Bitcoin Winters Are Over (2012 Investor Explains)

0:00The U.S. printed six times the monetary mass, each dollar today equates 15 cents. If you ask me in 2013, my BSV here was that nations could articulate like a joint banning of Bitcoin and prohibition, and I don't think that's possible anymore. The direction in the mid to long term is still the same. The value of Bitcoin for society is still the same. But because we have different players, I think the market dynamics are changing. I don't think we'll have a winter person. I think we'll have more of an autumn. If you're enjoying my content, it will mean the world to me if you could subscribe to the channel and like my video to support my journey. Thank you. Hey guys, welcome back to the show. Today I'm here with CEO and co-founder of Roots Talk Lab. Diego, welcome to the show. Thank you. Thank you very much. I mean, you've been around for a bunch of cycles and you see it all. So, where do you feel we are now in the cycle? Since 2024, when Wall Street got integrated into Bitcoin,

1:00thanks to the ETFs and then institutional players started using it. I think we are in a different cycle. No, and people always were talking about the four-year cycles on Bitcoin. Doesn't apply for a while now because the cycles were meaningful when the stock to flow was changing very heavily. It's like at the beginning, you had zero stock and then in four years, you had 50% of the Bitcoin's being issued and distributed. So, that halving, the first halving was very relevant because suddenly you went from zero stock to 50% flows to suddenly you have 50% stock and 25% flow during four years. But I would say after the third halving, it stopped being meaningful in terms of the stock to flow. So, I think those cycles are gone. And then also in the beginning, the early cycles, the markets were so small that the news were basically defining the cycles.

2:03Now, it's like, if you had a relevant news, you could have Bitcoin go to a few cents or a dollar to thirty-something dollars like in 2011 and then all the way down to two dollars because the markets had no liquidity. It was, you know, it was possible to do that. That is also something that changes. We have bigger markets. But I think in the last way, what happened is that we are starting to have more and more derivatives into play. And when people have options and start playing with that, they suppress a little bit of the upside and they suppress a little bit of the downside. So, in a way, I think we are in markets that are not so volatile as they used to be. But the fundamentals of Bitcoin are still the same. The direction in the mid to long term is still the same. The value of Bitcoin for society is still the same. But because we have different players, I think the market dynamics are changing.

3:042026 has been so far for that month and a half we have seen. It's been super interesting because you have the four-year cycle brews and they're saying, hey, October 6 was the top, which means 2026 is going to be a bear market until the end of the year where we coin bottoms and then 2027. We're going to go back into it. It depends on what kind of data you look into it. Still, you could argue they are right. The old M.I. was so far in October and we haven't gone any higher. But I agree with you. I think the business cycles and the narratives has shifted. So now the question I have in my mind is, are the whales trying to make everyone think we're going to bottom so that they can correct the price, accumulate and then pump the old thing? Because if you are a four-year cycle bro, you are expecting now lower levels. Maybe you're selling because you think, oh, I can play the cycle. I can sell now at $70,000 and buy cheaper because this is where I think the problem comes in because being a trader is not for everybody. This is how people are getting hurt. I think that's my opinion.

4:04And also the players, the new players, the big ones. Some of them are using Bitcoin. Bitcoin is one tool more in their tool set. It's not like, you know, the trouble leaders like you and me that have been in Bitcoin for, you know, more than a decade. For us, it's a matter of principles we are for the long term. We are not so much speculating. But the new players, it's like they have one more assets in their portfolio when asset that is decently liquid. So they can get out of that position pretty relatively fast. That operates 24-7. You know, a lot of the action we see has nothing to do with the fundamentals of Bitcoin. A long term is more Bitcoin as one more financial tool. And that's why we see a lot of correlation between Bitcoin and the traditional financial system. That is also changing. That's why I said for me in 2024 when the ETF started, the new games started as well. Crazy to see the first $10,000 candle on Bitcoin. In either

