Bankless - 65 - Crypto, Legacy, and Value | Mark Yusko

Episode Date: May 17, 2021

Mark Yusko has been at the forefront of institutional investing throughout his career, in both the legacy and crypto. He is the Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge  ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini  🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer  👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave  🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap  ------ 📣REGISTER FOR COINDESK CONSENSUS 2021 AND SAVE $20 W/ BANKLESS http://bankless.cc/consensus2021​  ------ Bankless Podcast #65 - Crypto, Legacy, and Value Guest: Mark Yusko Mark W. Yusko is a seasoned investor in both traditional and crypto finance, and is the managing partner of Morgan Creek Capital. Notably, he is also an avid fan of Pokemon Go. In this episode, Mark provides a deep and logical basis for a sound decision matrix in the world of investing. He emphasizes broad narrative context, addressing themes reminiscent of our episode with historian Joshua Rosenthal on 'The Crypto Renaissance.' Mark explores the speculative frenzy in the markets and how it is indicative of a fiat-based financial system that has run its course. Continuous printing has gameified the economy, and crony capitalism has created an environment where you are either in or you're out. If you're in, then you're an incumbent who is incentivized to maintain the status quo. The centralization of power makes progress hard and proper equity even harder. As a long-term investor who prioritizes values & principles, Mark discusses money as a shared illusion, and notes that value is relative. He presents salient takes on crypto's role in the broad shifts driven by the inevitable failing of incumbent institutions. His worldview feels compatible with the Bankless narrative, and towards the end of the episode, we discuss how Ethereum fits into all of this. ------ Resources: Mark on Twitter: https://twitter.com/MarkYusko?s=20  Morgan Creek Capital: https://www.morgancreekcap.com/  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front-run the opportunity. I'm Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, excited about this next guest. He is a seasoned investor on both the traditional finance side and also on the crypto side. I learned a lot in this episode. Tell us what we covered. We covered so much, and it's always really good to get people's perspective like Mark Hughesco's where they know money, they know finance. Also, they are not tricked by some of the shenanigans, I would say, is going on in the legacy market, specifically with regards

to the Federal Reserve. And Mark has a lot of very strong opinions with how the Federal Reserve has really dictated how the world works. And that was just always a treat to hear that perspective from somebody who is a seasoned legacy investor, who is also very attuned to what is going on in the world of crypto and getting more and more attuned every single step of the way. And I think there's a lot of through lines between what Mark values and what he sees as valuable and what we are seeing going on in Ethereum and in the Defy app layer. And I actually don't think Mark has gotten all the way there yet. I don't think he completely sees what we see. But that is kind of the unique perspective that Mark brings is that he sees things as valuable and he

went through a list of things that he sees as valuable. And what I saw is him rattling off a list of Ethereum characteristics. So if Mark represents the typical season skeptical investor, that makes me very optimistic about the future of this industry. Yeah, absolutely. So there are three parts of this conversation. The first part, we talk about the world as it is now, what's happening in the macro world. And Mark absolutely tears into banks. He tears into to central banks, the Federal Reserve, talking about how the existing markets have become almost a Ponzi game. And then we got to talking about crypto, and we asked them the question about ETH. Basically, the question, is ETH money? And this is an interesting conversation because

Mark is partnered with Anthony Pompiliano, and there have been many Twitter back and forths between myself, David and Anthony, about this question. Some people like Pomp think that ETH is not a money that only Bitcoin has established the ability to become a store of value asset. Of course, bankless is much more open. In fact, sees the emergence of Ether as a money in addition to Bitcoin as money. We've talked so much about ultrasound money and the future of Ethereum. It's just really hard for me to take a contrary viewpoint. So we talked to Mark about that and got his insight.

I don't think he completely agrees with his partner on this, but he also doesn't completely agree with the bankless idea on his ETH money. So that was an interesting conversation. And then we ended with what are the tips for crypto natives? So somebody who's, you know, crypto might be their first real investing experience. There are some timeless ideas, timeless concepts from traditional investing that somebody like Mark can bestow. So it's worth listening all the way to this end of this jam-packed episode.

David, before we get to this conversation with Mark, we want to thank the sponsors that made this episode possible. AVE is a borrowing and lending protocol on Ethereum and just recently released AVE version 2, which has a ton of cool new features that makes using AVE even more powerful. With AVE, you can leverage the full power of defy money Legos, yield, and composability all in one application. On AVE, there are a ton of assets that you can deposit in order to gain yield and all of those same assets can also be borrowed from the protocol if you have deposited collateral. Here you can see me getting a 200 USDC loan against my portfolio of a number of different

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Balancer governance token. Balancer's mission is to become the primary source of liquidity in D5, by providing the most flexible and powerful platform for asset management and decentralized exchange. dive into the balancer pools at pools. balancer. Exchange today. Bankless nation, we are super excited to have our next guest, Mark Yusko. He is the founder and chief investment officer of Morgan Creek Capital. That is the traditional legacy side of investing. And he's also a managing partner at Morgan Creek Digital Assets, which is the crypto side. We're going to talk a lot about legacy and crypto and the bridges between them. He currently manages close to $2 billion in assets.

How are you doing, Mark? It's great to have you on a bankless. Doing great, Ryan. Thanks for having me. I guess is it Ryan only or is it Ryan Sean? Oh, wow. I just go by Ryan Only on the podcast. That works.

Ryan Sean Adams. There was a singer-songwriter Ryan Adams. You may be familiar with him. He took my name first, right? So because I came after, had to insert the middle. middle name and that's what I'm doing. No, it's funny because I actually never asked that question before. Yeah, I always use my middle initial and people look at me like, why do you? I'm like, I don't know. So my dad did it and so I do it. And so I'm always marked out of you. So.

Yeah, you have to have like a unique identity, I think, because the internet is so large. I'm like, I'm not sure how many other Ryan Adams are there out there? There's got to be hundreds. There's probably a Ryan Adams out there listening to this podcast. Yes. And there are not a lot of Mark Eust goes, although there is one up in Greenwich, Connecticut, and he's a DJ for some small radio station. And so whenever I go up in the east, they're like, oh, I heard you on the radio. I'm like, no, but not me. Yeah, so all right, that's cool.

You got a DJ. I have a rock star. Yeah, yours is better. We're in the same realm. Well, if we're on the same subject, there's a Dave Hoffman lawyer out there who did an analysis of ICO claims about vesting schedules. and then he actually went into the smart contracts and looked at if the ICOs, the contracts, the vesting contracts actually upheld what the actual commitments were.

And he found out that like 95% of them were not. And that was Dave Hoffman, the lawyer. I love it. And well, and I think you should just go with Hoff, right? Because Hasselhoff uses that. So you can just go with that. That was high school. Exactly.

We need to get the other David Hoffman on the podcast. It sounds pretty smart, smart guy. Yeah, he's a smart guy. All right, Mark, let's talk about. this. We are going to talk about crypto as a wealth creation opportunity. I think that's going to be the through line and theme of this. We also want your advice for the crypto natives listening to this podcast. That's our audience, Mark. For a lot of the crypto natives, the asset class where they learn to invest is actually crypto. Right? So there are some timeless things that I think you know that we want to transfer to this new generation.

We really want you to be sort of our Sherpa, our bridge. There are some things that are different in crypto, there are some things that stay the same. But I want to start with the big picture, the thing that affects everybody, both in the traditional markets and in the crypto markets. And that is the macro landscape in 2021. What is happening in the macro world? It feels like things are getting crazy. We've got stocks at all-time highs. We've just had corona, you know, wreck things for over a year, but stocks at all-time highs, wealth inequality at all-time highs, debt levels at all-time highs may be distrust in our current legacy institutions at all-time highs. I'm not sure what is going on? Money printing, liquidity. And to your point, they're only at all-time high, stocks or

only at all-time highs if you denominate them in the toilet paper we've created, which is the US dollar. And what's interesting is if you look at U.S. equities since 2008, they appear to be up, right? The nominal prices is higher. The index number is higher. However, if you denominate by central bank assets by Fed balance sheet, dead flat. Okay. So let that sink in for a second. If you denominate in gold, which is real money and has been real money for five thousand years, were at the same level in U.S. stock prices as we were in 1996. Okay. Now, if you were to denominate the S&P over the past few years in Bitcoin, it's ugly. So it's all about your reference currency.

And this is called money illusion. And it's been going on since 1913. And, you know, you ask what's going on macro is the plan is being executed flawlessly, right? The dictator playbook, and the dictator gets to the top and surrounds himself with cronies. The cronies own all the assets, and then you devalue the currency. And said, it's been going on since 1913. And it was a plan hatched by Amory Aldrich, John D. Rockefeller's father-in-law, along with John D. and J.P. Morgan, his buddy. And it's, say, it's been executed flawlessly. And COVID was an accelerant. Literally, it poured gasoline on this paper currency bonfire that we've been and having

for the last hundred years. And here's a crazy stat, right? I'm sure you've heard it, right? 39% of all the dollars ever printed in the history of our republic were printed in the last 12 months. And so we have this illusion that things are going up. And you see it every day, right? Housing prices went up the most ever quarter over quarter. first quarter. 18%, 1-8% in one quarter, housing prices went up. You know, collectible art. It's like the people, right? I'm not a fan, you know, no accounting for taste. Some people like it. I don't like it. But I respect. I respect what he did, right? I have not brushed my teeth every day for the last 13 years. The dude created a piece of art every day for 13 years. So I respect that

and put it all together and created one. And one of anything can be. valuable. Now, it doesn't mean that everything that has one should be valuable. So not every NFD is going to be good. But anyway, that's a long rambling answer, Ryan, to your question. But it's so important right now to step back and say, okay, this is a liquidity event. Well, what does liquidity mean? And I have this great chart, and you don't have charts, but just visualize, if you will, a straight line for 5,000 years. And that is gold. And for for 5,000 years, literally, one ounce of gold has bought a fine man suit, which I guess now I've say fine person's suit, but a fine man suit, from a suit of armor to a suit during

the American Revolution, to a suit suit in the 20s, to a fine man suit on Savo Road today, one ounce of gold. Now, it was money for all that period, and money is different than currency. Money means something that exists in the absence of a liability. So gold has been money. Currency is different. Currency has liability associated. Governments issue currency by issuing debt. And so governments perpetuate this myth that currency is valuable.

