The Wolf Of All Streets - Raoul Paul: Bitcoin & Crypto Will 100x to $200 Trillion Market Cap in 10 Years

Episode Date: September 2, 2021

In this whirlwind episode Raoul Pal, founder of Real Vision, asserted that crypto is a once in a lifetime investment opportunity. A scarce set of assets combined with previously unseen network effects have put the ingredients in place to change the world for the better. Furthermore, Raoul is still “irresponsibly long” on his crypto positions, and predicts we are still at the beginning of a generational opportunity. -- Harmony: Build on Harmony, run on all chains. Harmony is your open platform for assets, collectibles, identity, governance. Be the ONE to bridge to all blockchains. Harmony is an open and fast blockchain. Their mainnet runs Ethereum applications with 2-second transaction finality and 100 times lower fees. Harmony’s secure bridges offer cross-chain asset transfers with Ethereum, Binance and other chains. https://thewolfofallstreets.link/harmony --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This episode is brought to you by Harmony. Please stay tuned for more information about them later in the episode. What's up, everybody? I'm Scott Melker, and this is the Wolf of Wall Street's podcast, where twice a week, I talk to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, politics, anyone with a good story to tell. Four months ago, Raoul Pal and I talked about going irresponsibly long on Bitcoin. And frankly, he was talking about it long before that. Fast forward today and the market has made it clear that this was the right decision.

He's also been an outspoken advocate for Ethereum and has even called it the greatest trade, which I'm excited to dive into because I tend to agree. Raoul is an expert in everything finance, has created one of the greatest disruptive financial media brands of our time. Raoul Pal, thank you so much for coming on for part two. Scott, it's always a pleasure to chat to you. So I'm looking forward to this. Yeah, I mean, I mentioned the brand, obviously, I have to say, just as a huge fan that I've been checking out everything you guys have going on at Real Vision Crypto, and it's almost too much content for me to consume. I mean, I think you guys have had five a week or something interviews, and I've been learning a ton checking it out over there. I would love to hear why you started Real

Vision Crypto and what you guys have going on over there, because I'm a fan. Yeah. So Real Vision, we started itself to democratize the very best financial intelligence. And part of that journey is I knew crypto was going to be part of this whole thing, part of macro, part of finance. So we covered it a lot. But the ethos of the space tends to be free when it comes to this kind of information. And I thought, how can we educate as many people as possible? The space tends to be a bit siloed. People focus on certain aspects.

And we wanted to have that broad, deep, here's the full interview about the protocol, and here's three follow-up interviews about it. Here's how this is all working. Here are the players. Here are the institutions. Give everybody a much broader space. So Real Vision Crypto was born. And so as opposed to a subscription model, we've got some five key sponsors, which is fantastic. That allows us to get out to as many people for free. So anybody watching this, if you love crypto, there's a ridiculous amount of content. Scott's obviously been on it as well. It's super high quality what's there. So realvisioncrypto.com and knock your socks off. It's all there for you. We built it for you to go and take advantage and learn as much as possible.

Yeah, I feel like we're all students before anything else. And there's always more to consume and more to learn. It's definitely one of my go-to places for that. So now on to other things. Really curious. So now we are seeing the Dogecoin Foundation back in full force. Do you think that Dogecoin is actually stepping out of memedom and becoming a real force to reckon with? I've been saying this for a while. People are so

blinkered in what they see and know, and they hate anything that is changed and different. But Elon Musk and Mark Cuban spotted this early on. It's like, okay, people want to trade this because they feel an affinity to this. And it's like, okay, people want to trade this because they feel an affinity to this. And it's kind of speculative, but it was a joke, kind of like GameStop was as well. But people started making money and it attracted other people. Suddenly, you had a cryptocurrency worth $40 billion with millions of investors. Well, that's one half of a network. All you have to do is create use cases. So Elon made that pretty clear that actually this is a pretty interesting thing because anything that's kind of meme-y can have money because people attract your value to it and

they enjoy using it. And it's not like Bitcoin that you just lock it away. It actually feels like it's a transactional currency. Mark Cuban said the same thing. He started accepting his payments and now they've kind of got the gang back together and they're going to try and build this out into a meaningful cryptocurrency. And you know what? It's got a decent probability justies for different use cases. I mean, it's hard to get our heads around. We don't know where it's all going, but it's not going where we all think it's going. It'll go somewhere wildly different. Well, it never does. And Mark Cuban had a lot to say, obviously,

about Doge on Twitter of late, but then it came out that he only owned 490-something dollars worth. Do you think that's enough skin in the game for him to speak about the asset? Well, he's accepting it as part of the Mavs. So therefore, the Mavs probably own a lot more Doge just because they'll get paid. Now, not that many people are going to do it.

Yes, it's part marketing gimmick. But the points that he made in his Twitter feed are correct. And don't forget, the reason he owed so little Doge is because he did it for his son, because his son wanted to buy it. So that's why he's done that, which will be a percentage of his son's net worth kind of thing. So my guess is he still takes it seriously because he wants to see, okay, how does his son think about this? What does this mean to him? So I get it. You talked about GameStop, obviously, and the rise, I guess, collectively of meme coins and meme stocks. But the flip side of

that is that GameStop is blockbuster for video games, and maybe it should have gone to zero, right? GameStop was taken over by the audience. It went up tremendously in price, but that didn't really make it a better business. Well, we don't know. This is a grand experiment in either the madness of crowds or the smartness of crowds. I happen to believe community is smarter than anybody imagines because of the democratization of information we've now all had that, you know, Real Vision has been at the forefront of, you've been at the forefront of. We've tried to democratize that information.

