The Pomp Podcast - #517: Jim Cramer on Bitcoin’s Performance and Future

Episode Date: March 22, 2021

Jim Cramer is the host of Mad Money on CNBC. He is a former hedge fund manager as well as an author and a co-founder of TheStreet.com. In this conversation, we discuss bitcoin, gold, corporate treasuries, Wall Street, Gamestop, and NFTs.  ======================= Remote makes it easy for companies of all sizes to employ global full-time employees and contractors. We take care of international payroll, benefits, taxes and local compliance, so you can focus on growing your business. Learn more about Remote and their new Remote for Startups program at http://www.remote.com. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp =======================

what's up everyone this is anthony pompliano most of you know me as pomp you're listening to the pomp podcast simply the best podcast out there let's kick this thing off jim kramer is the host of mad money on cnbc he's a former hedge fund manager as well as an author and a co-founder of the street.com in this conversation we discuss bitcoin gold corporate treasuries wall street GameStop, and NFTs. I really enjoyed this conversation with Jim, as always, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi provides financial products for crypto investors. Those products include a high-yield interest account that pays up to 8.6% APY, a US dollar

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retirement savings. So head on over to retirewithchoice.com slash pomp. Again, retirewithchoice.com slash pomp. Again, retirewithchoice.com slash pomp and sign up for an account today. One more thing. You know how I feel about this, but if you have a pro that manages your money, don't take any BS. Choice has tools for them too. Take back control today and visit retirewithchoice.com slash Pomp. Again, retirewithchoice.com slash Pomp. All right, let's get in this episode with Jim. I hope you enjoy this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek

Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. all right guys bang bang i have the man himself he is back jim what's going on man here's what's going on you made me a ton of money and i i had to keep out the experts there because when someone's made me as much money as you have you do want to kind of pepper with the authentic language i did exactly what you told now i know you probably hear a lot of people say You know what?

I did what you told me. Uh-uh, no. I went and called my CFO, all right? And I said, listen, I just talked to this guy, Pop. And I want tomorrow, and I'm going to give you some numbers. I said, I want, I hope I don't get in trouble. I said, I want a half a million dollars in this. And you can buy it over a couple of days, but I don't want any longer than that.

Because this guy was the authentic deal. And I had studied it before. It wasn't like I just like, you know, I didn't just blow off a turnip truck. But I said, this guy is compelling. I even used, and I don't know whether you have any fillers or not, but the brokers you suggested. And I mentioned the money because it's never happened to me before. I've bought a lot of stocks in my life, but I want to thank you. The reason I called you, I said, can I please come on your show and thank you?

Because it happened. It happened just as you said. It also happened much faster than you said. But I'm very grateful. And you know who else is grateful? My kids. So thank you very much. Well, listen, as many people who watched our first episode together, I think noted, the most compelling piece of it was how open minded you were and how intellectually curious you are.

And I think that is something that people forget is important in the investing world. So I can yell and scream from the rooftop all I want, but it takes courage and conviction for you to do something about it. Well, look, it comes from studying your work. And look, by the way, I mean, you can say, well, I'm sucking up. I'm not going to suck it up. I mean, I just have tremendous respect. A lot of what you said to me, I have since, of course, told others. And there are things that you would say. I mean, I always knew that there was a limited number of Bitcoin. I always knew that there should be protection. And I regard it as an asset class.

But I have for years said that you should have gold. And I think that what I had going for me was the recognition that what you were saying is what I was really searching for with gold all along. But gold let me down. Gold is subject to too many vicissitudes. It's subject to mining issues. It's frankly subject to failing in many cases. Do you think that's what's going to happen? Do you think that people are going to drop gold and buy Bitcoin?

Or what do you think is going to happen now? If they listen to me, they're going to drop half their gold. I've been saying 10% of gold since 1983. And now I say 5% of gold, 5% Bitcoin. And I did not say that before I talked with you. I had thoroughly researched it. I was skeptical. And the reason I was skeptical is, frankly, because I said, you know what?

I've done okay with my gold. You know, this is the old dog, new tricks thing that I run up against, let's say, with the Wall Street bets people. Like, they're constantly saying, oh, listen, you know, you're an old baby boomer. You're forgotten. I think it has to do with how young your mind is. And I listened to you, a friend of mine, Kieran Goodwin, said, I heard you on PON. A couple of times the smartest guy said, you know what? Damn straight.

And I think that what matters isn't how old you are. It's whether you're young enough in hearing someone who knows more than you. And you know what? A lot of what you have to do is accept the fact that someone knows more than you. Now, we did in school. It's very funny because you walk into a chemistry class and you know there were guys who were geniuses in chemistry and you're going to get blown out. I walk into a Bitcoin class. What do I think? I'm going to know more than the Bitcoin guy. It's no different from a chemistry class, no different from an engineering class. I walked into the POM class. And when I got not schooled, but taught by POM, I said, what am I doing not protecting

myself in what I have been saying to people could be hyperinflation? But even if there's just plain old inflation, why not get in? And I did the thing like that. The only thing I was confused about was this notion. You got to help me here. Currency versus asset class. because I think that I am, I'm conflicted and I, and I'm conflating. You can help me say what it really is. Yeah. So I think that there's three things people are using it for right now, right?

