BUILD WEALTH: How To Understand Crypto & Invest In This CRISIS | Anthony Pompliano

[Music] Anthony Pompiano, welcome to the show, man. Absolutely. Thanks so much for having me. Dude, I am really excited. So, there's something my audience has heard me talk about this before. I feel a moral obligation to get people to look at cryptocurrency, Bitcoin specifically. And there's a a famous saying, I'm almost certain you've heard it before, which is poor people spend, the middle class save, and then the wealthy invest. And this is what's going on in cryptocurrency to me seems like the first time where the average person, whether you're poor, whether you're middle class, doesn't matter, you can actually frontr run the investor and use whether it's Bitcoin or something else as that investment vehicle. um talk to me about the breakdown here in the US of people that invest versus don't invest. Yeah, so one of the easiest ways I find to talk about Bitcoin is just talking about the legacy problems and kind of what the average person does. Um and both from uh those that are successful and those also that are not successful. Um and so let's start with some statistics around just the United States, right? 45% of Americans hold no investable assets. That's so crazy. So what is an investable asset for people that don't know what that means? a stock, a bond, uh cryptocurrency, real estate, right? All the things that are basically are not cash that you're buying because you think that they're going to appreciate in the future. And so really that 45% of folks are living paycheck to paycheck. Uh they keep all of their wealth stored in dollars in a bank account. Um they tend to be um you know, obviously not very well financially um off, but also on top of that uh they tend to actually not be nearly as educated about how the system works. So there's a wealth inequality gap, but there's also a very large education gap. And so do you think they're one and the same? I I think that the education gap actually drives most of the wealth inequality and and really it's because of the debasement of the currency. I've made that's interesting. So we'll get to debasement of currency in a second. I've made a statement that I expected to be more controversial than maybe it's become which is so I worked in the inner cities a lot. So I've I have seen firsthand up close intelligence be evenly distributed. So they can process raw data very quickly. like you're hanging out with them, you're like, "Okay, you're poor. You come from a long line of poverty and yet you're incredibly bright." Like, I am confused now as to why you haven't, you know, been able to achieve escape velocity and get out of here. And then you realize that their frame of reference, the way that they think about things is so detrimental because your behaviors ultimately are all that matter, right? You can think that Bitcoin is the greatest thing since sliced bread, but if you don't actually buy any Bitcoin, then you can't take advantage of the growth. And so I began to realize that or hypothesize I should say that generational poverty is a frame of reference problem far more than it's a money problem. And that if you took that same person so they're born on day one. They were born to parents that have you know lived in the inner cities forever. they've struggled for generation after generation and you bring them into a household where they're going to be educated around investing and you know what the the game is that you're talking about that it's a system. It works in some kind of way that way is predictable and it will reward some behaviors and it will punish other behaviors and nothing else matters and if you do that they will come out just fine. And so I was like wow this really is a knowledge gap problem. Yeah. I mean, think about if I told you to go play a game and I said, "But I'm not going to tell you the rules, right? Be pretty hard to play the game at first, at least. Maybe you figure it out, maybe you don't, but you're obviously going to be much better equipped to play the game if I explain to you how the game works and what the rules are." And so, if you think of money or finances as a game, uh there's really one key rule that everyone has to understand, which is the dollars will be worth less in purchasing power terms over a long period of time. That's not a negative towards the dollar. That's not a positive towards the dollar. It's just that is a fact. And we call it inflation. Yeah. And the system is built that way. And and the economic argument for why it is built that way is because if I know that uh my dollars are going to lose purchasing power, meaning that today it cost me, you know, $2 to buy a loaf of bread. In five years, it'll cost me $4 to buy a loaf of bread. I'm financially incentivized to either invest the money or to spend the money. But holding it is a losing proposition. Now, that economic theory is predicated on the fact that everyone knows the dollars are going to lose value because what ends up happening is those 45% of Americans end up not investing the money or really spending the money. They're trying to save the money, but it is losing value. And I always go back and I think this generational idea is really um can be extrapolated even further. It's not just folks on the inner city. If you think back, you know, I'm 33, you're in your 40s. If we go to our parents or our grandparents, for the most part, their financial advice was save, right? Spend less than you make. If you save, then you can make your way to financial security. That was actually true specifically around our grandparents generation a little bit for our parents and then for us not so much. And so the advice that was passed down was actually predicated on a situation that no longer exists because before 1971 there was nowhere near the debasement of the currency that there is today because it was tied to gold. That's a huge piece of it for sure, right? Which is basically the fact that when we handed over the power to print currencies, right, this is a 50-year experiment that we're in. And you know, again, there are some very positive impacts of being able to print currency, right? you essentially are able to devalue the currency. You can pay off future debt with uh kind of less valuable dollars. And there's all this economic theory that really fast, I want to ground this in something I've heard you say before, which I think it was so simple. I was like, whoa. You said if I have $100 in my bank account and I'm I need $150. I can't go in and edit the database and now I suddenly have $150, but the government can. Yes. And I was like, whoa. Like when you say it like that and it's like literally just somebody going into a spreadsheet, I was like, "Oh my god." And I even, dude, this is recent. So I am I'm very good at making money and I have historically been very bad at investing money. Although now I've become obsessed with investing now that I'm sort of track because I I was just trying to get as close to my money buried in the backyard as humanly possible. And anybody thinking to rob me, I don't actually do that. So you will find zero dollars here at my house. Um, but that was my mental sophistication around finance. I didn't understand it. I didn't want to understand it. Quite frankly, I had put a lot of energy into just getting good at entrepreneurship so that I could generate whatever wealth that I wanted. Mh. But I came very late to understanding this idea that one that the governments can print more and that in printing more you make it less scarce and in making it less scarce you devalue it. And I actually as of maybe 8 months ago thought that when they say print more money that they were actually printing more money. And so I'm like when they've got the bag of cash who are they giving it to? I couldn't understand. Like I was so But like if anybody puts any amount of credibility into whether they think I'm intelligent or not to think that a guy that could build a billion dollar company as of eight months ago was imagining somebody from the government walking around with like a bag full of cash. like that's how ignorant I was to the system and that's exactly how people end up getting held back. I I think that uh what's fascinating about this is this is not an uncommon story, right? There are plenty of people on Wall Street etc. who don't understand uh economics uh macro or micro uh and also just simple personal finance things, right? This stuff is hard and it goes back to there's nobody teaching it in school and so you basically have two ways to learn. You can learn by doing kind of trial by fire and some people figure it out, some people don't. Or you're lucky enough to have a parent, a friend, a mentor, somebody else who sits you down and explains it to you. And I think that's why you're seeing such an explosion of interest. Yeah, sure. The meme stocks, cryptocurrencies, it's easy to mock and make fun of these young people, but these young people are interested in understanding how does the market work, how does finances work, how does investing work. And so, you know, if you go back to that data, right, we talked about 45% of people have no investable assets. The two stats that just blew me away when I started to look at this was uh 80% of millionaires in the United States inherited zero dollars. So, the narrative is interesting. Everyone inherits wealth and it's just passed down. Well, 80% of Americans inherited nothing. 20% inherited something, 80% nothing. The second one is that 33% of uh millionaires in America never made more than $100,000 in a single year. So you start to ask yourself, well, how does it that somebody that doesn't make six figures a year become a millionaire? Well, they have to be disciplined and understand personal finance. And so it is possible to do it. It's not everyone. It's hard, right? It's not the uh the easiest thing to do, but it can be done. And so as you start to understand like, okay, the education is a huge piece of this, you actually see that the people who are wealthy, some of them could explain to you why they're doing things. they have a a a kind of a deep level um and detailed knowledge of the actions they're taking and and the reason for it. There's a whole another group of people who are wealthy who couldn't explain any of it to you and they just know that their parents told them, "Hey, buy real estate. Real estate always goes up." But they don't understand printing of money. They don't understand quantitative easing, interest rate, and none of that stuff matters. It was just they just did the action. And so there's a lot of paths to get to kind of the um the desired, you know, area, if you will. Um, but I do think that Bitcoin specifically, what it's done for me and and for other people is I have an economics degree, which is crazy because I didn't learn anything. It was only once I started to actually invest money that I started to really get the education. So, I always say, you know, Bitcoin taught me economics, it taught me personal finance, it's taught me social psychology, you know, all these different things. Um but there's an element of just understanding hey invest because at this point given the inflation and the monetary debasement it is impossible literally impossible in America to get a financial security position by saving just it's just they're debasing the currency. 38% of all dollars in circulation were printed in the last 18 months. That's insane. That's insane. Like when you think that we're over 200 years old as a country that's really bananas. 38% in the last 18 months. Whoa. So now as I think about So I'm I'm trying It's funny if people go back and watch all my interviews, they see me from the time that um this all kicked off with COVID, they see me grasping at straws, trying to help the sort of average person find a way through this because I really started to panic isn't the right word, but it's like I was deeply at unease because I knew who was going to get pounded the hardest by what was happening. And it was like, look, I was going to be fine, but a lot of people that I know, care about, love, were not going to make it through this thing. And so I started bringing on because of the reach of my show, I was getting on like the biggest macro investors in the world. But because I didn't understand finance, I didn't know that that was the wrong person to go and talk to because they can influence countries and they can help huge hedge funds, but they don't know how to talk to the average everyday investor. And one of my employees kept heranging me to look at cryptocurrency and Bitcoin. And I was like, David, I just don't have any interest in investing. It's not my thing. Like, I know how to make money. And then NFTTS came along and I realized that was going to be the future of my business. So, I went all in. And like you started learning all this stuff from investing in crypto. I had to learn about the blockchain by to understand NFTts to create content there that was interesting and compelling. And as I learned about that, I was able to get to first principles because now I understood how the blockchain worked, which led me to what's different about fiat currency to cryptocurrency. And then all of a sudden, you're like, wait a minute, are you [ __ ] kidding? This is what's going on. Like they can just print money at will. That's insane. that also when you start thinking about so one thing that's always enraged me and this sends me back to my days when I was young and broke and I would have let's say $19 in my bank account not joking and they won't let you take it out because there's a minimum that you have to have in your account or there's like $20 minimum at the ATM and so I'm like hold on I'm not going to be able to go like get a meal right now because of banking rules so I've developed this just like internal rage over banks acting like my money is their money and So now like seeing how it's hard to get your wallet set up admittedly, but once you like get on the rails of cryptocurrency of how easy it is and so that's really been eye opening and gamechanging now I think we have to get to all right you have to get to those first principles to form a thesis and then you can invest based on a thesis. So I want to talk about the thesis around Bitcoin. We'll stay specific to that because I know would you do you call yourself a Bitcoin maxi? No. So I think there's um a separation between there's monetary component of this and then there's like a technology or like a corporate component of it. The monetary part you have to be a maximalist, right? You're