So is the crowd dumb or is the crowd smart? Now, it may have started as a joke because that's what humans like online. They like to have an in-joke and they like to be tribal. So maybe GameStop started as that. But what they've done is give GameStop an ability to reinvent itself. They've given them the money and the option. Whether they take it or not, it's a different matter. So everything and all investing is a probability game. There is a higher probability today that GameStop evolves into something else than there was nine months ago. Simple as that.

That's a perfect corollary to Doge when you put it that way. It really is. They're both in the same situation. The money came first, and then the use case can come second. Yeah, that's right. Dead right. And we'll see. As I mentioned, you're irresponsibly long Bitcoin last time we chose.

I'm going to judge by the fact that you're wearing a t-shirt right now that says irresponsibly long that that probably has not changed. Is that true? David Collum Well, I own less Bitcoin and more Ethereum. So basically still 100% of my liquid net worth is in crypto. And I know everybody always asks the split. It's currently 55% Ethereum, which is going up every day because Ethereum is outperforming, which I know some people don't like to hear. 25% Bitcoin and a kind of tail of an equally

weighted basket of other protocols and tokens, plus a bit more of a concentrated bet in community tokens and NFT side of stuff. Has Ethereum naturally increased its position based on price action or have you been purposely buying or converting from Bitcoin into Ethereum? Purposefully. Firstly, I saw the vitriol of the Bitcoin community when I, in October,

started saying the ETH chart looks pretty interesting and ETH Bitcoin chart looks interesting. People were angry. They hunted me down online, you know, and I was like, huh, that always makes me, if somebody says I'm an idiot for looking at something, it makes me want to look at it. So I started doing work on it. And the assumption was from the Bitcoin community was Bitcoin was special. It was the only one. And it was driven by store of value and everything else was a shitcoin. So then I started looking into Metcalfe's law and I realized that Bitcoin and Ethereum were priced off exactly the same mechanism as were all of these tokens. And that it wasn't special Bitcoin in how it was priced. It was basically the number of users. And yes, Metcalfe's law is the number of users and basically the interconnection between

those users. And I looked at that and went, oh my God, well, Ethereum's just launched DeFi and NFTs and all of this stuff. So there's a lot more activity going on in the chain than there was on Bitcoin. And that made me start to pay attention. Then the charts started breaking out. And then I realized that the breadth of what was happening, the speed of the growth of the network in Ethereum was twice as fast as Bitcoin. So it was likely to grow twice as fast as Bitcoin in price. Simple as that. Are any of the fundamentals concerning

to you the sort of endless 18 months away of Ethereum 2.0, the high gas fees, any of those? Or do you think that those are functions of a nascent asset that'll eventually be eliminated? Well, I wrote an article saying the greatest trade. And basically, I looked at Ethereum, looked at the on-chain data and realized that, okay, we've just gone through the EIP 1559. So that's burning ETH. Then I looked at, okay, on-chain what's going on? Well, there was a huge amount that had been taken off exchange, an enormous amount that had been staked for ETH 2.0. There's a massive amount that was also in DeFi locked away. And that left 13% of the entire supply available on exchange. So the supply is falling every day. It's probably about 11% now. And yet demand was exponential. So if you've got

exponential demand and limited supply, you're going to get an exponential rise in price. I looked at this and said, not until ETH 2.0 comes out, is this going to change? Because everybody's going to stake because there's no point not staking until that moment, right? Because the ETH price is going to rise. So everyone's incentivized to stake or to take it off exchange and there's no supply and it's going to keep falling. And they're burning ETH. I mean, holy shit, you never get an opportunity like this. I'm like, this is better than Bitcoin was in March 2020. This is a monster. And a lot of Ethereum is actually sitting on platform or exchange earning yield that's not staked in the Ethereum 2.0 contract. I mean,

you could hold Ethereum on the BlockFi's Voyagers of the world. It's still sitting technically on exchange, but is effectively locked in yield. Yeah. So if you imagine that you've got a network that is now incredibly attractive in risk reward with incredible attractive yields, no wonder the gas fees are high, right? Because it's incredibly in demand. Does that push people out into Solano and other things? Of course. And that's great because it's a multi-chain world out there. So people who need cheap, fast transactions will move to different chains. People who want the benefits of Ethereum will remain on Ethereum.

And there's a huge investor base that will remain on Ethereum for the reasons we've talked about. Now, a lot of this gets solved at ETH 2.0. I think it gets done by March of next year. Who knows? But my guess is it's a buy the rumor, sell the fact, because everyone can unlock after it comes out and everybody sells their E to take some chips off the table. So my guess is we'll have this complete parabolic move into 2.0 and then the unwind afterwards. Much like we saw with Coinbase, if you remember. Coinbase was the exact high of Bitcoin.

It was. And as soon as it came out, everything plummeted because, by the rumors, sell the facts. Yeah. Futures in December 2017 and the Coinbase listing in 2021 were the tops of the two major cycles. You touched on the fact that your interest in Ethereum somewhat sparked as a result of the vitriol that you received from the community when you even dared mention it. I view them as really separate assets, separate investments. I made the comparison recently to saying you can buy gold and you can buy Amazon and nobody would think you were crazy or that you were betraying one or the other. Why do you think that that vitriol exists? Why do you think that people view them as such comparable assets and can't separate them?