So you have people who are using it as a medium of exchange. People are using it as store of value and people who are using it as a speculative asset, right? And those three things serve different use cases for different people. But I think that a currency, obviously medium of exchange is store of value. It's hard to deny that people are storing value. I think that's pretty well accepted, kind of the digital gold narrative. And then when you look at like on-chain transaction volume, right? And some days now it's, you know, 10, 12, $15 billion in a single 24-hour period of this transaction volume. That's putting it into trillions of dollars on an annualized basis, which, you know, Visa and some of these guys are, I don't know, $8 to $12 trillion in

annualized volume. So you're talking about maybe 25 to 50% of the largest card networks in the world. So people are using it. Now what they're using it for is very hard to determine, but they're using it as some sort of medium of exchange. And then I think the third one and probably the one that everyone focuses on is the speculative nature, right? People are absolutely in some cases buying it because they think it's going to go up in US dollar terms and they're going to sell it at a profit later. And so I think that what we got to figure out here is what's the dominant use case? Are most people speculating or most people using it as store value or most people using it in medium of exchange? My guess is when you look at the data, 60% of Bitcoin hasn't

moved in the last 12 months. So that tells me that the majority is being used as a store of value over everything else today. Now, what happens in the future? We'll find out. But that's how I kind of think about, you know, from a use case perspective. And is it a currency? Is it an asset? Well, technically, it could be both, right? Right. Well, you know, for me, because of my value, here's something that is old dog. I have always said to people, listen, if you could ever, ever, ever be in a situation where you can play with the house's money, you take out what you put in, then you're blessed and you never have to touch it. And that's what I've done. There were a lot of people who may have only took out the money I put in, but now I've been, I'm never

going to touch it, Pomp. I'm not. And I may never, because you traced out a scenario. And for those of us who, if those of you who haven't watched it, you traced out a scenario that doesn't stop at a hundred thousand and a lot of people laugh. And I didn't, it was a 12,000. And I started thinking, I got to get in before it got to 50. And I went home and told my wife, I said, Lisa, I'm doing this thing. And she said, why? And I described it. I should describe our talk. She goes, you sound mesmerized. I said, no, I sound educated. These are two different things. It's not being mesmerized. It was educated. And the course that you laid out made me think, you know what? It isn't just a current. I bought it as a currency, but I realized it was a store of value

and a better store of value than what I was using. And did I have the belief that it could grow up, go? I mean, I did believe that it could be speculative staying power. But more importantly, what I realized is I deal a lot with the company Square. And instead of saying that I'm going to ride the speculation wave, I knew that this cash app, kids are buying a little bit of a schnitzel, as I would call it. They're buying slivers of Bitcoin. And I said to myself, you know what? I want to be with them because they represent the future. But I also recognize they may be doing it for whatever reason. But I can be part of that wave, too, and not feel that that wave is faultless. It's not faultless speculation, not after the way that you laid it out. And I am sure

that you can lay it out for just in one minute, you've got to just lay it out again. I know that's a short capsule, probably not fair, but why you know exactly what made me pull the trigger. Yeah. I mean, look, it's very simple. There's a fixed supply asset. And if demand increases, the US dollar price value has to go up. And what we're seeing now is historically, there was tons of retail investors that were coming in with retail dollars, but now every single financial institution and corporation are asking the question, what is our Bitcoin strategy? And when they show up, Tesla shows up with a billion and a half dollars. Michael Saylor shows up with a billion dollars, you know, JP Morgan, Guggenheim, hundreds of millions of

dollars. And so I think that naturally what you're going to just see is continued upward price movement to accommodate everyone because the existing holders don't want to sell. And so, again, $100K, I think, is a milestone on a much longer journey. Where it goes and on what time frame, who knows? But I think that it's pretty crazy that just a couple of months ago, it was $12K, and now we're sitting here and it's $55,000, $60,000, whatever it is. So kudos to you. What questions do you have? Let's do questions you have. I suggested that corporate treasurers, which I at one time handled a $100 million fund for a corporation, that corporate treasurers should put a percentage of their corporate cash into Bitcoin. And I was laughed at universally. Should I admit? No, of course not. And what you're going to find is most corporate treasurers, I think, pride themselves on the fact

that they're not running a hedge fund, right? They don't want to look at themselves as speculative investors. But ultimately, what their job is, more than anything, is risk mitigation, right? So everyone thinks of Bitcoin and they look at the upside. Oh, how much could it go up in US dollar value? But actually, if you look at it the other way, right, and we could talk about some of the kind of inflation concerns that probably you and I both have, you start to say, wait a second, the dollar actually may be the riskier asset out of these two. If you look at your bond portfolio, there's not a lot of bonds you can hold right now that are going to really retain value in the same way. And so I just say to people, look, zoom all the way out, look at a 10-year track record,