But what's really happening is it gets devalued, which creates the income and wealth inequality that you talk about. And so in 1974, we untethered our world from the gold standard. and we went to a Fiat system, which means money could be created by Fiat, by WIM. And that's when things started to get really ugly. So if you look at income inequality, wealth inequality, racial, and all the things that get fomented when you divide the classes, it all really accelerated in 1974. And that's the point at which we went to a Fiat system and now the line changes color from gold to green. Well, now in 2008, and it is not a coincidence that Bitcoin was released, I won't say created, but was not released at the depths of the financial crisis.

That was not an accident, right? It didn't just happen overnight. They were working on it for a while. Again, whoever he, she, they are, Satoshi came along and said, okay, I'm going to create this thing. It's not an accident that the Genesis Block has a reference to the chancellor's bailout. none of that is accidental. And so now it's the X factor. So we got the X, that fiat currency is going to slowly decline and cryptocurrency is going

to slowly ascend. So, Mark, that is a really insightful answer. And I think I've heard people articulate it similar sentiments before, but none as explicitly as you did just now. I think what you're saying is basically a fiat currency, modern, monetarily. policy is the root of this warping effect that we see across all assets. But you said something different. And this is the part that was most explicit to me. And maybe comes out in a tweet I recently read from you, which you said the Fed has only one goal, just one goal, to transfer wealth from

average citizens to banksters and the top 1% through stealth tax of inflation. What you're saying implies something a bit more insidious. That this is... Sinister. Right. That this has been all part of a pre-prepared plan since the early 1900s, and it's now just coming to fruition. It's not sort of an accident of the system or a by-product or an after-effect. This is very intentional.

Is that the case you're making? Oh, it's absolutely intentional. And people get all mad. Like, how can you say this? You're going to get put on some target list. And no, I'm not. Look, people don't care what I say. The reality is that J.P. Morgan, right, was the original bankster.

And he created this incredible organization. And there was a law passed. Well, let's back even up further. So banks were started by the Medici's in the 1300s with this idea that you needed a central middleman to referee lending. So in the good old days, right, single entry accounting, I would lend you money. And I would write down that you owed me $100. And you had to trust me that I wrote down the right amount in my ledger. So then these Gregorian monks or something, I remember who it was exactly, came up with the idea, what if we had two ledgers? So now both Ryan and Mark could write down

what they owed each other. And they actually used something called a tally stick, right? You'd break a stick in half and you'd carve a notch. And if those notches matched up, then you knew how much that you owed. But you could fudge your notch maybe, or what if I wrote down 200 and you wrote down 100? Well, the Medici said, ah, we will sit in the middle and we'll charge a little fee and we'll have these accounts and we'll take care of your money. Because, again, the old days of money, money was just a substitute for barter. So you had chickens, I had cows, and we would drag our chickens and cows to market and we would trade. I'm like, nah, that's stupid. Why don't we just print little coins and you put chickens on your coins and I put cows on my coins and we'll swap the coins.

Well, then we got this big old sack of coins and I don't want to drag those all the way to market. So how about we deposit the coins in a trusted third party and they issue paper, an IOU that says you left your coins here and now you have this amount and the Chinese invented that in the 700s. And they call it flying money. Because it flew away in the wind. It's amazing. If you didn't hold it down. And so all of this system was created by the banksters to control the wealth. And so if I want to send you money, I have to have bank account, you have to have bank account, and they charge us a fee to send it, and they're really happy. And they built this great business. So in the 1600s, the Rothschild said, huh, banks. What about a central bank?

Well, we'll create a central bank in the Netherlands and said, we'll use this to finance our wars and our exploits and our accumulation of wealth and it worked really well. So the Spanish created one and the French created one and then the Brits created one. And then we created this little republic in, it called the United States. And we said, huh, okay, well, let's borrow what the Rothschild did. So we stole the word dollar from Dolar, which was Dutch. And we created this idea of a national bank. We're not going to have a central bank. We're going to have a national bank. And so we chartered the first national bank. It lasted 20 years. Chartered the second national bank the last 20 years. And then Andrew Jackson came along and said, whoa, whoa, whoa, whoa. These banks appear to be owned

by the wealthiest European families and I love this quote, our most opulent citizens. Such a great quote, right? So it's basically the rich people own the banks and are owning everybody else. So I'm not going to renew the charter. We're not going to have a bank. And so we went for about a 30-year period where there was no national bank and everybody issued their own money. Texas had its own money. Companies had their own money. And it was a shit show. I mean, it was horrible. And so in the 1890s, they said, yeah, this is a bad idea, reconstruction. All right, we'll have a new bank. And so they created banks. And then they're like, well, to fix the problem of monopoly bank power will allow trusts to be created. And a few trust started to grow. And they're

There's this trust called Nicarbacher Trust. And J.B. Morgan famously quipped, I like a little competition. And he said, all right. So that Nicabacher Trust is taking our business away. So I'm going to spread a rumor that they're insolvent. They're a problem. And we've all seen the picture of the run on the bank or the men and women in their suits and ties and, you know, run into the bank with the umbrellas to get their money out.

And basically, Nickabacher went down and J.P. Morgan wrote a little check for $25 million, which was a lot of money back then. and saved the banking system. Happy to buy all the assets. It's like, you know, Mr. Potter and it's a wonderful life. He just bought up everything that was on sale. And fast forward, his buddy, he was buddies with John D. Rockefeller, and John D. Rockefeller's father-in-law was Amory Aldrich. Amory had married off his daughter to John D. Rockefeller to get some power. And Amory became the most powerful senator. And they hatched a plan called the Aldrich Plan to create a central bank in the image of the Rothschild Central Bank, always goes back to Rothschild's topic for another day. And so they hatched

this plan in 1907. And it took six years to get it through Congress, but they did eventually get it. And I could not make this up. They signed the documents to create the Federal Reserve, which, by the way, is not federal and has no reserves. That's my joke that I stole from somebody on Jekyll Island, right? The creature from Jekyll. I mean, you couldn't make that up, right? heck, you know, Jekyll and Hyde. So they create this creature. And there's this great book. And I've, I've done presentations on it. I've tweeted pictures of it. There's this great picture of a guy who wrote a book about Theology Planet and how horrible it was going to be. And it shows this octopus with these tentacles in everything, in corporations. And it's basically sucking money out of everybody's

coffers and then upchucking it onto Wall Street. And that's what the banking system does. And the Fed is owned by the banks to make the banks rich. That's what it does. And that's why we bail out the banks at every turn. And it's why inflation, we've perpetuated this myth that it's good for you. Why is rising prices good? Who is that good for? It's good for you if you own assets. It's bad for you if you have a fixed income, if you're on minimum wage, if you are retired and own bonds. It's horrible for you. So inflation, is a wealth tax. It is theft of your wealth and transferring it to the rich. And that's why, from 1913 to today, income and wealth inequality has gone to the widest in history. And it's why this myth of inflation being good for you and why that should be a goal of the central bank,

it's just ridiculous. But I don't feel strongly about it. Mark, you would fit right in in the bankless movements or you know like look i mean this is what we've been saying since we started this thing is crypto and defy more specifically is money by the people for the people it removes if it's done well if we get to a future that is decentralized then we don't need the banks in the middle anymore this is what the entire movement is about and why it's so important and i think why people are uh you like listening to this and engaging and and joining us in crypto can we talk about this I feel like the bankers would have a different take on all of this, of course. So their reframing of what you just said is like, but Mark, the people really needed this, the chaos, the runs on the banks that were happening.

They asked us to step in to restore order and to restore calm. Chair Powell gave a speech, I believe, yesterday. It depends on when people listen to this. But somebody asked him about froth in the equities markets, specifically about GameStop and Dogecoin. And he made some statements about, yeah, froth in the equity markets, I don't like what's going on. Like, be careful out there. But when I was hearing what he was saying, I was just like, do you realize you've created this? You've turned the entire financial system into a Ponzi game.

Like, people can't even buy a house without having to engage in rampant speculation as to what the price is going to be. Is like, I guess my question to you is, Mark, what is the story? central bank's next move because the framing of the macro is we're in an era of money printing, right? And we've been doing a ton of it. What happens next? How do we get prepared for this decade? What's Powell's next move?

He's going to print more. And look, the history on this is very consistent. All empires fail, every single one. reserve currencies end. And the final throws of those empires is rife with this type of cronyism, this type of taxation without representation, so to speak, this type of rampant inflation and money printing. And go back to the Roman Empire, right? So the Roman Empire, there's some quotes from Marcus Aurelius, right, that could have been written yesterday. I mean, literally, They just talk about rampant government spending and lack of discipline and people being too lazy and not wanting to work and wanted to pay people not to work.

And all the things we're talking about today. I think like universal basic income. What a crock. Modern monetary theory. What a crock, right? It just means producing more of a wasting asset. So Roman Empire had these dinari's, these gold coins, and then underneath it they had silver coins. and what they did is they would clip the coins. Literally, they would clip the edges and steal the

silver. It's why quarters have ridges on the side. So you can tell if you've been clipped. And so what happened to the Roman Empire? Failed. And so then go to the Ottoman Empire or the British Empire, right? British Empire. The Sun never said on the British Empire. When we were an emerging market run by a gang, if you ever seen the movie Gangs, New York, 1860s, is not a fun place to live, the United States, right? You walk down the street, you get killed. I mean, it was tough. And British Empire ruled the world until what happened? 1913, they invaded Mesopotamia, incurred a bunch of debt. Pound sterling collapsed. And the dollar ascended. It took 30 years for the dollar to ascend to Bretton Woods and for us to become the World Reserve currency.