If you notice online, this is happening everywhere. It's anti-Tesla, anti-ARC, anti-EV in generally, anti-climate change, anti-vax, anti-crypto, Bitcoin people don't like Ethereum, right? There's this weird split. When you set back and say, what is going on here? There is one narrative that ties it all together. It's the fear of change. We're going through the fastest period of change of all human history. And it's hard for people. And they want to know what they know. And they can't deal with all of this change happening. So Peter Schiff had a long discussion with him today on a different podcast. And it's like, Peter just doesn't want to know really. We're never going to persuade him. He doesn't want to know. He knows what he knows. It's what he values.

And that's it. The people who hate Tesla or electric cars or whatever, it's what he values and that's it the people who hate tesla or electric cars or whatever it's to do with they're moving away from something they know the trusted car the engine the part of the culture and that all goes and it's the same with the vaccine which is a technology people like i don't trust the technology it's because the future's coming at us too fast. And Bitcoin, with the rest of the crypto space, is kind of the same. Because they're like, but we had the perfect thing. And as you say, yeah, but there's different perfect things for different outcomes. And in fact, nothing is perfect here. But there's a bunch of use cases for a bunch of different things. And that's OK. It doesn't stop Bitcoin being amazing. It doesn't stop gold being amazing. And it doesn't stop a Ferrari petrol engine being

amazing. That's okay. They can all exist, but the world is changing whether you like it or not. So when it comes to governments and regulators, they largely seemingly have the same approach. I mean, it's my opinion that certainly with Bitcoin, they probably hoped it would go away and they would never have to address it. And then it became mainstream enough that they were forced to. So do you believe that we will get heavy handed regulation that's based in their fear of something new? Or do you think that we'll be able to get reasonable regulation that makes sense and actually helps consumers? I think it's going to be reasonable. And I think the battle that happened a couple of weeks ago or last week, I can't remember, everything happens in like,

a whole year happens in a week in crypto. But that showed that there is a huge bunch of young voters who will not get pushed around and that people want change. Younger people want change and the older people fear change. I get it, that's normal. But in the end, somebody carries more votes, and it's going to be the young people. Because of the millennial and Gen Z combined, with us Gen Xers in the middle,

we carry the swing boat now, not the baby boomers. So I do think it changes, and I think they become reasonable. They will occasionally try heavy handed tactics. And we should expect that, you know, anybody in this space understands what roadblocks get put up, they eventually get taken down, mainly, you know, how many times has China banned Bitcoin, or crypto? Yeah. So every cycle. Yeah. Well, coincidentally, right after the price drops every single time, seemingly, is when China decides to ban Bitcoin as part of that reactive, bearish news cycle, which we see the upside as well. I found the infrastructure bill that you just mentioned astounding. I don't think I've ever seen an example of where a community with no lobby basically just tweeted enough and called enough senators and made enough noise that they

froze a 2,700-page bill for a trillion-dollar infrastructure that had both parties effectively on board. To me, that was a sign that we've made it. God, yeah. If the whole of government is debating cryptocurrency, It's over. That battle has been won. There is no, is this for real or not? Is this going to last? Are we going to make it? Of the Senate actually came to a compromise before one old man stood up and ruined the entire thing. It's my feeling that it'll move to the House of Representatives. And now the Congress people, who, by the way, have to get elected much more frequently than senators, are going to see the power of this community, what just happened in the Senate. And a lot of them are going to jump on board just because it's the popular thing to do. And I think they can grab some votes. Yeah, I mean, politics is going to change rapidly at the same time.

You know, anybody who's read the book The Fourth Turning realizes when you've got this demographic shift underway of this magnitude, so you're replacing 76 million baby boomers with 85 million millennials, and one group is actually slowly dying off. Government politics have to change. It has to change to appease the younger voters. And that's a different world. Yeah, it certainly is. And it's interesting to see that power coming from social media and just from grassroots movement. I'm curious, do you think that they intentionally, being the senators or most likely the age who wrote the bill, do you think that it was an intentional attack on the crypto community?

Or do you think that it was basically an afterthought that was worded poorly that the community grappled onto? I don't know. I think somebody somewhere said, we need to raise more tax. How do we do that? Let's stiff it to crypto. Yeah, let's do that. And then worded it poorly.

Then an entire shit fight blows up and they're like, if they just thought about it better, a lot of the crypto leaders were like, nobody minds better tax collection on crypto, but just don't scrub the whole system by randomly naming participants or not naming participants and implying that they all have to pay on something that they have no control over. It's ridiculous. Yeah. So going back to Ethereum, we've heard the notion over and over and over again of a Ethereum

killer potentially, right? And we have a number of other layer one protocols that you even mentioned a few of before. ADA finally going to theoretically be adding smart contracts. Do you see a world where one chain wins and either Ethereum dominates or there is an Ethereum killer? Or do you think that maybe we see interoperability and all of these chains find a niche? I think Pareto's law will win every time, the 80-20 rule. I think 80% of all will be on 20% of the blockchains and there'll be a big tail. And I think that's fine. Is it going to be Ethereum? We have no idea. But is it going to be the lead for the time being?