5:08direction, we've got super down and super up in a space of like a 24-hour time frame. And I don't know if you agree with me, but if I was the market maker, this is the perfect narrative. What I would do, honestly, I would make everyone think we're going lower. I'll panic sell a little bit. Then I'll pump the old market. Then people are going to jump in because then formal kicks in. In fact, we've seen on Google searches, we reached a new old time high only a few days ago because whenever there is volatility, people are interested. Then I'll pull the rag. 150, 180, I don't know, it depends. It doesn't matter. We will see. But definitely, again, we have players with the capability and the knowledge to those kind of things. Although you see some players, I read, for example, they didn't have major withdraws. So some players, they clearly are playing for the long run. So you have both. That's part of the game on Bitcoin. Also, I think there's another thing that Bitcoin came to solve that is like

6:13the lack of transparency of the traditional financial system. That's why I think the derivatives in Bitcoin that are operated in centralized platforms, they are not operated in on-chain systems, can be a tool to gain the system, to play with the system. That's why regulations exist. Otherwise, if you have centralized players and they have the ability to take the price, they will do so. We know that eventually they will do so. That's why regulators chime in and try to control it. But the final solution is when we move everything into blockchain systems and we have transparency and then they cannot manipulate the system. They can only operate with the real amount of Bitcoin they have and then we remove a lot of the manipulation on the market. That's part of the transparency that Bitcoin was bringing. Still, the protocols like to do that are not. First, you cannot operate those protocols on Bitcoin

7:15directly. Second, we are in that, well, that's what we at Rusta we are doing, scaling Bitcoin and providing new capabilities. But also the markets still operate in centralized platforms. So I think that's a shift that eventually will happen. I think the technology is there. We need to develop the primitives or deploy the primitives and start using them. But that will change the game as well, bring more transparency. How far do you think are we from that time where we can see things shifting or moving into the blockchain or specifically into Bitcoin? I think five to ten years, I would say, for the derivatives and those things, there are protocols. There are the derivative protocols already. No, and you have verbs and you have some primitives that are like new and unique to our space. Rusta is very particular because for me it's not only about bringing all that activity into Bitcoin, but also making that activity a source of profit for the miners because then all that activity makes Bitcoin itself safe. And Rusta is the only

8:21layer two or sidechain, depending if you want to be a purest on the terms that that's that, that not only use the Bitcoin security to anchor the state of the chain, merge mine, proof of work, so around 80% of the hash-empower of Bitcoin is protecting Rusta chain at the same time. So we have that part of the security, but also the fees of Rusta chain go to the Bitcoin miners because it's merge mine. So that's something that only Rusta does. And I think it's very important in all these discussions we were having lately around what will happen when the fees, when the minting goes away and how the miners will be sustained. Which is not new, it's something we have been discussing since 2012, but well, Rusta is a solution for that as well. The math that we should be doing is like in energy terms, like how much the miners produce, and I think every year. And when you turn, you calculate that in, well, if you calculate it in

9:25dollars, like you have an amount that is interesting because it's more or less the same over the years, well, in the last years. So if you manage to provide that, the same amount of money to the miners, they will, you know, they will keep operating. Hardware will be more efficient, so you will be able to have more computing power for the same energy. But conceptually, if you look at that, then you realize that first, with the appreciation of Bitcoin, let's say that Bitcoin will do 10x in the next 10 years. That will make even that a small amount of Bitcoin is being minted more relevant enough, like relevant enough for the miners to support. But also some part of that cost will go to the fees. And that's something we knew for many years. And the question is like how we use that hatching power for more things that will provide income for the miners. And then we make the fees on Bitcoin not so heavily heated by this increasing price, no. But my calculations were

