitcoin network is open source. You know, you can anyone can build apps and work with it, and so it's kind of two incompatible things in that sense. And again there are businesses, awesome projects like Lightning pay who are bridging that gap and going through the work to be a regulated entity that can do that stuff. But ultimately, I don't think innovation happens in those kinds of places. I think you can't really innovate in a sand pit that's operated by the state. I think you have to go out on a limbit and build open source stuff. And so I think a lot of that space is populated by again these kind of old coin projects, which are ultimately worthless systems, and they are quite moneyed in a lot of a lot of situations because the companies and so they can have their token, they can do a pre mind, they can sell their token, and they can get all of this money they can use for marketing their system, whereas again bitcoin it's open source, there's no boss, there's no company behind bitcoin, and so it's a lot more grassroots and so I think that's one angle. And then the other angle you mentioned are the Reserve Bank and the CBDC, and I'm certainly at odds with what they're trying to do there. I think on a political level, they are trying to I think, long term ensure the stability of the New Zealand dollar, which is actually I think under threat from things like stable coins the US dollar dominance. So I think there's a lot of geopolitical considerations, and so bitcoin is just another thing nipping at their heels. I don't know actually what the long term outlook is for the New Zealand dollar, if I'm honest. I think the yen as well, where I am in Japan, is certainly not doing too well. I think they've got a lot of political considerations and bitcoin is just another one of those. And so the CBDC I see as a kind of a stop gap where they can innovate just a little bit more and to ensure the New Zealand dollar doesn't die straight away. But if you look over the long term, the history of war feat money is as they all go to zero. I mean, the New Zealand dollar arguably is only since nineteen sixty eight, I think when we moved over from the pound, and you know, all of these currencies after a few decades they all eventually die. So I think we are going to see that in slow motion as people lose trust in the state, in the government money and who knows, whether it's stable coins, bitcoin or you know, hard metals. Maybe there's things people move into and they move away from New Zealand's currency, and.
We're sort of seeing that to some extent. For instance, gold, you know, China has been hoarding gold, other countries, the bricks nations have been buying up gold deposits. So that's one indication of the lack of confidence, for instance, in their own currencies. Also the US dollar we've seen l Salvador, although they pull back from that in the last couple of weeks. Bitcoin as a you know, as a nation state sort of currency, a recognized currency there, they are still investing in bitcoin. But there have been a few experiments like that having there in smaller countries that have very little confidence in their currencies, high inflation, high corruption, they see that as potentially a way to improve live, improve life for their citizens.
Yeah.
So, I mean it's classic adage that in times of strife you go into gold. I don't know. I mean, gold is a bit of fun, but I don't think how relevant. I don't think it's that relevant in the modern world. It's it's hard to move around. You know, you can you can store it, but how are you going to liquidate it? I mean, bitcoin innovates on that in so many ways, and you can send it anywhere, you can take it with the overseas, you know, can't you can't take gold on an airplane really without getting detected. So there's a whole lot of considerations there. But I think when it comes to experiments with us, the world is kind of crazy, man, Like, well, you know what's going on in times of strife, people are going to look for hard assets to park their value, and I think bitcoin's doing a really good job of that. You've seen starting to see countries experiment You mentioned our Salvador, they played around with this legal tender law, which I think they've just repealed. I don't quite know the full implications that there might have been some political pressure from the IMF, but regardless, it was an experiment and it was really interesting, and so you've seen all these companies now start to move to ourself or you can still use it there. It's just I think they've just changed the law around the legal tender status, but you can still use it. Really exciting stuff. There's a few other localities in Switzerland. There's Lugano, which is a city that has you can use bitcoin amongst all the merchant There's a few places in the Philippines other other kind of bitcoin communities where there's this circular economy emerging, and I think it would be really awesome actually to see something like that in New Zealand. I can also highlight Queenstown as a bit of a bitcoin hub. That's where part of Lightning Pay is based out of Queenstown and there's a few merchants there. So we're going to have actually having an event there in March that I'm going to attend and we're going to pay on bitcoin, and it's going to be kind of cool. So I mean, I'd love to see a bitcoin circular economy like that in New Zealand, but yeah, sort of early's still early days, I think for that that kind of thing.
