Cryptocurrency Deep Dive - The Aspen Institute with Brian Brooks and Brooks Entwistle, Ripple

Based in Washington where all the action has been happening lately. I'll be moderating today's discussion, which is a deep dive into the question of whether digital assets are a trustworthy alternative to the traditional financial system, or if they are speculative and potentially dangerous financial assets. The reality is that the answer to this question may change over time, especially as the industry starts to evolve. We saw such a big run-up in crypto valuations from last summer into the fall. Prices were soaring and so many more people were jumping into the market. Our own NBC News polling showed that one in five Americans actually are invested... you guys are actually helping the older generation. Fifty percent of those 18 to 49 have used cryptocurrencies, and for Black Americans the rate is 40% adoption, so twice the level of the general population. So there was a lot of enthusiasm, a lot of interest, a lot of energy in the crypto market when prices were going up. We've seen prices since then come down in spectacular fashion. Bitcoin losing two-thirds of its value, XRP, which is a token of Ripple which we'll talk about in a little bit, also lost two-thirds of its value. Ethereum has lost 75% of its value since then. So a lot of people have lost a lot of money, which is when Washington lawmakers and regulators start knocking on your door and asking hard questions... regulator was head of the OCC. And we have with us as well Brooks Entwistle, who is one of the top executives at Ripple overseeing emerging markets. He's also a trustee of the Aspen Institute and was chief business officer at a little company called Uber, so he knows something about growth, scale, adoption, and fighting with regulators. Exactly. So we'll kick it off here. Brooks, I was hoping that you could start by giving us a high-level view of where you see the market today. Some folks say that we're in a crypto winter. How long could this winter last and how cold is it going to get?

Well, you know, it's a little bit like asking questions... are mortgage-backed securities the best driver of rising home ownership rates, or are they a risky asset that has the potential to tank the global economy? And the answer is yes. The problem with talking about crypto in terms of asset values... you could begin by just saying after this giant crypto crash, Bitcoin has only outperformed the S&P 500 in the last 12 months by 5x instead of 30x. You could look at it like that. 30x is better than 5x though, but 5x is a lot better than the S&P 500, and the next tent isn't having a panel about the future of US equities, right? So the point that I always try and tell people is... the biggest issue is that the idea that most of crypto is about replacing the centralized banking system with networks that allow user control versus bank CEO control. The crypto assets that have prices are more like internet stocks. It's more like you bet on Google if you think there's going to be high internet traffic, and you short Google if you think people are going to go back to the post office, right? But it's not that Ethereum or Ripple or anything else is trying to replace the US dollar. It's trying to replace a system of transmitting value. We'll talk a lot more about that. So for me, the prices are not that relevant anymore, any more than Google's volatility is, and in the early days of Google that was super volatile.

This is an important point, because you're saying cryptocurrency is actually not a currency at all, at least some cryptos are not currencies... created by Ripple was sold as a security, was sold not as a security without the proper disclosures to investors to the government agencies. Is Ripple a security? You have fought very vocally against this idea from the government.

Assets and our business outside the US... I'm based in Singapore and have looked after our international markets. This business is thriving in certain jurisdictions. But how are people supposed to know if someone is looking to get into the crypto industry or looking to purchase a cryptocurrency? How do they know when they're buying it? Am I following the letter of the law? Is the asset that I'm purchasing going to be redefined as something else later, and then I could get in trouble for making this investment? Coming to me... either one... go ahead.

So Brian, if crypto is more like a stock than like a currency, who should be regulating crypto? And are there enough regulations for crypto?