a fiat maximalist. If you're a US citizen, you get paid in dollars, you save in dollars, you invest in dollar denominated assets, you pay your taxes in dollars. So you're a fiat US dollar maximalist. When it comes to monetary assets, everyone in the world is a maximalist because that is what you denominate your wealth in, right? very very rarely does somebody say, "Hey, 50% is in this currency, 50% is in this currency." And so from a monetary standpoint, definitely a Bitcoin maximalist because I think Bitcoin is the only one that has an opportunity to actually um kind of ascend to global reserve status and and end up being the superior monetary form. But when it looks at the technology, I think that there's going to be massive competition on that. So if you look at the technology side of it where you're not talking about monetary asset, you're actually talking about a technology asset, it would be like saying you're an iOS maximalist or you're a, you know, I don't know, Python maximalist, right? Depending on the language or the platform or whatever. So I think that you've got to be able to separate out and say, you know, Bitcoin is competing with uh fiat currencies for store value, medium of exchange, etc. And really fast, fiat just means it's governmentbacked. Just governmentbacked and and basically they control it. So the the key definitions here are a fiat currency versus let's call it sound money. All sound money is is basically something outside of the system and something that people can't create more of. So gold is a analog version of sound. It's a physical form of sound money created by stars exploding just I mean when I heard that I was like god yeah that really is an interesting way to think about why it's scarce. Yeah. And Bitcoin is a digital form of sound money. And so you can compare the sound money to the fiat money. Um, and you know, it becomes pretty clear pretty quickly to people. It's like, okay, one is uh completely abundant and can be created at will. 38% has been created in the last 18 months versus one that nobody can create more of. Well, I don't need to know much else other than that to know which one's going to end up being more valuable. And so if we look over the last 12 years or so, Bitcoin's purchasing power and all purchasing power means is how much does it cost to buy, you know, a good um the purchasing power has appreciated. It's increased. So all of the expenses around you, all the the physical items that you buy have gotten cheaper and cheaper. So it used to cost me one bitcoin to buy a loaf of bread. Now it might cost me 0.001 bitcoin to buy a bread. Okay, that's pretty interesting. The dollar is the opposite, right? The it cost me more dollars to buy the bread. So everything's getting more expensive around me. And so ultimately, hold on, hold on, hold on. Like that's that's so basic and so gamechanging to understand. So you've done a mental switch where you now denominate emotionally in Bitcoin, aka Satoshi's, and I haven't yet. So as I see the price fluctuate on Bitcoin or whatever, I get excited. Well, the funny thing is I get excited in either direction. when it goes up. I'm like texting my wife, yo, in the last like 24 hours we just made and she's like, "You have got to be kidding. I mean, it's crazy." Yes. Now, when it goes down, I'm texting her like, "Yo, we're going in hard. Like, we're buying this dip." So, but it's really, really interesting. Do you mind saying again the cost of loaf of bread compared to dollar versus Bitcoin? So, if I denominate my life in dollars and let's say I buy a loaf of bread today and it's $2, five or 10 years from now, that loaf of bread may cost me three four $5 depending on the rate of inflation. If I denominate my life in Bitcoin and today, let's say that it cost me one Bitcoin for a loaf of bread. In the future, it will cost me less than one Bitcoin. So it'll actually become cheaper for me to buy because every asset when you think of price, it's denominated in a currency. So a stock, right, when I when I ask you what is Amazon stock price, you're telling me one Amazon share over how many US dollars? And that's how we get to the actual value. And so when you start to think about that, look at the stock market. The stock market from 1971 to today is up and to the right. It's a perfect 45 degree angle. Oh god, I know what you're about to say. When you denominate it in gold, it's down. That's since 1971. If you denominate it in Bitcoin since 2009, uh, 2010, it has crashed aggressively. Bitcoin has been the best performing asset, but that's because it's denominated in dollars. And so ultimately what we're watching is we're watching an entire generation of people wake up to this fiat currency kind of fiasco. Um, and there's a famous uh I think it's Henry Ford quote where he said, you know, if people understood how money worked, there would be riots in the street before morning. And it's simply, again, it goes back to that education gap. And so the 55% of people who hold investable assets, whether they understand why or not, they're actually benefiting from this. And so it's important to remember that I don't think there are um nefarious or malicious intentions or, you know, let's screw people at the bottom of the totem pole. In fact, sometimes it's actually the exact opposite. Uh, but the system is working as designed. It's a feature, not a bug. And the reason why that's important to understand is because the system is not going to change, right? You and I are not going to be able to convince anybody to do anything different. They're going to do what they're going to do because that's the way the system is built. But what you can do is you can change the way that you're positioned. So, you have a a choice. I can either suffer at the hands of this system or I can flip around to the other side of the table and I can benefit from the system. Every single rich person understands how to benefit from the system. Hold assets, not a currency. Don't hold the dollar. Instead, hold the assets because one thing it's it's to hold an asset that you have a reasonable belief is going to go up in value over time. And one thing I want to go back to, so you said, "All right, you're the cost of the loaf of bread is going to take less and less of the Bitcoin that you own." That's a prognostication, right? You're hoping that that is true. But one thing I want to point out is the things that you're looking out into the future and saying that it the the bread will cost more dollars is back historically. So it's simply you looking backwards and then carrying that out forwards. And the same is true of Bitcoin is that you're looking at the historical performance and projecting it forward. It's not like you're just making that up and being hopeful. And that is where I think this starts to be important is one to to recognize everybody has to do their own research. You have to figure this out for yourself. You want to understand it to the point where you're not thinking in analogy. You're thinking from first principles. So you understand how the game works. You're, you know, emotionally riding in the streets as Henry Ford predicted. Um, but yeah, I think that that that's an important thing for people to understand. This isn't this is looking at the historical performance and in fact one of my favorite statistics and and strike me down if this is inaccurate but that Bitcoin and this I got from Ral Paul that Bitcoin is the fastest adopted technology in all of human history. Yeah, it it depends on how you count but for sure um and remember price right is kind of the best indicator of uh adoption. If you have a fixed supply asset and demand for something or adoption for something goes up, the price has to continue to move upwards, right? Just more and more people want this scarce asset and so the price goes up. Bitcoin was the best performing asset over the last decade. Now, all people talk about is the volatility. Well, volatility actually, and this is like where you get uh a little bit more in the weeds, uh can be very good for a portfolio. So, there's a um this data is because you have potential massive upside. Yeah. So there's two kind of ways to think about volatility. We think of volatility when it's talked about in the mainstream media as a negative thing, right? Oh, it's volatile. It's volatile. Well, if something goes up in value, it's volatile to the upside. If it goes down in price, then it's volatile to the downside. So volatility isn't good or bad. It's just is it going in your direction or not? Right? If you're short an asset and the asset goes up in price, you hate volatility, right? Because you want it to go the other way. So volatility being not good or bad is important because you want it to actually be volatile if it's going in your direction. The second thing is um I think that this data may be I think it's 2015 to 2020 um and don't quote me exactly on the dates but um there was a 5-year period where if you invested in a 6040 global portfolio 60% stocks 40% bonds you got a 7.2% annualized return for 5 years. It's about average where where we've seen it over the last few decades. If you had taken half a percent from stocks and half a percent from bonds, so you had a 1% allocation to Bitcoin, 39.5% to bonds and 59.5% to stocks, you would have taken that 7.2% per year and increased it to 9.2. So a 200 basis point increase in your annualized return. If that 1% allocation of Bitcoin had gone to zero, you lost all the money. You would have only gone from 7.2% to 7%. So it's about a 200 basis point or 2% upside for a 0.2 or a 20 basis point downside. So 10 to one. Whoa. During that 5year period, now the reason why I say that is 1% of a portfolio is not a lot of money. For most people, that's kind of a speculative type investment. Uh but because this is so volatile, because it has the ability to appreciate so aggressively like you talked about when it when uh lots of people are getting excited etc is it can have a really profound positive impact on a portfolio and still you only have exposure of 1%. And so we just haven't seen that many asymmetric assets like this before uh available you know kind of in a liquid market for people to go buy. And what I think ends up happening is people come in because of the price. They're like, "Oh my god, I'm going to get rich. I did. This is amazing. This is like the greatest thing ever. It goes up in price over time, whatever." But then what happens is, as my friend Marty Ben always talks about, he's like, you know, you come for the money, but you stay for the money. And you you came for profits, but you stay because you start to understand fiat currencies, economics, personal finance, etc. And you start to realize, wait a minute, I have to do something. I can't sit with cash. And so it's just a very unique asset that we're all kind of living through global adoption, right? We've gone from the creation of an asset 12 years ago to now there's a nation state that has bought Bitcoin. I don't think anyone, you know, 10 12 years ago thought that a nation state would buy Bitcoin this quickly. And so you going back to Raul's point, you're building all of this on top of the internet. And so the internet adoption happened on top of the telephone lines and and kind of the connectivity we had. So it had a certain rate limiter to it. It could only grow as fast as we had, you know, kind of uh communication infrastructure. Now when this gets built, it's being built on top of the internet. So look at what is the total internet penetration globally. Well, that's the rate limiter for how fast this can grow. And I don't think we probably talk about it enough, but there was immense work done in places like South and Central America, countries in Africa, uh you know, places like India, etc., uh China to to really drive uh internet infrastructure over the last 15 years, right? Everyone from the Googles, Facebooks, Amazons of the world to kind of the traditional internet providers all spent billions and billions of dollars getting uh all that infrastructure installed and now here comes comes along a technology that is literally just going to ride the coattails of that internet infrastructure and get adoption and so that's where you see countries like Nigeria uh and others that you wouldn't think of being you know super forward you know uh kind of thinking on technology they're actually some of the highest penetration and adoption they have the macroeconomic problems s of the currency and they're watching their currencies get devalued. They're watching the dire financial position they're in and they have the internet infrastructure now and so they're not tied to a legacy infrastructure financially. So what do they do? They leap forward a developed country and I think El Salvador's got a shot to do that. I think Nigeria is going to do that. So we're just watching you know a tale as old as time. This has happened over and over and over again with technology trends. It just so happens that now it's coming for finance and there's a lot of powerful influential people who don't like that. Yeah. All right. So, I want to leave some breadcrumbs for people that maybe are in my position eight or nine months ago. They have no idea. This is so dizzying to them. And if they've made it to this point, I'm very impressed because they're investing in their future. But now, just a few breadcrumbs. So, going back to you, if you don't understand the first principles of something, what I'll often refer to as the physics of the situation. So, you're you're as low as you can go. There's you're at this sort of axiomatic state where you just you at some point have to say, I believe these things to be true. Nobody knows sort of anything below that. So, okay, we're not reasoning from analogy anymore. We're getting to the point where we understand what fiat money is, its pluses, its minuses. We understand what cryptocurrency is, Bitcoin specifically, its pluses, its minuses. And now we can begin to think for ourselves to solve novel problems because we're thinking from first principles. From that, they're going to form a thesis. And I'll lay out my thesis. Be great for you to lay out yours. And I'll explain why I'm not afraid of price volatility. Why, in fact, I get excited in either direction. when you know when it's going up I'm like oh my god I'm getting richer this is amazing and when it's going down I'm like I can buy more. Now the reason that I want to buy more is the following. I believe this is one of my um axiomatic statements. So there's nothing below this one. I believe it to be true that