Yeah, and look, it's not necessarily bitcoin based, but we're always see some really good innovation in New Zealand pockets offt it. We don't necessarily have a you know, an industry that focuses on this, but you have, for instance, immersive, really innovative company Jerome Farre's company that is sort of interfacing with master card and and bitcoin, so you can very easily use your bitcoin to pay it at master card terminals and hundreds of thousands, if not millions of them around the world. You've got future Verse, which is around non fungible tokens and gaming, and like we've talked about Lightning Pay and several others. So do you get a sense that, you know, we have a thriving software as a service industry in New Zealand. We've exported zero software and others vend to the world. When you look at the sort of the grassroots stuff that's going on and web three and blockchain ventures in New Zealand, are you sort of heightened by the activity.
So I think, again, the bitcoins really were my focus is, and I'm a little bit disappointed. I think generally the quality of these other systems is pretty low. And again they're all hype. They're all hype. They don't really have any true value, and they're sort of riding the train. And I think we have to unpick the hype from the reality. And the same could be said for AI stuff. I mean, there's certainly a lot of value there, but it's sort of you see it float by on LinkedIn and you think, okay, we've hit peak. And so with the crypto stuff, I think a lot of that is vestile from the last bull run and all of that was driven by bitcoin, you know, and so then it flowed into these old coins, and so I think, really people need to be critical. Again, blockchain doesn't matter unless it's decentralized and secured like bitcoin. NFTs are again interesting, but they don't if they're not on bitcoin. You might as just have it in a database, you know. And so I think there's a critique there of what's going on in New Zealand. Now that said, with the bitcoin stuff, there is a few companies doing some awesome stuff but it sits a little bit, just a little bit outside of the Overton window of sort of what's acceptable, because again, bitcoin is is pretty big as an idea, and it is disruptive. You know, we're software and SaaS and that all of this stuff is about disruption, and the biggest disruption we can make is disrupting the monopoly on nation state currency. And I think that's really the big piece, and that's maybe just a bridge too far for some people who want to play in the fintech sandpit that the government has made for them. You know. So I guess I have a little bit of an aversion to maybe some of those projects that certainly don't plan too the bitcoin world. That's sort of maybe a little bit of a distraction. Though certainly some of that stuff, if it could be positively, if it could be brought over into bitcoin, or maybe some of those people can work on bitcoin stuff, that could be really awesome. But yeah, there's sort of the software landscape generally, though in New Zealand I think is pretty strong. I'm a big fan of some of the agritech stuff that's happening as well and New Zealand, I mean that's where we need to be going is exporting software instead of milk.
You know, I guess the two remaining issues that are barriers to bitcoin adoption and the hyper bitcoinization of the world really is lingering perceptions of trust. And this isn't anything integral to bitcoin. This is about the actors who work around that network. We've seen exchanges like Dasset Cryptopia here in New Zealand collapse owing a lot of money. FTX was a big moment for the industry Binance. The CEO went to jail, huge finds there, So I guess we've got to work through that. And the other thing is the volatility. So interested just finally to wrap up really what your thought is on those two things. Are we going to see and with Trump throwing his own mean coins out there and sort of polluting the pond to some extent, are you just going to see more bad activity that's going to sort of taint this whole area, particularly bitcoin, And as it matures and it's more uptake and interest in bitcoin, either peaks and troughs are going to flatten out a little bit or is it always going to be a boom bust sort of deal holding and investing in bitcoin?
