Unchained - The Chopping Block: How Prediction Markets Outsmarted the 2024 Election feat. Laura Shin - Ep. 733

Episode Date: November 8, 2024

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner get together and give the industry insider's perspective on crypto. This week, Laura Shin joins the squad to help break down the aftermath of the 2024 U.S. presidential election and its impact on the crypto landscape. With a new pro-crypto administration on the horizon, they explore what Trump’s stance on blockchain regulation could mean for the industry, from ETFs and stablecoin legislation to the potential of a national Bitcoin reserve. They also dig into the power of prediction markets, which outperformed mainstream media in election coverage, signaling a shift in trust and transparency. From the populist appeal of crypto to the challenges facing a divided Democratic Party, this episode uncovers the political dynamics that could drive innovation or stifle growth in the U.S. crypto market. Expect insights on the forces shaping America’s crypto future and the role of policy in crypto’s place on the global stage. Show highlights 🔹 Prediction markets outpaced mainstream media in calling the 2024 election, marking a shift in how people track election outcomes. 🔹 Trump’s pro-crypto stance signals potential changes for the industry, from new ETFs to a possible federal Bitcoin reserve. 🔹 The Democratic Party’s anti-crypto stance highlights a disconnect between progressive values and blockchain innovation. 🔹 As prediction markets gain popularity, more Americans rely on them over traditional media for real-time election insights. 🔹 One high-stakes bettor’s multi-million-dollar wager on the election paid off, thanks to a unique strategy involving the "neighbor effect." 🔹 The Democratic Party’s focus on "woke" issues may have contributed to a historic loss, raising questions about the future of these policies. 🔹 With pro-crypto Republicans in control, sweeping legislative changes are expected, from stablecoin laws to crypto tax reforms. 🔹 Crypto’s anti-elite appeal is resonating with populist movements, indicating a potential path for mass adoption. 🔹 The idea of Bitcoin on the U.S. national balance sheet is gaining traction as a pro-crypto administration takes office. 🔹 Political choices could propel or stifle America’s standing as a global leader in blockchain innovation and technology. Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly  ⭐️Tom Schmidt, General Partner at Dragonfly  ⭐️Robert Leshner, CEO & Co-founder of Superstate ⭐️Laura Shin, journalist, author of ‘The Cryptopians,’ founder and CEO of Unchained Disclosures Links Kamala Harris Shouldn’t Just Embrace Crypto. She Must Help It Flourish by Laura Shin: https://time.com/7111315/kamala-harris-crypto-laura-shin-essay/  How the Trump Whale Correctly Called the Election by Alexander Osipovich https://www.wsj.com/finance/how-the-trump-whale-correctly-called-the-election-cb7eef1d  Timestamps  00:00 Intro 01:17 Election Night Observations 04:32 Polymarket's Role 06:19 French Whale x Neighbor Effect 14:52 Mainstream Media vs. Prediction Markets 25:54 The Future of Prediction Markets 27:26 Crypto and the Democratic Party's Missteps 30:30 Democratic Party's Superiority Complex 31:38 Crypto's Global Impact and Legislation 43:23 Predictions for Crypto's Future in the U.S. 49:47 The Return of Crypto Companies to the U.S. Learn more about your ad choices. Visit megaphone.fm/adchoices

The mainstream media overwhelmingly was dismissing this delta between polymarket and the mainstream media as being attributable to bias, right? The idea was like, well, polymarket, it's a bunch of crypto bros, it's a bunch of, you know, these people love Trump. These people are, you know, kind of shadowy folks on the internet who are just manipulating markets and who knows what they're up to. And the mainstream media never once acknowledge even the possibility that there might be some alpha in the prediction market, because they know something that the polls aren't capturing. Not a dividend. It's a tale of two Kwan.

Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. Unnamed trading firms who are very involved. D5.Eat is the ultimate. DFIPOTOC protocols are the antidote to this problem. Hello, everybody. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider's perspective on the crypto topics of the day.

So quick control us first you got Tom, the Defy Maven and Master of Memes. Hello, everyone. Next we've got Robert, the Crypto Gronisornecour, and Tsar of Super State. Aloha. Joining us again today, we have Laura, CEO of the show. GM. And I'm Hib, the Headhubman of Drive and Fly.

We are early-stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Lecy Chopin Block and XYZ for more disclosures. So it has been barely 24 hours since the close of the election. And obviously, it's been a momentous election for everybody in the world. I'm actually in Asia right now. and it was my first time experiencing an election outside the U.S. And it was very weird.

It was really bizarre. I mean, obviously, I felt an affinity with everybody in the U.S., but this also felt like an election that uniquely people were experiencing through their phones much more so than any previous election that I've experienced. Like, all the previous elections, I felt like they were really happening on TV, and the Internet was kind of this side show. But this felt like a really internet-first election. I don't know.

What was your guys' experience actually just watching the election? election. I'll give you my own personal experience. I actually thought there was going to be more volatility in how the results unfolded. So, you know, in prior years, there was a little bit more back and forth. I was expecting the polymarket charts to go up and down, you know, a little bit more. The only real back and forth was very early on, you know, in Nevada prediction markets because there was, you know, some like early voting data all throughout the day. There were signals coming out from, like, you know, exit polls. And so like aside from Nevada, though, like none of the states really were going back

and forth and trading off winners until, you know, Wisconsin. But, you know, and then it sort of just tipped. But I was expecting more uncertainty, more turbulence. I was expecting crypto markets in general to be significantly more bi-directionally volatile. But what really felt like the election results unfolding was that everything was just a drift up. You know, Trump's odds drifted up. The results generally kept on being consistently a little bit better than expected. You know, Bitcoin prices and crypto complex, you know, its aggregate just drifted higher.

And I thought there was going to be more drama. So I was a little bit, you know, underwhelmed by how just like consistent the results were throughout the night. It was a lot more orderly than 2020. Yeah, I thought it was going to be like 2020 where it took a few days for all the votes to be counted and stuff. So that was like just a little bit confusing because I don't think the laws changed. Although I guess the difference is the pandemic probably. Maybe that's why the vote went. Yeah, all the mail.