technology is a one-way street that we will never go backwards. We will never unwind the internet. We will never be a less digital creature. We will only be more and things like Neurolink are going to become real. And I actually and and I don't want to lose people on this. I think in a very far distant future. So this is not in the next 20 or 30 years. You know, maybe this is 100 years, maybe it's 300, but there are people already that have colear implants that give them back hearing. We're working on um implants into the eye that give people back vision. So it'll start with correcting things, but we will ultimately as ourselves become really um tied physically to technology. So I believe that everything will ultimately get digitized. So what we're living through right now is a really fascinating moment where art is now being digitized, money is being digitized, and those two I live at the intersection of art, collectibles, and money. And and watching those go digitized and watching for anybody that wonders if this if the human mind is just ever going to be into these things in the way that they are physical things. I will just say this that uh in August of 2021, OpenC did $3 billion in revenue on purely digital goods, digital art, digital collectibles, all of it. And that blew them past Etsy at like day 16 of the month or something they went past. I mean, just absolutely insane to see how much money is pouring into the system. And I think this is with only 200,000 wallets. So 200,000 people driving $3 billion worth of revenue all on digital goods that have no physical tangible thing in in out in the world. Now there's utility. It's beyond the scope of what we're saying now. So okay, my thesis the world's only going digital. I have all these kind of proof points around it. Now one of the things that's going digital is money. Bitcoin in particular has a really fascinating feature which makes it what you call sound money. And that feature is programmatically it can only ever produce 21 million of these units. Unlike gold, which for me, and I don't know if you'll agree with this, my mind got wrapped around it immediately when it was like Bitcoin is digital gold because I understood what gold was meant to be. I was never going to carry it around and shave some off to buy a loaf of bread. Like it's a thing that I store somewhere else that we all agree and yes, it only has value and that we agree it has value. It only can be created when stars explode and that rains down on the planet and gets embedded into, you know, the bedrock of, you know, the earth. And so we have to go and dig it out. But we dig it out at a rate roughly 2% a year. As economic incentives go up, we dig out more. And so there is some big question around, well, if there was enough incentive, could you devalue that more by discovering that there are actually harderto-reach um deposits of gold? Okay, so I get that it's capped. there's only 21 million units. Therefore, as long as we all agree that that thing has value, it becomes sound money as you say because there can never be any more of it. So, the more I can get now in this sort of early phase where it's sort of a secret in plain sight and which is how I feel every time I buy it, I'm like, why are people selling me this? Like, this is crazy because I have sold exactly zero satoshi's. So, I keep having a number and I'm like, I can't wait till I have, you know, more than this and more than this. Um, and because my thesis is technology is a one-way street. We will never go backwards. Money as a value is going digital. The number one front runner is Bitcoin. When the price goes down, it's better for me because I can buy in. And there will come a day, I think, where the predominant trajectory even in the relatively short term will just be up up. So, it doesn't make sense to even get excited as the price goes up because it's just almost sad that I can't buy in more at that, you know, the earlier rate. Um, and so that's my thesis and why I wouldn't sell because it becomes like Michael Sailor says, um, it's like buying a plot of land in Manhattan because you're never going to make more Manhattan and so that's only going to go up in value over time, which of course is exactly what happened to real estate in Manhattan and you can borrow against it, etc. Okay. So, what's your thesis? It really just comes down to this idea of um the purchasing power increases versus the purchasing power of the dollar decreasing. And ultimately, what I think ends up being really important for the conversation is there's a financial component which we're talking about now, right? Is uh I want to store the value uh of my time, right? And I think this is like a really really key component of the financial conversation is all money is at the end of the day is a unit of time. And this is kind of a crazy concept until you think about why do you receive money? Because you or somebody you employ or an asset you built or some is exchanging time for money. And so ultimately if you have lots of money you end up having leverage on your time. If you don't have lots of money, you have to spend time to get dollars. And so money is just a unit of time. And so when I think about that, if I expend, let's say, an hour of work today, and I get paid $10 an hour, and then you tell me that I took that unit of time, I put it in my bank account, and then in the future I would have to work two hours to get that same $10. Well, that actually doesn't feel that great, right? In terms of it's it feels like I'm I I can't keep up. I've got I only have so much time in a day and I'm constantly falling behind. But if instead you said to me, hey, if you work an hour, you get $10 and then you put that money in a form of an asset that is only going to appreciate its purchasing power. Then wait a minute, in the future I actually don't have to go work for three or four hours because now I have that $10 that saved from the time I originally spent. And so this idea of like a unit of time becomes really fascinating because what do rich people understand? Don't get in the game of trading your personal time directly for hours, right? They either employ other people or they own assets that deliver them some sort of financial return. And so when you look at Bitcoin specifically, it has a financial component that is unavailable in other assets. It is systematically built to continue to protect your purchasing power. And protect could also just be going sideways, right? Just it doesn't degrade. It happens to be going up a lot now because it's being repriced by the world, but at some point it'll reach some stable value and it'll kind of just go sideways and it'll protect that purchasing power. Really important concept. The second is this idea of sovereignty. So like you talked about putting that $19 in the bank and you couldn't get it out. Huge problem, right? A lot of people don't know. Um, I I've got a friend, uh, Mark Yusco, who talks all the time about like when you put money into a bank account, it's not your money anymore. That's crazy, right? It's an IOU. They're supposed to give it back to you. But we seen in very kind of outlier events like in Cyprus in 2013, I think it was, where they basically come in and the government says, you know what, if you have $100 in the bank, we're taking $10. 10% tax across the board. Well, how can they take my money? Because it's not your money, right? And so you you end up not understanding some of that. And so this idea of sovereignty, the ability to hold your assets yourself, right? You talked about you don't actually have money buried in the backyard, right? That would make you a sovereign individual. It also puts you at a lot of security risk, right? Somebody could come here and dig it up and and uh harm you, etc. With Bitcoin, what it allows for is uh this sovereignty. You can actually hold on to it. Nobody else is holding it for you. You get to custody the asset. And so in the developed world, we don't think a lot about this, right? We just I put money in the bank. I go to the ATM. I can take it out. I can swipe a card, you know, no problem. In the developing world, this is a huge problem, right? If all of a sudden I need to get up and I need to flee Venezuela, for example, well, I have to get on a train, a plane, a boat, or walk. And at every single one of the ports, airports, train stations, or border crossings, what are they doing? They're confiscating people's wealth. And so there's, you know, report after report after report over the last few years where somebody went to the airport and they had physical gold in their suitcase and and the uh, you know, government or the military took it from them. Well, you don't have sovereignty over the asset because you don't have the security of it. And so, Bitcoin having this cryptographic uh, kind of security to it ends up being really really important on a global basis. Maybe not so much in the United States today, but globally really important. And then the last thing is uh there's this censorship resistance with the payment network. And so one of the things that again in the developed world we don't think a lot about is if I want to send you money I basically have too many options, right? I can hand you physical cash. I can Venmo you. Uh I one time I asked my youngest brother uh how he sends money to his friends. He said Uber. I said, "How do you send money on Uber?" And he goes, "Well, I split rides with them at the end of the ride." Right? So there's all these ways that we don't think that we send value back and forth to each other uh in the developed world. Well, what happens if the government said you can't send Tom money? And sometimes they do that where they'll say, you know, Tom's a criminal. You're you're not allowed to do financial transactions with him. I think generally as a society, we say there's got to be some rule of law. We agree bad people shouldn't be able to launder money or, you know, commit crimes with money, etc. But what happens if it goes from Tom's a criminal to Tom didn't work out today and Tom's been a bad boy in our society? And so now all of a sudden, Pomp, you can't send Tom any money. Well, what do we do then? Because all of the technology that we use would be exposed to that threat. And so this idea of censorship resistance, while I don't think most people around the world today are worried about their government saying Tom can't receive money because he didn't work out today, what we are worried about is well, what happens when all of a sudden a um a dictatorship says to their citizens, you're not going to be able to get your capital out, right? Can I'm actually a little more worried maybe than you are. So, I am not a very controversial person by nature, but watching some of the controversial people get shut down where like Stripe is like, "We won't even process your payment account." There are ways to really [ __ ] with people. Now, here in America, like it gets a little scary. I I usually don't go too far down this rabbit hole only because uh you end up in this weird world where everyone becomes a conspiracy theorist real quick. But um you know in the last 18 months a lot of the conspiracy theorists were just early right they ended up being right about a lot of things and um it's unfortunate uh it's not always that that um situation but I do think that we are headed towards a world where we're understanding the more power that you give to governments the more that they encroach on personal freedoms individual liberties etc. And the most extreme examples everyone can identify and I think generally in the developed world we point our finger and shake it and say you know they shouldn't do that right. Um but when you look here in the US it's always a that could never happen here. And I don't think that there's people who fundamentally believe that it's going to happen tomorrow because it's usually this like slow degradation of freedom. But if all of a sudden they shut people down from Stripe. Okay. Well, there was just a guy who was in politics who Chase Bank shut down his account for reputation risk. This isn't somebody who was, you know, out saying crazy conspiracy theories, whatever. Definitely politically controversial, whatever. But I think if you and I had to sit down and make a list of all the people who get, you know, financially censored or or censored off social media, it's usually kind of the fringes of society, right? It's the people who if I went home and I talked to my mom, she'd be like, eh, you know, that person's a little crazy, right? These are people who are just involved in politics. And so, I think that at some point you have to start to ask yourself, do I want to risk even being exposed to a system where it could happen? It's not saying it's going to happen. It's not saying I have some prediction as to when it happens. It's just why even subject yourself to that risk? And I think it goes back to this conversation around the best investors in the world uh for the most part are actually not very risk tolerant. They don't want to go and take immense risk. Almost never will you see one of the best investors in the world say I'm going to take 100% of all of my investable assets and I'm putting on this one stock, cross my fingers and hope it works. Right? That just doesn't happen. Instead they think a lot about risk mitigation. They try to figure out what are the ways that I can basically make investment decisions where there's lots of upside and there's very little downside. And so I think that as a society we're learning now that's probably the pretty good way to think, right? It's a pretty good way to kind of position your life. And so if you're a content creator, don't go all in on only one platform. Why? You have platform risk, right? Build two or three different platforms. If you're a citizen with your financial life, don't go all in on one bank or don't go all in on one type of asset. Have some sort of durability to it. And so in the US, I don't think we worry so much about censorship. Um, but in some crazy way, what is a sanction? The United States government runs around the world sanctioning countries. And they have reasons for doing it. In some cases, I think people would agree with them. In some cases, people won't agree with them. I'm not here to debate should we do it, should we not, but the word sanction ends up being um a marketing term. Uh censorship would sound a lot worse. Hey, we're going to censor this country. There's a um a comedian uh and I wish I could remember who it is. I want to say it's Chris Rock uh has a whole segment um around the Iraq