right? Bitcoin has grown in US dollar terms at a 200% compound annual growth rate, 200% a year for 10 years, right? 12 years, whatever it's been. And you can say all that you want in terms of, oh, that's because it started out really small and there was no exchanges or whatever, and it grew. well, the compound annual growth rate over the last 10 years has been going up this year. It started out the year at like 196%, and now it's at like 205. And so naturally, you're just getting this upward movement. And so I think that ultimately what you're starting to see, whether it's MicroStrategy, Square, Tesla, et cetera, is absolutely the founders or the CEOs of these businesses happen to be individuals who are forward-thinking, who are technology-minded,

did. And they see that they're not going to go put 50%, but they're going to put a percentage, whether that's 1% up to, you know, Tesla, I think it's got 7, 8%. Michael Saylor from MicroStrategy is taking a very different approach. He's saying, listen, I'm going to get the market to give me free dollars, right? At 0% interest rates. And I'm going to take that as free dollars that are guaranteed to lose value over time. I'm going to convert it to this sound money, this digital sound money. And I think that what we're about to see, and again, I don't know exact timing. I don't know who kind of will break the dam even further, but I think we're about to see a lot of people do this. Why would you not take free money that you can then go convert to sound

money and essentially watch it continue to appreciate? And so I think that what this is going to happen is this is going to go from on Wall Street, what was a contrarian idea has now transitioned to a consensus idea. Everyone has a Bitcoin strategy or trying to figure out what it is. In corporate America with the treasurers, what you're about to see is we're probably on the precipice of the transition from contrarian idea to consensus idea. And when that happens, they're going to bring a lot of dollars with them, right? And so I think that you're just going to continue to see this super aggressive upwards price movement over some period of time. Maybe it's three months, six months, nine months, who knows what it is. I'm sure that there will be

a blow off top at some point, you know, kind of Q4 this year, Q1 next year, whatever. But the key that point is going to be Bitcoin's not going to die. It's not going to go to zero, right? It's not a Ponzi scheme, a bubble in the sense that it's going to pop and go to zero. Instead, what you're going to see is you're going to see the consolidation again, some new floor of the value of the asset. And then we're going to go through it all over again, because in 2024, we got another having another supply shock coming. And so it's just this like crazy, beautifully designed asset that I think now you're starting to see Wall Street, you're starting to see corporations wake up to. And here's the crazy part that you'll understand that some other listeners may not

is Bitcoin is probably the only asset that as it goes up in price, it actually becomes more attractive to the corporations because now it's getting to be big enough where they can actually play in it. And that's a wild concept, right? Because most assets, it's the exact opposite. Yes, that's true. And I think that there's a great miscommunication. There's another disservice being done to Bitcoin, which is that we hear that the speculative juices got it, say, from $15 to $50. Well, how about that I could say, no, see, when the Treasury prints $4 trillion that it doesn't have, that gets it from $15 to $50. I would bank on my reasoning as much as the speculative. When you print $4 trillion, and what, are they going to make it back with a 1%

wealth tax? I mean, are you kidding me? I think that there is no coincidence between the amount of money that we're printing and this run. And therefore, I don't think the run is over because we're obviously going to have to print to pay for all the printing. And every time you print to pay for all the printing, it makes Bitcoin worth more. Of course, it is the check to undisciplined monetary policy. Let's talk a little bit about inflation, right? So there's now $6 trillion in quantitative easing that's occurred. We've seen massive kind of lowering of the interest rates to emergency cuts last year to a zero rate environment. There's plenty of people who say, hey, we're in a deflationary environment. There's plenty of people who say, well,

the demand can soak up all of the printing. The counter argument would be, well, food prices are going up. Gas prices are going up. Lumber prices are going up. What's your take? Is there inflation? Are the official numbers accurate? How should we think about it? Well, I think that there's two kinds of inflation, obviously. There's the inflation of the food variety, of which I think will be taken care of, and the steel variety will be taken care of. And then there's just the you can borrow money for so little if you have a decent balance sheet, only if you have a decent balance sheet, and go buy things of great value that you're going to keep doing that. And that inflation is very much in play. So I mean, one of the things that I've been doing with my wife is

in real estate. I'm not allowed to own stocks. So she said, look, they're giving the money away. Let's just go buy. And I think that that is for people who have fortunately have been lucky enough to do well, they're giving the money, well, let's go buy, it's the inflation that's got to end. And that's what the Fed is going to be faced with. I mean, at what point does J-PAL say, you know what, I can't continue to have people make, you know, have a percentage of the people who are wealthy make even more money as I struggle to get the guys making $15 an hour to $18 an hour. We need structural change. I mean, I'm not talking about whether, you know, whether you're a Marxist or a Trotier or whether you're a Reaganist or a Trump or whatever, but that kind of inflation

where you're still you're paying 3% interest rates for something that is a tremendous store of value, like I think land is or tremendous store of value, like I think that I think Bitcoin is, that's inflationary. And that's the kind of inflation that I think makes me want to talk to you, because it's inflation that I can I can do something about. I can't I can't change the price of corn. I can't change even if oil goes to four, gasoline goes to four. But I have to take protection.

