3 Takeaways - Cryptocurrencies, Digital Assets, NFTs and the Future of Blockchain, Including Even for Social Good: Galaxy Digital Founder and CEO Mike Novogratz (#57)

Episode Date: September 7, 2021

Mike Novogratz, Founder and CEO of Galaxy Digital, shares on cryptocurrencies including Bitcoin, digital assets, and the possibilities of blockchain. Learn how the first Tweet, a single sentence by Twitter co-founder Jack Dorsey, sold as an NFT for millions of dollars and why it was worth so much. He also shares how blockchain can even be used for social good. In prisons, for example, it could be used to record solitary confinements and make criminal justice more transparent. This discussion should not be relied on for investment advice. 

Welcome to the Three Takeaways podcast, which features short, memorable conversations with the world's best thinkers, business leaders, writers, politicians, scientists, and other newsmakers. Each episode ends with the three key takeaways that person has learned over their lives and their careers. And now your host and board member of schools at Harvard, Princeton, and Columbia, Lynn Thoman. Hi, everyone. It's Lynn Thoman. Welcome to another episode. Today, I'm excited to be with Mike Novogratz, who's been described as a whale in the digital markets. Mike started his career at Goldman Sachs, held positions in Tokyo, Hong Kong, and Latin America, and then left to run a hedge fund. He became a big believer in blockchain and digital currencies and in 2018 founded Galaxy Digital to promote the growth of and to invest in blockchain-based businesses and digital assets. I'm excited to learn about blockchain, digital currencies, and digital assets like NFTs,

including digital art and other digital assets. I'm looking forward to understanding how the first tweet, which was a single sentence by Twitter co-founder Jack Dorsey, sold as an NFT, a digital asset for millions of dollars. Mike, welcome and thanks so much for our conversation today. Glad to be here. Before we start, I have to say the following. Our content is intended for informational purposes only. Nothing contained in this discussion constitutes a solicitation, recommendation, or endorsement to buy or sell any financial instruments or investments. This discussion should not be relied on for investment advice. You should do your own analysis based on your own personal circumstances and consult with your own advisors.

We do not make any representation or warranty, express or implied, as to the accuracy or completeness of any of the information. Three takeaways, Lynn Thoman and Mike Novogratz, expressly disclaim any and all liability relating to or resulting from the use of this information. Mike Novogratz may buy, sell, or hold investments in some of the company's

digital assets or protocols discussed. Okay, glad that's done, Mike. Digital assets are so interesting. How did you first get interested in them? I was a macro trader most of my career. Macro traders look at politics and economics and big trends and make bets in broad instruments, equity indices, interest rates. And I got a call from a partner of mine who was a guy on the other side of the investment spectrum, right? He was a credit guy but within details. And he asked me about this thing called Bitcoin. And so I went on Google and I Googled it real quickly said, it's cool technology. There are a lot of libertarians at this point that were clamoring. This was in 2012, right after the European financial crises or during the European financial

crises and after the great financial crises. And so people were worried about inflation. There was a distrust in government. And I thought the Chinese are buying. This is going to work. And so I bought it originally Bitcoin as a speculative bet. And it wasn't until I started being asked to speak about it. And I was paranoid of looking stupid on stage. I had to start really researching it and digging in. And as I dug in, I found this passionate community of people that believed in it.

And then I ran into Joe Lubin, who was ironically one of my college roommates, 1987 Princeton. And he had been working on the Ethereum project, which was Bitcoin's cousin. And he was a co-founder there. And I went into his office and I found this dynamic group of people that were literally plotting out a revolution. And it was at that point I was like, whoa, this is a lot bigger than a speculative object. This is about rebuilding the financial architecture of the world and something that's more egalitarian and transparent and fair.

And I was like, it's fun to be part of a revolution. Five, six, seven years later, you're seeing it right now, breaking out all over the world. Before we talk more about Bitcoin, let's talk about the blockchain technology, the tech that underpins Bitcoin. Can you tell us about that technology, what it is and how it's changing the way businesses operate? Bitcoin was the first asset on blockchain. And so we all thought of Bitcoin and blockchain almost as the same. It took me a long time as a simple-minded guy to sit with a computer scientist and boil it down to something I could understand. And Bitcoin was the first digital asset that you could encounter.

