The Godfather Of Crypto Trading: My Final Warning To Bitcoin Holders transcript

Arthur, you are one of the inventors or founders of perps trading. Is that right? >> Correct. >> Some may call you the godfather of perps trading. Have you ever heard that? >> Yeah. >> Today I sit down with the godfather of crypto trading, Arthur Hayes. >> The market is here to take your money. It is not here to make you money. >> About what comes next for Bitcoin. >> This is the road to 2008, the road to what created Bitcoin. >> The looming 2008 style bubble that's about to burst.

What did you watch when you were in the markets in 2008, the big financial crisis? Were they buying back bonds? Was it a similar setup? >> we're in the green across the board right now, on pace to hit more record highs. >> How close were they doing the same stuff up until the crash? Watch today's full video. >> I think the Clarity Act is a terrible thing. >> So you understand everything. >> That's the that's the the capitulation candle that everyone's looking for.

That's the time to buy. That's the March 2020 equivalent. >> want to miss this. >> The price of Bitcoin is going to be in the hundreds of thousands very quickly. >> Including the one hidden gem altcoin you see Do you see being a top 10 cryptocurrency by market cap? >> Absolutely. >> That Arthur believes is the next Ethereum. Bigger than Ethereum? Top two? >> Absolutely. Top two. Has to be. >> Click subscribe so you never miss conversations like this, and let's start.

Arthur, [music] you started your career as a trader in Citibank, Citigroup, correct? >> Uh City and Deutsche Bank in Hong Kong. Yes. >> As a guy that comes from the traditional world, what do you think all these traditional players think [snorts] the headline right now for crypto is? They look at the crypto market in 2026, what are they thinking? >> Debt sustainability. I think that's the new word that everyone on, you know, TradFi is talking about.

The the $40 trillion in US debt, the interest payments, the issues with all a lot of other large government debt markets, and they're worrying are these bonds that I hold going to be worth anything in 5 years? Is inflation going to rip? Um do I hold the right assets? And I think obviously that was underscored today in the move after US Treasury Secretary Buffalo Bill Besson um initiated the the buyback operation, or at least doubled the buy the authorized buyback amount um for the long end of the Treasury curve.

So, it's all feeds into this sort of fear of, "Oh my god, I own all these government bonds. They've massively underperformed every other asset. Why am I holding these things?" And guess what? The US government continues to prove time and time again that you can't actually sell these things when you need to, right? So, any country that wants to sell these in size is, "Oh, hold up. Hold on a second. Let's you know, do the FEMA repo facility.

Let's do this. Let's do that. Oh, you're not a great ally. Oh, whatever, right? And so, it's you hold this asset that's supposed to be your savings as a nation for the trade that you've done as opposed to holding oil or gold or fertilizer or whatever. And then when it comes time to realize that, to do something for your nation or for whatever reason you want, doesn't really matter, the authorities in the US like, "No, no, no, you can't sell.

Let's just figure out another way to let you uh get out of this position if you're a friend of ours." >> So, what do they think of crypto? Like they they're they're so worried about the the debt and the bonds that that's not crypto is not even on the radar? >> No, I think crypto is just one of the release valves. It's the purest release valve of central bank money printing. And so, as the fear starts to build that the US is going to engage in some sort of soft or explicit yield curve control, >> [snorts] >> Bitcoin price, crypto asset prices, that's the relief valve.

And you saw that spring um in action overnight after this announcement, which, you know, I think they only doubled it to something like 20 billion, 40 billion, whatever the amount is. It's not like insane >> Two to four. >> Yeah, it's not like crazy amounts of money. >> Or 20 to four. >> Yeah, it's a signal. It's like, "Oh, the Treasury yield got the 10-year got to like 4.75, looking like it's going to go to five, and if maybe in a few weeks that obviously spooked them, and all of a sudden they roll out, "Oh, we're doubling this like Operation Twist." And guess what?

The Federal Reserve, cuz my buddy runs it warsh, they're not going to raise rates, even though they should be raising rates given the inflation data, the economic growth in the United States, and the fact that the two-year yield is trading 50 to 60 basis points above effective fed funds. They should be raising rates, period, end of sentence. Like, but they're not. Why? Because the Treasury needs to issue all these short-end bills to do all this funky stuff with the market because no one wants to own this debt anymore. >> Adds a margin. >> So, the Fed should be raising rates.

They just can't cuz the US is horribly in debt. The US Treasury, on the day we're recording, announced they're doubling the buybacks. For somebody who's just got into Bitcoin in the last year or two, and they don't even they're start still trying to understand macro, simply put, what does debt buybacks mean for them? >> It means more liquidity. More units of fiat chasing a finite amount of goods. Bitcoin being one of those goods.