The vote counting went faster. Yeah. Way longer. Exactly. Yeah. Yeah. Yeah, I remember in 2020, there were also prediction markets and, you know, early the night, you know, Trump was trading up to like 80%, and then dip back down.

It just felt like there was a lot of uncertainty in chaos. And obviously 2016 was its own kind of bucket. And this just felt like, yeah, you're watching the markets kind of chop up, but still up with kind of a straight line. And so if anything, like you said, I think watching CNN felt very antiquated. You're zooming into different counties and giving their play by play. And it's like, well, the market's already pricing it in. were refusing to call you the election as of 11 p.m. midnight. And it's like, Polymark is at

97, 98%. Like, what are we really doing here? Yeah. So this was a big theme of the night for anybody who's following Twitter or following basically the cryptosphere is that crypto seems like it was having a very different experience of the election than the mainstream media. And that really put polymarket at the center of the night. So Polymarket, you know, the biggest prediction market in the world disclosure, you know, where investors in Polly Market as is robot ventures. Polymarket did over $3.3 billion in volume on the main presidential election market. It was, it was very striking how, for one, Polymarket, two things that really happened. I went through a lot of this in a tweet thread that I wrote right after the election closed.

So Polly Market was pricing Trump to win 62% to 38. So a clear favorite, not an obvious blowout, but definitely. he was supposed to be a favorite coming into the election according to Polymarket. Now, almost every single pollster and every single modeler had the race at dead even. So there was a significant delta between what Polymarket was saying and what the sort of traditional media as well as the modelers were saying. And the modelers overwhelmingly, they only really use polls as inputs into the models. And Polymarket, by its definition, uses whatever people think is correct that they're willing

to bet their money on. And the mainstream media overwhelmingly was dismissing this delta between polymarket and the mainstream media as being attributable to bias. The idea was like, well, polymarket, it's a bunch of crypto bros. It's a bunch of, you know, these people love Trump. These people are, you know, kind of shadowy folks on the internet who are just manipulating markets and who knows what they're up to. And the mainstream media never once acknowledge even the possibility that there might be some alpha in the prediction market, because they know something that the polls aren't capturing. And we know that polls have gotten crappier and crappy over time.

So there was a lot of fixation, especially in the days before the election, of the person on Polly Market known as the Trump Whale. So the Trump Whale, sorry, not the Trump Whale, the French Whale. So the French Whale was the single person who was betting on Polly Market. And I think they had upwards of $30 million of open interest on Polly Market, a significant portion of the total open interest. And he was single-handedly, he used like four accounts to just bet on Trump, bet on Trump winning the election,

Trump winning the popular vote, as well as he believed that Trump was going to win six of the seven swing states. And it turns out that the Trump whale, or sorry, the French whale, has now he's going to win over $50 million from the collection of bets that he's made. Including the amount that he waited. So it's not 50 million of profit. I see, I see. Okay. 50 million total that he's going to win, you know, 20 million roughly of profit. And supposedly this guy also bet most of his net worth on this particular election. So he was very, very all in on the idea that the polls were systematic. dramatically wrong. And now his claims, I think a lot of people were kind of laughing at his claims

before the election once he was en masse. But specifically, he did another interview with the Wall Street Journal. And the claim that he made was very specific and I think probably insightful is that the way that pollsters were polling was the way that they've been polling basically forever, which is they put an internet survey and they say, who are you going to vote for? And then they do a bunch of statistical corrections because they know that the response rates on modern polls are so low, right? The response rates are like 5%, that is so low that you know it's a bias sample. There's no way that a uniform sample of people are responding to bulls. And so you have to do a bunch of corrections and those corrections are noisy.

What he was saying was that the shy Trump voter effect is people kind of falsifying who they're going to vote for because they know that it's kind of not okay to say in polite company that you're going to vote for Trump causes people to just basically confabulate so much about who they're going to vote for that you cannot trust what they say. And a way to overcome this bias is to do what's called the neighbor effect. And the neighbor effect is don't ask people who they're going to vote for. Ask them who they think their neighbors are going to vote for. And they're much more likely to tell you the truth about what their neighbors are going to say

than what they are going to say when they actually go into the ballot box. And he claimed that he had actually done this. He had commissioned a pollster to go in and actually collect a poll, only asking people who their neighbor is going to vote for and not themselves. and he noticed there was a big delta between what this neighbor poll effect was reporting and what the real polls were reporting. Now, he didn't do this across the whole country, but he didn't enough places to give him confidence that the pollsters were making a very, very big miss in the way that they were

polling. And that was what gave him the confidence to make this big bet with his whole net worth on the poll outcome. So very, very interesting story. And I'd say this also matches up with my own lived experience, which is that I know so many people who were telling me in private that they were going to vote for Trump and did not dare to say any of this publicly. You know, they feared alienation from their friends or their family or whatever.

And there was another anecdote from Harry Stebbings, the 20 VC guy who was saying that, you know, when he was getting these VCs coming on the podcast, 90% of them, as soon as the mic turned off, were like, yeah, yeah, I'm going to vote for Trump. I think the, you know, country's going to shit. I don't believe in the Democratic story anymore. But almost nobody was willing to do it on air. And so every, I feel like everybody. kind of perceived this.

Like we sort of all saw this was happening. But there was this trust that the polls were going to figure that out. And it seems like they completely failed in doing that. This is an incredible anecdotal story about data being put into effect in the market and making the market more accurate without people realizing it. So this happens in other markets all time. Like there's hedge funds that use, you know, are famously using like satellite images of like parking lots to figure out whether Walmart's sales were going to be higher or lower than

anticipated by seeing how many cars were like, you know, trafficking the parking lots. Like there's always been examples of either hedge funds or crazy smart people using data in new ways to make money because markets are mispricing things. And, you know, before all of the information came out, people were just assuming like, oh, this guy is a fool or, oh, he's trying to do it to manipulate the market. This is just a trader. who had a lot of capital, because of that much capital, was able to commission his own polls to create proprietary data that he had and then wagered it, which, yes, it did move the market prices, but it moved the market prices closer to where they should have been.

And he made a fortune in the process. And so I actually think this story tells, you know, explains the why of prediction markets just so eloquently, because this will not be the last time that people, you know, figure out ways to make money by having an information advantage. Yeah, I think also part of it is I do think that those are just fundamental, fundamentally different questions of, you know, how are all these different people going to vote and like trying to, you know, go after like a representative. sample of the likely voters versus just, you know, who do, who do I think is going to win?

