Home Automation Podcast Episode #193: An Industry Q&A With Theo Tsavoussis
In this weeks home automation show of Automation Unplugged, Theo Tsavvoussis, CEO at Prometheus Systems shares on the future of Bitcoin and other crytocurrencies.
This week's home automation podcast features our host Ron Callis interviewing Theo Tsavoussis. Recorded live on Wednesday, November 10th, 2021, at 12:30 p.m. EST.
The Information on this show, Automation Unplugged, is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.
The Information contained in or provided from or through this video stream and podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice.
The Information provided during this show and on our website is general in nature and is not specific to you the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this show or our website without undertaking independent due diligence and consultation with a professional broker or financial advisory.
You understand that you are using any and all Information available on or through this show and our website at your own risk. The trading of Bitcoins, alternative cryptocurrencies has potential rewards, and it also has potential risks involved. Trading may not be suitable for all people. Anyone wishing to invest should seek his or her own independent financial or professional advice
About Theo Tsavoussis
Theo Tsavoussis is an audio-video integrator passionate about Bitcoin mining and sharing his knowledge of cryptocurrency. Theo graduated with a bachelor’s degree in business and then went on to pursue his master’s in computer science. In 1997, he founded Prometheus Systems, an AV integration company that specializes in high-end residential projects. While Prometheus Systems is based in the Bahamas, Theo has completed projects throughout the Caribbean and throughout North and South America. After reading Satoshi Nakamoto's white paper, an informational guide about Bitcoin, in 2011, Theo became interested in Bitcoin. Today, Theo is a Crypto Investor and active speaker and educator having led numerous talks on the future of cryptocurrency.
- What is Bitcoin and how does it work
- How Bitcoin promotes the development of renewable energy sources
- Centralized vs Decentralized Blockchains
- The future of Bitcoin and other cryptocurrencies
Ron: Hello. Well, folks, today is it's going to be a lot of fun for many reasons. One reason is that I get to have a longtime friend of mine and an industry veteran on the show. This individual was actually a customer of mine back when I was at Lutron and then when I was at Creston. So our relationship actually goes back 20 years. What's also really fun is that this individual was also one of the few people I launched my business with within 2007. And I went out to dinner, friends, and family, a round of fundraising to start that business. He helped me out and gave me a loan to start the business. It was pretty amazing.
At the end of the day, when you start something like that, all you want to know is that somebody believes in you and is willing to bet on you. He did that, and I'm proud to say it was the early years of any business or struggle, but I remember how proud I was when I was able to pay back that loan with interest and give him his final payment. It was a big deal for me. It was like a moral win. This individual is Theo Tsavoussis, and I've known Theo for many years. He's down in the Bahamas. He runs a business called Prometheus Systems. He is an integrator. He is one of you.
He also happens to have a hobby similar to my hobby. In fact, I think it's been his hobby longer than it's been my hobby, and that is cryptocurrencies. My lawyer has advised because of what Theo and I are going to be talking about. I have a lot of legal issues that I'm going to have to read to you here live and also kind of record this special for the audio podcast version as well. Just bear with me. But due to the nature of the conversation that we're going to have, this is what I need to say. I'm going to say the information on this show. Automation Unplugged is provided for educational, informational, and entertainment purposes only without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The information contained in or provided or through this video stream or podcast is not intended to be. It does not constitute financial advice, investment advice, trading advice, or, frankly, any other advice. The information provided during this show and on our website is general in nature and is not specific to you, the user, or anyone else.
You should not take any decision on financial investment, trading, or otherwise based on any of the information presented on this show or on our website without undertaking independent due diligence and consultation with a professional broker or financial advisor. You understand that you are using any of the informational information available on or through this show and on our website at your own risk. Trading of bitcoins and alternative cryptocurrencies has potential rewards, and it also has potential risks involved. Trading may not be suitable for all people.
Anyone wishing to invest should seek his or her own independent financial or professional advice. There you go. That was a mouthful. Without further ado, let's bring in my friend Theo. Theo, how are you, sir?
Theo: I'm great, Ron. How are you doing?
Ron: I am good. I have a special image here. Let me go to this view, and I'm going to bring this in. There we go. There you are. You visited my CEDIA booth Firefly Design Group back in September of 2009. That would have been two years after I launched the business. Do you remember that?
Theo: I certainly do. That was a long time ago.
Ron: That was. And there's me. I'm not sure why I have the medical gloves, but I've got medical gloves going on there. I don't know; I was doing something there. So Theo, first of all, where are you coming to us from?
Theo: Well, I'm in the Bahamas. I'm in my house, and I'm enjoying a beautiful, sunny, warm day here in the Bahamas in Nassau.
Ron: That wouldn't have anything to do with Bitcoin and Ethereum reaching all-time highs in the last hour with it.
Theo: That is just a wonderful coincidence. I could sit here and speak with you and your audience about cryptocurrencies as the market hits all-time highs.
Ron: The coincidence you and I have been talking for years about crypto, and we've stayed in touch on that subject, and here you are on our show live. What are the odds?
Theo: Absolutely. Awesome. It's pretty amazing.
Ron: Awesome. Alright. Prometheus systems. What is Prometheus Systems? Where do you guys do work? What type of projects do you guys do?
Theo: First of all, I got started way back in 1997, when I first convinced someone to buy an automation system from me. We focused on really high-end residential and gated communities. The average size house is like for many of you guys, this is no big deal, but the average size house is maybe 15000 square feet. I'm doing a house right now that's 40000 square feet. Really focus on upscale residential. Upscale due primarily.
Ron: Have you stayed focused in the Bahamas, or do you work throughout the Caribbean? I know you've been doing these projects since the late 90s. Where do you primarily do the work?