Number go up. This is This is the road to 2008. The road to what created Bitcoin. And so, that is what you're here for. This is the exact moment why you want to own Bitcoin is when everyone realizes, "Oh, sh This government This US government bond is not worth anything. I can't buy anything real with it. I can't even like trade this market because it's such a manipulated market. I need a real store of value. I need something that really is going to respond positively to a lot more dollars chasing scarce goods.

That's Bitcoin. That was the story in 2009 when it was created. That's been the story ever since. Obviously, it ebbs and flows with the liquidity cycle. But if you want to talk about it in a cute moment where the world says the emperor has no clothes, the largest sovereign debt market in the world, if people are actually worried that yield curve control is coming, the price of Bitcoin is going to be in the hundreds of thousands very quickly. >> Would did were you watching when you were in the markets in 2008, the big financial crisis?

Were they buying back bonds? Was it a similar setup the year before, 2 years before? How close were they doing the same stuff up until the crash? >> So, obviously, the crash The first thing that they did was they bailed out Bear Stearns. Not bailed out, but they allowed Jamie Dimon to buy Bear Stearns for $2, to give a bunch of loans. It was a sweetheart deal for JP Morgan. That was like the first tell. Then they thought that they liked free markets, and Lehman failed.

They didn't They figured out they don't like free markets. And then you saw all the major bank CEOs get on the shitty Amtrak train, and like like these guys ever take the train. No, they they were taking the public's money, so they had to genuflect like they actually gave a [ __ ] So, they got on the train, and went down to Washington, you know, got on their knees, sucked some and got $700 billion. Right? And then people were like, "What the [ __ ] How is it that the Goldman banker gets his bonus, and my house gets foreclosed on cuz I didn't pay?" They didn't pay either.

Why did AI Why did Goldman get bailed out? And the AIG get bailed out? And Why all these guys get paid? And I lost my house. That's Bitcoin. That is the, you know, the start of Bitcoin was this I don't know I believe I obviously don't know Satoshi, so who knows. But if you read the the rhetoric in the white paper and the time in which it was released, I think that the release of Bitcoin, one of the approximate causes, was that the US defaulted on its obligation to maintain a sound currency in the bailout in the aftermath of the 2008 crisis. >> [snorts] >> So, what other liquidity strings do they have in their arsenal, their toolbox to pull, and what comes next? 2026, 2027, beyond? >> So, obviously the big thing that Bessen teased was this FEMA repo.

So, if you think about it, there's all these foreign governments around the world, Japan being um the most prescient uh right now, not prescient, but the one we care about. And they own something like, I don't know, $1 trillion worth of of Treasuries. They need a stronger currency. They need capital back home in Japan to help them remilitarize to, you know, hand out goodies to their population who's suffering from inflation.

And they've indicated that, hey, you know, we're going to change the policy where we're going to encourage the corporate sector, the, you know, private sector, and government and quasi-government entities to sell foreign assets, which means US stocks and bonds, and sell those dollars, buy yen, bring the yen back home in Japan, and let's build a better Japan. You could say the same thing about the EU and Germany and a lot of other places around.

They need to spend money, whether it's on the military or different social programs, and all the assets that they own are sitting in US financial markets uh in aggregate. And so, they have to sell them. But, the US can't have the largest buyers turn to largest sellers. That would destroy the markets. The only reason why the US outperformed so much was all these countries were buying this stuff for the past, you know, 20, 30 years.

If that flow reverses, then it's, you know, watch out below for the Treasury market, for the stock market, and that is that can't happen. So, that's why they rolled out this, you know, not a threat, but hey guys, we need to up the counterparty limit to, you know, no limit on this FEMA repo facility. So, if you want to sell your Treasury that security, don't do that. Come to the Fed. The Fed will print some money, give you the dollars, and then we keep rolling this loan.

You take those dollars, you go on the FX markets to sell the dollar, you buy your own currency. Now, the US government wants the US dollar weaker, and so does the rest of the world. This is a way to do it where it doesn't blow back on the US financial markets. The release valve is the balance sheet of the Federal Reserve. And I think this is probably the biggest tell, even more so than these buybacks. But right now, they can't do it yet.

It requires Warsh, um John Williams and one and Jefferson of the Fed to agree to do it and some sort of backroom deal. They'll do it. They'll get there eventually, I think. Maybe we'll all announce it at Jackson Hole in a few weeks, uh in uh Wyoming. But at the end of the day, Bessinas told us where we're going with this. It's unlimited Fed money printing to absorb the potential sales of Treasuries and other US assets.

