August 25—Investors remain infatuated with bitcoin, the digital diva of cash systems, despite its extraordinary volatility. But is the love misplaced? Alyse Killeen, founder and managing partner at Stillmark Venture Capital, joins Chief Investment Officer Tony Roth to break down the currency into its essential building blockchain elements and explore its practical applications.

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Alyse Killeen, Founder and Managing Partner, Stillmark Venture Capital

Please listen to important disclosures at the end of the podcast.

Wilmington Trust’s Capital Considerations with Tony Roth

Episode 39: Bitcoin Deconstructed
Tony Roth, Chief Investment Officer, Wilmington Trust Investment Advisors, Inc.
Alyse Killeen, Founder and Managing Partner, Stillmark Venture Capital

ALYSE KILLEEN: While bitcoin is aiming to sort of be a global store of value, other cryptocurrencies, smaller, newer, and more fledgling cryptocurrencies, they’re aiming to be bitcoin. Bitcoin’s aiming high and other cryptocurrencies are aiming for bitcoin.

TONY ROTH: That was Alyse Killeen, founder and managing partner at Stillmark Venture Capital, sharing her views on the transformative nature of cryptocurrency and blockchain technologies.

TONY ROTH: Welcome to Capital Considerations, the market and economic podcast that’s fully invested in your success. I’m your host, Tony Roth, chief investment officer at Wilmington Trust. Cryptocurrencies continue to make headlines as a major disrupter in our financial system. Even with all the intention though, the inner workings of this new investment category can be quite opaque. We’ve seen some meteoric price surges and some steep drops in value alike, none of which seem to dissuade many savvy investors from piling in.

So, what does the future of these digital currencies hold for the world? Joining us today is Alyse Killeen, founder and managing partner at Stillmark Venture Capital, an early-stage investment firm specifically for startup companies in the bitcoin ecosystem. Alyse has been investing in bitcoin and blockchain startups since 2013 and has been a preeminent voice on the subject, appearing on Bloomberg TV, and at a variety of crypto blockchain-focused conferences. She’s also currently a member of the board of directors for Blockstream, a company providing crypto financial infrastructure to bitcoin users. Alyse, thank you so much for being here today.

ALYSE KILLEEN: Thank you for having me, Tony. I’m looking forward to our conversation.

TONY ROTH: Yes. Me too, very much. I think the place to start, Alyse, is with the basics. We’ve got a pretty sophisticated audience. But, I think it’s important to level set. It’s probably useful to start off with what is a cryptocurrency blockchain? How is blockchain used to provide, if you will, a lot of the value proposition associated with the cryptocurrency?

ALYSE KILLEEN: There’s different categories of blockchains, but to start at the initial bitcoin. The blockchain is simply an open ledger of transactions and each approximately 10 minutes a new block of transactions get committed to this record. Anyone can access the record to see which transactions have happened historically. And it’s a permanent record. And so, once the transaction is committed, there it is. That’s what the bitcoin blockchain is.

The idea of cryptocurrencies is that the internet was missing a sort of payment mechanism and that that was slowing down our ability to connect, to transact, and to have a truly digital economy and, thus, the introduction of cryptocurrencies. The idea of bitcoin, though, is different from many other cryptocurrencies in that bitcoin is meant to be a secure and sustained monetary policy in that it’s a software-enforced currency or asset where the rules are defined, you know, a decade or more ago and are unchanging.

TONY ROTH: A lot to understand there. Let me try to simplify it a bit for our audience. The basic idea I think, and bitcoin is an instance of this idea, is there is a, what I think of as distributed ledger out there in the internet where there are many, many instances of this ledger. And if I make a valid change in the ledger, then all the other versions of the ledger will reflect the same change so that you can’t really tamper with the ledger because they’re all these versions of the same thing are interlocking and validate one another.