I have to defend. And there are some people who defend by buying masterworks. I don't have the $100 billion to buy a special painting. I think that does preserve its value. I know that in Zimbabwe, certain mansions and huge amounts of land preserve value. In Weimar, Germany, gold preserves some value. And in the United States, Bitcoin preserves value. That's what you've taught me.

And I am happy to learn. I think the craziest part about this is what we're essentially watching is a real life economics course, right? Where people are understanding that first, everyone doesn't experience the same level of inflation. The bottom socioeconomic statuses experience higher levels of inflation than the top. And they also experience different types of inflation. So the benefit accrues to the top in terms of asset inflation, right? literally the stock market, gold, Bitcoin, real estate, all that's going through the roof. At the same time, the cost of goods that is the majority of expenses for the lowest socioeconomic classes is also skyrocketing. And so one is a very consumption driven type financial situation. The other is a very investing heavy. And so I keep going back to this idea of the system's working exactly as designed, right? The system's not designed to make a wealth inequality gap. what it's designed to do is to devalue a currency slowly over time in order to drum up economic

activity or investment. The problem is that only 55% of Americans understand that and are educated on that information. And so there's 55% of Americans who hold investable assets, the bottom 45% hold no investable assets. And so that's where you get that bifurcation, that continued kind of widening of the wealth inequality gap. And so to me, it's a financial education thing. If we could educate everybody and tell them, hey, invest, don't try to save your way to some sort of financial freedom, but you have to invest. I think we could actually put a dent in the problem. It's just, how do you do that in an efficient way? How do you do it? Look, obviously, I'm not denigrating the asset that I talk about all

the time, which is stocks. I am saying that I can't earn individual stocks. So when something stumbles, it comes along my way that I think can have some appreciation. And it's not a stock. It's pretty fascinating, of which it's been real estate and it's been what you talk about. I still think stocks are tremendous investments by no means by what we're talking about, am I saying? And that's why I say you got to sell this, that, that. We have tremendous stocks. They've created an amazing wealth. But I think that where I've got to go next with you is I'm on a conference call for NVIDIA, which is a stock that I've recommended since it was about $10. It's at $500. And one of the things that happened in 2018 was that people use their cards to mine. On the conference

call, they talked about how in March, they're going to produce cards that are just for Ethereum mining. So the two questions I have is, one, their cards, obviously, these are not swappable. You don't just say, oh, I'll do Ethereum, I'll do Bitcoin. And two, why is it in the interest of an NVIDIA to do that? And who's buying it? Yeah. So there's a couple of questions in there. First is there's a specialized type of computer. It's basically ASIC miner that is specifically focused on Bitcoin mining. What the Ethereum network and other networks will use is a GPU, right? The graphic processing units. And so what you can do is there is some level of variability in terms of you have a GPU based miner. You can basically switch between a handful of these different GPU

based type mining protocols. But Bitcoin requires these ASICs. And so that tends to be kind of where you get the difference. And these businesses are set up to do the GPUs, right? The kind of holy grail eventually is going to be that somebody sets up an advanced computing system or a center. And what they say is, hey, I don't care if I'm doing 3D rendering. I don't care if I'm doing some sort of computation for self-driving cars, mining some sort of cryptocurrency, whatever it is I just do advanced computing and I have one set of hardware and I can kind of do all of it. I don't know how quick that's going to happen, but when we get to that world, then when it becomes really interesting is then you get a real free market dynamic at play. That's going to push the

price of a lot of the other types of advanced computing needs down. And when you start to all of a sudden say, Hey, we can now do 3d rendering, or we can do stuff for self-driving cars or other types of DNA sequencing or whatever. And we can push those costs down and lower the friction. And imagine all of the innovation kind of breakthroughs we're going to have when you just lower the cost to actually do some of this stuff. And so I think that's like a big piece of it. NVIDIA and others like it, I think, are in a really good spot because they understand hardware, software, and advanced computing. And so when you look at the Bitcoin mining businesses, they got to do Bitcoin mining, right? That there's no ability for them to kind of go into the other fields.

And so I think that's really where you're seeing a separation between the two different types of hardware really dictate kind of what you can do with that hardware. Well, I mean, should I be buying Ethereum? Look, I think that there's a lot of folks who basically look at Ethereum in a couple of different ways. So first is it's important to understand Ethereum and Bitcoin are going after two completely different things, right? Bitcoin is going after kind of the world reserve currency, right? It wants to disrupt gold. It wants to disrupt central banks. It wants to be this programmatic, transparent monetary policy.