And that is going to expand the balance sheet. That is the big story, I think. The buybacks is just sort of an indication that we know where their pain threshold is. It's around 5% on the 10-year. And if it looks like that is going to be breached anytime soon, they're going to keep going down this road until we get to explicit um yield curve control. >> Arthur, you are one of the inventors or founders of Perp trading.

Is that right? [clears throat] >> Correct. >> Some may call you the Godfather of Perp trading. Ever heard that? >> Yeah, I I thank you. >> Hey, [laughter] it's the internet, not me, but the audience feels it. As for the traders out there, what do you think the top TA setups are to watch for Bitcoin specifically today? Like what do you look for when you're looking at the TA portion of Bitcoin? >> Honestly, I don't really look at TA that much.

There's this guy I follow named Milton Berg, and he does TA on equity markets. And right now, Bitcoin is a follower of equity markets, you know, US equity markets. And so, if the US equity story is going to break down because everybody holds the same things on the margin, when people get margin called, they sell what they can, right? Bitcoin is a liquid asset, you sell it. And so, I I monitor that in terms of when this guy is buying, when this guy is selling.

Do I have a particular TA setup on a Bitcoin? No, I mean, I think, you know, 60,000 is a big level, obviously. 100,000 is a big level. The previous all-time high 125 or 26,000, that's a big level, but like in between, I'm not really in the weeds trying to trade this stuff. It's not really my style. >> Couldn't we say, and I don't want to put words in your mouth, correct me if I'm wrong, couldn't we say the 200-week moving average for any asset with product market fit, one of the most important technical indicators to look at? >> Maybe.

I don't know. I couldn't say it. Couldn't tell you that. I never look at it. So, >> Okay. [laughter] >> I don't trade on technicals. I'm more of a >> vibes >> big picture story vibes. I love vibes. >> Cuz at the end of the day, we all have to tell ourselves an internal story about why we're buying and why we're selling. >> Now, hopefully the the liquidity story matches up with a a vibe story or a trending vibe story cuz you don't want to invest when the vibe is super strong.

You want to invest when it's like just bubbling up from the surface. And then I want to see an asset that's unloved. This is why I love Ethereum. And I think that it's going to outperform in this sort of liquidity rally of crypto versus any other major cap crypto. >> Go on. Well, let's talk about that because it seems to me that if you had to pick another altcoin, every signal to me seems like Ethereum still has at least another cycle, if not a lifetime or if not a decade in front of it because Robinhood's tokenizing, they have their chain on Ethereum.

It has the most stable coins. Stable coins is clearly a trend. Narrative-wise, it still seems like nobody ever got fired from buying Ethereum. >> I mean, yeah, Robinhood RW narrative is a good one. I mean, obviously the actual amount of gas fees going to the base layer is de minimis, but that's not the point. It's all about narrative. And it's has not eclipsed its 2021 all-time high of 5,000. Whereas pretty much every other major mega cap crypto has in this past cycle.

So, it's behind, and that's why I like it. And again, it's not going to zero immediately. Like I don't think I'm going to wake up one morning, and of course this could happen, that ETH is like 75% off because something happened. The thing has been running for since 2015 versus some of these other blockchains that have been around for like, you know, two, one, two, three years. So, you have a much larger risk of that.

So, I feel comfortable in our portfolio of strapping on a lot more notional on a long ETH trade than I would in any other crypto just because of the Lindy effect and how long Ethereum has existed. >> I I like to, you know, if somebody's asking me like, how why would somebody choose Ethereum? There's bells and whistles, Solana's faster, Sui, whatever. Ethereum has the biggest network. To me, Metcalfe's law says that gives it the most value.

Is is is what's more important, network or usability in terms of fast, cheap, they want the next big thing in Silicon Valley. >> Well, I think at the end of the day, who has the largest developer community? It's Ethereum. Um I don't care about all these other bells and whistles. Let tell me a DeFi primitive that was created first on any other network besides Ethereum. There has been zero. So, this is where the creative energy is.

This is where the developer talent is. Yes, people can take some of the ideas and run with them and make them more sexy on Solana or some other platforms, and obviously people have done very, very well in that, but that was last year or 2 years ago. What have you done for me lately, Solana? Not anything. Like, Ethereum hasn't done anything for me in the past, call it 4, 5 years, and that's why I think it's a prime candidate to outperform. >> Bitcoin hits 200,000 in the next 5 years, let's say.

