#646 Building A Multi-Billion Dollar Bitcoin Company with Adam Back
8/29/2021 · 57 min · transcript via mlx
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Key topics
— Adam Back's background in cypherpunk cryptography, Hashcash invention, and early correspondence with Satoshi Nakamoto regarding Bitcoin's design.
— Blockstream's product suite spanning hardware wallets, block explorers, the Liquid sidechain with confidential transactions, and Lightning Network integration.
— Bitcoin mining decentralization efforts, enterprise mining hosting, ASIC supply chain diversification, and sovereign mining opportunities (e.g., El Salvador volcano mining).
— Liquid versus Lightning Network: complementary systems serving different use cases (traders and smart contracts on Liquid; micropayments on Lightning).
— Bitcoin's evolution from hobbyist curiosity to institutional adoption, reserve currency potential, and comparison to physical gold valuation models.
Market & price signals
— Back noted option markets pricing $100K Bitcoin as "quite possible" by year-end and referenced stock-to-flow models and gold valuation frameworks suggesting hundreds of thousands or half a million per coin long-term. He discussed mining profitability through cycles, citing a case where mining through a 50% bear market (from $15K to $7.5K Bitcoin price) yielded 25% positive returns due to increased coin issuance as difficulty adjusted downward. Back also mentioned Blockstream's Blockstream Mining Note returning approximately 0.3% daily in its first 50 days of operation.
Actionable insights
— Long-term Bitcoin holders should consider mining or mining-linked products as a volatility hedge; historical analysis shows 60% upside participation in bull markets with significant downside protection compared to direct Bitcoin ownership during multi-year holding periods.
— Verify Liquid's confidential transactions use standard cryptographic building blocks (similar to ECDSA and Schnorr signatures) rather than novel unproven methods, and understand the difference between inflation-risk and mathematically-proven versions when evaluating sidechain adoption.
Episode sponsorships
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