Theo: Primarily, the work is right here. In Nassau. But I have projects on the islands, including small boutique hotels that we've done, and I've done projects as far south as Chile and as far north as Montreal and haven't done anything in Europe, but I've done a few. I've done several projects in the Caribbean itself.
Ron: Can you take us back in time? How did you get into the integration space?
Theo: OK. My background is technical. I also have a degree in business. I had a company back in '95. I was a partner in the company. We put up satellite dishes, and in the early days, it was the big dishes before Direct T.V. came up. But we were putting in this. This big dish up, some huge house, and this were in '95, and I walked in, and there were these guys from L.A. They were putting keypads on the walls and doing a home theater. And so I said, "Guys, what are you doing?" And they said, Well, we're doing home automation. It's the lighting control system. We've got audio everywhere, video everywhere, and home theater. I looked at it, and it was as if a light had come on. So I said, "This is what I'm doing next."
Ron: Would that have been a Lutron system?
Theo: To be honest with you, it wasn't. I think it was a Vantage. They were putting them there wasn't Lutron. So yeah, that's why actually, I went, and I didn't know any better. I didn't know anything. So I just went and got trained with Vantage, and I started selling Vantage Systems. I think the first five or six projects I did was Vantage. Then I switched over to Lutron, and everything else has been Lutron ever since.
Ron: Got it, and how has your business evolved over those 25 years?
Theo: It's been really good in terms of getting larger and larger projects and getting to the point where it becomes really straightforward. There's not much in terms of a challenge anymore with putting on systems. I've come to the point where I'm thinking of moving on.
Ron: Yeah, we're going to get to that. What led to you deciding to be generous back in 2007 and lend me money to start Firefly Design Group? What were you thinking?
Theo: Well, I thought you were nuts.
Ron: You're right there.
Theo: But I also thought, if anyone can do this, it's Ron because he doesn't quit. And so I thought I was like 99 percent sure, at the very least, you'd pay me back with interest. I wasn't worried about it. I wasn't sure about your long-term viability. But I thought for sure you would give it your best go. I had no problem extending you that loan.
Ron: Was it memorable for you when I did finally pay you back? I don't remember what year that was. I don't recall how many years it took. Does that stick with you? Do you remember when that happened, or was it too little to be memorable?
Theo: Um, no, I remember it because, you know, it registered in my mind is Ron did pay me back, which is what I fully expected. And I believe if I'm not wrong. It might have been 2010, but I'd have to check that I'm not sure.
Ron: Yeah, that could be right. That could be right. To bring us to I'm not going to say the present, but what I recall is maybe in 2016, and you give us your background, when did you hear about bitcoin? Because what I think I know is that in '16, you made an investment. Were you involved in it before then?
Theo: Oh, yeah.
Ron: Oh, you were alright. Tell us, when did you hear? When did you have the twinkle in your eye of this white paper on this thing called bitcoin?
"I came across bitcoin in the form of Satoshi Nakamoto's white paper in 2011. I decided, hey, this looks like, at the very least, it's going to be fun. I built a rig with big graphics cards and Big AMD's at the time and started mining bitcoin in June of 2011."
Theo: I came across bitcoin in the form of Satoshi Nakamoto's white paper in 2011. I decided, hey, this looks like, at the very least, it's going to be fun. I built a rig with big graphics cards and Big AMD's at the time and started mining bitcoin in June of 2011.
Ron: What the podcast doesn't audience doesn't hear my jaw dropped, I'm picking it up off the table that you were mining in June of '11.
Theo: Yup. Absolutely. Bitcoin was two bucks at the time, and so I started mining it. But I had a problem, and the problem was that I mean, the. The bitcoin algorithm is so GPU intensive that you could fry eggs on these graphics cards so they would constantly shut down in an air-conditioned room. My brothers own Wendy's franchise here in the Bahamas, and they've got big walk-in coolers. I asked them if I could move my mining operation into one of their coolers. I plugged it in, and it ran for a year and a half. I was mining bitcoin for a year and a half before I calculated that the computer I was running would not be able to mine another bitcoin, even if I let it run to the end of time, simply because the size of the bitcoin mining network had become so large. My contribution was so minuscule a year and a half into it that I'd never mind another bitcoin, so I shut it down.
Ron: Your hashing power was not adequate to mine a bitcoin.
Theo: Correct. And I'm just, so everybody knows hash is one iteration through the bitcoin algorithm. The bitcoin algorithm is about 1500 instructions, so one hash is 1500 instructions that execute one round of looking for the answer within the bitcoin mining network. Yeah, my hash power was no longer high enough for me to get anywhere. I shut it down.
Ron: We're going to come back to this idea that you were mining in '11, which is astounding. I see Taylor here. Taylor is our V.P. of Operations and Finance. His answer is simply, "Wow." That's why you're definitely an O.G. if you're mining at '11. But for our audience, we have a lot of newbies for sure listening. What is a bitcoin?
"Bitcoin is a very interesting concept. It is really the very first time that we've had a form of money that's not issued by a king or an emperor or a government or some central bank, some central authority."
Theo: Yeah, Bitcoin is a very interesting concept. It is really the very first time that we've had a form of money that's not issued by a king or an emperor or a government or some central bank, some central authority. It is a democratized way of creating and giving money, at the very least. It is also because of the electronic. What is popularly called the Internet of Money, and it's very interesting that it exists on a ledger called a blockchain that exists on all computers that are running the bitcoin mining algorithm if they're actively participating in bitcoin mining or just a node that verifies transactions more of participatory way rather than being a full mining network. You can run a verification node with a lot less horsepower than if than someone who is actually mining.
"Bitcoin is fungible, meaning that a bitcoin you can give me a bitcoin, I can take your bitcoin. You can give to me. We can exchange bitcoins, and we have equal value of a bitcoin."