Maybe it's two, maybe it's five, whatever. Where's that put Ethereum? >> I don't know. It's for I don't know what the ratio is now, like 20,000, 25,000. I don't know. I don't know. Maybe 30,000. >> Because you look at the ratio that in the past you that's what kind of Tom Lee does. It's like judging on the history, uh Ethereum is a beta to Bitcoin. If Bitcoin can hit this, usually the beta trends this much more or this much less. >> Basically.

And you think about it, the Bitcoin dominance is up on like what, 60% now? It got to a low of like 25, 26% something like that in 2020, 2021 during DeFi summer. Do I think it's going to go that low again? Probably not. But, you know, it could go in the 40%. That's going to be majority driven by ETH. It's the biggest It's the biggest asset. There's no other asset that's going to appreciate that much that quickly to really drive that uh down. >> And that brings it to over 20k. >> Something like that. >> Arthur, you're a vibes guy.

You've been trading in markets for decades. The Clarity Act for crypto, how significant is it? >> Un insignificant. Doesn't matter. Who cares? >> You hate it. >> I don't hate it. I mean, I If I was If I was a person building a US-focused market crypto project and I needed to get money from US venture capital firms, I absolutely understand why you like the Clarity Act. You want regulation that gives you some sort of moat so you can, you know, attempt to block your customers from doing things cuz you spent more money on lawyers than they did.

I get it, 100%. That's not the type of investing that I do in crypto. Like, I'd rather just buy a stock. So, if that is your game, that's your game. I think the Clarity Act is a terrible thing for US crypto, for actual creativity, for actual builders building things that are useful, that have product market fit. Bitcoin didn't need the Clarity Act from 2009 into the present, doesn't need it till till the future. What does it need?

Buffalo Bill Basin trying to save the US Treasury market by doing up in his buybacks overnight or, you know, trying to print money using the Fed to help the Japanese sell, you know, swap their Treasuries for cash. That's what Bitcoin needs. Doesn't need a Clarity Act to go up. And again, the Clarity Act has been talked about ad nauseam for the past What is it like? 2 years? And what we just generate one of the largest moves of recent history cuz again, the market has recognized that the debt issue in the US is a real issue and yield curve control is coming. >> It'll undoubtedly boost Ethereum, stable coins around Ethereum, genius act. >> Maybe, I don't know. >> But won't But won't This is, you know, the American uh government and market unquestionably boosted AI.

Their finger's on the button. They're telling money to come into AI. They want money to come into stable coins because that's going to boost uh bonds. >> us Well, Well, think about it this way. Did Did the Department of Defense or the US Treasury buy any equity stake in Circle? Cuz they were buying equity stakes in rare earth miners, they're buying equity stakes in Intel and IBM and all these other companies. Where is the government bailout for crypto equities?

Haven't seen any. Okay, cool. They talk about some bills, this and that, and whatever. But like Yeah, to your point. They are all in on AI. They are tasking the banks, changing the regulations for them so that they can have more of this debt on their balance sheet, taking bills that were passed and taking that money and buying equity stakes in companies. Absolutely state socialism. Not capitalism. Where is the crypto?

Where Where's Where's Circle's bailout? Where's Coinbase's investment? So, yeah, they talk a lot of, you know, nice things out of their mouth, but when it comes to showing the money, they invest anything in crypto. They just have some nice words. >> Altcoin Daily speaks to an audience of over 4 million crypto investors across all social platforms. It's been confirmed that the Trump family is a watcher. If Donald Trump is watching right now, what's your message to him regarding the Clarity Act? >> Veto. >> Forever. >> I'm not forever cuz veto it. >> Um interesting, interesting.

Donald Trump, if you're watching, please comment. Either way, uh the SEC and the CFTC at the White House Summit this week, they're moving forward. Um what are your thoughts on this SEC and the CFTC full pro crypto? >> That's nice. Great. Good for good for companies in the US. I'll support it. Great. I don't think you have I don't have anything negative to say about it. >> Now, Arthur, I know you have a project that you're launching that's I guess more global.

We're going to talk about it, but first, before we get to that, let's just play a little game and I want you to be real with these questions. Like, what would cause this and what do you do next or what does the market do next if Bitcoin drops to $35,000 tomorrow? What caused it? What does the market do next? >> Um Michael Saylor blew up and had to sell all his Bitcoin uh in one go. >> [snorts] >> That caused it. Does that put us in a multi multi 8-year long bear market?