And part of the value proposition is that the underlying blockchain protects the integrity of the ledger and it, therefore, protects the ownership that anybody might have in their cryptocurrency, because once the ownership is recorded in the ledger, unless it’s validly changed the ledger it’d be very, very difficult in any way corrupt the ledger.

ALYSE KILLEEN: Well, that, that’s the goal. So, what assures that that’s the case is that the network is decentralized and that the incentives of, you know, sometimes opposing stakeholders in the network are functioning. And so, this is actually what is most important to note about bitcoin is that bitcoin is pretty singular here. There are many instances of the ledger held by nodes and by miners and the way the incentives work between these stakeholder groups is such that it’s incredibly difficult to change the state of the ledger once a block has been committed to it, once a transaction has been committed to it. But in other cryptocurrencies and on other blockchains, that’s in fact not true and there’s some, been some very notable rollbacks of the ledger in other spaces where the network is less decentralized than bitcoin.

TONY ROTH: So, this is really important because when we think about what a currency needs to do in order for it to be successful, generally we think about currencies and we can think about fiat currencies like the U.S. dollar, which has value just by the fiat of government behind it. But it does two things fundamentally. It’s a store of value and it’s a mechanism of exchange of that value. And in a sense, what you’ve just described for us addresses both of those points.

The store of value is essentially delivered through the integrity of the blockchain system and how difficult it is to go in and sort of corrupt the ledger because it’s so distributed in the way that you’ve talked about. And then the idea of it being a medium of exchange is enabled by the fact that it exists in internet space or electronic space.

Bitcoin, you mentioned already, is different. It’s singular in that it’s one of the oldest ones. It has a very well-defined set of rules, and it has an ecosystem that has built up around it and that gives it a lot of value and credibility. Are there other things or other aspects of bitcoin that makes it the predominant at this point sort of coin-based system or are – is that – is it just the fact that it was early on with a good set of rules?

ALYSE KILLEEN: I think there’s two important things to note here. One is that bitcoin was not the initial attempt at producing a digitally native currency. So, bitcoin was the outcome of approximately two decades of work from engineers and computer scientists and economists on how you could introduce a secure version of a transaction ledger that was resilient or resistant to change such that it could be trusted in the way that you just described.

So, that’s the first and probably most important thing to note. Then, I think you see a difference in the culture that exists around bitcoin, bitcoin’s early adopters, the core developers, bitcoin’s miners and users that’s inherently different from other cryptocurrency cultures. And the importance of that is that everyone is moving in a direction that’s consistent with the development of a store of value and medium of exchange. And what I mean by that is that what everyone in bitcoin is aiming for is consistency in the monetary policy and security of the tech. So that’s what anchors the community together.

It’s not that advancements are being introduced at the protocol levels of this ecosystem in order to increase the value of bitcoin. Instead, it’s that the value of bitcoin, the intrinsic value of bitcoin is built every day, every week, every year that the monetary policy remains the same and the system remains secure. And you can see that exists in contrast to other ecosystems where instead the monetary policy might be changed or the method of security may be dynamic in order to sort of boost up the price or be responsive to what that network of people believe external forces will value. Of course, it’s quite difficult to develop a store of value when a monetary policy is dynamic versus stable in bitcoin’s case.

TONY ROTH: You’ve used the term monetary policy numerous times just in the first few minutes of our conversation. When we think of monetary policy as investors, we’re typically thinking about where the Federal Reserve is going to set interest rates or how a central bank, in general, is going to manage the monetary base of the economy in terms of the amount of cash in the economic system. My sense is that you mean something subtly different here. What do you mean when you say the monetary policy of bitcoin?

ALYSE KILLEEN: What I mean is that there’s a rule set that exists to define bitcoin that is known and knowable to folks broadly. It’s transparent and relatively easy to understand. For bitcoin what that means is that there’s 21 million bitcoin. New bitcoin are introduced to the system when a miner mines successfully a block and the number of bitcoin that miners get as a reward for their efforts decreases by half approximately every four years.