Ron: There's a hip term, and I'm going to come back to bitcoin, and I'm going to jump into mining of bitcoin and get an explanation, but I think there could be an opportunity here to teach. And I'm going to allow you to empower you to do that. That is, a bitcoin is fungible, meaning that a bitcoin you can give me a bitcoin, I can take your bitcoin. You can give me. We can exchange bitcoins, and we have equal value of a bitcoin. And so that's a fungible token. There's something called a non-fungible token, and it's all the rage.
People are seeing it on CNBC, and it's being talked about across the internet. This thing is called an NFT, a non-fungible token. Can you maybe use bitcoin and as the foundation? How is an NFT different, and where perhaps is it applied today, and where might it be applied in the future?
Theo: Yeah. Fungibility is the nature of money. One dollar is the same as another dollar. This was actually challenged, and I don't remember what date it was, but it was some time ago, but it was challenged in the U.S. courts because. A certain person had copied the serial numbers of the bills, your dollar bills they had in their possession, I don't know what possessed them to do that, but they were robbed and. The thief actually spent that money in some stores or whatever it was. And what happened was that this individual took the store to court to try and get his dollars back because he could prove from a serial number that they were his, and the court ruled against him because they said the dollar is fungible.
It doesn't matter as long as the person who ends up with the dollar has not broken the law in any way that that money is equivalent to any other dollar. One dollar is the same as another. That was shown in law. Similarly, one bitcoin is the same as another. Not entirely, but that's the idea. That's fungibility where one is equivalent to the other. Non-fungibility is where one token, whatever that is, is different from another token. They represent two different things, and sononnonfungibleokens don't exist directly on the bitcoin network but on other networks that support what is called layer two solutions, which are programs that run on top of the foundation layer. They have mintednonnonfungibleokens that represent art, music, real estate. It's phenomenal the artistic side of it is such that you can program a smart contract. You've seen NFTs explode recently.
Everyone's getting into them, and they have the reason that they're valuable is you can prove that you own them because you have a private key that nobody else has that proves your ownership. You can publish a message on that NFT that shows you own it. You could not sell them unless you had the private key, so you would transfer ownership from you to another person. Now the thing is that lefties are really just smart contracts that can be bought, sold. Whatever you wish. But what's interesting about them is that, say, you're an artist. You can program an NFT with an image that you've created that people love and are willing to pay for, and someone buys it.
But in the programming baked right into the smart contract, any time that NFT changes hands, any time it's so you can program it so that 10 percent or whatever percentage you decide is transferred to you of the sale price as the artist, as the original owner. You make money in perpetuity every time that artist changes hands.
Ron: I'm old enough to have experienced in the mid-90s the invention of music compression technology called MP3. Things like Napster were born and the transmission of music around the I remember because my dorm buddies and I would head over across campus at Virginia Tech to the one kid on campus that had a CD, a DVD. It was a CD burner. We would pay him a handsome ransom to burn our music onto the CD. It was like $50 a CD so that we could have this portable music and what it meant ultimately was that the artists. We're not getting paid because people weren't necessarily going to the store and buying the DVD or the CD for that artist, and it caused a lot of destruction to the music industry, as an example.
These new technologies and tell me if this is correct or your version of this and well, we're going to back, we'll get back into smart contracts and Etherium. Smart contracts and NFTs actually changed the game entirely. Do you agree with that, that kind of looking forward to what it means for artists around the world?
Theo: Absolutely. The important thing is that a lot of artists are not getting royalties either due to piracy or because of the middle man taking such a large cut, the bigger.
Ron: The intermediaries, all of the dealers and brokers, and people that are getting their pockets lined.
Theo: Exactly. The problem was that in the past, you couldn't sell a single listen to a piece of music to a song for five cents or a dime because any payment system that you tried to process through it would cost at least a quarter to run that transaction. This is VISA and others. There's no way to run such a small transaction without it costing so much. This NFT blockchain technology makes it possible to sell a single listen to a particular song for five cents because it now costs a fraction of a penny for that transaction to take place. What happens is when we start doing blockchain transactions, you get no friction and extremely low cost.
I seem to remember I'm trying to get the number right. I checked this was a few days ago. I think it was something like 1.3 billion dollars of bitcoin that was moved for 81 cents. That's what it cost to send one point three billion dollars. Go try to do that at a bank and see what they charge.
"The country of El Salvador has made bitcoin a currency in the country. They did that because of the cost of remittances and the remittance industry."
Ron: Well, let's talk about that and the idea that it's been in the news for several months now that the country of El Salvador has made bitcoin a currency in the country. They did that because of the cost of remittances and the remittance industry. Can you go maybe for our audience and describe kind of the the the reality is if you're an El Salvadorian and you have family in the U.S. and how the previous is the status quo remittance industry works, and this is global, but we'll use El Salvador as an example and why bitcoin changes the game entirely.
Theo: Sure, it is a well-known fact that banks exhibit what is called rent-seeking behavior. They sit there and just suck a little bit of each transaction that comes their way. This happens from when the money is passed from one institution to the next before it gets to the final recipient. You've got this chain of parasites sitting there just making money off your transaction because they can. That is coming to an end. This is where banks are actually terrified because they see the beginning of the end of their model of doing business. Sitting there with a straw sucking as money goes by is no longer a business model. You better go find something else to do because your business model is out the window and down the toilet.
What happened in Salvador is that you can now send bitcoin to anyone living there to their bitcoin wallet, and they can spend it right away. They don't even need to convert it to U.S. dollars, which is the other currency that El Salvador uses. I guess what I should do is really finish talking about bitcoin a little bit. Why it's so powerful, and the reason it's different is that anyone can participate. You don't have to ask permission, may I? You want to be a bitcoin miner. You simply download the software into your machine, and you start mining. You didn't ask anyone if you could do it. The software itself is open source. It has been constantly audited, so we know that it does exactly what it says it does. There are no backdoors.