Yeah, so I have a lot of sympathy for people who have maybe had issues with a bitcoin of lost bitcoin through exchange hacks and things like this. You know, there's certainly maybe people who are not so tech savvy and they don't know that there's other ways of holding bitcoin. I certainly have sympathy that for their loss. And unfortunately, in some of these situations there is a regulator who can come in and make things right. But ultimately, I think bitcoin is a profounding new idea in the sense that you can self custody your funds. And this is not possible currently unless you're holding cash, physical cash in your house or physical gold that you can't self custody or money all of it lives in bank databases, and bitcoin is totally opposite. You can hold this, you can hold it in your own wallet, and it's out there on the blockchain. Your wallet sort of unlocks those funds. No one own says access to it. So that's a very new and kind of radical concept of ownership. And so it's naturally it's going to be quite quite hard for some people to get their heads around that. And so if you have your money with a custodian, the custodian is now the risk point, and so I think I would encourage people to learn about the nature of self custody and what's involved. And it really is as simple as twelve words that you get from your wallet that you can write down and secure your bitcoin with that. There is maybe a little bit more nuance about exactly how you do that, but it's it's a process that people need to go through. And if you can, if you can drive a car, you know, if you can use a computer, you can, you can use bitcoin in a self custod of your way. In terms of these bad actors, again, I think we are going to see this probably for the for the foreseeable future. There's going to be a number of these sorts of exchanges and businesses that come out that are actually not holding the bitcoin they say they are. They've got paper bitcoin for example, that they're selling to people, but it's not actually a real bitcoin, and so there's going to be risk and we saw that with ftx and other exchanges in the past. But again, doing a due diligence, doing a bit of research and understand exactly what you need to do to get bitcoin into your self custody is really important. And then I think also the lens or the I guess you could say the mantra of bitcoin not crypto is really important here because if you brought into the trump coin, for example, you got rugged. You know, you lost all your money. If you've brought into any of the other thousands of cryptos that have come over the years, you're going to lose money. Whereas bitcoin, you hold it, and generally speaking, over a three or four year period, it's always going to increase in purchasing power. There are ups and downs, and there is volatility, and man, that is the rollercoaster ride. You know, when you and I last spoke, I can' quite remember what the bitcoin price was and New Zealand dollars, but it was certainly a lot cheaper than it is today. And you know, I had to ride through all of that, but I understood the network. And so I think education is really the big piece here. And so if people, if they can, I would suggest reading some books about bitcoin. I can recommend the Bitcoin Standard is a really good place to start. There's some really awesome meetups happening in New Zealand as well. We can talk to real people, genuine people and kind of learn about how bitcoin works. So I can sumably call out the bit key we meet ups. There's a place people can go to learn about bitcoin, and I kind of ask the questions that are burning. But really education is the key piece. And once you begin that and you sort of see how it unfolds, you've begun down that rabbit hole. There's no I don't think there's any coming back to the old way. So yeah, that's all I would say. Education is important.
Well, it's a great podcast, The Transformation of Value. You got some great guests on there, and I highly recommend it as someone who has been educating myself on this has been really valuable and for answering some of the bigger philosophical questions about you know, financial freedom and what this is all about, what bitcoin represents. So thanks so much. We'll put links to that in that book you mentioned in the show notes. And thanks so much for being on the Business of Tech, Cody, and look forward to catching up with you again and seeing what potentially crazy stuff happens in the world in twenty twenty five and what it means for bitcoin.
Yeah, thank you very much, Peter.
So being and you into.
Bitcoin, No, no, I did dabble. I wish I had kept my money in there, but you know, I think it was around the fifty sixty thousand, but I only had like one hundred bucks in anyway, just just just to try it out. But I do kind of have an understanding of what he's saying. It's like cryptocurrencies are out of the bag now the box is open, and if we want one that is going to be the you know, dominant useful crypto, it really kind of makes sense for it to be Bitcoin in many ways.
So there's there's that, there's and that's what I'm really interested in. I've bought some in the hope, you know, several years ago, I bought this in the hope that, you know, I can start using this and educate myself on it and start transacting with it. I haven't touched it since then. I haven't used it to make a transaction. Cody a few years ago took me through that whole process, so I know it's possible, but I just don't see the compelling proposition to do it. But it's not just about convenience or even lower fees. I think for people like Cody, it's a fundamental transformation of the financial system and what they see as freedom from an oppressive controlling system, including the government with the Reserve Bank and the banks around it. And it's really quite remarkable when you start listening to his podcast. You know, a lot of these people really see that the currencies are collapsing, inflation is killing spending power. The only way really to counter that is backing bitcoin, which, as he says, you know, is volatile, but has been increasing in value on a trend line over the last fifteen years.