Well, maybe not in price, but in usage, for sure. In price, could something else overtake it? Absolutely. We have to monitor the networks because, unfortunately, we can't be dogmatic about this. We have to be investors about it as well. Pragmatic. We have to monitor the networks because, you know, unfortunately, we can't be dogmatic about this. We have to be investors about it as well. Pragmatic. We have to look at, okay, what is changing here? Because this is a very fast changing world. If not, we end up being the same old man railing at the internet because Ethereum got overtaken. No, let's not do that. Let's just be open-minded. It's okay. And we're all that way about something. We all become our parents, the old man, get off my lawn. I do it with music all the time. I can't help myself. This new rap music is so bad. The old stuff is better. I mean, I really can't help

myself. Well, to that end, being open-minded, is there something specifically that would invalidate your thesis on Ethereum? The only thing is if I'm true to myself and I say it's network effects, the only thing would be a decrease in growth in the network would be an alarm bell. So let's say you do start to see a switch. Maybe it's ADA, maybe it's Solana, whatever it may be. If you start to see a transfer of network from one to the other, you've got to be aware that, okay, this is not going to look right. And the good thing is, is a lot of that will come up with technical analysis. A bit of charting helps you figure out what's going on. And even just looking at the relative price between stuff. But price isn't everything in this, because if you're coming from a smaller

market cap protocol with more entrants coming in, it's going to move more in price. It has a higher beta. So you have to kind of filter that out a bit. Back to the infrastructure, Bill, what I found interesting was that price did not react at all. In fact, Bitcoin price continued to rise through what could have arguably, depending on your lens, been viewed as the most bearish news of the entire cycle. What do you make of that? Do you believe that now we're going to enter a positive news cycle again? Do you think that the news is reacting? Do you think that that's a sign when price doesn't drop on, quote unquote, bearish news that price is ready to head up? What do you make of it? I think when price doesn't drop on bearish news, it's a signal and it's a good signal. It tends to mean that the underlying market structure

is much better than people imagine. So we'd shaken out a lot of the weak hands. So you've got only the strong hands and the strong hands have always had regulations coming and yes, there will be speed bumps and yes, we will get through it. So therefore, they would have bought any dip. And that manifests itself in the price not going down at all. Now, sure, we're going to get another correction at some point soon. We get up to 60,000. We'll probably correct another 25%. And then we keep moving. Interestingly enough, Bitcoin is following Bitcoin in 2013 very well in chart pattern terms. And Ethereum is almost perfectly matching Bitcoin 2017. And it's kind of like it's a cheats thing, because it's all there, the corrections and everything. And Ethereum is almost perfectly matching Bitcoin 2017. And it's kind of like, it's a cheats thing because it's all there, the corrections and everything, and they all seem to

play out. So I just go with that. And again, I don't take it as a source of truth, but just a source of, okay, what kind of corrections, how late in, what do they look like, what kind of rallies do we expect? It helps, a roadmap. Yeah, that makes perfect sense. So do you think this market clearly overreacts to news? Because none of the news that even drove it down was that bearish to me. And of course, we saw the price either react or be driven by that. Do you think that we're waiting for a catalyst now to the upside? Another Tesla buying 1.5 billion of Bitcoin, some sort of institution, ETF, government, another- Yeah, you need to think of the marginal returns of negative and positive stories.

So what we've got is the marginal return of a negative story was zero. The price didn't go down. Right. So then what is the marginal price action for Microsoft or somebody owning Bitcoin. Marginally positive. Now, it'll probably be okay. But I think we all expect that now. It's kind of in the price that every day there'll be a new.

But the Bitcoin ETF isn't because it's going to bring every RIA into the market, buying for everybody. I don't think that's in the price in any way, shape, or form. So that's the biggest positive out there. There's not regulation, because we all kind of expect regulation to move forwards, but in a slow, lumpy way. We understand people are putting it on their balance sheets. Sovereign wealth fund, okay, even though I know several of them own it. But if somebody comes out and makes a meaningful stake

or a governmental level, like Saudi Arabia says, we're going to create solar plants to mine Bitcoin and put it into our reserves, okay? That's really big news. And if not, I think it's the ETF. Do you have any thoughts on timing for that? I think they're making it clear. So Gensler said, I'll probably accept a futures one.

Novo immediately files. And five companies file a futures ETF with an application within five days. Yeah. And so he's told you what he's going to accept. And that way he keeps all the custody within the CME, which gets around the other issues.

It's going to mean that the CME is going to see a lot of arbitrage because the bloody futures contract is going to trade a huge premium for a while. And that's going to create yield in the space and change the dynamics over time. And it will trade more like the GBTC. Yeah, a tremendous premium. And people will take advantage of that arbitrage and pass off yield to people like us. as GBTC did, because the 30%, 40% premium, it collapsed. You've lost 30% and the price hasn't moved. And retail investors don't really understand that. So I think they will allow it and it will create a huge boom.

Right, but is a Bitcoin futures ETF enough or does it have to be a true Bitcoin ETF? Well, it's enough for the flows because the arbitrage creates the coins on the other side. So Well, it's enough for the flows because the arbitrage creates the coins on the other side. So yes, it's fine. Right. Unless, of course, that allows for institutional money that's sitting on the sideline that actually wants to get in, but the risk managers are saying ETF or bust. And then it's enough money that it- Yeah, but the futures one will be enough because almost every institution on earth has them.

