The Pomp Podcast - #1222 Pomp On Bitcoin Journey | FX Summit 2023

Episode Date: July 12, 2023

Anthony Pompliano talks at FX Summit 2023 in Miami about his bitcoin journey, bitcoin vs altcoins, bitcoin as a threat to US dollar, bitcoin halving, fiat currency devaluation, craziest experience in bitcoin, and more. ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat

any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. on denim was peak fashion inline skates were everywhere and two out of three women rocked the rachel while those things stayed in the 90s one thing that hasn't is that fuzzy feeling you get when west jet welcomes you on board here's to west jetting since 96 travel back in time with us and actually travel with us at westjet.com slash 30 years it's a pleasure to have you here absolutely thanks for having me. For the two people that are sitting in the back that may not know who you are,

you want to give a brief introduction? I think it's probably more than that. I am an entrepreneur and investor. I run my family office now. About half of what we do is investing. I would say about 50% of that investing activity is in Bitcoin or kind of crypto-related startups. The other 50% is either early stage technology companies outside of crypto or in real estate. And then the other half of the family office is all operating businesses that we own and operate. So which one of these takes the majority of your focus now? Is it the investing, the analysis, the media? What's the majority of the time spent on? Just depends on the day. My wife and I like to joke all the time that half my job is like doing

the things that are offensive. And then the other half is just putting out fires. And so one of the benefits of doing a lot of different things is it's intellectually stimulating one of the downsides of doing a lot of different things is when shit's on fire it tends to everything be on fire and so you got a lot of work to do for sure i've seen you be consistent for so many years in the space and so i really want to get your take on like this timeline where if you can give us a comparison of crypto 2016 2017 to crypto today what are some of the biggest differences that you're seeing? Yeah. So I first heard about Bitcoin in 2014 when I was working at Facebook. We just hired David Marcus from PayPal. And he was talking about Bitcoin and integrating it into

Messenger and all this stuff. And I was just like, what is this? I did nothing with it. And so I don't really have that much context other than people inside of Silicon Valley were talking about it, but it wasn't necessarily mainstream or widely accepted. In 2016, 2017, there was this massive bull market. Bitcoin went from about $1,000 at the start of 2017 to $20,000 at the peak. And it was the first time that really it kind of broke through in the mainstream media. The media had previously written about it, but I think they were starting to be like, hey, wait a second, all these idiots on the internet actually are making money. What's going on here? And what was interesting about it was there was really kind of the first time

where it was Bitcoin and something else. And that was all the ICOs. And the ICOs got so crazy that at one point, somebody sent me a link and they're like, hey, there's a new project. They're raising some money. If you're in, just put on this spreadsheet, your name, the wallet address, and how much ETH you're sending. Like, I'm out, right? Like, if that's how we're tracking stuff, like I'm out. And I was pretty, you know, I think anti the ICO movement, less because I didn't think that people weren't going to make money, but more so it was just very clear to me the regulators we're going to step in. And that was unpopular at the time. I think now that's kind of a more widely held belief. The biggest difference though I see between then and now is anyone in here think

that all of crypto is going to zero? Probably not, right? We may debate what asset's going to be successful, how big will it be, what type of people are going to adopt it, is it a financial kind of speculation tool or is it a technology that people actually use in products? All that stuff's up for debate. But in 2016, 2017, there was a real point when Bitcoin dropped from $20,000 to $3,000. A lot of people were like, this could go to zero. At the end of 2018 in December, myself and two of my partners, we issued a kind of public bet. And we said, we'll pick Bitcoin. Anyone on Wall Street, you can pick any other asset in the world for a decade. We'll put up a million dollars and whoever's asset is more successful gets the money. Not one person took

the bet. And what that said to me was, wait a minute, they may publicly be not talking about this. They may be pretending like they're not paying attention, but they realize that it's an asymmetric asset. And so whenever you have this asymmetry in a financial instrument, what ends up happening is you can't count it out. And that's what we saw ultimately. So it came flying back from $3,000 to the $69,000. And so I think now people are like, okay, this is going to stay. It's going to survive in the world.

The big questions now are in the United States, outside the United States. Which assets are going to be considered securities? Which ones aren't? I don't necessarily have those answers, but I think that there's just more nuanced conversation and there's less of this binary, will it survive or will it not?