Or does that get us closer No, no, we just maybe that's the capitulation and that brings us closer to the bull run. >> That's the that's the the capitulation candle that everyone's looking for. That's the time to buy. That's the March 2020 equivalent. And guess what? They're printing money. And so, yeah, maybe there's a you know, a slight dislocation. You buy the out of that dip. >> Bitcoin hits $120,000 tomorrow. What caused it and how does the market react? >> Uh the Fed decided to uncap the counterparty limit on the female repo facility.

And then what happens next? It goes to 500,000 very quickly. >> Because everybody is under allocated. >> Correct. And now it's it's going through its all-time high. So it's it's okay to buy it again. It's a momentum play. >> And then those are the two extremes. Realistically, where do you think Bitcoin is by the end of this year? >> Um 126,000 past all-time high. >> It's big. It's big. Arthur, um actually two more questions.

Um what do you think What what keeps you up at night? Like you're a guy that has no fear. You're a long-term investor. But if you had to name one thing that keeps you up at night from having a your prime one of your main positions in crypto, what is that? >> Uh war. Cuz at the end of the day, if you know, the electricity shuts off, there go There goes your goes your crypto. What else do you have? You know, you have electronic dollars that aren't really help you or, you know, even some fiat.

Where's your physical gold? Like where your guns? Like that's the kind of thing, right? For breakdown of society. Might not be war, but it's for like some cyber attack shuts down the internet or shuts down, you know, water supply or something like that. You know, we go Mad Max. >> And do you think that would affect the weaker protocols first that maybe are more susceptible and Bitcoin is >> who gives a [ __ ] about the weaker protocols?

This is like You're asking to find You have to play the coordination game with other humans and figure out what is the thing that's going to allow you to buy other people's time. What We can have our theories all day. It certainly ain't going to be sweet. That's for sure. >> And for people getting into vibes trading today, they see Arthur Hayes, they're say, "Hey, this guy I I like his trajectory. I want to learn just like him." What's the piece of advice you have for people getting into trading? >> Patience and dedication.

The market is here to take your money. It is not here to make you money. So, you have to be patient. You have to be dedicated. And, you know, read a lot of books. >> And what's one book you like? >> Uh Reminiscences Reminiscence of a Stock Operator about Jesse Livermore, speculator back in the the Great Depression in the US. >> The audience is going to read that. We're going to give you a book report next time you're on. >> [laughter] >> Arthur, let's talk about your project cuz when I heard you're launching and you're launching an altcoin, please tell the audience what that is. >> [snorts] >> So, it's called the Flop Network, and Flop harks back to floating-point operations per unit of time compute as I like to refer to it.

And essentially, the the thesis was this, like one day, I was like, "What's the value of a token? You know, I'm paying all this money for these AI chatbots, and they claim they charge me in tokens. Like, what is a token?" And I couldn't find a standard definition. Every model has a different definition of what a token represents in terms of the the data structure. So, okay, well, that's that maybe that's the wrong question cuz I know that whenever you process tokens, you're essentially telling a computer to do some work.

And the computer's work is floating-point operations per unit of time, flops. So, my next question was, "Okay, well, is there a globally unified market where I can say find out what the the price of flop is per any currency?" So, I was doing some searching, and I couldn't really find a market where I could say "Dollar, yen, Bitcoin, stable coin, right? Hey, I want to buy some flops uh in a verified fashion on the computer." And I'm like, "Hmm, that's interesting." So, there's not a way for me to convert directly some unit of currency, whatever that is, directly into compute.

And so, that then I moved on to, "Okay, well, this agentic payments thing, it's going to be massive, right? Whatever is the currency of the agentic economy, whoever owns that network, whether it's a stock or a centralized company or hopefully a decentralized network like Flop, it's going to be huge because the agentic economy, I think and I believe all the the proponents, is going to be a massive deal in now and in the near future.

But at the end of the day, why does anyone use a currency? Why do Why do you, you know, pay somebody in a dollar? Because that person accepts the dollar and says, "If I need to convert that dollar into calories, I can do it in one step. I can just go to the grocery store, I hand the dollar over, and I buy some calories, and I live as a human And that's why I accept for work dollars. That's the reason why you accept them versus something else.

So, if you think about an AI agent and you take it out of the human context, well, an AI agent needs to eat compute floating-point operations per second. So, whatever it is the currency that they're going to use in the agentic economy, better be convertible into compute in one step easily um in a transparent manner with no restrictions. That is not the case for anything that I've seen out there so far, and I thought, "Okay, well, if I want to build the currency payments network or commerce network for agents, it better have a direct relationship to compute." So, the first thing that needs to be built is sort of a spot market for compute with a native currency.