We have to reset that stop... let me answer the question by just starting. I'm looking at this audience and I'm feeling like we've got an audience of a lot of smart people who need a 30-second orientation on what crypto even is. So I'm going to seize the moment and I'm going to give you a 30-second tutorial on what crypto actually is. So here's the concept. In 2009... the way that system worked was if you wanted to get a loan, there was either a CEO or a credit committee at a bank that would decide whether you got a loan, and if you wanted to send money somewhere, there were these very small clubs of banks that would allow you to do that. You could do that over something called the Automated Clearing House, something called the network or whatever, but those were things that were owned by a handful of large banks who made a lot of money whenever you did that. Basically, these centralized institutions were toll collectors. What we learned later was they weren't just toll collectors in that they charged you $25 every time you sent a wire internationally. This is the issue that Brooks's company is trying to solve. But they also weren't just toll collectors, they were decision makers. They could decide whether you justified getting a loan or not. In the olden days they would decide... we created a financial system that wasn't controlled by centralized actors. It was a decentralized network to make financial decisions. How would we ever do that? The way the banking system works is we pay people's salaries to work at the bank and be on the credit committee. If we were going to have a decentralized financial system, meaning we're all going to connect our computers up to a network and transmit value without there being a CEO, how could we convince each of you to go home and download the software and start maintaining the XRP ledger or the Bitcoin blockchain or any of these other networks? Crypto is about the networks, right? The answer is the way we get you to do that, to maintain this network that will become your new bank, is we pay you... a bunch of other networks. So that's the point. When I say it's like a stock, I don't mean it's literally like you own part of a company. I don't mean that. I mean it's like a stock in that the value of these tokens you're getting is related to the adoption rate of the underlying network. So when tens of millions of people are transacting Bitcoin, the value of Bitcoin goes way up. That is why Bitcoin isn't going to stay at $20,000 a Bitcoin, right? Because more and more people use it. Same with a lot of other things. So the focus is the value of the network is what drives the value of the token.

So we've talked about the network that underlies different cryptocurrencies, but many people do invest in these tokens as investments. They're investing in them with the expectation of making money from them. So is there a separation or difference in your minds between how the public or how the retail investor might view these decisions?

Decisions of... why would I be a Bitcoin investor versus an Ethereum investor versus a Solana investor, right? And the answer is each of these networks is being built for a set of purposes that those of us who live in this world actually understand super well. Just to give you an illustration, you've all heard of Ethereum. You've probably only heard of two cryptos. I'm going to guess that 75% of you have only ever heard of two cryptocurrencies. I'll bet you've heard of Ethereum and Bitcoin. Some of you have heard of others, but most of you have probably heard of those two. Those are radically different things. They're as different as Google and Ford Motor Company, right? You wouldn't go into your Charles Schwab account and say, 'I want to buy stock, I don't care what the company is, I'm as happy with Ford as I am with Google.' Right? You're picking Google if you're an internet investor, you're picking Ford if you're a large-cap fundamentals or industrials investor, and they're totally different... the last panel in a world of globalization. As we hear a lot, you probably think that one of the big frictions in the global economy is the need to engage in foreign exchange. Every time you send money from Country A to Country B, you have to pay a large tax to change dollars into euros, into yen. But what if you could trade the same currency on both sides of the border, and it could just be XRP as the tracking stock for that transaction? That would be an amazing thing if you could cut all of that out of the system. So if you believe that, you'd buy XRP tokens. If you believe that one of the greatest threats in the universe is the debasement of fiat currency, and that the evidence for that is historically high inflation globally, you'd probably buy Bitcoin, right? Because the unique thing about Bitcoin is its inherent supply limitation, so it can't be debased the way that fiat currency can... probably buy Ethereum tokens because Ethereum is the network on which a lot of financial services applications are being built. So when I say that these are like stocks, what I'm really talking about is each of these networks is being built for a different purpose. But the theory of each of them is that that underlying purpose would be better done on a decentralized network than it would be done by a bank. That's the theory. And if you believe that, you'd find the token that matches your investment thesis and buy that token.

Brooks, Brian just gave a very nuanced and complex answer... do you feel that Washington... that's not a compliment... that Washington understands those nuances and complexities?

In some jurisdictions, in our early use cases around remittances... remittances is a $750 billion dollar market per year. Even with a little dip during 2020, that market will continue to grow. That is money that's sent back home from Saudi oil fields, from other markets to the Philippines or other corridors that many of you are familiar with. It's done often for 7% money. It's done in ways that it would disappear over long weekends. It would take a long time to get to that village to pay the hospital bill, the education bill, whatever that is. So if you can step in the middle with a payment solution using digital assets and the blockchain to upload that fiat and immediately across the... business in the first place, and why do these business models and these white papers begin in the first place? I believe at the core that they were going after some intractable world problems. That's why we're doing this.

