0:03

For the first time in the

0:05

history of will host to we

0:07

can be run institutions in buying

0:09

this thing and they still can't

0:12

do it. Their hands are tied,

0:14

they just can't do it. and

0:16

how are you doing right field?

0:18

One week away from cheat code

0:21

he billie Danny's he he fainted

0:23

from Australia we need it for

0:25

nearly ready We've got such an

0:27

amazing lineup, even been food in

0:29

old and has to pay check

0:32

to check manners. Will come

0:34

into my home town. Isn't Bitcoin

0:36

for some football? Incredible! So if you

0:38

only get over ticket we do have

0:40

a handful left. Please do head over

0:42

to Cheat Code, Dakota Uk and any

0:44

of you who are coming. I cannot

0:46

wait to see you to meet you

0:48

and the be with you until you

0:50

about what we're doing here in Bedford.

0:52

Anyway, welcome to the What Bitcoin The

0:54

Podcast which is or two point in

0:56

the massive Legends Iran formerly known as

0:58

Ours Energy Iran is using their next

1:00

generation data centers to power the future

1:02

of Bitcoin mining and a I'm using

1:04

One hundred Percent. Renewable Energy Iran remains

1:07

the same business with the same

1:09

goals now just with a different

1:11

name. again he who beat him

1:13

Cool Mack and damn good to

1:15

my good friends on the podcast

1:17

Religions Dreams Alive this area weeks

1:19

so we recorded when we were

1:21

recently out in Vegas. Danny.

1:24

And I decided to get these two

1:26

together to sit down and get into

1:28

Wall Street arrival into Bitcoin Now. We.

1:30

Discussed Wind Trend Fi has traditionally

1:32

struggled to understand Bitcoin. Why?

1:35

They are now just waking up to it. Volatility.

1:38

Leverage and how Bitcoin is a new paradigm

1:40

for investors tonight and love this one. But

1:42

if you do have any questions about this,

1:44

any feedback you want to get in touch

1:46

any reason in our to get hold of

1:48

me as hello a what Bitcoin did.com. The

1:54

morning guys were there to get little a

1:56

some point sir. No.

1:59

good as a gift Nice. Yeah. Someone... He

2:01

was a cool guy. Because we

2:03

needed someone to record. And usually

2:06

when we go to a city, we book an Airbnb, but... I

2:10

was expecting you guys to be an Airbnb. But

2:13

here, the kind of thing you need, you're

2:15

off strip, you're... Or you're in

2:17

a condo. Yeah. And so, you know, if you're going

2:19

to meet people and do shows and go for dinner,

2:21

it's like, it's good to be central. I

2:23

spoke to a friend of mine, he said, I can get

2:26

you a place here. And so, I mean, it's perfect for

2:28

us. Size-wise, it's about what we have

2:30

in Airbnb. But as a

2:32

hotel room, it's fucking jokes. Yeah. Yeah, this is

2:34

just right. This is exactly what you need. When

2:37

do we ever get an Airbnb this big? It's massive.

2:39

That one in Malibu that you guys had when I first

2:41

came on the show... Wasn't it big, but it was pretty

2:44

sweet. That was pretty sweet. Yeah. That's when

2:46

Hoddle drunk all my mitches. Yeah, that was fun.

2:48

He was so drunk on that show. Did

2:52

he fall asleep at it? No, probably you.

2:54

Almost, yeah. But

2:56

we've had some decent size. Yeah, we have. Nothing

2:59

like this. Yeah, this is great. Yeah. And, you

3:01

know, we feel very lucky. Anyway, good

3:03

to see you both. Good to see you, man. Good to

3:05

pay you both up. Do you guys know each other already?

3:08

We've had a few interactions, but... We've talked on

3:10

the phone. My first podcast with the lab dog.

3:12

I'm ready to rip it. We've got the young

3:14

buck with you. I'm

3:17

the young buck. What

3:20

is it? The old bull? You're looking at me. I

3:22

was. Right.

3:25

We had a dinner last night. We were talking

3:27

a little bit about TradFi people. So I kind

3:29

of want to start there. Yeah. Yeah.

3:31

Because you kind of both have had a different

3:33

experience. You're saying the TradFi people are still laughing.

3:37

Like, they don't get it. Whereas you're saying

3:39

some of them are coming over. Well,

3:41

kind of both, right? Right. I mean, you come

3:45

from private equity. I come from

3:47

a hedge fund world. Similar,

3:50

slightly different, you know, lens

3:53

on how to invest. But I did a

3:55

little bit of... I did a lot of private equity too.

3:57

But how are they different? So people listening

3:59

who... in the finance world? Well,

4:02

for the hedge fund world, it's

4:04

super liquid. Typically, you're often

4:07

doing lever trades, you're doing paired trades,

4:09

you're doing a lot of hedging, hedge

4:11

fund, and you

4:14

have a shorter time horizon, typically, and

4:17

you're looking for inefficiencies that you're just taking

4:19

advantage of. In the private equity world, you're

4:21

looking for deep value, something

4:24

that you can invest in

4:26

for years. And

4:29

there's different types of it, and Eric

4:31

can go into it more than me,

4:33

but you've got control positions, you've got

4:35

non-control positions in which you can influence

4:38

the outcome of the investment, you

4:40

can help, you can sit on the board. So

4:42

it's a little bit more active, typically,

4:45

and it's a longer time horizon.

4:47

So now, I've got a

4:50

hedge fund and a private equity unit within the

4:52

same. So it's kind of a hybrid, so we're

4:54

doing the same, we're doing a little bit of

4:56

both. Right, and in a venture

4:58

fund, they typically wouldn't just be buying Bitcoin,

5:00

they would be investing in companies, and maybe

5:02

Bitcoin companies, whereas a hedge fund could be

5:04

directly buying Bitcoin as part of their strategy.

5:06

Yeah, part of your strategy, like in part

5:08

of our strategy has been to put on

5:11

a substantial portion of our

5:14

treasury in Bitcoin as we're looking

5:16

for investments on both the public

5:19

and private side. Well played.

5:21

Good part. Yeah. What

5:23

we're crazy about is that, you know, it's

5:26

like anything, the world is on sale, and

5:29

if it was Walmart, if it was

5:31

Amazon, Black Friday, everybody's lining up.

5:34

But if it's the stock

5:36

market, if it's Bitcoin, people are fleeing, and

5:38

it's just like the people we talked about,

5:40

you know. But I mean, it's the same,

5:43

I'm sure. Yeah. So it

5:45

was difficult to raise money in that

5:47

environment, but we are extremely

5:49

happy with how well we did and what

5:51

we're doing, and we're excited. I mean, I

5:53

can't be more excited about the opportunities. Yeah,

5:56

we will dig into that. I think we've

5:58

all experienced over the last. Few

6:00

years mean we've all come into the system

6:02

time spots that we've all kind of witnesses.

6:04

A bit of a reluctance from tribes. why

6:06

be able to get involved? They still don't

6:08

get it. Button downs with with the birth

6:10

of easy to yes. I. Kind of

6:13

felt like this would be the time where everyone for

6:15

traveler oh how to show enough? Now I need to

6:17

at least look at this. I'm the only take this

6:19

thing seriously, especially with the inflows. Yet.

6:22

You still have even provide our own

6:24

here we seeing first year yeah I

6:26

think like on August of one other

6:28

point to that own add the the

6:30

comments here to making plates for from

6:33

like like the hedge fund is a

6:35

very broad term at this point inside

6:37

a A it originated with a certain

6:39

style of investing and then it's kind

6:42

of emergency to psych broader public market

6:44

as out with Horlick Strategic from the

6:46

strategies were Zeiss the execution of the

6:48

private equity world I'd say is largely

6:50

very different. From. Public Mark and is

6:52

where you have to do you know,

6:55

piano board and you're doing due diligence.

6:57

It's like very deep accounting. Due diligence

6:59

are you know have a much more

7:01

operating expertise or acquired whereas when you're

7:03

participating in look good liquid capital markets

7:05

it's a lot more like analysis have

7:07

eat you know searching for alpha with

7:10

market quantitative type com. Strategies

7:12

and structuring things. An instructor yes the

7:14

I hang exactly see other the world

7:16

that I came some was we we

7:18

were a buyout private equity fine. You

7:20

have like this ranges you know from

7:22

I can have you the world. From

7:24

the position of control you can sit

7:26

minority interest to still taking showing positions.

7:28

Once you're taking controlling positions in companies

7:31

that's a whole new can of worms

7:33

is a lot more that comes with

7:35

that. And you have board seeds. You

7:37

are bringing in a capital structure when

7:39

you're buying at a company. Had to

7:41

have lending. relationship sorted for all that

7:43

the humanity diligence that requires and

7:45

the insurance and like all these

7:47

other things get really nasty so

7:49

like the world that i came

7:51

from we are barred by out

7:53

on corporate carve outs from larger

7:55

enterprises and of israel like declining

7:57

units of a business too soon

8:00

buyers for that. So you have to be

8:02

a specialized buyer and say like we're gonna

8:04

buy this piece of a pie. It doesn't

8:06

have a back office. The accounting gets really

8:08

nasty because when you're looking at

8:10

a piece of a pie like corporate overheads

8:12

doing all these allocations and it's just like

8:14

well what is the cash flow of this

8:16

actual division? And that's where all

8:19

the negotiation comes down to. And it's

8:21

just what we were doing was a little

8:23

bit of like turning around a business that

8:26

was declining and nobody else really

8:28

wants to buy it and we get really good

8:30

valuations on it and then if we can change

8:32

something about the business and we

8:34

can bring in you know the right capital structure for it

8:37

then we can make you know pretty

8:39

strong returns doing that. So think about

8:42

that mentality right? The mentality of what

8:44

we what where the world we came

8:46

from. It's very focused on you know

8:49

structuring trades, finding

8:51

inefficiencies, taking

8:53

control positions, using

8:57

a lot of financial instruments to

9:00

maximize your profitability.

9:02

It's financial engineering

9:05

in essence and my side a lot

9:07

of arbitrage, a lot of pairs

9:10

trading and hedging out risks and

9:12

isolating the alpha that you're trying

9:15

to capture. Now imagine being from

9:17

that world and then

9:19

Bitcoin comes onto your plate and you're like

9:22

well there's no cash flows, there's no underlying

9:24

value. You know this is what they see

9:26

right? And it's like there's I can't

9:28

really attach anything to it. It really

9:30

mostly just looks like high-flying

9:33

tech stock. It looks like a

9:35

really risky technology play and yeah

9:37

maybe I'll throw a few percent at it

9:39

here and there but that's the

9:42

only people who are doing that really by and far

9:44

we're hedge funds. They're taking flyers on it just saying

9:46

this is like an Nvidia

9:48

or an Amazon. I'm just going to take a

9:50

flyer on it but they don't really

9:52

understand it and they put it in the same categories. ETH

9:55

and Solana and whatever else they can find they

9:57

think oh well those just have a They

10:00

just have a higher volatility. They

10:02

have a higher beta to that base

10:04

asset, which is Bitcoin. How can

10:07

I trade around it? And that's where they're

10:09

coming from. That's like kind of the starting point

10:11

in the hedge fund world. You go

10:13

to the private equity world, you go to

10:15

the pension funds, the institutional

10:17

investors, a real big money. We're

10:20

talking about, I mean, the

10:22

biggest hedge fund I was in was about $5 billion when I

10:26

left. I don't know how big your private equity

10:29

unit is, but $1 billion in private equity is

10:31

a big deal. Yeah,

10:33

we were like middle market around like $350, $500 million. Yeah.