There's so many great topics for us to touch on. If we can just cover, what is your take on, let's say, bitcoin versus the altcoin market and do you feel like anything has changed in your perspectives in the past three four years on that or do you still feel like there's a clear separation between those assets yeah so i mean you can break it down uh by a bunch of different perspectives so first start with uh the technology itself i believe that bitcoin is the only truly decentralized technology now everyone in this industry is very focused on the word decentralized it's almost become like

this marketing term right but you have to remember decentralization has trade-offs it's not good or bad. If Amazon was decentralized, that would be horrible for their business, right? Amazon's all about efficiency and being able to quickly deliver something. It still amazes me, I can press a button on my phone so they can show up, you know, literally hours later. And so Bitcoin being decentralized is because it's specifically optimizing for security, censorship resistance, etc. There's many other technologies that people are building, where they're basically trying to use the idea of decentralization, but still capitalize on efficiency, speed, low cost, et cetera. Now, Bitcoin believes that you can do that on other layers. So layer two, layer three,

some of these other technologies came out and they said they were going to do it on the layer one. So I think that that's probably one of the biggest differences is that Bitcoin is actually decentralized. The creator is unknown. I saw somebody joking on Twitter yesterday. They're like the SEC is going to send a cease and desist to the creator of Bitcoin, but they can't find them? Again, haha, right? Got it. But like, it's highlighting this point of, it is definitely different, right? The second is on the regulatory front. It appears that the SEC, CFTC here in the United States, but also regulatory bodies around the world have all said Bitcoin is not a security, everything else is. Now, whether that actually ends up being the final verdict or not, there's

a number of companies, Binance, Coinbase, and others that are going to go and kind of have their day in court. I don't know. Right. And I think that it's always been this like unknown risk. The community identified it early and they've been debating it for years. At some point, we're going to get that answer. Maybe it's next year, maybe it's 10 years from now, but at some point we'll find that out. But I do think that Bitcoin has kind of passed all those filters on the regulatory front. The third thing is currently Bitcoin has really been the only asset where institutional investors have warmed up to allocating to it. There's been a couple, I think, publicly announced institutions that have also bought Ether or Ethereum, but those are pretty

few and far between. And then pretty much almost everything else has been ignored by the institutional world. Some people will argue, oh, that's because they're newer and give it a couple of years and institutions will go buy that stuff too. Some people argue, no, it's because it's not actually worth anything and they're going to completely ignore it. Again, I don't know what will happen there, but I do know that Bitcoin has kind of crossed over and now is seen as one of these institutional assets. And you see that not only with public companies like MicroStrategy and others putting it on their balance sheet, Tesla, etc. But you also see a lot of large financial organizations building technologies around this. I mean, Fidelity Investments is a

massive company with over a trillion dollars of assets. They have a whole dedicated team to building all of this stuff and building technologies and custody and try to help people get onboarded, etc. And then what you see is, I don't think we've ever heard a major macro trader, Stanley Druckenmiller, Paul Tudor Jones, Bill Miller, etc., talk about anything other than Bitcoin. And again, does that mean that they don't hold the other stuff? Maybe. Does it mean that they don't yet feel comfortable talking about it? Does it mean that maybe they're worried about regulatory risk? I'm not sure. But what it does say to me is, again, Bitcoin seems to kind of have passed over this threshold and be in kind of a different category to some degree. So when I

look at those three things, I say to myself, okay, well, those are like positive for Bitcoin. What's the downside argument? And it depends on who you're talking to. If I go and I talk to somebody on Wall Street who runs a hedge fund or a big family office, many of them think that Bitcoin is the single most risky thing that they could invest in, right? They don't even look at the rest of the market, but they just look at Bitcoin and like, okay, I got my stocks, my bonds, maybe some commodities, real estate, whatever. This Bitcoin thing is crazy. I'm going to put half a percent. And so if you then go talk to like a 22-year-old crypto degen, they're like, dude, you hold Bitcoin? Like Bitcoin is by far the like boomer coin, right? It's like the least risky

thing. Why are you buying that? And so I've for years now said like, that's actually where I want to sit. I want to hold the asset that is riskiest to the most conservative people. And I want to hold the asset that is safest to the riskiest people. So it kind of sits right there in the middle. Now, what that means is, yes, if you're looking for the absolute highest potential return and you don't care about risk, then sure, go speculate on, you know, whatever latest coin is, whatever. I just think that that's no different than going and buying penny stocks or, you know, doing anything else in financial markets. If you're instead looking at it from a risk-adjusted standpoint, I think that Bitcoin probably provides one of the best opportunities across all financial

markets. And so when you look at Bitcoin's performance compared to stocks or other assets, it's down right now from the all-time high. And there's a lot of people on Wall Street who will point and say, I see you idiots. I told you. If we go back to the start of the pandemic, though, Bitcoin is up over 300%. And so this argument that Bitcoin was going to serve as this inflation hedge, right? Plenty of people in the kind of Bitcoin and crypto world said it, but Paul Tudor Jones, Stanley Druckenmiller, et cetera, said it as well. It seems to have worked. And so when you see that, you're like, okay, well, the next time that we start to see inflation rising is the playbook learned, right? And if that's the case, instead of there being tens of billions of dollars allocated

as there was in 2020, 2021, and in 2022, next time is it hundreds of billions of dollars? Again, maybe it's just we're all biased and we kind of look at it through that lens. But I do tend to think that what we have seen is Bitcoin in any moments of cracks in the legacy financial system seems to serve as a flight to safety. And so whether it's a banking crisis, inflation, debt default, et cetera, becomes pretty interesting when you're like, hey man, there's not a lot of those people holding that asset yet.