10:26when I started, when we started Roostog in 2015, Bitcoin without any subsidies was going to $20 per transaction, something like Swift, which for huge amount of transactions is okay. It's like if you're moving $100,000, you don't care about paying $10, $20 for small transactions, it's not good. But then our thesis is that Roostog will provide to the bottom line of miners enough money, so they don't need to transfer the full cost into the Bitcoin transactions. And I think with that we can lower the transaction fee on Bitcoin by half. So then you will have like $10 transaction fees in Bitcoin. Then in Roostog, you can scale Bitcoin like 40 to 50 times on chain without losing decentralization, protecting the principles of Bitcoin. So then you have transactions that are maybe 10 to 20 cents per transaction. And then you have layer 3 that we are building with RoLabs now

11:32that will enable you to have a couple of transactions, all secure by Bitcoin, no. And then you have different layers with different securities and you choose the layer you want for the type of transaction you want to. On top of that, you have lining as well, which is great. But lining will be impacted by increase of the cost on the layer one. And we need to see how that sorted out. You mentioned 5 to 10 years before we can see some sort of a big shift. Things are not going necessarily slow. But do you see a bottleneck specifically that we have to go over before we can see maybe an acceleration? The thing that made Bitcoin successful, it's a living. There's like most people who went in Bitcoin lately, like the Michael sailors and the big proponents of Bitcoin in general, they see Bitcoin as a store of value. And I've been arguing and it's also the reason why we started Roostog is like, for me, if Bitcoin is only store of value, then we have a problem

12:35because store of value for people, it's something that you can in the way of Bitcoin is something you can use if you can store value for three years or more. But 85% of the population lives in shorter time horizons. They live like months to months, day to day in the more extreme cases, maybe semester to semester. So if we don't make Bitcoin work for everybody, then I don't think we will win. I don't think we will replace the traditional financial system with Bitcoin. So that for me was always the main reason why we started Roostog to make Bitcoin work for everybody. And that will lead, in my opinion, to hyper-Bitcoinization, but in a little different way as people expect, not so much by turning Bitcoin into the medium of exchange directly. But if you use Bitcoin as collateral to create a stable assets or synthetic representations of commodities or anything you want to trade,

13:39then Bitcoin becomes a store of value, but also an enabler of a full decentralized economy. And that's what we have in Roostog, for example, with money on chain that created the first dollar back by Bitcoin, the first state that has been running since 2019. So it went through the crash of 50% with no problems. And then on top of that, you have tropicals that enable Bitcoiners to get loans against their Bitcoin. And I think that happens in a smart contract. So you see your business is not the third party. So we are removing what we are creating. It's like all the financial primitives that people use on their daily lives, but secure by Bitcoin and operating on a decentralized network. And I think that's where when we win. And I imagine I have models, for example, for international trade where we can start having a ton of soy represented that is backed by Bitcoin. So then Bitcoin becomes a representation of the quantum of value

14:43of the world. So I can transform a ton of soy into Argentinian pesos or into US dollars. And everything happens on chain fully centralized without touching the traditional financial system. If on top of that, we add a payment layer that we are building with this roll up and the reef protocols, then you can have something that basically is a global settlement network for anything. It can be like remittance people sending money. So I send Argentinian pesos on one side and the other side will get Colombian pesos all backed by Bitcoin. So basically there's no secondary markets. Everything is profitable based. And once you have that, then you basically don't need to touch the traditional financial system anymore. When you describe water to someone, what is water? Well, I can use it to shower, I can drink it, I can take a sauna, I can put ice on it.

15:44You know, the use cases are infinite. And we don't have to label things and put them into a box. It's a decentralized network and you can participate as much as you wish. Very important that one thing is Bitcoin the asset that you can say, okay, that their main value. For me, Bitcoin the asset itself is revolutionary because if you have a reserve of value that is not dependent on any political power, basically you are removing most of the words that have been, you know, happening in the world in the last decades. No, because they were to defend the petrodollar and the moment you have a reserve of value, then you remove a lot of violence from society and you give sovereignty, you remove the other big problem that is governments minting money and destroying the wealth of the people, mostly of the working people because they cannot escape. If you have a lot of wealth, then you can diversify, you can escape inflation,