Brooks, I'm curious. I saw some analysis that showed that the US was like number eight in terms of crypto adoption around the world, and that actually some of the countries that had the highest level of crypto adoption were Vietnam, India, Pakistan. Do you see a correlation between the strength and credibility of a country's government and the popularity or use of crypto?

Brian, what do you think the temperature is in Washington? Crypto cold or crypto hot?

Well, you know, I think that in Washington you have a consensus on one side and a debate on the other side. A fairly strong pro-crypto consensus has emerged in the last couple years on the Republican side for a couple of reasons. On the Democratic side, there's a group of champions and a group of detractors depending on which group of Democrats you're talking about. The way I describe it is on the Republican side there are sort of two salient groups of people. There are the tech Republicans and there are the financial services Republicans. The financial services Republicans, of which I consider myself a part, I ran the banking system in the last administration... over COVID vaccine mandates. You saw the Canadian bank regulatory system leveraged against the truckers to prevent the truckers from even accessing their own checking accounts during that period. They were debanked and denied access to their own bank accounts because they were engaged in some form of civil protest the government didn't like. You can't do that in crypto. There is no government. There is no system. It's a decentralized network that is sent the same way you send emails. No one can actually stop that. So the financial services Republicans see this as freedom. And the tech Republicans see this as it's important that an open society in the West kind of own the development of Web3 the same as we owned the development of the original internet. So all the Republicans are aligned. On the Democratic side, you have a group of mostly younger... legacy technologies created in banking. Suddenly you can have deposits with zero fees. Suddenly you can send money across borders without the $25 wire fee. It's great for the dispossessed and for emerging communities and minority groups and others. So those Democrats love it. But they're not the Democrats in charge. The Democrats in charge, the Sherrod Browns and Elizabeth Warrens, the people who were of that generation, the people who grew up under LBJ, they believe that the defining feature of all profit-driven finance is unfairness and inequality. So if anyone's making money in finance, that's questionable. So they're on the other side. So there's a civil war going on on the Democratic side, but a consensus on the Republican side. My belief is, as we saw with the original internet, networks always win. There is a reason that nobody goes to their local... hardback novels for $77.95 on Amazon and have it delivered the same day, because it's just cheaper and faster. You can't compete with that. So at the end of the day, those kinds of efficiencies are coming to financial services the same way they came to shopping malls a generation ago and for the post office a generation before that. Standing against that tide is a losing battle. I think people in Washington are starting to figure that out.

But the Sherrod Browns and the Elizabeth Warrens of the world, part of the reason why they have been so vocal, and part of the things they're basing their complaints on, are some of the runs we've seen on certain types of cryptocurrencies in recent months. We saw what happened with Terra, stable coins they're saying are unstable. So first thing, can you guys, since we're going to all learn here, what is a stable coin?

That is used for way too many different things. So I'm going to tell you what a stable coin really is, and then I'll tell you how Terra and other stable coins have blown up because of what people mistakenly think they are. Here's what a stable coin really is. A stable coin is simply today's internet version of things you're already familiar with. If you're old enough like me, you remember what travelers checks are, right? Travelers checks weren't money. Let me be super clear about that. They were not money. You didn't have to buy them from the bank where you held your deposit account. Travelers checks were just a super convenient way to fly from Washington to Paris and be able to write checks and buy things. What a travelers check was, was an instruction to a bank to send money to whoever the holder of the check was. That's all it was. A generation later... the card is just a set of instructions that when you swipe the magstripe, it instructs a bank to send money somewhere. What a stable coin is, is it's the internet version of that. It allows me to email you money. Now you might think, 'Brian, we already have that. We have Venmo and Zelle, right? So who needs stable coins?' Most people who don't work in the field don't actually know that Venmo and Zelle don't send money to anybody. Venmo and Zelle are super complicated technologies that actually just send an instruction to your bank to tell your bank to send money to some other bank, which then instructs the recipient to acknowledge receipt of that money. It's a super complicated set of messages. That's all Venmo is. What's more, you can only send Venmo to another Venmo customer. So if I'm a Zelle customer, which I am unfortunately, and you're a Venmo person, you can't send me... you have that. So the point is stable coins are a form of electronic money that is like an internet version of a travelers check. It's something that's very familiar, and it represents dollars that are held in a bank. There are stable coins like that where there are dollars in a bank account that are immediately redeemed as soon as you send the stable coin to somebody. That's what a real stable coin is, versus what you've heard stable coins are, right? Like you mentioned Terra. Terra said it was a stable coin and it was marketed as a stable coin, but really what it was, was a crypto token whose value was dependent upon the value of a related token. It was super complicated. You don't need to know what it is. You just need to know what it isn't. It isn't a stable coin. It was an algorithm that was super complicated. The worry that many of us have in crypto, and I'll bet Brook... failed. Some people actually wrote headlines that the internet was over. That seems absurd, right? But if you remember 2001, everybody knew it was BS. The internet was over. I was at a wedding once with the CEO of Pets.com, and that guy was working at a Starbucks six months later, right? But the internet wasn't over. What emerged out of that was Google and Amazon. Same thing's going to happen here. The stupid projects, the Pets.com of crypto, are going to go to zero. And it doesn't mean crypto's stupid any more than Amazon was stupid at that time. But I will say one other defining feature of stable coins is that they are intended... some currencies that you were saying were not really stable coins, even though they call themselves stable coins.

