القائمة الرئيسية



 As with many good stories, it starts with a Twitter thread.

Anthony Pompliano kicked things off by summarizing an article by Avik Roy.

Mark Cuban, owner of the Dallas Mavericks, investor of Shark Tank fame (and who was pitched sub-$300 bitcoin by Michael “Bitstein” Goldstein in 2015 at SXSW) somewhat caustically responded:

From there, Preston Pysh jumped in to remind everyone that Mark Cuban has been promoting Dogecoin publicly while he has only about $500 of it. From there, Cuban confronted Pysh asking him to disclose how much bitcoin he had. Pysh then offered to have a conversation with more nuance on Twitter Spaces, which Cuban quickly joined.

With the context out of the way, let me give props to Mark Cuban. He went into a Twitter Space with people who strongly disagreed with him on a Saturday night to discuss this more. He very easily could have signed off and not continued the conversation, but he chose to engage with Pysh and others about Bitcoin in more detail.

This article is an attempt to summarize the high level points. I’d encourage you to listen to the conversation in full.

First let's start where all parties agree. Cuban has updated his investment thesis from 2019 where he famously said he’d rather have bananas than bitcoin, because bananas have utility. During the Twitter Space, Cuban said, “Bitcoin is the best store of value. [That] is why I own it.”

Where there is a departure in perspectives is the likelihood that bitcoin will become a reliable medium of exchange. Anthony Pompliano asks Cuban what needs to happen for bitcoin to check the box and be acknowledged as a medium of exchange.

Cuban replies, “We need to have another 2017 with inflation.” Adding, “[bitcoin] would not be as good a store of value, people don’t feel shitty when they spend it and then it goes up another $100 and they just realized they left $100 on the table.”

Pomp expands on this, “So if Bitcoin continues its adoption, and it goes from 100-150 million people globally holding it, if we start going to 2-4 billion holding it, the USD exchange rate volatility will subside, and at that point more people start to use it, you think that is a viable path?”

Cuban quips back, “Yeah, and if the Mavs make every single shot they take we will be undefeated.” Cuban adds, “The problem with that perspective, is that you have a lot of other cryptocurrencies, I don’t like to even call them currencies, let’s call them platforms that have their own value and differentiation.”

Earlier in the conversation, Preston Pysh points to the work Jack Mallers and Strike are doing with the Lightning Network in El Salvador, “Are you tracking what Jack Mallers is doing? Because what he is doing is auto-swapping fiat currency into the Bitcoin Lightning Network, transporting it down to El Salvador, and if people want to accept the local currency of Dollars or whatever they want, it immediately swaps back into that currency. So he is using the Bitcoin rails to conduct all of these transactions… even though people don’t even know the [Bitcoin] network is being used”.

Cuban replies, “So what you’re saying is that Bitcoin is going to compete with Solidity-compatible blockchains and L2s, and it’s Lightning versus optimistic rollups, against Polygon, against Cardano, against Solana? That is not a positive for Bitcoin.”

Cuban fails to understand the censorship resistance and decentralization that is the value proposition of bitcoin, as Lightning is the only Layer 2 solution that maintains these qualities.

Cuban’s larger critique of Bitcoin as a community is that from his experience of investing in hundreds of businesses and starting many, one thing an entrepreneur has to do is not lie to themselves and think they are infallible. He believes Bitcoiners are blind to the competition that is out there.

On the subject of other projects, Peter McCormack asked, “Why are people buying dogecoin, because people think it's stable?”

Cuban exclaims, “Because it's fun! They are part of a community and they have fun with it, it's like going to an amusement park and they have a chance of making money, and if they don’t make any money they can buy a Mavs jersey or go to AMC and watch a movie.”

What this does not address is the loss of value, up to 100%, of memecoins once their time has passed.

Peter also spoke about a lot of his experiences spending time in El Salvador seeing Bitcoin work as legal tender first hand. This is where Cuban puts forth a critique I had never heard of before with El Salvador adopting bitcoin as legal tender.

Cuban argues that, “El Salvador has a fundamental problem:[while] they can use their volcanoes for energy to do mining [...] it is not an organic bitcoin economy if the majority of the bitcoin comes from purchased bitcoin, which introduces a lot of overhead and time.”

He proposes that if El Salvador could mine enough bitcoin from their volcanos to support the entire Salvadoran economy, it could fix this problem he has identified.

We learn that Cuban doesn't understand the reality of remittances; Salvadorans abroad are selling their labor for new fiat and/or btc. That's where value is being infused into the economy.

Cuban then pivots to Axie Infinity as an example of a different way to distribute a currency. “[Axie Infinity] will make the argument that hundreds of thousands of people in the Philippines are making money by playing this game and if this takes off enough […] it will become a de facto currency for them.” He adds that a currency needs to be organically generated.

At this point I jump into the conversation to point out a key difference between Bitcoin and other projects. “Bitcoin had a divine conception of no one caring about it for 18 months before  there was a market price. All of these other currencies are coming in now saying, ‘get in on my cap table, you get in at low pre-seed vesting prices, and then we get to launch it onto the market and retail gets to buy it at 100x.’”