It's a different question. And so I actually feel like the pollsters, in a way, they're trying to do this, yeah, just kind of more, I don't even know how to explain it, but they're trying to get something right in this, like, kind of, what's the word I'm looking? Is, It's just like a sort of like they're thinking about it too hard kind of way, if that makes sense. Whereas, you know, if you just want to get it right, then you will go about it a different way. And then you don't because also I feel like they're, you know, try like, you know, all these different models. They have like all the different states and, you know, like, but that's like such a, I don't know, it's just like trying to make some recipe that has like 50 different ingredients where you really

only want to know one answer. But then one other thing that I was going to say about that was so I was also one of those people who beforehand, I did think that probably the markets had some kind of bias toward Trump naturally for probably two reasons. One is that, you know, we have seen before that the election or the prediction markets do get, swayed by information that comes from the mainstream media, you know, like around like earlier in the summer, like when Biden was going to step down or, you know, who would be the Democratic nominee, stuff like that. So, you know, it's not like there isn't that kind of two-way information flow. But I feel like, you know, when you have the pollsters showing that they're equal,

then because of the electoral advantage that the Republicans generally have, you know, due to the small state, small states just having more weight in the electoral college, I feel like that also would, would like lead the prediction markets to then bump up Trump's chances. Well, no, but the people who are modeling the polls based on, or sorry, modeling the election based on the polls, right? The New York Times is doing this, as was Nate Silver and many others, just using the polls. almost everybody was benchmarking at 50-50 for the electoral college, not for the popular vote. Oh. So the polls were telling a very different story about the electoral college. And Polly Market was diverging from that story. And were the polls saying that Harris would win the popular vote?

Yes. The polls were saying Harris would win the popular vote, but that the electoral college was 50-50. And Polly Market was saying the electoral college is not 50-50. The electoral college is 62-38. Got it. And you said in your answer that, you know, there's this two-way street between the prediction markets and the mainstream media. And I think the problem is that it's not a two-way street.

It's a one-way street, which is that the prediction markets incorporate the mainstream media, but the mainstream media was not incorporating the prediction markets. They were dismissing the prediction markets. They were saying this stuff is a bunch of, you know, 4chan reading, Trump-loving, you know, foreigners who are, you know, crypto-pilled, and they don't know what the hell they're talking about and they're betting on their hopium. And this was the mistake, I think, that again, kind of is part of the whole story of this election was that the experts got it wrong.

The media was way overconfident and almost arrogant in thinking that, like, yes, we know exactly what people want. We know where women are going to vote. Like, Trump has won white women, which was supposed to be like, oh, no, reproductive rights, this is the story. Obviously, nobody's buying Trump's story about wanting to protect women. It turns out, no, actually a bunch of these stories. or as Latinos, like the black vote.

So many of these things broke for Trump in a way that violated the narrative that the media was desperately trying to tell. Yeah, although I don't think a majority of black voters did, but yeah, he got more than in previous elections. He massively outperformed. But one last thing I just wanted to say about that was about the, oh, oh, I do. So on Bits and Bips, which is another show on this channel, they did talk about how. they felt like, you know, there was this gender gap. And, you know, I'm pretty sure. So I don't know the

data on Pollybrook, but I'm assuming that there's just more male traders, just the way that, like, you know, anybody who is into crypto is, like, more male. So I did think that that also might be why that was, and which is not, I'm not saying that I was like discounting it or whatever. I was just saying that, for me, part of the gap, at least, whether or not it was the whole thing or just some part of it, I did think, okay, some of the gender stuff could have been causing that. I hear that. I respect that perspective. But I think this could also go back to the neighbor problem, right?

Which is polymarket is it not asking people who they want to vote for? It's asking people who do you think the elector wants to vote for? And therefore, I think it's more accurate. And I think it has less potential bias based on people's own interest. Now, yes, there's got to be some correlation between people's own voting interest. and what they think others are going to do, right? And there's got to be some correlation between, and we know from the data already, that there's a correlation between gender and voting preference in 2024, right?

So I think there might be some of that, but I think it's probably, you know, offset by the fact that people are wagering money based on what they think the expected outcome is, even if they think it's different from themselves. Like, there's a lot of Harris voters who are betting on Trump. There's a lot of Trump voters that were betting on Harris. There's a lot of people that were like, I'm life hedging. betting for the other candidate. There's like all sorts of stuff that I've heard about.

And so I think that is a critique, which is the demographic of bets might not reflect the population at large. But I don't know if it has to represent the population at large, just be scientific enough to figure out what the market thinks the population is. Well, obviously it doesn't because the market for betters is all foreigners. They're not Americans. Right. That might be better.

That might be more objective about. Exactly, exactly, because they're more dispassionate, right? They're looking from the outside. So many people I know who are outside America thought the American media was crazy, thinking that this was going to be a close thing, right? Like I was listening to somebody in there was like this bar in Paris. I can't remember what show I was watching, but there's like this bar in Paris that always does it like a straw poll on the election

of American expats. And America, like these, it's a very famous thing in Paris. And this bar, Trump won the, vote in this bar, which is this is American expats in Paris, right? This is like a stronghold of very, very liberal people, and they voted in favor of Trump. So there are all these signals that people outside of America, like, I mean, I spend a lot of a time outside America. So many people were like, yeah, Trump's going to win this election. I don't know what your media is talking about. To be fair, I think, you know, I think prediction markets were infinitely more helpful on the night

of compared to following the TV and trying to see when results were coming in. and what their models were saying. And I think obviously, you know, Polymarket was giving Trump, you know, 60-ish odds versus 50-ish odds for most of the modeling. But, you know, Polymarkets still had Trump at like 25% to win the popular vote. And so it's like, you know,

how can you give a credit for that and not, you know, credit for having, you know, 10% skews versus the model. I will push back on that. That was a one that's a much smaller market than the presidential election market. It's also the market that doesn't matter. And it's the market,

because it's, you know, who cares who wins the popular vote? nothing changes based on that. And also, you can't hedge it. You can hedge the actual presidential election because there's a bunch of other stuff in the world that is priced based on whether Trump is going to win. But there's nothing that's priced based on who wins the popular vote. Right. So you could construct a basket. Yeah, I mean, you are still talking tens of millions of dollars in volume. So I wouldn't say it's nothing, but fair enough on the hedging. But also, the macro trade has been flipping back and forth, right? Like people saying, oh, it's like strong dollar,

Now it's weak dollar and now it's like, oh, treasuries are selling off. And so obviously, the electoral calls are still the biggest one. And also, to be fair, polymarket has been trading roughly in line with a lot of other, you know, prediction markets like forecast X, like Cal She. So even people in the U.S. are obviously still, you know, trading in line with foreigners are looking at even if foreigners are slightly more, you know, accurate or Trump biased. Yeah. But at the end of the day, it was basically like one-eighth, the size of the presidential market.