And my opinion and many people in the Bitcoin community is that it's going to achieve that goal, right? And so you can put whatever kind of percentage probability on that, but that's kind of what Bitcoin's going after. Ethereum basically was created by Vitalik Buterin and a few other folks. They wanted to build on top of the Bitcoin network, but they said, hey, this is too difficult. And so we need to go build on something else that has smart contract capabilities, et cetera. And so now we've ended up in this world where Ethereum, the network was built, and there's all kinds of people building applications and various products and services on top of

that network. But also we now have a lot of smart contract capabilities on top of Bitcoin and other networks as well. And so what you're going to end up seeing is probably coexistence in this world, right? And a lot of people, they want to think that the world's binary. They want to say, hey, there's going to be one thing to rule everything. But ultimately what we're seeing is we're seeing the market adopt certain things on the Bitcoin network and layer two technologies and smart contract type capabilities. But also we're seeing that happen in a very big way on Ethereum. And then what I think is a really interesting area is like, what happens if it's just interoperable? So if you're on the Ethereum network, I'm on the Bitcoin network, and we can

actually transact with each other in some interesting way. I don't know where it goes. I'm not a developer in terms of having the technical knowledge to say, hey, here's the exact technology that's going to be the winner. But I do think that the most interesting part for investors is, look, there's a ton of innovation and experimentation happening all across this ecosystem. And the flood of intellectual capital coming into this from the world's best technologists is undeniable. And so you just got to be in the space, right? You got to have the exposure and you got to start paying attention. You know, it's funny. I posited on one of these days when this GameStop went to 350 that, look, I know that NVIDIA is going to sell the GPUs for Ethereum.

Maybe GameStop should be in the businesses of selling those cards. But you know what? After listen to you. I'm thinking maybe that sounds so far-fetched. Well, look, I mean, if you really think about, so let's talk about GameStop, right? GameStop basically had this incredible run. One of the things that surprised me was there was no sort of capital markets activity, right? As far as I know, there was no debt issue. There was no kind of equity raise, even with the inflated stock price. And so that kind of struck me as like maybe a missed opportunity, or maybe there's something I don't know in terms of why they didn't do it. But the second piece of it that I thought was really interesting is if you believe the kind of pitch from the company, my understanding is

they want to go from pure product retailer in a physical presence. They want to get more into gaming, IP. They want to have a subscription product, like all that kind of stuff. That's not really that far. If you've got people coming into a physical location, you can now say to them, hey, we know you're into games, but you're also very technical. You're also into kind of these virtual worlds. Why don't we sell you some sort of virtual skin? Or why don't we sell you some sort of uh cryptocurrency that's inside of a game right that isn't necessarily a token uh what happens when all of a sudden you can take you know a sword that you get in one game you can bring it to another world like i don't know where it goes but that all feels like that's right up there

right that's why this fellow uh he's but you know right right guy obviously uh ryan collins i'm sure he's watching him i'm telling you he's look i love chewy uh he is the co-founder true but that is what i'm talking you have now put it far more articulate than i was and have been but that's what I'm talking about. Make the game about, you know, make it a contest, make there be e-gaming and the winners are paid in a currency that you and I trust. A worldwide currency with worldwide games. And I don't want to mess with dollars. I need something that can store value. It's really funny when you look at, you know, I remember once when I was taking economics class at college, they said, listen, you know, all you have to do is every seven years, you know, that

Your money's cut in half with the dollar. I'd be like, so why do I sit here and just say, you know what, I'll just accept that. We would never accept the idea that every seven years a car is worthless or it's depreciated 50% or have it at home. Oh, in seven years, you've got to throw that home away. I mean, it's supposed to be our principal asset. And so all of these things are made at someone like me. It's like an upside down world.

But someone who's younger has the privilege of not having thought about the way that we've been stuck with. Which brings me to all of the newfound talk about buying art with tokens and doing what Musk is doing, getting a discussion going that frankly is happening so quickly, I need your help. I just need your help. What questions do you have about NFTs? Okay, so why do I, when I think about NFTs, why do people talk about expensive sneakers and hard-to-value art. Why are those the things that people talk about? So let's remember what drives a lot of value. What drives the value of Bitcoin? Scarcity. There's 21 million of them. What drives the traditional art market? Scarcity. What drives

the Supremes and sneakers and kind of all of that economy and culture? Scarcity. What drives trading cards? Scarcity. Now, when you get into the digital world, the best way I know how to explain it is, let's say I have a music file, right? And you want to listen to the same song that I have. I say, okay, great, Jim. I'm going to send it to you. And I hit send. And in a generalized way, what it does is it sends you the computer file. You now listen to the music and I listen to the music. We both are happy because we get to listen to the song. But I don't know if you got the original or the copy of those files. And so when it's music, who cares? You're listening to the song. I'm listening to the song. All is good. But if all of a sudden that computer

file is supposed to represent or does represent money, some sort of scarce art, some sort of digital good, it's really important that you know you got the original and you didn't get the counterfeit. And so that's where ultimately kind of the need for some ability to understand what the original is in the digital world comes in. The other way to think about it is, and I forget who thought of this, but I thought it was a really interesting way to look at it, is a serial number. So take the Eiffel Tower, for example. In the physical world, the only Eiffel Tower that has real value is Eiffel Tower number 001. Every other Eiffel Tower after that has almost no value. And they've replicated it in Vegas, in the little trinket

