Finding 1,000x Assets & Asymmetric Returns | Dan Morehead of Pantera Capital AI transcript and summary - episode of podcast Bankless

Go to PodExtra AI's episode page (Finding 1,000x Assets & Asymmetric Returns | Dan Morehead of Pantera Capital) to play and view complete AI-processed content: summary, mindmap, topics, takeaways, transcript, keywords and highlights.

Go to PodExtra AI's podcast page (Bankless) to view the AI-processed content of all episodes of this podcast.

Bankless episodes list: view full AI transcripts and summaries of this podcast on the blog

Episode: Finding 1,000x Assets & Asymmetric Returns | Dan Morehead of Pantera Capital

Author: Bankless
Duration: 01:19:48

Episode Shownotes

How do you find an asset with 1000x asymmetric return? How do you find the next bitcoin? Our guest today is Dan Morehead, founder and managing director at Pantera Capital. He has been buying bitcoin since 2013 when the price was just $65. His fund is up over 100x since

then. There’s a lot to learn from Dan’s story, about early bitcoin history, but also the pattern recognition required to identify asymmetric assets. We cover price predictions, 4 year cycles vs a supercycle, how much upside is still in crypto, the trump administration and his thoughts on a strategic bitcoin reserve ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BUG BOUNTY PROGRAM https://bankless.cc/Uniswap-Bug-Bounty ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⁠ 📈 iYield: YOUR FINANCIAL PICTURE, SIMPLIFIED https://bankless.cc/iYield 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/base:0x4be6cd4d402fed49eb2de95fbc8e737e8ffd3e7f/1?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E ------ TIMESTAMPS 0:00 Intro 6:00 The Email from 2013 14:15 Asymmetric Patterns 17:50 Buying Bitcoin in 2013 26:25 Onboarding Investors 32:12 Crypto's Global Adoption 37:15 Bitcoin's Escape Velocity 43:19 US Government Impact on Crypto 52:21 Global Bitcoin Race 56:14 Institutional Adoption for Crypto 1:04:37 Crypto Cycles 1:09:20 2025 Bull Market? 1:12:53 Macro Environment 1:16:50 Tokenization 1:21:18 Thoughts on AI 1:24:19 The Next Bitcoin 1:26:46 Future Plans 1:27:23 Closing & Disclaimers ------ RESOURCES Dan Morehead https://x.com/dan_pantera Pantera Capital https://panteracapital.com/ ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

Full Transcript

00:00:00 Speaker_01
We should buy Bitcoin now at $65 from Dan Morehead. This email is dated July 5th, 2013. Your brief thoughts were, I'm going to buy 30,000 Bitcoins this weekend with personal money. The fund can have this purchase or not, as others which.

00:00:14 Speaker_01
Give us the context and the lay of the land at that time when you wrote this.

00:00:16 Speaker_02
Bitcoin's a serial killer. It is going to rip through so many different industries, but the only important part of that line is it will do it serially.

00:00:26 Speaker_02
And the hard thing in our space is that it's not going to do it all overnight, but it's probably going to take 10 years to compete with Visa MasterCard.

00:00:40 Speaker_01
Welcome to Bankless, where today we explore the frontier of asymmetric assets. This is Ryan Sean Adams, just me here today. David is out, and I'm here to help you become more bankless.

00:00:51 Speaker_01
The question for today's episode that I think you should be thinking about is, how do you find an asset with 1000x asymmetric returns, at least a profile for that? How do you find something like Bitcoin early?

00:01:03 Speaker_01
Our guest today, Dan Moorhead, has made his career on asymmetric investments. He's got this letter to investors from July 2013, and I think it's legendary. The email subject line is titled, in all caps, VERY TIMELY, WE SHOULD BUY BITCOIN NOW AT $65.

00:01:19 Speaker_01
Over the next two years, his fund then proceeded to buy almost 2% of all the world's Bitcoin supply. And at the time, this was a massively contrarian bet. It was hard to raise the funds. It was hard to even purchase the Bitcoin itself.

00:01:32 Speaker_01
His fund is now up 1000x since then. I think there's a lot to learn from Dan's story about early Bitcoin history, but also about the pattern recognition required to identify something with asymmetric returns, something like Bitcoin in the early days.

00:01:48 Speaker_01
We start with the story of why Dan decided to make a big bet on Bitcoin in 2013. And then we talk about where he thinks crypto and Bitcoin, the entire asset class, is headed over this next decade.