And so people are talking about, well, is the presidential market really liquid enough? You know, can we really take this market seriously. You definitely can't take a market that's, you know, roughly a tenth of size to be as meaningful as the 10x bigger market, especially when there is no real, like, if Trump had won the electoral college and not won the popular vote, Republicans still could have sweep. There's still, you know, there wouldn't necessarily be any change in the world that is discernible other than just, okay, now, you know, the Democratic Party is much more humbled now than it would have been had they won the popular vote. Yeah. I mean, it all comes back to just, it's a incentive aligned design of how this is work. It's a market. You know, I bet next year, you know, Nate Silver will be back and Seltzer will be back.

And like, you know, they're not going out of a job because they, you know, fucked up this cycle. Whereas, you know, if you lost $30 million, you might be, you might not be coming back next cycle. So like markets have better incentives than pollsters. Yes, absolutely full stop. That is the biggest lesson is that, you know, nobody is losing a job over having. miscalled this election. Like what pollsters are going to be like, well, great, I'm out of business now. I'm not coming back next year. But any better who was, you know, gambling their life's earnings on Kamala winning, they're out. They don't get to play again. And that is, in a way, that is the

ruthless efficiency of markets is that if you are wrong, if you are not adding alpha, goodbye, you know, do not pass go, do not collect $200. And that's why markets work. You have worse incentives, right? There's, there's poll hurting where you don't actually want to report the raw inputs. You want to have a, you know, poll result that looks. roughly like everybody else so you don't get called out. And then you get these, you know, garbage in, garbage out kind of results with traditional modeling. So yeah, there was the delta between the two prices. And then as you mentioned, Tom, the fact that Polly Market was way faster to call the election than the mainstream media. And, you know, I harped on this quite a bit in my piece, which, again,

if you guys haven't seen it, please, please just give it a read. Basically, it was like by midnight, polymarket was pricing the election at 97% that Trump was going to win. Like, it was basically over. And the mainstream media was just milking this thing all night, like six hours of like just false drama of, oh, no, who knows who's going to win me to swing state? Yeah, I know. Oh, MSNBC wasn't calling a single race, like a single state, like state. They were like everything is a swing state still. I know. Yeah.

Well, yeah, I know I'm always an apologist for the media. I just need to explain that. Go for it. for the media are you don't want to get things wrong. So I know, like, when it's trending and it seems so obvious, but like if there's like some margin of error, you know, I can't remember, I'm sure there are elections in the past when they've called things too early and then they were wrong. And so like, yeah, the incentives are just like so completely different. So I get that. I get that. So just put the odds on the screen. Count the votes. Wait until it's like

a sure thing, but just put the odds on the screen so that people are not misled. Agreed. I thought it was way more misleading for them. to say like, oh, only 60% of the vote is counted and like there's a 6% gap. Like, we can't call this, you know, when any statistician would have called it. And in fact, many other venues were calling states, like decision decision desk was calling the states relatively fast, right? That's a very official source. You know, it was just the incentives are broken because they need viewers. They need eyeballs. And I think for a lot of these networks, they want to convince the audience that they're on their side, right? These are somewhat partisan, you know, networks. And, you know, they sell their own

story. And so I don't think, you know, real-time factual accuracy is in their business model. I completely agree. And I think a big part of it is that, of course, the election, I mean, the election is like the Super Bowl. You know, it's just such a huge event, so many eyeballs, so much energy and attention. But like, it's kind of a, it's, there's a lot of pageantry. You know, it's a big spectacle. And the spectacle, we all were coached by the media what to expect. There's these seven swing states. We have to wait until Pennsylvania gets called.

And what Polymarker showed was that the polling error was so big in even non-competitive states that had already, you know, called their states by, you know, by like 8, 9 p.m. Eastern. Like New York. Like New York, like Florida. That there was no fucking way. There was just absolutely no way with a polling error this big and correlated across all the states. that the swing states were going to be close.

Like, it was basically done before a single swing state was called. And the media could not explain this to people. Like, it's just not in their business model to tell people, guys, here's a subtle statistical argument for why the election is over and Kamala has lost, even though a single swing state hasn't been called. Because there's just like this kind of dutiful sense of process that the media has to adhere to because this is what they sold to their customers. Yeah, just no, we have to watch the two bars move.

You guys, I don't have a TV. So, like, I did not watch this in the way that a normal, I've, like, literally never opened a TV in my entire life. All right. How are you consuming this content? Well, I... Just your computer? Yeah, I was... Well, so first of all, you guys, I had a class.

Like, I'm taking this writing class. I had a class. So I was, like, not paying attention for, you know, until, like, 10 p.m. Then I, like, fell asleep. And then I woke up and I was like, oh, I guess she was losing. So, yeah, no, I didn't have like a watch party or whatever. So anyway, so you're asking all these questions and I did not experience it the way an an oral person did.

But all I'm trying to say is so you're describing all this and I'm like, oh, right, right. I remember what TV can be like. But yeah, I personally don't know. I think it is, what I'm hoping is that this is the moment for the American population to really understand why prediction markets matter and why there are better ways of understanding what's really happening than the media. Now, obviously, as you mentioned, Laura, there is a symbiotic relationship between prediction markets and the media, but right now it's a one-way street, and what I'd love to see is for it to become a two-way street, right? You saw,

you know, Elon Musk and, you know, a bunch of politicians quoting the Polymarket odds on the night of the election. There was also a story that Shane, Shane, the founder of Polymarket, was saying that the Trump campaign team was calling him, telling him that, you know, thank you for Polymarket because it's helping us understand what's happening, because we're watching the media, right? Like, I mean, all their polling is done. They're not doing anything anymore. They're just sitting and watching. And the media is just basically bullshitting, right? They're just lying about what's going on in the country. They're pretending that it's close. When in reality, Trump is overwhelmingly favored to win. It's pretty much over.