Yeah. Yeah, I think there is a bit of a logical jump from there we're having a crisis of currency and economic inflation to straight to bitcoin is the only option. I mean, listening to him speak, I thought he made some really excellent points, and I really liked a lot of what he was saying, But they were few kind of alarm bells that rang for me, and I think one of them is what you've alluded to just now, which is the number of times that he repeated just hold it and it will grow, and it's like, actually, that's not really how things work. The reason, one of the reasons that we're facing this massive economic issue at the moment is because of the growth at all costs mindset, Like, I don't think having a different currency that grows faster is the answer because they can't just do it forever.
No, it can't.
But I guess he's looking at the fundamentals off a limited supply and a truly limited supply, they'll only ever make so many bitcoins.
It's getting harder and harder to.
Make that, and that's other issues we've talked about around the energy required to do those transactions or those calculations to put blocks on the chain. But then there's the issue off volatility. So I think Cody basically has all you know, transacts everything in booitcoin, which is fine if you truly believe in that upward trajectory which is holding true over time.
But it's those big dips.
So if you're trying to buy a big ticket item in your car, is something like that, and unfortunately you hit the dip.
That's the thing. I think most.
Consumers don't want to bar for it at the moment just because of that volatility.
And it's fine if you have a lot of money. You can do that. If you're independently wealthy, or if you have a lot of assets and you don't have any concerns. But if you're somebody living day to day who just wants to be able to get by, buy groceries, buy a car or a house eventually, and knowing how much your income is is really important. The reality is is that currency based on something that is fluctuating constantly, it will just cause so many issues for so many people, those people who are just scraping by, those people who are even just like lower middle class, that's just not going to just won't work, just w and then is the other issue of self custody of your bitcoin, which is the only way really to keep it safe. And I just think there's you know, it's improved the ability to do that, but it's still just something that the average consumer won't touch with a barge pole. So there's still a number of fundamental barriers to get over with bitcoin. But what I fundamentally love is just the efficiency of making transactions, so payments to the obvious place where this can save us money, do things quickly with those Layer two applications on bitcoin, even with Ethereum and others as well, smart contract tracts. Those are the things that really my eyes light up really about these technologies. A more efficient way to do things with money in the digital world, and I'd like to see innovation, and there is some great innovation happening even here in New Zealand. A handful of companies are doing really cool things. They're still quite niche, but definitely, I think what Trump is doing and changes at the SEC and the financial sector's embrace off exchange traded funds, it's just going to make all of that innovation more likely to happen. Ultimately, I think his messages are good, one which is, go out and educate yourself. If you feel uncomfortable about the extent to which your reliance on big finance essentially and you're seeing what that does to your life, there may be an alternative. Go and educate yourself on it. Don't take my word for it. Go and have a look at the stuff. Play around with bitcoin, see what you can do with it, transfer it to other people. You can now pay for things with bitcoin if you want to do that. Just don't trust anyone.
Just just don't trust anyone, and definitely don't trust the Trump mean coin or encodes you any the other cryptocurrencies. And I think he's probably got a point there.
I'm currently considering a campaign to change the term to scamcoin. I think we should. I think that's what we should do. I think calling it memecoin is far too kind.
Yeah, fair enough.
Thanks to Cody Ellingham for coming on check out his own podcast, with weekly episodes on bitcoin and freedom tech. You can find it at the Transformation of Value dot com.
Show notes and this week's reading list are in the podcast section at Business Desk dot co dot NZAD.
Where you can stream the podcast on iHeartRadio. It's also available on your podcast platform of choice.
Get in touch with your feedback and topic suggestions were on LinkedIn and blue Sky.
Next week, we look at China's designs on the Pacific and tap a local expert on his views about whether we should get involved in the Orcust defense tech arrangement with Australia, the UK, and the US.
Tune in next Thursday for that.
In the meantime, have a great week.