Up until then, control, copy, paste. So the Internet was great at reducing the cost of information because everyone can get it, but it was terrible at creating value around information. Blockchain technology, and so step back, what is a blockchain? A blockchain is a big database that's owned by more than one person. Think of it as an Excel spreadsheet, but it's updated every so often by lots of different people and they get a copy of the database. And so it allows for transparency and finality, which doesn't exist in most places. Even at a place like Princeton, I think they're going to be honest about my grades, but someone could change my grades, and how would I know?

Now, we do trust lots of organizations. They have vested interest to tell the truth. But there's plenty of places we don't trust. There's devastation going on in Afghanistan. And I almost know with complete certainty that next week you're going to hear that the Taliban has frozen the accounts of most people in Kabul and has confiscated their wealth. That's a horrible thing to happen where if you're on a global blockchain on a global Ledger, they can't that money is yours. It sits there.

Everyone knows it's yours. And so that concept of shared databases and open-source so we can appear to peer transaction cut out the center is really, really powerful. And again, it started with Bitcoin as first digital money and then just digital gold. But now people are seeing it can be for anything, for any intellectual property, for transactions, payment systems. And so you're going to see, I think, the world's infrastructure rebuilt. We can call it Web 3.0. There's lots of different taglines for it.

But really, this series of databases that are open sourced and shared that are transparent, you're going to end up building all kinds of systems on top of. Can you describe some of those? What do you think will be possible with blockchain technology in the next five or so years? Let's just start with payments. Right now, I can take my phone and I can send you a picture of myself with my glasses, without my glasses, making funny faces. I'm one of like 72 different apps and you'd get in a millisecond for free. But if I wanted to wire you money or send you money, especially if you were not in the United States, it's three days and a lot of money.

That's insane. I should be able to tap and go and you get $86 or $86,000 of any money to give you. And so you're going to see payment systems all change for remittance payments for overseas workers back home to just payments sending your kids money. Now, we have Venmo, which is a junior varsity version of it, but it's a closed system. You're going to get a varsity version of it built on a blockchain, and it literally is going to change the way payments happen. That's just one use case. It's going to happen in art. We're going to have digitally native art that gets creative. Artists used to not create digitally because too easy to counterfeit,

control, copy, paste. But now you can guarantee this is a unique piece or it's one of four or one of 10. And so you're seeing a new generation of artists use their own creativity, use AI, combine it to create new, beautiful things to evoke passion, to evoke emotion. When I started talking about that five, six years ago, people looked at me like I was crazy. And all of a sudden now we're getting the first bit of it. First blossom of NFT art. Generative art has become a big deal, right?

Using AI and humans combined to create art. But it's way too early to know what part of that's going to work. I just know it's going to work because there's so many bright people moving in. I actually did a keynote at Christie's and I laughed so hard because I was a crappy art student

in elementary and junior high. I was like, only my teacher can see me now. I'm sitting up here. And it was fascinating because you have this whole new world of artists. You have old artists also moving into the space.

Tom Sachs has done a really cool project. Urs Fischer did a really cool project. And so these are guys who are selling stuff for half a million, million, five million dollars in the physical art world that have now pivoted into the digital world. Mike, can you talk about the application of blockchain to some areas where transparency would have a huge impact on social good? I spent a lot of my time in the criminal justice space, and we've been brainstorming a lot about that. And one of the things when you talk to people who spend time in prison is they have all these stories. The guard says one thing, they say one thing. And if you think about blockchains,

they provide transparency. And so you could create a prison where guards log in and log out in the blockchains. And that would hold people accountable. We have no data around prisons in America. It's hard to figure out how many people are on parole, how long people spend in solitary, what percentage of the population

has spent time in solitary. I would tell you, having asked a whole bunch of them, about 95% of people that spend any time in prison end up in the hole in solitary. That's a shocking number. It would certainly help with the narrative. Like we send people to prison and no one on the outside knows what's going on. And so bringing some transparency to the system probably creates a more moral and fair system. Just one off the cuff thought of where blockchain might help. That's amazing. And to think that blockchain will be applied everywhere. There's such a range of possibilities in this digital world. Looking more at just the digital currencies to start with. There's Bitcoin, there's Ether, they're both created in very different ways, and they use blockchain in different ways. Can you talk about the different digital currencies and how you see them?