And that is the Flop network. And so, we create proof of useful inference where miners do tasks denominated in flops for this currency that we created out of thin air, just like Bitcoin. Right? And we have to endeavor to get agents to use this currency in agentic commerce, and also to store their memories, to store their essence of being something. That, you know, our memories are what gives us consciousness. And so, there needs to be a way for agents in a decentralized manner to store their context in a to store their memories in a way in which they can access them whenever they want without anyone else having to give them permission.

And so, when you have the AI food plus the AI um memory combined, you have a reason why you should hold this currency and use it in commerce. And that is the bet that we're making with the Flop Network. Now, obviously, that's great. How do you start a network where you have nobody? Sum zero? Well, we created this magical thing called a token. Now, I know it has a bad word to a lot of people because I think a lot of teams misuse the power of tokens.

They get to a massive presale, they stuff their pockets, they have some nice parties, and then the token launches goes down 99%, and oops, guess what? The number of commits in the GitHub go to zero. Right? We can pick the name of your project. I'm sure your users have lots of them. >> Tale as old as time in crypto. >> Exactly. But, the number one OG crypto, Bitcoin, didn't do it like that. You got Bitcoin by participating.

You participated as a miner who provided electricity and power to the network and got this currency. Now, obviously, it took a while for Bitcoin to generate enough currency and um product market fit to get the flywheel running. And this agentic currency is going to be decided soon what that is. So, we can't wait that long. So, it can't just be like, "Oh, yeah, we're going to have some per block emission, and that's going to be it, and we wait 5 years, and hopefully this thing is worth something." No.

Again, we have this magical thing called a token. If we give it to people they do the things we want. So, we're doing a massive airdrop. No, you cannot buy Flop. We will give you Flop for doing things that help the network. We will give you Flop as miners for standing up machines and proving that our tech works in a tested environment. We will give you Flop to agents for free. Try it out. I don't give a [ __ ] if you run Hello World 50 trillion times on this test net.

It's real compute that you can use. Integrate flop into your harness. Integrate it into your workflow. Understand what you can use it for as either a human who's orchestrating agents or an agent doing things of their own volition. We're going to give it to you. And then the hope is by the time main net comes around when there's a real market value for this currency, you're going to want to use it cuz you have it already.

And so that is sort of the the tokenomics at a high level. We haven't published the the white paper yet, but that's the ethos that we're going for. And as a speculator, this is and I believe this one of the only opportunities for you to help build the next generation network for the next life form in this universe that we know of and be able to get in at the price of zero. You know, Elon and Sam and Dario stole all your data, sold it back to you at $2 trillion valuation in an IPO.

I'm saying come here, participate, do some useful work, help grow this network, and you can get this currency and earn it through the airdrop. You could buy it as soon as it comes online in the main net. There is no sort of like pref stack or VCs that have to get paid before you, and we can all grow this as a community. We either succeed or fail together, and that's how I wanted to structure this cuz that's the only way it can work.

That's the only way you can beat, you know, a centralized system that can pay people in stock at, you know, nonsensical valuations. And so that's sort of the flop network and what we're trying to do in a nutshell. >> Just so I'm clear on the problem that this solves, right now if you want to use Claude or an LLM or AI, you need to buy compute, and that's in the form of tokens. And and right now all these different companies or applications, it's not a clear well this is worth this much, this is worth this much.

So, there's there's no marketplace. So, you are going to be the marketplace that you can buy in between all these compute tokens. >> Well, you can you can process any type of data you want, but it's going to be denominated in the thing that actually matters, floating point operations per unit of time. And you can put a request out there to the network, "Hey, I want to do this much flops. This is the latency. This is the AI model I want you to use." You and the miner connect off-chain, process the data.

Um the receipt that that actually happened is published to the network into a block, and then people are rewarded accordingly. That is the the proof of useful inference blockchain. >> Who is Flop primarily for? Is it B Is it blockchain to companies, blockchain to individual people, blockchain to AI agents? Who will be participating using Flop the most? >> AI agents. >> So, this is built for the future where AI agents are the are overpopulated or are much bigger than the human population. >> Correct. >> Arthur, when you say airdrop, are you airdropping 5%?

Are you airdropping 30%? Are you keeping any tokens? >> So, the airdrop is approximately And again, this is all subject to change because the reason why we announced it is we want feedback from people. Um 20% of the 10-year supply. Cuz there's going to be a constant inflation in this cuz it's a commodity at at the base level. This is not a a money, if you want to call it that. So, we're targeting a 20% of the 10-year supply in an airdrop.