And I know people are tired of hear me to talk about the World Reserve currency, but the World Reserve currency was historically held by the company with the most powerful Navy. So it started with Port Portugal because they had the tallest trees, so they're the fastest ships. Spain took them over, got the trees, taller ships, and then France, and then the Netherlands. And ultimately, the steamship was invented in the UK became the superpower. And then we invented nuclear. And so we have subs. And so we became the most powerful Navy. Now, what's interesting is world reserve currencies last about 70-ish years. So our run is about over. And everybody says, oh, Bitcoin's going to be the next one. No, no. There's a step between Bitcoin, I think, and the dollar, which is the Rem and B. I think China figured out 10 years ago that the next war will be fought with chips, not ships. And I can't believe it took me this long to actually watch it, but I've been watching Mr. Robot for the last couple weeks. Oh my gosh. Blown away, blown away at the genius of the writing, the accuracy of the storyline.

and this whole thing about China rules the world. They do, right? Ten years ago, you had to choose. What do you want to be best in? And the United States decided we're going to be best at social media. And we rock at Instagram and Facebook. We are the best. China said, you know what, I think we're going to be the best at AI and 5G.

That's better. One of these sounds more sustainable. Yeah, one of them sounds more sustainable. One of sounds more important. And so China has literally been ruling the world. and they have this long plan, this 30-year plan. So the previous 30 years from 1990 to 2020, their 30-year plan was a harmonious rise

to drag 700 million people out of abject poverty into the middle class. And a harmonious rise sounds very nice. It didn't sound very threatening. Well, their next 30-year plan is to become a global superpower, okay? Stated goal, global superpower. And so that's why all this Cold War II rhetoric

has popped up and why China is the enemy. Now, it also helps to have an enemy, right? The military industrial complex works better if you have an enemy. So we had the USSR way back when, and now we got China. But it's really more about this, that the next war isn't going to be fought with ships. We fought with chips. The next war is all about cyber. It's all about technological prowess. And it's why China will be the first with central bank digital currency. They are way ahead in AI. They are way ahead in crypto. And, you know, Americans suffer from this problem. I joke that Americans are like Notre Dame football fans, right? You can see my fighting Irish picture in behind. I'm a Notre Dame guy. And Notre Dame fans think that we win the

championship every year. The fact is we won since 88. It's a long time. And if you talk to my father, I was like, no, we win every year. I'm like, no, George, when you were there, we won every year. Because after the war, we went overseas. We went overseas. We were. We got all the guys from Army and Navy to come back as 28-year-olds. And we had a pro football team for four years. And we went undefeated for four years at Notre Dame in the 40s. And we won four National Champion, or actually we went three. They stole one. But bottom line is, you don't get to do that anymore, except at BYU. So now you actually have to play the game with 18, 19, 20-year-olds. And Notre Dame is not irrelevant, but we're not the superpower. Now you have to cheat,

like Alabama does. I shouldn't say they cheat. They have been in the rules. and over-recruit. But they're the superpower. And China has figured out that the war is going to be won in cyber and digital. And so it all goes back to this idea of the American Empire, right, which Americans think that we rule the world. We're 20% of crypto globally, you know, maybe 20%, maybe 25. It's not 100. And so we're important. But we're important. But we're We are grasping at straws from a legislative and regulatory perspective or, you know, talk about, oh, we're going to ban Bitcoin. Okay, first of all, you can't ban.

It's like squeezing a balloon in the air. Just goes someplace else. China tried to ban it in 2017, quote unquote. They actually didn't. But they said they were going to. And what happened? Price fell 40%. And the exchanges said, oh, we'll just move to South Korea and Japan.

They're like, bring them. We'll tax you. It'll be great. Good for us. And South Korea becomes a leader. And now the U.S. is talking about over-regulating. So what's going to happen is instead of embracing technology, instead of embracing the movement to digital currencies,

we're trying to fight it. And why are we fighting it? Because we like our legacy system. We like being in charge, at least the people at the top like being in charge. People at the bottom don't like it as much. People at the top really like the fact that they own all the assets. I was saying the other day, you know,

there's a threat of raising taxes. and someone said, are you kidding? Pelosi's never going to vote for that because he and her husband are really rich. And so they don't want to pay more taxes. And, but they'll exempt the congressman and senators just like they exempt them from insider trading. Can you believe that?

It's legal for congressmen and senators to insider trade. And when they asked them about it, this is great, when they asked, and it's not a political statement one side or the other, but when they asked one of the congressmen or one's senators, years ago, she's like, well, of course, it's part of my compensation.

Because they were saying, well, do you think it's right for you to vote? Do you think it's right for you to vote to hold up something that increases the profits of MasterCard and you're a big holder? She says, well, of course that's okay. It's part of my compensation. I think so much of the infighting between left versus right is very media-driven, not to get on politics, but I think every American, at least that is not among kind of the elites, is anti-corruption, right?

Like we – Oh, amen. And Ryan, look, I'll sum it up for you. And I don't mean to cut you off, but this is my thing, right? There's no left. There's no right. There's no Republican. There's no Democrats. Remember it was Democratic Republicans, you know, the Hamilton thing. There is no left or right. You're right. It's just the media. There is in and out. That's all there is. And when you're out, you do or say whatever it takes to get in. Ronald Reagan, Donald Trump, lifelong Democrats got in by being Republican, being Republican. Ha-ha. once you're in, you do or say whatever it takes to stay in. Let's take our current president. Again, no left, right comments, just current president. Remember, before the election? Oh, my gosh, the world will end if Biden becomes president because oil companies will get overregulated and all this, and they'll go down.

What's the best performing sector this year? Energy, oil! Because he got there and he's like, oh, they write those kind of checks. Those are big checks. Oh, okay, I'm not going to regulate them. So it's in and out. And so when you're in, you're part of the elite. And what you want is to preserve your wealth and the wealth of your crony friends. And the most extreme example is that, called the dictator playbook, are true dictators. Let's take Maduro. Right. So Maduro,

what do you do? You got all his friends at the top, cronies, and then he devalues the boulevard. What happens? The average person in Venezuela, totally out of luck. Right? And what happens? In they found Dash or Monaro or Bitcoin, they basically lost everything because the currency was destroyed. And that's happened in places like, you can't see it, but on my desk over there, I have a 100 trillion. Can let that number sink in for a second. 100 trillion Zimbabwe dollar bill. Yeah. And I say this all the time.

Like one trillion. We'd have to sit here together and talk for 31,710 years, which I guess talking to you guys would actually be pleasant, but 31,000. years might get unpleasant. But and spend a dollar every second, that's a trillion, one trillion. And so now we talk about four trillion dollar stimulus plans. Again, your mind has to be blown because if you start with a trillion of money and you add four trillion, you just devalued that currency. And so the idea of Bitcoin as a deflationary currency instead of an inflationary currency and a true store of value as opt-out insurance, as schmuck insurance, as I call it,

is we know that the schmucks are going to do what they do. We know that they are going to devalue the currency. We know that they want to preserve the empire. We know that they want to foment class warfare and increase the wealth at the top of the pyramid. That's not a surprise. In fact, I thought this was really cool. So another thing I watched a while ago was Stranger Things,

you know, the show. Yeah, love it. And there's this amazing thing. right, you got the lab building, right? If you look at the, I can't remember the name of it now, whatever the lab was called, it's the name of the town. But if you look at that building and you look at the Fed, they're the exact same building. They look exactly the same. That has to be intentional. And if you go back to that 1910 book I was talking about, they talked about the Aldrich Plan, they showed this multi-tentacled monster that was inflation. That's the mindflare. It looks exactly the same.

I mean, it's life-imitating art. I mean, or art imitating life. It's unbelievable that the stranger things that are happening inside the Fed are basically this tentacled monster taking the wealth and putting it in the banksters. And Mark, the life-imitating art, I think, is actually a really good way to illustrate the fact that people understand what's going on. Maybe not as explicitly as you have stated it. And that's why we've brought you on to the podcast to explicitly.

to explicitly state things, but people feel this, right? Young people feel discouraged. They don't feel included. They feel lost, right? And it's not just young people, but it's the majority of the United States. And this is the same through line that we saw in the Roman Empire, right? Where the people of the world, they knew that things were corrupted. They knew that things were wrong.

And if we take a historical perspective, people saw inside the Roman Empire, it was hard to see it fall in real time. But if you look back in hindsight, the writing was on the wall. And now we have this historical perspective, right? We can see these same parallels. We can see people make a farce of the current status quo, right? Like, money printer, go burr. Jeffrey Epstein didn't kill himself. Like all of these things.

Like people know subconsciously at the very least that something is going wrong. And at least we have these parallels to draw throughout history. And we can also talk about the new things, the unique things about this current state. where, well, now we have this thing called Bitcoin, right? And it is in direct opposition to the status quo. How do you feel about, like, cultural understanding of some of these nefarious activities that are going on that really define the world that we live in? Yeah, I think it's a really great point on the inability to see something when it's happening

to you. I wrote a letter about this. It was the year of the frog a few years ago. and I know, I think it was the year of the dog, and I called it the year of the frog, in that you're basically being boiled. And when you boil a frog, if you drop it in hot water, you just jumps out.

But if you put them in cold water and slowly heat it up, you're going to paralyze and can't jump out. And so you're right. You don't see it when it's happening to you. But I will say the younger generation does see it for what it is. And I don't really know why. Maybe it's because media is so,

much more advanced today. And it, you know, in the olden days, right, my days of Walter Cronkite coming on and reading the news that was the news that was created so that you would consume it. Some of it propaganda, some of it really news, but, you know, and not that he was a bad person. He's just doing his job. Today, you know, if I want to know about the Argentinian elections, I don't wait for a reporter to write a story to get edited, to get published, in a big national media with their particular slant, I watch a periscope of people in line at the polling place. And so the immediacy of information and the ability to get source data, I think has just been enhanced by the internet and by all that. And so I think there is a really

interesting digital divide. I talk about this all the time. If you ask anyone over 35, who's your broker? I don't know, Merrill Lynch, UBS, whoever. How much gold do you have? I don't know, three, four percent. How much Bitcoin do you have? Oh, are you kidding me? It's a Ponzi scheme. Dermy Diamond, it's a fraud. And, you know, you heard Warren Buffett. Warren Buffett, he calls it Rat Poison Square.

And I joke, yeah, not to be outdone. His partner, Charlie, says, you know, it's like trading newly harvested dead baby brains. Wow. That's an actual quote. And I apologize to listen, but what the fuck, Charlie? Seriously. That's weird.

That's some weird stuff. That's some weird stuff. Well, why? He says that to be extreme. Why? Because he's an incumbent. 46% of Berkshire Hathaway is financial services. Jamie Diamond, okay?