That’s the simple monetary policy and it’s one that’s enforced by software versus by regulators or any sort of central institution. It’s just simply the software that enforces these rules.

TONY ROTH: So, probably the most difficult concept for me to grasp has been this idea of mining, and it almost sounds like going in to rob a bank, right. I don’t have any cash and I’m going to do something to get some cash. What is this mining concept?, How do these miners create out of thin air, in a sense, currency that they are given for doing something?

ALYSE KILLEEN: Mining is really the conversion of energy into bitcoin. And what’s happening in proof-of-work mining is that miners are conducting these sort of computations whose purpose is just to validate a block. These computations produce numbers essentially at random that will either validate this block or that will not.

And so, the way that this all sort of works out is that the percentage of hash power that a miner contributes to the network is approximately equivalent to the percentage of reward that they will get over any defined period of time. And proof of work is based on a concept called hashcash, which was introduced by Adam Back in the ‘90s.

Adam Back, of course, is considered a forefather of bitcoin and he’s the CEO of Blockstream. You noted at the top that I’m on the board of directors at Blockstream. And to complete the story full circle, Blockstream is at the forefront, one of the leaders in the enterprise mining space today for bitcoin.

TONY ROTH: So, a physical currency has certain features that protect it from being counterfeit. And in a way, we can analogize that to what’s going on with the miners. The miners are providing the bandwidth to conduct mathematical equations to ensure that the ownership of the bitcoin as reflected in the ledger is authentic and when they accomplish that, in order to compensate them for their efforts and energy, they’re given a small piece of, some fractional amount of, bitcoin and the system goes on from there.

So, they play an integral part in actually protecting the integrity of the ecosystem and the strength of the store of value.

ALYSE KILLEEN: That’s exactly right.

TONY ROTH: It sounds like it’s a beautiful system. Why is it so volatile? Why is it that, you know, one day we can wake up and bitcoin is today $45,000 and tomorrow it may be $38,000 or $52,000, not just over longer periods of time, but even over short periods of time. It seems to be just an enormously volatile holding where people can’t seem to agree on what it’s worth.

ALYSE KILLEEN: In the short-term, bitcoin is volatile. Of course, historically, bitcoin’s volatility has decreased over time and as adoption has grown. And so, what that means effectively is that as bitcoin’s price has risen its volatility has decreased.

One of the things that has been most impactful for bitcoin’s short-term volatility, and this is also true of other cryptocurrencies, is the amount of leverage that exists within the system. Now, we have seen very recently efforts by exchanges made to reset their own rules or what is accessible to their users by way of leveraged trading so that we can have a healthier dynamic in these exchange rates.

Specifically, I’ll mention FTX and Binance, which in late July reduced the amount of leverage available to traders to 20x, which of course is still significant leverage. But it’s much healthier than the 100x that existed before. And so, as we see best practices be set by these exchanges that mitigate the amount of leverage in the system, I expect that will reflect or catalyze a decrease in volatility in the ecosystem and for bitcoin.

TONY ROTH: Long-term, you’re not concerned about the volatility, particularly since, as you rightly observe, it’s been one way for the most part, upwards. But you’re not concerned that it’s going to somehow really undermine the credibility of the asset.

ALYSE KILLEEN: I am concerned. So, the reason why I’m concerned though is maybe a bit different. So, we believe that bitcoin is relevant to, you know, the – a global population, including those of lower socioeconomic status where volatility is much, you know, more difficult to manage or to tolerate. And right now, what we’re seeing in the second half of the year is that emerging markets are beginning to onboard to bitcoin.

We know that El Salvador intends to adopt bitcoin as legal tender next month. And, of course, what we want is for folks everywhere, but particularly in emerging markets what I want, is for folks to get great use and value out of bitcoin without having to be exposed to, you know, undue risk or risk that doesn’t match their daily lives or what they can handle. And so, volatility concerns me in that way.

But the tech is rising to meet the challenge. So, if I can give you an example of this.

TONY ROTH: Please.