and Afghanistan war and he said uh the word insurgent was the greatest creation ever. He I don't know any insurgents. Do you? No. All right. Kill them all. Right? He goes, "But if we'd said, "Hey, we're fighting humans." Also, whoa, hold on a sec. What do they do? Are they good people? Are they bad? You know, there would be questions or you would think differently about it. But when you use a terminology that is somewhat clinical in nature and and isn't something that's part of the everyday vernacular, you just think differently about it, right? And it's just human nature. And so, I think that uh sanctions is another one that kind of falls in that of, oh, we're sanctioning these bad people. Sanction them, right? Like, we're censoring people. Well, who are you censoring? Oh, we're cutting off an entire country's access to the global financial system. All of them or just the bad people, right? The everyday citizen, they get cut off, too. Oh, well, maybe they don't get cut off, but maybe there's negative ramifications for them. A lot of nuance in the world, right? And so, I think that ultimately we're moving more towards a world where uh anybody can use this payment system, which at first sounds a little scary to people because that means that the bad people will use it, too. But who's the good person? Who's the bad person? Well, who gets to decide? And I don't think anyone wants to encourage terrorist financing, money laundering, criminal behavior, or any of that stuff. But the one benefit that this payment system has on top of sovereignty and censorship resistant is that it's done on a public ledger. It would be like criminals basically saying, "Hey, you know what we're going to do? We're going to go and we're going to do crimes and then we're going to literally write down every transaction we have and we're going to put it on a website on the internet and anyone can come look at it. A lot of criminals say I probably don't want to do that anymore, right? I actually want to use that bag of cash that no one knows about and I'm going to use physical dollars to facilitate this. Are there stats around how much sort of nefarious stuff is going on with Bitcoin versus US dollar? So um the stats that I know off the top of my head is over $2 trillion dollar of uh fiat currency are just money laundering every year used for illicit purposes which is about the size of the entire crypto industry not just Bitcoin but the entire crypto industry right uh so it's a very big number um some of that is uh simple things like uh terrorist financing and then you're you know literally bringing a a bag of cash or whatever but a lot of it also is uh major banks who end being caught up in moneyaundering situations, etc. And I'm always careful. I think it's very easy to kind of point your finger at banks and say, you know, these are all bad people, whatever. Uh I tend to think of it more as uh folks with good intentions. They're trying to do the best that they can. Um are there situations where they definitely know they're doing it? Of course, but if you had to monitor millions of transactions a day going through your bank, they do a better job than I would. Right. So there's there's again nuance there. Um so so that's the fiat system. And then uh in the Bitcoin world, so not all crypto, but in Bitcoin specifically, uh the latest stats that I've seen is there's a report out that says 04%, so less than half a percent of all transactions are used for illicit or nefarious purposes. Um and then there was also a former CIA director who came out and basically published a whole report. I don't remember what exact number he came up, but it's pretty much in line, you know, definitely less than 1%. And so, uh, if you talk to law enforcement, they say all the time, they're like, "If somebody commits a crime, we want their fingers on a keyboard." Why? There's a digital trail. It's much easier to track them. It's much easier to figure this stuff out. And so, I think what we've seen is just criminals uh, in the early days of 2009, 10, 11, 12, even maybe 13, 14. Oh, there's a pseudonymous currency that no one knows about. Like, I'm going to go do all this crazy stuff with it. Well, now that we're in 2021, people realize, oh, wait a minute. I just used this public, you know, ledger. That probably wasn't the smartest idea. Um, but I think that it's important actually that the criminals and bad actors adopted it first because that is the adoption cycle that every great technology takes, whether it's mobile phones, beepers, the internet, etc. There's a constant cat-and- mouse game between law enforcement and bad actors. And so, what are bad actors constantly doing? They're looking for new innovative ways to use technology to get away from or obscure law enforcement from catching them. And so criminals are actually usually the first adopters of new technology, which again doesn't make people feel good, but if you go back and you look, it's a historical pattern. And so the fact that they were first and then we got kind of the first adopters from a technology standpoint. And then we started to get more of the mainstream and now it's estimated that more than 100 million people globally use this stuff. It's kind of like goes back to your is that high already? Oh yeah. I mean Coinbase alone uh I think they report now that they've got uh if I remember the number correctly, it's like 58 million registered users. Just one company and they're not even the biggest exchange, right? Um in the month of July uh 1.2 million new users came onto the Bitcoin blockchain. So not Coinbase, not any exchange or wallet. The actual blockchain itself you can see on chain new entities. uh and 1.2 million new entities came online, which is the fastest it's ever grown in a single month. And so what you have is you have a fixed supply asset that now you've got the most number of entities ever joining in a month. Of course, the price goes up, right? Fixed supply asset, demand goes up. Unless you think that supply demand economics are invalidated, you know, the the price has to move to accommodate everyone. And so it's just um a just a fascinating asset that I think ultimately um those that embrace it early will end up benefiting from and and a lot of times as I kind of go down this path talking about the criminal behavior and and you talk about the public ledger, you talk about the adoption, people get uneasy. They don't like change, right? Humans hate change. But just like the internet, right? Imagine if we had sat here in the United States and we had said this internet thing is kind of crazy. It's a decentralized open thing. Anyone that has an internet connection can kind of join and and participate and get information. Yeah. Do all this stuff. You know what? I don't think the US should participate. You know why? China. China's going to benefit. And North Korea is going to use the internet, too. And Iran, those bad people, they're going to use the internet as well. So, the US, we're going to set this one out. Well, people did do that. North Korea did that. And North Korea would suck to live in, right? It's just they cut their people off from a very important technology. And so when you think about that from an open payment system, right? The idea of an open payment system is so foreign to us because of the system that we live in. But anyone in the world can plug into this open system and send value to anyone else without asking permission. If we sit here and we say, you know what, we shouldn't participate because there's some other country or some other organization that's going to also benefit from it, we're actually get likely to be the ones that get hurt the most by those decisions. Instead, we should do what we do with the internet. Internet's going to be a thing. The United States is going to be the leader in the internet. We're going to benefit more than anybody else. We're going to use this new technology to our benefit first. What would that look like? I I think the easiest thing to start with is to use the payment rails. So, Bitcoin as an asset, when people hear Bitcoin, um there's a lot of confusion because, uh the asset, the thing that you hold, the the one of the 21 million units, uh think of that as like a dollar bill, right? In terms of it's a unit of currency. Bitcoin, the network is the payment rails itself. So, more of like a Visa. So, I send dollars across Visa's network, right? In the legacy system here, what I do is I send Bitcoin across the Bitcoin network. So, it gets a little confusing. um the uh the crypto community has never claimed to be great marketers but great technologist and so Bitcoin the network ends up allowing anyone to use it. So I'll give you a perfect example. Um I invested in a company called Strike and what Strike allows you to do is send any currency to anyone else in the world completely for free instantaneously and they do it without going through any banks. Now that sounds like a utopia, right? How how the hell do you do that? What it allows you to do is let's say that I have dollars in my bank uh or in my account and you want euros. You live in Europe. I send $20 to you and my $20 ends up arriving to you a $20 equivalent in euros, but have instantaneously and nearly for free. How? What they're actually doing is they're taking the dollars, they're converting it to Bitcoin, they're sending the Bitcoin across the Lightning Network and then they convert it back into euros. Now, the reason why that's so fascinating is if I now can send any currency, whether it's dollars, euros, bitcoin, name your currency across rails that allow for instantaneous settlement and near zero, if not zero fees. All of a sudden, I don't have to send large amounts. Your bank wouldn't let you take $20 out of the bank, right? Or $19 because you needed 20. Well, I can't go wire somebody $5, right? If I went to the bank, I said, "I want to send a wire to Tom in Europe for $5." They say, "Well, the minimum is whatever. You got to pay a $25, $30 fee, all this stuff." Okay. If I wanted to Venmo you, but you're not on Venmo, Venmo doesn't communicate with Revolute or SoFi or Cash App or name your payment system. It's a closed network. So now what ends up happening is Strike can say, "Hey, anyone with an account can send money to anyone else plugged into the system. Tom has Tom's Lightning app, right? And you start signing up users. People from Strike can send money to people on Tom's Lightning app. Why? It's because it's an open payment system. It's an open standard. And so now all of a sudden you can also not only send to anyone through that censorship resistance component, but you also don't have to send large amounts. Mhm. So now what I can do is I can send you a penny. I can send you 10 cents. Send you 5 cents. I can send you a dollar instantaneously and completely for free. And so when I do that, it unlocks all kinds of new use cases for payments on the internet, right? What if I don't want to buy the easiest example is these like media subscriptions. I don't want to spend 30 bucks a month for a media subscription, but I really want to read this one article. I'll pay 10 cents for it. And what if I can just simply do that automatically? Mhm. Rather than have the $30 thing, they actually probably will make more money doing that than forcing people into the monthly subscription. This is where the more you're in the NFT world, you begin to realize like the ultimate fantasy for anybody selling anything is to have you just connect your wallet and then it's especially if you still in your own mind sort of denominate in dollars. It's like, oh yeah, I've got these, you know, Ethereum coins, whatever they are, and I can click this and it's only 0.0 04, you know, whatever ETH. It's like, oh, that doesn't sound so bad. And you just you end up buying way more than you would. It is so effortless. The wanting to having is like so quick. And so, to your point, the number of times I've gone to read an article and I'm like, you've got to be kidding. Like, even the thought of having to open an account and put in my credit card, no way. So, even if I could get that article for 10 cents, knowing the sort of traditional hoops I'd have to go through, I'm not I'm not typing my name or any of that [ __ ] But now with a MetaMask wallet, you go literally it prompts you connect. You hit connect and then it's like, you want to buy this? Yes. Two clicks and now you're reading the article for 10 cents. I mean, that I had never thought of that, but that would be it. It will increase spending 10fold, 20fold. Be crazy. I I uh uh when we agreed that we were going to do this, I think it was going to be more of a conversation, but I'm going to pull you down the rabbit hole because I could tell you're intellectually interested in this stuff. Um I'll give you another use case that I think will have a profound economic impact globally. Historically, an employee gets paid every two weeks. In the four largest banks, uh, this this data comes from, I think, 2019, they made $8 billion in overdraft fees. So, an overdraft means that they tried to debit your account. Mhm. And you didn't have any money in there. Yeah. So, the four largest banks made 8 billion from people that didn't have any money. There's all kinds of ethical and questions and whatever. Part of the problem is when you start to un unlock this and look into it is u uh the folks at Bridge another company I invested in um they went and did a whole deep dive. Why are these people Why don't they have money? What is it? It's usually not because they don't have money. It's because they get paid every two weeks. So I get paid on the 1st and the 15th. On the 10th I went grocery shopping. My car payments on the 11th. My Netflix hits on the 12th. Oh, I made a purchase on the 13th. Overdraft. Yep. If I get paid, there's no real time updates, by the way. So, you don't even know where your account is. You think you're fine. Like trying to track all the mental math or write it down. Get out of here. So, when I get paid on the 15th, what do I do? I pay for the the things that I need. And then I just have budgeted in an overdraft fee. And my $35 overdraft fee every month adds up. And so does all the other millions of Americans and ends up being eight billion for top four companies. Oh my god. Now, why can't we pay people at the end of every day? Why when you leave work today, don't you get paid? Why does it only once, you know, or twice a month? Well, it's a technology problem, right? And sure, there are economic reasons why the company wants to hold the money rather than give it to you and they earn