I love that tweet the other down. Maybe you did. Whoever did it of the six stages of J.P. Morgan, right? They went through the denial and then the greed. And now their acceptance and, oh, we're going to have an actively managed fund. But it's amazing to watch. But look, incumbents will always tell you that the new disruptive thing is bad. Right?

at the turn of the century, horse's carriage. The average person doesn't know why stoop's in downtown New York are nine feet above street level. Got the old buildings from the 1700s. The stoop is nine feet above street level. Why? It seems like a hazard. It does to me. Well, it's because of horse shit.

Literally, the poop would get swept to the side and a pow, three, four feet up, and the ladies didn't want their dresses to dragging it. So they built elevated sidewalks, nine feet high. and you'd walk into your house. To your point, a hazard. Get drunk at night, fall off, right? Into the horse poop and never be seen from again. Bad plan.

But that's why it exists. And so the street sweepers didn't want to lose their jobs when the horse's carriage came out. So they passed out pamphlets saying that you would die if you got in a horse's carriage. My grandfather-in-law went to work for the airline, American Airlines, left the train safe job. And his parents thought he was an idiot. and the train companies passed out pamphlets saying if you got on an airplane, your body would cave in on itself because you'd be going too fast. So fear, uncertainty, and doubt has been around, FUD has been around forever.

And so back to the digital divide, ask anyone under 35, who's your broker? What's a broker? You mean my Robin Hood account? I got one of those. Okay. How much gold do you have? Oh, you kidding me? Boomer rocks?

Are you, pet rock? No, zero. What are you talking about? How much Bitcoin do you have? I don't want to talk about it. Why not? Because it's a really big percentage in my network. Because I don't have enough.

Yeah, because I don't have enough, right? And why is that? You know, why do the boomers think it's a Ponzi scheme? Why is Peter Schiff, right? I mean, what? Incumbents. Incumbency, right? Incumbency.

But also, there was this great thing, and I actually retweeted it on, on Plansie. elasticity, that if something's invented when you're born, it's normal. If it's invented between when you're born and when you're 35, it's innovative. If it's invented after you're 35, it's against the normal order of things. It's just hardwired biologically. And that's exactly right. And if you think about my tech cycle that I always talk about, which is, you know, 54 is the mainframe, 68 was the microchip, 82 is a personal computer, 96 was the internet, 2010 was the mobile net, and 2024, okay, is the trust net. It happens every 14 years, why? And it always is led by young people. Why? Mark Andreessen was 19. Sergei and Larry were 20s. Why is it always young people? Because the creative

class, okay, they don't know any better. And again, before, he was a bad person. Bill Cosby was this funny comedian when I was growing up, and he had this great schick that he did about this kid. And he said, this kid was amazing. He could ride his bicycle anywhere. He could ride it up over the swing set, over the top of fences. He could do 360s, six inches off the ground, and he never fell. You know when the first time he fell was? When someone explained him about gravity. And so young people don't. know what they don't know. And so they experiment. And they try things that are new. And then they discover things and they innovate. And innovation is what creates wealth. And you asked at the

very beginning of this, is this an opportunity to create a way. This is the greatest wealth creation opportunity I will see in my lifetime. Money over internet protocol is the greatest invention of this century, bar none. And everything that is happening in real time. And it's why I went from spending none of my time eight years ago. And look, I've done plenty of stupid things. And I am not a gazillionaire because I wasn't smart enough to get involved when I first got exposed to this in 2013.

And Noah's crying for me. I'm doing fine. You know, that's not the point. But the reality is that I didn't get it because I didn't do the work. And I was over 35 and I wasn't as open as I should have been. But now, one, because I'm hanging out with people like you, Two, because I'm at Pomp and others.

And I now get to hang out with the crypto kids. And I get to hang out with people who are smart and motivated and energetic. And I'm kind of reverse aging. And I have a little bit of wisdom because I've seen some things that have happened in the past. And I can kind of use that to my benefit. And I've had more fun in the last eight years than I've had my whole life because this is a big deal. and it is a chance to take 40% of people in the world don't have a bank account. 40% of the people in the world don't have a bank account.

So they can't get financial services. They can't get lending. And now we are going to provide financial services to everybody. And to your point about bankless, right? I mean, we can all be bankless. We can all interact. We can all move from these legacy financial systems that were controlled by this banking cabal to a more democratized and open society. And I'm not in the, you know, back to Mr. Robot, I'm not in the F society, not fuck society. No, no. I'm about let's move society to a more open and less. Ponziized. And Ponzi is an important word because people want to talk about Bitcoin as a Ponzi or Ethereum. No, no. That means you don't understand the word. Ponzi works like this. In the old days of finance, right, your banker lived in your town. He knew your name. He knew where you lived. He knew your

family. And you would go to the bank and they would do what was called hedged finance. They would lend you money with the expectation of getting paid back principal and interest. and the bank kept the loan on their balance sheet, and they took the risk and you were partners. And then we moved over the years to speculative finance, where the banker kind of knew who you were, and he didn't really think you could pay back the principal, but he's pretty sure he could pay the interest. So they would make you a loan for a second house or maybe some speculative real estate. And we moved to speculative finance. Well, in the last couple decades, we've gone full-on Ponzi finance.

where the banker doesn't know your name, banker doesn't live in your town, it's a nameless, faceless organization, you get the money. They don't ever expect you to pay back principle or interest, right? Bullet loans and long-term, it's just can you pay, I mean, can you flip the house at a higher price? Can you flip the stock at a higher price? Can you gamify investing or gambling like game stock or all this other crap that's going on? I mean, Dogecoin. Doge is everything that's wrong. And maybe, hopefully, you guys don't love it, but it's everything that's wrong with, the markets today. Pardon? We do not love it. Okay, good. So it's, to me, it's everything that's wrong with the markets. Start it as a joke. A bunch of people want to pump it and buy it because the price is moving.

If you're buying something because the price is moving, you're a degenerate gambler. Now, that doesn't mean you're a bad person. It just means you're gambling. If you buy something because you think the value, you think the price is below the value, you're an investor. And if you buy something because you think the growth is really good, you're an investor. And so the way I think about this is as technology evolves, and as we move to this more open society and more democratic society and more equal society, and as Jimmy Song, who I love, and we talks about this, and if you have a a fiat currency-based income, and he says it, and that's why I'm borrowing it, you're a slave, I'm like, okay, it's a little dicey of a word, but it's true, right?

You are an indentured servant to the fiat masters who can devalue your asset at any time, which they've done in spades. Yet if you own this other asset that's outside that system and is fixed in supply and has a beautiful deflationary monetary system, now people say, but mark, but it lacks all the benefits of fractional reserve. Yep. I actually don't hate fractional reserve. I think if you look around the world, the countries that have fractional reserve banking systems actually are better off than those that don't. So the idea of depositing assets, lending the assets is a good thing. That's why we invested in BlockFi and other CFI. So I don't think everything has to be DFI. I think CFI has a role. I think it replaces TradFi. And I think DFI will replace everything that is human and will go to code like derivative contracts. Humans don't need to be involved. Structions. products, right? If I want to buy high-risk Bitcoin, meaning basically Bitcoin on leverage, or low-risk Bitcoin, meaning low-volatility Bitcoin, I can do that with a smart contract now.

That's why I invested in Bond through Barnbridge. Mark, there's so much there, right? So some points you made, right? So the overarching point, of course, is the reason things like Doge are possible is because of the central bank monetary system today, right? That's why things are trading on memes and narratives rather than deeper fundamentals. So at some level, like Jerome caused this, you know, the bankers caused this. And you also made the point about using systems in order to understand what they are.

It's definitely a core component of the bankless program. We encourage everyone listening. If you want to understand what crypto is, hold it, buy it. If you want to understand how to use defy, go out and take out a loan on Ave or compound. open up your Meta Mask account, actually use these systems if you want to understand that. But so before, no, Ryan, I want to reiterate that because again, particularly for us guys, right, the old guys, for a young person who is digitally native, having a metamask wallet, oh, piece of cake, having a hardware wallet, no, no problem. Understanding, you know, what a direct lending on Ave is, no problem. but for my generation, they're like, I don't know.

It's tough. I get it. It's tough. But your point about doing it. I'm lucky, you know, although he's moving, which I'm kind of sad about, but, you know, the guy who founded Barnbridge lives here in Chapel Hill. And so he comes over and he gives me lessons on ETH and Defi. And it's awesome because I want to learn.

And, you know, he's helping me do a, you know, a wrapped Bitcoin and depositing it. and then staking it and then using it to borrow. And I love this stuff. And it's awesome. It's, oh, yeah, that's a yield farming. It's a scam. I'm like, no, it's supply and demand, right? And all interest rates started high, right?

Banking interest rates used to be very high, and they got low because supply and demand got equilibrated. Today there's more demand for digital assets than there is supply, so interest rates are still high. That will change over time, and that's okay. But your point about using something is so important. And look, I got SIM swap twice. Thankfully, I mean, literally, thankfully, I didn't lose anything because I wasn't dumb enough to put a lot of money on my hardware wallet, on my phone.

And by way, anyone listening, if you are still using a phone number for two-factor authentication, please stop. Don't do that. Some security alpha we're dropping here. Please don't do that. use a second email address, never, ever, ever use your cell phone number. It's a horrible experience to go through. It went through twice.

But thankfully, nothing bad happened. It's one of the hazards that comes with actually using these systems. We call it going west because you're really setting out on a journey west and bad things can happen. Mark, we want to get to crypto and talk more specifically about crypto. But just to put the final point on the macro picture here, right? So we're painting, you're painting kind of a bleak picture. The U.S. loses its reserve currency status.

You know, asset price inflation, inequality continues to grow. I think that the question in people's minds, as they prepare for the 2020s, particularly if there may be a younger crypto-native investor is, okay, what does that mean for my portfolio? What should I hold over the next decade? Like, Lynn Alden is somebody who might say, she was on the podcast. recently, she might say something like hold scarce assets, right? Be careful of things like sovereign bonds. They are not going to do well. What's your allocation? Maybe we can use this to segue into a deeper crypto conversation. But let's say traditional assets versus digital assets,

what's a good portfolio mix, do you think, going into this decade? Yeah, look, I couldn't agree more on the concept of scarce assets. I mean, scarcity is what drives price ultimately, right? It's just, it's the, the misalignment of supply and demand. If there's not enough supply of something, the price will rise. I mean, look at oil right now. Oil is recovering from negative prices. We had negative prices in the crisis because everybody got locked in their home, right? Which, again, not to go here, but, you know, the word quarantine is about taking sick people and putting them aside, not taking healthy people and putting them inside. Whole other topic for another day. But so we locked everybody down. Oil demand collapsed. Oil supply didn't.