10:37

But we're talking about institutions that

10:39

have trillions of dollars, like hundreds

10:42

of billions of dollars of assets, like hundreds

10:44

of billions that they're sitting on. You're

10:47

talking about California pension retirement, CalPERS,

10:49

you're talking about Texas teachers, Guggenheim,

10:53

like these are massive, massive

10:55

behemoths. And they have all

10:58

this structure. So this kind of

11:00

sets the stage to, okay, you've

11:02

got this Bitcoin thing. It's been around for

11:04

all these years. And

11:07

people have heard about it, but really the only ones

11:09

who have dabbled in it are who I'm talking about.

11:11

And maybe some of the private equity guys in their

11:13

own personal account, but not in

11:15

their fund and in the hedge fund

11:17

side, it's just a risky asset. So

11:21

that kind of is where the mentality comes from.

11:24

The thing is, if you're going to own

11:26

it as one of the big institutions, if you're

11:29

a registered investment

11:31

advisor and you have clients

11:33

that you're managing,

11:35

okay, so here there are different categories.

11:37

You've got private equity, you've got hedge

11:39

funds, you've got the pension funds, you've

11:42

got the endowments for schools. But

11:49

when you get to that level, the

11:51

structure there is like they have hierarchy

11:53

structures. And so it

11:55

starts with the highest person up in

11:57

the investment side is the chief investment

11:59

officer. And then you've got

12:01

portfolio managers and then you've got

12:03

analysts, you know Some of them have

12:06

in-house traders and so and all

12:08

of those people are involved in this

12:10

knowledge, you know gathering and synthesizing

12:13

and making decision out of so

12:16

if you just think about The

12:18

what they're doing is they're buying

12:21

there. They have specialized funds. So

12:23

people think okay, well Texas

12:25

teachers well, they've got to own X

12:28

amount of bonds X amount of stocks X amount

12:30

And foreign stocks but in

12:32

reality there are different portfolios within there and

12:34

they have them segregated into buckets There's

12:37

certain buckets they're mandated to hold or

12:39

mandated that they can't hold Yes,

12:43

yeah, go ahead. Yeah. Yeah. Yeah. It's

12:45

like It's

12:48

a very corporate structure and there's a lot that the

12:50

mandate can In terms of

12:52

like the hierarchical structuring of it and like I

12:54

think a lot of people are just like oh

12:56

if you can just You know, why

12:58

can't they get this and why can't they understand

13:00

Bitcoin? It's like well It's

13:03

it's just like getting anything done in like

13:05

a hierarchical corporate type structure It's like you

13:07

can solve people but you're not necessarily Incentivized

13:09

to be a cowboy or be a first

13:11

mover in one of these businesses. So I

13:13

actually disincentivize your disincentivized Yeah You don't want to be

13:15

the first mover So it has to like kind of

13:17

come in this bottom-up way and you could have a

13:19

portfolio manager in one of these structures be totally Sold

13:21

and he could have a fund that like the mandate

13:24

allows for it But why would he take on that

13:26

risk and be the first mover and

13:28

that's a whole different and even if he does

13:30

Let's say he's like he's like, okay I I

13:32

really believe in this and I think I can

13:34

generate alpha because I'm a young portfolio manager I'm

13:36

in this fund that has a billion dollars. I

13:38

want to go manage a fund with a ten

13:40

billion dollars, right? So I want to make my

13:42

name and the way I can do that like

13:44

look, um, you know David

13:46

Swenson over at Yale made his name by

13:48

doing the things He was the

13:50

head of the Yale endowment when I was there

13:52

and he went way out there He was buying

13:55

private equity. He was buying venture capital He was

13:57

buying hedge funds and all the other endowments were

13:59

like Is the yell out

14:01

of their mind and then their returns started,

14:03

you know They're they started having better risk

14:05

of just returns and all the

14:07

other endowment started catch on So he was

14:09

young and he was making a name for

14:11

himself and he was doing very well He

14:13

wasn't trying to you know, skip to

14:15

a different endowment He was just truly he believed that this

14:17

was the right way to go But let's

14:19

say you do have a pen you have a portfolio

14:22

manager in one of these big funds and in one

14:24

of these, you know Big institutions that decides I want

14:26

to do this. Well, what do they have to do? They've

14:29

got to get everybody up

14:31

above them to agree to

14:33

it They got to get like if you're

14:36

a performing major that happens to answer directly

14:38

to the chief investment officer Great you it's

14:40

only one layer But you've got to get

14:42

their buy-in Then they've got

14:44

to get the general counsel's buy-in the

14:46

general counsel has to get all the

14:48

compliance committees by in like it's this

14:51

And I've talked about this before It

14:53

is such a long

14:55

and arduous road to get approval

14:57

to do something like this That's

15:00

a new asset class that is

15:02

it's very you know, it's NASA

15:04

It's not defined very well in the

15:06

Wall Street world, you know The SEC

15:09

has just reluctantly allowed these ETFs to

15:11

come they've kind of warned people against

15:13

it though at the same time You

15:15

know, it's like There

15:17

again you go back to well, what's the

15:19

what's the incentive for the chief investment officers

15:21

say? Yes So is this why when is

15:24

it a bit fidelity? Is

15:27

that a name? Yeah, and Larry like when

15:29

Larry Fink gets it Yeah, then it just

15:31

it just kind of goes downstream from there. Well,

15:33

yeah, because then everybody's like, okay Well, wait a

15:36

minute now This is a different and how this

15:38

a whole different conversation because Larry Fink gets it

15:40

because he knows he can make fees off of

15:42

it Yeah, like that. He may believe

15:44

in it, but it doesn't really matter

15:46

What he believes in is other people believe in it

15:48

and I can make fees off of that. That's his

15:50

job Yeah, nothing against that. That's what his job is

15:52

to create a product that people want to buy. Yeah.

15:55

Yeah, exactly It's like it's more of a question of

15:57

like, you know, cuz it So

15:59

it's funny cuz people mix up Blackstone and

16:01

Black Raga all the time in there is

16:04

like kind of like to end of the

16:06

spectrum of the financial. You know the investment

16:08

management industries were like Blackstone as largest private

16:11

equity fund of the world's and Black Rock

16:13

is the largest as a manager and the

16:15

rope completely different strategies. Blackrock as high volume

16:17

you know, low fees whereas private equity is

16:20

much more targeted high seas and done. So.

16:22

Block everything about that does can be a lot of

16:24

volume in this and that people are going to be

16:26

transacting in and out of the assets under management going

16:29

to grow over time In terms of if you are

16:31

to make a calculator bet on this industry is like

16:33

a private equity. your headphones type for are all. As

16:36

a long term time horizon approach, it completely different

16:38

as thou. they'd be considering this vs. Blackrock Soy

16:41

Going back to the pension fund argument when these

16:43

guys are considering an allocation to this site's well,

16:45

how's this going to be building? How much for

16:47

long term as opposed to we don't really want

16:49

to take a major stake in it, we just

16:52

want to know that people are going to have

16:54

interest in the first thing is worth going to

16:56

go. Because. We these buckets like what

16:58

buckets as a going yeah So when your

17:00

heads when you're trying to analogies from these

17:03

pension funds, these endowments they and of what

17:05

they want to knows what buckets you fit

17:07

in so might pick one up t on

17:09

their be like okay you fit in the

17:11

bitcoin bucket. Promise we'll have a bitcoin bucket

17:13

he announced assimilate. They think there is a

17:16

be very difficult at this point. Maybe in

17:18

five years you may been three years but

17:20

you know it's it's both groups who buckets

17:22

think of anything because yes they are. Yeah

17:24

yeah yeah yes yeah. So maybe we've been.

17:27

In that that's like one of the fundamental

17:29

problems because that that exact mistakes that I

17:31

made when I first heard about Bitcoin is

17:33

it wasn't pitch to me. Is Bitcoin really

17:36

is just like looking to block chain texts

17:38

and I looked into it and you know

17:40

you you apply this financial framework of well

17:42

okay with this new technology doesn't really have

17:44

any cash flows in China like look at

17:46

deriving season the network but there's no way

17:49

that you can have if you'd actually structure

17:51

vehicle uncertainty around. this is you can't really

17:53

extract any of that out of and so

17:55

it's just like okay well this. Isn't comparable

17:57

to like a security frameworks and Psych.

18:00

Okay, well how do I produce any sort of

18:02

i waited? It actually could be a technology. It's

18:04

worth a lot. Spider know what price point makes

18:06

sense to me to get enough. And I don't

18:08

know what price point makes sense to me to

18:10

exit about. So that's what made me avoid it

18:12

for years. us to psych speculative investment with no

18:15

fundamental values. That's all within the framework of. Assets

18:17

not like monetary get which is basically

18:20

like the other side of it were

18:22

once they are are like I understood

18:24

the prom central banking at very nihilistic

18:26

view of what the future was gonna

18:28

be like as was like okay what's

18:30

going to roll into another empire at

18:32

some point and we're going out the

18:35

collapse since you know in a fall

18:37

the same pattern but once I realized

18:39

okay but. How is this

18:41

all gonna end in? Had some,

18:43

you know Bitcoin is this emerging

18:45

monetary good. It's an alternative system

18:47

to central banking stats and everything

18:49

completely changed from anathema. the sake.

18:52

Of the go I going to look into this and then

18:54

you get let into. The Crypt a rabbit

18:56

hole for a bet your to psycho killer.

18:58

How are these other you know technologies, better

19:01

monetary goods and it takes time to really

19:03

get to the former Decide Bitcoin has is

19:05

unique properties the can't be replicated and we

19:07

basically had this. Multi.

19:09

We have an investment opportunities that

19:11

hasn't emerged in effectively a millennia.

19:14

If you compare to like a

19:16

commodity as a base layer assets

19:18

and nobody understands it because there's

19:20

no financial frameworks. Hilfiger, homosexual y

19:22

Con: a good in the commodity

19:24

bucket to commodity don't have Tesla

19:27

is a good question. I'd I'd

19:29

more. I think it could attend

19:31

Yes, hand But it says. You've

19:34

gotta get past when I said be

19:36

when I when I said before which

19:38

is that initial. Just needs

19:40

York of This is just a technology high

19:43

flying like this isn't gold. The. Disease

19:45

all over the place. I can't I

19:47

can't put it in the gym, prefer

19:49

lose my gold and silver like it

19:51

doesn't make any sense, right? So of

19:53

course we all understand it. At

19:56

a different level. but going back to what

19:58

you're saying is a that that. Long

20:00

Pot to get there. You are interested

20:02

in it. You want to find a

20:04

way for to work for you and

20:07

understand that intellectually as as a place

20:09

to invest as something to invest in.

20:11

And again you hear that word Investment

20:14

Investment Investment Because when you're when you're

20:16

in Wall Street gets everything you're thinking

20:18

about his rate of return. Like.