What is mining anyway? Well, mining is a computer network that is probably in the neighborhood of 10 million computers around the world or more that process transactions, bitcoin transactions every 10 minutes. What happens is, they say, the transactions that occurred in bitcoin. I said bitcoin to new U.S. bitcoin to somebody else, whatever. All those transactions are encoded in a block encrypted, and then all of these machines get to work trying to solve the encryption problem. There are millions of machines, and everyone's working on the problem. This is not exactly the bitcoin algorithm, how it works, but this is a good analogy.
Imagine that you've got two very, very large prime numbers, right? The basis of this cryptography is a one-way function. What that means is you can go in one direction very easily, but it's very difficult to come back. You take two numbers. You multiply them. You get a result. Very easy to do. Taking that result and trying to find which two numbers multiplied together created it very difficult. That's why they're called one-way functions. Imagine all of these computers all over the world get going, and they're all working out. What are the two primes? What are they multiplying furiously one against another? The next one, the next one until someone has a solution?
As soon as one machine figures out the solution, they publish it. The other machines, the remaining stock, and they look at the solution if in fact. It is correct that what the publisher, the computer, the publisher says it is, then it's accepted, put onto the blockchain added to the blockchain, and the next iteration begins of finding the next block. Now, the computer that found the solution is rewarded. Bitcoin is freshly minted out of thin air out of the 21 million that will eventually come into existence. When I was mining, the reward was 50 bitcoins every 10 minutes. After four years, that was cut down to 25. After the next four years, it was cut down to twelve and a half. Now it's six and a quarter, and it will continue to halve every four years for the next hundred and twenty years when the last bitcoin will be minted in 2140. That is baked into the bitcoin algorithm cannot be changed unless everyone agrees to change it. And that is a whole other problem because saying that we would look at 21 million, that's not really enough.
Look, let's make a billion bitcoins instead. I quickly rewrite the bitcoin algorithm, and I publish it, and I say, Here's a better one. Here's a better algorithm because we get more bitcoins this way. Well, good luck, because which bitcoin miner is going to give up this very powerful network where they're making money to adopt your idea of of of having a different algorithm? This actually happened in 2017. In August, when Bitcoin Cash was born, a guy called Rajveer came up with the idea that, Hey, Bitcoin transactions are too slow. The block size is only one megabit. We cannot set enough transactions. The price the cost of the transactions is sky-high. Let's create a bigger block size. It was eight megabits, and the software was generated, and basically, the messaging went out that August, the 1st, 2017. Whoever wants to run this new and improved version of Bitcoin. Change the algorithm in your machines, and off we go. And so it happened. Now they were expecting to become the bitcoin.
They expected that most miners would switch over. As it turned out, most of them ignored this hard fork, as it's called, because the network went in two different directions. They ended up with 10 percent of the mining power. It is very difficult because no one controls bitcoin. It's very difficult to get any sort of consensus. You have the miners. You have the developers who make sure the code is good and add any improvements or whatever we're going to do. And you have the users. There are all of these entities vying for influence over the bitcoin algorithm and what we're going to do with bitcoin next. It's like a restaurant that nobody owns. You've got chefs, you've got the owners, the managers, you've got the clients.
The clients say, Well, you know, I'd like to see more vegetarian offerings, and the chefs say, No, I don't think so. And they just keep cooking what they're cooking. The managers may make a suggestion to the chefs. Please accommodate the clients, but the miners do what they want to do. No one is in charge of bitcoin. This thing runs of its own accord. The United States government shut down bitcoin. This was a concern of mine. One year ago, on Christmas, I was in Montreal, I was visiting my kids, and I had this dream. And it was a terrible dream. The dream was that bitcoin was on fire, and it wasn't like a rocket taking off. It was in flames. It was burning. And I thought, Shit, can bitcoin be destroyed? So I couldn't sleep. I got up, and I started researching. By the next day, I had written a paper on it, and so it turns out that the answer is no, and here's why. The size of Amazon's A.W. apps, Microsoft's Azure Cloud, Google Cloud, all of those put together now, keep bear in mind, these clouds are general-purpose computers that compute anything, whereas bitcoin miners are what are called basic machines application-specific integrated circuits. The actual bitcoin algorithm is baked right into the chips that make the machine 50 times faster than a machine that has to read and write to the hard drive.
What happens is you get a much faster computational power if you're using async machines, and that's the only way you can mine bitcoin. Anything else would be too slow if you put the entire. The computational power of all of these cloud services actually does not even come to one percent of the computing power of the bitcoin mining network. That's how big this monster is. You cannot stop it. It is too huge. That is why it consumes so much electricity now. Is that bad for the planet? There are people out there hating on bitcoin. They say it uses too much electricity. The answer is no. And I'll tell you what. First of all, this is largely fear, uncertainty, and doubt FUD that is created by those who would not wish to see bitcoin succeed. If we really look at bitcoin mining and where bitcoin miners are placed. What you start to see is that the majority of them, in fact about 75 percent at last count, are drawing their power from renewable sources. Why? Because it's cheaper. It's cheaper to do that than most. Bitcoin miners are right next door to the power plant. Whether it's hydro, whether it's solar, whatever they are right next door because it costs more money to send electricity further. After all, you lose electricity along the way.
Being right at the source is where you are going to get your cheapest electricity. And then, on top of that, a lot of solar fields when they're created, a lot of hydro isn't used, the full capacity. There's a lot of spare electricity.
Ron: They pump right into the ground, right? Typically, it goes used.
Theo: Exactly. It goes unused. And so, bitcoin is actually promoting the development of renewable energy sources because we now have a 24-7 need for this power. It makes sustainable energy sustainable economically.