I would break things up into a few buckets. So Bitcoin is almost its own beautiful ecosystem. And it has won the lane in lots of ways as a digital store of value. Think of it as digital gold. It's a finished product. It doesn't have to get better. It works. And it is being adopted really quickly because governments around the world have been irresponsibly printing paper money, fiat money at an accelerating rate. Our debt is up quantums in the last 25 years. And so we've gotten to the point in the U.S. and Japan and Europe, all over the world, where it seems really difficult to come up with a ballet that allows us to pay that debt back anytime. And so people say, the only way out is for them to inflate their way out, to debase the currency. And what we're hoping for, ironically, is that they can debase it just enough, but not too much. So it doesn't feel that painful. If we can get inflation at three to four percent,

and over time, we'll devalue your currency, but you wouldn't feel it so painfully. What some people fear is once you go down that road, it becomes Weimar Germany or Venezuela, or you have a real breakdown in trust in your currency. That happens. You have a breakdown in civil society. And so people are buying Bitcoin as a hedge. And it's a lot of ways to report card on how well the Treasury and Central Bank do together. And it's being adopted unbelievably fast because everyone's looking at the same macroeconomics and saying, oh, a trillion here, a trillion here, a trillion there, pretty soon it's real money.

We are spending money like there is no consequence. And we're spending it for some good reasons. We've had 30 years where the rich-poor gap has gotten wider and wider and wider. Now, pre-revolution in France looks more balanced than we do. And so the progressive side says we need to do something about it. If it's free college, pay for student loans, UBI or some version of UBI, the child tax credit, all ideas that seem reasonable. It's just there's a huge price tag. And so that's what Bitcoin really has become. Digital gold to hedge against that debasement.

There are other groups in that lane. Dogecoin, which is a funny meme coin, its only use case is the same as Bitcoin's. Just it's a community of people that say, I'm going to store my wealth in this. I don't think Dogecoin has long-term viability, but I could be wrong. When I criticize Dogecoin, I literally get death threats. So there's this community of people that really appeal passionately about their coin. Ethereum would go in bucket two, which I'll call protocol level, base level of trust, global decentralized supercomputer to authenticate and process data. And so it's got competitors, things like Terraluna,

Sol, DFINITY, all kinds of different, Cardano even, which I don't completely understand why it trades so expensively. But most likely, Ethereum becomes the winner of that group. Now, it might be a few get pieced together, they interoperate. And so what do they do? They process all these other systems. So they process where NFTs get minted and stored. They process where decentralized finance, which is using a blockchain to disrupt traditional banking and traditional exchanges go. And so their value comes more from the network effect of being used than people think of them as a currency. So it's really a digital asset. It's part of a digital network. And then there are other things like stable coins, which are just dollars wrapped in a token.

Most likely, as we move into this next chapter of digitalization, you're not going to buy your Coca-Cola or a nice sweater or a haircut with Bitcoin or Ethereum. You're going to buy it with the dollar, the dollar just in a tokenized form. Your bank account is going to become a wallet. You're going to have a wallet on here. It's going to own your crypto, your dollars, your stocks, probably your Bitcoin. If you want some Bitcoin, your opera tickets, it'll all exist in your own wallet as opposed to a JP Morgan in the bank. That's the big transition that's going to happen in the next five or six years. And so those things will trade with less volatility because if the dollar is strong, it'll be strong.

If the dollar is weak, it'll be weak. So you can put things in different buckets. Even decentralized finance protocols that people invest in, they will feel a lot more like buying equities. Because you're going to buy into the governance of a project that as more people use it, some dividend will go to the people that are supporting it. Even how we invest in them is not one uniform way. One is, okay, adoption like gold. One is, oh my goodness, how much business does this protocol do? And so it's becoming a much more sophisticated area than it was five years ago. People were like crypto. Yes. Crypto. No, it's growing unbelievably fast. So, for example, the Internet at its greatest adoption level got up to about 70 percent compounded adoption rate.