So you think a pension fund, that's within their risk parameters to invest in the future? Oh yeah. Don't forget, they all trade futures. You know, pretty much everybody. In my past life, that's what I used to do. Everybody has futures accounts. And to have an ETF that doesn't appear as futures anyway,

nobody's going to care. Guys, I'm really excited to be sponsored by Harmony. I know all of us have traded their coin one in the past, but what they're fundamentally doing is a game changer. Harmony is your open platform for assets, collectibles, identity, and governance. Think of it as the one to bridge all blockchains. Harmony is open and insanely fast with two second transaction finality and 100 times lower fees than Ethereum. Their secure bridges offer cross-chain asset transfers with Ethereum, Binance, and almost every single other chain. Maybe most exciting is that Harmony,

in cooperation with Sushi, will be providing $4 million in incentives for liquidity mining. Find out more about this program and build something yourself at thewolfofallstreets.link slash harmony. That's thewolfofallstreets.link slash harmony. Build on harmony, run on all chains. Do you think that at this point, every institution effectively is looking at Bitcoin or is forced to have that conversation in the boardroom? Or do you think that there are still some where it hasn't really reached their shores? I spend probably 20% of my entire week, every week, both talking to institutions, presenting to institutions, answering requests.

They're all over this. Everybody is. You know, everybody, if you talk to anybody from Galaxy to Luca to any of these companies that see the onboarding, you know, NYDIG, all they're seeing is wall-to-wall requests, incoming, onboarding. It takes a while. People don't understand that, you know, for institutions to go, oh, well, we're going to buy Bitcoin.

Okay. How do you mark to market it? What is the open? What is the close? Which price do you take? There's no single exchange. Then how do you custody it? How do you account for it? All of this stuff takes months of work. Which is interesting because it's been a year since MicroStrategy first purchased Bitcoin. We saw Tesla come in. Then Michael Saylor hosted a meeting of 2000 CFOs or representatives from companies. And there was this sentiment that by March or April,

we would see 100 more companies adding Bitcoin to their treasury. And it didn't happen. Then obviously, we saw the correction. People could argue that that's a reason that they didn't come in then. But do you think it's just a function of what you just described? It's going to take six months or a year, 18 months? It's a function of two things. For institutions, it's a function of what I talked about. It just takes time. There's a lot of people to get across the line and you need to appease a lot of people. For the corporations, it's how you account for it in gap accounting. This is the big problem is you can only mark it down, you can't mark it up, and it has volatility in your quarterly earnings. So only people like Michael Saylor will accept it,

others won't. So everyone's trying to figure out, can we get gap accounting rules changed? Or if not, is there a vehicle that will be able to allow us to do it without putting it on the balance sheet, is a way of having off balance sheet. So that's why the corporations are slow. They want to do it. I've spoken to many, but they're like, these accounting rules, we don't know what to do. A sailor is a bit of a unicorn. I mean, he's in a position where he has enough control to make that move and has, I guess,

the balls to say, if you're not on board, see ya. Right. But I don't think we're going to see many more companies adopt at that level. Right. I think we'll see more than one to 5%. When the rules change, it makes total sense. At that level, no, it doesn't make sense for companies because he's basically bet his whole company on this and that's okay. But for Microsoft to do it, no, but they do manage a huge amount of cash and it's a very good instrument for them. And we even had a paper commissioned at Real Vision about portfolio effects and it's

incredibly powerful. So they want to do it. It's just hard. So you mentioned the Pareto principle earlier, the 80-20 for the networks. Is that generally your view on how many of these coins in general will survive? I mean, we probably have 10,000 coins on CoinMarketCap at this point. I haven't looked, but what happens to most of these? Yeah, the 80-20 rule. I mean, this is like the dot-com boom, how many survive? Not that many. But yes, it's okay to play with these small ones, but you need to know what you're doing or just take a very small position and realize that you're hugely speculative. You're trading penny stocks and they can go bust at any time. Or you can build a proper portfolio and think about risk management

and understand that not all of them will work as well as you want, but you're going to only get involved in the top 30 or 40 coins. And then you may take an individual bet because you particularly like Audius or something like that. That's okay. But don't go looking for penny stocks to try and get rich because it's proven that virtually nobody ever gets rich from penny stocks. Generally, they end up in prison or broke. That is absolutely true. And you sort of touched on-

The Wolf of Wall Street being a classic example. Yeah, absolutely. And so you talked about maybe next March is sort of a cycle top for Ethereum. Do you view either Bitcoin, Ethereum or any of these assets as generational investments? Or is it still a trade where you're looking to exit at a cycle top? Well, you can trade a cycle and that's okay. That doesn't mean you've cheated on your girlfriend. You can trade a cycle. If you want the dirty truth, you should never own Bitcoin. The actual truth is you should own alts or stablecoins. Because when Bitcoin outperforms, it's generally when the markets are falling. And in which case, you shouldn't own Bitcoin. You should just own stablecoins. And when the markets are in a bull

run, generally, the alts outperform, particularly the large alts, so like Ethereum. And when the markets are in a bull run, generally, the alts outperform, particularly the large alts, so like Ethereum. And therefore, at that point, you should own those. And maybe you should never own Bitcoin. Now, that's the extremity of the whole thing. So my view on this is I think the market cap of the space goes up 100x from here over the next 10 years. So call it from 2 trillion to 200 trillion. I mean, that's ludicrous. We've never been faced with an asset class that does that in all recorded history in a period of time like this. So the cycles are going to be important occasionally, because you don't really want to sit for two years not making money.