interest or or whatever, right? But it's mainly a technology problem because there's two components. One is how do I actually pay you every day? What am I on a wire? Am I going to run payroll every day? Like, that's pretty crazy, right? That seems inefficient. And two, how do I keep track of it? How do I do the accounting around? Well, did did Tom get paid? Did he actually get it? Yeah. Okay, he got it. All right. Who who didn't get paid today? Who didn't come into work? Okay, we don't pay them. Whatever. So, when you bring the cost of sending small amounts of money to zero and you do it in a frictionless, censorship resistant way, you get what you call streaming payments. So, kind of the most economic prosperity is now I can pay every one of my employees at the end of every day. Well, if I do that, how much better financial position are they going to be in? Just that alone would drastically lift millions of people around the world into a better financial position. Just pay people at the end of every day. And there's companies that are working on this. Some of them are using crypto reel, some of them trying to do other stuff, whatever. But that when you drop the technology cost to zero to send money is life-changing for us. This is why I want people to understand what's going on in cryptocurrency, what's going on in the blockchain in general. It is a technology. money happens to be one of the things writing on the back of the technology. In fact, this is one of the things we have to talk about. I'll finish that point and then I I want to get to that is all right. This is a technology which means I'm I have opened not me of course but the the creators of which have opened up this toolkit and now what people do with the toolkit just like when I first got on the internet and I remember 1994 hearing the word email for the first time and I was like what the [ __ ] is that? And you go from what's that to I live I'm one my business is almost entirely online two most of the things that I purchase are online especially now in the middle of pandemic it's like most of my social interactions are online like I could never have predicted that that's where this is going to go as bandwidth gets bigger and bigger as network effects you know take and more and more people are on it absolutely crazy and so now it becomes a question of what is the sort of underlying thing that makes this all magical. The the whole notion of distributed technology like what does it mean to be decentralized. Mhm. The the whole idea around decentralization is essentially no one person or organization controls the system. That's it. Right? If you think of centralization, um it's important to kind of recognize why is centralization important or why has it been effective, right? If Amazon wants to be uh be built or we want to accomplish a lot of the things that have been great throughout this industrial revolution, we needed central order or central kind of um coordination of resources, both financial capital, human capital um and also plans and and uh and execution. And so these centralized entities end up being built into hierarchical structures. there's somebody uh or a group of people at the top and they basically are able to um you know kind of decree down to the rest of the company here's what we're going to work on here's what we're not going to work on and that's basically what the corporate world is as we know it right um Jeff Bezos got immense leverage with Amazon because he had human capital and financial capital and a hierarchical centralized structure that's actually a good thing we would not have Amazon without it right Amazon's actually been a huge net positive for the world in my opinion name every other tech company same thing, right? They're all centralized hierarchical structures. Now, what we're getting though is a technology change that allows for the coordination of resources that doesn't require the hierarchical structure. Instead of one person making the decisions, what if everyone gets to make the decision? Well, it depends. What are you trying to accomplish? Sometimes decentralization's better, sometimes it's not. Right? There's a very strong argument that in certain situations, centralization is the the more efficient, better uh kind of structure. But now that we have decentralization with this technology, what you do is you can actually build much larger networks. So the difference between a hierarchical structure of let's say uh Amazon that is trying to build out all of these super um kind of moonshot type ideas AWS and logistics and all of this compared to maybe something where a network ends up making much more sense, right? So take Bitcoin. Well, there's miners, there's node operators, and there's holders. These are three different groups. Um, and the miners are financially incentivized to run computers to run the network. It's pretty interesting. There's a financial incentive for people all around the world. There's literally millions and millions of machines around the world that are all doing this. It's the strongest computing network in the world. Why? Because every 10 minutes or so, there is uh a certain amount of Bitcoin, 6.25 25 bitcoin that ends up actually being given out to folks um that are running that network to to the people who are running the uh the Bitcoin blockchain. And so that financial incentive right now ends up being somewhere $4550$50 million a day in Bitcoin ends up being given out to these people based on the how much computing power and some nuance there. So, when you create a network that doesn't have a hierarchical structure, there's no CEO of Bitcoin, there's no marketing department, there was no uh here's the master plan. Okay, Tom, you go build the site in Washington State and you know, Larry, you go build the site in uh China and and Mark, you go build the one in Texas. There's none of that. It was purely Tom says, "You know what? I want my piece of the Bitcoin block reward every day. And we know what I'm going to do. I'm going to go figure it out. I'm going to go get energy or power. I'm going to buy these machines. then I'm going to run this and I'm going to have a profitable business. And so rather than rely on that hierarchical structure by creating a network, we created the strongest computer network in the world in 12 years. And is it strong because you can't break it? There's no person there's no point of failure. I can't go hack Timmy. Um I can't con, you know, seduce somebody and like, you know, get their keys to something. And is that what makes it strong? just that it is there would be so many people to go after. I I think of strength of a network in two ways specifically around let's say Bitcoin. Um one is just a pure qualitative uh metric um or I'm sorry a qualitative metric and then one is a quantitative one. The quantitative one is really easy. How much hash rate? How much computing power is actually running this network? And that's can stop a brute force attack or or anything like that. And so um the Bitcoin network has more computing power running it than anything else, right? it's way bigger than any of the largest computers in the world etc. Um so that's a quantitative metric. The qualitative one I think more as structurally, right? So, um, from a structure standpoint, if you think about, um, other technology networks that have been shut down, right? Napster is always like a really easy one. Peer-to-peer file sharing was a great idea. People were doing it obviously. Uh, the music industry didn't like it. How do they shut it down? Well, you can basically go and find out who's the CEO of the business, where is the business, where are their servers, all this type stuff, and you can go ahead and you can shut it down. And so when you remove that hierarchical structure and you now have a decentralized structure, the strength comes from there is no single point of failure. So you have a a quantitative metric and you have a qualitative uh kind of framework. The qualitative one is the design of Bitcoin itself and that network. The quantitative one is just the financial incentives or the economic incentives at play has drastically outperformed any hierarchical effort. And so when you start to look at that, you say, "Okay, that's interesting. Where else is decentralization important?" And what you find is, and I think the industry is learning this right now, is in some cases, decentralization really, really important, right? We don't want anyone to control this. We don't want anyone to be able to create more of it. We don't want anyone to be able to censor it or or shut it down or whatever. Very important. But there's also a lot of people who said, "Oh, we're going to take those same ideas. We're going to apply it to traditional technology, database technology or whatever." And what you find is in many cases on that front, people, the end user doesn't care if it's decentralized or not, right? They just say, "Hey, look, I need something that's fast, it's cheap, it's easy to use, whatever." And so I think uh we're watching this in real time play out. Um some things that are decentralized don't need to be. Some things that are centralized need to be decentralized, right? So I think that's ultimately one of the the most interesting parts of this industry moving forward is just what ends up getting decentralized and what is actually better off being centralized. Um and the market's going to decide, right? Like one of the things I think through my career uh from an investing standpoint is when you're a little bit younger and and you're just starting out, you want to be very much of a um I call like a market predictor, right? I saw A, B, and C and so that means D, E, and F is going to happen. maybe right the almost like the younger the more naive and the more arrogant you are like the more you have confidence that that's going to happen as I've gotten older and just gotten more experienced is I don't want to be a market predictor I want to be a market observer just tell me what the market's doing and then I want your ability to react fast it react fast but also what you can see is um the market is the ultimate referee right is Bitcoin valuable I have a personal opinion you have a personal opinion so does you know millions of other people. No one's individual opinion matters. I could talk to somebody all day long and they could tell me Bitcoin's not valuable. The best retort to that is it's a trillion dollar asset that has tens of millions of people around the world holding it and it does more transaction volume than some of the card networks. Sure, maybe it's not valuable, right? But like yeah, but the market has determined that that is valuable. and you just work your way through the assets and what you find is asset after asset that some group of people think is invaluable. Well, the market's decided it has value. Now, you could argue that the market is wrong or mispricing it or whatever and there's arbitrage opportunities, etc., but ultimately, I think that um we're really bad at predicting the future. And so, the more that you can be a market observer rather than a market predictor, uh you start to just understand uh crazy stuff happens. I want to really differentiate between the two. So if I'm a market predictor, I'm trying to say because of ABC then um D, E, and F are going to happen. As a market observer, I'm just saying D is happening right now. And so therefore, I know what to do in this moment based on the fact that D is happening. And if you know Q starts happening, then I'm going to go and adjust my strategy based on Q. I I'll give you a perfect example. So I do a lot of early stage investing, right? And uh when I'm looking at early stage opportunities, there's two different types of investors. Uh some investors look at a business and they say, "Okay, you want to build uh you know a wi a company that builds some kind of widget. I think that widget market is going to grow bigger. I think that you should do A, B, and C. I think right and and they come at it very much from a here is how I see this happening and therefore I'm going to make my investment decision on whether your plans line up with how I think the world is going to move in the future." That is a market predictor. You're you're predicating the investment decision on the prediction of what you think is going to happen in the future. And I did a lot of that early on. Some of them worked, some of them didn't. Over time, what I became is market observer. Is this person intelligent? Do they know how to solve problems? Are they a clear thinker? Do they think from first principles? Do they have traction in what they're building regardless of whether I think it's a thing or not? Right? There's a lot of people using it. And so what you start to do is you start to become more of an observer. And it it's um it it grounds you much more in like humility from an investing standpoint of saying I don't know what's going to happen in the future. Could be bullish, could be bearish, could be somewhere in between. But what I do want to see is I want to see the trends, things that are in motion stay in motion. And so if there's tons and tons of users flocking to something, who cares what my opinion of the future is, right? There's plenty of companies that I think were really stupid. Like imagine when somebody came in and said, "Hey, uh, we're going to create a company and we have air mattresses in our kitchen and people are paying us to stay there and we think everyone in the world is gonna have an air mattress in their kitchen." A lot of people were like, "That sounds insane." Like that's never going to happen because what are they doing? They're being a market predictor. But also along with that pitch was, by the way, there was a conference this weekend and at that conference we had six people, you know, whatever pay for pay us to do it and so people are doing it. If you were more from a market observer, oh that's interesting. Can did you do it another weekend? Right? The questions you ask are different. It it's less about where's the world going and it's more about show me that the uh the observations that I have available to me today that this is working or that there is something here. Yeah. In the NFT market, you see that in a big way. Do you mess around with NFTs at all? I uh was very very early to NFTTS. Um, and uh, it's not very popular uh, in some sectors of this industry, specifically with Bitcoin maximalists, etc. Um, and it's why I make such a a serious delineation between monetary maximalism and then like the technology competition. But in May of 2020 or