20:20

What's high risk reward and we can get

20:22

into all of that and in a bit

20:24

but that's all you're thinking about. Where do

20:26

I put it My buckets housing in effect

20:29

of all till my pockets. How's it going

20:31

a that the returns my buckets. That's all

20:33

you're thinking about because that's what you're paid

20:35

to do is maximize your risk adjusted return

20:37

and as they consider and are high fine

20:39

sex dog that probably also considering that the

20:41

price may be dumped the never returns or

20:43

even goes to zero karate to get completely

20:45

such right because they don't understand the actually

20:47

an honors in the decentralization they don't understand

20:49

how it's grown and. Out the organic nature

20:51

of a Drc and the user base

20:53

growing still understand them than second Layer

20:56

benefits of it. You know it's it's

20:58

it takes. What? I

21:00

mean I don't know. It took me a

21:02

good one hundred hours of of research to

21:04

just feel like I started to really begin

21:06

to understand Animal By you can buy Blue

21:09

not N N Yeah I mean I would

21:11

say even in doing this podcast switched to

21:13

hundreds of evil eye to eye. Costs

21:18

the be certainly wasn't Estado

21:20

Nepal tossed out of would

21:22

have a sequence ah I

21:24

would say only probably. Pretty.

21:27

That three in a lot of it clicked

21:29

in a donor way was like this is

21:31

going away and is going up forever. You

21:34

meet and rights and checkpoints on Sunday at

21:36

a fish as a lot for that yes

21:38

as us a great question of of our

21:40

offer the you know the other day I

21:42

was awesome. Watson. That are interview

21:44

with him that you did the other day

21:47

and the great interview but I'm you asked

21:49

him for the we. do so it

21:51

was easier to understand bitcoin coming from

21:53

the traditional finance walk as you and

21:55

all this finance of training you understand

21:57

all the stuff and is is as

21:59

soon as you may i ask I

22:01

was like, oh, hell no. It was

22:03

way harder. Makes it worse. You have

22:05

to reframe. You have to unlearn everything.

22:07

Your brain is already solidified. It's calcified

22:09

in this fiat world and how do

22:12

you value this? How

22:17

does it fit? You

22:19

have to unwind all of that. I've never

22:21

done any investing in my life. Bitcoin's

22:24

the only real investment I've done apart from

22:26

literally fucking around with some CFTs ones. I've

22:29

done no real investing. I don't have

22:31

that baggage, I guess. It's baggage, yeah.

22:33

Yeah, to the point about how much

22:35

time, well, I guess one other point I want to make too,

22:37

before I forget, on the commodity bucket piece, I

22:40

think the biggest thing too that they're looking for is

22:42

when is this going to have a negative beta? And

22:44

once it has a negative beta, then they might be

22:46

like, okay, this falls into our commodity bucket, because that's

22:48

really what they're searching for. Explain what a negative beta

22:50

is. Yeah, so like if, it

22:52

just means that it has an inverse relationship with other

22:54

asset categories, is really how you're looking at

22:56

it. When the market moves, the broader market

22:58

index, that can be chosen in a variety

23:00

of different ways. When

23:02

that moves up, if something else moves down,

23:04

or vice versa, that's why people look for

23:06

gold. The correlation that gold has to other

23:08

assets is that, risk happens fast, you want

23:11

to have exposure within a portfolio. So if

23:13

broader asset correlations all start going down at the

23:15

same time, you maintain optionality

23:18

and you have value in an asset that's going

23:20

up at that precise point. So that was one

23:22

of the big criticisms of Bitcoin for a

23:24

while. And it seems like, and I haven't looked at

23:26

the data on this recently, but

23:29

I remember it was at like the beginning of

23:31

last year, that Bitcoin's correlation with broader market assets

23:33

is starting to detract from its historical pattern. And

23:36

I think that that's going to be one of

23:38

the most massive aspects of this, is once we

23:40

have these passive buyers coming in with the ETF,

23:43

it's going to change the narrative, because now it's going to

23:45

start to behave in a very different way with its price

23:47

action. And once that happens, once it

23:49

can kind of fall into a commodity bucket, because

23:51

we do start to get this inverse correlation of

23:54

Bitcoin with the market, people are

23:56

going to categorize this asset so much more differently. It's going

23:58

to open up the flood case for more. It

24:00

can. strategic asset allocation totally agree but in

24:02

one of the things that are bitcoin has

24:04

going for it and against it in in

24:07

that sense is that a trees twenty four

24:09

seven. So if you're in a situation, your

24:11

portfolio manager and you own some bitcoin you

24:13

actually on the decoy not eat yes and

24:16

you like or you may be due on

24:18

the T F news. Wanted the edge out.

24:21

You. Can trade the sing over the weekend.

24:23

So let's say that there's in event that

24:25

happened Friday night Saturday Morning Saturday Afternoon Sunday

24:27

you can. You can say I want to

24:30

take some risks off my portfolio immediately Now.

24:32

Well. Everything's closed. Accept Bitcoin

24:35

so that's can. I can have worked against

24:37

it a little bit when we have these

24:39

you know these uncertain periods and A or

24:41

could is especially at the eat. We have

24:43

the same in not in a more she's

24:45

like ah Nine private equity as much as

24:48

in headphones like he didn't want to be.

24:50

I don't expose over a long weekend like

24:52

safe. I have some sounds most behead sun

24:54

and I'm not heads and I'm going into

24:56

long weekend. I feel I don't feel good.

24:58

Why didn't That were both ways though the

25:00

one I'd risk over the weekend. They can

25:03

buy the it's you know I'm. It

25:05

when it's more along the lines of

25:07

when you have an an An event

25:10

gray and it's if it does he

25:12

have to be Black Swan Sydney in

25:14

advance that a negative events. That

25:16

is, it's big enough then typically all

25:18

assets correlate to one, right? And that

25:20

means they all drawdown the same time.

25:22

Even gold. Why is that will? Because

25:25

portfolio managers look at their exposure like

25:27

what I'm going to get margin calls

25:29

on these things Because or they're all

25:31

operating at least Reg T And so

25:33

which means that they're bowing half of

25:35

their portfolio And so they know they're

25:37

going to have margin calls on certain

25:39

names and they like Oak. I've got

25:41

a gonna raise cash. We're going to

25:43

raise casts well see. Easy thing to

25:45

do is to sell ten. Percent across the

25:47

board to sell Timpson very their own. and we're going

25:49

to figure out what's going on because this market is

25:51

nuts. I don't have time to get in there and

25:54

figure it out. if you don't have it modeled out

25:56

beforehand. That's what happens. Or it's

25:58

a took the aren't who. The next

26:00

generation a date isn't business are in

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the future Bitcoin mining, an Ai using

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one hundred percent renewable energy policies. Guys

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Oh, and also, please remember to

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gamble responsibly. Also. Don't

27:39

check out my conference t code? Yes!

27:41

I'm. Bringing Bitcoin is to Bedford my hometown. a bid

27:43

for it at the ranch and on about bed for

27:46

this the links are doing his part. costs. And

27:48

Alice oh boy team. And want to

27:50

bring as many people to best as possible to check

27:52

out what we're doing in the town to scale the

27:55

subway same. I'm also working on the plans may

27:57

be coins. Central. To the

27:59

future bedford. So I'm really proud to be doing this.

28:01

And next week, April the 12th and 13th, we're going

28:04

to be hosting a conference there,

28:07

the Bedford-Corne exchange. And we've got

28:09

an unbelievable set of speakers coming,

28:11

including Lynn Auden, Preston Pish, Jeff

28:13

Booth, Alex Glastine, Jack Mellas, and

28:15

so many more. On the

28:17

Saturday, I'm going to be mixing up a bit. I'm

28:19

going to take in all the speakers, all the attendees

28:21

to my football club, Rael Beva, to watch us play

28:23

our last home game of the season. And there is

28:26

a small chance we might even win the league that

28:28

day, which would be incredible. I

28:30

can't wait to get you all to Bedford. I can't

28:32

wait to get you all to my hometown. It's not

28:34

the most glamorous place for a conference, but it

28:36

means so much to me. Now tickets are

28:38

falling fast. We do have a few less.

28:40

If you do want to come along, please

28:43

head over to cheat code.co.uk, which is C

28:45

H E A T C O D E

28:47

dot co.co.uk. I'll

28:50

tell you a little story about my failed

28:52

attempt to trade stocks. So back in 2012,

28:55

I was just in my fear job, had my agency,

28:57

and I was I was fucking around with the CFDs.

28:59

Right. Just it was a way I could just bet

29:02

on the stock market. And I didn't

29:06

know what the hell I was doing. I was playing

29:08

with luck. But what I noticed is nothing went up

29:10

in a straight line. It will go up and they'll

29:12

go down and go up and go down. But like

29:14

directionally in one way or the other. And so I

29:16

was just kind of like playing that with Tesla stock.

29:20

And I was doing well. I was like trading all

29:22

and I got up to like the close. And when

29:24

we hit the close, I was I was closed out

29:26

with my short and close up my position. I was

29:28

in a short. And I remember it specifically because I

29:30

was on a train and had my phone and didn't

29:33

have a good connection. I didn't close on my position.

29:35

Didn't think anything of it. Right. Anyway,

29:37

going over the weekend. And

29:39

this is where I discovered pre market. Right. And

29:42

the pre market, they were up like 20 percent.

29:44

And the problem is CFDs they're leveraged. Right. And

29:46

I think it's because they'd had like some kind

29:48

of like announcement about sales, whatever. There was a

29:50

lot of Tesla stuff going on back then 2012

29:53

2013. And I ended

29:56

up with a position. I remember it specifically because I

29:58

was four thousand pound down. That was a huge

30:01

amount of money for me at that time. Like that's like that's

30:04

that's what I live on for two months,

30:06

right? And so I had to

30:08

call my ex-wife and say look I've got I'm

30:10

feeling sure I've got a confession and told her and

30:12

I never Trade it again after that I was done.

30:14

I was like, I just don't know this Yeah, if

30:17

you don't know it you might as well go down

30:19

the casino. Yeah, you mean honestly I know that

30:21

was my exposure but that so when you

30:23

mentioned the long weekend, I was like shit I

30:25

thought it was gonna be the other trading story

30:30

In LA where you turned up the job into you in flip-flop I

30:35

don't know you want that. I don't mind tell it

30:37

was when I first got into Bitcoin I

30:40

was flying back for to LA you met my buddy

30:43

Justin the other night. Yeah. Yeah Yeah, so I forgot divorce that he's

30:45

like just come out stay with me and I did so he's come

30:47

back and forth First go into Bitcoin. I was

30:49

just tweeting about it probably have like thousand

30:51

followers or 1500 followers And

30:54

I was on the plane just tweeting. I'm

30:56

off to LA Mike Jones who runs science

30:58

in Santa Monica he

31:00

was the CEO of My

31:03

space when when they that was taken over

31:06

by Rupert my wall. So cool guys like

31:10

I'm interested in this Bitcoin thing might

31:12

have a job for you. Do you want to come see me? I wasn't working at

31:14

the time. So and it was really humid

31:16

and I got to Justin's I

31:18

was like, I'm many close to this

31:20

like you let me some clothes It's like

31:22

what would you want to wear? I don't know. He's like, do

31:24

not pick just go short some flip-flops Specialts

31:28

and flip-flops because this new thing has be active.

31:30

Yeah, if you walk in and show some flip-flops

31:32

I was like, I can't fucking do that. Anyway,

31:34

I'll say I did I went his shorts and

31:36

flip-flops Cats out and everything just just

31:38

bolded to his office. He's like tell me about

31:40

Bitcoin. I didn't know shit about it I just

31:42

talked about it anyway, and then they

31:44

turn around and say great How's

31:46

your trading going? I was like brilliant. I showed him because

31:48

I was that was the bull market to the European I'd

31:51

turn like 35 grand into like a million

31:53

and I had all my trades up on my website So

31:56

he was like, would you want to trade for us? I was

31:58

like, yeah sure so they gave me a hundred Bitcoin

32:00

to trade right, but it's right at the peak.