You might be able to make money in other stuff. But, you know, generally speaking, you want to keep some into it. And, you know, some people will keep all into it. I won't. I will take some off the table and do other stuff. And I will then look for the time to get back in again when I think it's going on its next move. Now, maybe we've eliminated the cycles altogether now. And that it's smoother and it trades sideways for two years. That's possible too. I don't really have a view, but I won't be

100% my net worth the entire cycle. That doesn't make 100% sense to me. Yeah. But would you be 20? Oh, yeah. Yeah, yeah, yeah. And knowing that that 20 could go down to eight because of the markets. Yeah, I have no issue with that whatsoever. What is your take on at this point

in either the cycle or just in the general life of crypto on its correlation between other markets? I don't think it's correlated at all. I think the only correlation occasionally, there's passing correlations, but they don't last. The correlation generally is central bank printing tends to rise all asset prices. So of course, that features in Bitcoin's price as it does in gold and equities and real

estate and arts and all these other things. So that's probably one of the larger drivers, but it's not correlated. Why? Because it's a network effect asset. It's different. It's not just a rare asset. It's a rare asset with network effects. We haven't seen any of these before. This is why it keeps confounding people in how it moves. Network effect rare assets never existed before. So somewhat inversely correlated to the dollar, which goes down when they've read money. Well, the dollar versus other currencies, that's not true. The dollar, that kind of denominator fear puts you out. Yes. Yeah. We've talked about that before being, you can be bad, but if everybody else is worse, the DXY still rises. That's right. I mean, the dollar's going up right now, you know, but yes, you're right. It's somewhat correlated

to that, but I've always said it's the store of value, which would go up and down with that, but it's a call option on the future. That's the network. And the whole space has got the same attributes. Some is more speculative, for sure, because we don't know how the network's going to get used. RAOUL PAL. I mean, can't we assume that central banks are trapped and are going to continue printing somewhat endlessly in some way, shape, or form? NICK CORREA. So last year, we had the biggest recession in all recorded history. And it only lasted two months. Because we threw more money at it than any other thing in that two months than had ever happened before by a factor of God knows 10. So Jay Powell and Janet Yellen sit back in a room and go, we did pretty well there.

And they kind of did. They kind of did for the economy. Yeah, they did. And for people who owned assets, it's like, okay, the world didn't fall apart and we stopped a recession.

So why are they not going to do that again at any opportunity? I mean, they now go, well, Christ, we avoided the financial crisis. And then we avoided the biggest insolvency in history over the pandemic. Well, let's keep using this magic tool because it's the gift that keeps on giving. They're not going to say, well, we're not going

to take it out of the box until it's a really special moment. They'll be like, fuck it, the S&P is down 10%. I'm opening the box. Yeah. Unload the big guns. Yeah. Of course. That's human nature. Right. But what's the end game of that? Do stocks literally just only go up?

Yeah. Because of the denominators falling. So are Venezuelan stocks going up or not? No. When you put it in dollars. But my view on this has been, and who knows? None of us have a clue. My guess is this parallel universe, more people migrate across to it. So the end of the existing system ends with a whimper, not a bang. Because people have already left and migrated to a superior system,

and it effectively just dies a slow, quiet death. Correct. Interesting take. And what's gold's role in that transition? I think gold will always play its role and it will go up in value over time. It just doesn't have this call option effect, which is why Peter Schiff gets angry because Bitcoin keeps going up versus gold. Yes, because it's gold plus. It's as simple as that. Gold will do its thing. And all of the people who trusted in gold for millennia, it will still maintain its value. So if you look at real estate versus gold or equities versus gold, art versus gold,

all of these things, they're all roughly in line where they should be. Nothing's wildly overvalued. Gold is the anchor pricing of the world. It's the stable coin of the world. So I think that continues to work. I mean, I follow a basket of gold versus 27 currencies, excluding the dollar.

And all it does is it goes sideways, sideways, sideways, money printing up. Sideways, sideways, sideways, money printing up. It's like it perfectly does what it's supposed to do. It kind of suggests that global currencies since 2008 have been devalued by 65%. And central banks still buy gold. Yeah. They're not stupid. I mean, they don't live in a world where they don't hear any of this. They just live in a world where they can't express their view.

Where they don't advertise what they're doing. Because listen to what Greenspan said the moment he came out and listen to what Mervyn King said the moment he came out from the Bank of England. They're like, yeah, it's all a bit fucked. They know it. They're not stupid.

They might want to tell the world other things because you can't reveal the Wizard of Oz. It's an impossible job then. It is. I mean, I would never want that job. So, you know, I hear other things because you can't reveal the wizard of Oz. It's an impossible job then, right? It is. I mean, I would never want that job. So I hear people on Twitter all the time, well, they should raise interest rates. Okay, go do that. See what happens to the world. Oh, well, Austrian economics, survival of the fittest. I'm like, you're going to kill, destroy everything. All the banking system, all the pensions industry, all of the savings, everything.

So what gives? And then the other one is, okay, we'll just keep going because you don't do that. Yes, you still screw people, but they don't notice it as much. So it's kind of like, okay, look, we need to get out of this somehow. Do we just devalue it or do we just nuke it? Well, devalue it slowly is a much better option than nuke it. Right. Well, devalue it slowly. What does that mean for your average person who has a paycheck to paycheck job? Is it just an endless hamster wheel and they never catch up? Or is there an option for them to exist and thrive in this system? Well, they can never catch up in assets. So buying an asset is saving for future consumption later. And you want the asset to go up over time, and then you can consume more. So you buy a house, and then you hope to

sell it when you retire. And you hope it's gone up more than the cost of living. That's why we have assets. So the problem is that wages aren't affected by this monetary printing all the variable stuff like corporate earnings and wages don't change they move a bit by the rate of cpi inflation because a lot of them are referenced to it but they don't change but the cost of assets keeps going up so your future self is getting poorer because you can't afford them. So what you're doing is destroying future wealth, future consumption. Now, why crypto has been so important that I've been pounding the table over is because it's fractionalized, you can have 10% of your net worth in Bitcoin, and I can, and Mark Cuban can, and we're all on equal footing.