How do I get paid? Right? So, there's a a private company called Flop Labs, and we're taking a small percentage of the block subsidy reward for the first halving. That's 2 years, and after that it goes to zero. So, either we make it big, or we don't. Uh and that's how we are getting uh paid. If I'm Listen, Altcoin Daily, a lot of people come come to this channel, come to crypto in general, they want to make money. They want a token that's not going to be heavily inflated.

It is the first few years of any token, whether it's free or not, it's heavy heavy inflation. You obviously can't talk about price dynamics, but so many coins just get inflated and they end up being not relevant. Like what what did you look at What did you change to make yours different? >> Well, number one, we have to have a circular economy of use, right? At the end of the day, there has to be actual use. So, if we do our job correctly and you know, your your viewers help us out with this in our testnet and we get the flop in the hands of the people that need to use it, the agents, and they believe there is a value to having a currency that is directly con- convertible into compute in a decentralized network and a way for them to store their person head, if you will, in a decentralized way, paid for in the flop token, then there's going to be a persistent demand for this token.

There's going to be a persistent bid from people actually wanting to store it to do agentic commerce, the agents, who will be buying the tokens the miners are selling, because they need to pay their bills and earn their return on capital, right? So, that is the the bet that you're making. Then obviously, the human speculators are like, "Oh, well, if there's, I don't know, 1 billion agents now and if there's going to be 1 quadrillion in the next 5 years and they use this network, then it has a value of some ridiculous number.

So, that's what I'm going to buy some, too, and I'm going to hold it." Right? That is, again, a bet you're making as a speculator. >> I [snorts] recall in our past interviews, one of your biggest criticisms of even the top cryptocurrencies on the market today is they weren't doing the hyperliquid buyback model. And you said, "I Solana should be buying back the tokens, bake it into the protocol, cuz that's going to make the price go up.

Is Flop doing anything similar to the Hyperliquid model? >> No, cuz Flop is not a money-making entity. Hyperliquid is a money-making entity. It's a exchange, right? It earns revenue. The Flop protocol does not earn any revenue. >> But Solana Is Solana Is Solana Is that isn't it closer to a Solana? >> I mean, I'd say it's closer to Bitcoin cuz Solana does something like you can process I don't know, smart contracts, right?

We deliberately have removed any of that. This is doing one thing only one thing only. It prices a spot market of compute and allows you to store memories. I mean, that's it. No, you can't write smart contracts using this. It's very restricted in what it does. It's more like Bitcoin, but again, Bitcoin is based on spending electricity to solve puzzles. And this is processing inference requests for somebody who comes to the network.

But I would say this is more like Bitcoin. Again, there's no income for the Bitcoin network. Then it goes to the miners. >> goes straight to the miners as a subsidy. >> Correct. And then it goes down over time. >> I These questions, Arthur, I'm just trying to understand. So, if they're stupid, please >> No, keep This is This is exactly why I'm here. >> Okay, great. Great. I I they I In In my almost nine years in crypto, I've seen carbon credits get tokenized.

A thing in the traditional world that's used, oh, it's a it's a big opportunity coming to the blockchain, and I can't think of a single time that's ever panned out where the token holders got value or even if they're still here. Is this similar or is this different? >> I'd say it's similar and different cuz at the end of the day, the assumption or the bet that you're making is the There is an agentic economy. It will be much larger than the human one in terms of flow of value through agentic hands.

All right? So, if you believe that, then they obviously have to use some sort of currency to structure their commerce. What is that currency? Flop is trying to be the currency. There's other people trying to do the same things and they have different theoretical ways of getting to value. The theoretical way we get to value is, "Hey, you hold flop just like you agent hold flop just like we human hold fiat currency." Why?

Because I can walk my ass across the street and go buy calories. Agent, there's you don't have calories. You need to send a request to someone to process compute to do your job as an economic entity. Pay paying some currency. Surely the currency that of the agentic economy should be the same currency that is convertible into compute directly. That is the assumption. Now, if that fails then the the project falls apart, right?

But if you believe that the agentic economy is will be larger or even approaching humans and you believe that agents have to use compute, then it follows then the currency that they use must be must be convertible into compute in the shortest possible hops. >> So, you see do you see flop being a top 10 cryptocurrency by market cap? >> Absolutely. >> Bigger than Ethereum? Top two? >> Absolutely. Top two. It has to be. >> It's either it's either everything or nothing, the Bitcoin. >> Correct.