32:03

And so everything, all the guessing that worked

32:05

all through the bull market, where I thought it was

32:07

a G. The exact opposite. Yeah, the exact opposite. There

32:09

was me, there was another guy doing it. And

32:12

I think by the end, there was like 40 Bitcoin. They're

32:14

like, yeah, let's close this out. I mean, look, that was

32:16

100 Bitcoin at a time when it was like, maybe

32:20

it wouldn't have been 100. I can't remember the exact numbers.

32:22

But anyway, I lost them a bunch of money, but they

32:24

were pretty cool about it. That's pretty, that's funny. Yeah,

32:27

every time I've attempted to be an investor or

32:29

trader, I've completely failed. Like

32:31

fucking idiot. There's a lot of investors

32:33

and traders who fail on Wall Street

32:36

too. Yeah. So do you think the

32:38

thing is, they're not getting that

32:41

Bitcoin is so much more than

32:43

an investment. It's like a fundamental

32:45

change in the world. Well, definitely

32:47

not. Yeah, I feel like, but

32:49

I don't think you start there. You don't start it.

32:52

It's a savings technology. I think you start with, well,

32:54

one, the advice whenever people are like, how do you

32:56

pitch these people? I'm like, the first thing I try

32:58

to do is I try to get their opinion and

33:01

I try to hear what they have to think about it. And

33:03

like, I mean, honestly, like play a little dumb and

33:05

usually a lot more comes out and I'm like, okay,

33:07

here's, here's their, and you get the perspective pretty quickly

33:09

and then I'll jump in with that. But usually it's

33:14

kind of like what we were talking about last night. You

33:17

can't make this whole like, okay, well you need to

33:19

understand money and then you jump in and start talking

33:21

about like, here's how money works. That's just, that's too

33:23

much. You need to be like really quick. And what

33:25

I find that works really well is

33:27

what these guys understand very, what's

33:31

the word I'm looking for? Tangible

33:35

points that are highly

33:38

defensible. And you can say like, Bitcoin

33:40

is, you know, de facto, one of

33:42

the largest computing networks in the world.

33:45

It's growing on pace with the internet. The largest

33:47

asset manager in the world is an investor. And

33:49

then you can drop names that they're familiar with.

33:51

Paul Tudor Jones, Stanley Druckenmiller, things like that. And

33:53

then all of a sudden they're like, okay, why

33:55

am I not interested in something like this? And

33:57

why haven't I dove deeper in the world? And

34:00

that, I think, opens them up to start

34:03

listening to the money argument. Right, and then

34:05

you get into, okay, so

34:08

let's go back to the institutional,

34:12

if you're an institution and your portfolio manager wants to

34:15

buy it, right? And you,

34:17

but the problem with it is

34:19

just structurally you couldn't, you

34:21

literally could not buy it because what

34:24

portfolio manager in their right mind

34:26

who's managing, you know, a

34:29

billion dollars or $10 billion and

34:31

has, what portfolio manager wants to

34:33

take control of 10 million or $100 million

34:35

worth of Bitcoin keys? Like there's,

34:37

the personal risk is so high. Like why

34:39

couldn't they go to like a fidelity even

34:41

before the, they could, but they'd have to

34:43

open up, it

34:47

would be a whole new thing, open up a

34:49

whole new prime brokerage account with them and have

34:51

to go through all of those steps and make

34:53

sure that they understand on the compliance side exactly

34:55

how these keys are being held and how they're

34:57

being managed and who's got one, is there multi-sig,

34:59

whatever it is, at the

35:02

same time that you've got FTX going

35:04

on and Celsius going on. And like,

35:06

that all was happening when I

35:09

started hearing institutions circling around saying, this is something

35:11

we need to start paying attention to and

35:14

then the fallout from all of the

35:16

fraud. And, you

35:18

know, that was a massive blow. Okay,

35:22

so now he's like, but there were

35:24

so many things, Danny, it wasn't just like,

35:27

how do you hold the keys? Well,

35:29

who's gonna trade it? Is it an approved

35:31

exchange? Can we trust that exchange? Is it

35:33

not being manipulated? What are the fees gonna

35:35

be on it? Well, who's gonna settle it?

35:37

Who's gonna prime broker it? Who's gonna custody

35:40

it? How are, you know, where are we

35:42

gonna market? Do we market at New York

35:44

Close? Do we market at the 4 p.m.? Like

35:46

what, are we marketing at London? Like,

35:48

where is it marked? Market at midnight?

35:51

Like, how do you do that? And

35:53

then is it, you know, marginable? And

35:55

obviously not. Like, how do

35:57

you, like, and then you gotta hold.

35:59

So you've got all those questions. And

36:02

in one fell swoop, this

36:04

January, they were all solved,

36:08

every single one of them. And there are still

36:10

plenty of money managers and brokerages who are

36:12

not on board yet. So we can come

36:15

to that because most of them

36:17

are not. However, the structural

36:19

issues are solved. All

36:21

they have to do is buy the ETF,

36:24

settle it with their prime broker, have

36:27

it custody by them, and

36:29

they know exactly how to trade it. They

36:31

know exactly where it's being custody, how it's

36:33

being held, what exchange is being traded on,

36:35

who's trading it. They know all of those

36:37

things now, and they have

36:39

it settled just like a regular stock.

36:41

There's no difference for them. So

36:44

it's simple. The only thing is

36:46

it's probably not marginable like some

36:48

of the others, but that's not

36:50

atypical of micro cap stocks or-

36:53

What's marginable mean? When

36:56

you are managing the cash of

36:58

your portfolio, you'll

37:01

buy something and on New

37:03

York stock chain, it's called Reg T, and you'll be able

37:06

to borrow 50% against it.

37:08

Oh, okay, okay. So you'll have excess

37:10

cash that

37:12

you can kind of manage around. If

37:16

you have certain margin agreements, it'll get you down

37:18

to somewhere around 10% that you have. It's called

37:20

the haircut. But

37:22

anyways, the long and short of it is that that's

37:25

all been solved. Now the question

37:27

is, and I was over exuberant.

37:29

I thought that there was a lot

37:31

more institutions. This will get to your first question

37:33

that we haven't really answered yet. Where

37:36

are the institutions? They're

37:38

not there yet. They're kind of still,

37:40

some of them are still kind of laughing at it.

37:43

And why? Because the volatility, it's gone up to 75, it's

37:45

down to 60. It's like, where's this thing?

37:48

Like, I can't keep, you guys

37:50

are nuts. This thing is not, you know, I

37:52

don't even, again, know how to value it. What's

37:54

the cash flow? Is it gold?

37:56

Like, what's the mining? Like, I don't understand the mining.

37:58

It's just math. It's an outreach. Like

38:00

but is it nothing else that's ever

38:02

had this kind of volatility? Oh That's

38:06

a good question long-term volatility and

38:08

an rising asset. I don't think

38:10

so well, yeah, because part part

38:12

of this to that's a nascent

38:14

and you know, also from the

38:16

perspective of these guys with

38:19

broader crypto is Like

38:21

we we have these assets that

38:23

are publicly trading That are early

38:25

stage for the first time and typically when you're dealing

38:28

with any sort of assets like the most volatile you're

38:30

getting Is like penny stocks, but like, you know, we

38:32

probably wouldn't categorize these things as like, you know, like

38:34

legitimate asset categories, but There's

38:36

a so like I think that that's one

38:38

of the big things I mean, I'm sure

38:40

that you could back test like I don't

38:43

know What was like one specific asset but

38:45

not like categorically and you you would definitely

38:47

find some things and what why is it

38:49

so volatile? Is it a liquidity issue? Because

38:52

it seems fairly liquid now I

38:55

mean, yeah James. Yeah, I mean there are

38:57

only so many exchanges you're trading it on

38:59

right and and It

39:02

is it it's volatile because

39:04

there's pockets of illiquidity So if somebody comes

39:06

in wants to buy a hundred coins, you

39:09

know, that'll move the market Typically,

39:11

you know, it's not like if you see Windows

39:14

when you see these big wicks, it's

39:16

when five thousand ten thousand coins are

39:18

moving in You know in 15 minutes

39:21

or an hour. Do you see one exchange wait

39:23

down to like 3k? I think bit max went

39:25

to eight or something. But if that was

39:27

on like a one of their like perpetual swap

39:29

Come on. Okay. I don't know. I

39:31

don't know why that it a lot of it's

39:33

like the leverage in the system's pretty immature Right.

39:36

Yeah, that's right. And so they're yeah exactly the leverage

39:38

in the system is immature And then you've got leverage

39:41

traders and you've got hedge funds are whipping these things

39:43

around there looking at them They're looking at those the

39:46

the books and and they're seeing what

39:48

the perpetual, you

39:50

know rates are and whether there's a lot of

39:53

leverage in there and then they'll sweep it out

39:55

and they'll just You know, I've got a question

39:57

about that. So We

39:59

often see when they. Price while weeks down

40:01

wix up. They say all the

40:03

market makers are just like sweeping

40:05

out the leverage. What? what is

40:07

actually happened in there. Who

40:09

is doing this and why and how well

40:12

so what is happening is you can see

40:14

more prepared when the leverage when the when

40:16

the rate the interest rate goes a high

40:18

the means that people are borrowing to do

40:21

whatever trade it is and typically you know

40:23

if it's either very they're going very long

40:25

other room very short and so you can

40:27

see in their the kind the balance. And

40:30

on the books. And so I

40:33

hedge fund will just me or

40:35

they can come in with hundreds

40:37

of millions of dollars and just

40:39

push it through a price that

40:41

they know will liquidate those those

40:43

ah levered trades. And when that

40:46

happens, you get stopped out. Eight.

40:48

So thing with this way that say

40:50

you've gotta tend to one on trade

40:52

on that much. Twenty to One The

40:55

A twenty One trade on So you

40:57

bots are five thousand dollars of of

40:59

bitcoin arm. You've given five thousand hours

41:01

to the and to them that exceeds

41:03

and they have allowed you to buy

41:06

a hundred thousand hours of Bitcoin right?

41:08

Twenty to one. The problem is if.

41:11

If. It moves five five percent. Your.

41:13

Five thousand dollars is gone. And.

41:16

So what are both an algorithm will kick

41:18

in and exchange or just so you are

41:20

your stopped out so they get their ninety

41:22

five thousand dollars back and they don't lose

41:24

that see your ticket on that risks and

41:27

so patrons can see that that those those

41:29

are where the stops are and or Big

41:31

Wales in L don't have be hedge fund

41:33

but typically somebody with a lot of cap

41:36

on their seats are stop them out don't

41:38

know they'll get still get sold at the

41:40

market and then that to misuse Big Wix

41:42

down But why would the whales. All.

41:45

I can understand why the exchange wants to stop them

41:47

out because. They can buy with the

41:49

well. do it because in the wells can sit

41:52

there with bids below the market right. And.