ALYSE KILLEEN: Bitcoin’s Lightning Network is about a quarter or two away of being able to have payment channels, Lightning Payment Channels, defined, denominated in fiat versus bitcoin. So, what that would look like is that bitcoin was transacting in the payment channel, but the relationships of the participants in that payment channel were fiat denominated. So, someone in El Salvador could be using bitcoin as reals while holding the value of that bitcoin in pesos. So, this is an example of the tech, the innovation happening in the technology of bitcoin rising to meet the challenges that adoption introduces.

TONY ROTH: So, let me hone in on that a bit more, Alyse, because one of the things that’s been tough to fathom is that there is so much literally energy that is invested in a transaction. So, I buy some bitcoin and in order for that to be reflected in my name appropriately, a bunch of miners do a bunch of calculations to make sure the ledger is appropriately reflected and then they get paid off in a little tiny fraction of bitcoin. And that happens each time that there’s a transaction.

Well, if the transactions are very large values and relatively few, it sort of makes sense to me. But if I’m in El Salvador and maybe I want to buy a cerveza, it seems like a lot to go through for a beer. Do you think that there’s a way to make the cryptocurrency flexible and compatible with a massive number of small exchanges or does it only really work for, you know, high value monetary transactions?

ALYSE KILLEEN: This is a great question and a really important point. And I’ll explain after I answer why it’s important. So energy is spent on producing these blocks approximately every 10 minutes. Regardless of how many transactions are in the block or whether your transaction for a beer is in the block or not, the same amount of energy will be spent on that block. It’s not transaction dependent.

Remember though that many, transactions happen not on bitcoin’s core blockchain, but either between custodians, like on a Coinbase or on the Lightning Network, which those transactions happening on the Lightning Payment Network are not transactions that are immediately committed to bitcoin’s blockchain. It’s a different layer of the tech.

And so, in fact, if you’re going to the corner store in El Salvador to buy apples, a bag of oranges, that transaction is likely never going to hit or at least not that day going to occur singularly or on its own inside a block on the bitcoin blockchain. Instead, what will happen is it will be represented in a Lightning Payments Channel and if and when that channel ever closes, and only then, it will get aggregated and dropped down, anchored into the bitcoin blockchain.

The reason why this is important to understand that it’s only a fraction of bitcoin transactions that are actually represented in these blocks on the bitcoin blockchain is because of the competitive nature that exists between cryptocurrencies. While bitcoin is aiming to sort of be a global store of value, other cryptocurrencies, smaller, newer, and more fledgling cryptocurrencies, they’re aiming to be bitcoin. Bitcoin’s aiming high and other cryptocurrencies are aiming for bitcoin. And sometimes the result of that is that other cryptocurrencies will sort of introduce, you know, almost what I would consider propaganda that confuses folks that don’t spend 24/7 in this space. One of the things we’ll say is think about how expensive it is to purchase that beer in bitcoin in terms of energy when, in fact, actually there’s no energy spent when you purchase that beer in bitcoin.

TONY ROTH: It sounds like, and I know I’m simplifying, but this Lightning layer of technology has been created to accommodate transactions that don’t require the same level of authentication due to the size of those transactions and can live in a level of lower authentication. And then ultimately, it’s the really big transactions that are reserved for making it into the actual ledger.

ALYSE KILLEEN: Right. So, in, you know, five years from now, the actual bitcoin blockchain will likely be used to settle say interbank end-of-day transactions and most other transactions or daily transactions, will all be occurring on the Lightning Network.

TONY ROTH: If I buy something on the Lightning Network, let’s say I go out and I buy a Tesla, an automobile, and I use that example not by accident but because there’s been a lot of attention around the fact that Tesla wanted to take bitcoin and they pulled back because they felt that it looked bad because of the amount of energy that went into a transaction. Let’s say I go out and I buy a Tesla. If that is only occurring at the Lightning level, rather than the underlying ledger level, do I have a risk, or does Tesla have a risk, since it’s going to be giving me the car and I’m going to be giving it my bitcoin, that somehow it’s not going to be as secure as if it were in the ledger?