And that was helpful for people who were actually in themselves in the race. So I think this is a moment that like all the other ways in which there's been a chastising of the media over the, you know, over basically the last four years, I think this is another thing that is going to raise the legitimacy of prediction markets as being an important tool for understanding the news

and understanding world events. And what I hope to see is that that trend is going to continue a little bit more, is that you'll see news stories quoting polymarket odds or quoting prediction market odds and saying, you know,

for stuff like, will there be an invasion? What's the likelihood that, you know, this thing is happening or that thing is happening? Instead of reading some op-ed from a journalist who like, you know,

doesn't fucking know, just kind of guessing based on their views. I just wrote an op-ed. What was your op-ed about? The Time article. I basically read a letter to the Democrats and liberals telling them that they were being stupid about crypto and that it was putting the U.S. at risk of losing its place in the leadership of the world.

Well, let's dig in on this topic because, you know, like this is probably the other major story from this election is that the Democrats' work. were being dumb on crypto. And it did cost them many elections up and down the ballot in some degree. And so, why are we? I honestly, I actually just want to like, yeah, talk a little bit about that right now because interestingly, after I published that, so many people in crypto, like prominent people in crypto came out of the woodwork and privately messaged me and told me that they

agreed with me and they were Democrats or liberals. And they don't understand how the Democratic Party could be so. anti-crypto. So I'm clearly not the only person who feels that way. And I've had like a lot of private conversations now. And, you know, so for any, any Democratic politician who's like listening right now, like, please pay attention because those of us in crypto who have that political leaning, we are just minds are blown. We don't understand how our own party or like people that we believe have the same political values could be against a technology that we view as being totally in line with our values. It's so confusing. So like, you know, I'm going to fully admit

this is not going to be a popular opinion. But when she ran, Elizabeth Warren was my favorite presidential candidate. And I truly thought that crypto is like exactly what, like, what she was talking about in technology form. And so when she was against it, I was like so concerned. I was like, how does this make sense? Like, this is what you used to talk about in your campaign, but we can like do it now using this technology. And yeah, like multiple other crypto people who also used to love her, they also were like, yeah, when she started being against this, like, didn't make any sense to me because I used

to support her. I believe this technology can accomplish the goals that she had said she wanted to accomplish. And so anyway, so, yeah, like I'm very upset with my party on multiple things. But yeah, I am just realizing there's multiple issues now where because I'm, you know, aligned with, you know, some stance on that issue, I find myself with like other kind of pro-Trump right-wing people in those communities, even though for any other issue, like I don't align with the Republicans or the, you know, the people on the right. So it's so confusing. And I feel like basically what has happened is that the Democrats have become, like very self-righteous about a lot of things and super superior. And they like immediately will have a knee-jerk mocking reaction to a lot of things. And they don't, they have lost some like intellectual curiosity because they just have this sort of superiority complex. And it's really aggravating.

Because, you know, just like, I mean, as a really simple example, and I know we want to keep it to crypto. So I'll just say this really briefly and move on. But like, I also know a bunch of crypto people were pro RFK. And, you know, people in the last days of the election were like mocked. the notion that RFK had anything useful to say about health. And I mean, you guys all know, I've been dealing with like crazy health stuff. And if I had not experienced things in my own body, I probably also would have been like one of those people mocking what he was saying. But no, he's spot on about a lot of things, a lot of things. And it's only when you have bad health and you like have to go through some crazy shit to like get your body out of it,

that you realize like, oh, whoa, no, he's onto something. And it would be beneficial to have a point to be like that in government. So anyway, point is just like, yeah, with crypto health, I mean, there's like numerous other issues, but I just see it over and over again. And I think part of it has to do with like that whole woke whatever, the identity politics thing, which just fucking drives me nuts. And I feel like it's like a big part of that whole moral superiority complex that the Democrats have. And I feel like they need to, you know, eat this humble pie and like take a look at what their values are. You know, Nimbism is another one. There's just so many ways where I feel like the Democratic Party has veered from their liberal values. I mean, obviously on some of the big ones,

which is why I still voted for a Democrat, they haven't. But, you know, there are certain other ones where I'm like, what you guys are saying, that's not even a liberal position. And now the, like, the health one, it's like these right-wing people are pro the party that has been trying to take away health care from people for over a decade. And it's just like, make it make sense. Make it make sense. Well, I mean, this election really showed exactly what you just said, which is a massive repudiation of the Democratic Party across both, well, the presidency and Congress. So Republicans now control House and Senate. And if you look on the crypto side, so Stand With Crypto was tracking the races, which of course, the Fair Shake Pack was a big contributor to the success

of a lot of pro-crypto candidates. There were 258 pro-cryptos elected to 116 who were anti-crypto. Senate 17 pro-crypto were elected, 12 anti-crypto. It basically was a big loss for the Elizabeth Warren wing of the Democratic Party, right? I think I'd say if we're going to imagine how the Democratic Party is going to recover or evolve from this. Yeah, but it's too bad she didn't lose herself. She didn't lose herself. She's in a state.

She's a stronghold in Massachusetts. Yeah, yeah, yeah, yeah. But I think her status within the party has massively decreased now with this election, right? This was very, very clearly a complete repudiation of the far left, of which, you know, Elizabeth Warren and AOC are probably the most striking embodiments. And their sway in the Democratic Party will absolutely decrease over the next four years. You know, I heard many people saying like, oh, if Trump wins, it's going to be a revitalization of wokeism, people are going to, you know, because Trump is just such an odious figure and people

are going to want to push back against him. And like 2020, or sorry, 2016 to 2020, that was why woke culture rose was because of Trump and now that Trump is back. It's going to have a second win. I think it's the opposite. I think it's that people have realized now, wokeism is not a winning strategy. This sucks. Voters don't like it.