And so prices went negative for a month. Well, then what happened? A whole bunch of companies went bankrupt because they had too much debt. And now supplies have collapsed. And OPEC finally realized that some discipline made sense. And so oil has been the best performing asset this quarter. And so, and I don't think oil per se is scarce, but I think this myth that tomorrow everybody's going to drive a Tesla, right? Even if we all wanted to drive a Tesla, we couldn't because there just aren't, you can't make enough. It's going to be 30 years before we even get to 50-50, ice versus EV on the roads. 30 years. So oil is going to be pretty good. But scarcity is really important. And so if you look at anything where there is a natural,

scarcity. So rare earth minerals is a good example. As more people try to build EVs, there's going to be more demand for those things. But other scarce assets, digitally scarce assets, Bitcoin to me is the perfect scarce asset because we know exactly how many are they're going to be. And that's why I tell everybody, right, hashtag get off zero. Zero is the wrong number. I mean, you cannot have zero exposure to Bitcoin. You just, you can't. And I believe five years from now, it will be deemed fiduciarily irresponsible to have zero. That's a big change, right? Today, a lot of people I talk to are like,

oh, we're fiduciaries. We can't do this. Like, no, no, you have to do this as a fiduciary. And there's this great article in pension investment age, which is the rag for boomer to people, about the big pension fund in Fairfax that gave us kind of our start in the business and has committed, you know,

hundreds of millions of dollars to this space, and they've been rewarded handsomely. And they were very brave and very visionary. And Catherine Mulnar and Andy Speller are fantastic visionary leaders. But so scarce assets is one. So I do like commodities broadly. I think we're in a world where, because fiat is going to be devalued everywhere, not just in the United States, in Japan. I mean, look, Japan makes the Fed look like amateurs. They've been doing the Fed before the Fed. I mean, Japan prints money like nobody's business. And they are over-indebted, like, like nobody's business. But if you go to Japan, it's okay, right? Apartments are nice, cars are

nice, businesses are nice, restaurants are nice. But what it creates is a kind of a zomified world in that, you know, you go to work, you do your job, you get paid, you live in a nice apartment, but your assets that you think are appreciating are solely being eaten up by the inflation that isn't counted in CPI. And I think that's going to happen in Europe and in the U.S. and all the graying society, right? I got the white hair to prove it, is if you look at emerging markets, that's another place I would own.

I would own places where they have lots of young people, places like India, places like China. People think, oh, China's graying. Yes, they are, but they also have 330 million millennials. We have 90 million millennials in the United States. They have 330 million. So they got a lot of young people, too. So Latin America, fantastic story, particularly in Brazil.

So that's another area. I like private markets. most of my net worth is kind of barbelled between private markets and then scarce assets, things like commodities and digital assets. And then I do hold a decent amount of long, short equity because I like active management in traditional markets, because I think for every winner, there'll be a loser. And so I like that long short approach. But I'm very, very overweight innovation as an asset class. And I believe that you get most of that alpha from the private markets. I'll give you one funny story on that, right? And David, so three years ago,

we're up in Fairfax talking to the police pension fund to try to convince them to give us money for our infrastructure venture capital fund. Two and a half hour meeting, which is actually a good thing. It means they're asking all the right questions, all the buy questions. And we get to the end. And the chairman, who is an active duty police officer, and I am not making this up. I couldn't make this up, Harley outside, helmet and gun on the table, sunglasses, mustache, full uniform, right out of central casting, says, all right, Mark, I hear everything you say. But you're telling me, I got to go tell my guys, I just put their retirement in drug dealer money? What? No. No. Well, okay, I see your point. Okay. No. What you're going to tell them is as a

fiduciary, your job is to make seven and a quarter percent actuary assumed rate with bonds at two percent and likely to do worse. And equities at low single digits, based on GDP growth and profits, it's going to be really hard to get to 7% unless we embrace innovation as an asset class and find alpha through illiquid markets like venture capital and growth equity.

It's like, all right, I can get behind that. Next day, newspaper, pension fund, invest in drug dealer money, literally. And he was quoted almost word for word saying, nope, as a fiduciary, we have to find alpha. We have to get that through the illiquidity premium. Because look, there's only four ways to make money in the whole world. Right? If we take no risk, we make no return. If we leave our money in cash, we make no return. Now, it's worse than that. You actually lose because inflation will chew up all your earnings.

The long-term inflation rate is equal to the short-term cash rate. So you make no real return. So you have to choose to take risk. Investing is about taking intelligent risks. If you take no risk, you get no return, hence the name risk-free rate. So you have to choose which risk you're going to take. And intelligent risks are risks that you're compensated for. So the reason Lynn hates bonds, as many people do and should, is you're not being compensated for the risk. Because a bond, interestingly, is a contractual claim. So I buy a bond, I take a risk, but if they don't pay me, I can sue. So there is a contractual claim. So you don't get paid very much for that. You only get 2% above risk-free. Well, if risk-free is close to zero and two is the maximum, the risk

reward there's not very high. So bonds today are certificates of confiscation, meaning if rates rise, I could lose years of yield instantaneously. Like what happened in the first quarter, you know, bonds were down 4%. That's two years of yield in one quarter. And so they're just not really a good risk reward. Second risk I could take is equity risk. Equity is a contingent claim, meaning you only get paid if the bondholders get paid. That's why I don't like Tesla. and I said, oh, but you've been wrong on Tesla? Maybe I'm just early. Tesla's debt exceeds their market cap. I mean, their equity. So if they had to pay back all their debt holders, if people wouldn't keep giving them money because they like the fact that he's, you know, innovative and actually looked at the fact that they will never make money as a business. The only reason they made money is they sold some Bitcoin. So that business, the assets, I mean, the liability exceed the assets. So the the equity is negative. I think that's not worth very much, but other people disagree. So equity only has value if the bondholders get paid. So there are a lot of companies today, 40% of the Russell 2000,

don't make any money. If you don't make any money, you can't pay off your, you can't even service your debt, let alone pay back your debt. Crazy. So stocks, I think, are really highly overvalued, and I don't love them today, which is why I like a long short. Third risk you can take is illiquidity risk. Ah, illiquity risk is awesome. Private equity, private equity, private real estate, private energy, private debt, growth capital, venture capital, making private investments. The only difference in a private investment, public investment is liquidity. If I have a share of Microsoft, I can sell it to you. If I have a share of a private company, I have to convince you to buy it from me. And therefore, I get paid more. I get 5% above equities. So, Mark, one thing.

The other difference, though, is that only accredited investors get access to the private markets. Oh, amen. Yeah, yeah. Which is such a pain point, I think, for many of our listeners that does not exist in the same way in crypto. It's a scam. And it's, look, it's not intended to protect you from your, you know, from the ravages of the scammers. It's created to protect the rich, right? The rich created the credit investor laws, not to protect the small investor. That's a crock. I know plenty of people who aren't rich who are really smart. I know plenty of people who are rich or not very good investors. And vice versa. So a credit investor is to protect the wealthy. The gatekeeping. So they get access to the.

great deals. It's like why companies stayed private longer, right? They stayed private longer because the only people that could invest were accredited and qualified purchasers. And that's, you know, they invested into Tiger Globals and the Cotos and the, you know, Tiro privates and the Wellington's. And they kept these companies private. Now through SPACs, we can take these companies public faster. We can get them into the hands of individuals faster. You can own these companies of the future. And it's a democratization of access. Again, topic for an other day. But the fourth risk you can take is leverage and leverage is just a tool. 100 to one leverage in crypto? Bad idea. People still do it. Dumb idea. 100 to one leverage in

fixed income? Dumb idea. Not quite as dumb as 100 to one in crypto, but still a dumb idea. 30 times, 40 times leverage, still a dumb idea. We got banks in Europe 40 times leverage. That's a bad idea. Look, you want to use leverage. Everyone leveraged their house, four to one. Other people lever other assets. You want to use margin debt. But make sure you understand how it works. If you use 100 to one leverage, you need a 1% move and you've lost 100% of your equity. And most people don't think of it that way. There's like, oh, the price is going up, so I'm making more money.

Yeah, but. And I'm a big believer that credit risk, not very attractive. Equity risk today, not very attractive because of all things we've been talking about with the money printing. Illiquidity risk is the best I've ever seen because most people don't want to be a liquid. And here's something for everyone on the call. So I have this thing that I talk about. My daughter, when she first got her job,

she's a pediatric oncology nurse, and she worked nights. And she called me up one day and said, Dad, what should I do with my 401K? And I just got angry. My daughter has no business being in charge of her 401K, not because she's not smart, not because she's not a wonderful person. I mean, she's doing God's work as a nurse.

But she works nights. She's tired. She didn't have any interest in the market. She didn't want it. and she's not educated in management of her assets. And why do 401ks exist? They don't exist to help the average investor. They exist because the mutual fund companies lobbied to create them.

Because back in 1986, you used to have to have a defined pension, a defined benefit pension fund, and the company took care of you after you worked for the company. And they said, oh, no, no, no, no, no. By going from defined benefit to define contribution, you cut the cost to companies by 30% that went straight to the bottom line. How did they get that done through lobbying? Which is just a fancy word for corruption. And so the mutual fund industries get really, really rich. And the average person, it should, look, so what does my daughter do?