that you bring home. And they've even built, you know, real life models of it in a computer, all this stuff. But Eiffel Tower number 001 is really important. And we all know where it is, and we can go see it and touch it. In the digital world, it's really hard to do that. And so ultimately what these kind of NFTs or digital goods are doing is they're able to prove that if you create something, this is the original, this is, you know, number 001. And so ultimately when you can now prove scarcity in a digital world, what do people do? They just look and they say, okay, what's the old stuff, right? That had scarcity as a value driver. And now I'm just going to bring it to the new world. It's kind of the equivalent of like a newspaper saying, oh, the internet, like, let me just PDF my newspaper, just put it on a webpage and like, I win. But as we saw with the media companies, that's not all of the value that the internet provided. You couldn't change the headlines, you couldn't distribute it differently, you couldn't put multimedia, all that kind of stuff. And so what I'm really excited about is like, what happens five, 10 years from now, when people really understand all of the things that can happen here, and they start to apply it for new types of goods, right? And so I, you know, whether it's these kind of virtual museums, where you could buy a digital good, you could display it in a virtual museum, and then Jim can go in virtual reality and go actually visit that place. or what happens if all of a sudden now you look at like the music industry or you look at some sort of sports tickets. Those things have a secondary market and those secondary markets

can be really, really high volume. But if I'm a sports team and I sell you on the primary sale that sports ticket and you go resell it, I only made money on the primary sale. But now if it's a digital good and I can actually code into the asset and say, hey, every time this trades hands, I want 10%. And I sell it to you. I make my money from the primary sale. Then you sell it. I get 10%. That person resells. I get 10%. All of a sudden, it becomes a pretty big revenue stream. But I need blockchain to be able to make that happen that I can keep track of the revenue stream. Exactly. It's who owns what, when. Right. Right. It's essentially what ends up happening. And so I think that the key piece for people

to understand is like, look, Bitcoin is going to be the global reserve currency. It's going to serve as that kind of world currency you talked about. But people are trying to figure out this technology, what else can I add to it? And I think we've got to be careful because just like when there's always this highly innovative, disruptive technology, people will take it and they'll use it for good and they'll use it for bad, right? And a lot of times it's hard to tell who's who because you got good actors and bad actors all kind of doing similar things. And so I think we want to encourage the innovation, want to encourage the experimentation, but we also want to call out the people who are just doing cash grabs or who are just doing things that kind of

are malicious, right? And so I think that's where you're seeing a lot in the community around debate and kind of controversy. It's just like, what is kind of the things that people should be doing versus the things that people shouldn't be doing? But I think Bitcoin obviously has kind of risen above everything in terms of market cap. And now you're seeing kind of exploration in these other areas and some of it will work and some of it won't. But where are we serious and where are we not? I mean, this is the Musk problem. You know, every time I mentioned Bitcoin, you know, people mention another point. I, I'm trying to take it as seriously as possible. And I feel like that there are people who don't get the seriousness of the topic, or maybe the people who feel like,

you know what, it must likes it. Anything goes. I mean, where do you come out on Doge? Yeah. So, well, here's the really, really crazy thing, right? Is I'm a huge believer that like the meme is the message. And so one of the most effective ways to communicate with a very large portion of the internet population today is via these memes and GIFs and all this stuff. And so the easiest manifestation of that is literally, I can put a picture with some words on it or whatever, and you and I laugh, but you get the message, right? It's kind of like a good joke, right? There's a hint of truth and a great humor to it. But what I think that we're starting to see is, well, what happens when those memes are financialized? So what's the difference between

Dogecoin and GameStop? Well, some people may say nothing. Other people will say they're two completely different things, right? But what you're starting to see again, is you're seeing that when you democratize access and you start to break down that walled garden for markets, and you say that people, it doesn't matter if you have a lot of money, it doesn't matter if you're, you know, wear a suit and tie to work every day. Anyone in the world with an internet connection can play the game. You get all kinds of weird stuff, right? And some people just say, look, I like the stock, right? As you know, Roaring Kitty said, or you get Elon Musk who thinks that Dogecoin. He just likes it. Okay, great. Right. And so he goes and he tweets about it. And so I

think we gotta be, you know, we gotta be cautious, right? We don't want people to, especially with large audiences to kind of lead folks to the slaughterhouse. But at the same time, there is an element of this is entertainment, right? And so what's the difference between going and buying a lottery ticket or buying Dogecoin? I don't really know if there's much, right? Other than the education or the state gets paid in the lottery and in Dogecoin, they don't get paid very much, right? But other than that, I think that a lot of this stuff, it's just pure entertainment. it. And so you got to let people have fun. And, and, and at the end of the day, what do they say over a long period of time, the market's a weighing machine, right? We're going to end up