Each year, 70 percent more people are using the Internet. Crypto right now is at 130 percent. So almost double the adoption rate of the internet. We went from about 120 million users to 200 million users globally in the last four months. So an explosive growth, which makes it a fascinating place. When I started this business, I had a hard time hiring the people I really wanted. And now the list of analysts that are summer interns,

I could never get a job at my own company. Isn't there an international case for digital currencies as well, based on perceived risk that some currencies may become inconvertible or cases like India, where the prime minister announced from one day to the next that the 1,000 rupee and 500 rupee bills would all be removed from circulation. And in one blow, he essentially removed close to 90% of India's circulating money. I was talking about this this morning on our earnings call with Afghanistan. There are so many places in the world where it's unbelievably difficult to preserve your wealth. If you live in any place with high inflation, Argentina, Venezuela, Nigeria,

Tanzania, you work your tail off to save a little bit of money and inflation erodes its buying power over time really quickly. There are places where governments like now in Afghanistan are going to come in and just confiscate your wealth, shut down your bank account, say it's mine. Sorry, that's happened from time to memorial. And so in the developed world, we need to start looking at your ability to preserve your value as a human right. Bitcoin as a human right in the rest of the world. It's a luxury. It's a wonderful thing in the West. It's a way of protecting against inflation.

There's other ways. You can buy real estate. You can buy gold. There are other inflation hedges. But in places like Afghanistan right now or Venezuela in the last few years, there isn't. And so you see in Nigeria, it's the second largest by transaction user of Bitcoin.

In Iran, Bitcoin has exploded. And governments have a hard time shutting it down. You have to go door to door and say, let me see your phone. Because it's peer to peer. And they don't control the system. It's fascinating. This is the first global markets we've really had. We've never had a global speculative mania before 2017 when

we had the first crypto. And crypto has been a revolution of the people. It's been Mr. and Mrs. Watanabe, not the Japanese government. It's the first speculative bubble that we ever saw that was started by retail. Usually it's by the taxi cab driver buys it, it's over. It was started by the taxi cab driver. It's fascinating that now that institutions are getting in, right, it's over. Let's start with a taxi cab driver. It's fascinating that now that institutions are getting in, right, it's a $2 trillion market cap, which is still small in global wealth. Global wealth is probably $150 trillion. And so two out of 150, it's not even a percent. I think there's huge room to grow in this thing. Digital currencies are obviously hugely volatile in value,

but how secure are they? They're stored in so-called digital wallets, which exist either on people's computers or their phones or in the cloud. And these have been hacked and digital currencies stolen. How secure are digital currencies? They're getting more secure by the day, I would say. When crypto originally started, a lot of the exchanges were fly-by-night operations set up by people in their basements. And it wasn't that the cryptocurrencies themselves were ever hacked, but it was the places people were trading and leaving them. And the whole industry grew up about how do I keep my crypto keys safe? We just bought a one and a quarter billion dollar company called BitGo, which is the leader,

was the first real big custodian. Now it's the second largest custodian behind Coinbase of taking people's keys, taking them offline, putting them in what's called cold storage, providing ways they can get access when they need them. And there's a whole huge industry growing up around this. And so I think as more money moves in, as more is at stake, the security just goes up and up and up. Now, what's interesting is you look at the internet itself, there hasn't been one company that's survived being hacked.

One of the big national security threats to the world is this wild culture of hacking, of ransomware. And so crypto is certainly part of that. And it has its role to play in making things safer as you have these transparent and open databases, harder to hack. But right now, people are using Bitcoin as the ransom payment. Hey, I hacked your non-crypto company and say, give me Bitcoin or I'm going to never give you your data back. And so it's just another piece of the complex puzzle of getting regulators and people comfortable with it. This is actually a hugely beneficial addition to society. Up until a couple of years ago, this was like, well, what is this? Is this Beanie Babies? Is this drug dealers? And so it's in some ways a miracle that in 12 years, it's gone from that to