But if they start to, things change. So in terms of Bitcoin being a safe haven when everyone's trying to kind of flow out of other currencies, do you see it as a potential threat to the US dollar before I ask this next question? I don't think so, at least in the short to medium term. If you think about it,

how many people here have 100% of their net worth in Bitcoin? Yeah. Nobody. Nobody, right? Nobody does, right? Okay, how many of you here spend more than 50% of the currency that you spend is in Bitcoin to buy things? Nobody, right? And so it's no different than gold or real estate or even stock portfolios in that sense. People are looking at this as an allocation from an investment standpoint, and they're holding it. Every single investment asset is a speculative tool. And so maybe we can talk about a little bit is like most of the things that you've been taught about investing are wrong, right?

And when I say that, it really, really upsets kind of the legacy world, but it's true. So first of all, they're like, oh, that's just for speculation. Warren Buffett speculates with hundreds of billions of dollars a year. That dude's a gambler, right? You can dress it up.

You can put the suit and tie on. You can read the annual reports. You can hold your whole carnival out in Omaha. But at the end of the day, you're a gambler. That's what investing is. You're taking risk. And so if you look at that, Bitcoin is no different than any of these other assets.

The second thing is that Bitcoin is the only truth teller in the market. And what I mean by that is it's the most free market that we have. There's definitely things that are wrong with it. And I wish that it could be even freer than it is. But if you look at the way Bitcoin performed in terms of inflation,

Bitcoin ran up before inflation hit. So one of the misconceptions in investing is when inflation was high, Bitcoin was falling, that must mean Bitcoin is not a good inflation hedge. But what people forget is that markets are forward-looking. If I know that inflation is coming or I believe inflation is coming, I don't wait for inflation to come and then move my assets. I move the assets in anticipation of the event. And so in 2020, when everyone said high inflation is coming, they're printing trillions of dollars, they've dropped the interest rate,

people moved assets. Bitcoin went from $10,000 to $60,000. High inflation hit, Bitcoin stayed high for a while. But in November of 21, when all of a sudden the Federal Reserve started to say, we are going to bring markets down, we are going to increase interest rates, Bitcoin fell. And everyone's like, see, it failed. But no, actually, Bitcoin told you the truth. Bitcoin led markets and said, we are going to go down in price, and so are all these other markets. And then you saw stocks, real estate, everything else kind of follow. And so what that ultimately of leads to is that the efficient market hypothesis, which majority of investors base their investment decisions on, majority of the mainstream media base their perspective of financial markets

on, and I would even argue majority of the market itself is based on this idea of the efficient market hypothesis, which basically says everyone, given the same information, has the same knowledge and therefore perfectly priced into an asset. That's like the dumbest thing in the world, right like literally just think about this for a second we have an entire multi-trillion dollar financial system that is built on a lie and the reason why i say that is because how many people in here know that the bitcoin having exists right okay how many people in here know when it is next some people how many people in here think that the bitcoin having is bullish and will lead to a higher price okay how many people in here think that the bitcoin having is going to lead to a

lower price? A couple hands. Now, why is that interesting? We all have the same information. We know that the having exists. We know when it is, but we have a different perspective on what's going to happen. So if I tell you, I can in advance tell you next quarter, Apple is going to make a hundred billion dollars in profit. Some of you will be like, oh my God, I'm going to go buy Apple stock because that's going to be this great performance. Some of you will take that same piece of information and you will say to yourself, well, I thought they were going to make 120 billion. So they're going to actually miss. And therefore, I should short the stock because I think it's going to go down. The efficient market hypothesis is not real. And the reason why that's

important is because the only thing that is real is the market. There is no efficient market. It's an inefficient market of people who come together, who express a view, and they trade. They take positions. And so Bitcoin having this free market, if Bitcoin goes down 50% in a day, there's no circuit breaker. There's no stopping it. No one steps in and says, hey, let's halt trading for 15 minutes, right? I joke with people like that's little boy stuff. Wall Street needs those guardrails. This is a free market. And so if you then look at it and you say, hey, if you then look at it and say, they're sleeping right now. Why are the assets not trading? Why are stocks not trading right now?