16:45but the working people cannot escape inflation. So with only those two things is like, you know, that's amazing. But if you add the other element that Bitcoin is also the safest settlement network in the world and you add the things that we are adding on top, then you have the first like truly global financial system in the world that will be backed by Bitcoin, both as a network and as an asset. And then that's revolutionary because you end up separating, truly separating money and state, which if you think about like separating religion and state was a big step in society to remove a lot of the violence and hatred and where we see states that are still connected to religion that were most of the violence that is not related to the other thing I mentioned happens. So for me, that separation of religion and state was the big step forward for humanity and

17:47the separation of money and state will be another huge, it will free humanity in ways that we cannot imagine. No, everyone has an iPhone, a bank account, a job, a fiat money. People live different lives in different places. You know, in Argentina, someone has a different life than someone in the US or in Europe because it's going to go and help all these people. Like you said for some, Bitcoin is a sort of value. Like maybe I have a job and I want to invest into it and I have a 15 years time frame. A bit for someone else is a bank account, someone else is money, right, to use every day to purchase things. That what you say is interesting because one of the things for example, I'm building my house in Buenos Aires and how I'm doing it is like because I don't want to keep selling Bitcoins. What I do is I take loans in tropics, in this protocol that runs in Rousseau and then in that way I don't need to sell. So for me, Bitcoin is a sort of value but it also is a collateral I can use to get money for my short term needs. So when you have these tools,

18:52you can basically make your future self and your present self living harmony because otherwise with Bitcoin, one of the problems I was seeing as well is like, you know, as a Bitcoin owner, then because you always want to think in the long term and everything you don't want to sell your Bitcoin, but then you stop leaving. No, you start eating rice alone just to preserve your Bitcoins and however future. But now we have tools that if you use consciously, of course, if you take loans up to 80% of your Bitcoins, then you will get liquidated. But if you take loans of 30, 40% of the value of your Bitcoins, then you can basically have the best of those words. We have in the community, people who is doing that, you can do it in different scales. I'm building a house, but we have people that is doing that to change jobs. So they take a loan, they know they will get a better job, but they won't be, you know, collecting the payment for months or so. And then they take a loan against their Bitcoin, so they preserve the store

19:57well, then they change jobs and then repay the loan with the job that is better paid. So I think those are the things that as we evolve, we realize that Bitcoin can be all of these things, you know, and I'm very positive because I see that happening today in a very small scale compared to the world, but it's happening now. It's no longer like a futuristic thing, like how it used to be. It's a technology that is being given to society, and then we build layers on top. And people are so impatient. Guys, this has been like what, 17 years, if any, it's not even 18 years old. So give it higher, right? The separation of money and state can take three decades, and that will be still fast if you compare to other processes in humanity. You know, it's like in three decades, changing something so deep in society is like, it's nothing. We are not here trading or selling certain numbers to revive certain numbers, but do you think the sentiment will

21:00be bullish in 2026? I'm not sure, to be honest. As I said, I think we are playing a different game now. I don't think we'll have a winter per se. I think we will have more of an autumn. But there's a lot of, I think, Bitcoin again now. It's very well connected and dependent on the macro. I think it's more about understanding where the world is going, but the thing is so many things are changing in the world like so fast that it's difficult to tell. The distribution of power of the world has been, you know, already distributed as we speak. You see the US trying to consolidate their position in America. China has been like creating their area of influence for so many years in Asia. Then you have the Greeks as a third axis of power. So I don't know, to be honest, it's like, but I think it's, I think the fundamental service is strong as ever. If not more stronger, I would say, because I don't think now that Bitcoin is

22:05part of the traditional financial system, I don't think banning Bitcoin is an option anymore, because it's like a so ingrained in the traditional financial system that, you know, some of our biggest fears in the beginning, if you asked me in 2013, my biggest fear was that nations could, you know, articulate like a joint banning of Bitcoin and prohibition and send it. And I don't think that's possible anymore. Also because of these, you know, multi-polar world we are entering where, you know, if one power takes embraces Bitcoin, then the other power needs to embrace Bitcoin at least to a certain level. So I think that those power dynamics go in favor of Bitcoin, but difficult to say what will happen. I think my feeling is like we'll have an autumn and maybe what we'll have is a more gradual race in price, not so much as we used to have these big steps up, but more like a gradual increase in the price over the years.