00:02:00 Speaker_01
price predictions, four-year cycles versus super cycles, how much upside is still left in crypto, the Trump administration, his thoughts on a strategic Bitcoin reserve, and many more topics. Let's get right to the episode with Dan Moorhead.

00:02:13 Speaker_01
But before we do, I want to thank the sponsors that made this episode possible, including our recommended crypto exchange, the place to go buy your crypto assets. That is Kraken. Go create an account now.

00:02:25 Speaker_00
Want to know the exchange we at Bankless use to buy, sell, and trade crypto? It's Kraken, one of the longest-standing and most secure crypto platforms in the world, with tools for every type of trader to get started.

00:02:34 Speaker_00
Over 13 million users trust Kraken with their funds because they lead with transparency and privacy through top-notch security measures.

00:02:41 Speaker_00
Plus, they'll have access to professional 24-7, 365 client support from real humans because your financial goals deserve real attention. Kraken also has a trading platform for advanced traders called Kraken Pro.

00:02:52 Speaker_00
Professionals and DGems love Kraken Pro because it's one of the most customizable, high-performance, and intuitive trading platforms in the industry.

00:02:59 Speaker_00
Design your ultimate trading interface by choosing from over 25 widgets for market data, analysis, execution, and other order management tools.

00:03:06 Speaker_00
Save multiple layouts and switch between them effortlessly on any trading scenario across 300 different assets.

00:03:12 Speaker_00
Manage your trades on the go with Kraken Pro's highly rated mobile app, or use the all new desktop app to unlock ladder trading in a native Rust application. With Kraken Pro, you can truly trade like a pro.

00:03:22 Speaker_00
Ready to take control over your crypto journey? Visit kraken.com slash bankless to get started today. Not investment advice. Crypto trading involves risk of loss and is offered to U.S. customers through Payword Interactive Inc.

00:03:31 Speaker_00
View legal disclosures at kraken.com slash legal slash disclosures. With over $1.5 billion in TVL, the M-ETH protocol is home to M-ETH, the fourth largest ETH liquid staking token, offering one of the highest APRs among the top 10 LSTs.

00:03:43 Speaker_00
And now, C-M-ETH takes things even further. This restaked version captures multiple yields across Kerak, Eigenlayer, Symbiotic, and many more, making C-M-ETH the most efficient and most composable LRT solution on the market.

00:03:54 Speaker_00
Metamorphosis Season 1 dropped $7.7 million in Cook Rewards to mEth holders. Season 2 is currently ongoing, allowing users to earn staking, restaking, and AVS yields, plus rewards in Cook, mEth Protocol's governance token, and more.

00:04:08 Speaker_00
Don't miss out on the opportunity to stake, restake, and shape the future of mEth Protocol with Cook. Participate today at meth.mantle.xyz. Are you looking to pay your team in stablecoins or set up token grants with ease?

00:04:19 Speaker_00
Traditional payroll providers aren't designed for crypto. Handling tax withholdings, government reporting, and local filings for tokens can be a nightmare. With Toku, everything about global token compensation gets simpler.

00:04:31 Speaker_00
Whether it's paying full-time employees in stablecoins, managing token grant administration, or even navigating the TGE process, Token covers over 100 countries on one seamless platform.

00:04:41 Speaker_00
Integrate Toku with your current payroll system or choose a fully managed service. Either way, Toku simplifies every part of token compensation. However you work, Toku works for you. No guesswork, no missed deadlines, no complexity.

00:04:52 Speaker_00
Visit Toku.com, that's T-O-K-U.com to talk with Toku today.

00:04:56 Speaker_01
Bankless Nation, very excited to introduce you once again to Dan Moorhead. He is the founder and CEO of Pantera Capital. If you're not familiar with Dan, he is a certified OG, let me tell you.

00:05:05 Speaker_01
So Pantera was one of the very first investment firms, particularly from the institutional side, to focus exclusively on Bitcoin and crypto.

00:05:13 Speaker_01
So at the time of recording, we're here to celebrate a big milestone, which is Bitcoin is now trading above 100k, which is amazing. Dan founded Pantera in 2013.

00:05:22 Speaker_01
And so Pantera's Bitcoin fund, in terms of lifetime percentage to date, has been a whopping 131,000% Okay, growth, lifetime increase. So obviously, we wanted to bring Dan on, talk about 100k, the future, talk about how we got here.

00:05:40 Speaker_01
Dan, welcome back to Bankless. Hey, Brian. Thanks. It's great to be back on. So I was thinking of you because I get the Pantera investment memo.