so, um, I started to hear about it, look at it, it was interesting to me, etc. Um, and the more that I dug into it, I realized I was like, this is the same argument as to Bitcoin verse gold, right? The digital version of something is always bigger than the analog version, right? So, the physical version is that just your gut says or is there name one asset that you can think of where the physical version is not bigger than the digital version? I can't. And you have just put words to something that I feel but have never had words. That feels so true to me. That's why I'm so hyped about Bitcoin and Ethereum and NFTTS is like dude the my brain switched over to digital so fast on artwork I can't tell you. So there was actually I found myself somebody wanted to um send me something and they were like oh you know I want to send you I forget what it was a painting or something like that and I in my heart was like oh man if it was an NFT I would [ __ ] love it but I'm like the physical thing thank you that's so sweet. Oh my god, so kind, but you know, go ahead and keep it. It's weird how fast that happened. The the thing um if you just go down the line, so the easy examples are shopping, you know, uh all that type of stuff. Taxis, Uber, the reason why most investors missed Uber as an investment opportunity is they compared Uber to the total addressable market of the taxi industry. Well, that was actually the wrong analysis. That's really interesting because the digital version of taxis ended up actually not owning any cars and it was a market expanding technology because it didn't just eat taxis. It didn't just eat black cars. There are millions of people in the United States who are young who don't own a car and they Uber everywhere. How many people in Manhattan own a car? Well, most of the young people they just Uber everywhere or they use public transportation, right? And so what ends up happening is the opportunity or the addressable market expanded drastically with a digital version of the analog. If you look at gold, gold's market cap's about 10 trillion. Bitcoin today is 1 trillion. I fully believe that Bitcoin is not only going to drastically eclipse gold's market cap, but it'll be a market expanding technology. If you ask me right now how to go buy gold, I couldn't tell you. Agreed. I'd have to call a broker or go on a website or, you know, and I have to figure it out. I don't know how to do that. Myself and most digital natives know exactly how to buy Bitcoin. And so you look at that now bring it to art. The art market, you know, depending on how you count or whatever, trillion dollars or less, right? The digital art market, you just said it. OpenC did $3 billion in transaction volume in a in a single month. Crazy. And so why is Bitcoin better as a global store value than gold? Why is the digital version better than the analog? Well, one, there is uh a digital component to it, meaning that anyone in the world with an internet connection can sign in and immediately start to transact in it. So, there's an accessibility advantage. Two is there's fractionalization. I don't have to buy a full Bitcoin at $45, $50,000. I can buy a piece of a Bitcoin. Uh three is that I can carry it around really simply on my phone, right? Or on my laptop rather than lugging around physical goals. there's a portability advantage to it and then you start to look at it from um a storage cost etc. Right? There's a whole bunch of advantages digital version versus the physical version. What happens with the digital art? It's the same thing. More accessible, more divisible, more portable, all this type of stuff. And so if we're going to go and move our lives into this like metaverse, digital world, whatever, you know, is the the new way to describe it, why would we leave the assets we care about in the analog world? No, we're going to bring them into the digital world, too. All right, I'm going to try to touch on something ephemeral to just drive this point home. Have you ever looked at a VV vault? VV Vault? No. What is that? Okay, this is so crazy. So Vive is a collectibles company that's partnered with like DC, Marvel to do, but their their NFTts look like actual collectibles. So it looks like a toy, it looks like a statue. Like it it's they're going out of their way to sort of literally just digitize the collectibles industry, but they're brilliant to move and I'm still dazzled by this is that they gave their users the ability to create these it they've made it right now. I'm sure future iterations won't, but it looks like a vault. So, you're going through a vault door and then you're on the inside, but it's just a virtual space for you to put display all the things you've collected. The level of creativity that people show in placing their items is insane. So, I'll give you one example. The the way that they have programmed this space. So, one of the collectibles you can buy is the Delorean from Back to the Future. And one guy put it upside down and on the roof. So, it's actually outside the vault, but it plays an animation in a loop of the flux capacitor turning on, which has all this electricity, right? If you remember the movie, all the electricity sparks and then it disappears. So, it does that animation. So, as you walk through this guy's vault, every 30 seconds, whatever, all this electricity just runs around the ceiling because he's placed his collectible. And I was like, "Oh my god, if I have the physical thing, you one, you have to come into my house to see the physical collectible. B, it's not gonna have electricity sparking everywhere. It's going to zap some kid walking by. So, not only now am I only bridled by my imagination, but anyone anywhere can come and see this. And so, now as a social creature that wants to connect with my community and I'm given these virtual tools, I don't need to be wealthy, right? You no longer need a big crazy house to display all of this art. You can create this virtual thing, put all your stuff in a way that only you have done. It takes time, right? You talk about money is this equation to time. So, we know we value time. So, when I see somebody who's spent their time creating something like this, I'm just like, oh my god, like this is so much cooler than what collectibles have ever been ever before in history. And so, I start thinking about, all right, now you're going to have companies that spring up that are making virtual galleries where the gallery itself is like this crazy physicsdefying piece of art. You're not just walking through a mimicry of a traditional gallery. You're on the [ __ ] moon. You're in outer space. You're inside the body. Whatever you want. Like it is the creativity that the digital realm unleashes because you you no longer have to obey the laws of physics. It's just oh my god. I I think there's an element of like you don't have to obey the laws of physics. You also don't have to ask permission of anybody. Right. So, you know, um, if you go and you look at an art gallery in Manhattan, for example, how many people really got an opportunity to design the art gallery, well, there usually people who have some sort of pedigree. They got trained somewhere, right? There's like all these like hurdles to get in and so it ends up being a lot of the same people who all know each other and they're the ones who do it on the internet. Imagine if you held a global competition for whoever could create the best art gallery, right? And there was like a prize for it. Mhm. You'd get some really, really cool stuff because there was no barriers to become the person who could do that. That's all this is is it's now just saying, but you don't have to come do it in Manhattan. Like, just do it on the internet. And I think that um you know, the the best analogy I have for this is think of Twitter. If I said to you, Tom, you know what you're going to do every day? You're going to go hang out in this virtual reality square. You're going to talk to random strangers. You'd be like, "Dude, that sounds like cool to like test one time, but like I got things to do." But what do you do? You go through the portal, which is your computer or your phone, and you go and you hang out in a digital square and you talk to strangers. Like that is in some weird way a version of virtual reality, right? I I tweeted recently. I said, "We live in virtual reality already. It doesn't look like the thing that you put, you know, the Oculus headset on and you walk around. you could touch and feel things and like like that's like level, you know, 2, three, four, five of virtual reality, but Twitter created virtual reality for people and you can go there and you know, hey, every day we all come here and meet up again, right? And you keep going and then what am I basically doing? I'm basically walking around the square and I'm saying, okay, Tom's talking about this, this person's talking about this, this person talking about this, and I have a choice. Do I want to button the conversation? Do I want to reply? Do I want to quote tweet? Do I want to say, hey, Tom just said whatever? and I go and tell my friends that's a retweet button like like you start to think through this and it's like yeah this is all going to happen. How quickly does it happen? Up for debate. Uh what technologies is it built on? Up for debate. Um how how should an investor invest? Up for debate. How should you as a market participant who's not an investor wants to be a user? How should you use this stuff? Up for debate. But I think that one of the trends that every great investor has figured out or one of the activities is just find that kind of uh direction that the world is moving as be an observer understand the world's moving this way and then go and say okay well what are people using to your point about observing it to not judge it so one of the things the NFT market has taught me is that in fact I wrote my rules they were tongue and cheek when I wrote them but I think I should publish them is that everything you think is cool is going to go to zero and everything that you think is dumb is going to moon. And I've just seen that play out over and over and over again. It's really hard to predict what other people are going to think is cool because it's really a moment is created. Energy is orchestrated somehow through this. It's not an invisible hand because there are some people that are really good at it, but they can get the energy moving towards a project for whatever reason. Like I don't know if you paid attention to what happened with Loot. Mhm. So, um, the guy that I consider my king of alpha, David, um, he sent me a tweet like I was about to go to bed and he was like, "Hey, Tom, this thing called Lud is popping off. Look at it." I looked at it and I'm like, "This is white words on black a black background. This doesn't make any sense." And I was like, "But I know this industry and if people believe that this is like new, fresh, exciting, that at least for a moment there's going to be this influx of attention." Now, that moment could be 10 years. That moment could be 10 minutes. I have no idea. But I'm getting better and better at sort of arbitrageing some of these things. So, I bought two of them. And then a couple days later, if you owned them, you got an airdrop of uh basically their token. And I didn't even know about the airdrop. And the same guy, David, was like, "Hey, Tom, because you bought two, you've been air dropped this stuff. You actually have to go pull it out of the contract directly. And so, I'll show you how to do it. So, here you go." into ether scan and this is how you do it and I got it and I got my two bags of gold and as of that day that thing so I bought the ones that I bought I think I bought it I can't remember if it's 1.9 ETH for the original loots or 0.9 but it was in there somewhere and at the time I got the gold which remember I didn't even know existed I was already making money handover fist just on the actual squares that I bought and the bags of um their coin that my friend had to tell me were there. I went and sold one of the two for $50,000. And I was like I imagine if a friend was like, "Hey dude, I know you don't know, but in your bread box in the back cupboard, a guy just left you 50 grand." You'd be like, "What just happened?" It was so surreal. And I was just like, "Okay, don't think about things. think about the nature of things. And I was like, this is telling me something about the nature of humans, of creative energy, of attention, and how it can be swayed about enthusiasm and how it it moves sort of restlessly. It never lands on one thing and stays. And so there's these really predictable curves that these projects go through. And I'm like, hold on. If you do your, you know, 10,000, 20,000, 30,000 hours of research and you like really figure this game out, obviously never invest a single dime over what you're prepared to lose because NFTts are the single highest risk investment I've ever seen humanity come up with. I want to make that really [ __ ] clear. But it is so interesting to see how it captures that same part of the psyche around sports betting. How we're all locked up because of what's going on with COVID. like there's all these factors that have come into play and just that crypto is taking off and NFTTS have answered the question of whether there's a real thing there and whether people will value them. But once I stopped judging the market and just started saying this is happening whether I think it should or not whether I think white text on a black background should be cool or not it is and it's capturing energy and dude it wasn't long ago that I made $50,000 a year. So I was like th this is so crazy and this comes back to like my obsession. People need to do their own research. I cannot predict the future. You cannot predict the future. Who knows? This could all go to nothing tomorrow. That does not seem likely. And given what's going on today, the nature of the technology, right? Understand it. Think from first principles and it becomes far easier to do novel things. But just looking at what's going on, I I legitimately want to with all the caveats of you have to be so careful. You cannot go blindly into this. But I can think of few things that are worth people's time and energy to understand more than the blockchain. And that if this were a baseball game, we are still in the locker room getting ready to come out onto the field. It it's like because I mean that from a technology standpoint. Like even forget just that you could buy Bitcoin or Ethereum or whatever today and it will go up in value. What's going to be built