The U.S. stock market is closed more hours a year than it is open. Why? It's because Americans have created a system that works for Americans. But there's a whole global base of people who want to participate in the capital markets. And guess what? 86% of all trading of Bitcoin happens outside the United States. We're just a small fraction of the percent of people who participate in this. and so when Americans are sleeping and other people are awake around the world, they can't

participate. Why is that? Well, maybe America has to be a little bit more humble and say, hey, we're playing a global game now. 24-7, 365, this thing trades in a free market, and so you can imagine, well, what would happen if the stock market that happened? They would never let it occur, right? Because it's all about control. It's all about trying to push all this trading into a short period of time, and so it goes back to this idea that Bitcoin is the free market. And what we have seen over and over and over again over the last couple of years is that everything else is a lie. Bitcoin is the only truth teller in financial markets. CPI data, people in here will think it's a lie. Some people will believe it. People will

look at asset prices. They'll say that it's a lie. But what we do know is that Bitcoin continues to trade 24-7, 365 with hundreds of millions of people around the world. And it seems to be able to tell us what is coming down the pike in all of these other financial markets. And I think it's worth at least watching it. Doesn't mean you got to buy it. Doesn't mean you got to trade it. But if you watch it, it will tell you what's happening better than almost any other asset. As accurate as Bitcoin is, it's also relatively new. So it may be hard to kind of really pinpoint what is the thing that makes it move. And I just posed the question to Glenn and Michaela while they were up here and we were mentioning how liquidity really drives the market. What do you

feel like are those driving forces that either push the cryptocurrency market to start seeing a lot of money coming in or money going out? So I have to admit, I'm not that smart. And so whenever I look at price, I just look at it as a function of supply and demand. If more people want to buy than sell, the price goes up, right? If more people want to sell than buy, the price goes down. And so the reason why I say that is I think a lot of people across financial markets, even, you know, I spent a lot of time with some of the people who run some of the largest hedge funds in the world, et cetera. It's just, it's easy to get things complicated. And so if you actually look at some of the best investors in the world, what they have figured out is, can you tell it to me

in two simple sentences, right? How many of you in here make investment decisions and could literally say to somebody else, I'm doing this because you get two sentences, no big words. that's it right in 2020 i came out and you know i'd been pretty bullish on bitcoin before i was doing a whole bunch of different investing across different markets and it was like hitting me over the head in terms of how obvious they are going to drop interest rates they're going to print money and at the same time there's going to be a supply shock in terms of the habit and so it was they're basically going to push liquidity in the market and they're going to cut supply it's going to be rocket fuel for Bitcoin. And when I first started saying it, people were like, oh, this is just like

another, you know, you think it's going to go up, you think it's going to go down, whatever. But the reason why it was so powerful to me is like, that was the simplest explanation I could think of, right? And so if you go and you look today, it's like, what drives the price? It's literally demand. Because Bitcoin specifically is a very unique asset. How many people in here know how many Bitcoin there's ever going to be? Right? How many people in here know how many Bitcoin come into the market every day. You can see it, right? And so if you know what supply is going to be, then you only have to understand what demand is doing. And is demand increasing or decreasing? So it actually, people in this market have an advantage over traditional investors, right?

If you trade stock, how many of you have woken up one day and you're like, shit, these guys just issued a bunch more equity, right? These guys just did this. These guys are buying back stock, right? Like you have to worry about the supply side and you don't know what they're going to do. They don't telegraph it all the time. And so that ends up being this really interesting thing of like the price is ultimately driven by increases or decreases in demand. The hard part is it's 24-7, 365, global investor base. Like it's not just what do people in the United States think? And so if you look at an event like Turkey or Argentina, there's all these a currency crisis. There's high inflation. There's all these issues that they're dealing with.

Those people are running to dollars, Bitcoin, anything to get out of their local currency. But they're still small markets. So it's not as simple of an analysis of like, Argentina has 90% inflation. They all want Bitcoin. Maybe. And so really what I think ends up happening, I know a lot of you guys in here are traders. I kind of just opt out of the game. I just say, look, I'm actually not smart enough to know what is the intraday or intraweek, intra-month movements of these assets. I simply want to buy this asset over time, hold it, and literally give it to my grandkids, which is like antithetical to everything a trader believes. But the reason why I think of that is you have to understand what game you're playing. And if you