00:05:47 Speaker_01
And I saw enshrined inside of that investment memo was an email that you wrote in 2013 when you're just getting started. And the subject line is fantastic. I screenshotted this. I put it on Twitter.

00:05:57 Speaker_01
It says, very timely, we should buy Bitcoin now at $65 from Dan Morehead. This email is dated July 5th, 2013. Give us the historical context for that date, this time, this email, in which your brief thoughts were, I'm going to buy 30,000 bitcoins this weekend with personal money.

00:06:06 Speaker_01
The fund can have this purchase or not, as others which.

00:06:18 Speaker_01
I just want to get involved. Give us the context and the lay of the land at that time when you wrote this.

00:06:22 Speaker_02
No, it's great. It's fun. In March of that year, My friends, Pete Brigger and Mike Novogratz, who I went to college with and we worked at Goldman together, and they founded Fortress Investment Group, called to ask if I want to talk about Bitcoin.

00:06:37 Speaker_02
My brother had mentioned it to me a year or two before, and I'm a libertarian, so I was thinking it'd be great if it happened, but I didn't actually do anything. And so when Pete and Mike called, it was great because it was something that was cool.

00:06:51 Speaker_02
And I thought it'd be wonderful for the world if it really happened, but I hadn't actually, you know, lifted a finger to help. And I went in for a coffee in their office in San Francisco, and it lasted for like four hours.

00:07:03 Speaker_02
I was just like so mesmerized with all the stuff we were talking about. And I actually stayed in the office for years. Pete offered me space in their offices and ultimately they became part of our GP for a while.

00:07:15 Speaker_02
And I think we probably stayed like six years or something like that. So I went in for a coffee and stayed for six years because it was so compelling. And so as we thought about it,

00:07:26 Speaker_02
You know just seem like an incredibly asymmetric trade and that's what i had done in my career i'd previously been the head of macro trading at tiger management when julian robertson was you know very fantastic investor looking around the world for trades.

00:07:40 Speaker_02
That had way more upside than downside right risk and reward go together you never gonna find.

00:07:46 Speaker_02
quote arbitrage or anything that's risk free you always have to take risk in what i've been trained at tiger and peter actually was found in two thousand three we started the crypto part of it in two thousand thirteen so i've been doing for all those years before is looking for things.

00:08:02 Speaker_02
You know where i was there's a lot of ways you could lose your money but. If it worked, it could go up more than that. And I had been working, our previous trade at Pantera actually was Tesla Motors.

00:08:16 Speaker_02
I had met one of the founders at a dinner in our little community of Woodside, California. His kids went to the same local public elementary school with my kids. And he told me about an electric car. And I was like, wow. That sounds dicey, right?

00:08:31 Speaker_02
Actually, one of our partners at Pantera, a guy named Ryan Glantz, used to be the number one II, institutional investor, auto analyst for a long time. He was a partner with me at Tiger, and then moved to California, and we worked together at Pantera.

00:08:45 Speaker_02
He still edits our investor letter, and still a fantastic partner for us. He was an auto expert, and so I called him as soon as I got the idea to invest in Tesla.

00:08:56 Speaker_02
And he told me a fact that I love, that prior to Tesla Motors, the last auto company to go public was Ford Motor Company. Everybody else failed, all the John DeLoreans and whatever.

00:09:10 Speaker_02
It was just a zero chance anybody could ever make a car come to the work. So ultimately, we did a bunch of work, and I had a view on Tesla that, hey, it was a couple billion market cap at the time, great idea, really cool.

00:09:22 Speaker_02
If it worked, it could go way up, right? And the fun fact is there was a period in 2013 that Tesla Motors and Bitcoin traded at the same price for share. So we were very big in Tesla, and then we decided, hey, let's swap that.

00:09:36 Speaker_02
And we literally sold all of our Tesla motors and went all into Bitcoin at the time. So it was a very paired trade, but it's very similar. So the punchline of that very long thing is looking for trades like that. They're very asymmetric.

00:09:48 Speaker_02
The upside is way more than the downside. And although Bitcoin has gone up a ton, I still think it's true. I still think, you know, yeah, it could definitely go down. You know, we've lived through three down 85% bear markets.

00:10:03 Speaker_02
I don't think you could do that anymore, but, you know, it could go down a lot. But it really still could go up an order of magnitude, right? And there's so few investments out there that actually could do that.

