UpOnly: Chats with Crypto Experts
Ari Paul of Blocktower on maximilism, decentralization, and investing
Episode guests
Podcast summary created with Snipd AI
Quick takeaways
- Incorporating advanced privacy measures on Bitcoin could enhance its appeal and functionality.
- Enabling decentralized finance on Bitcoin offers new opportunities and competition in the crypto space.
- Embracing collaboration and innovation can lead to a more versatile cryptocurrency ecosystem.
- Options trading popularity signifies a shift in retail trading behavior towards leverage and speculation.
- Understanding leverage and risk management is essential for successful options trading in both crypto and traditional markets.
Deep dives
Upgrade in Privacy and Technology on Bitcoin
The introduction of zk rollup chains and addition of opcodes on Bitcoin could significantly enhance its privacy and functionality. Transitioning towards a more private communication layer could make Bitcoin more competitive and appealing for users seeking increased privacy and security in transactions. Discussions and proposals within the community are hinting at potential future changes that could elevate Bitcoin's capabilities, allowing for more innovation and experimentation in the space.
Importance of Defi Integration on Bitcoin
Enabling decentralized finance (DeFi) functionalities on Bitcoin through rollup chains and opcodes could open new opportunities for users, attracting interest from those involved in Ethereum's DeFi ecosystem. This move would not necessarily aim to replace Ethereum's DeFi offerings but to provide additional options and solutions for users across different networks. Embracing DeFi on Bitcoin could foster competition, innovation, and diversified use cases within the cryptocurrency space.
Community Dynamics and Tribalism in Bitcoin Advocacy
The debate between Bitcoin maximalists and those advocating for innovation and integration of new technologies reflects a deep-seated tribalism within the community. While discussions may often devolve into factionalism and chanting of established beliefs, exploring new solutions and embracing contributions from various projects could lead to enhanced functionalities and security measures on the Bitcoin network. Collaborative efforts and openness to experimentation could pave the way for a more robust and versatile cryptocurrency ecosystem.
Prospects for Bitcoin Evolution and Ecosystem Development
As Bitcoin continues to evolve, incorporating advanced privacy measures and expanding its functionality through interoperability with other networks like Ethereum, the cryptocurrency stands to gain increased utility and appeal. By leveraging the strengths of diverse cryptocurrency projects and innovative technologies, Bitcoin can enhance its value proposition as a leading digital asset. Embracing these changes may offer users a more secure, efficient, and versatile financial ecosystem in the future.
Options Trading in Crypto and Legacy Markets
Options trading in both crypto and traditional markets is becoming more popular, with retail traders increasingly engaging in speculative trading. In the crypto space, retail traders often turn to options for leverage and the ability to speculate without facing margin calls. Options provide a unique opportunity for non-professional traders to benefit from volatility and hedge risk. The rise of retail trading platforms like Robinhood has also contributed to the popularity of options trading.
Implications of Options Trading on Volatility and Risk Management
Options trading has implications on market volatility and risk management, especially as retail traders increasingly participate in this space. Retail speculation through options can impact pricing and market dynamics, leading to increased volatility at times. However, for astute traders, options present opportunities for targeted risk management strategies.
Balancing Leverage and Risk in Options Trading
One aspect of options trading involves balancing leverage and risk. Retail traders seeking higher leverage often turn to options for speculative plays, aiming to amplify their gains. However, managing risk becomes crucial, as options trading can expose traders to potential losses if not used prudently. Understanding the dynamics of leverage and risk is essential for successful options trading.
The Evolution of Options Trading and Access to Derivatives in Crypto
The evolution of options trading in the crypto space mirrors developments in traditional markets. Retail traders now have access to derivatives platforms like FTX and are exploring options for leveraging their positions. As the crypto market matures, the availability of structured products like options adds depth and complexity to trading strategies, offering new avenues for profit and risk management.
Speculating on Options with Leverage
One key insight from the podcast discusses a method for speculating on options with leverage in a cautious manner. The speaker emphasizes the importance of not risking one's entire account and suggests a smart approach for casual speculation on options.
The Significance of Interoperability in DeFi
Another main idea highlighted in the podcast is the growing importance of interoperability in the decentralized finance (DeFi) space. The discussion points out the emergence of innovative projects focusing on connecting DeFi to real-world lending, aiming to tap into substantial pools of capital. This trend is identified as a significant value creation opportunity in the crypto market over the next few years.