can trade, more power to you. Bitcoin's super volatile. That's why a lot of the market-making firms, et cetera, all want to trade it. And so therefore, you're able to actually go and make a profit. If you're not good at trading, the next best thing is just to hold the asset for a really long time and so in some way i've kind of given up on trying to understand price and just said let me play a different game now what gives you the confidence to know or what gives you the confidence to assume that bitcoin will survive the test of time uh you know kind of looking at the regulatory environment looking at how much how many attacks there are in the crypto space and i genuinely feel like the attacks on some of the centralized institutions now are because they

can't go after bitcoin if you can't go after bitcoin let's go after literally everybody else and see what sticks. So because of all of these attacks, what gives you the confidence to know that it's going to be here? So there's, I think, two different components of this, right? The first is Bitcoin is software. It's no different than iOS running on your phone or any other software program that you use. If you understand what software is, it is words written in a database, right? Boil it down to like its most fundamental thing. It's words written in a database that then is run by all these computers around the world. One big difference is that Apple or Amazon or Facebook doesn't control that database. It's instead this decentralized network. So Bitcoin

will survive if literally aliens come tomorrow and kill everyone except for one person and they have Bitcoin running on their computer, Bitcoin survives, right? So from a technical standpoint, now, if there's only one person left in the world, Bitcoin's probably not that valuable, right? And so then there's the question about like, what about the resilience of price or the value of the asset. I do believe that Bitcoin derives a lot of value from being the strongest computer network in the world. Many of you probably heard me say this before. One of the critiques of Bitcoin specifically is this idea that Bitcoin is not backed by anything, right? Put aside the ridiculous arguments of like, well, neither is the dollar.

But ask yourself, what is the single most valuable commodity in the world today? it. It's not oil. It's not corn. It's not wheat. It's not any of that stuff. It's computing power. Computing power is the single most valuable commodity in the world. That's why things like Amazon's AWS trade at such crazy multiples if they were a separate company is because ultimately they're no different than Standard Oil 100 years ago being in control of the flow of oil. amazon controls the flow of computing power google controls the flow of computing powers the single most valuable commodity in the world so bitcoin's actually backed by the strongest computer network in the world which means that it is backed by the most valuable commodity in the world and so if you

look at that you say it's worth something but the market has to decide what that value is now what we do know is that right now let's say that there's 150 million people who have raised their hand and said, hey, I'm going to participate in this market. 8 billion people, right? And so what ends up happening is that more and more people continue to come into the market. They continue to learn about the asset. As they do that, price will continue to grind slowly up as a simple function of supply and demand. And so in some weird way, Bitcoin's survival from a technology standpoint is in the decentralization. But the resilience of value ends up being in this idea that the fixed supply only has to have increasing demand over time in order for the price to

continue to grow. And so when you see that, that's why I look at it no different than I look at real estate. Some of the wealthiest people in the world, I think it's, if I remember correctly, 70 or 80% of all millionaires in the United States did it in real estate. Why? Because real estate was built for dummies. Buy something and hold it, right? And when you think about that, you're like, wait, what are you talking about? All you're doing is you're converting dollars into a hard asset, and then you're just letting them devalue the dollar. And as they devalue the dollar, somebody else shows up and they need more dollars to buy that asset from you in the future. And so at the end of the day, yeah, you're making the investment

decision, but really all you're doing is you're allowing the structure of the market to enrich you. And so people got really mad during the pandemic when I said literally the number one thing that we can do for financial kind of excellence and financial health in the United States is just teach people invest. Don't finish the sentence, just invest. If you buy anything that most people would consider to be low risk, you likely will do well over the lifetime that you live simply because they are forced to devalue the dollar. And so if you buy the S&P 500 and you forget about it

and come back 30 years later, you're rich. It's that simple. If you buy real estate, forget about it, come back. You're probably rich. Same thing with Bitcoin, same thing with a lot of these assets. And so there's a study that Fidelity did, this may be like 15 years ago now.

They've actually reportedly deleted it from the internet, which I find interesting. They studied all of the accounts and they were looking for what are the correlations between the best performing accounts? You know what the answer was? People who forgot their passwords or died. Right?

Which is like insane, right? But like, think about it. If you just bought a basket of stocks and left it for 20 years and came back, probably gonna be higher, right? And that's what the whole idea of the indexes, et cetera. And so if you think about this from the sense of Bitcoin, I do tend to think that allowing the US dollar to just continue to be devalued, like they're telling you that is their system. And so maybe it's just, I'm not smart enough to do it, but if you can just do that one thing, you're going to be okay. heard it you guys heard it less is more now if we're going to talk about uh you did mention some of the global issues like argentina and like turkey over the years that you've been studying

bitcoin have you seen bitcoin as a viable solution to some of those currency devaluations or maybe what's happening in venezuela or has it just not gotten the adoption that people thought it would and just fell flat on its face. How many people in here were born in another country or live in another country right now? Right, anybody? Okay. If you go and you talk to the people in those countries

and you ask them, the currency fails, what do you want? Majority of people will say US dollars. In the US, we're like, oh, this dog shit currency, right? Because we're all idiot. Like the American experience is so insane to anyone outside of the United States, right? But we're like, oh, this stupid currency. But if you think of somebody in Argentina,

they're like, are you guys kidding me? You have the dollar. And so I do think that most people in those countries, that's what they want. They want dollars, right? They want safety. They want the full faith and credit of the United States government.