So this comes back to this idea of regulation and definitions. What are we? What is the language that we should be using to describe these things? Because the language is important, because that's how consumers and investors know what they're buying into, and regulators can then determine whether or not these companies are being upfront.

Can I just put an underline under what Brooks just said? I think, coming back to your question about what's the temperature in Washington around these things, what I would say is stable coins are actually the tip of the spear on crypto... the controller. I signed the first regulatory guidance that defined what a stable coin was that would be allowed inside the US banking system. What I said was that a stable coin, to be in the banking system, has to have three features. First, it has to be backed by risk-free assets, meaning it cannot be backed by junk bonds, long-dated corporate securities, or whatever. I used to joke that one of the popular stable coin projects was backed by 68% bank deposits, 12% partially hydrogenated vegetable oil, and a set of other things, right? That's not a stable coin. It has to be backed by risk-free assets, meaning insured bank deposits and short-term treasuries, and nothing else. Second, it had to be redeemable on demand and at par. If you meet those three conditions, in other words if you really are a travelers check... that's the more interesting thing you should care about, because in the future stable coins will become what people think of bank deposits today. The difference will be especially for lower income Americans and people... these will be bank deposits.

Books, so CBDCs, that's a good pivot from this. And it is another one of these terms that is thrown around. It's on the cover of The Economist. It's very interesting, and it's again a wide spectrum of projects, from a Chinese Central Bank where they have a digital yuan that's well down the path of a central bank digital currency, all the way down to think about...

Big banks around the world, central banks that are much further down the road. Isn't El Salvador? Don't they have their own? How's that going? Don't they have their own digital currency? It's called Bitcoin. It's called Bitcoin. They, I thought they issued their own as well. I mean, I would buy B before I...

So let me talk just for a second about this CBDC thing. So first of all, again on terminology, we're here in Aspen, Colorado, right? This is one of the first places in the United States where pot was legalized a couple years ago. And as I was walking to coffee this morning, I walked past like 12 CBD stores, and I'm thinking, CBDs, that's what they're going to think this is. Yeah, so this is not potcoin, okay? But I will say, CBDCs to me are super scary. So I would like to take 45 seconds and scare...

Why I think this is a really scary thing. So in the United States, for a long, long time, we've had a culture of financial privacy, and the bedrock concept of financial privacy is the concept of cash. Now the problem is, none of us has cash anymore, as I embarrassingly discovered last night when I lacked a tip for my ballet, that was really embarrassing. But we used to have cash in our wallets all the time, and the reason that was important was it allows us to buy things without other people knowing that we bought it, right? So it could be that you were buying cigarettes but you told your wife you were trying to quit, and you know, that's not great, but still, it's like some things are kind of your business. Or it could be that you were giving money to a person that you didn't want the government to know about. Maybe you're contributing to the wrong political party in Venezuela, and it's actually super dangerous for the government to know you're doing that.