41:54

nine one one liquidation like cascade into another

41:56

and an air and and yet we now

41:58

have a by exactly So and

42:00

that's and that's what so we actually saw

42:02

that happen and in in big world you

42:05

saw that happened in London in the And

42:07

when the guilt yeah, the guilt trade

42:10

got upside down they got to the

42:12

Theresa May is exactly what happened in

42:14

big terms Right. So the

42:16

the the pension funds out there,

42:18

right? They had these they had

42:20

these liabilities And

42:23

so they knew that with

42:25

no interest rates For

42:27

so many years they put on these things

42:29

called leverage debt instruments, right? So what they were

42:31

doing is they were leveraged levering up their debt

42:34

to get you know, instead of 2%

42:38

they're trying to get like 6% 3x or maybe more 8% 4x 10

42:42

You know They're trying to juice the returns

42:44

and actually was the the actual industry was

42:46

much lower because you know You were we

42:48

were in zerp zero in straight environment for

42:50

so long and but they have these liabilities

42:53

They know that they're gonna have to pay

42:55

out pensioners as they retire and they

42:57

know they need a certain amount of capital They've got

42:59

to make returns to keep up. And so they were

43:01

lever it up and then when

43:03

you had Your new

43:06

Treasury Minister or whatever came out and said we're gonna

43:08

have big tax cuts I don't know how we're

43:10

gonna pay for them the market freaked out. They're like,

43:12

wait, wait, wait, wait Who that

43:14

means you're gonna have to float more bonds That means

43:16

we're gonna have higher deficits and like oh

43:19

god And we just you know The UK

43:21

had just crossed a hundred percent debt to

43:23

GDP and the guilt market fell apart what

43:25

happened? Well one One

43:28

of the pension funds got stopped out and they

43:30

got sold out and it in to

43:32

Danny's point and then it triggered another's and

43:34

then another's and and they went into the

43:37

They went they basically went to BOE and said

43:39

you got to rescue us but we're gonna be

43:41

insolvent this afternoon And it wasn't like 50 60

43:44

billion. I thought ridiculous. It was the crazy. No. Yeah

43:46

crazy On a large

43:48

scale that's what happened there and

43:50

so the BOE came in and saved them

43:52

and Bitcoin Nobody's coming in to save you

43:55

if you get stopped out. Good luck, you

43:57

know, do you you you have an expect?

44:00

that the volatility will decrease as the

44:02

market matures them. Absolutely. Yeah, yeah, I

44:04

certainly do. There's so many different dynamics

44:06

as these, I think that these

44:08

passive flows to what we were hitting on earlier is going

44:10

to change quite a bit of it. Yeah,

44:14

so onto that. I

44:16

was surprised that not more

44:18

brokerage houses and

44:22

institutions were ready for those ETFs, but then if

44:25

you go back and you think through it, Gensler

44:28

was so against them, he was talking out against

44:30

them, he was refusing, and then they were just

44:32

asking questions, asking questions, and you kind of have

44:34

this sense that maybe it's really going to happen.

44:37

And then you have the false

44:40

tweet, the

44:42

hacked tweet supposedly, the intern put out

44:44

the approval and then they yanked it

44:47

back. And then they put out the

44:49

approval and a press release and then took that down. And

44:51

it was like, it was just a cluster. So

44:54

if you're institutions and you're watching this,

44:58

just circus, you're like, let's

45:00

just wait and see what happens. Let's see how these

45:02

things trade. Let's see, because this is just a zoo.

45:04

And so they all waited. And

45:07

so then now we're at the point,

45:09

and I was surprised. I thought that

45:11

a lot more would come in right

45:13

away. They didn't. He

45:15

was surprised that the volume

45:18

of V-implows. I thought it'd be more. I

45:20

thought there'd be more brokerages that would be

45:23

approved to do it. Now we have Vanguard

45:25

who's just absolutely refused. They're not gonna, they'll

45:27

capitulate at some point, but they're

45:29

not gonna do it for the time being. But then

45:31

you've got, like I expected for

45:34

these brokerages to see that this is a great

45:36

thing to offer to you. Fidelity's doing it. Well,

45:38

Fidelity's got their crypto

45:40

asset arm. And so it was easy.

45:43

They've been holding Bitcoin. They know what, they

45:45

have one of the ETFs. So

45:47

of course they're going to say yes. But

45:50

then, things like when you

45:52

see Morgan Stanley or Goldman Sachs and

45:54

they just absolutely refused. They're like, well,

45:57

if you're a private client, meaning if you have 50

45:59

or 100 million. million with us and

46:01

you ask, maybe we'll

46:03

accommodate you and you can buy the ETF,

46:06

but they're not actively out there offering

46:09

it to any of their investors. It's all

46:11

just inbound. It's all inbound. That's

46:14

right. So what's the role of Morgan Stanley and

46:16

Goldman Sachs in this ETF?

46:20

They manage money for people. Okay. Right?

46:23

So like BlackRock? Somewhat

46:26

similar, but BlackRock manages funds. Yeah.

46:29

It's a little bit different. These guys

46:31

are behemoth financial institutions. They have divisions

46:33

that are probably touching in all different

46:36

areas of financial services, but Goldman's historically

46:38

an investment banking type. The

46:40

majority of their revenue is coming out of

46:42

that, but then they'll have their brokerage house

46:44

that's managed. High net worth. If

46:47

Goldman went bull's deep like Larry, would

46:49

you expect huge inflows at that point?

46:51

I expect significant,

46:54

but it would be more that, oh, Goldman's

46:56

doing it. Okay. Goldman's

46:58

doing it. I'm Morgan Stanley. I'm going to do it. JP

47:00

Morgan's like, well, if Morgan Stanley do enjoy it and Goldman's

47:03

doing it, I'm going to do it. City

47:05

group is like, well, maybe we can offer it to our people. But

47:08

the thing is you've got to get all of it wrapped up and

47:10

there's like a 60 to 90 day,

47:13

you know, it's like a 60 to 90 day

47:15

kind of quiet period when

47:17

something like this is released where

47:19

they're looking at, they're watching it. They're kind

47:22

of circling their ducks. They're

47:24

having their meetings. They're having compliance meetings. And

47:26

more compliance meetings and more compliance meetings. And

47:28

then you've got the general counts and more

47:31

compliance. Like the compliance meetings are mind numbing

47:33

how many that you're going to have on

47:35

this. And then they're going to have

47:37

the pamphlet and they're going to have

47:39

the copy written for the pamphlet. And then it's going

47:42

to go back to compliance and the general counsel is

47:44

going to look at it and it's going to go

47:46

back to compliance. We're going to say, well, you need

47:48

to change this word because we don't, we, you know,

47:50

we got to see why a cover our ass. We

47:52

don't want to be seen like we're pushing this, you

47:54

know? Like it's just so funny. The joy was so

47:56

funny about that is they're having to do all of

47:58

that while we're all out. They're memeing

48:00

and being shit. Hacking

48:03

out Vegas. Have fun seeing poor you. Yeah,

48:05

being irresponsibly logged, trolling them. Well, this is

48:07

the craziest thing. But what

48:09

I've been talking, and you and I talked about this last year,

48:11

is like, for

48:15

the first time in the

48:17

history of Wall Street, we

48:19

can be front running the institutions and buying

48:21

this thing and they still can't do it.

48:24

Their hands are tied. They just can't do

48:26

it. And even if they can, I'm talking

48:28

about like pensions and endowments, like the

48:30

big ones. You're seeing a

48:32

trickle of the private

48:34

clients coming in. You're seeing the trickle

48:37

and that'll, so you've

48:39

got this highway, superhighway, it's built. They

48:41

can do it. It's easy. They gotta build

48:43

the on-ramps. And each institution has its on-ramp.

48:46

But for the first time, it's like back

48:48

in 2000, well, you're younger,

48:50

but back in 2000, and

48:55

I've told this story before, we were ecstatic

48:58

if we could get an allocation

49:00

to one of the hot new

49:03

IPOs for the internet for

49:07

all these new hot companies. Like if you were

49:09

gonna get 1,000 shares

49:12

of pets.com, or

49:14

you were gonna get 1,000 shares of Amazon,

49:17

you know, it was like, wow,

49:19

like that was gonna, because you knew what,

49:21

just, okay, the function of it. The

49:24

investment bank prices the deal. They

49:27

syndicate it and then they farm it

49:29

out to their best clients. So

49:31

I get 1,000 shares of that, because

49:33

I'm one of the best clients. I'm at a big $5 billion

49:36

hedge fund. And so, but they

49:38

price it at $20, say, okay? That's

49:42

what the deal price is. When

49:44

it starts trading that morning, I got my 1,000

49:46

shares, it's hit my account, I'm all happy. And

49:49

it starts trading, it doesn't trade

49:51

at 20 bucks. It trades at like $70. And

49:55

then it trades from 70 all the way up to

49:57

like 120. And

49:59

who's... buying it there. Well, all the

50:01

retail buyers bought it at 70 on

50:03

the opening and they bought it all the way up to

50:05

120 while I'm sitting there with my $20 price. I'm happy

50:08

because I

50:10

got it first. That's the exact

50:13

thing that is going on here. You could

50:15

have been buying this thing, you know,

50:17

back at 16, 18, $20,000 when all these ETFs were being, uh, where they

50:23

were, they were all filed and they were

50:25

all fighting for it. And then grayscale wins

50:27

their, their, their court battle. And you're like,

50:29

this is going to happen. You

50:32

could be out there buying this thing and

50:34

now it's trading at 60, 70 and might

50:36

go back down to 50. Who knows? It's

50:38

Bitcoin, but this is not stopping when the

50:41

institutions are, when more and more honorants come

50:43

on and more and more people

50:45

start to understand it, there's

50:47

going to be more capital, less volatility,

50:50

more capital, but it will,

50:52

it will just continue to gravitate upwards and

50:54

we'll, we can talk about the function of

50:56

how institutions buy it because in

50:59

reality, if you're an

51:01

institution and you have a, let's say

51:03

you have a, um, you know, a

51:05

billion dollar hedge fund and you want

51:07

a 1% allocation, that's $10 million, right?

51:12

So you're going to go, you're going to turn around. You're going to

51:14

go, Hey, I need to, I need to buy $10 million worth of

51:16

this. You're not going to tell them buy it

51:18

at $62,300. That's

51:21

your limit. You're going to say, I need, you know, 10

51:23

million bucks worth. Just go get it and

51:26

they'll go out and buy it. And then when they get

51:28

that, you know, you know, I need, I know I want

51:30

to buy another 10, just go along

51:32

with the market. But that's one

51:34

institution. When you have 20 institutions doing the

51:36

same thing, now you've got $100 million at

51:38

the market. They're all

51:40

in there participating during the day. Well,

51:43

there's going to be a day where you have

51:45

not just a hundred billion dollars, you're

51:47

going to have like billions of dollars that

51:49

are kind of at the market, all climbing over

51:52

each other because you've got some of these big

51:54

boys that have gotten approved, just the timing worked

51:56

out. And now they're all out there buying it.

51:58

They're not that price sensitive. They just

52:00

want to participate and get

52:02

a share of what's been trading. And

52:05

so it's just a different mentality. All

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56:11

you think a lot of them will be? Looking

56:13

at their exit prices. So, you know you

56:15

say you got pets calm at $20 If

56:18

is it 120 you're like deal I should I

56:20

should sell this or do you carry on like

56:23

well some of because I remember There was a

56:25

company in the last bull market was the gold

56:27

investment firm Yeah

56:29

roughers and and they didn't

56:31

they like double their money and then they

56:33

sold out they did pretty well I think

56:35

yeah, it's three X. They're like we're out.