figuring out what, what actually has value and what doesn't, but experimentation is important. But I mean, should I be on a stock X? I mean, should I be trading sneakers as part of a asset call and some sort of store value? I know what they've got to pay. Here's what I would say, right? Is if you look at a traditional 60, 40 global portfolio, I literally think you can take your cash and your bond position and throw it out the window. And so now you've got a bunch of liquidity, right, in your portfolio that you say, what do I do with this? And sure, you can keep go piling into the stock market and buying more of the same assets, but you're just getting more and more concentrated. So you want some

diversification. And so I think people are buying some Bitcoin, right, which obviously you've started to talk about. But I think that they're also looking for other types of alternative assets. And in some crazy way, like, you know, timber used to be this crazy idea, We're going to buy timber and that's an alternative asset. Well, now that's a pretty well accepted, especially in the institutional world. Like that is something that people will do. Well, I actually think that every institutional investor one day is going to be buying alternative assets, but they're going to be buying sports cards. They're going to be buying sneakers. They're going to be buying all this stuff because again, it all comes back to scarcity.

And when you live in a world where it is impossible for the federal reserve and elected officials to stop devaluing the currency and they have their hands tied behind their backs, they can't raise interest rates. You ultimately are going to have this flight to safety, but safety gets really, really big aperture because people are saying, wait a minute, I can't hold just real estate. I can't hold just stocks. I got to get other stuff. And look, there's all kinds of crazy stuff people are buying. Some of it will be worthless. Some of it won't be. But I just think that there's a generation who they want the sports cards. They want the digital art. They want the sneakers. And so who are you and I to say that they're wrong? I don't know. I'm reading a

tremendous book called Titan. And it's the biography of John D. Rockefeller. And he was the richest man. And he figured out that currency, that oil was going to have tremendous scarcity value. People couldn't even figure out what it was going to be used for. He had already decided that it was going to have scarcity value. So he buys every refinery in Cleveland. And people don't understand why he's buying any of it because it makes no sense because people can't even envision, well, what the hell is he going to do with it? And then, well, what did he do with it was he basically cornered one of the most important markets in the world. But right now, there'd be you and me. We're Rockefeller and Flagler, which was his buddy. And they would be talking

about the need to own all the oil in the world because there's only so much oil. And other guys would just say, here, take my oil for $100,000. And it was worth $100 million. But they said, take it for $100,000. Sometimes I feel like Bitcoin. Take it for $6,000. I'm so thrilled to get rid of it. All the people who sold the refineries for 100,000 thought they did great. They all thought they did great. They would be names on buildings and hospitals and schools. But no, they thought they did great. And they thought they did great because they did not have the creativity that you had to take a look or what Rockefeller had to realize, you know what, this thing may have tremendous, tremendous value. And a lot of people laughed at Rockefeller. He was

kind of a cranky guy, but he had a vision. And it was a vision that the stuff that was in a western part of Pennsylvania where no one was willing to go was worth a great deal. And you and I are talking about this, and I do feel like it's Cleveland right after they decided, you know what, maybe it can light, maybe it can be used to light things up. They hadn't thought about anything else. And imagine, maybe we are like you talked about, maybe we're going to be in a virtual room like like jensen wong has told me at nvidia listen jim one day maybe you go into room and you're alone but you want to talk to five people who love mozart boom i'll give you the five who love mozart now just like you also said there's going to be people who use it for evil we have to be

sure that doesn't happen but right now our minds are our limiting factor and i find older minds really have to be careful because they're the ones that are going to that were ruined in weimar They were the ones that were ruined in Zimbabwe. And when I say ruined, I mean, literally, they thought they had a lot of money. And it turned out that they didn't. And it's not necessarily any different from what you and I are talking about right now. We all may have thought before the government prints $4 trillion that we had a lot of money, but maybe we don't.

And we don't have oil. But we can buy if you're at Square. I mean, I am most appreciative of anyone who watches this and says, well, listen, I see Bitcoin at X, but I can go into Square, my cash app, and I can buy some, put some every month, put some away. I think you'd probably be appreciative of someone trying to do that. Absolutely. So you bring up John Rockefeller. And one of my favorite stories about him is obviously he gets in a little issue with a lot of the guys who run the railroads. And what is probably one of the smartest things that he ever did was then he said,

well, I'm just going to use a pipeline. I'm going to literally create pipelines. I'm going to push the oil there and I'm going to go around your railroads and you can kick rocks. So I think that again, innovators innovate, right? Absolutely. So innovators innovate, but here's an idea for you that I think the world hasn't yet woken up to that. When I sit back and I say, you know, what's a secret that investors, if they start to wrap their head around this, will start to change the way they invest is we talk a lot about commodities, right? We talk about oil and all kinds of other commodities, but actually the world's most valuable commodity, right? And if you go back to Cleveland and people realizing that this kerosene and oil was going to be so valuable

for everybody else is computing power is the world's most valuable commodity. And so ultimately what Bitcoin is backed by is the world's strongest computing network, right? It is backed by the strongest commodity in the world. It's the largest kind of computing network commodity in the world. And so I think that what we're starting to see, and it's starting early, right? There's still a lot of people that drop their head around this, is if you start to think of computing power as a commodity, and then you start to say to yourself, well, who owns the pipes to the computing power? Well, Jeff Bezos and AWS are doing pretty well. The Bitcoin network is backed by the strongest computing network in the world. It's a trillion dollar asset now, right? And so