literally almost shutting down Washington two weeks ago during the congressional debates around the infrastructure package, when Congress tried to jam in a factor way to regulate crypto, in over three days, they heard the community roar. And every senator was deluged with phone calls, not just from their constituencies, but from the wealthier guys in their district, from big business leaders, from Elon Musk tweeting, and DC was like, uh-oh, we screwed up. And I think it was a coming of age for the whole system. I think that weekend, and I was in France on a phone frantically, that weekend, D.C. realized this is a real industry. It's here to stay. We've got to take it seriously. And no one wants to drive it offshore. And that's the threat of how do you regulate in a positive way to create

innovation? And again, there's a lot of education that's still happening. I'm a progressive, and none of the progressives in Congress see crypto as progressive. It drives me insane. I'm like, OK, wait. Banks right now, on average, charge $4.50 for an ATM withdrawal. $12 billion last year in overdraft fees charged to mostly poor people. Crypto is going to make banking free. And so how is this not progressive? But we haven't gotten the politicians to see it that way yet. And so that's the real work of the next 24 months. Privacy is also an interesting idea. There are two opposite ideas about privacy and digital currencies that are common, but they both can't be true. The first idea is that all digital currency transactions are private and anonymous. And the second idea is that all purchases and sales and

their sellers can be discovered. Which one is true? That's a great, great question. So to start with every transaction on the Bitcoin blockchain and most blockchains is public. You don't know who did the transaction, but the transaction happened. And there are very sophisticated research shops, places like Chainalysis or Cyphertrace that can do all kinds of analytical work and figure out broadly where the transactions are coming from. And so from a bad guy using Bitcoin point of view, it's a terrible thing to use. Matter of fact, we hired the ex-head of the CIA, Mike Morrell, to do a report. And after eight weeks of a deep dive using CIA kind of training and how you do analysis,

he came out with saying if the government was going to build the system to catch criminals, it would look like Bitcoin. You don't give up all your privacy. One of the unique things about the computer science is they have this ability now to give you the information that you need, but not all the information. Let's take a simple example. You have a 21-year-old daughter who goes to a bar and the bartender wants to see her driver's license. He doesn't really need to know her address, her height, weight, and eyes. He just needs to know she's 21 years old and is eligible to drink. But right now we're giving all this extra information that might or might not be used for the best of reasons. And so in the future, we're going to have the capacity to say, hey, here's the green light. Well, the same way, who gets to see all the information?

There are two ways crypto is going. China, who's banned Bitcoin, is saying we want to see all the information about all our citizens all the time. It makes us understand how we can control the economy better, how we can control people better. It gets us better data. The Chinese have a long history of giving up privacy for the greater good. It is terrifying to me, terrifying, because cryptocurrency is programmable currency. If I don't like gays and I want to shut off gay money and I have all the data on who's gay and who's not by what they shop and what they spend and what they search, I can hit a button in China and gays have no money. That's not the American way. It's not the Western way. And so what you're

going to see in the West is a more decentralized system of blockchains, but some ability to know we're not dealing with Kim Jong-un or bad actors and that people aren't using it to avoid taxes. And so there's this fine line to try to walk that is going to be measured out and created in the next one to five years. But it's interesting because the same technology can be used to really empower tons of people, can also be used in a different way to really control people. So China is looking at creating its own digital currency, and the U.S. Fed is reportedly looking into creating a U.S. one. What do you think about central bank digital currencies and specifically Chinese and U.S. ones? Well, I think they're coming. China's is already here. You'll be seeing more and specifically Chinese and U.S. ones? Well, I think they're coming.

China's is already here. You'll be seeing more and more use of it. So China wants domestically to control their population. Right now, already 95% of Chinese payments go through a payment processing house. So the Chinese already know what you're spending. Now they're going to go through their crypto RMB as opposed to just a digital RMB. Their bigger mission, though, is to destabilize the dollar, to move the dollar away from being the reserve currency. And so when you travel to Africa, when you travel to the Mideast, when you travel to Latin America, traditionally, people have done

all trade in dollars, and they've kept their money in $100 bills in the pillowcase. There are more $100 bills overseas than there are in circulation. There are $1 bills in America. As we move to digital, the Chinese say, hey, we want to be where you keep your money. If you're in Nigeria, hold it in RMB. Here's the difference. We're going to make it really easy for you.