Ron: We have some questions coming in, but only because I referenced it earlier in the show. Can you help the audience understand what Etherium is? As it relates to, you know, maybe compare and contrast to bitcoin.
Theo: Yeah. OK. There was a sixteen-year-old called Vitalik Buterin, the smart little kid, and it was, I think, 2014. He went to the Bitcoin Core developers, and he said, Hey, I have an idea. I want to create a layer two solution, a platform that runs on top of bitcoin. Can we do that? This is equivalent to me or you are going to visa and saying, Hey, I have this great idea for a payment system that would run on top of visa? Can I do that? And they will laugh at you and throw you out the door, which is exactly what happened to him. They threw him out. They said, Get out of here, kid. And so he said, OK, I'll write my own platform. He got together with a guy called Gavin Woods, Dr. Gavin Woods, and another guy called Charles Hodgkinson. The three of them formed Etherium, and Gavin Woods actually wrote Solidity, which is the language of smart contracts that run on the Ethereum blockchain. This became like a world computer.
You could now program money, and thus smart contracts were born where that worked fully funded, and with multi signatures, the funds would go wherever they're supposed to go. They were self-executing and unstoppable. There was no way you could shut down a smart contract until it finished until it executes, and then it stops. This opened the door for creating a contract that didn't require lawyers. This opened the door for contracts that could not be stopped, that you couldn't renege on. This also created the possibility of a concept called a DAO, which is a decentralized autonomous organization. Now, this is an organization that has no people, none. It runs entirely on machine code. And you say, OK, well, what's an example of that? One possible example is rideshare with electric cars that are self-driving. And so you can create a corporation of DAO, and it buys 100 electric cars that drive around the city all day, accepting rides with their app, knowing where to go, to get recharged, knowing where to go, to get repaired.
I'm not a person involved. It just creates money. And this has begun. Guys are now legal in Ontario and Canada, and I'm not sure where else they have passed as legal entities. But this is the future—totally decentralized autonomous organizations. And listen, they are decentralized. That means the blockchain itself is decentralized. No one controls it. No one can stop it. All these computers are running as long as the network keeps going. You cannot shut it down. You cannot serve a cease and desist order to a DAO if it continues. It's very interesting the implications. And on top of that, we have completely decentralized finance huge. This is going to be absolutely the biggest thing ever to come into our world. Decentralized finance allows us to do. Landing there are things called flash loans, which are fascinating constructs never existed before. Most of what's coming out in Defi does not and cannot exist in the traditional finance space. The traditional financial space is a dinosaur. It's just a matter of time before it's gone because it can do not. A fraction of what Defi can do on flash loans are amazing in that you have no need to ask any permission from anyone to borrow money as long as your venture is successful and as long as it can be executed in one comprehensive set of steps, you get the money because there are these decentralized liquidity pools you can borrow from. If you want to do arbitrage across two exchanges and you see an opportunity, you can borrow the money to buy low sell, high pocketed the difference, and they talk about the network effect.
I'm going to say from the standpoint that telephones when they were released, and it took so long for telephones to move, make their way across the country and then televisions and then cell phones and then the internet. I know you went to a conference just last week, and you and I were chatting and catching up on that, and you mentioned even a reference to the network effect currently observed globally as it relates to crypto. Can you speak to that and kind of what your thoughts are around that at the rate or speed of change?
Theo: Yeah. What actually came up at the crypto conference from a venture capitalist slash hedge fund manager who spoke? They said that the rate of growth of innovation on the internet now when the internet first started is one-ninth of what we see in the crypto space. Crypto development innovation is going nine times faster than innovation on the internet. That's number one. It's exploding exponentially, of course, but nine times more exponentially than than than than the internet did. What going to happen? What's the law?
Ron: There's a question here from Taylor, he says, I'm actually going to put it on the screen, and I'll put. He says, "I'd love to hear Theo's thoughts on the latest bull run." We'll get to that. But he says, "How long does it last?" It was maybe a different question. I know I scanned it over here, but Taylor asked a question that is essential. Look forward. Where is this going?
Theo: There is a concept that's well known that is called infrastructure inversion as an example of when the internet first started coming out. To go back to your original comment about the telephone and the network effect. Yes, the telephone was a wonderful invention. However, when there were was. Only ten people or 100 people had a phone. It wasn't very useful. But take the phone to millions, and it starts to become useful. Take it to billions, and now you got something. And similarly, with the internet when it first started. Very few adoptions, very little adoption as it went on.
We heard the stories way back that, oh, the internet is only for criminals and pornographers and pedophiles and those. It's a fad. It'll soon go away, and some of these were respected individuals who said this. Shame on them, but I don't know. If you're too entrenched, I see this in bitcoin as well. And I have spoken to some of my clients, my hedge fund manager, and I've spoken to them from years ago. They manage billions of dollars, and I've gone through them and said, Hey, what about bitcoin? And three years ago, up garbage. What do you what are you talking about? That's going to zero.
They were so entrenched. They are so entrenched that even now that they're having trouble seeing it. There are the enlightened ones, though. We've got Paul. Tudor Jones brought his hedge fund on board, and he's got something like, I don't know, $2 billion in bitcoin as part of his hedge fund. We know Michael Saylor from MicroStrategy is a great spokesman for the adoption of crypto on your balance sheet. As a corporation, he's done extremely well. He got Bitcoin Nog last August to the August before August 2020.
Ron: It just came out in the last week that Tim Cook, CEO of Apple, has now a personal allocation in bitcoin. He just admitted that in an interview.