you start to start to look around and say, where's the computing power, right? Where's that pointed to? Who's providing it? Who's the underlying infrastructure that's making that possible? I think that that whole world and that whole economy and industry is going to get really, really interesting. But there's another piece of it that gets me even more excited, which is if you look at some of these companies like Great American Mining, and there's a whole slew of them, what they're doing is they're saying, we're going to connect that old commodity world to the new a commodity world. So they go out to the oil and gas guys and say, hey, you guys are killing the environment. You guys are flaring all this gas out here. And it's one of the most harmful things you

can do, but you're doing it because you found oil. What if we could actually capture the flare gas and we could turn it into power on site and we could mine Bitcoin right here? Whoa. And that's what they're doing is they're literally powering Bitcoin mining equipment on site at the oil and gas uh kind of uh wellhead and they're capturing flare gas and they're mining because all you have to do is have an internet connection in these machines all right so i just thought all right so i'm meeting with the ceo of coca-cola and i said how much you're paying for the carbon dioxide he tells me price i said i got an idea why don't we take all the carbon dioxide that comes out of the wells when they drill and we'll send it to coca-cola here's the way i'm thinking

I'm thinking about a soft drink. You're thinking about Bitcoin. And that is the difference. But you see, after this interchange, I know enough with the CO2 and the Coca-Cola, you've got an idea that is brilliant. And it's like if I take the Darren Woods tomorrow at Exxon, I'm going to say, what the hell? Why can't you diversify like this? Every single company in the world that has any sort of power generation is going to do this because the financial incentive is way too high. Every day right now, Bitcoin miners are paid like

50 to $55 million all around the world every day. So we're talking about billions and billions of dollars in terms of annual revenue to Bitcoin miners. But the beauty is that you don't have to go buy equity in a miner to get that exposure. Exxon said, hey, you know what? We got a lot of gas flaring going on. We got a lot of access to power. Why don't we just buy some of these computers, plug them in, and then we'll start to get our own fair share of that revenue. You would see that not only are these companies going to have what a lot of people are referring to, like Michael Saylor referred to as a treasury strategy. How do I go ahead and buy Bitcoin and put it on my balance sheet and kind of use that to protect my shareholder value? But also what

they're going to start to say is, wait a second, I need a P&L strategy. How do I actually participate in this economy and drive revenue and profits off of this? And so I think that ultimately, the financial incentive for this system is going to be incredible. It's just that people are uneducated yet. They haven't spent the time. If you're running an Exxon, this last thing in your mind is how do I mine Bitcoin? Over time, though, that changes. You just got to think like Rockefeller, who was this bumpkin, but he had thoughts like this. He wouldn't be rolling over his grave right now he would be saying you know what i want to go right now and ring the neck of the exxon guy that he hasn't thought about it or worse than he thinks it's small of course that's what the people

felt were the refineries the 27 cleaver fires they thought they were small but when you took them together oh my god well anyway look i'm gonna go shoot i gotta go like so man i gotta go lose money versus make money you are pure joy let me ask let me ask you one question before i let you go. We talked last, I think at Q4 last year. So we're almost three months into 2021. What's been the biggest surprise in the financial markets for you? I think that the biggest surprise is a belief that could actually turn out to be true, that the companies that we, um that 20 that the second half of 20 and this is gonna be tough for j pal that the second half of 2021 could be like 19 like 1990 i mean not even even better than 46 okay even better than 46

or if you go read grant another great book 1866 where there was this sudden you know 500 000 of our guys, remember, much smaller country, die. No one's able to do anything. And then suddenly 1866 occurs. And people don't even like nothing's happened in the country for six years. And then bingo, everything happens. And I think that to bring it full square with Bitcoin, if you believe and you have taught me that my boom thesis is true, if you are not hedged against what a boom would mean in this country, you're nuts. I mean, literally, you're nuts. If my thesis is right on a boom, you're crazy not to have Bitcoin. And I don't care. I don't care if it's $70,000 right now. I'd be saying the same thing. I wouldn't be saying, and you got to wait for a

pullback to $53,000. No, I'd be saying, listen, if my thesis is true, and I've spent a lot of time on my thesis, the only way that you can protect your assets is going to be that you can obviously buy certain stocks. But I'm talking about protecting your assets. Insurance, the way I like insurance and I buy insurance is with Bitcoin. I don't know what else to do. The boom means Bitcoin. I will leave it at that because I definitely agree with you. And I think that people are drastically underestimating what we're about to witness. And you and I will talk later this year. And I think we will be having a lot of fun. We're going to talk sooner than that because it's too much fun. Thank you again. It's very rare that you ever in life get to say, listen,

I owe you one, and I owe you one big, partner. All right? All right, Jim. Thank you so much. We'll do it again. Thank you, Pop. Appreciate it.