Card economy, and then to an online economy and everything, but still the government didn't have direct visibility into any particular thing you were doing. And then along come CBDCs. The concept of CBDCs is that instead of transactions clearing through your wallet in the form of cash, or clearing through your bank in the form of when you go and use your Amex card or your Visa card, all of your transactions are now going to transact through the Federal Reserve. And so every single thing you buy will now be seen by the government, and that'll be used in all kinds of ways. Now we can speculate what those are, but as Brooks says, we don't have to because China's already done it. So we know exactly how this works. Here's how the movie plays, okay? And I'll tell you this from real life experience. So I used to be on a committee called the International Heads of...

Experiences were with their CBDC. The vice chairman of the People's Bank of China said that China walked down this road for three reasons, and tell me if you like any of these reasons. Okay, reason number one is, with a CBDC we will build our own network that will be entirely away from the global financial network administered by the US through something called the Basel Committee. And once we do that, the US will not be able to sanction us anymore, because we'll have our own system and we can be in it with anybody we want. It could be Russia, North Korea, Cuba, Venezuela, or whatever, but it'll be free from sanctions because it doesn't run through the banking system. That's reason number one. Reason number two, because our economy is such a fast growing and large economy, we will be able to supplant the dollar as the...

CBDC. So if I'm a US investor and I want to invest in WeChat or Alibaba, I can no longer write a check in dollars. I have to first go and remit it in that form. And the third reason, the third reason is because we want to approve and disapprove transactions for our citizens. There's some things we think some people shouldn't buy, and we want to be able to turn it off. Much as China recently used their COVID health app to shut down a series of protests by turning it red, right? They want to be able, when you are the bad guy in the Tiananmen Square protest, to turn off your wallet and not allow you to spend your own money. So these are things that I'm not making up. They've happened in the only country to launch a CBDC thus far. I don't think anybody thinks any of those are good things, right? And you're probably thinking, well, that'll never...

You're crazy if you think that some generation of leaders in whatever administration you disagree with won't do that. So Brian, I think I'm going to need a CBD after that very scary 45 second explanation.

Exactly. But I guess my question is, if the blockchain, which is sort of the technology that cryptocurrencies are built on, is a public ledger, can't the government already see everything that you're doing on the blockchain? So can they see the things that you're doing on...

I always love it when people talk about the blockchain, because there are of course dozens and dozens of blockchains. But the concept of a real blockchain is it is a public ledger, you're right about that. And so unlike the bank where the transactions are known only to the bank executives, it is true that the...

Figure out who those people are requires a fair amount of forensic skill. There are companies that do that, but it's very, very different from the government being able to either see that it's Brian Brooks sending to Brooks Entwistle this many Bitcoin. That is not possible. But more importantly, on to the open point, nobody controls it, whereas the government does control the CBDC. It can tell you, hey, over here, you know, we have a famous skier in the front row, you voted the wrong way in the last election, you can't buy your next pair of Rossignols or whatever. You cannot do that. And if you think that's a joke, it's real in China today. That's the problem. They can't turn off the Bitcoin blockchain.

Brooks, one argument that I've heard in favor of having central...

While China has its own super fast, super efficient network that leaves the rest of the global financial institutions back in the Stone Ages. What's your argument?

So Elon, the way you framed the question was, what about the people who say we're going to lose the race to China if we don't quickly adopt our own CBDC? So my short answer for this always is, we're never going to out-China China, okay? And so the question is, do we want to race down the road to a centrally planned economy with...

The Soviet Union had that was never our plan. Like we won the Cold War through the dynamism of markets and rock and roll, okay? That approach that the Soviets had failed, and we didn't want to beat them at their own game. We wanted to have a different game. And my belief is that the way that this country's financial system ultimately will win is the same reason the original internet won versus countries that were slow to adopt the internet. They lost a decade of growth. The way we'll win is by embracing the idea that all kinds of risk-taking entrepreneurs are going to build a lot of amazing stuff that we can't even predict on top of these networks. And we don't have to predict them. We can leave that to the central planners of the world. The lesson of the internet is, when you build networks, whether it's the XRP Ledger or the Ethereum network or the...

So rich. Maybe you're here because you're so rich, but there are people out there who have a thesis of what to build on top of the Bitcoin blockchain, and it doesn't matter that we can't predict it today. It's going to be amazing. But if we follow China down that path, none of those things will ever get built.