Theo: Yeah, I mean, there's very little doubt left in the institutional space that bitcoin is a tremendous hedge with a tremendous upside that you would be foolish not to allocate some of your capital in. And we saw it with Tesla. He put one point five billion bitcoin on his balance sheet on Tesla's balance sheet. And so more and more, I understand that there are six thousand companies now who have filed to have bitcoin on their balance sheet and just to wait for the approval. I understand the process takes some time with the FCC. It can take up to six months.
But I think what we're going to start seeing is one company after another at an exponential pace, adding bitcoin to their balance sheet. Then we'll see Etherium coming on board and on and so on. And we have just begun. Just as a store of value, Bitcoin is only like a 1.3 trillion-dollar market cap. We're somewhere in that neighborhood. Gold is about a $10 billion market cap. I see bitcoin surpassing gold simply because it has so many advantages over gold. It's much harder money than gold is. It's much more transferable, much more easily transferred than gold as it is. It has so many advantages over gold that institutional investors are starting to get it. Even central banks are starting to look at it. That's the upside.
Getting back to infrastructure inversion when the internet first came out, we all remember the dial-up modems mark online that whistling that was going on. And then you got mail. What was that about? Well, that was because we were using voice lines to send data, and that was completely inefficient because it was incredibly slow. The best you could hope for was 1200 baud, maybe three thousand if you're lucky. What happened? Infrastructure inversion.
Theo: I remember logging into a BBS board and watching a JPEG load line by line. Yeah, absolutely. Absolutely. That's all you could do if you use voice to send data, but turn that on its head. And now you have data with voice-over I.P. on top of it, and bang, everything takes off. We're into the megabits and gigabits. This is what's happening with the entire world in money and in representation on the blockchain. For instance, there is no doubt in my mind that within the next ten years, we're going to see everything become tokenized, real estate will become tokenized, insurance will become tokenized, even the stock market will become tokenized.
It's just much easier to trade and much cheaper. And instantaneous, and so what happens is that you can start to do things you could never do before like you create an NFT that represents a property house, whatever. And now you sell the NFT, and the NFT is traded for zero. No middleman. No banks taking their cut. No for financing. No real estate agent taking their cut. The entire thing becomes effortless, frictionless, and very efficient. Not only that, but say that you've created 100 NFT is to represent a house, and now you sold that. All over the world, anyone can buy one of those entities that represent one-hundredth of the value of your property. You can work out what that means.
Ron: You could buy a fraction of a famous painting.
Theo: Exactly, there are no limits to the imagination of what can be done. But what we're looking at is a market like. The stock market, which is 125 trillion on top of a blockchain like Ethereum running on top of this area, tokenized completely. We're looking at the currencies of the world 100 trillion worth. Again, tokenize running on top of a blockchain. We're looking at insurance. Either fifteen or twenty-five trillion-dollar space tokenized on top of the blockchain network. We're looking long term at perhaps 300 trillion dollars in the market value of blockchain networks.
Decentralized, I should make a distinction between what is a centralized blockchain versus a decentralized blockchain. Now a decentralized blockchain says that I wished to publish a fraudulent block. And again, this isn't exactly how bitcoin works, but it's just the analogy. Say that I wish to publish a block that showed that Ron had transferred all of his bitcoin to me.
Ron: I would like that to work in reverse. You transfer to me. I don't want it to be fraudulent. I want it to be real.
Theo: What I would do is I would change the bitcoin algorithm just a bit. Publish a fraudulent block, and I signal to all the other machines in the network and say, Hey, got a solution right here? They would probably look at it and ignore it because they see it's bullshit. It has nothing to do with what they're doing. It's crap. You're just ignoring—no big deal. Everyone just goes right back to work. If you want to publish a fraudulent block, you need it because it's a consensus algorithm.
You need 51 percent of the voting power of the network to publish your fraudulent block, which means you would need to go and find that kind of computational power to take on the bitcoin. That's unattainable. Unattainable. Exactly. It ain't happening. The only way you can shut down the bitcoin network is to shut off the internet. And if you shut off the internet, we have much bigger problems than that.
Ron: Versus a centralized blockchain. You are contrasting. You just described a decentralized blockchain. Compare that to a centralized blockchain.
Theo: I don't know if I can swear on this.
Ron: Well, we've heard it's alright, it's my show, and everything goes.
Theo: OK. A centralized blockchain is a joke. It's a joke simply because you have got one authority or a few handfuls that can create blocks, and they can change them at will. And you don't need to use a blockchain. You can just use a database and screw around with your own database. But the point is if you want to look cool and you want to look like you're with the times, you might say, OK, yeah, as a central bank, I am issuing a central bank digital currency. I see. Here it is.
Here are the wallets. Here are the accounts, and everyone's got a bank with us. Now you're buying. Your account exists on some central ledger. Well, the problem with that is that if. Someone in authority gets pissed off with you individually because you said something or you did something that they didn't agree with. It's entirely possible that they can just freeze your funds. Now you cannot transact. And so this is not possible in a decentralized way because decentralized. Blockchains are public. No one has control over them. They're borderless. No one can stop you from selling from one country to another. They're neutral. Nobody cares who sends what to whom. The censorship-resistant because you can't say no. You can't do that. You can't send money to that person because they live in that particular country.
We don't have good relations with that country right now, so no money going there, you know? All that bullshit is bypassed. It becomes very difficult for authorities to control what you do with your own money. It's a bit like cash.
Ron: I'm mindful of time. We're already at our record for length of time on a show, but I have a bunch of topics that I still want you to address. The show is going to go a little longer, folks. Bear with us. But do you mind, and we'll try in a lightning round? Taylor supplied us with a bunch of questions. I love it. Just give your replies. Sure, I'll put them on the screen one by one. What are your thoughts on the latest bull run? All jokes aside, right today, right now it is all-time highs for Bitcoin and Ethereum. How long do you think this lasts, and what is your price prediction? And I'll leave the witness here for this cycle. And for those listeners, you have to study up. What does that mean by a bitcoin cycle? What's your prediction for a bitcoin top four this cycle?