56:37

Nobody still owns Amazon from the IPO Yes,

56:40

except for Jeff Bezos right and

56:42

his family I think right?

56:44

So that's it All right. So

56:46

if you're an institution you bought this thing and

56:48

when Bitcoin was down in the 40s You

56:52

know when it gets up to a

56:54

hundred that's a major mental level. They will be they

56:56

will be fine In fact, I expect they've been trading

56:58

around it up here at the all-time high They're like

57:00

once it's all-time high we'll get out and then let

57:02

it shake out We'll buy it back and then we'll

57:05

and they'll write 200. So the thing that the interesting

57:07

thing about Bitcoin is The

57:09

longer I've been in it The

57:13

more I realized never sell right and

57:15

I used to sell a bit here or there

57:17

and every big one I've sold I've eventually regretted

57:20

and once we have mature Markets

57:23

for borrowing against it because we've got

57:26

I think with semi-ch mature

57:30

markets like what I'm chained have done with their segregated

57:32

custody is interesting I think lead and have a similar

57:35

one. It's it's kind of interesting, right? Look at that

57:37

really The

57:40

largest lady season ever but what I want is I want

57:42

fidelity to be doing it well Okay,

57:45

well, but if we get to that point, I'm like, I'm never

57:47

saying so for example with my football club, right? When

57:51

you raise money when we raise money, there you go.

57:54

I'm gonna put it all in Bitcoin And

57:57

then I know if I sit on my hands that's

57:59

gonna give us That's more power as a football club

58:01

if I raise the right amount of money and

58:03

manage it in the right way We may never

58:05

need to raise again, right? And so

58:08

I'm in that mindset now, but you have a different

58:10

mentality Yeah, but do you think they

58:12

will get to the point where they realize we should never

58:14

yes And this is how well do they have to sell

58:16

it? So this is how they'll get to that point They're

58:18

gonna buy it 40 they're gonna sell it

58:20

70 they're gonna buy it 50 they can sell it

58:22

100 Then it's gonna go to 300

58:25

and they're gonna go shit

58:27

Yeah, and then they'll come back

58:29

down and then they'll start buying it and just hold

58:31

it, you know But it's gonna take

58:33

them a couple of cycles of the you know,

58:35

and there will be mental I mean, it's just

58:37

gonna be they're gonna be mental stopouts a hundred

58:39

thousand dollars It's gonna be mental stop out 200

58:42

250 mental stop out 500. Definitely, you

58:45

know big round numbers big round numbers It's

58:47

just like your mind it's natural for the

58:49

humans mind to attach to that But if

58:52

you're like a pension fund you've

58:54

got to pay out on those pensions So you

58:56

have to sell assets at some point right at

58:58

some point at some point and so at some

59:00

point Will they be required to sell the Bitcoin

59:02

or do you think it will be the last

59:04

thing they sell it? What they'll do is they'll

59:07

they'll rebalance. Yeah, right. No rebalance. Yeah, but they

59:09

guarantee the rebound Yeah, will they definitely yeah because

59:11

they're gonna have some sort of strategy and if

59:14

they're saying like, you know You know whether it's

59:16

a commodity allocation or whether if they're saying like

59:18

we're gonna You know maintain a 1% position in

59:20

Bitcoin and then that's gonna go to 300 and

59:22

all of a sudden It's like

59:24

a 5% position that they now have and they're

59:26

gonna be like, okay Well, we're gonna

59:29

be selling and maintaining that position over time and it's gonna pretend

59:31

on a lot of factors but at the end of the day

59:33

like there's gonna be quite a bit of selling but yeah the

59:35

key thing I think on more the the

59:38

hedge fund side of the world is

59:41

yeah, like there's gonna be a point where

59:44

The and this is what I tell everybody as well just

59:46

general retail It's just like sure like, you know, there's ways

59:48

you can try to time the market There's ways that you

59:50

can probably make money doing that But

59:52

we're gonna hit whether it's like super cycle theory

59:54

or whatever you want to call it we're

59:57

gonna hit a major inflection point and Bitcoin's

59:59

gonna to 10, 20X in a very rapid way. And

1:00:03

once people, to your point, once people miss out on

1:00:05

that, and the question is, is how big is that

1:00:07

actually going to be? And we

1:00:09

don't know, but once most of the

1:00:11

world is aligned in terms of infrastructure

1:00:13

to be allocating capital directly into this

1:00:16

asset, something

1:00:18

could happen very fast where Bitcoin gets

1:00:21

into the millions of dollars in a very rapid way. And

1:00:23

then all of a sudden, it's just like how many people

1:00:25

are going to ultimately end up missing out over that period.

1:00:27

And that's going to be material. But so let's talk about

1:00:29

that. So the

1:00:32

multiplier effect, you

1:00:34

don't need a trillion

1:00:38

dollars to come into Bitcoin for

1:00:40

it to double from here. You

1:00:43

just need one dollar to come

1:00:45

in or less, someone buy one

1:00:48

sat, one fraction of a

1:00:50

dollar, and

1:00:52

there's no offers between here and double

1:00:54

the price. So if

1:00:56

somebody buys, there's no offers between

1:00:59

here and $130,000. And

1:01:03

one sat trades, that's the market

1:01:05

value of Bitcoin now. That's

1:01:07

the hard thing to wrap your head around. So

1:01:09

it has to do with the demand and

1:01:12

just how much that demand is outstripping

1:01:14

supply at any one moment, which

1:01:16

goes back to your volatility. And so you feel

1:01:18

like we're very early then? Yeah.

1:01:22

And this is something that, yeah, I really want

1:01:24

to get into this conversation because there's always like,

1:01:26

OK, so one thing that annoys me on Twitter,

1:01:28

for example, is when people are like, OK,

1:01:30

well, when we have this much supply coming in and

1:01:33

there's this much earmarked in terms of demand,

1:01:35

here's some sort of ratio between these two

1:01:37

variables. And it's like at the end of

1:01:40

the day, it's just like, sure, it's like

1:01:42

a finger test of like

1:01:45

what could be happening. And there's a lot of ways that we can look at

1:01:47

that. But at the end of

1:01:50

the day, prices determine where marginal buyers

1:01:52

meet marginal sellers. And

1:01:54

to James's point, if marginal sellers has just become

1:01:57

such a low number that there's practically no market

1:01:59

on the side. selling side, it

1:02:01

doesn't take that much buying power to really

1:02:03

have this price to start shooting up. And

1:02:06

that's like one of the primary arguments. But

1:02:08

yeah, all we know in terms of like

1:02:10

a lot of these prospect of things is that

1:02:12

there's a lot of heuristics, there's a lot of

1:02:14

models we can look at. But to say with

1:02:16

certainty is all we know is that demand is

1:02:19

dynamic, supply is dynamic when people

1:02:21

are like hodlers or hodling. It's just like,

1:02:23

well, yeah, I mean, but at what point

1:02:25

are they not? And that's, that's a reality.

1:02:27

Yeah, who was it? There was

1:02:29

somebody who, and maybe it was a Twitter

1:02:31

post that I can't remember if it was

1:02:33

a message to me, but somebody who knew

1:02:35

somebody who was very early, bought it

1:02:38

$100, you know, had a few thousand

1:02:40

dollars worth or whatever, turned around, sold

1:02:43

it the high for 48 million

1:02:45

is out, done. Okay, well, that's gonna

1:02:48

happen, you know? Yeah. And

1:02:50

yeah, it's part of the redistribution of right? Yeah,

1:02:52

totally. We exactly we want that. Like, and that's,

1:02:54

I think we had an episode where we talked

1:02:57

about this and it was just like, you know,

1:02:59

what's going to happen with wealth inequality, intra

1:03:01

Bitcoin. And it's

1:03:04

just like, it's true of any sort

1:03:06

of economic system that we are naturally

1:03:08

going to have people who are, you

1:03:10

know, some of the primary capital owners

1:03:12

within that system start to

1:03:14

reduce their allocation in that system. It only

1:03:16

makes sense to only have an incentive to

1:03:18

do that over time, by hoarding significant proportions

1:03:21

of the supply, it's actually undermining the value

1:03:23

proposition. And as the incentive for

1:03:25

them gets greater, that indifference curve

1:03:27

that they have of buying and selling is start is

1:03:29

going to change. But like even at a fundamental level,

1:03:33

hodling is incredibly important thing. It's what got

1:03:35

Bitcoin to where it is, it's going to

1:03:37

continue to get Bitcoin to where it is.

1:03:41

But people need to eat and people need to live

1:03:43

and people will do that. And that's good. But yeah,

1:03:45

this whole debate, like whenever it gets into this, or

1:03:47

like the having and like, what's priced in and all

1:03:49

this crap, it's just like all we can say is

1:03:52

marginal sellers and marginal buyers, that's dynamic. And we

1:03:54

can try to earmark different degrees. And we know

1:03:57

that demand is growing. I mean, yeah, well, I

1:03:59

don't get about. that like someone who bought $100

1:04:01

got 48 million like I understand they want to take

1:04:03

some off the table buy an incredible house or whatever

1:04:05

like go on holiday for why take it all off

1:04:07

but what are you doing with the rest of that

1:04:09

money like you're then going to send dollars like well

1:04:12

that's and yeah I can't make that I have no

1:04:14

idea what they're thinking and maybe they just said it

1:04:16

yeah yeah there's a lot of things I'd be willing

1:04:18

to buy if I had 48 million right now yeah

1:04:22

so would you sell all your Bitcoin 48 million

1:04:24

then sit with no Bitcoin just cash no not

1:04:26

really I mean I would just I but I

1:04:28

would I there there's going to come a

1:04:30

point in time to where you know I'll

1:04:33

definitely be selling a material proportion because I

1:04:36

I like to enjoy life I like to

1:04:38

live life like but taking it all off

1:04:40

this table just it makes me think you

1:04:42

don't understand what Bitcoin is totally totally yeah

1:04:44

yeah I would sell like the you

1:04:46

know kind of looking at it like savings I'd sell like

1:04:48

the appropriate amount to where I there there's

1:04:50

gonna be a point where I'd be like okay I want to make

1:04:52

a big step up in lifestyle you know I want to get this

1:04:55

nice house I want to get a car that goes really really fast

1:04:57

because that's like part of the fun in life for me and like

1:04:59

you know there's gonna be all these things that I would do

1:05:02

and you know and that's gonna be

1:05:04

sick you

1:05:11

know so but but to your point Danny there's

1:05:13

a lot of tourists that are gonna be in

1:05:15

this and we're seeing more

1:05:17

tourists come in every day now through the ETS

1:05:19

so what's happening well when when

1:05:22

it when it jumps to 120 they're gonna

1:05:24

be filing out and it's not like you're

1:05:26

gonna see those orders on the books on

1:05:28

the exchanges they're gonna be sitting there

1:05:30

and you're at a hedge fund you own

1:05:32

you know a million

1:05:34

shares of the of the ibit and

1:05:37

they're like oh look this it just

1:05:39

jumped to 93 000 you know why don't

1:05:43

you sell half a million here and it

1:05:45

was nowhere it was nowhere to

1:05:47

be found it wasn't on the books it wasn't the order books it

1:05:49

was nothing it's just suddenly shows up like

1:05:51

that and that's how we're in

1:05:54

a market now it's so dynamic you

1:05:56

know that you can have

1:05:58

orders show up in nanoseconds I

1:06:00

could literally look at a screen pick up my

1:06:03

phone call my trader It's on

1:06:05

them. It's already on the exchange within less than

1:06:07

a minute like probably 20 seconds, you know

1:06:10

And so that's it's

1:06:13

different today and which place

1:06:15

the volatility and you know We saw

1:06:18

in GameStop, you know and

1:06:20

when these you have huge bouts of

1:06:22

volatility and big bets either way and

1:06:24

this this Asset

1:06:27

Bitcoin is a it one

1:06:30

thing we've seen is it it does produce

1:06:32

a lot of emotion around it Yeah,

1:06:37

yeah, which is good marketing do you

1:06:39

think some some people at the moment

1:06:41

are potentially risking Reputational

1:06:43

damage themselves like Vanguard or would they ride this

1:06:45

out? Could it be a scenario where in a

1:06:47

year? They're like fuck and all there everyone's like

1:06:49

why didn't you allow us out to have this?