00:10:15 Speaker_02
And so when Mike and Pete and I sat around and thought about it,

00:10:19 Speaker_02
You know i got sucked in i just you know people say you know got rabbit hole i just couldn't think of anything else and i haven't traded anything but crypto since two thousand thirteen because it's so captivate i still think you were in the early days of this huge thing and the reason i love it is there so many.

00:10:39 Speaker_02
things that crypto can do you know when you have a new technology everyone always wants an analog to the old school world right like SMTP became electronic mail even though it really does things are totally different than snail mail and so everyone's always trying to come up with a new word for things and so.

00:10:59 Speaker_02
Bitcoin and other blockchains have been called cryptocurrencies. A lot of people call them commodities. The CFTC calls them commodities. But they're a wholly new thing that has hundreds and hundreds of use cases.

00:11:12 Speaker_02
And that's why I'm so excited as an investor. It really is going to rip through so many different use cases. And I guess one other analog would be, you know, when you have a technology that's incredibly disruptive, they call it a category killer.

00:11:26 Speaker_02
Bitcoin's a serial killer. It is going to rip through so many different industries. But the only important part of that line is it will do it serially.

00:11:37 Speaker_02
And, you know, I think the hard thing in our space is that it's not going to do it all overnight, right? Like Bitcoin and other blockchains are really good at some things right now.

00:11:47 Speaker_02
But it's probably going to take 10 years to compete with Visa MasterCard or some of these other applications. They'll ultimately get to, ultimately, definitely, definitely. But there are some things that they're not good at yet.

00:11:59 Speaker_02
So I still have that view. We're really early. It feels like the internet turned 50 last year, right? I mean, Bitcoin's still a teenager, right? It's very young. Still got a long way to go.

00:12:10 Speaker_02
And I think it is still one of those trades where although it's definitely risky and you should only invest as much as you can afford to lose 80% of, it's probably going to go up a lot more than it could go down.

00:12:22 Speaker_01
Dan, I want to kind of get into the way you think because you're calling it a trade, right? And some people think of a trade and they think of something like day trade or something a month trade.

00:12:30 Speaker_01
talking about a trade in the context of you've been holding this thing for like 13 years plus. I want to get inside your brain and how it thinks. So it's interesting to me about the founding story of Pantera, where you guys actually started in 2003.

00:12:41 Speaker_01
And so you've already been in place for a decade looking for asymmetric upside opportunities. And there you see, in 2013, the Bitcoin trade.

00:12:50 Speaker_01
And then you have the conviction to buy in size at that time, to write an investment memo like the one that we're looking at. And we're just basically saying, hey, if you guys come with me or not, I'm buying 30,000 Bitcoin right now,

00:13:02 Speaker_01
And in 2013 to 2015, you guys proceeded to buy 2% of the world's Bitcoin. So you did this with conviction. You did this with size. I think there's a lot of like investors, like obviously everyone listening wishes they had more Bitcoin.

00:13:15 Speaker_01
That's a thing that we all wish. We also wish we had the skill to recognize asymmetric upside opportunities. What's the pattern there? How do you get the conviction on an asymmetric upside opportunity? Where do you just see that?

00:13:29 Speaker_01
Because, you know, some people will look at this and they'll say, Dan got lucky. There's always an element of luck involved to investing. I don't know what you call it, but maybe it's luck, maybe it's something else.

00:13:37 Speaker_01
But you also have this pattern of identifying asymmetric upside opportunities. How do you do that? Can you teach that to us? Well, you're using the word pattern because I think it is pattern recognition.

00:13:48 Speaker_02
Like, if you've seen these things happen, you know, time and time again, and I've actually been doing this for about 40 years. I started on Wall Street in 1987, so 36 years. And, you know, went through

00:14:00 Speaker_02
Big s and l crisis went through you know financial crisis investing in commodities in the eighties and were you working in the nineties and so that is one of the reasons i've had probably a better position in some of the younger people investing in space in that.

00:14:15 Speaker_02
I think i've seen this movie before like i was a goldman when they did the gsci and now everybody considers commodities to be an asset class i was doing emerging markets investing in the nineties and now em.

00:14:27 Speaker_02
Is an asset class in two thousand six or seven pantera launched the first. Fun to invest in the gcc countries the uae and saudi arabia.

00:14:37 Speaker_02
From the west the first western fun to do that every thought that was super crazy because it seemed really exotic and different now everyone thinks of you know the mina region as a you know completely normal place to invest so.