ALYSE KILLEEN: Well, so the way that that would work is that you would look to see. So, today if you were buying a Tesla, you would surely do that in one of two ways. Either that would be done between accounts on an exchange, so from your Coinbase account to the Coinbase account of Tesla and that would likely be settled, you know, in their database versus on the bitcoin blockchain. But if you were to do it direct, that would be happening today on the bitcoin blockchain versus on a second layer or a side chain.

But the way that it works, Tony, is really that you look at the fee structure of the bitcoin blockchain, how much it’ll cost you to transact on the bitcoin blockchain, and decide whether it’s worth that extra layer of security or whether you want to take it up a layer to a side chain or to Lightning Network. So today, for example, it would cost you about $10 to send a transaction on the bitcoin blockchain and get it mined relatively immediately, so within the first 10 minutes. And when you’re transacting today you would be deciding whether you want to spend that time and money to secure that transaction on the bitcoin blockchain or whether you preferred something instant and cheaper and could get it done on Lightning Network.

TONY ROTH: So, I was going to ask early in the conversation how bitcoin compares to these other upstarts like Ethereum being the one that we’ve probably heard of the most.
In other words, you would think that with an early adopter or an early version of a technology, it’s not necessarily version 1.0 that’s the most successful. Maybe it’s version 2.0 or version 3.0. Some of these other companies might’ve come out and seen some of the things that bitcoin might’ve not done optimally and succeeded even better. Why are you so committed to bitcoin as opposed to other cryptos?

ALYSE KILLEEN: So, prior to bitcoin I was working on tech, infrastructure type of tech like this, like cyber security, data center software, cloud networking. We, I was really early in the cloud networking space specifically.

What I expect for Stillmark to start there and to be really specific is that although Stillmark is today defined as a bitcoin venture capital fund, in a decade we’ll really just be a generalist fund with expertise in the bitcoin and blockchain space. The way that we operate today is that we operate as a generalist fund that has knowledge, special knowledge and proprietary deal flow in the bitcoin space.

If there were to be another sound technology in the cryptocurrency space that emerged, then we would consider also deploying capital there. But we have to be really thoughtful about what we’re exposing our investors to in terms of risk. And there’s not a desire to expose investors to infrastructure protocol risk, but instead to expose folks to standard venture risk. What that means is that we need a secure, dependable, a stable base layer that the companies we invest in are built upon or are dependent upon. And so, it’s not that it’s bitcoin but it’s that bitcoin is a secure and sound technology.

I also want to maybe push back against bitcoin being defined as a version one, because I think, actually, bitcoin is more like a version three or four in terms of attempts for cryptocurrency. So, we know that predecessors include Wei Dai’s B-Money. Nick Szabo had Bit Gold. There were other attempts prior to bitcoin in the couple decades before the white paper was introduced at having this scarce, verifiably scarce digital currency, an internet native currency, and bitcoin emerges from that. So, it wasn’t an attempt number one at digital currency.

TONY ROTH: Fair enough One more question we have touched on it, which is the amount of energy that is devoted to maintaining the bitcoin ecosystem. How do you feel about that and how should we feel about that in our environmentally sensitive world? Is that problematic?

ALYSE KILLEEN: Well, I don’t think so. I think it’s actually a really great opportunity to have capitalism push us towards green energy. So, miners in a proof-of-work system are competing essentially for access to the cheapest energy. That’s the key variable. And the cheapest energy we know is wind and solar. And in the U.S., there’s an abundance of fallow assets in the wind and solar space. And so, my expectation is that miners will continue to take advantage of that opportunity.