1:06:53

I think that Vanguard and I want to hear

1:06:55

what Eric has say has say on this, but

1:06:57

I think Vanguard has a different You

1:07:00

know demographic that they're serving

1:07:02

then, you know, probably then

1:07:05

certainly Robinhood, you

1:07:07

know, yeah, so They

1:07:10

have I think they got a lot of rope

1:07:12

They've got a lot of rope right now But

1:07:15

they're not gonna win over young investors

1:07:17

and that's the problem is that as

1:07:20

this demographic ages As

1:07:22

the boomers die off and that

1:07:25

wealth gets transferred to younger hands

1:07:27

They're gonna take it out of Vanguard and

1:07:29

be like I don't the Vanguard doesn't understand

1:07:32

me. That's my thought Yeah,

1:07:34

I definitely think there's truth in it

1:07:36

But I do wonder how

1:07:38

much people would actually care you

1:07:41

know, like new cycles happen fast

1:07:43

and let's say Vanguard comes around in three to

1:07:46

four years and They're probably

1:07:48

still gonna have the same boomer clients and then

1:07:50

they're gonna be moving forward with like a Bitcoin

1:07:52

allocation people are You know, we'll see how quickly

1:07:54

people and all the media just like yay, you

1:07:56

know once they're on our team like who cares

1:07:58

anymore Okay. Yeah, well like some Some people might dunk

1:08:00

on them for a little bit, but outside of that,

1:08:02

it's basically just being like, okay, cool, they're on our

1:08:04

team now, they're the second largest asset manager in the

1:08:07

world. 10 trillion dollars, 10? 10

1:08:09

trillion dollars of assets, I mean, they've got a lot

1:08:11

of rope. Yeah. They need to

1:08:13

get their social media person on board. He's a

1:08:16

bit of a pressman from Templeton. Did

1:08:19

you see the Vanek one the other day? Those were funny. Vanek's

1:08:22

doing it right. Like, Franklin Templeton, wait,

1:08:24

which one? The one the other day

1:08:26

where somebody, like, Vanek tweeted something, somebody

1:08:28

put, okay, Boomer, and the Vanek Twitter

1:08:30

account replied, okay, renter. Killed

1:08:32

me. That's good, that's good. Yeah,

1:08:34

they've been pretty good. And

1:08:37

I think they kind of get it. Like, I've

1:08:39

met their head of digital asset research, and I

1:08:41

think that they're looking at things in

1:08:44

a good way. But the,

1:08:46

yeah, Franklin Templeton, a

1:08:48

lot of things I like, I mean, I was shitting on

1:08:50

them for a little bit. I

1:08:52

think that like, yeah, I

1:08:55

don't think that they totally get it. So

1:08:57

going back to your friends that have been in touch,

1:09:00

you know, you've got a mixer, some laughing. The ones

1:09:02

who are coming in now, is it the same questions,

1:09:04

or are the questions getting better? I think

1:09:06

they're getting better from what I've seen. People

1:09:08

are starting to get their head around some of the

1:09:10

money side of it, is what I'm noticing. There's less

1:09:12

people coming in. Like, granted, I still have people, I

1:09:15

think people are coming in from more of the crypto angle. What's,

1:09:18

you know, good and bad is that they're coming

1:09:20

in asking me about Bitcoin L2s, and

1:09:22

like, what's the best L2? And

1:09:25

that's a whole other can of worms. What I like

1:09:27

though is like some of my research is starting to

1:09:29

get picked up by big crypto podcasts. And

1:09:32

that's huge, because now I can just like send these guys a

1:09:34

link and just like, look man, I think it's gonna be very

1:09:36

different from what a lot of people are talking about. Check

1:09:39

out this link, which is like a 20 minute

1:09:41

clip, some overly simplifying and being totally incorrect about

1:09:43

it, but nonetheless is getting some of the message

1:09:45

across. And that's,

1:09:48

I think that that changing within

1:09:50

like the broader zeitgeist, that's

1:09:53

gonna be super valuable, because now we're having a

1:09:55

much more direct funnel, I think towards Bitcoin and

1:09:57

the money thesis. So I think it's coming in

1:09:59

from different angles. angles is kind of the answer. Yeah,

1:10:02

I'm still so I still

1:10:04

I've a few people have contacted me

1:10:06

from my old world, you know, in

1:10:08

the institutional investing world. And,

1:10:10

you know, they're asking about things

1:10:13

like the mining stocks, you

1:10:15

know, micro strategy, like how, like, are these

1:10:18

are they are they these good values in

1:10:20

here, whatever. But then

1:10:22

when they know that I

1:10:24

have this Bitcoin opportunity fund,

1:10:26

they're like, really?

1:10:29

And it's just that, you know, like, really,

1:10:33

that that sounds

1:10:35

crazy. You know, there's

1:10:38

that silence that sounds crazy at the

1:10:40

end of the really yes. And James

1:10:42

has lost it. He's lost his mind.

1:10:44

Yeah. And I don't care. Because

1:10:47

they're gonna be there. They're so far behind

1:10:49

in this. Yeah. And but they can't get

1:10:51

their heads around. Yeah, yeah. So like, yeah,

1:10:53

which is I guess I was answering a

1:10:55

bit more from like the retail perspective. Yeah,

1:10:57

from like the the institutional type perspective, and

1:10:59

a lot of the conversations I'm having, it's

1:11:03

definitely four years ago, there was definitely like

1:11:05

the quiet type of answer like, Oh, okay. Well,

1:11:07

you know, trying to move on, like, I'm not

1:11:09

gonna state my opinion. But I think you're Yeah,

1:11:11

I think you're an idiot. And I

1:11:13

think Ron at 1031 had the same

1:11:15

when he left. I think people are like, yeah, doing

1:11:17

yeah. Oh, totally. Yeah. Well, I mean, when

1:11:20

I left, like, I think, you

1:11:22

know, some people thought I was depressed, I think

1:11:24

it was one of the first things. When

1:11:27

did you leave? This was 2020.

1:11:30

Right. 2020. Yeah.

1:11:35

And yeah, like, there were a lot of

1:11:37

opinions. And I think that a lot of

1:11:39

those have changed now just because you

1:11:42

know, number go up. It's pretty much that

1:11:45

simple. And but I think that yeah, on the on

1:11:47

the I guess there's a

1:11:49

distinction to between building a business that's

1:11:51

like providing private capital

1:11:53

to this, I think that that's something that

1:11:55

is still like a long ways out for

1:11:57

understanding. And then just buying big

1:12:00

Bitcoin itself. There's a lot more people that I think

1:12:02

are understanding that. They're understanding the gold narrative. But

1:12:04

when it comes to, OK, you're going to be an

1:12:06

entrepreneur in this industry and build this out, why? Can

1:12:10

you talk about what you're doing? Yeah, yeah,

1:12:12

yeah. I mean, we're early stage. We're

1:12:14

fundraising. But we're investing in Bitcoin companies and

1:12:16

just adjacent protocols, which is honestly, it's kind

1:12:19

of hard to define, but

1:12:21

it's freedom technology. Using cryptography in

1:12:23

ways that's innovating the financial system is one

1:12:25

of the best framings of how I think

1:12:27

we're looking at it. It's just

1:12:29

the idea is that Bitcoin is, you

1:12:32

know, we understand the value proposition. We

1:12:34

understand that as Bitcoin grows, it's

1:12:36

becoming a much more valuable asset. It's becoming

1:12:38

a valuable form of collateral. And

1:12:41

all the infrastructure that's needed to bring

1:12:43

it to the next step

1:12:45

in its evolution is all getting built out

1:12:47

today. And I feel like we're kind of

1:12:50

getting to this inflection point in the ecosystem

1:12:52

to where not only are people realizing

1:12:54

the value proposition, but enough infrastructure has

1:12:56

been built so that there's

1:12:58

actually much stronger investable opportunities that are

1:13:00

emerging on the private capital side. And

1:13:02

the valuations are very different. You know,

1:13:05

Bitcoin is a trillion dollar asset. And

1:13:07

over this next cycle, we expect

1:13:10

that to change materially and be

1:13:12

even greater. So as Bitcoin increases,

1:13:14

whatever the ultimate market potential ultimately

1:13:17

becomes, there

1:13:19

is an asymptotic relationship that's probably

1:13:21

going to occur with return potential

1:13:24

over time. And

1:13:26

then the question is like, OK, well, if

1:13:28

we have infrastructure, which is almost like levered

1:13:30

Bitcoin in some sort of way, that, you

1:13:33

know, valuations on the early stage side are in the

1:13:35

five to 20 million range, the upside

1:13:38

potential to invest in the next JP Morgan's or

1:13:40

the next Bloomberg's or all this other infrastructure that's

1:13:42

getting built out around it is

1:13:44

really strong. And the question is, what

1:13:46

is the timeline going to be for

1:13:48

that? And that's kind of like the

1:13:50

risk side that we're playing, I think.

1:13:52

Yeah. So what is the investment thesis

1:13:55

for investing in infrastructure in kind of

1:13:57

equity within Bitcoin companies versus just buying

1:13:59

Bitcoin? Well, I mean,

1:14:01

everything has to be weighed against the risk reward

1:14:04

of Bitcoin. And

1:14:06

so every single investment is different,

1:14:08

though. A seed

1:14:10

investment is different from a venture investment, is

1:14:12

different from a private investment, is different from

1:14:14

a public investment. Debt, equity,

1:14:17

where you are in the capital structure,

1:14:19

they all have a different level

1:14:21

of risk attached to them just in the

1:14:23

type of investment. And

1:14:27

then the company itself, like what kind of company

1:14:29

is it? Are they super early stage?

1:14:31

Do they have a path

1:14:33

to revenue? What

1:14:35

are their moats? There's so many ways you have

1:14:38

to think about this. And

1:14:40

each investment is entirely different.