There are three to four years ahead of the U.S. And so it's now a monster, monster national security issue in the U.S. that we can't let China do this. The Treasury gets it. The Fed is a little nervous. They're both. So how are we going to do our version of a central bank-issued digital currency? There are two paths. I pray and

think we take the first path, which is with guidelines from the OCC, part of the treasury, and blessing from the Fed, we allow private companies to create, in essence, wrapped dollars. The dollars that back those currencies are kept with a Fed bank. We already have one called USDC run by Coinbase and Circle. They have about $25 billion in circulation. The dollars they keep are kept at U.S. Bancorp. And so it's just basically a digital representation of a dollar. Let five or six companies compete in that. Let the Fed make sure the dollars are kept in safe places.

And boom, you're off and running. Facebook's Diem project is trying to do just that. People are staring because it's got Facebook associated with it. But what they're trying to do now in round two is just create a digital dollar. And they can put it in the hands of 2 billion people the next day. And so if I'm Treasury, I'm at least letting as many smaller of these companies like USDC do this. And I'm probably allowing Facebook to do it, even though you can call Facebook the evil empire, as long as I've got some assurances around the privacy side, because I think it's

that important that the digital dollar gets out there in the world fast because China's coming. The other path the U.S. can take is to try to do what China is doing. But our government is not a good builder of things. No governments are good builders of things, but certainly our government's not a good builder of things. So for them to become technologists and build their own blackboard, it's a 10-year project and we will have lost the battle three times over. And so I think when they do the analysis, you're going to see projects like USDC explode. Let's pivot and talk about blockchain and NFTs. Can you start by explaining what NFTs are and talk about some of the different areas of NFTs?

When I came up with that insight that Bitcoin was the first digital asset, you couldn't counterfeit. What's unique about Bitcoin is there are 21 million of them. They all look and feel identical. So they're fungible. One Bitcoin is the same as another Bitcoin. An NFT is a unique asset. It's a non-fungible token. But it's the same concept.

I can now take a piece of intellectual property, a piece of music, a piece of art, a piece of code, a photograph, and give it an address on a blockchain and make it unique. And that's a stunning breakthrough. The internet allowed data, information to be shared. So information was completely shared on the internet and therefore the value of the information almost went to zero. It's likely the PD of Britannica was shit out of luck. It was Google. And who got rich? Well, the people that provided access to that.

So Facebook, Google, these big silos who provided you access for money to this crushing of the price of information. What crypto and blockchain technologies are doing is going to say hey we can give value to information now not all information is going to have value just like not all going to have value but some will and we have a system that can assign value and hold value and keep the scorecard of value very naturally the genius of this move is just. And so you're going to see a shift of power from business venture creatives. Creatives are going to get paid for their stuff finally. And there's all kinds of unique things that you can do. You can have an artist where every time his painting sells, he gets 10% of the new sale price or 10% of the difference between the old sale price and the new sale price. Or that 10% goes to his favorite charity or it goes to his family foundation.

But what happens now is young artists sells 10 paintings for $4,000 each. 20 years later, they're worth a million dollars each and he got his $40,000 and the art dealer made all the money. And so how do you ensure that the creative continues to participate in the earning stream of his work? Now you have a way of doing it. If all these people would say that would happen and they would sign a smudgy contract and it would get lost. And I remember meeting a jazz musician, a blues musician who literally wrote Time is on My Side. That was the Rolling Stones song.

And he died penniless, Jimmy Norman. And he was supposed to get royalty, but he just never did. Whose fault was it? Who the heck knows? The shady dealer, the shady manager. But think about that. You're one of the songs that we all know how to sing

and you're dying penniless. You're not even getting a royalty. This new system makes your word, not just your word, but a contract. That is so exciting. Fascinating. Twitter CEO Jack Dorsey sold his first ever published tweet as an NFT for almost $3 million. The tweet, which just said something like, quote, just setting up my Twitter, unquote. That's it. That's the digital asset. What does the buyer do with that digital sentence?

I know the buyer. He makes so much money. I think it was a glory buy. Jack Dorsey is a legend in our business community and certainly in the crypto community. So it makes sense in the frenzy of the very beginning of the NFT that someone would pay for that just to have it. It's like Dave Bruce home run ball. What he pointed at someone to hit the home run, a souvenir to collect. Will it be worth $3 million in a few years? I have no idea. I wouldn't spend $3 million on that tweet, but I get the idea that value is always around things that create an emotional tie. Think about what Twitter is to me. It dominates politics. It dominates the world.