on the back of the technology will create a world that will be as unrecognizable as a post internet world would have been to me in, you know, 93 before I'd even heard of email to now. I mean, that's utterly just it's a transformation that I could never have predicted. It's going to be the same thing, but this one's happening in full view because we already have the internet. So, it's already you and I are talking right now to, you know, hopefully millions of people. And then on top of that, it's we've all seen it happen before. So you can say, "Hey guys, remember mobile phones. Hey guys, remember the internet. This is a big one like that." And so I think this is going to be I'm going to make a statement and you're going to say whether I'm a fool or not. I think this will be the biggest wealth transfer ever that we've ever seen. Like robber baron moment type wealth transfer. But it it's not going to go to a really really small number of people. It's going to go to whoever the [ __ ] takes the time to learn about this and go there's some percentage of my daily income. It doesn't like it will go to people who don't even think in net worth terms yet because this is as Ralph Paul said this is the first time in human history where the average person has been able to frontr run the institutions. So, this is a chance for people to get in $10 every paycheck, whatever. But like to get in and now whether it just becomes sort of wealth redistributed because so many like the older and more established your wealth, the less likely you are to move on this quickly. Well, you you got to think too um from an investing standpoint, you've got to ask yourself like who are you, right? Like what what type of investor do you want to be? Uh there are some investors who are the most riskaverse people in the world. They say, "I don't want to take any risk. I'm already wealthy in many cases. I want to protect. I'm in capital preservation mode." There's a lot of people who say, "No, I'm in capital accumulation mode, right? Is I want to go make money. I I need to make money." Um, and what you need to seek out then in most cases is asymmetry. Now, that doesn't mean that you shouldn't do I I have these like five principles, right, of from a personal investing standpoint. You need to spend less than you make, like kind of a core principle, right? Kind of get out of debt if you're in debt. Uh the third thing is that you have to get out of cash and you have to invest in assets. Doesn't really matter what assets as much more so as the in action of investing. You got to be super super super patient, right? And you got to be disciplined and that's it. And if you do that for long periods of time like you will make money and the reason is because the currency underlying it all is going to be devalued. So all of these asset prices continue to go up. Stock market every single day it seems like it hits a new all-time high, right? It just continues to go up and up and up. But that's if you're a super riskaverse and you say, "Hey, I'm just going to buy a lowcost index fund, S&P 500, whatever." There are some people who want to take more risk and they want to look for more asymmetry. But I think that the NFT stuff, etc., is fascinating because there is a level of wealth that is being uh created, but it's not being exchanged. And so this is something that I think a lot of people when they think about, oh, there was um, you know, $3 billion that was put through a system or that person is worth a billion dollars and they made it in crypto. In many cases, what happened is not that somebody gave a billion dollars of fiat currency and received a billion dollars worth of digital tokens. Instead, what happened is somebody created it out of thin air. And so now all of a sudden you have all these tokens that are worth a penny and they start trading and one trades at two pennies and next you know now that market cap of the asset is now 2x right it's no different than companies so for example when Jeff Bezos starts Amazon right he says hey my company is worth X dollars you can buy shares at you know y price okay as the company acrru value based on all these valuation metrics that people have eventually the company's worth you know a trillion dollars And you're like, "Well, did a trillion dollars get paid to you?" No, I don't think Amazon's ever made a trillion dollars in cash, but the equity value, which has acred value over time, ends up being a really big opportunity. And so, it's fascinating for me to watch people like you take a Jay-Z as kind of the quintessential example. You can see over the 20 30 year period him wake up to and understand the power of owning equity. That's something that was created out of thin air that acrru value based on a certain number of valuation metrics. And if you're the one holding the asset, you can actually drastically increase your personal net worth and and the value um and cash etc that you have. A lot of that's happening here as well, right? Is somebody's buying something. You bought the the loot um which is you know kind of this ability to play this game or or participate in this uh uh community. And as more and more people wanted to participate, it became more valuable. And so it's no different than you buying a piece of real estate and more people want the real estate and so the value goes up. Now you're buying this asset and the value goes up because more people want it. Owning equity ends up being the greatest way to create personal wealth. Whether you're owning a cash flowing business, whether you're owning the equity of a payment system like Bitcoin by holding the actual asset itself and having financial exposure to it, you're owning the equity of real estate, of a community with NFTTS, etc. It's all the same investment mechanism. Now, which ones acrue value, which ones don't, why should they acrue value, etc. If you are in a market predictor, you know, kind of seat, sure, you can speculate based on what you think is going to happen, what you think is not going to happen. If you're the market observer seat, you simply are saying, "Look, the loot game, I wasn't really into those types of computer games, etc. as a kid. My brothers and I were all playing Madden and, you know, basically throwing the N64 controller at each other, you know, halfway through the game right before somebody 21 each other, right? So, to me, like that's outside of my intellectual curiosity, but as a market observer, hell yeah, that's valuable, right? There's a ton of people who want to play this. There's a ton of people who are running into it. And so do I know if uh the price is going to go up or down or what? Like all of that is almost secondary and frankly I don't think anyone can predict as much as being able to observe the fact that I I don't know there I think the GitHub repository of uh Loot in general was one of the most positive uh or was one of the most popular GitHub repositories last week. So crazy on the entire internet. And does that mean that it's going to be worth tons of money? No. Is that a pretty good data point that there's a lot of developer activity? Yeah. Right. Are there a lot of people who are talking about it online? If you go search on, you know, Twitter in the tech community, whole lot of people talking about it. Again, well, we've seen things tons of people talked about and end up going to zero, right? So, there's no no one data point is the predictor. But I think if you sit in the market observer seat and constantly remind yourself, I do not know the future, but I'm willing to observe what's happening right now. you start to understand that uh there's corners of the internet that think weird things are valuable and so if you can get out of the game of I see these things right and I think that is weird why would somebody buy words on a on a black screen I wouldn't buy it right so nobody must want to buy it well no I'm an idiot if I think that right because what ends up happening is as an observer you have the humility to understand there's there's millions and millions and millions of people on the internet that want to do stuff I don't I don't want to do. Okay. So, you can choose to invest or not invest, whatever, but but being aware of and observing what's happening, I think is really important. And whether it's NFTTS, whether it's games, whether it's something else, you start to just wrap your head around and say, man, this technology is creating two separate revolutions. One is a monetary revolution, which is Bitcoin. What we've talked about in terms of the fact that nobody can debase this currency. anyone has access to it and has censorship resistant payments and it has sovereignty for those that hold it. That seems pretty valuable. Trillion dollar market cap today, how big can it get? I I don't know, but I think it's going to be bigger 10 years from now than it is today. Okay, I probably want to own some of that, right? That's my personal decision. The second revolution is this idea of uh kind of the digital realm or the the automation that comes with all of this. And when you start to think about this, you you say to yourself, "Man, there's a lot of people who seem to want to do this, even if I think it's completely stupid, even if I think that it's literally the worst idea in the world." How do you argue with the market? And so, I think that, you know, there's folks who uh choose from like a a maximalist standpoint to focus only on Bitcoin. And and frankly, that's where I tend to spend most of my time because the monetary revolution is much more intellectually stimulating for me, right? I'm I'm intrigued by it. It's things I sit and think about all day and spend time on, but I got plenty of friends who think that's the dumbest thing in the world. They're like, dude, who cares, right? Like look at this and pick your kind of other area to focus on. And so I think that um it's really easy online to like get caught up a lot in this idea of uh one revolution is important and one's not uh or vice versa. At the end of the day, it's well, who who's asking the question? And what we're watching here is um every industry is going to be impacted by this technology. Yes. And so if you're into art, you should understand it because it's coming art, right? And likely the digital art, everything, music, all this stuff, everything. The um the the thing that is most fascinating to me about the entire thing, and I've been doing this now, you know, five almost six years. In the beginning, all the legacy players wanted nothing to do with this. And a lot of my time was focused on Bitcoin because that was really the only liquid true asset that they would even you have a conversation about. All the billionaire investors not interested. All the big Wall Street banks not interested. All the um you know institutional investors not interested. Almost to a tea, the best in the world have changed their mind. They continued to get new information and they changed their mind and now some of them are the largest investors in the industry and so there's a level of intelligence and intellectual humility it takes to get new information and change your mind. The people who haven't changed their mind for the most part not not everyone but for the most part historically they haven't been very good investors. That's interesting. And so they just have this rigid way of thinking and regardless of the technology evolution, regardless of what happens in the market, they just have that rigid, you know, kind of adherence to a framework. And so to me, like that's been one of the biggest investing lessons is I talked to that guy. He wasn't like he gave me a 12minute meeting. He literally could nice to meet you. I basically took the meeting cuz somebody else I know told me I should meet with you, but like I got to go to lunch, right? To now you're a huge investor in this stuff and you're out and you're talking about it and and you're explaining it to people, etc. In two years, what happened? Oh, you're not religious about your ideas. You're not religious about uh having to be right. Instead, he said, "No, it reached a point where it was very obvious that the macroeconomic environment was going to continue to be crazy. people were going to want to hold this asset. I understood how it worked and so I changed my mind. By the way, I'd been an idiot if I didn't change my mind. Yeah. The only way to live like that to me is my core life thesis is like I'm not interested in being right. I'm interested in identifying the right answer faster than anybody else. That's it. Yeah. Building your self-esteem around being right is a trap and most people fall into it. But that's really interesting. It it's also um if you think about uh trends and like identifying the right answer a lot of times if you were to go ask like venture capitalists have to a lot of times understand technology innovation they also have to kind of extrapolate out really really kind of uh parabolic type growth etc. And the best way to do that is actually not to think about it, right? It it it's not to say, you know what, Airbnb is going to go from no locations to globally dominant in five years. It's impossible to see that world. The guy has air mattresses on in his kitchen. How is he going to go become a globally dominant company? Uber has black cars driving around San Francisco. How are they going to go literally convince people not to buy cars and instead use their service? That sounds insane at the time. But what you can do is you can basically identify people who have some future vision of the world that is different and if successful will end up actually being incredibly valuable. So kind of different and right. Right. And what you find is that's why venture capitalists make so many bets is because they're building a probabilistic outcome. Okay, if I make 10 of these bets, four of them are actually going to work. The four will pay for the six losers and all I need to go do find is, you know, 10 crazy people who think that they can change the world. Right now, sure, not everyone invests that way. But what you start to realize is rather than try to predict it yourself, finding the people who know some secret or know some, you know, future vision of the world that they're going to go build and create ends up being a way easier way to predict the future than actually sitting there and like pontificating about, you know, I think NFTTS are going to be whatever in January. Did anyone think NFT one NFT platform would sell $3 billion worth? No. No way. No way. Now, one thing I know that you don't predict the future, but that I it's the only