Theo: Hard to say. Hard to say. There are a number of predictions in JPMorgan Chase. As of last week is calling for $149,000 to bitcoin. The stock-to-flow model, which we haven't covered, which has been very accurate in the past, is calling for 200 220. We don't know how long it's impossible to call tops. But I expect this is my own personal opinion. I expect at least 100000 at the top. And then when? Well, I would. We are at the moment in massive supply shock. There is no bitcoin to buy. None. Institutional investors want bitcoin-like crazy, but there's none available to buy. This is what's driving the French. How long will this go on this run? This particular bull run? I would say at the very least, and until the end of this year and quite possibly the end of Q1 next year, is when I would be looking to take profits. At least some.
Ron: I'm going to go to the next question here just to try to get knocked through. Some of them. "Would also love to hear about some altcoins that he thinks is particularly interesting." We didn't really get into many altcoins what we're clearly going to have to do another show, volumes of information to still cover. But I've heard good things about Matic and the graph in particular, for the audience to know there's like ten thousand plus altcoins out. There are many, many thousands. Any thoughts on that?
Theo: Yeah, there are a lot of cryptocurrencies out there. And beware, 99.9% of them are crap. They are absolute garbage. Do not touch them with a 10-foot pole. The project is very difficult to know what projects to buy and which to avoid. You have to do a lot of due diligence and there's a learning curve involved in crypto. But right off the top of my head, I would say that good projects that I've looked at, the founder, the co-founder of Ethereum, Gavin Wood's, left Ethereum. After he created that, I went and started another blockchain called Polkadot. Polkadot should be huge. I think it's undervalued at the moment, not financial advice, but go researching Cardano. Charles Hoskinson, the other third member of the three musketeers will be here when I'm from Cardano. Cardano is important because even though it's a slow developer, it uses functional programming and functional programming. The actual programming language is called Haskell.
Functional programming is such that you can prove mathematically that your algorithm is correct, has no bugs in it. And so it's very important when you're creating smart contracts because as we know, some years back, someone created parity, created a bunch of smart contracts to the tune of $140 million that got half the money was lost forever. It's very important to be able to prove that you've got no bugs in your code. And that's why Cardano is good. Polygon, Chainlink, Algorand, Tether. Well, never mind take out Tether.
Ron: Delete, Tether.
Theo: That's a stablecoin you don't touch that. And then, I don't know Avalanche Alron, Theta, Solana, Terra. Yeah, as I said, Chainlink, Algorand, these are all good projects.
Ron: Love it. You gave us some gold. People are going to be rewinding and researching that for sure. The question here on the Metaverse. What's cryptocurrency's role in the Metaverse? We all heard that Facebook just changed the parent company to meta. Facebook clearly sees a big future in the metaverse. What is the role of crypto in that space?
Theo: Well, this is where the metaverse is going to live. We have projects like Sandbox and Decentraland, where you can actually buy virtual land on these projects and build virtual worlds within them. Gaming can be added to or you can go from from from one space in the metaverse to the next. It's wide open, Ready Player One. Is this a real thing for those that are listening? This is a great book and a movie by Steven Spielberg Ready Player One. Is that what we're talking about? We're talking about that, but we're also talking about how to. How to monetize it so that you come out a winner rather than giving all your money to Zuckerberg. Where you are not the product, but you are actually making money off of the problem, and it is phenomenal where this can go. Have a look at a game called Axie Infinity.
This is a play-to-earn game where you earn Axie tokens. There are countries like the Philippines where people just play this game all day because they can make like 30 bucks a day. Doing it with 30 bucks is a lot of money in the Philippines on a daily basis, Axie Infinity is worth $9 billion. Ubisoft, which is a very large video game company. Is worth $7 billion. One game is worth more than the entire company. Electronic Arts, that's worth $40 billion market cap and one game is almost one-quarter of Electronic Arts. This is huge! Games created on blockchain in the metaverse, but running on top of blockchains, decentralized, well, tons of money, all for us, the creators.
Ron: Alright, I've got to ask this coin. I promise I won't make this the last question because we can't end on meme coins, but all the dog coins out there, Dogecoin, Shiba, and all the different parodies out there. How do you feel about these types of coins and their role in the future of crypto? This is where four-letter words are allowed, Theo.
Theo: Well, again, these are shit coins. OK, I'll tell you why. Because take a look at those. Doge does nothing. It's a joke. It was a joke from the beginning. There is no development on those. Elon Musk took it and started tweeting about it for fun and, you know, great. All of these people, institutional investors would not touch this shit with a 10-foot pole. But retail investors, oh, that old parliament, because what? Because Elon Musk is tweeting about it. Give me a break. This shit always happens at every bull run. And I've seen it before with ICEOs during the last one.
But big crash like crazy. As soon as the bull run is over, they go. They lose 99 percent of their value. If you're going to get in. Make sure you get out before the shit hits the fan because intrinsically these are valueless projects. They've got nothing. They have nothing to offer. There's no use case. Right? And the only thing they have is a meme coin and viral marketing. But it's crap otherwise.
Ron: I agree. I want to give a shout-out. Wes made a poster, said this was a great podcast that covered many topics, including crypto, NFTs, Web3, and he's referring to the Tim Ferriss Naval Ravikant and Chris Dixon show. I agree I listened to that show, and I think I even shared that with Taylor and a few other people. I thought that was a great as two and a half hours. But it was a fantastic show. Let's close on this deal. Where do you go to consume your knowledge and to kind of learning? Maybe it's a two-part question. Where do you go to learn about the crypto world and where would you advise those that are listening that maybe are a little newer to the space? This is all maybe a little intimidating.