Now, what ends up happening is in some countries like take a Venezuela and you talk to people on the ground there, they're like, look, it's dangerous to try to get dollars, right? If I go and I put the dollars in the bank account, how do I know tomorrow doesn't get confiscated? If I go and I try to get it in the black market,

sometimes I have to do things that are dangerous in terms of literally physically getting the dollars. And so then if I get the dollars, I got to hold the dollars. Well, what if somebody comes to my house and takes the dollars from me? And so in those situations, then maybe people say, you know what?

Actually, Bitcoin may be a better thing. And so back in, I think it was 2019, I went on national television. I said, the single greatest thing that the United States could do to continue to proliferate the United States dollar around the world is to digitize it. Because guess what happens?

if I'm sitting in Venezuela and it's dangerous to get dollars or any other fiat currency in physical form, I go on the internet and I actually don't want Bitcoin at first. I want dollars. And if there's a digital dollar there and I can just click some buttons and get dollar exposure and I don't have to worry about sitting at a local bank, I'm probably going to do that. But my big concern at the time was China was creating a digital currency. And so what happens if I go on the internet and there's no digital dollar, but there's a digital yuan or a digital yen or a digital euro or some other currency. Well, fuck it. That sounds better than, you know, get my money taken from me. So I'll just buy that. And so what I think is happening now is the United States actually has

a national security issue on hand in that if we want to continue to get dollars into people's hands in the digital world, we have to create digital dollars. There's obviously stable coins and some people are getting those, but the United States government is going to have to do that. Now, where does Bitcoin come into this? There's a lot of people who just say, you know what, screw it. Just like here in the United States, I actually think that the dollar is going to be devalued or whatever, so I'm just going to buy Bitcoin instead. And so what you see in these countries is that there is a drastic uptick. The reason why the number 86% of all Bitcoin is traded outside the United States is interesting to me. I worked at Facebook in 2014, 2015. When I left

in 2015, guess how many users on Facebook's platform was outside of the United States? About 86%. And so I don't yet know, and I'm trying to understand, is that because the way these networks grow after about 10 years, Facebook was started in 2004, right? We're 14 years into Bitcoin or so. Is that kind of the percentage breakdown is about 14, 15% is in the US, 85% or so is outside the US, or is it just something that happens to overlay and look nice, right? I'm not sure yet. But what I do know is that if 85 or so percent is outside the United States, those people may be buying it because they think they're gambling. They may be buying it because their currency is failing. They may be buying it because they think that their

government's going to confiscate their assets, or they simply may be buying it because their friend told them to. But it doesn't matter. If they continue to have demand, a fixed supply asset, it'll continue to grind up over time. Guys, this is so many gems, so, so many gems. I think the biggest takeaway is this idea, because in traditional assets, you have to think about both sides of the coin. How much supply is there?

How much exists out there? Gold or diamonds or whatever it is. And the demand side, which is how many people want it. This is, would you say this is the only asset that really only has that one side dynamic? Not that they can't make more real estate, but they, you know, you go to Dubai, for example, and they really do create more real estate.

or Elon suggests that we can find gold on an asteroid somewhere. When it comes to Bitcoin, is it truly the only scarce asset? I think that it is the only provably scarce asset at the moment. Now, sure, maybe somebody figures out a way to find all of the gold deposits in the earth and they can prove that there'll never be more gold or whatever. But I do think it's the only provably scarce asset. The reason why scarcity is so interesting is because it is scarce in that there is 21 million Bitcoin. But if you then look at how many Satoshis, right, there's 100 million Satoshis or sats in every Bitcoin, et cetera, it's an accessible yet scarce asset, which means that you can go and you can buy something with $1, right?

I always laugh. People are like, yeah, if you buy high-rise towers in Manhattan, they're not making more of those. Okay, who here is doing that, right? Like you need a lot of money. It's not an accessible asset. And so I do think that there is this element of scarcity that plays out. But I also think that Bitcoin specifically, a lot of people don't put value on the brand. Bitcoin is probably one of the most valuable brands in the world.