Square and Ark conducted joint research here and published a brilliant white paper on it, in which they hypothesized that, in fact, wind and solar projects will be built simply to provide energy as a resource for miners. But even if that’s not achieved, I think what we will see is mining being able to sort of add a profit center to wind and solar projects that have these fallow assets. I imagine that your audience is very well-versed in these sorts of facts. But we know, as an example, that the wind blows more frequently at night and that the demand for energy is lower at night. And so, there’s a mismatch here in terms of supply and demand. There’s this intermittent energy pattern.

But bitcoin mining can work very well in that sort of dynamic. And so, the addition of a bitcoin miner to a wind project could have the effect of increasing ROI of that project without diverting energy away from households.

It’s capitalism that will drive bitcoin mining towards green energy sources.

TONY ROTH: That’s very helpful to put it in perspective. What I, from my layperson perspective, see as the greatest risk as I advise our clients around investing in bitcoin, perhaps not over the short term but over the longer term, which is regulation and competition. I think they’re related because the regulation and the competition come from the same place, which are sovereign governments. There’s very little regulation today.

How much regulation do you think is inevitable? What shape might it take? And could it have a dampening impact on the use and value of these cryptocurrencies that exist today, starting with bitcoin?

ALYSE KILLEEN: So, I think that Gary Gensler, as chair of the SEC, is very bullish for bitcoin. And here’s why. It’s just simply because Gensler understands the technology. We know that when he was at MIT he taught courses on the technology and he seems to have almost an innate understanding of what makes bitcoin different and singular rather than similar or indistinguishable from a bucket of cryptocurrencies.

Now, for bitcoin, because it’s decentralized, specifically because it’s decentralized, no one’s in control of it and there are not coordinated efforts around how to adjust the software in order to increase the intrinsic value or exchange rate of bitcoin. Because Gensler understands this, I think that regulation can actually be favorable to bitcoin.

So, an example of this is that last month Ethereum introduced a new monetary policy that in theory and in practice reduces the supply of ETH as blocks or mines. So, it looks like about one ETH maybe so far has—is removed from the network every time a block is mined. But much of the coordination around that effort, at least the marketing coordination, was tied to the ultrasound money meme which was Ethereum will be more valuable once we make this change. That’s different from bitcoin where changes are made to increase the security of the system or to increase the utility of bitcoin as programmable money.

I guess the sort of summary statement I can say here specifically with the regulators we have in place now and their desire to foster a regulatory environment that is beneficial to innovation while still protecting consumers. The better they understand the technologies of cryptocurrency, the more favorable for bitcoin, while at the same time the better they understand these technologies, the more regulatory risk there will be for Ethereum and other cryptocurrencies.

TONY ROTH: And you say other cryptocurrencies and it’s a great segue to what about a sovereign sponsored competitor, you know, a dollar, a digital dollar if you will or yuan? It seems that those are inevitable. The ECB, again, they’re going to throw their hat in the ring at some point it would appear, and it would seem that they would have – be in a different category in terms of regulation and such. Do you think that it’s even an outcome that anybody would want to see the dollar replaced or as a store of value or medium of exchange or any of these other critical fiat currencies?

ALYSE KILLEEN: I think they’re just different value propositions. So, what’s important about bitcoin is that it’s an opt-in system and that you’re not forced to use it, but you can use it. And I imagine that that would be quite different for, you know, a government sponsored digital currency.

You know, I don’t know that I see them in competition. I see them potentially as being cooperative with one another and perhaps even boosting the value of one another. And it’s historically been the case. I mean it, it’s quite clear that stablecoins have increased the sort of utility of digital currency and the types of things you can do with bitcoin or in a digital currency space. And so I don’t know that I perceive any risk to bitcoin from the introduction of government sponsored digital currencies. But I do think that they’re definitionally different and will be perceived as offering different value to users. So, I could imagine, for example, a user in the U.S. having a digital wallet that held both bitcoin and a USD government-sponsored digital currency and using those two assets quite differently and maybe even on a daily basis.

TONY ROTH: I would like to ask you one last question. Are there other things that we should have our eye on as we move forward in thinking about the growth and the maturation of bitcoin?