23:09But in the long term, I still believe Bitcoin will go to a million somewhere like that in the next 10 years, seven to 10 years, because it makes sense only as a replacement of gold, even if it's partially half of the gold, then you are there. And I think that's another thing that I realized in the last two, three years, 2021, I have this realization that when you have the ability to use Bitcoin as a collateral to get loans and short-term liquidity, then and those loans are run by smart contracts. Basically, you have the most efficient lending machine. Why? Because the execution of those loans of the collateral is instant. There's no default in those and the administrative processes zero basically is you can execute the collateral instantly. In this downturn, I saw that there were like some of my positions got mildly liquidated, but was very fair because it was not

24:11liquidated in my full position only enough to take me out of the risk zone. So when I see that, I said, this is the more efficient lending system you can have. Why I would store value for the long term in luxury real estate like people do if you go to a penthouses in Manhattan, they are mostly empty, they are like use as investment. Why I would buy art for speculative purposes when selling the art pieces or selling the luxury properties takes forever. If you use them as a collateral, maybe the loan to value in the case of real estate will be very good for the people providing the loans, they know the cost of executing the loan is very high. So I think the more efficient lending markets will be around Bitcoin. So I think Bitcoin will also siphon in some of the value, maybe 10-20%

25:12of the value in speculative real estate, maybe 10-20% of the speculative value in art. So I think that increased my expectation and these virtues are a cycle of like having that now you have with stable assets. So if I can have my Bitcoin in the smart contract get a loan, then get stable assets to do my things and those stable assets are accepted everywhere. Then I have everything I need, everything what most people need for their daily lives. So I think it's exciting. I think again, I'm more of a fundamentalist guy so I don't care much about price but it's like for me what I see is that we are finally connecting Bitcoin to a productive economy and I think that would be the big breakthrough. We are focused on Latin America mostly but I think if we are successful there it's very easy to replicate them all anywhere. Imagine how attractive this is when they understand

26:14this is super liquid and it's super portable. You can just push a button and sell all of it. I think tokenization of real world assets will help. I think that's another trend that is coming but compared to Bitcoin it will still be. So my thinking is like I think Bitcoin will remove the speculative element to almost everything. I think it's like everything which is great because then houses will be worth what they need to be worth. So people who wants to live in a house not by does an investment will have the opportunity to do so. So I think it's hard will be bought because people appreciate the value of art not as an speculative investment. So that's another thing that I think Bitcoin will bring to society that is very positive. Removing speculation from things that should not be speculative assets but more utilitarian assets. Inflation is not two percent.

27:15I wish it was two percent plus there are countries like we discussed earlier where it's a major issue like 8% in the US. It's actually not as bad as maybe 50% or 80% in Turkey or in South America there are places where people literally have to go and run into things because money is debasing so fast. Now in Argentina that we are in a good place we have 25% inflation per year and before that before millays you assume as president we were on our way to hyperinflation we were reaching 200% inflation in a year and and speeding up. But also as you mentioned I think inflation also was manipulated. If you think about the amount of dollars that were printed the reason why the gold went so high recently it's not because the demand for gold went up it's basically because the mechanism they were using to suppress the gold price broke. Because if you think about it the

28:20US printed six times the monetary mass since 2008 to now so it's like that means that every dollar from 2008 is worth like you know six times more than a dollar today so each dollar today equates 15 cents but we didn't see that inflation reflected in prices because there were other tools to say like basically bonds the treasury bonds were siphoning in the capital so they were like printing it and then siphoning but then then they were increasing the interest rates they need to pay for that. So it was like a system that you can sustain for a while but at certain point you cannot support anymore because the burden of paying the interest alone becomes unbearable and we are at that point. So in a way I think inflation was bigger but was distorted or not reflected in full because of that. That's basically again one of the big inequalities because that