Right? People know Apple everywhere. You can go anywhere in the world. People know Apple. Most countries, people know Amazon. Most countries, people know Google. Bitcoin is known globally. And they did it without a board of directors, without an executive team, without a marketing budget, etc.

And the reason is because how many people in here own Bitcoin? You all are employees of Bitcoin. You're holding Bitcoin. You're contributing to the network by holding the asset. But guess what? Out of the people who just raised your hand, how many of you told your friend about Bitcoin? You're part of the marketing team. Right?

and so it's this weird thing of like, I think when people first find Bitcoin, like, uh, what's the joke? Uh, uh, you don't need to ask people if they do CrossFit, they'll tell you. Right. Same thing about Bitcoin is like, you don't need to ask people if they own Bitcoin, they'll tell you. Um, but I've gone through this like weird kind of progression where when I first heard about it, I was like, Oh my God, I have to tell everyone. And now I'm just like, all right. You There's enough people, there's enough whatever, but I do think that there's this element of when you really study this asset, the brand, the word of mouth, all these things, I always joke that you could take Warren Buffett's investing principle. I'm a huge Warren Buffett fan

minus his views on Bitcoin and crypto, but I'm a huge Warren Buffett fan in the sense of I think that he took timeless investing principles and he basically was the first finance influencer. right think of what warren buffett does he does interviews rarely he has a conference and he puts out blog posts once a year that everyone goes crazy over he just calls him an annual report but like warren buffett's a fucking influencer right just for boomers and if warren buffett was 25 today he'd have a twitter account a tiktok a podcast a sub stack like all this shit right so if you think of it from that he just popularized these ideas that he learned from someone else But his entire investing philosophy basically is find great assets and hold them forever, and then find things that have great word of mouth, brand, all these things.

Bitcoin fits every single thing that he talks about except for cash flow, right? He's very big on cash flow. The difference is he looks at it as the Bitcoin holder has no cash flow. True. But the Bitcoin network, if we were to centralize it and say, okay, now all of that mining revenue, all those transaction fees are going to get booked on one single P&L, Bitcoin's pretty fucking valuable, right? A lot of cash flow in there.

And so what ends up happening is that you have to look for assets, or at least my view is that you have to look for assets that check the boxes of all these timeless investing principles. They are timeless for a reason. but if you can find new assets that fit the old kind of framework early then you're able to benefit as more and more of the world understands them no different than if you're the guy or girl who finds the stock that you think is going up and no one else knows about it and then everyone on wall street figures it out later the price goes up same thing here and i think that bitcoin

kind of fits into that mold awesome i heard you talk many years ago uh i think it was cnbc with andrew ross sorkin you're basically i think at the time you were a bitcoin maximalist because i think that you were one of the largest proponents for bitcoin is that fair to say i think you were one of the biggest faces of bitcoin for many years yeah cnbc uh they let me go on one time and that probably was the mistake um because uh most people go on there and they have like their talking points and you know there's like they're like bragging about whatever they're doing but with like bitcoin like i got nothing to do with bitcoin like i don't i matter zero to Bitcoin. Every single person in this room, you matter zero to Bitcoin in the

grand scheme of things. Right. But I kind of was just like, fuck it. So they were all, you know, shitting on it. And Kevin O'Leary was screaming at me or whatever. And okay. Right. And so I grew up with four brothers. Like we just talk shit. So I just talk shit back. It was like a, it was like a knee jerk reaction. Like you're talking shit. Okay. I'll just fire back. And so in some way it was like i maybe i was like the most believable shit poster from twitter that they were like all right like maybe he's not gonna say two crazy things um but what i did learn through all of that was anyone remember what kevin o'leary was saying at the time he hated it hated it there was a bunch of people now that are in crypto they hated it he said it would never work he literally

i mean dead serious right before i went on uh they were like oh by the way kevin o'leary's gonna be on i was like oh cool like i've seen shark tank and i hear him say this is all crypto garbage and I was like, oh, fuck, right? And so if you think about it, he changed his mind. The smartest, best people in the world changed their mind. Paul Tudor Jones, Stanley Drucken, they all changed their mind on it, right? Kevin O'Leary did as well.