ALYSE KILLEEN: At the core protocol level there’s three things happening when work is being done beyond maintenance work on the bitcoin blockchain. So that is, one, that we are, core developers, are working to make transactions more private and cash-like. Two, they’re working to make transactions more efficient in terms of their cost and the amount of space they take within blocks. And so, essentially what that means is they’re working to increase the throughput of the bitcoin blockchain itself. And then, three, advancements are happening that expand the breadth of utility in bitcoin as a programmable money. The repercussions of that are things, you know, are introduce the trends that bitcoin invests to back.

So, an example I already cited earlier was the potential to have a payment channel on the Lightning Network that is denominated in something other than bitcoin. We’re also going to see a really interesting shift taking place over say the next four or five years which is that we’re going to start seeing people being introduced to bitcoin via earning rather than via purchaser investments.

We’re already seeing that, a demand for that via a Mechanical Turk competitor or Scale AI competitor called Stackwork, which allows folks to complete simple tasks on their phone and get paid in real-time in bitcoin. But we’ll also see that happen through play to earn games, maybe people participating more commonly in mining. And once folks begin to be introduced to bitcoin through earning, they will have influence over what bitcoin is and I think it’ll be a really exciting time to be present in this space. We’re still quite early.

TONY ROTH: Well, it’s certainly a really fascinating topic and it’s one that clearly requires tremendous expertise and experience in order to fully understand it and the nuances associated with it. It’s just been such a great conversation.

Let me summarize three key takeaways. Number one is I think it’s really important to appreciate that not all of these digital coins are created equal. While they’re discussed together as a category or a grouping, if you will, bitcoin is by far the largest and most predominant one and there’s a reason. It’s a category or a technology that has been the result of many years of thought and technology and monetary exploration. And it has built an ecosystem around it, which is probably its, one of its strongest attributes and that does distinguish it from many other ones.

Second, I think is to understand that there are risks associated with bitcoin but there are also mitigants that can come to those risks through the technology itself. And the risks associated with bitcoin, we believe, are probably from the sovereign itself, whether it take the form of regulation or competition. Those are really the greatest risks associated with the long-term future of any cryptocurrency, including bitcoin.

But having said that, the technology and the capital system in which it exists does provide a mitigant to that as we’ve seen, for example, with respect to the environmental characteristics, which Alyse so articulately explained that that can be addressed through migration away from energy usage, which is dirty, if you will. And similarly, as there are challenges that may be presented through regulation or competition of sovereigns, it’s a big enough pie that these coin bases, particularly bitcoin, can use technology to address a lot of those challenges.

And then lastly, I would say that I’d make a generalized statement which is that we’re really at the beginning, at the cusp of a major change in how we live as it relates to medium of exchange probably most prominently and the underlying story of value. But I think the whole idea of buying a beer in El Salvador is really a very compelling and resonant idea in that it suggests that you swipe your phone and you just exchange at the Lightning level a fraction of a bitcoin.

I think it really suggests a very different world and it suggests one where from a regulatory standpoint the sovereigns actually have much greater control and transparency into activities and a much better ability to control illegal activities and so on and so forth as a record of all this activity is stored in the digital space. So, there’s a lot of tremendous potential for the use of digital coin going forward and it’s inevitable that it will be with us and continue to transform and disrupt the landscape. And right now, there’s no question that bitcoin is the dominant approach, and we will at Wilmington Trust continue to think hard about the right entry point for our clients potentially into the crypto arena from an investing standpoint.

So, with that, Alyse, thank you so much. This has been a really fabulous episode and conversation.

ALYSE KILLEEN: Thank you, Tony. It’s been great to spend time with you.

TONY ROTH: I encourage everyone to visit wilmingtontrust.com for a roundup of our investment and planning content. You can subscribe to Capital Considerations on Apple Podcast, Spotify, Stitcher, or your favorite podcast channel to ensure you get updates on future episodes. Thank you all for listening.

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