And she's great, she's smart, but she does one over end. She got five choices. She puts 20% in each, and that's how the average person invest. Well, why should she own any bonds out? It should be against the law for a 25-year-old person, a 35-year-old person, a 35-year-old. person to own bonds in their 401k. You can't touch the money for 50 years. You should have a hundred percent in venture capital, growth equity, real estate, commodities. It should be against the law to own bonds. Right. But then it wouldn't be profitable for the mutual fund companies. So you got to consider the source and you got to consider why things exist. Remember a couple years ago they were trying to get the thing, the rule passed called the fiduciary act where you had to invest in ETFs instead

of mutual funds because they were lower fee. Guess who wrote that? Bill, the head of Vanguard and the head of BlackRock, who were the head of the ETF groups, because they lobbied a lot to get the ability to write that. And thankfully, look, Mucci and I were friends. And Mooch, he had 10 days and off in the administration, but in those 10 days, he convinced them not to do that, thankfully. But I just, I do get angry about this because the average person has everything stacked against. them. The average investor has everything stacked against them, from accredited investor rules to the inability to access talent to an inability to access the best assets in the private

markets. They can't get into Sequoia and Kleiner and all the great venture capitalists. They have no chance to be involved in private real estate or private energy except in crypto. Bitcoin is a venture capital investment. It is a D-round of a late-stage venture capital investment. Why? Because if I want to own Amazon, Amazon is not a company. Amazon is a network. Amazon doesn't make anything. They're a search engine. They match buyers and sellers, and they take a cut. They take a very large cut. A friend of mine bought this company called lock laces. It's the thing that runners use to slide down their shoelaces so they don't have to tie them. They bought it. And he went to Amazon and said, I want to sell on Amazon. They said, We take 45% of revenues. He said, what? 45%? No way. Like, all right, then you're not on. It's like, fine. And it was a good thing. Because sales went up 10x. So he made five times more by putting it on Amazon. So they are the unbelievable network. But a network grows, according to Metcalf's law, and it grows exponentially. So the most valuable companies in the world today are networks, Amazon, Apple, Facebook. Those are not companies. They're networks.

Bitcoin is a network. It is the fastest network to $100 billion ever in history. It's the fastest network ever in history to a trillion dollars. It will be the fastest network to $10 trillion and then $100 trillion. And what people don't understand is how exponential math works. If I say to everybody on the call, what's two times two? Four, easy. All right. What's 17 times 23? I'll wait. Let's give Vitalik in here. That's the limit of human intelligence. The average person cannot do that in their head. They need a calculator. So what if I say, how about nonlinear regression? How about parabolic exponential growth? Huh. Probably not good at that. And I use this example all the time just to make a... If I take 20 steps across the office, I'm at the other side of the office. Linear steps,

20 linear steps, other side of the office. If I take 20 exponential steps, I go around the world twice. And that's the beauty of being able to invest in the protocol. calls themselves, which are venture capital investments. You can own them no matter what's your net worth. You can own them directly. You can own them in fractional pieces. You don't have to own a whole Bitcoin. You don't have to own a whole Ethereum. All of these things are democratizing access to capital formation, business formation, wealth creation in a way. And imagine a world, this is where my mind gets blown. Imagine a world where every asset, every stock, every bond, every current. every commodity, every piece of art, every piece of real estate, every private business,

every everything is digital. Trades 24-7, fractional ownership, and I have an algo. Instead of me, trying to wake up and figure out what to do with my 401K, I have an algo that owns a little piece of that people, owns a little piece of the most valuable or the best performing asset in the last 10 years, which is not Bitcoin. It's collectible Porsches. You know why? Because of the dentist rap phenomenon. So the dentist rap phenomenon is this. Dentist go out. buy a Porsche. They don't know how to drive it. They think you're allowed to accelerate and turn the steering with the same time, which you should never do. And they wrap the car around a tree. And that Porsche is out of commission. So over a number of years, there's one or two left. And they become rare. Back to rare assets,

scarce assets. There are three guys in the world, Jerry Seinfeld, Jay Leno and John Shirley, number three guy at Microsoft, who will pay whatever it takes to buy that collectible Porsche and put it in a garage and buff it with a cloth. I'm like, dudes, at least drive them. At least let us see them. Put a museum or something. But the more scarce an asset is, the more valuable it is. But imagine an algo that owns a little piece of that, that owns a little piece of agricultural farmland in the Ukraine, owns a little piece of an innovative company startup that's going to, I was talking to this Israeli company the other day. They have a technology, and I don't know if it works, but I'm going to find out. They have a technology. They think they can put cryptographically secure

technology into cloud computing. That'll be big. Hey guys, I hope you're enjoying the episode with Mark Uscote so far. In the second half of this podcast, we go into the concept of Ethereum as the new bastion of emerging markets. Mark loves to invest in emerging markets and takes the point that perhaps Ethereum is the biggest and best frontier of emerging markets that currently exists in the world today. We also get his opinion on Ether as a monetary union.

it is Mark sold on the concept of ether as money. All of these fantastic conversations and more. But first, we have to get to some of these fantastic sponsors that make this show possible. Guys, we've entered a bull market. Now is the time to start building your crypto empire, and you should do it on Gemini. You already know Gemini is the world's most trusted crypto exchange, but now you can do even more than trade. You can earn. You can take one of your crypto assets and park it in an interest-earning Gemini account. where you can get up to 7.4% annualized. There's nothing more satisfying than earning passive income on an asset that you're already bullish on.

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Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswop ecosystem is the Uniswap Grants program is now accepting applications for grants. We have been saying this for a while and we'll say it again. Dow's have money and they are in need of labor. If you think that you have something to contribute to the uniswap Dow, apply for a grant to

uniswap. Just look at the size of the uniswap treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the uniswap Dow? No matter how big or small your idea is, you can apply for a uni grant at unigrants.org and help steer uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for bankless and you can do the same for your project. Thank you, Uniswap, for sponsoring bankless. Mark, there's a lot of through lines that we've gone through over the last little bit. And a lot of what you're saying, I find a ton of residents, right? And so to back up a little bit, you talked about how you love to invest in innovation. You love commodities. You also love

emerging markets. Also, accreditation laws are really gatekeeping young people and non-accredited investors from accessing these sort of things. And all of these automation strategies are actually ridding people of their self-agency towards investing. And when you just said that all these assets can become digital and cryptographic tools, the through line that I'm seeing between all of these things is Ethereum. And I really want to turn to the conversation there because Ethereum is the world's largest emerging market as a digital native economy on the internet. Oh, man, that is a new hashtag. I love that, David. Man, I'm stealing that. And not only, is Ethereum, the internet native emerging market, but also Ether is the commodity asset that powers that

native economy. And also, people get to access illiquid markets, as you've said, with these defy tokens, right? Many defy tokens, instead of going to seed investments, maybe they do, maybe they take one seed investment, but they go to, like, quote unquote, public markets on Uniswap very quickly. And that's why I think there's this. reservation from the legacy institutions watching these defy tokens like uniswap go from four dollars to $40 in under six months. And they say, that's a Ponzi. That's a scam where all these young people who are using these protocols get access to these upsides that they've never been able to to access before because they are not gate kept by the accreditation laws. And so I want to, I want to,

you bring up. Go ahead. No, no, you bring up so many great points. But the really, really great one that that I think people will miss is no one says that the returns earned by venture capitalists are a Ponzi. No one ever says, oh, I put a million dollars in that company. Like we put $3 million in this company called Beyond Meat. Now, I wouldn't eat it, actually, because I got seed oils and all this stuff. But I'm really happy that I took out $150 million. Now, no one would call that return a Ponzi.

right but if it happened in the public domain oh it's a Ponzi like no no no you're missing the point by allowing access to capital formation company formation venture capital process you get a multiplier effect you get that illiquidity premium you get that that that what used to be a discount that was can't get it too excited um you get that discount that was basically uh created by forcing that only wealthy people could be involved by now having more people get involved and that discount now gets realized by everybody. And when something is a big return, people want to say, oh, it's luck or it's it's a Ponzi. I mean, no. People are trying to have like rid themselves of cognitive dissonance of missing out on it. That's why Bitcoin has such strong tailwinds. It's like,

oh, 20,000 percent gains that I missed out on must be a scam. And I'm going to go sleep easy at night knowing that it's a scam. Yep. But your point about the digitally native land or the biggest emerging market being Ethereum is exactly the way I talk about. Again, I'm old enough to remember that this guy, Vinceurf, invented this thing called TCPIP back in the 70s when he worked at DARPA. And it took until 1994 for Tim Berners-Lee to come along and invent the internet.

And Tim, right, it's not a rich guy. He's doing fine. He's a professor at MIT. And actually has a cool crypto company that may make him. I'm a really rich guy. But he's not a rich guy because he invented www. I mean, he created the first web page. And there were 80 internet protocols, 80. Today, there are five, right? There's TCPIP, which is the base layer. Then you got SMTP for email. You got HTTP for websites. You got FTP for a file transfer. And you got www. dot that ties everything

together. It's the toolkit. As we go forward and we say, oh, there's all these cryptos. No, they're not. there, 12 cryptos, there's a whole bunch of utility tokens. Most of them are going to zero because they were just crowdsource venture capital, but you didn't have a right to equity debt or current cash flows. So most of them are going to zero. But the ones that don't, like we have a little one called the graph and it's done really well. And it's now powering defy and it's pretty interesting. But a lot of them are going to go to zero. But cryptographically secure technology is not going away. So that's first. Cryptocurrencies as protocol layers are not going away. And the way I view it, And maybe this is wrong. The way I view it is Bitcoin is Bitcoin is. Okay. Filecoin will be FTP.

Now, SMTP and HTTP, I don't know, Pokedoc, Cosmos, Solana. I'm not sure which one wins there, but one of them is going to win. And then on top is ETH. It's the www. of the internet of value, or the trust net, as I call it. And that has been established. And everybody says, oh, no, something else. is going to come along. It's not the way it works. So Paul Romer won the Nobel Prize two years ago for what's called the law of increasing returns. When I was in business school back in the 80s, I read his paper in 87 and I said, man, this guy's going to win the Nobel Prize someday. It took a freaking long time for him to finally win. But the law of increasing returns explains two things. So one, why all the car dealerships are in the same place, why there's always a Burger

King across from McDonald's, or there's always a target across from Walmart, that concentrates right, is leads to higher wealth, right? If you have one gas station on a corner, you get X, if you have two, you get four X. If you have four, you get 16 X. So you get a lot more revenue by having more. The second part of law of increase in return says it's not the best technology that wins. It's the technology that gets critical mass first. And most people don't know the story. I grew up in Seattle, so I know that there were two competing operating systems for personal computers, DOS and CPM. CPM, far better, right? Never crashed, more stable. We wouldn't have to restart a computer or

phone all the time. And so IBM was building personal computers. They flew to Seattle. They met with the Microsoft guys. And I joke, look, I grew up in Seattle. Most of my friends don't work anymore. I still work because I wasn't smart enough to go to work. But if you've ever seen the picture of the original Microsoft 11, you'll forgive me. They were kind of rough looking. We're all rough looking in the 70s, but they were rougher than most. And so they show up, they meet with Bill. They think he's the coffee boy. They're like, we're out of here. They go to California to meet the husband-wife team that founded CPM. And the guy's like, not meeting with you, sign my NDA. And we're like, we're IBM. We don't sign NDAs, right? You should be kissing our feet.