Links
Show Partner
This episode is presented by FTX. Trade on an awesome mobile interface fee-free, and still get all the great portfolio tracking features you know and love: https://uponly.tv/ftx
Show Notes
Introduction
– Ari bought first Bitcoin in 2014
– Really dove into crypto 2016
– Friend emailed him in 2011 asking to check out crypto, Ari said it won’t retain value, not backed by guns like fiat
– Ari: “For crypto you kinda gotta know a little bit about a lot of things”
– Got involved with crypto through crypto twitter
– Cunningham’s Law – “The fastest way to get an answer on the internet is not to ask a question, but to state something wrong”
Ari’s Headspace
– Long term mostly thinking about the future of crypto
– BlockTower bets on where the world will be in 1-3 years, not 10-20 years
– Fascinated by the big picture
– Huge believer in giving people defensive tools for overbearing states
VC Stuff
– BlockTower is a trading firm by nature, so they invest in projects that they can actually be power users in
– Ari: “Evaluating seed stage teams is its own skillsets, very different from evaluating something like Microsoft”
– Cobie skeptical of a16z’s success in crypto, followed like 4 deals they did and got crushed
– A lot of the time, timing is much more important than vetting skill
– Ari: “If you were trading NFTs 2 years ago, it almost doesn’t matter if you were good it just matters that you were doing it”
Privacy
– Ari: “There’s a whole tech stack for privacy that’s missing”
– Countries can control the internet very easily
– People think the internet is super hard to control – there is literally a bundle of wires that delivers the internet to an entire country
– Ari: “zk-rollup chains where you can shield the mempool… there is some super cool math we’re building into the system now that could change everything”
– You could fork Ethereum and add it as a rollup chain to Bitcoin
– Ledger: “Is there really a market for that?”
– Ari: “It seems likely in the next 2 years that we’ll get a soft fork to implement this”
– Ari: “There are bitcoiners who are pitching this as humanitarian technology but against adding privacy technology that exists…borderline unethical”
Making ETH Maxis Mad
– Ethereum is a risky startup competing on tech
– The odds it is a market leader in 10 years is under 20%
– Facebook didn’t need a single Friendster user or dev
– If you have an industry that’s going to 20x, you don’t need to take existing users
– Ari: “Solana has something like more than 10,000 active developers now”
– Ethereum does not have much of a moat, it has a little bit of brand recognition, a little bit of regulatory head start, some dev moat, but largely the moat is very small
– Ethereum cannot move as fast, cannot take as much risk. It’s hard to maintain its lead
– Cobie: “Do you think Ethereum should have a canary network, kind of like Kusama?”
– Ari: “(pause) I actually haven’t thought about that”
– Seems to be a real, good idea
Solana
– Ari has been recommending Solana for the last 2 years
– Well intentioned team, real project, very cool innovation at the communication layer
– *Ari still has a long Solana position to be clear*
– It’s quite centralized, depends on the team to stay up, has a real path to decentralization
– It’s a highly speculative early stage bet
BNB
– Exchange coins are basically sold as equities
– There are tons of regulatory actions which could likely be negative for $BNB
– Would not hold the coin
Cardano
– Ari: “Cardano I actually know very little about”
– The only thing he really believed would stick around for 5 years was Bitcoin, DeFi and NFTs
– Ari: “I worry that in 5-10 years the winning metaverse will be Facebook or Fortnite, some centralized entity, which scares me because I want a decentralized world”
– Ledger: “so Cardano” lol
– Ari: “I am deeply skeptical of Cardano”
– Ledger: “Dump it”
2017 Bull Market
– Ari bought $50k calls in 2017
– Did it to maintain upside exposure while not keeping material risk on
– Went onto CNBC to talk about it, they mid-curved his thinking
– Ari: “Options are a bet on volatility, not the direction, because you can always hedge the direction with the underlying”
– Ari: “If you can’t define skew and kurtosis then you probably shouldn’t be trading options”
Crypto Investing
– Ari: “If you’re investing with a lot of small bets in alts, it almost acts as a call option”
– Ari thinks vol is about fair today
– Basically every time Bitcoin vol gets below 60, Ari buys it
– Ari: “The crazier the bull market the crazier the retrace”
– Ari: “My basic thesis now is DeFi 5-10x’s here and then retraces 80-90%”
– Ari: “The biggest value add from crypto over the next 12-18 months is connecting DeFi to real world lending”
FINAL ALPHA
– Ari: “It doesn’t matter how much money you make, if you don’t keep yourself healthy you won’t enjoy it”
– Focus on your health!
Notes by Kevin
Music by GiovanniPickle
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