00:14:50 Speaker_02
That's been the pattern oh and i went to russia when gorbachev was still the premier and invested with some partners in gas from. and their privatization, and you know, so always looking for these kind of, you know, interesting... The frontier.

00:15:03 Speaker_02
I mean, all of these things are frontier asset classes. Frontier. In 2000, we did a fund to invest in Argentine farmland after their penultimate crisis. They have one often.

00:15:13 Speaker_02
You know, so it's just looking at things that are kind of off the run or not normal. And again, you know, if we want to come all the way back to present and blockchain,

00:15:22 Speaker_02
I think it's still true for blockchain that very few institutions really have a real size position, right? Like, is this still frontier? It's a $3 trillion asset that's still frontier, which is really weird. I've never seen one like that.

00:15:35 Speaker_02
So it really is this pattern of having seen this cycle a bunch of times, thinking about how disruptive

00:15:41 Speaker_02
blockchain could be in a couple of subsequent memos that i wrote over the next few months listed out all the use cases and how it's gonna compete with gold and it's just starting to do that right now it's that super exciting thing to talk about today but you know it's gonna compete with visa mastercard it's gonna compete with you know all the big remittance companies that charge migrants an entire month's wages to move money across the border which bitcoin can do.

00:16:07 Speaker_02
super easily and super cheaply and so when you add up all the different use cases, you know the ultimate value of crypto is just so much higher than it is today and that's why, you know in our business there's a huge race for pundits to come up with the craziest forecast for the price of bitcoin.

00:16:24 Speaker_02
I don't know where it's going, but it's going so much higher that we don't really have to think about it.

00:16:28 Speaker_01
You know, this might also help people to get into your pattern recognition skill with asymmetric opportunities. Could you just describe in 2013 what it was like to try to buy Bitcoin in the type of size that you're talking about?

00:16:39 Speaker_01
Because so I purchased my first crypto assets in 2014. And so a year after, you were doing some of this, not in size, not like this. And I remember how sketchy it felt. I opened up accounts on five different exchanges.

00:16:53 Speaker_01
I didn't really know what was happening. The websites were janky. It felt like I was doing almost some back alley type deal. And for a lot of investors at that time, they would see all of that as reasons to stay far, far away.

00:17:06 Speaker_01
They're bearish, given that you somehow navigated through all of this and came out bullish on the other side. But what was it like to purchase Bitcoin in the size that you're talking about back in 2013?

00:17:17 Speaker_02
Well, yeah, it's so different than it is today. And if you remember LocalBitcoins.com, where you'd like, Meet somebody in an alley. That was too sketchy for me. I was like, I never did that.

00:17:29 Speaker_02
I mean, it's like, literally, that was one of the best ways to get crypto back then, is meeting some random person in some, you know, random area and try and, you know, hand cash and get Bitcoin. So it was really hard.

00:17:41 Speaker_02
And that's the thing, people don't really appreciate how much the world's changed.

00:17:45 Speaker_02
We were potentially gonna do this fund as a part of a bigger public companies brand and so we tested out all the systems, had all the funds set up, you know, made sure everything really worked, but that company ultimately decided not to do it.

00:18:01 Speaker_02
So we had to do it is a pantera branded product with not much notice cuz the price of bitcoin and fallen fifty percent which is you know often does we really want to get it launched and so we had accounts in a couple exchanges but we can't frankly hadn't tested in the oven.

00:18:17 Speaker_02
So when the price of bitcoin hit 65, I was like, man, this is just it, we gotta go. And it's, having done this so many times, I was like, this has to be it, we gotta go.

00:18:26 Speaker_02
So we decided to launch and buy, it was over a 4th of July weekend, and we had sent money, we'd totally tried to prepare, and we'd sent money to a couple exchanges.

00:18:36 Speaker_02
We had everything dialed, we had our funds, you know, we really had it all tested, we thought. I guess we hadn't really done the one last thing to try and buy a few bitcoins.

00:18:45 Speaker_02
So we go in, and I was using this little startup nobody ever heard of, and try and buy some bitcoins, and there was a pop-up on the screen that said our limit was 300 bucks. And you're trying to deploy what? Millions?

00:19:00 Speaker_01
A couple millions?

00:19:00 Speaker_02
Yeah. And so in Wall Street, sometimes people use the word bucks to say millions. I mean, this was like 300 US dollars. Like we couldn't buy anything. And so then I said, and it was a trendy little startup. So they didn't have an address, a phone number.