And I own the first tweet. It might make you feel good, but it might be valuable. If you told somebody that a Picasso painting 100 years ago or 50 years ago was going to trade for $60 million, they'd look at you like you were crazy. Value is a very funny thing. We're learning now that the federal reserve is making money so cheap that people are putting value into things we never thought they

might digital goods are trading people literally will buy digital clothing for their avatars and spend fortunes on them and people over 40 look like that makes absolutely no sense to me. My mother thinks it's insane. But my kids are like, dude, dad, I want my avatar dripping in Gucci. You have expensive kids. Yes, I do. But if we're going to move more and more into the metaverse, and we have this weird world where we've got people hurling into the metaverse. I mean, Gen Z was born with these things in their hand.

And they don't think we're going to visit the metaverse as an amusement park. Because that's intuitive to be my age. Oh my God, you put on the VR headset or the AR glasses, and you have this experience, and then we come back to our real world. They're like, oh, you are so old, dudes. They are in the metaverse already in their mind. It's just going to get better and better. And so the difference between me dating an avatar who I think might be in Shanghai, but is actually in Poughkeepsie. I think might be a beautiful woman, but it's actually a short little fat guy with glasses. But I'm still having this connection. It's a really interesting world

how fast it's changing. We're going to have art galleries that are all NFT that don't exist anywhere but in the metaverse. We're going to meet to watch sporting events, real sporting events in metaverse lounges and e-sporting events in metaverse lounges. These glasses are literally going to go from glasses to AR glasses where I can walk down the street and see you walking with a little NFT

birdie that you bought on your shoulder. And you'll be like, that's the only one that exists. And I'm like, cool bird. It'll be like jewelry. What's the difference? Why do you have real earrings versus cool digital earrings? And with AR glasses, we're going to live in this hybrid world. It all sounds a little science fiction until you actually see the projects. And we invest in tons of them. I'm seeing the projects already. And it's not like next year's stuff. It's already there.

And so give it five years and it will proliferate. Even the VR headset, last year they took the chain off. So now you can walk around. It's half as big. It's beautiful. It's white. The Oculus. And I got a thing in three or four years.

I'm going to look like that guy in Star Trek with a skinny pair of glasses. Sounds amazing. Mike, what are you most excited about? I always kind of want to close my eyes and come back in three years and see where we're at. I think we are at the beginning of this explosion right now of NFTs and DeFi. And they're connected, but they're separate. But it's interesting, but happy at the same time, because the base technology is just about ready for them. I'm most excited about seeing if we can disrupt the financial system,

because I think it hasn't worked well for a lot of people on the planet. And so to me, from the political economic side, that's where my excitement is. Can we create a payment system that doesn't rip poor people off every time? I mean, think about when you go to take $20 out of the ATM and they charge you $3, it's a 15% tax. And so the poorer you are, the higher the taxes. It makes absolutely no sense. But I'm just as fascinated with the creativity boom that's going to come what worries

me is i was in college i was fascinated with this movie blade runner and then they made an update of blade runner blade runner whatever 2042 or something and it was this wild world where some of us lived in the metaverse the this cool stuff, and the others really didn't. And that we've got places, my son always tells me, Kinshasa Zaire has 7 million people that don't have electricity. Or out in Silicon Valley, we have people living in this amazing space and then homeless everywhere. That so much of this cool stuff is happening at a great neck pace.

And we have the other half of the world that will they be able to participate or not? What I'm hoping is, yeah, this phone becomes their bank. Electricity shows up everywhere. I think we've gone from 800 million people that didn't have electricity down to 200 million. And so we're getting there. But that'll be a challenge, too, to see how all that plays out, because we're living in a world that's changing so fast. I mean, we've got the Taliban with their 1100 government from the Stone Age is almost showing up and running a Kabul city of five million people. It's not a small place.