They know it's a thing, but they don't quite fully understand it yet. What would you advise that they do? Where do you go to learn and then where would you advise newbies that are listening, where they should go to learn?
Theo: OK, so here's the thing. Crypto is a steep learning curve. You spend an hour, a hundred hours studying crypto, you're now dangerous. You spent a thousand hours studying crypto and you're just starting to get it. 10,000 hours studying crypto, you're starting to just master it. I have been in the space for a decade. I have done over 10,000 hours of research and there's a ton of stuff I still don't know. It's very difficult. You've got to do your due diligence. You've got to consume crypto education as quickly as you can. I would point you towards our Coin Bureau. Coin Bureau, I find is brilliant with its educational platform. His name is Guy.
He's a British guy, but he's very good at our analysis and showing you. He does a video every day, so he's got hundreds of videos. I would hands down, advise him above anyone else. I can think of their mistakes. I certainly have learned a lot from him. He's no-nonsense and he understands he's smart. So there's him. then once you start to understand, go-to podcasts, Anthony Pompliano, if you can listen to anything you can find by Andreas Antonopoulos, he is the evangelist in bitcoin education. He is absolutely brilliant. He actually has been invited by senators.
Ron: He spoke to Parliament in Canada to tell. Canada ended up getting a Bitcoin ETF approved before the United States. Correct?
Theo: Yup. Absolutely. He's very knowledgeable and brilliant in his delivery. I recommend him highly.
Ron: Theo, what is what's the future of your business Prometheus Systems? Sounds like maybe you don't have to continue being an integrator much longer. Yeah, I think this is my last year.
Theo: Right now, I'm just doing it for fun. I'm going to hand it off to the younger guys on my team. Let them run with it and I'm going to go out to pasture.
Ron: Cruise off into the sunset.
Theo: I have a house in Chile that I'm thinking of going to or I have land in Costa Rica and I'm thinking about building a house. I'm also going to build a house on the beach in the Bahamas on one of the islands. It'll be between those three locations and you'll find them. But I'll be either in the mountains or on the beach.
Ron: Theo, you've been incredibly generous with your time and your knowledge, and this has been an awesome show. 193 our audience that is watching or listening and they want to learn more about you or get in touch with you, perhaps any recommended communication methods. How could they reach you?
Theo: Well, I'm a very private guy. I've been asked to start a podcast, I've never done it. I'm on the radio all the time. I've even, you know, I haven't even been invited to churches to give sermons on bitcoin. When I was back in two thousand five hundred, they asked me to come to talk to them about bitcoin. Imagine bitcoin as a sermon, right? Wow. So I'm really, truly an evangelist administration. You can see from my T-shirt.
Ron: Oh yeah, look at that.
Theo: Alright. Email me.
Ron: Alright, so we'll supply an email down in the show notes for our do you want to describe what that email is, or do we want to just supply that afterward?
Ron: There you go. Theo, thank you for being generous with your time and your knowledge and for coming on the show. It's been a blast having you on.
Theo: Thank you, Ron. It was great talking with you.
Ron: Alright, folks, there you have it. That was fast and furious. As you could tell, Theo is a passionate individual, and he speaks about this subject with tremendous passion. And he's been a go-to resource for me for four years around this subject and a lot of my questions, which I mean a lot of there's almost an infinite well of questions about this stuff.
It's important for you all to find your resource or find your sources of knowledge and information. I would add crypto. Twitter What does that mean? You hear of this reference crypto Twitter. You know, here at One Firefly, we do marketing for integrators around the world, and I've never really found the purpose for Twitter, for the typical small business. Even my own, perhaps. I discovered Twitter personally as it is related to my hobby and my hobby is cryptocurrencies. I found that going out and listening and following thought leaders around the world has been a really tremendously valuable use of Twitter. And in fact, it's probably the best source of knowledge and information, because if you find the people that you, you like their position or you listen to a podcast and then you go follow them. It just starts kind of springing from there and you get more and more people in your network.
What's really neat is I can go on crypto Twitter now, and I can see the real-time feed of all the people, all the thought leaders around the world that are passionate about this subject. And it's real-time news. I mean, it's more real-time than any other source. This podcast will hit my podcast feed a week from now, right? Sometimes great podcasters put out their content the same day. But if you go out there and the social networks and particularly Twitter, you can get it real-time. They may soon as someone has a thought or idea or comment. You can grab that off Twitter. Anyway, folks, I'm going to sign off. We've gone about 20-30 minutes here over our normal time, but I know I certainly had a blast. I hope you guys did, too. This was show 193.
If you have not already done so, don't forget to go to Automation Unplugged on your, your phone, or your device and subscribe to the show. Leave us a review and that is always greatly appreciated and signing off, and I will see you all next week. Thanks, everybody.
In 1997, Theo founded Prometheus Systems, an A.V. integration company that specializes in high-end residential projects. While Prometheus Systems is based in the Bahamas, Theo has completed projects throughout the Caribbean and throughout North and South America. After reading Satoshi Nakamoto's white paper, an informational guide about Bitcoin, in 2011, Theo became interested in Bitcoin. Today, Theo is a Crypto Investor and active speaker and educator having led numerous talks on the future of cryptocurrency.
Ron Callis is the CEO of One Firefly, LLC, a digital marketing agency based out of South Florida and creator of Automation Unplugged. Founded in 2007, One Firefly has quickly become the leading marketing firm specializing in integrated technology and security. The One Firefly team works hard to create innovative solutions to help Integrators boost their online presence, such as the elite website solution Mercury Pro.
Resources and links from the interview:
- The Pomp Podcast by Anthony Pompliano
- Unscrypted podcast by Andreas Antonopoulos
- Coin Bureau education on crypto