David Gellarino 1,000% can. And we're all on equal footing. That is the game changer here. And so it gives people a chance to not get left behind. Right. Because when it comes to stocks and someone may say, Amazon, company of the future going to be the greatest asset you could ever own. I don't have $3,500 to buy a share. I want to put $30 in a month. Or do you want to buy one share of Amazon? No, I want to buy a basket of shares, but I don't want to have the whole S&P. I want to have these stocks. Well, suddenly I need 25 grand. Why don't I have 25? It's like, we've got to help people more and we're just not. Wall Street is so busy pushing back against change. If it just stood back and said, what do people need?

It would change its view on everything. So would the regulators. All of this accredited investor stuff is nonsense. You're allowed to go to Vegas, do whatever the fuck you want, but you're not allowed to invest in a security or a startup. Your friend's company? Yeah. Are you insane? Who are you helping here? You're helping Wall Street because they can pull their money for you

and then you can invest. You're not helping people. But do you think that the spirit of that was at any point actually to protect the little guy and to protect the consumer? Do you think that it was always a way for Wall Street to pad their pockets? Because they'll tell you, obviously, that the spirit of it is protecting you from a bad financial decision. But isn't that just saying, because you're poor, you're too dumb to make this decision for yourself? So the political system in the United

States is driven by lobbyists. So after 1929, where a bunch of people have been scammed and lost a lot of money, the best thing for Wall Street to do is say, you know what? You need to regulate all of this. You can't have all of these little stock operators. What you actually need is we'll be the guardians. And it's going to help these poor people.

And the regulators will go, that's a good idea. And so they think they're doing good and Wall Street's doing this because it just concentrates power and wealth. You do have to protect people or just give them bloody warnings, but you cannot have the ability to go to Vegas and bet as much money as you want and in the same breath, stop people investing. That's insanity. Yeah. The people, I mean, the lottery, obviously it's the exact's insanity. Yeah. The people, I mean,

the lottery, obviously it's the exact same thing. Why is that allowed? It makes absolutely no sense. And you talk about Wall Street going like this and the regulators saying it's a good idea. And now Wall Street is the regulators. I mean, that's a revolving door. They don't even hide it. No. And so what have we done? We've built parallel financial systems that fuck you. We're not doing this anymore. And 2008 was the direct, that was the point where everyone said, look, we're not doing this anymore. We can't give you all of the power and then we lose out and you don't lose. That dynamic has changed. And this is why this space is scaling so fast because Silicon Valley plus a bunch of rebels kind of realized that

we can disrupt money too. Well, with that said, we've built this separate financial system based on Bitcoin. And then of course, DeFi. Do you believe that DeFi can take that much of a market share of global banking or of these systems? Or do you think it becomes a side rail for the few who get it? No, I think it will be available to everybody, but the yields will go down because more money will go in. You have to. And so that's just how it works. But you'll get different yields from using crypto versus US dollars for the fact that the dollar gets devalued all the time and crypto is more volatile.

There's different things that will, the space will keep developing. And I think that staking is the big change. Staking is huge. It's risk-free. If you're going to keep your ETH, then staking for yield is a risk-free reward. And somebody wrote about this on Twitter today about, well, is ETH the new government bond? It's kind of interesting. And the second level effect that I love of staking is you don't panic sell.

It's locked away. You protect it from yourself. I think that that's the same case with multisig for Bitcoin. If it's going to take you a week to get it to the exchange and sell it, then you're going to be way too late to have panic sold when you wanted to anyways. And all of us are used to having these money market locked funds, these time funds. So you get a bit of spare cash to get the extra yield when there were interest rates. You'd lock it away for six months. And you'd have this six-month thing and you couldn't

use the money. And if you did, you paid a penalty. Well, this so happens that it's better yield and it's equivalent safe because it can't default on you. Ethereum can't default, nor can Bitcoin. That's a game changer. Different exchanges can, different DeFi protocols can, but staking can't. I was just going to ask you then, how do you view staking versus one of the central,

I guess people call them CeFi, the BlockBys and the Celsius and Nexos and Voyagers of the world? Do you think that there's more risk in parking your assets there and gaining your yield from them than there is in staking it directly in the contract? Yes. And you should be compensated with high yields for it. So it's the same as the bond market. In the end, money is efficient. And what it will do is it will sniff out where high yields are. Sometimes it's due to demand, in which case more capital goes in and it goes down.

Or it's to do with risk. Junk bonds have a higher yield than AAA corporates. Will Barron It's normal. Will Barron So eventually you think these inefficiencies effectively disappear from the market, the market becomes bigger, but the yields start to- Will Barron Yeah. So you might say that Celsius

should have a higher yield than BlockFi will reverse, and one will have- and we've seen that with banks in the past. Will Barron BlockFi's yields went from 6% to less than 1% or something on less than a one Bitcoin holding or something, largely because of the GBTC premium, presumably. Yeah. So there's going to be a number of mechanisms where people will give different risks to different DeFi protocols or exchanges or whatever. What do you make of punks, penguins, rocks being multi six-figure prices to buy the NFT market right now?

I think some of this, 80-20 will apply. I think 20% of these will retain value. Bored Ape Yacht Club and the punks, probably, because it becomes tribal. You own it. You can show off that you're part of that tribe and you're one of the people who got it early rocks stuff like that penguins feels all like it's copying so you create these mini tribes that don't have the same community as the larger tribes or the more valuable tribes so who knows i mean nfc is not going away and this is the first manifestation of where this is all going it'll literally change the world. Right now, we're kind of betting on my tribe versus your tribe and that'll last for a while.