You will just keep losing the more you embrace this. Yeah, but I can't believe it took them this long. Absolutely, because it's just, it's hard to tell when you're in this echo chamber of like this just, you know, left eating the left about everything when it comes to identity politics. Yeah, it's not a politics podcast. It's a crypto podcast. But just to, you know, espouse and that further, I agree just speaking from personal experience as a lifelong Democrat. Like, it has been difficult to watch. the party get more and more ivory tower and patronizing towards voters of both parties over

the last couple election cycles, where it's like taking for granted the majority of Americans, it's taking for granted most ethnic groups. It's like, and it's so condescending towards, you know, Trump voters or the Republican party at this point that it's alienated me, right? as an individual from the party. And like, it's a conundrum because it's a party that I'm still a member of and, you know, have always voted for. So hopefully this is, and I'm speaking again as a Democrat, one step forward.

There's like one step backwards, two steps forward for them, right? But they're wrong on crypto. They're wrong on a lot of topics. They're wrong on this, you know, ivory tower nonsense. And hopefully they will learn from this. I mean, crypto is a good example of that in that, you know, if you, like, how does the Democratic Party view crypto? Or at least how did they until, you know, yesterday, basically. I think the answer is that they view it as, look, this is basically gambling and people cannot be trusted to make good decisions for themselves.

They're too stupid. They're going to buy mean coins. They're going to buy Bitcoin's a scam. I don't believe Bitcoin's a good idea. Therefore, people shouldn't be allowed to buy it. We've got to protect them. Mixed with a Venn diagram overlap of like being an anti-tech party right now. Like, for whatever reason, the Democratic Party used to be about, like, championing, you know, new things and growth and innovation.

And for some reason, it took its name, progress. Yes. Yes. Exactly. They took this, like, regressive detour to be like, okay, Google's a monopoly and it has to be broken up. That's literally one of, like, the major views within the Democratic Party right now, is that tech companies are out of control and too large. and the party's become anti-tech. And it's not just crypto is only used for like speculation.

It's like it's like crossbred with tech. And like the combination of those things, I think is like creates for some people within the party in a logic reaction. Yeah, but this is so myopic. And this is what I wrote about in the timepiece because like, you know, how many people have I had on the show who were like, oh, I live in, you know, like Afghanistan and this helped me, you know, with this or that? Like, you know, I'm in Africa or I'm Argentina or, you know, whatever.

There's like just so many people. Like, like, basically the Democrats only view it, like, within this bubble of, like, how we live in the U.S. And like, oh, but, you know, we have good banking. Like, what do you need Bitcoin for? And it's like, yeah, well, you're lucky. You live in this amazing country, but there aren't people that live in this country who could really use this. And, like, how did they forget that? Like, that's why I'm like, you're just abandoning your progressive ideals.

I completely agree with that. but I think the core of it was really that they didn't want Americans on this. And I don't think it was because like, oh, we're worried about the dollar. We're worried about this or that. It was just like, you know, it was kind of stupid that the Democratic Party just decided one day, basically two years ago, that crypto was evil and that it needed to get stamped out and like, this is the hill they're going to die on. There was a tweet by Justice Slaughter for Paradigm who said he was speaking with a former Biden Whitehouse staffer,

who the quote from the staffer was, no Dems are going to fight with crypto anymore. Crypto clearly has more staying power than we thought, which again is like this humble pie that just like, people want this. Leave it alone. Dude, like, stop trying to second guess what people in America want. They will tell you what they want. This is what I wrote in my timepiece that, yeah, because like I said, like being against crypto is like saying you're against the internet.

Who was against the internet? Like it just doesn't even make any sense. small number of people and history proved them wrong very quickly. And luckily it didn't really become part of either party's platform because that party would have been ridiculed for probably decades. Yeah, it's just stupid. It's just stupid. Like, we're going to have this. It's going to be a thing, you guys. Like, let's embrace it. Like, yeah. I mean, this is what, and this is what I wrote in the timepiece. This is why I wrote the time piece and this is why I'm all agitated because I feel like their stance puts the U.S. at risk of falling behind as one of the leaders in the world. And

And that, like, is maddening to me. And it's over these, like, stupid, you know, whatever, just judgments they have. They're very judgmental now. Well, I think it's also because, and, you know, this is something of, like, coming down to, like, narratives, policymakers in D.C. only hear small soundbites of crypto good and bad. And it's not oftentimes part of a larger conversation of what is it good for and why. And, you know, I think if as society we're having more conversations about like, what does it mean for America and why, you know, the narrative would very quickly shift. And I think there's a lot of folks that would view this as a tool for our own economic security and dominance.

And that like a significant, you know, facet of the American hegemonic, you know, exceptionalist system is that we're going to be the best at economics. we're going to be the best at new technologies, and we're going to export our monetary superiority everywhere we can. And to shun an industry that's at the forefront of how money works, how financial assets work, how assets move throughout the world, it would seem foolish to shun this industry. Yeah, I mean, like, we dominate in tech and finance already. Like, why would we want to lose that edge? Somebody please explain this to me.

The rest of the world wants to win this, you know? Here's what I would say, actually. I take a slightly more nuanced take, which is that I think the anti-crypto stance would make sense to me if it were coming from a perspective of we need to maintain the monopoly of the dollar and we are afraid of Bitcoin or other cryptocurrencies usurping that monopoly. But that was not the language, that was not the rationale. The rationale was crypto is a scam and we're going to protect you from the scam. That was the rationale, which is like, what are you talking about?

Like China. Not just that. Not just that. It was also, this is only a tool for drug dealers, money launders. Drug dealers and fat cats. And a bad dude, because that is a soundbite that was accurate circa 2011 when a lot of people heard about this for the first time. It's not accurate in the 13 years since that, but circa 2011, it was pretty much exclusively

for bad people. Sorry to say that if you're in crypto. Right. So there is a realpolitik that actually makes, to me, makes more sense to come from the right is to say, no, no, no, this is a national security slash dollar dominance issue and we want to ban crypto or ban Bitcoin the way that China did, right? It's not inconceivable that this could be in your national interest. But that was not the reason why they were anti-crypto. They were anti-crypto for this like holier than thou reason that like, no, we're going to protect you from how stupid you are. And then, you know, if you look now, like the Republican Party now coming into complete control of basically the American government, the right, the right, the right, the kind of broadly anti-elite, right? That's like the kind of mega populist narrative, which is that, oh, you want this? Here you go. Have it. You know, you want to bet on mean coins? Great. Bet on mean coins. You want to trade unregistered security? Go ahead. Fuck it.