True, true. Absolutely. Mike, before I ask for your three takeaways, is there anything else you'd like to talk about that you haven't already mentioned? The one thing I would say is, in a lot of ways, this blockchain revolution is generation. It's Gen Z and millennials who are looking up at the baby boomers, Bill Clinton took office in 1992. So they'll call it 29 years. The last 30 years. So Clinton, Bush and Trump were born the same year to start with. So you've got a concentration of decision making from the same basic generation of people. The average American has gained 30 pounds.

So we've gone from a relatively fit country to a fat and obese country. 30 pounds. That we've gone from a relatively fit country to a fat and obese country. 30 pounds. That's the average. The average woman is now 5 foot 470 pounds in America. That's incomprehensible. So, okay, we've polluted our food system with sugar. Check. We've run up more debt than we'll ever be able to pay back. The single largest increase in debt in nominal terms and in percentage terms in the history of our country, leaving their grandkids to pay it back one day. If you look at when they took over, we had about 70% of our children in the country under the poverty line and about 70% of seniors under the poverty line. Today, we have 70% of children under the poverty line

and 2% of seniors. That's a staggering statistic. They took the apple from their grandkids mouth and they ate it themselves. Jack. Oh, and by the way, I just read this weekend that the pollution has gotten so bad or the global warming has gotten so bad,

people think the planet will be unstable in 10 years. We have a generation of leaders that had their chance and really screwed up. And there is zero humility in anyone. Zero humility. I still need to make the decisions. We've got a 70-year-old president who, listen, I voted for because I didn't like the other choice. But it's time for that generation to say, hey, maybe we haven't been so smart. And the crypto revolution is a little bit about that.

It's Gen Z and millennials looking up and saying, dude, you guys screwed up. You really screwed up. And we're not going to wait for you to move away. We're going to build our own ecosystem, our own culture of currency. And so this is really much more, I'm humiliated that I'm 34 days a baby boomer. I'm November 26, 1964. So I'm like, oh, I hate those baby boomers. And it's, I'm one of them. I always tell people I identify as Gen Z as a joke, but, but I do think there's something to be said there that the 74-year-olds have to look around and say, hey, we didn't do so well. And that it's time to at least be open-minded that there's another system that can take its place and maybe do better. I hear that nonstop.

I came back to work in this field because I wanted to work with young people. I find it more exciting. You learn more. And the best companies are filled with the younger and younger people. My sister, she'd be an ageist. And I said, well, the only safety I have is I am a baby boomer. And so I'm beating on my own tribe. But I think that's an important thing to at least meditate on because we've got Nancy Pelosi and Richard Shelby block this bill. And so it's shocking how many people over 75 are running our country.

Mike, what are the three takeaways you'd like to leave the audience with today? One, the crypto revolution is here. It's real and you should get involved. Two, if you're scared, just start. Get off zero. Make an investment. I say crawl, walk, run, or just get off zero, either the same way. The moment you actually own something, you start focusing on it. You read about it in the newspaper, you get intellectually curious. And I have not met one person who I have turned on to Bitcoin or crypto that hasn't gone down what they call the rabbit hole, that hasn't found it fascinating and exciting and exhilarating. So that's two. And the third one, I think I'll play

it off crypto, is that this is about systems change. Our country, our world needs a whole lot of systems change. So it's not just using crypto. I do a lot of work in criminal justice reform that everyone should look around and say, okay, what other systems need changing? And you'll find a great parallel between the energy of this crypto revolution, which is often mistaken, right? People like, oh, it's all about making money. It really isn't. When I met with Joe Lubin and his team, and I said, I got inspired. they were literally plotting out the revolution and couldn't care less about the money. And I think there's a moment right now where the world seems to be almost in tatters. Where we have China having pivoted away from engagement to a one-man emperorship.

Scary. Where we have now, we just saw what happened in Afghanistan, where we have a breakdown really of what looked like a world order. And so it's really time for people to think about how they contribute to changing this system that doesn't seem to be working. Mike, this has been great. Thank you. Thank you. If you enjoyed today's episode and would like to receive the show notes or get new fresh weekly episodes, be sure to sign up for our newsletter at 3takeaways.com or follow us on Instagram, Twitter, and Facebook. Note that 3takeaways.com is with the number 3. Three is not spelled out.

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