Cuban replies, “I’m talking about today.”

I think this distinction could be an article in its own right, so I won’t expand upon it in detail here. What I will say is that there is a fundamental difference in how someone like Mark Cuban can invest in this marketplace, getting privileged access to these networks long before the retail market can and at prices several orders of magnitude lower than what is listed on an exchange.

Pysh brings it back to the core thesis: “When you look at this at this bond market compressed to 0% how do you see that ending?”

Cuban replies that central banks will eventually raise interest rates and there will be a market correction like there always is.

Pysh follows up, “So as the entire planet is levered to their eyeballs and interest rates are at nothing percent, you actually believe central banks are able to raise interest rates and the economy can handle that?”

Cuban replies that this narrative is creating a myth that central banks cannot do anything right. He disagrees with the premise. Saying that trying to keep people healthy and prevent a depression is a valid effort.

This is a core departure in world views, as Pysh presents Bitcoin as an emergent decentralized alternative to the current manipulated market structure around the dollar.

Cuban sees a different path to addressing the issue. “Let me give you an alternative: what if we use artificial intelligence [and] we increase productivity 20%?”

McCormack replies, “You’re literally selling a new myth.”

Cuban exclaims, “Yes exactly! That’s my point!”

The point Cuban is making is that if productivity is able to outpace the rate at which new money is being printed, you have a path out of the current rut our current economy is in.

At this point I’ll direct you to a thesis Peter Theil has around crypto vs. AI from 2018. In short, you have an axis of centralized versus decentralized, where cryptocurrency is inherently an emergent libertarian idea, whereas AI is communist. Thiel even predicts that China is going to stop bitcoin mining in China, which we have seen play out over the past few months.

Cuban disagrees with the Thiel thesis. “There is no correlation or causation between AI and bitcoin at all. If I had my druthers between AI increasing our productivity 5%, 10%, 15%, I’ll take that over bitcoin taking over the economy every single time.”

McCormack points out that AI having such gains in productivity is an even bigger myth than Bitcoin, since Bitcoin is provably working and growing today.

Pysh then asks Lyn Alden if central banks can stop quantitative easing (QE). Alden says, “they can stop for a period of time, they can do another cycle probably, but we will be put back on the same track they have been on for the past decade.” Pysh follows up, “so for 5-10 years they can stop what they are doing?” Alden responds, “No, structurally I don’t think they will be able to do that for quite a while, real rates will be negative for a persistent period of time.”

Cuban brings it back to what he views is the consumer perspective. “Consumers are going to find applications they really like and where they are easy to use. Where those applications are hosted will be the winners if they are able to sustain themselves. It doesn’t matter what we think about Bitcoin or the decentralization.” Cuban pauses, and says, “Ok I don’t want to get everyone hyped. I just made a bunch of people's blood boil by saying it does not matter about the decentralization, let's take a step away from that”.

Cuban points out that you fundamentally have the Lightning Network versus the thousands of other protocols which are being greatly subsidized, so any non-store of value application Bitcoin is trying to address has a large uphill battle.

This brings us to maybe the most memorable part of the discussion. “Consumers do not pay attention to the intricacies.” He added, “don’t sell the recipe, sell the brownie. The consumers buy the brownies, they focus on the brownies that work for them [so] they do not worry about the recipe. So if enough people are buying different brownies and love the brownies and those brownies may not be as decentralized as you may like, they will ignore that fact and keep on buying those brownies. Stupid analogy, lots of people will tweet that it is a stupid analogy, but it’s the best I could think of.”

Dennis Porter adds onto this asking about the migration of proof-of-work to proof-of-stake and challenges with doing that.

Cuban as a retort points to 2017 and the forks away from the Bitcoin network, which is fundamentally a different situation. What happened in 2017 was that people were able to continue existing with the consensus rules they wanted. With a migration to proof-of-stake, there is no party advocating for a different option, so the entire Ethereum community needs to move with that change.

Cuban says, “if they have to roll back, then great […] I’m guessing Vitalik will figure it out”.

Porter then mentions the continual decrease in the ETH mining subsidy, comparing it to cutting the pay of your security guards. Cuban compares this to the halving that happens in Bitcoin, which misses a key distinction in that the halvings in Bitcoin were predetermined from the start of the protocol versus ad hoc decisions made by ETH developers.

Overall I found the conversation both enlightening and frustrating. It was a treat to see a Twitter back-and-forth evolve into a higher bandwidth form of communication on Twitter Spaces. It is no surprise that Cuban’s outlook for Bitcoin greatly differed from the others on stage, and this was an important dialogue to have. As a spontaneous conversation, it was hard to keep a set agenda of topics to discuss.

I’d like to thank Preston Pysh for having me up on the stage. My personal hope is that Cuban keeps in touch with Pysh so they can have a oneon-one conversation to dig into this more. If it took two years for Cuban to go from saying he preferred bananas over bitcoin to finally admitting he sees at least some value in bitcoin, maybe in another two years he will ditch the brownies and fully take the orange pill.