1:14:43

And so one of the great things

1:14:45

you can do is, like Eric is talking about,

1:14:48

is find investments where you're exposed

1:14:50

to Bitcoin. So you're not

1:14:52

handing them dollars. You're handing

1:14:54

them Bitcoin. And then

1:14:56

they're exposing you to their

1:14:59

growth in Bitcoin terms. So

1:15:02

you retain that risk reward of Bitcoin. And

1:15:05

we've found a few investments like that

1:15:07

in my fund where you're retaining that

1:15:09

exposure to Bitcoin. But

1:15:11

then you've got that levered aspect

1:15:14

where you can do well beyond

1:15:16

that because of the growth of

1:15:18

this company will be a factor

1:15:22

of what Bitcoin does. So

1:15:24

those are the best kind of

1:15:27

investments to find. Yeah, because when he's describing it,

1:15:29

it's like you have leverage, right? And then there's

1:15:31

financial leverage that you can put into a business

1:15:33

based on how they structure their capital structure. And

1:15:35

there's also operating leverage. And that's kind of the

1:15:37

point is that you're adding operating leverage into the

1:15:39

equation, which is one way of looking at

1:15:41

it. And that's powerful. But I

1:15:44

think that there's a lot of frameworks

1:15:46

for how you can say like, there's

1:15:48

also just you're getting exposure to the

1:15:51

growth in Bitcoin as

1:15:54

well as but different characteristics

1:15:56

of growth. Like you can be

1:15:59

getting exposure to it. business that either has its

1:16:01

balance sheet or its revenue economics tied to

1:16:03

the capital appreciation of Bitcoin, but

1:16:05

it's also increasing its revenue based on

1:16:07

the volume of transactions that are occurring.

1:16:09

And that's just a different risk exposure

1:16:12

that doesn't exist in

1:16:14

other forms. So you can get

1:16:16

exposure to other aspects and you can make bets

1:16:18

on like, okay, well, how is this particular aspect

1:16:21

of the Bitcoin infrastructure going to build out

1:16:23

over time? And like, there's plenty of examples

1:16:25

that exist in the industry of, you

1:16:28

know, you can take like hardware, for example, and,

1:16:31

you know, ledger, like a lot of these companies

1:16:33

are nearly like unicorn status, they've

1:16:35

achieved very high valuations in a short

1:16:37

period of time. Exchanges

1:16:40

have a persistent model that has localized

1:16:42

characteristics that, you know, is defensible and

1:16:44

can grow over time. And

1:16:47

I think like a lot of the ways that you can make

1:16:49

bets on this is like, what is the use case of Bitcoin

1:16:51

going to be on what timeline?

1:16:54

And it's like, okay, well, medium exchange is kind of tough,

1:16:57

but we do see, you know, that's

1:16:59

much more further into the future. But

1:17:02

on the store of value side, there's kind of

1:17:04

like this world of like, okay, well, Bitcoin superior

1:17:06

collateral, and there's a ton of valuable businesses that

1:17:08

I think are going to be built around that

1:17:10

where we can use things like the Lightning Network

1:17:12

to move collateral, circumvent basic

1:17:14

infrastructure, and, and build

1:17:17

a financial services business around that. That's

1:17:20

something that's like really compelling and probably set up in

1:17:22

like the right timeline. And then, you know, on the

1:17:24

other side, it's like we have all these futuristic technologies.

1:17:26

And, you know, a lot of my research goes into

1:17:28

e-cash and how I think that like, that

1:17:31

might be the next protocol, not

1:17:33

layer, but just adjacent protocol that

1:17:35

is leveraging Bitcoin as collateral

1:17:37

in some form that could really impact

1:17:40

financial services. The timeline

1:17:42

on that's uncertain. This is emerging

1:17:44

protocol, very infant, but, you

1:17:47

know, we're building relationships and we're

1:17:49

working towards what that's going to be in the

1:17:51

future. So I think like when

1:17:53

you're looking at a private capital portfolio, you

1:17:55

want to be looking at it from the

1:17:57

perspective of how are we allocating within these

1:17:59

different. different risks exposure around the Bitcoin industry.

1:18:01

How much is in allocated to the store

1:18:03

value function? Do we have a lot of

1:18:06

businesses where it requires Bitcoin

1:18:08

to be a medium exchange for those to be successful? And

1:18:10

if so, is that the risk that you would want to

1:18:13

be taking on? And

1:18:15

where is the growth gonna come from? Do we

1:18:17

have a large allocation of lending, which we know

1:18:19

is gonna be proliferating very significantly? And there's a

1:18:21

void in the market for that right now. And

1:18:25

demand, yeah. Yeah, and very, very strong demand

1:18:27

for it. You wanna look

1:18:29

at it from, there's a lot of different frameworks that

1:18:31

you can consider this from. And

1:18:33

I think the shortest answer is that

1:18:36

the private capital side is just very infant.

1:18:39

And a lot of people are realizing that

1:18:42

so much value is gonna be flowing

1:18:44

out of broader crypto and

1:18:47

towards Bitcoin native infrastructure over time.

1:18:49

And that's kind of one of the places that's just very

1:18:51

under invested at this point. Interesting.

1:18:54

Well, it also looks like to me, look,

1:18:57

we hold Bitcoin on the balance sheet as a

1:18:59

podcast. If Bitcoin does what we think it

1:19:01

does over the next few years, we probably have one of the most

1:19:03

valuable podcasts in the world based on our treasury. And

1:19:06

so it almost feels like

1:19:09

if these companies are generating cashflow and

1:19:11

they're putting that cashflow into Bitcoin, that

1:19:14

you have an opportunity to invest in

1:19:16

companies who are gonna have some kind

1:19:18

of like skewed to the upside valuation

1:19:20

because they've got a deep treasury position

1:19:23

which isn't really reflective of their cashflow.

1:19:26

Yeah, that on top of it, that's yet

1:19:28

another layer. And but I mean, what we

1:19:30

tell people, and I'm sure you say something

1:19:32

like, don't invest

1:19:34

in my fund and it's closed now, so

1:19:36

it doesn't matter. But we

1:19:38

said, don't invest in this fund unless you have your

1:19:41

core position in Bitcoin that you

1:19:43

are happy with. And then this is

1:19:45

beyond that. Okay. And

1:19:48

that makes sense to have your treasury in

1:19:50

there. Like that makes perfect sense. Your

1:19:53

fund is open. Yeah, we're at Epoch VC and yeah,

1:19:55

reach out to me. All

1:20:00

right, anything else you guys want to cover? I

1:20:04

think we had a lot of it. We nailed it, man.

1:20:06

This was good. Yeah, this was really good. I feel

1:20:09

like we could talk about this for a few hours.

1:20:11

Maybe we set up the next record podcast. The

1:20:15

institutional world is a

1:20:17

little bit opaque. And

1:20:20

so I think there's a ton of

1:20:22

misunderstanding, especially on Bitcoin, Twitter,

1:20:24

on exactly how it really does work

1:20:26

and what these guys are

1:20:28

up to and what they're doing. You just

1:20:32

have to think of it like a very slow-moving

1:20:34

beast that is just

1:20:37

like, and

1:20:39

collectively, not

1:20:42

the most curious in the world. And

1:20:48

they're paid to take a certain amount of risk

1:20:50

and not beyond that. Yeah, they're wealthy, they're older,

1:20:52

they're not as hungry. It's just like the incentives

1:20:54

are aligned to where it's going to take a

1:20:57

while. I just like this idea of all these

1:20:59

people in suits. You referred to the zoo. I

1:21:01

mean, it is a zoo of people. Just

1:21:04

YOLO it. We

1:21:07

need to be doing this. And they don't know how it goes. Yeah.

1:21:11

And you've got a super respected

1:21:14

account like Lynn Alden. And

1:21:17

she tosses out a meme every once in a

1:21:19

while. It's great. And

1:21:22

I do too. Just

1:21:24

chill out, relax, man. It's

1:21:26

supposed to be fun. One thing

1:21:28

is like for final words as

1:21:31

well as like, I think on

1:21:34

the private capital side investment, it's just

1:21:36

like what I really like is that

1:21:39

not only is there potential for high investment

1:21:42

returns from participating in this, but

1:21:44

I think it's systemically the most

1:21:47

important thing that needs to happen within

1:21:49

Bitcoin right now is that this

1:21:51

infrastructure needs to be progressing fast enough

1:21:53

so that we don't have a bunch

1:21:55

of ETF flows. Like we want flows into the

1:21:57

digitally native system and we want to get that.

1:22:00

consumer experience there. And

1:22:02

there's a lot of technologies that are

1:22:04

moving, but we just don't know what

1:22:06

the inflection point is going to be

1:22:08

for a massive capital flood into Bitcoin.

1:22:11

And will we be ready

1:22:13

in terms of infrastructure? And if we have

1:22:15

this infrastructure set up, too, like even putting

1:22:19

the revolutionary aspects of Bitcoin, put

1:22:21

those completely aside. If

1:22:23

all you're interested in this number

1:22:25

go up, then building out digitally

1:22:28

native infrastructure is going to create

1:22:30

multiples greater market size for Bitcoin

1:22:32

in the long run, as opposed

1:22:34

to just digital gold

1:22:36

narrative. Right. And you'd

1:22:38

rather have the ETFs

1:22:40

enhance the

1:22:43

growth and speed the growth of Bitcoin

1:22:45

than consume it. Yeah.

1:22:48

Yeah. Yeah. They're like

1:22:51

bridges to the future. And Bitcoin

1:22:54

was the same thing. Bitcoin started

1:22:56

in a cypherpunk, non-serious way. There's

1:22:58

all these gambling things. It's like

1:23:01

markets are bootstrapping. And there's going to be a

1:23:03

lot of use cases and a whole other conversation

1:23:05

about ordinals and all these other things. It's just

1:23:07

like, what is an okay

1:23:09

and non-okay type use case? But the

1:23:11

fact is, everything's going to

1:23:14

start somewhere. And there's bridges to the future.

1:23:16

And we want to make sure that the

1:23:18

system doesn't get captured throughout that process. And

1:23:20

that means building needs to happen. Yeah. All

1:23:22

right. Well, listen, appreciate you both. Anyone

1:23:25

listening, if you haven't checked out Eric's book,

1:23:27

Bitcoin, The 7th Property, we'll link in the

1:23:29

show notes. James, you also have a newsletter,

1:23:31

The Informationist. The Informationist, yeah. Yeah. Go check

1:23:33

that out. We'll put both in the show

1:23:35

notes. Appreciate you both. We're going to go

1:23:37

out drinking later. Thanks, Danny.

1:23:39

Thank you. Thank you for listening to

1:23:41

everybody. Enjoy. All right. All

1:23:44

right. Thank you, guys. All righty. What

1:23:48

do you think of that one? Yeah, it's an interesting one.

1:23:50

We had James booked and Eric was like, I want to

1:23:52

come out in Vegas. And we thought, you know what, let's

1:23:55

get the youngster and get the old guy

1:23:57

together, get their perspectives on Wall Street. they

1:24:00

differ, see how they agree. It should all

1:24:02

turn out to be a great show. So let me know

1:24:04

what you think. Get in touch,

1:24:06

drop me an email, give me your perspective.

1:24:08

You know my email is hello at whatbitcoindid.com.

1:24:11

And also before I go, I just want to

1:24:13

remind you that we are seven days away from

1:24:15

cheat code, our first ever full conference here in

1:24:17

Bedford. I'm hoping to see

1:24:20

as many of you as possible. We've got a few

1:24:22

tickets left. If you want to get a late one,

1:24:24

it's cheatcode.co.uk. Also, if you're following my football team, Real

1:24:26

Bedford, that's a pivotal time of the season. If the

1:24:28

men win three of their last four games, they will

1:24:30

win the league to back to back promotions. And

1:24:33

the ladies need to win three of their last seven and they

1:24:35

will get promoted. Come the end

1:24:37

of the season, we might, we just might have a

1:24:39

double promotion for the men's and ladies, which is truly

1:24:41

incredible. Keep an eye on that and get in touch

1:24:43

if you've got any questions. All right. Love you all.

1:24:45

I'll see you all next week.