He's like, nope, not meeting with you. So they went back to Seattle, signed up DOS, and the rest is history. So it's not the best technology that wins. It's the technology that gets critical mass. and whether Bitcoin is the best technology or not, I can argue that it is. It got critical mass first. And the Lindy effect says the longer you survive, the longer you will survive. And in an open source world, there's no way to MySpace it, right? You can't have Facebook come along and do better because I can just copy, paste onto chain and make it better. Ethereum is different in that it may or may not be the best technology, but because it gained critical mass first, it now has more. use cases and the same way that TCPIP became the base layer of the internet and Tim didn't get rich because he didn't own TCPIP the people who got rich or Zuck and everybody else who

built free application by way if it's free you're the product remember that free applications and he got rich by monetizing your data and now we can own a piece of that protocol. We can own ETH and it was, oh, it's a shit coin and oh, it's a Ponzi scheme. It's going to get rug pulled. Like you're missing the point. All of these things that are built on this platform, particularly the defy world, actually generate real revenues. We just made a ton of money with Coinbase direct listing. We're really happy. And I didn't make as much as the guy who put in $300,000 on day one, but we did okay for our shareholders. And we're really happy. But there are companies on Defi that have a reasonable close approximation to Coinbase's run rate and Coinbase's

$60 billion company. So I think there's a lot going on that the average person just can't really understand. And it's not because they don't want to understand. I mean, it's because they're busy and they've got their life and they just haven't spent it. I'm guilty. It said, I made lots of bad decisions. in 2013. I was introduced to this really early, had a chance to, but I didn't get it. I joke. I wasn't running drugs on Silk Road, not a cryptography student, didn't get Bitcoin in 2013. I got infrastructure and I made tons of money in infrastructure. We did Corbett, we did Coinbase, we did lots of stuff that had done really well for us. But I was late to the party in Bitcoin, but now I'm a big

believer and I'm done pretty well. I'm not, again, no one's crying for me. But it took doing the work. me going from spending zero time to 80, 90% of my time and loving conversations like this, where I get to really dig deeply into the next level. And, you know, it's like this conversation I had with these founders in Israel the other day. They're doing something that is really interesting that will take this innovation to the next level, where we intersect with the traditional universe. And I always talk about, you know, get the metaverse and the universe. And the universe. and they were like this, and now they're suddenly overlapping a little, but pretty soon it's all going to be won. And there will be opportunities to really exploit that overlap an opportunity.

And it just triggers one last funny story that I think is so cool, which is the reason Tim Draper became a, he was already a billionaire, but he came multi, multi-billionaire because of a sword. And it's a great story. So his friend was from South Korea and was telling him about this story where his son wanted 40 bucks to buy a sword. He's like, no, I'm giving you 40 bucks. Your mom's not going to let you have a sword.

He said, it's not a real sword, dad. I want a virtual sword. I want to think in my game. And the dad's like, no, I'm not giving you 40 real dollars to buy a sword in your game, no. And which I fight with my son just about every night on Brawl Stars about this. And, or me on Pokemon Go, actually,

or actually do put real money in it. But the reality is that Tim heard this story and went, wait a second, virtual money, virtual goods. Wait a second. Didn't they just close down this Silk Road thing? And he went to the FBI auction. And they were auctioning off the, I think it was 260,000 coins. And the price was $3. And everybody was trying to steal them for like a buck 50, a buck 60.

And Tim bid $3. And one cent. Got them all. That was good. Good trade. It was good. Well done, Tim. Good trade.

Mark, I guess part of what David was asking, I think, is it sounds like you're very bullish on bankless. You're very bullish on defy as a capital asset. And you're probably bullish on ETH and its network effect and Ethereum as an asset. One thing that we've had some back and forth with Pomp is he believes that Bitcoin is the only monetary asset that can exist in crypto. And I understand where he's coming from. because he's like, look, it has the history, it has the network effect, it has the fixed supply, 21 million, all of those other things. Part of the bankless platform is we are looking for the emergence of new crypto monies.

Bitcoin is absolutely one of those. We also think there are other emerging assets that can also receive a monetary reserve type status and that ether is one of those. It has an issuance policy that is always going down, for instance. It is used as an asset within the Ethereum economy. It's used as money for NFTs. It's used as collateral backing all of the loans on like Ave and Maker or a large portion of them, for instance.

What's your thought on that? So it's broader than the question of, are you bullish Eath? Because I think you'd say, yes, I'm bullish ETH. So yes, I'm bullish this platform, right? I'm bullish DFI. What do you think ETH's potential is to also become a, world monetary asset in the way that that Bitcoin is. Yeah. Look, I tweeted, actually last night, that, you know, I hate to disagree with Pomp

for the first time, which someone pointed out, he's joking. Mark says, if two people always have the same opinion, one is unnecessary, which is true. And Pomp and I have disagreed on many things, and we've had great conversations late into the night about everything under the sun. And, you know, he is a good friend and, and partner and compatriot. And, and, and, look, disagreement is good. This idea that we, the world in which we live has, has tried to tribalize and, and, and, and discourage open debate and dialogue and discourse. You know, discussion and debate is about seeking truth, not convincing the other person of your side. That's not the goal. But that's what.

social media does. It's what, you know, media does. And so this idea that the people can have a different opinion and therefore they don't like each other or, you know, it's bad. No, nothing can be further from the truth, right? We are, we should all be seeking truth. And so to answer your question on, you know, Pomp is absolutely a maximalist and he definitely believes, as you described, and I don't want to put words in his mouth, but I believe differently in the same, sense that I agree wholeheartedly with him that Bitcoin is money, just like gold is money. And remember, money is different than currency. Money exists in the absence of a liability. And Bitcoin has no liability associated with it. It is digital gold. It has all the properties

of gold as money. And now it is more scarce because of the last having. And therefore, I think it is on a course to become a bigger part of money. Right? So if you think about, I have this great chart and it shows that Bitcoin today is roughly in the circle with all the fangs. So it's a network that's equivalent to these other networks. The next step is gold equivalence, where it becomes the equivalent of a monetary part of gold.

Now, pure gold equivalence would include all the jewelry and, I don't know, maybe. But $4 trillion is kind of where we get to monetary. coins. Because gold is the only thing that's a currency and a commodity. When people trade it like a commodity, the price goes down like right now. When people trade it like a currency, the price goes up, like since 2011. I mean, I'd be from 2000 to 2011. And so I think if you think about it in those terms, I can make the case that, yeah, Bitcoin will be that base layer protocol, that monetary protocol, and it'll be the TCPIP of the Internet of value. And so, second layer systems like Lightning and others will create payment rails that'll replace Visa and

MasterCard. And so I can I can go with that. I view ETH differently. I view ETH as this WWW. This toolkit that allows you to build all of these other things. Now, unlike WWW dot, which you can't own, to your point, you can own ETH. You can use ETH as collateral. You can't. So I will, I will agree with you, which doesn't mean I disagree with Pomp, there's a difference, right? I can agree with you and agree with him. I will agree that ETH could, could have a monetary role. Now, I probably don't see it being used as a monetary store. Like, look, I do think some central banks are going to own Bitcoin. And some may already have it, right? China may already have it. Russia. I may already have it. And look, I think China is the first digital currency, Central Bank digital

currency. I think Russia's second. I think we come in third and hit, I'll say, I hate to quote Ricky Bobby, but if you ain't first, your last. So, you know, definitely needed to be first. But it's bad. So China's going to win that one again. And China's going to win the next century. That's just going to happen. That's not a bad thing. It's not a bad thing. So we'll do fine. just like fine to live in the UK, even though they're not the World Reserve currency and they're not the superpower anymore. But I could see a place or in a time

where ETH's market cap got big enough where people said, yep, we could use it too. But I don't think it needs that to be wildly successful. I don't think it needs that to power what I think will be an even bigger opportunity set, which is defy, which is, again, every stock, every bond, every currency, every commodity, every piece of value, every derivative contract, every structure product, every everything is going to code. All of it's going to be on smart contracts, all of it.

And people are like, Mark, that's ridiculous. I'm like, no, it's not. It is. Mark, I'd like to add in here that ether, the asset, is actually currently at a market cap that Bitcoin was at when the Bitcoin. Bitcoin-on-balance sheet's conversation started. Yeah. And it said, I don't have any problem with the idea of owning ETH as a monetary asset. I really don't. And I kind of do too. I mean, I do. I mean, I have, I don't know what the

exact numbers are, but call it 81% or 82% in BTC and by 17, 18% in ETH, and then some other various and sundry percentages and in smaller projects. But that kind of the way my holdings would work out. It's cool. It's cool to hear you talk about this, Mark. And, you know, I know you are, you know, a very open-minded investor in general. And that's something that I've learned from many of your other podcasts. It's like, hey, you got to keep an open mind. And, you know, there's a difference between having conviction and something and actually changing your mind and, like, figuring out where you were wrong and it's really important. And it's hard, I think, in investing in crypto to strike the balance. Like, how do you know whether it's conviction that's making you hold this

thing in the face of everyone saying, oh, 95% drop, it's gone, it's over, the thing is dead, it's used for drug lords and scam artists, all ICOs are complete frauds. You know, are you convicted in that moment? Or are you sort of, do you have a bag bias in that moment? And you just need to admit that you're wrong. I want to maybe end on this question, which is, what advice do you have for the crypto natives? Like, again, a lot of people, as we started this podcast, listening to bankless, crypto is really their first experience in investing. They're learning about investing through crypto, which is sort of bizarre.