Even some of the people on CNBC, Joe Kernan, right? He used to just be like, I don't know what this thing is. And then he started like talking about Bitcoin and the Bitcoiners, if there's one thing Bitcoiners are good at doing, they'll gas up anyone who's into Bitcoin, right? They had memes, they had Joe with the laser eyes,

like they were like joe welcome we've been waiting for you right elon same thing elon bought bitcoin elon you know everyone's welcome we've been waiting for you um and so i think that that is one of the big things is like the mainstream media now is uh they may still be critical of it they may still be maybe cautiously optimistic some of them um but they're talking about it and so if we look across society like actually controversy drives a ton of uh marketing and that's kind of what Bitcoin has on these mainstream media is that they ultimately are debating it, which normalizes it. And so I was joking with somebody yesterday. How many people in here have a kid who is 13 years old or younger? All right. Your kid doesn't know a world without Bitcoin, right? I have a young

daughter. She doesn't know shit about the world without mobile phones. Like that kid navigates the phone better than me, right? And so when you think about it from that perspective, you're like, wait a second, think about this timeline. Gold is 5,000 years old. I can't even comprehend 5,000 years. I couldn't name like three people that lived 5,000 years ago. It's just been here forever. There's no difference between 5,000 and literally dinosaurs, right? Like it's just like forever. fiat has been around for 50 years 1971 to now right 53 years whatever it is bitcoin has been around for 14 in the grand scheme of things of human history fiat and bitcoin are the same age right it's basically no difference it's just that we happen to have been born many

of us before that happened or i'm sorry after that happened and so when you think of it from that perspective, over time, a bunch of people are going to grow up and they're just going to be like, yeah, duh, Bitcoin, right? Like it's not going to be new to them. It's not going to be different. It's not going to be shiny. It's just going to be a thing that's always been around. And the lie that humans have is like, you ever hear about something and you just think it's been around forever? Like elevators, right? People are just like, yeah, they had elevators, like definitely back in like egyptian times for sure right you're like wait a minute that shit's only a hundred years old like my great great grandfather didn't have a fucking elevator like

right like damn that must have been a lot of stairs so like you think about this stuff and you're just like if it's around now it must have been here forever but that's not actually what occurs and so i do think that the normalization will end up being kind of a tailwind over time um because people will just say uh oh my parents or my grandparents or whatever uh they were into it so of course i'm going to be as well that would have been a perfect place to end but i have to ask you one last question which is uh could you give us uh probably the craziest experience that you've been able to have being in the crypto world like whether it's a room that you've got to be in a place you've got to go speak what is what is something that stood out to you just being

involved in crypto there's a lot i can't say uh that i really wish i could um maybe a fun one um In New York in 2018, in August of 2018, I wrote a piece. Bitcoin had fallen from $20,000 to like $6,500, and it was kind of going sideways. And again, I'm not a trader. Price, you know, I'm as stupid as they come. But I talked to a lot of people who I thought were smart, and they were like, hey, this thing's going to keep falling. It's probably going to fall to $3,000.

And I was like, well, you guys are all smart. You're all saying the same thing. I guess that's what's going to happen. And so I wrote a piece publicly and I was like, Bitcoin probably goes to 3,000 before 10,000, but like they said it, not me. So if it doesn't happen, like not my fault, right? And so that's what happened.

And when it dropped, I got a LinkedIn like connection request from a guy who worked at a sovereign wealth fund. And I was like, scammer, right? For sure, like no way this is real. But I looked, I Googled his name. There was a person by that name, whatever. I talked to one of my partners, he was like, well, if that guy really works there, we should

definitely meet with him. So I like messaged back, but kind of like cryptically, you know, like, hey, like, you know, put the bait, see what he does. Long story short is he comes to New York and we meet with them. And we had a whole team, we put together like a 25 page, you know, white paper explaining what Bitcoin was, the price, all this stuff, what it can do in a portfolio, all this stuff, you know, all like the smart people shit, whatever. And we got in the meeting. And towards the end, he asked me, okay, so what do you want from me? And I just stone-faced him and hit him with $1.2 billion so I can go buy 1% of the Bitcoin network and your country will be rich forever. And he looked back at me and he was like, that's interesting.

I can't share what country it is, but I mean, it's one that people would expect. There's only so many of them that have enough that could put $1 billion in and not really care. Um, and what was funny though, was this was a younger guy. He was focused on like super innovative asymmetric type opportunities. Like this fit what he was looking for. He went back and, uh, this specific place has a couple of different tiers to their investment committee. And he went to the first meeting. He got like three minutes into the pitch supposedly. And they were just like, dude, get out of here. So he had to call me back and be like, I think it's a great idea, but like, yeah, that's going to be a no-go for us. And so every once in a while, I send him updates on the price.

And so when it kind of hit the 10X mark, I was like, hey, man. Then it hit the 20X mark. I was like, hey, man. And I'm waiting. Now it's back down. He's going to be like, hey, man. Ladies and gentlemen, please give a round of applause to Anthony Pagliano. Thank you so much. That was absolutely awesome. Thank you. We'll be right back.