Brooks, you brought up the point of financial inclusion in your previous answer. And you know, just going back to a stat that I mentioned at the beginning, the adoption rate among the black community for cryptocurrencies is double the rate of that of ordinary Americans. I was at a gas station in Virginia where you can buy gas for less than $5 a gallon, by the way. And there was a slushy machine, there was a bunch of...

This platform we're building on. So maybe I can just quickly pick up on the question about why the rate of black adoption of crypto is twice that of the background population. And you know, Elon, you framed it in terms of, is this a better system for them to be part of, or maybe it's easier to get into this system than that system? I start from the premise that nobody wants to be in a system. Even those of us who are fully banked and have great private bankers and everything else, we're not there because we're super psyched to be in the banking system. We're there because we want to buy a house and we need a mortgage, right? Or we want to go to college and we need a student loan, or I owe Brooks for lunch and I got to send them a transmission of money somehow. I'm not there because I want to be in the system. And so the problem with the way that we currently...

About the system, that's just a necessary evil. The same way that we used to have to pay 45 cents for a stamp because the only way I could communicate information to you was to send you a letter. Nobody loved the postal system, it was just the only way to do it. The point, the reason that minorities at a higher rate than others are adopting crypto is precisely because if you're not already rich, it's way cheaper to send a USDC token than to send a wire. It's just cheaper, okay? The entire system is cheaper and faster and doesn't have all these entry barriers where you can only get in if you're already rich. It's as simple as that.

So you used to be a banking regulator, and now you're saying that crypto has the potential to put banks out of business?

Well, look, they're not going to... The reason that we even have banks. Banks originated in Italy around the year 1340, all right? And the reason they originated was because of a set of accounting advances that allowed banks to serve as trusted intermediaries between parties that owed each other money. Before that, literally I would write you a note and I would promise to pay you money, and you'd put the note in your pocket and you'd see if anybody else would take the note. You know, that's why we refer to discounting notes. And then banks arose, and it was like, you no longer need to do that, we'll take care of it for you, but you're going to have to pay us to do that. That function of needing a trusted intermediary to maintain ledgers of account, to figure out do I owe Brooks money or does Brooks owe me money, it turns out that function no longer has to be done by human beings. The same way we don't need postal clerks anymore. I can send you an email for free and it's instant, and that's just...

Value-add services, structured finance, investment advisory, all of the things that make a dynamic economy function. We still need people to do that. There's a lot of creativity going on in finance. But the core of banking, the base of the pyramid, the thing that drives most of their revenue, doesn't need to exist. And that's why I say, and I was saying to one of the organizers even before we stood up on this panel, cryptocurrency does not seek to replace currency. It's a bad name. Cryptocurrency seeks to replace banking. Just if you take nothing from this panel but that, that's what you need to understand.

New York just voted to pass... We'll see if the governor actually signs this bill, but New York has been looking at a moratorium on new data mining centers that are based on fossil fuel plants because of the concern of just the massive amounts of energy it takes in order for this industry to operate. Do you guys have any insight into that? Is the industry looking at ways to reduce its fossil fuel usage, to reduce its energy usage?

Okay, well, this is a question to me because I run a company that does this. So let me just begin by saying, and we support this, yeah. I mean, so right, so this is a place where Ripple and I might not be on the same side, which is totally fine. But I will just begin by saying the massive amount of energy that Bitcoin uses is...

Elon is talking about. And so again, I just need to orient all of you. Certain cryptocurrencies are what we call proof-of-work currencies. I didn't mean to get this geeky, I really apologize. Some of you may be saying, you are that geeky, Brian, and that's okay. I own that, that's fine. But there are some cryptocurrencies that are called proof-of-work currencies, and then there are some that are called proof-of-stake, and those are sort of the two main kinds. So what Elon is talking about is for the proof-of-work currencies, the way that you get the reward. Remember how I told you you can download the software and if you validate the next transaction correctly, you win the prize and you get paid with Bitcoin? The way it works on proof-of-work networks is your computer...

Spend a bunch of money to run those computers. That does use a certain amount of electricity. That is thought to be a really good thing for the network, because the theory is, unlike in normal banking, you can't just come along and counterfeit a Bitcoin. You have to invest a lot of money to get the next Bitcoin, and so only legitimate people are going to do that. You can't just fake it, and that's thought to be a good thing. The criticism is, okay, but that did use like 181 terawatts of electricity last year, and that's not very much globally, but it's not zero. So what do you think about that, Brian? And what the industry says about that for those of you who follow these things is, the industry first of all says that the energy mix of Bitcoin is about twice as renewable as the energy mix of the electric grid that you use to turn on the lights in the bathroom this morning. So unless you're...