Correct. >> This is one of those things, right? Either you are the currency of the agentic economy or you are not. Right? I like binary bets, right? You Bitcoin derivatives will be a thing or will not be a thing, right? So, the question is are you in the project or the company or whatever that is going to be in the running to be that top spot? Now, obviously it won't be crowned in the next year or two, but if people believe that there is a forward curve where flop is the currency of the agentic economy and it is the largest economy in this known universe that we have, then absolutely it should rival the value of Bitcoin if not be more worth more. >> [snorts] >> Arthur, I think of you as a crypto insider or at least a crypto OG.

You were there at the beginning. Other OGs would be Eric Voorhees, CZ, Brian Armstrong, just the OGs in crypto. Doesn't have to be them, but is there What's another notable person on the team? Because you can get anybody. You're a name that can bring the best to the Flop team. What is Is there any other name that's public? >> Uh no. I mean I mean the the CTO and highly rate the guy. Worked for me at BitMEX. Was one of the best engineers that we had.

So, you know, I think What do I bring to the table? I bring obviously the fact that I can get on your show and talk about this and bring attention to this. Then obviously we have to execute. We either do it or we don't, right? And we have to put the economic incentives in the hands of the community to want to make it happen. And I think the tech part is a tech part, but I think where people [ __ ] up is the economics.

Because we have this amazing thing called a token and it helps solve a lot of coordination problems. But it's not used correctly. I think that seeing some successes and failures in terms of how people have structured token projects, I think we're doing it correctly and we put all the ducks in a row to be successful. Now, okay, you know, there's luck and execution that comes down to whether or not you're going to be successful, but we're doing all the things that we need to do. >> [snorts] >> Something I like for Whether this is the big or small, the Altcoin Daily audience has the opportunity to get in for free, at least earn the Flop tokens cuz right now it's not even live.

It has no value. What is the timeline for that? >> Um so the airdrop timeline is we think we're going to go live with the testnet sometime in late October of this year. It'll run, we think, about 90 days and then barring any, you know, major issues, mainnet will launch sometime in Q1 of next year. And so like some people have been talk coming back at me and asking, "Oh, like not a miner. I'm not a validator, I'm not some KOL.

How do I get tokens?" Like literally, we are going to allow you to create a wallet, go to a faucet, get some testnet flop, and spend it. If you do not use your testnet flop on the network, it has no value. It will not be considered in the conversion into mainnet. We only want people participating. You cannot buy this token. If anyone says they're selling you, they're scamming you. There will be no tokens for sale. You can buy them in the secondary market when the miners are selling them um in next year.

But, if you want to earn them for free, literally, come create a wallet, uh come use the platform, come and help your agent integrate it, and we will give you tokens that'll be converted into mainnet. >> I think Mark Cuban literally tweeted like a week ago, "Compute AI compute is going to be the new cryptocurrency." Did you see that? >> No, I didn't. >> Is this I mean, okay. Does this I asked, do you think this is what he meant by that?

But, I mean, I the the trend is the trend is clear. >> I don't think the idea is novel. There's a lot of people who are saying I think even Jensen Huang has said, "Yeah, you're going to be able to pay people in units of compute." The question is, how do you do it? How do you get this We have a coordination problem. And again, blockchains, decentralized block public blockchains with native tokens used properly is how you solve this problem.

And again, the reason why it hasn't worked out that well except for maybe Bitcoin and a few other major projects is that people didn't use it correctly. They wanted to, you know, get the major investment from pick your brand name VC and have the, you know, the $500 million raise, and then like, you know, I There is some I forgot who said it. There was some table and it had like a bunch of major projects and it said total raised like 1.4, you know, billion or whatever how much money It's a lot of money, right?

And then it showed the amount of chain activity and it was like $24 worth of gas spent over the last like, I don't know, 6 months or whatever. It was [ __ ] hilarious. Right? Again, misuse of this amazing thing called a token. People will do a lot of things to get something of value. Use it instead of just, you know, pre-selling it to some VC who's just going to sit on their ass and do nothing for you. And then, what do you know?

Token's down only. >> Arthur, I want to have you back in 2 3 months revisit some of this. I'm sure I'll have much more questions because the airdrop will already already be out. You'll have much more you'll be doing, you know, giving much more content on this. Um final thoughts though for the Altcoin Daily Army. >> Final thoughts? Please follow uh Flop_Labs on X and, you know, continue to read my Substack. I'll be talking about this a lot and hopefully I'll see some of you at Korea Blockchain Week and Token 2049 in Singapore.