29:23hidden inflation is what also like created more concentration of wealth in the world. If you have the ability to operate with the more complex or sophisticated financial instruments then you could accommodate more wealth but if you were a worker that's it you were like eroding your wealth without knowing it and thinking that not but as you say no people look at inflation but inflation is not only the price of goods going up it's a lot of factors that are hidden. Is there something worrying you mentioned the fact that now we've seen different players entering in the market institutions and BlackRock and all those players how you wondered about it? Yeah it does worry me because you know sovereignty is a matter of it's like it's the full chain of custody you know it's like you need to have full sovereignty you need to have a sovereign network you need to have a sovereign asset bitcoins a sovereign asset but then you need to have sovereign custody of the assets

30:29and what we are seeing with the movement of Wall Street is like now we have like the bitcoins like getting into because Wall Street is offering value to bitcoins and I've seen like all timers moving into the ETFs and everything because for them it's easier it's safer somehow it's kind of a counter movement it looks like we won like say okay now Wall Street is is incorporating Bitcoin but at the same time I think we are losing but it's not something we cannot again that's why we are building the institutional products that are you know here to be here custody in smart contracts it's like we are building solutions that will provide the same close to the same principles of Bitcoin and that will have the same utility that Wall Street procs that do you know and that's that's the bit but yeah definitely there's a fight going on

31:30it's like we load the bitcoins of the world we manage by banks and ETFs or we will truly continue to have like you know the principles of Bitcoin of self-custody and autonomy being developed we have challenges I think this process is again you don't win these wars without fighting no it's not that will happen per se so I think we need to continue building you know in the revolutions of of the republics people were were having their markets to defend in this case we defend ourselves with cryptography and I would say my biggest worry if you ask me is privacy erosion is like how privacy has been eroded around the world and how we are allowing that to happen you know not understanding that without privacy there's no freedom and people then don't have that consciousness that's why I think you know using serenolage proof starting to have like decentralized communication

32:31protocols we need to regain control of our information of our money because I see a lot of totalitarian movements around the world I see Europe trying to to digitalize identity and money in in a centralized system that's 1984 come true it looks like a joke 1984 was a warning not the instruction manual those are my fears my biggest fears is like that we end up having you know custodial systems for the decentralized networks and assets we build and that people reach to do these things only through custodial custodial and the other thing is that we lot loose any right to privacy no yin and yang fighting each other as it's always been like you said I completely agree by the way I don't think we would have been what we are today without some sort of institutional adoption so we can have to take it in and digest it as we go when the internet started we were talking back in the 90s

33:32both of us were there we were talking about the neutrality and openness openness in the sense that everybody could use it neutrality in the sense that nobody would be judged to access or share information that's the way and that created of course you know that tool was used for evil but if you look at the good it made to societies you know orders of magnitude more relevant the good that made this brought to society and the bad is the same like openness and neutrality are something we need to defend also in Bitcoin and blockchain and you mentioned something that for me is because that is optionality you know it's not about like fighting the institutional adoption or fighting the government is like if we create optionality and we defend that optionality then the corporations need to behave better then the governments need to behave better they

34:34have a checks and balances to be done and that's what we are bringing to the world like escape hatch in case your government starts like printing money like there's no tomorrow and eroding your wealth you know escape hatch if you have a totalitarian government that was controlled your every move so that's what we are building the escape hatch that will create a more prosperous and free society exactly as long as they don't touch that I don't have any problems with people doing whatever they wish just leave myself custody alone and I'm happy at Yegoman gracias for being great having you on the show really appreciate you flying to a Hong Kong and funding time for us thank you no my pleasure and thank you for inviting me we have seen this revolution of the world now in the how the digital world transforms society into what it is today regardless of the fears I'm very optimistic enjoy Hong Kong bye