But I think they're leveling up faster than they might in the real world. But there's still some timeless lessons that can be applied from traditional. invest in here. What are those? Share some. So the first is to understand the difference between investing, trading, speculating, and gambling. And none of them are bad or good necessarily, just like introvert and extrovert, right? People like, oh, introverts are not cool and extroverts are cool. It's not what it means. It's how you recharge your battery. At the end of a long day, do you recharge by with other people or do you want to be by yourself? Neither one is right or wrong. Neither one is good or bad. But societally, we attach meaning to words. And so if I say gambling, oh, that's bad.

No, not necessarily, right? Gambling is gambling and understand what it is, right? It's partly entertainment, partly excessive speculation. And to define it really, it's where unfortunately the odds are actually tilted against you, so the longer you do it, the more you will lose. So it doesn't mean you can't win as a gambler. You can. But the odds are tilted against you. Speculation is where you are putting capital at risk simply based on price, right? And it is, you know, you haven't done any work. You haven't, you don't really have any conviction to your point. And you're basically just speculating on on movement. Trading is the same idea you're acting on price movement but both directions, right? You're okay with things going down because you might go short. You're okay with things going up

because you might go long. And so I can be a trader either way. I can go long. I can go short. I can trade actively. But none of that is investing. Investing is very different, right? Investing is where you hold an asset because you think the price is different than the value of the asset. You buy things where you think the price is under the value, and you sell things where you think the price is over the value. And so investing has lots of theory behind it, right? Markowitz won the Nobel Prize for this idea if I take cash, which is the riskiest asset there is, actually. Seems really safe, but it's really risky because you're chewed up by inflation. and I add bonds, which are riskier, meaning they have a higher volatility, and I put those together,

the risk of my portfolio actually goes down. Well, if I add stocks, the risk of the portfolio goes down. Well, how does that work? Well, it's because the assets are uncorrelated, and therefore they zig when the other zags, and your overall portfolio return is smoother, and your compounding effect is higher. Right? If I can truncate my downside, the upside takes care of itself. And it's the, you know, if you're down 10, you've got to be up 11, down 20, you've got to be up 25, down 50, you know, got to be up 100. So if you can truncate those losses through diversification, you win. So first piece is understand what you're doing. If you want to have a gambling account, go for it. It's great. Just make it small because you're going to lose it all.

And I used to talk about there's three buckets for an investor, right? There's the get rich bucket, right? And that's where it's your friends, condo deal, your brother-in-law's, you know, startup company, you know, some tip you got from a broker, you're going to lose all of it. So just keep it small, right? 10 to 15% in the get rich bucket, go for it. Then you got 10 to 15% in the liquidity bucket. And that's what you need to fund your lifestyle. And that has to be super safe, you know, cash in short term duration fixed income, maybe a little gold, but stuff that you can get liquid and that you can use. Then you got 70 to 80% in the middle. That's the stay rich bucket. And the stay-rich bucket, okay, look, getting rich is about concentration.

Every great fortune in the world is created from concentration. Concentrated stock position, concentrated business ownership, concentrated real estate position, all of it. But every small fortune comes from concentration. How do you create a small fortune? Start with a large one and stay concentrated. People say, oh, I don't want to pay the taxes. Wait long enough you won't have to, right?

Cisco went up to 286 times earnings back in 2000. And then it went down 84%. And to this day, it's still not back to where it was in 2000. Think about that for a second. In fact, if you bought the Fab Four stocks that were can't miss in 2000, Microsoft, Intel, Cisco, and Qualcomm, and you held them to today, you're still down. That is sad. Frightening.

Frightening. So concentration makes you rich, but diversification keeps you rich. And so as a young person, you should have more concentration. You should take risks. And Steinhart said it best. Michael Steinhardt, our famous hedge fund manager, she says, make all your bad decisions and make all your mistakes when you're young, when it doesn't really matter. And so investment is about willing to be wrong. With every investment, we've become richer or wiser, never both, right?

If you make money, you don't learn a thing. It's like the degenerate gambler, goes to Vegas, right? It's my brother, day trading back in 2000. First trade he made, made more than his salary the previous year. Worse than it could have possibly happened to him, because what happened to the rest? He lost everything. Literally lost 95% of his money because he thought if that was skill instead of luck.

And the difference, to be able to differentiate between skill and luck is really, really important. And luck is very good. I like luck. I'm a big fan of it, right? It's like Thomas Jefferson says. It seems the harder I work,

the more of it I seem to have. I love luck. It's very good. But you have to differentiate between skill and luck and about probabilities and possibilities. And part of the problem for most investors is like most of us live in fear. And the trophy, the participation trophy world in which a lot of people listening to this grew up doesn't make it better, right? We're not allowed to fail, you know, no one fails. Everybody gets a trophy. Bologna.

My 10-year-old, when he was four, okay, I have older kids and a little guy who's tailed caboose 20 years after our first two. Same wife. And she's the miracle. And when he was four, he went over in soccer. And they gave the team a trophy. And I took the trophy and I put it in trash. And my wife's like, what are you doing? I'm like, I didn't earn that. Oh, you don't get trophy for losing all your games. No, this world is about winning. Okay. The problem is we're so afraid of failure and we don't follow Will Smith. Fail fast, but fail forward. And winners in investing lose more often than losers. because losers are so afraid of losing that they don't take risk. Right? So they don't do anything. And they stay in cash. And they stay in bonds.

And they don't try crypto. And they don't do this. And then they miss the 2,000 percent return and say, oh, that was just luck. No, it's because you did what you're supposed to do as an investor. Take intelligent risks. Take risks where you were compensated. Build a portfolio of, you know, concentrated ideas. Let the winners run, right?

Julian Robertson, mentor, friend, you know, I've been very lucky in my life to have great mentors, and that's the thing everyone should do is seek great mentors. And actually podcasts make that easy because you're going to talk to a lot more people than you could person to person. They do. But the key is that he said,

you know, I asked people, what made Julian a great investor? And they said, oh, he had an uncanny ability to double up. It's the hardest thing to do in the world, which when something's working, put more behind it. And so that comes from conviction. and how do you get courage to double up?

Only if you have conviction. How do you get conviction? Do the work. The average person doesn't do the work. The average person's afraid of losing. They're afraid of failing. You've probably heard this story, right? My wife's only heard me speak one time.

She came to Vegas for a conference. And at the end of it, she said, Mark, you can't say things like that. Like, what do you mean? She says, well, you say things with such conviction. I said, what's wrong with that? She says, well, people might believe you. Well, that's the whole point. She says, well, what if you're wrong?

I said, that I'll change my mind. I'm wrong all the time. I don't mind being wrong. And this is the one thing I hate about Twitter. I love Twitter. I love Twitter. We're together because of Twitter. I love Twitter. I have met incredible people. I get to meet the president of the biggest bank in Greece because I post a picture of me in Athens during the banking crisis. A friend called me and said, hey, you're in Athens? Want to meet the president of the bank? I'm like, yes. And that was cool. So I love Twitter. But the one thing I hate, don't go through my old tweets from three or four years ago and say, oh, you said this and you were wrong. I'm like, I've changed my mind seven times since then. Please, I'm wrong all the time. It's not about whether you're right or wrong. George Soros said it best. It's how much money you make when you're right, how much money you lose when you're wrong. This game is not about being right all the time. It's about taking risk, risk that you're compensated for. It's about a constant discipline to rebalance. It's about a constant discipline of, you know, evolving to new ideas about cutting your losers fast. Again, where if you did something because you didn't have conviction, you hadn't done the work and it goes against you, you're not right. You're just wrong. Get out and move on to

something else. There's so many good ideas, so many good opportunities. And if you don't try them, you can't win. And so sitting back and complaining about everybody else and saying, oh, they just got lucky, that's just lazy. It's intellectually lazy. It's like teleb, right? It's going to zero. I've been saying it for eight years, dude. Eight years. At some point, You just look stupid. Well, actually, he's been long past since looking stupid. And look, I think Peter Schiff does it to, you know, get interest. It's like no, he's a PT Barnum believer. You know, all publicity is good publicity. So I think part of it's intentional. And now he's, you know, barring with pomp is to drive, you know, traffic to a site.

So people buy a mutual fund. Look, Mark, these are timeless lessons for every crypto native. What you're talking about is make sure you're bucketing, your various, know whether you're gambling or speculative. or investing, invest with conviction. These are all themes that we talk about on bankless so much, and you've just summarized them very, very well. Guys, go listen to the last five to ten minutes where Mark was talking about this again, because we need to embed this knowledge in our head.

It's what's going to get us through both this bull cycle and then future bear cycles that play out in crypto. But long term, look, we are bullish this asset class. If everything pans out the way we talked about at the beginning. beginning of this episode. Crypto and digital assets are going to do quite well. Mark, thanks so much for sharing your expertise and experience with us today. Now, Ryan, Dave, thanks for having me. This was a ton of fun. I say, I was on a show the other day and someone said, you know, the secret to a great podcast is get a good guest and sit back and shut up and make money.

And like, nope, nope, nope, that's not how it works. The secret is, you know, try to find some good guests. that's fine. But then do a little research, figure out a couple good questions, actually listen to the answers, and then formulate better questions, and let the conversation flow. And you guys did that flawlessly, really enjoyed this, could have talked all day, and hopefully we'd do it again sometime. Well, it's fun. And Mark, when you get the chance, keep trying out those D5 protocols, man. Using Barnbridge is really awesome to hear. So you are in the bankless club, my friend. All right. I appreciate it. In closing, guys, Action items, of course.

Follow Mark on Twitter. Mark, what's your handle? I'm at Mark Y-U-S-K-O. Great tweets, great insights, and make sure you do that. David, we also need some five-star reviews on Apple. I think we're doing really well, but it's a bull market. We need some more five-star reviews to get bankless to the top of the charts. How are we looking now?

Yeah, if you guys want bankless to go into more ears, we need those five-star reviews. We are still not in the top 10 iTunes. business and investing podcast. And we want to be there. And so if you guys can go and give us those five-star reviews wherever you listen to podcasts, it would greatly help accelerate the bankless movement. Risk and disclaimers, as usual, of course, guys, none of this was financial advice. Bitcoin is risky. Crypto is risky. So is ETH. So is D-Fi. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.

Thank you.