Like, why not? I don't care. And so I think we're in for a very, very big swerve in American politics. And I'm curious how you guys think this is going to shape up. So we now have the self-proclaimed crypto president who's going to take office early next year. He has said that he's going to fire Gary Gensler. He's going to completely overhaul the regulatory state. Apparently Elon Musk and J.D. Vance, who are both very pro-cropto, are going to be kind of pseudo running the country or running some part of the total platform. And, you know, Trump himself has massive economic interest in crypto. You know, from World Liberty Finance to his NFTs to the amount of crypto he owns that,

you know, I think Arkham tagged a lot of his addresses on chain. So he is really genuinely the first crypto president. And he's proclaimed that, you know, Treasury is going to hold some Bitcoin in the balance sheet now. So we are going to see the first, you know, the richest country in the world own Bitcoin, presumably, if he in fact fulfills this. Where do you guys think this is going over the next four years? What do we expect to see?

Honestly, this is like one of the only things I'm happy about. It's like this and the health thing. I'm like, okay, the Republicans were better on those two issues. So like, fine. I mean, the market's already kind of showing you a little bit of what it thinks, right? Like a lot of the sort of OGD-Fi tokens were ripping yesterday, you know, Uni, AVE, something else. I'm missing Frax, I think, occur. I think LDO, too.

Lido. So people are viewing, hey, these are things that either have been targeted by the SEC or are likely to be targeted by the SEC under the Gensler regime. Maybe there's going to be a more loose state under a Trump presidency and all Republican government. And so, I think the market is overall optimistic about a more favorable regulatory environment that's just more accepting and more laissez-faire around these kinds of things. And so I think we're hopeful on that. I think the World Liberty thing, I think maybe it said this on a previous podcast that, you know, obviously it's had a lot of difficulty selling out or doing this this fundraise. And I was like, oh, maybe if Trump wins, it'll sell out. I think that there's a story yet today.

They've only sold like another 2K of World Liberty Finance tokens since Trump won. So that is really seems like that is very dead. Wow. Wow. I actually saw the Twitter account was tweeting last night. They're like, oh, we have something big. I'm just like, shut up. Like, just don't like.

Not the right time. Not right now. Yeah. Wow. Yeah, I mean, I'm looking forward to just like there's just so many common sense things that should have happened before that finally will get, you know, like regulation, you know, probably like an ether, ETF with staking. Just, you know, just like so many just things that just should have happened. So I'm like looking forward to that. And I just feel like, you know, what I was saying before, like, I mean, the reason I cover crypto, I think it's obviously super interesting. And yeah, you know, I was saying before like just any technology, you can do good or bad with it, but, you know, by and large, so the internet is another great example. You can do good or bad with it. I would say most people would say it has been a net good. And I feel like if we allow crypto to develop over time, people will also say that.

So I'm happy that, yeah, we'll move forward and just some stupid things we should have done like five years ago. So, okay, to make some specific predictions, here's some things I think are probably coming down the pike. relatively, like within the next year. So one, we're going to get more ETFs. So probably, I would guess, XRP and Seoul are next in line to become ETFs. I was chatting with somebody about this the other day. I don't think we're going to see a Doge ETF. I think like ETF issues would just be too embarrassed to do a Doge ETF. But in principle, probably somebody will do it, but probably none of the major ETF companies will do a Doge ETF. I think we're probably going to see In-Kind Redemptions. Like you said, Laura, we're going to see staking. We're going to see a new and

common SEC drop a lot of these cases. Not all of them. I think some of them will continue, but I think most of these cases will get dropped or they'll get settled for some nominal amount. We're probably going to see some, so one, we're probably going to see some, like, nuisance stuff come out of this administration before they leave office. So probably they'll file more lawsuits or, like, do other stuff to just, like, just kind of be like, fuck you guys, you know, we're going to slam the door on the way out. And my guess is that the new incumbent, or the new entering agencies, we'll have to do some cleanup of just, okay, you know, a bunch of losses were sent out like right before they left office that obviously are not

going to go anywhere. And my guess also, I mean, we saw this with Coinbase, right? Coinbase opened up 30% today, you know, in addition, like $15 billion plus of market cap that was added to Coinbase. I think what we are going to see is many, many more U.S. companies and institutions onboarding onto crypto, both interoperable. terms of ETFs and in terms of directly with something like Coinbase. Coinbase, huge beneficiary of this whole process, which I think that pulls some of the energy from, you know, Black Rock and Goldman

and some of these traditional financial guys who have basically been acting as intermediaries. Like, look, I'll protect you from the dicingness of crypto. You can go through me and like, you know, the crypto bros, you don't have to ever get near them. I think some of the value of that intermediation has gone down. Now people will be a lot more comfortable going directly to Coinbase or going directly to these companies once these lawsuits get dropped and there's more regulatory clarity. And we probably see some kind of massive legislative package that gets seriously worked on within the next year. I don't know if we're going to see anything pass in the next year, but there's going to be much more sweeping stuff that is now possible with Republicans

basically, you know, having swept the U.S. government. Yeah, I'll echo to see everything you just said. I agree with your forecast almost like to a T. You know, the one thing I want to stress is that, you know, because so many pro-crypto candidates, one office in the House and the Senate, because the Republicans currently control three branches of government, I think this is finally when the dam breaks, when we start to see legislation, forget about the regulatory structure, when we start to see stablecoin legislation, when we start to see market structure bills, when we start to see tax bills for how this works. Like, when we start to see all of these things that define and enshrine crypto in the

U.S., I think it begins in 2025. And there was a lot of momentum at the tail end of 2224 of this year. It cooled off headed into the election because everybody is taking this wait and see approach. You know, the Democrats thought that they could win more negotiating leverage, you know, post-election. The Republicans, you know, had to eat it, essentially, without. having bipartisan support to actually move something through the Senate. But Fit 21 came close, Sab 121 repeal came close, you know, stable coin legislation came close. Like all of these things came close. And there's a lot of momentum to get them done and to get them done right.