Efficient user of energy, right? We're going to use more energy because the population's going to get higher, and wealth creation requires and comfort requires heating and all of these many things. So the question is, does Bitcoin generate more or less value per unit of electricity than other things that we do? And the answer is, Bitcoin is something like five times as efficient a generator of value than airlines, chemicals, even the banking system. And so at the end of the day, yes, it uses electricity, but to produce a billion dollars of value in Bitcoin is a lot more energy efficient than when United Airlines uses oil to produce a billion dollars of value. Are you going... That's a cocktail conversation. Come find me after, we'll talk.

Are you hearing this, Brooks, as a concern overseas as well as here in the US, or to the same degree?

Is actually a topic that's not being discussed. Yeah, I mean, look, the EU was just debating a Bitcoin mining ban over this issue. But the really interesting thing to me about Bitcoin mining in particular is, Bitcoin mining increasingly is becoming a renewable energy play. And so one of the things I've found running this company is, the people who want to run Bitcoin mining operations tend to be wind farms and solar farms. It's not actually, contrary to what you read in the newspapers, it's not coal-fired power plants. And the reason that the wind farms and the solar farms all want me to show up and build a Bitcoin mining data center there is that the economics of renewables, and I hate to be the bearer of bad news, is that they're just not profitable. And you know why they're not profitable? Because on a really windy day, a wind farm produces way more electricity than can be consumed in its...

And says, I tell you what, I'll consume all your excess capacity, and when it's not windy, I'll turn off. So on those days where I'm your base load consumer, I take your unprofitable wind farm and I make it profitable, which suddenly means Bitcoin is the only way you're going to get more wind and solar. That's the future of Bitcoin mining. So the worry I always have is, like with this New York ban you're talking about, Elon, most Bitcoin mining in New York is done in the hydropowered region of the Niagara Falls. Again, a lot of wasted electricity that can't be consumed. It's not like they banned coal-fired power plants. They banned the Bitcoin miners that are making hydro profitable. And surely that's not what we want, right? So there's got to be a more nuanced approach to this. And just saying, let's use less energy, you want to use more wind energy, right? More, not less.

In terms of security, in terms of speed, in terms of that, and in terms of big numbers. Great, I'll let you guys have the last words on sure. We should, I hit both of them really quickly and then we do the same on NFTs. We haven't gone down this. It's been amazing, 70 minutes. But clearly, as the NFT market has gone through a wide, this has been a brutal couple of months as well, no different. But good things are happening, right? If you're a creator or you're an artist or you're someone that has, you want the rights around your creativity long-term, this makes sense. I also think about exciting other things like real estate, fine wine that gets tracked. There are other things that are applications here are enormous. And so keep building, but realize that yes, the same kind of downturn we talked about in the market, the cold weather that blew through, it's actually getting...

Okay, so my super quick answers are, first of all, on NFTs, NFTs are a way of unlocking the power of creators versus the power of financiers. So one thing to know about me is I'm a musician. And in the olden days of music, the way that Beethoven was able to finance many of those sonatas and symphonies is he went on bended knee to various counts right around Europe and begged them to give him 500 florins or whatever to write the Moonlight Sonata. And all the power was...

Scalability. It's sort of like the original internet. I mean, I remember, it's embarrassing that I am actually this old, but I remember carrying around this giant IBM computer with my dial-up 28.8k modem, and it's like, man, this is never going to work. And then one day you had like broadband, and then you had streaming, and now you have everything you have today. So like, Bitcoin was super inefficient and slow and nobody could pay it, and now you have the Lightning Network which is as fast as Visa. Ethereum super clogged with gas fees, really hard to use, and now you have Solana. I mean, yeah, we're like, you know, when I started in this industry, we're at the bottom of the first inning, and now we're kind of in the top of the fourth inning, and it's a lot better than it was. It's like now we have T1 lines and not 28k modems, but soon we're going to have dark fiber and streaming, and we're on the way there. Way better than...

Great. Thank you both.