thing that gives me hesitation. So, you're whatever famously like 95% of your liquid assets are in Bitcoin. Um, I'm way way way way less than that. But my comfort, it started with, oh, I'll just do 1%. And then I was like, well, that felt good. How about two? And then that was five. And now it's like, you know, I'm pacing 10. So, um, so about 10% right now. That's what I'm pacing. I'll be there pro. Well, I guess if we dip really hard, then I'll race to that. Uh, if we don't, I'll just keep dollar cost averaging, but I already sort of planted seeds with my wife, I might be comfortable at 25%. So, uh, yeah, that I've really sort of adjusted my thinking on that. But the one thing that gives me pause is you've talked about Bitcoin is going to become the global reserve currency. I don't think that governments go down without a fight. Yeah. So global reserve currency uh first of all is like a term that everyone talks about but what is a global reserve currency right um there's two ways to look at this one is the legacy terminology of global reserve currency which is the most dominant military basically puts the uh the currency you know in place and then enforces that across the world the dollar is you a pretty good way to to use it as an example every economy has a reserve asset the US econ economy is based on the US geographic uh players, right? People within the US uh geography and the reserve asset is the US dollar. If you go to Mexico, the Mexican economy has a reserve asset, the peso, etc. And you go through the world, this is true. There's an economy though that has been created. It's actually the largest economy in the world and it doesn't have a reserve asset. It's the internet. The digital economy does not care about where you physically are. Geography does not matter. It's unhinged from the the geography. What's the reserve asset of the digital economy? Well, most people would say, well, I use dollars, right? That that seems to be one of the more popular ones, but that's because we live in the developed western world. People on the internet in India don't use dollars, right? They use their local currency. And you go around the world and you see this. What happens if we all just used one currency and all the units were the same? Okay, that'd be interesting. And so the reason why I say that it is going to be a global reserve currency is I actually don't think it's nearly as competitive with the fiat currencies as people think it is because ultimately what happens is the digital store of value. I want to protect my assets. And so what we're moving towards is a multicurrency world. Right? Right now you and I live in a single currency world. You get paid in dollars, save in dollars, invest in dollars, and then you also pay taxes in dollars. If you want to go to somebody else's single currency world, Mexico, you have to convert your dollars to pesos to operate within the the Mexican uh economy for the most part. Well, when you make that conversion, it's actually very difficult. You go to the bank and you try to withdraw it. It's got to be large sums. Or you go to like a currency exchange at the airport, they rip you off, right? like like it sucks. What happens if all of a sudden the friction and the cost of transacting between currencies or switching the switching cost goes to zero and now I get paid in dollars and with a click of a button I can change my dollars into pesos or into Bitcoin or into a digital euro etc. Well, now the technology is the exact same. The only difference, the only competition between the currencies is at the monetary policy standpoint. They're all digital currencies. So the digital dollar, the digital peso, and Bitcoin are literally all the same technology-wise in that steady state, but there's competition at the top layer at the mon at the monetary policy layer. What is monetary policy? All fiat currencies have the same monetary policy on on a structure standpoint. They're all inflationary currencies, meaning that there's constantly more printed of it. It's got a variable monetary policy, meaning that uh it constantly changes. Sometimes they're uh expanding, sometimes they're contracting. But the reason why the dollar is guaranteed to lose value is because they have to continue to create more of it, right? Same with the peso, same with the euro, etc. So, if you actually take all the fiat currencies and you put them in a bucket, there is a non-conensus or a different currency structure, which is Bitcoin for example. And so, if it ends up being right, it's going to be wildly valuable. It's non-conensus and right. But two is if I'm looking to store value, if I'm trying to save, I'm not going to save in the fiat structure. Regardless of the currency, doesn't matter, dollars, euros, yen, whatever. I'm going to put it into an asset where it protects my purchasing power. And if the switching cost is zero, I now can switch back and forth very easily. So, you can see a world where my employer pays me in dollars, it autocon converts into Bitcoin. I sit it there and then I got to pay my taxes in dollars. I convert back into dollars and I pay. Well, I'm saving in Bitcoin. I'm storing value in Bitcoin. What do people do? Well, historically, maybe I had to buy real estate to do that. So, my employer paid me in dollars. I took the dollars. I converted it into real estate. I sat there and then all of a sudden I needed money to pay my taxes. I could sell the real estate, get it, and pay it back. Now, that's a ridiculous, you know, uh, order of events if I'm simply going to use it as a saving mechanism to then pay my taxes, you know, later this year because there's cost, there's time lapse, etc. But there's no difference between doing that with real estate or doing it with Bitcoin. It's just now all of a sudden I can do it instantaneously. I can do it with a digital asset that protects my purchasing power and the switching cost is is zero essentially. And so when we move to a multicurrency world, actually in some crazy way the fiat currencies may become more valuable and this is uh not everyone agrees with this. I was going to say I'm so intrigued. It's like the restaurant problem, right? If I put a restaurant on a intersection, it's the only restaurant. It gets, let's say, 10 people a day. If I put a restaurant across the street, many times people will say, "Oh, that's competition. Now that first restaurant's going to suffer." If I put a third one there, people say, "Oh my god, that first one's screwed." A fourth one, oh my god, the first one is out of business. In reality, what happens is all the studies show when you build density at the intersection, everyone actually gets more traffic because that that becomes known as restaurant intersection. That's where all the restaurants are. I'm hungry. I don't know. Let's just go down there. We'll figure something out. And so, actually, the first one benefits from having the others move in there. There's two arguments when it comes to Bitcoin and the fiat currencies. One is that they're in direct competition with each other. Bitcoin wins, fiat currencies lose, game over, right? And in that scenario, governments absolutely do not want this to happen. The governments that embrace the technology that ends up being the winner first will drastically outperform those that are last to adopt it. Right? The second one is this argument of no actually a multicurrency world all boats rise together. Now, you know, I talked earlier about I don't want to be a market predictor. What I find right now is as technologies are being digitized, it actually increases the accessibility of them for people around the world. So, take that second example. I'm in Venezuela. The Bolivia ends up getting devalued away. I know I got to get out. Really, really hard for me to get dollars. I can try through the bank, but there's limitations. I'm worried about confiscation of by the government, etc. The black market is really pricey uh in terms of it could cost me a lot to actually go buy it and it could actually be physically dangerous. So why do I want dollars? Well, there's safety in the dollar in my mind. There's stability there. That's the best currency. My currency sucks. This one's great. Let me go buy this one. Okay. Dollars are hard to get. I'll get gold. Well, hard to find. Can be physically dangerous. Could be confiscated, etc. Okay. What can I do on the internet if all of a sudden I think let's say Bitcoin is too volatile for me? I want dollars, but the dollar isn't digitized on these platforms. But China takes their currency and they create a digital currency. It's better than nothing. So what do I do? I buy the digital currency of China. And it's just a pure accessibility thing. So I think ultimately the incentive is that everything will be digitized, right? You'll get digital dollars, digital euro, yen, etc. And some of that will be because people believe that there's some sort of uh internal domestic advantage to it, but also some of it's going to be just simply the game theory of we have to digitize our currency so it's accessible to people around the world and so we can drive more adoption, more value. But the second that everyone has digital wallets, everything becomes a currency, right? How many people say to themselves, "Oh, I own that piece of real estate. I need to sell it to get dollars to then go buy something." Well, what happens when I can just take the real estate and buy directly the asset? I don't have to go to the common unit of account of a dollar. All the technology is the same. The value just is different. And so, you get in this really weird world where like I don't know what's going to happen in the future, but you can clearly articulate two or three different versions. And in every single one of those versions, Bitcoin specifically is valuable. So, Bitcoin is valuable if it goes head-to-head with the fiat currencies. Bitcoin is valuable if the fiat currencies benefit, you know, and all currencies end up occurring more. And Bitcoin is valuable if all of a sudden every asset is a currency and you can interchange them freely. So, from my standpoint, it was actually the least risky thing I could do personally was to buy Bitcoin. And I always say that I sit at the intersection of two very, very different worlds. when I talk to, you know, friends on Wall Street or these large asset managers and and stuff, they're like, "You are insane having 95% of your net worth in this thing." And I say, "Sure, but I think you're insane for having 95% of your net worth in dollars or in dollar denominated assets." Right? So, we see eye to eye on insanity as just two different assets. If I go talk to uh particularly young people in crypto that are on the edges of innovation and really kind of pushing pushing the pace of this new stuff, they're like, "Dude, you are the least risk tolerant person I've ever met. Like, you just hold Boomercoin, right? Like, Bitcoin doesn't do anything." And so, how can it be that the same asset viewed by the the youngest, most kind of forward-thinking, innovative people is seen as the most conservative, but by the oldest, most successful is seen as the most risky. It's actually probably where you want to sit, right? Is because you're you're uh taking the two worlds and you're kind of meeting them in the middle. And so, when you ask about like allocations and all stuff, I always ask people, what are you optimizing for? I basically built a ven diagram early on and I said, "Okay, what is the thing that I think is most likely to be here a hundred years from now?" Right? My plan is to hand Bitcoin to my grandkids. Okay, so it needs it needs to be around for 100 years. The durability of it and also what is the thing that has a very attractive return compared to traditional assets? Bitcoin's compounded at 200% annually for a decade. That's crazy. Pretty crazy, right? So, if it's durable and it has an attractive return compared to traditional assets, I'm going to go get a lot of that. And if I denominate my net worth in it and my life, like my financial life in it, it actually changes psychologically spending money because it's one thing if I say, "Hey, you're going to go spend a depreciating asset to buy a house or buy a car or buy whatever." Might as well. It's going down in value anyway. You're financially incentivized to do it, right? is literally it's going to lose value, so you better get rid of it. If I say to you, hey, you're going to buy something with an appreciating asset that is likely to be worth more in the future than it is today. Now, all of a sudden, you think to yourself, well, what am I buying? Do I need it? Is it going to is it an investment? Is it going to be worth more than what this is going to be worth? You start to ask yourself a little some of the questions you might not have otherwise asked. And so, it's it it's um one of these things where like I basically just thrown my hands up and I said, "Look, the world is changing at a rapid pace. I spend all day on this stuff and I can't keep up. Um, it will look very different 25 years from now than it does today. Uh, and how lucky are we that we get to live here, that we're talking about it, that we see the opportunities, and you know what? You and I will make a bunch of investment decisions. Some of them will work, some of them won't. My guess is that by picking the right industry that has a massive tailwind behind it, we would have to be really, really, really, really stupid and then make really, really, really stupid decisions. We probably still will be okay because you're simply, it's like saying, "Oh, I invested in the internet in the 90s." I mean, you had to be an absolute idiot to not somehow somewhere end up better off after investing in the internet than before. I think the same thing's true here. So, you know, you can make optimizations, all that, but at the end of the day, anyone who's paying attention to this stuff, I think, is going to be fine. That is the perfect place to stop. Boys and girls, if you haven't already, be sure to subscribe, follow this man everywhere. Tell them where they can find you. Uh, just on Twitter, a PMPO or search Anthony Pompiano on YouTube. There you go. You won't regret it. And until next time, my friends, be legendary. Take care. Peace. I grew up in the world of what is known as macro investing. Macro investing is when you look at all the asset classes everywhere around the world. So bonds, equities, commodities, currencies, um credit, all of these things and you try and look for what is the best return you can get. Maybe that's in India, maybe it's in China, maybe it's in the US.