And now I think the Republicans have the motivation. There's quite a few members of the House and Senate that are extremely excited for legislation to cross the finish line here. there's going to be distractions, right? There's going to be, you know, balancing, like, there's going to be, like, the budget and, like, passing a budget. And, like, all these things that continuously plague our government. But, like, when it comes to legislation, you know, I think this is going to be for sure a major part of the 2025 session. Yeah. And honestly, I am really excited because I think we'll start to see more crypto companies and projects come back to the U.S.

And I already saw, I think you guys probably saw Alex, I don't know how to say his last name, the Nansen guy, Svonne, whatever. Svac. Yes, Svanovick. He, I guess, didn't get his, like, residency or something in Singapore. And so he said he wants to bring Nansen back to the U.S. And generally, I think it would be really good. You know, like, the reason I wrote the whole time thing is, like, just as an American, I'm like, what the fuck? We're losing.

It's like, we're going to be like blockbuster. So, yeah, I'm excited for us to be leaders on tech again. Yeah, I'mad posted, Imod from Schelling, I posted the same thing, was that he just yesterday created a U.S. company for his startup, whereas before he was avoiding the U.S. as much as he possibly could. Like, you know, everybody has been playing these, like, ridiculous games of trying to avoid a U.S. nexus is because the U.S. has been so hostile to crypto. And, yeah, I mean, I think this is a great moment for crypto.

I mean, Bitcoin's at all-time highs. Obviously, there's jubilation in the market. Everything is kind of ripping upwards. And I suspect that as we start to get more clarity on what this actually looks like right now, people are sort of imagining of what this is going to mean. But we don't know what the cabinet's going to look like. We don't know what the agency has are going to look like. And so probably over the next two to three months, we're going to get a better understanding

of what the Trump team is actually going to be composed of. But one way or another, this is a really big vindication for crypto. like unequivocally, you know, crypto spoke in this election. And it wasn't the main, you know, it wasn't the main speaker. Obviously, there was a much bigger meta-narrative going on across the country. But the Democrats really fucked up in large part, or not in large part, let's say, in small part, by ignoring crypto and thinking that this constituency didn't matter. The only thing that Harris said on the campaign was that, you know, we're going to protect

black men's crypto investments, right? That was literally the only thing she said on the entire campaign. Otherwise, ignored it and felt that it was just beneath her to give any kind of specific policy proposal about what she was going to do in office. And voters, I think, very fairly punished the complacency of that approach to this industry. So, yeah, it's going to be a crazy four years. Obviously, it's going to be incredibly stupid. And, you know, there's going to be all sorts of incentives. endiary shit going on in the media and from Trump and whatever.

I mean, I don't know. It's going to be bizarre. And in general, I am not a fan of unified government. I think divided government is generally a good thing. And it's a big part of the reason why we have so many branches so that they check each other. And I personally, although I am obviously very pro-crypto and I think it'll be good to see some crypto legislation go through, I am a little bit worried about what happens

in a government where there's much less need for compromise. I think in general, that's a very important check on the ability for a government to actually respond to its constituents and actually be good stewards of the country. So, but that being said, we're here now. We have at least two years of Republican control over basically everything. And we'll see how it plays out. Yes. The only counter argument I will give you is that sometimes the compromise bills have so many arbitrary consensus. in order to get them done, that they lose their, like, elegance and their Saturday, right?

Like, there's, you know, within the crypto bills that have been proposed and marked up, you know, if you've watched, like, the public conversation about them, they've always gotten, like, worse over time for the most part, where it's like, oh, here's a bill. And then, like, as part of the concession process, it's like, but not for minors if they haven't done X, you know, or like, whatever it is. And, like, you know, they lose their, you know, effectiveness. For my thing, for crypto, completely agreed. I'm very, very happy that for the crypto industry, it's going to, we're going to eat rich.

But there's obviously a lot of stuff that is going to happen in the next two years that I think the, that is what I'm more worried about, just as a citizen rather than as a crypto dude. Yeah. This is what, like people keep asking me on Twitter. like a lot of people took issue with the fact that I voted for Harris and I'm a Democrat and stuff. And I'm like, you guys, like, there's so many issues to vote on. Like, crypto was not the thing I was going to vote. And sorry, just I wasn't.

But anyway. A lot of people did. I know, like, and maybe it's because we're in this like echo chamber world. But like, I know so many people that it was the only factor in their vote. Wait, crypto was? Yeah. Okay. Right.

But I'm saying I know. I know you are not. I know you have a lot of, you know, things that you care about. You know, there's a lot of crypto people that are more maniacal. Yeah. Yeah. I wouldn't say that they're maniacal. I mean, they're for their own jobs.

Yeah. Or crypto. Yeah. It's like farmers vote for people who are good for farmers and, you know, people who work in manufacturing, care about manufacturing. So it's, again, like, you know, the country spoke, like, very clearly the biggest thing was the economy in the border, right? which is like these are very meat and potatoes issues that the Democrats lost on.

It's not, I mean, obviously the highfalutin, you know, wokeism stuff like it mattered and it pissed a lot of people off and alienated a lot of the party. But the main stuff is pretty obvious, you know. And look, I don't know that Trump is going to deliver any of the stuff that he said he's going to deliver. Politicians, I think we have a lot of magical thinking about what they can do and what they can't do. And I think we attribute responsibility and blame a little too easily to the president for what is ultimately a very complete. emergent process, which is a country of hundreds of millions of people. Yeah, but I wouldn't call him a typical politician. I would say if he doesn't deliver it, it's because he's not the kind of person who generally

keep the word. That's just my opinion. I know people might be mad at me for saying that, but just look at his history. So I guess now we've got a great deal to look forward to in the coming year of seeing how this pro-crypto America is going to look, what policies and what leaders are going to put in place and what regulators are going to be appointed. And then lastly, how markets are going to react as they continue to ingest what this new world looks like. So it's a good time to be in crypto, regardless of how you feel about, you know, American politics. And we're very happy to be,

you know, helping you guys to understand what's happening in this little world. Yeah. And if you're a crypto entrepreneur, come back to the U.S. Right. That's right. All right. With that, signing off. Thanks, everybody. Hi, everyone.