And how does it change the world? What do you see in the future for NFTs? Well, NFTs are the way to attach value to a blockchain and transfer them and to have scarcity and proven ownership. So IP rights, you're in the music industry. Very soon, the music industry has to move towards NFTs for IP. So you can own it, collect your IP without bloody middlemen, publishers, and everybody else who's in the middle taking money because music is a 80% of the economics is taken away. NFT solve a lot of that. NFTs for ticketing,

NFTs for art is fine. NFTs for any rare asset is fine too. And a rare asset could be access. It could be anything. And I've talked a lot about this. Communities, NFTs, this whole thing is going to literally change the global business model. And people look at it now and say, well, people are paying for rocks because there's a limited number of rocks. I'm like, no, people are proving that digital scarcity is true scarcity. Once you understand that, you understand where this is all going. It relates to that, but we were talking about, obviously, Amazon stock and the expense of it. Where does fractionalized stocks come into that? And do you think that that affects

the market in general? Do you think that when people are able to buy fraction shares of stocks on a grander scale or when that's tokenized, that will take a little luster off the crypto market because stocks are fractionalized as well? Only once the risk reward of crypto goes down. It can't be going up at 213% a year on average, even with the 60, 70, 80% drawdowns, that kind of risk reward is not available in most stocks. You have to choose a single stock as opposed to a broad asset. So it's pretty hard to do. But yes, all stocks are going to be tokenized.

I mean, already the European Investment Bank tokenized a bond, and there's more of that to come. We will see the whole stock market and bond market all being tokenized a bond, and there's more of that to come, we will see the whole stock market and bond market all being tokenized. So we'll eliminate clearing houses and 48 hours to confirm a transaction. All of that will be tokenized and instantaneous. Problem is, there's a lot of vested interest stopping that happening. Like the DTCC clears like a quadrillion a year of equities and transactions. Of course, they don't want to do that. It's owned by the banks, et cetera.

They don't want to give that up, but it'll be forced to because we know what this is like. This whole crypto market is like water. It just finds its way around every obstacle. There is nothing that will stop it because too many people are involved and it's amorphous. There's nobody who runs it. And that's why it's impossible to stop. That's the most powerful thing that Bitcoin brought to the world was this distributed network where nobody's the leader, but everybody wants the network to grow. That's astonishingly powerful. Right. In every space of crypto, there's some massive system, some

third-party toll collector that's threatened. I mean, you think about, you see Visa and MasterCard and the PayPals, all these payment systems moving into crypto and crypto is arguably a better version of everything that they do. Yeah. I mean, they get it. Visa was in this space since 2016. They got it very fast and built out an internal team and knew that they had to completely disrupt themselves. And I think most of the banks will. I mean, people like Goldman, they're not stupid. They know what's coming. The money center banks in middle America, yeah, they're going to be decimated. Central bank digital currencies and DeFi and wallets, I mean, why on earth would you ever use a normal bank? Never going to happen.

So they're all dead, gone. I think the Europeans are going to be lucky to do that because they've got a zombie banking system, as have the Japanese. They need the alternative. They need something that creates velocity of money because the banks suck in capital and don't give it back out again. So it is an answer for the world system. I mean, it is going to be better. It's just going

to take time. It's also better for them. I mean, a central bank digital currency is a wet dream for a central banker, right? I mean, utter control, no privacy. Well, even if they give privacy, and I think they will in the end, I think they'll concede privacy. And I think there will be zero knowledge proofs, whether it's in wallets or elsewhere. I think that's coming. Over a certain amount, you'll need to declare it as you do with any money now, because anything you transfer, if I transfer anything over 10 grand, it gets reported to the Fed and the Cayman Islands Monetary Authority. Do I care?

No. I mean, it's normal. We're used to that now. But the smaller transactions, people don't want that. I think the central banks will acquiesce because they know they don't want that fight. But to control monetary and fiscal policy with one instrument, that's a wet dream. And I think it's good. I think if you can say, right, you know, there's been a pandemic and these service industries have been decimated and can't reopen, we'll give them on a lifeline, but sorry, but we're not going to give you bloody Silicon Valley people a one and a half grand

check. You don't deserve it. You're all making a fortune. But we can't do that right now because it's so blunt, but we can change everything. We can have different rates of interest for different people. As I talked about, it's actually good. It's better than what we've got, which is a blunt, blunt, stupid monetary tool. But I also think the policymakers know that they've run out of ability to control monetary policy because of the banking system. So this is good for them, both CBDCs and DeFi and FinTech, all of these things together. It helps them out a lot. Bye-bye banks. Well, I know we're up against it here with time. So where can everybody follow you after this conversation and keep up with everything you're doing? And again, check out Real Vision and all you're doing in the crypto space.

Yeah, so I'm on Twitter a lot. So at Raoul, R-A-O-U-L, G-M-I. And I'm pretty sociable. I'll chat to a lot of people. And also, as I said, go to realvision.com forward slash crypto or Real Vision Crypto. It's free. So just go there, enjoy it and dive right in because all of these topics and more and everything you and I have talked about, all the protocols, everything, it's all there for people. Great place for all of us to go steal ideas, right?

Exactly. Yeah. And guests. Thank you so much for taking the time. I really appreciate it. We'll get ready for round three in a few months. Absolutely. Looking forward to it as ever, Scott. Thanks, Rob.