On and Beyond Tether - Paolo Ardoino

So Bitcoin to me is not just a currency, but it's more than a currency. It's an idea. It's what actually Plan B stands for. We want to not think about just a finite currency as Bitcoin as the end goal of this journey, but we want to think about how the teachings of Bitcoin can be replicated in tech, from artificial intelligence, telecommunications, education, and so on. So that's why with Tether we started expanding our investment in different areas. In the last two years, we made 12 billion dollars in profits, and we distributed almost a very small amount of money out of those profits because we want to keep the majority of these profits in the company to keep investing in areas where there's too much intermediation. The success of USDT as a currency as well is the fact that it's helping to disintermediate financial transactions and help people to be their own bank, have their own checking accounts. Almost 400 million people now are using Tether on a daily basis as their checking account and savings account, people that never had that opportunity before. There are 3 billion people in the world that don't have bank accounts, that are unbanked, not because they are bad people, they are just too poor for being of interest to the banks because they don't generate enough fees. So what USDT did really well is remove intermediaries from the equation and go directly to the last mile. But we can do the same thing with education, we can do the same thing with telecommunication. There are too many intermediaries, all the data centers, all the big tech companies, they're all unnecessary intermediaries in the equation. So we think that with the teachings of Bitcoin and what we learn from USDT, we can do the same in other areas.

I'm thinking like AI agents rather than humans increasingly driving rapidity and also decision making in global commerce. It will be part of my speech today at 4 p.m., so stop together. I'm actually just going to describe that in my opinion, in the next 10 years, given the amount of transactions that human beings will do on a daily basis, AI agents, robots, bots will do at least 100 times more transactions on a daily basis than humans. You have self-driving cars that will go around, they can pay themselves for recharging electricity, pay the tolls. You have fridges buying already today your own milk if you finish the milk. You have lights that are paying for their own electricity. So that will be all digital. All those payments will be very, very high frequency. I think the future is giving to all AI agents non-custodial wallets with USDT and Bitcoin potentially to have them being part of the economy and be able to transact and pay each other directly. So I don't think the future is having them... Imagine if all these agents, billions and billions of agents, do you think that they will be connected to PayPal, or do you think that they can be or they should have a non-custodial wallet so that their masters, that should be the humans, can grant them some money and they can spend it through our conditions in the real world economy?

Yes, the short answer is yes. Because I think it's clear how well we already did it. Cash in emerging markets is cash based on the local currency or is cash US dollars. So there are these two types of cash, but cashing US dollars is more and more difficult over time. It's always harder and harder for people to get cash dollars, and no one wants cash in their own local currency because that is devaluating very fast against the dollar. So that's why everyone, 400 million people already discovered USDT and they're using USDT in their day-to-day lives for that exact reason.

Definitely this broader topic on the US dollar hegemony, right? But keep in mind that we recently announced a EURT stablecoin, and we believe in optionality. People should use what they're more comfortable with, what they prefer. I think that among all the currencies in the world, the euro is doing a fantastic job to retain wealth, to grow wealth, and they have very, very little debt. Look at the $36 trillion of debt that the US has, and look at how much debt the euro has, almost nothing. There's like a few hundred billion, not even that. So for that reason, I think that having a stablecoin with the euro is a game changer.

First of all, I'm excited to see that the US finally, Bitcoin is part of the global discussion, also political discussion. So we could say as a community we can say we made it, right? We fought for so many years to get to this point, and now we are at that point. There is an option... If Bitcoin is a crucial part of the political agenda, it means that we made it as an industry, we were successful in making us understood by the most important institutions in the world. Also this year there was the ETF and so on. So I hope that the US, because the world is looking at the US as the place for sensible regulations on new technologies, and historically the US has been precursor of every single technology. So I think that whoever will win in this election, I think that will be a net positive.

I think as a stablecoin company, what we do is we keep the vast majority in US Treasury bills. We have $100 billion in US Treasuries. We hold a little bit of Bitcoin and a little bit of gold. We are 4-5% over-collateralized. So it means that when banks are under-collateralized, they keep only 10% of their reserves, we keep 104%. But we believe that it is important for stablecoin issuers to keep reserves in assets like US Treasuries that represent the underlying. US Treasuries can be sold very quickly for the US dollar.

Yes, absolutely. Because in the end, with USDT, it's not that we can buy bonds of I don't know friends, right? So we need to be able to have US dollar debt and bonds so that we can sell them quickly back to the fiat. There is something called primary dealer, so we have Cantor Fitzgerald as our T-bill dealer, a direct window with the Fed. So no matter how many, even if we had to liquidate $100 billion in a day, we can. And that is one of the reasons why we were working with Cantor and... interesting.

I would say so. I think the beauty of Bitcoin is it's a security layer. Security is almost a transferable property, so you can develop technology on top of Bitcoin and layer tools on top of Bitcoin that can inherit properties like security from Bitcoin, or leverage security from Bitcoin to help bring traditional finance onto the Bitcoin layer. And you can only do it with Bitcoin because all the other blockchains, the value of the underlying currency like Ethereum and Solana and all these ones, is too small in order to have the highest security. On a blockchain, you need to have an asset that is scarce, that everyone can trust, everyone can verify, and so on. Bitcoin is that asset. So it's completely different than any other blockchain.

Well, there is definitely Liquid, but there are other projects like RGB, that is a protocol developed initially by Peter Todd, Maxim Orlovsky, and others. This protocol helps to use the Lightning Network but built for all assets, also centralized assets. So I think what we miss is user experience. Most of it is we cannot pretend that people that don't have expertise in crypto to be able to use the tools that we create. Most of us create tools that are made for us rather than made for the other people.

I would summarize it in three words: disintermediation, independence, and resilience. So everything that we build has to have that in mind. Disintermediation from unnecessary intermediaries. Resilience means technology that can survive the worst case scenarios. And independence, technology that actually can empower people rather than being peasants under the control of a big tech company.