00:19:17 Speaker_02
They just had like a little help email address. So I hit that and I wrote in Uncharacteristically, all caps, I'm trying to buy $2 million worth of Bitcoin. And hit send. You'd think you'd get a reply, right? Sure.

00:19:32 Speaker_02
Because nothing was happening at their little company at the time. Four days later, their only employee, a guy named Olaf, wrote me back. And he said, OK. Oh, no, that was it. Sorry. We start out, our limit was $50. Yeah. one Ulysses grant per day.

00:19:49 Speaker_02
And they upped it to 300. And I was like, dude, I'm trying to buy $2 million in Bitcoin. It would take 6,000 days or something like that. It would take forever. So luckily we'd already sent money to Ljubljana, Slovenia to Bitstamp. And I totally hear you.

00:20:06 Speaker_02
Slovenia, the country. Slovenia, yeah. Spell that out on a wire transfer. Right, right. Feels super sketchy. And the manager of the branch came over and was totally hassling me like, what's this for? Who are you? What are you doing? And what's Bitcoin?

00:20:22 Speaker_02
And that's, you know, it just sounded so sketchy. And even that, that was like an hour to send a wire. Like I had to sit there and like talk to all the managers and all that stuff. And the funny thing is I've since spent a lot of time in Slovenia.

00:20:34 Speaker_02
And it's a very lovely country to the right of Venice and below Austria, right? But at the time I was like, wow, this money could be gone, right? And so we sent a bunch of money there and luckily that worked and we did a bunch of trades with Bitstamp.

00:20:47 Speaker_02
We ultimately became their only shareholder for a long time and I was a chairman of Bitstamp for six or eight years and they're super nice people and great group of people. But it was really hard, really hard.

00:20:58 Speaker_01
Because the startup you were talking about couldn't fulfill the order, they blocked you at 300.

00:21:01 Speaker_02
Yeah, they're all small, like literally Coinbase had one employee. That was the startup, right? It's Coinbase you're talking about. Sorry, I forgot the punchline here. It was Coinbase. They had one employee. I went and visited them.

00:21:13 Speaker_02
They were in a split-level condo over by the ballpark in San Francisco. That looked sketchy too, I bet. Honestly, yeah. You're trying to meet a company. You're going up to somebody's apartment. It's 17F or whatever. It's all so funny.

00:21:28 Speaker_02
Honestly, I thought it was great. I love that whole era. That was a super fun era. All these very creative people. I went over to Slovenia with Pete Breger and we met the team and Bitstamp and ultimately we became investors.

00:21:40 Speaker_02
It was super fun meeting people. For example, I flew all the way to Tokyo to meet the two guys that were running Mt. Gox.

00:21:47 Speaker_01
Wait, when you were buying, I'm just hazy on my timeline here because I came in a little bit after Mt. Gox blew up. Yeah, Mt.

00:21:53 Speaker_02
Gox was like 85% of the market cap at the time.

00:21:55 Speaker_01
Okay, so that was still when you were buying? Yes. Yeah, okay. Gox was still operational, had not yet been wrecked.

00:22:02 Speaker_02
Yeah, GOX was massive, and a little fact that's not well known is a person who was a venture partner with us for a while, Jed McCaleb, who's one of the founders of Ripple Labs and Stellar, he created now GOX, right? He's a genius.

00:22:18 Speaker_02
He's created so many, three massively cool projects, but then he sold it to Mark Karpeles and had nothing to do, obviously, with the blowup.

00:22:29 Speaker_02
This is a great example of like you just gotta do the work before i send all the money i was gonna fly over and like, see who we're talking about and so i went all the way to japan and i met mark and one of his lieutenant guys i spent two days there cuz we're gonna send millions of dollars to these people and,

00:22:48 Speaker_02
None of it made sense the stuff they were saying i was like man.

00:22:53 Speaker_02
This just doesn't feel right like they're either incompetent or fraudulent i haven't followed it since then but i think it seems like they were both but i was just like i can't stand any money here these guys.

00:23:04 Speaker_02
Super sketch even though they were dominant like it is so everybody was trading there so we did decide to send money to a little start up this now called coinbase and to best which is the oldest exchange in the world spin around since two thousand eleven.

00:23:20 Speaker_02
Mates and Damien, the two guys in front of that, were way ahead of their time. So all that was mega sketch. Oh, and I mean, as you know, Mt. Gox just, like, they couldn't do wires in the US because the Department of Justice had shut them down.

00:23:34 Speaker_02
Like, you know, literally. You know, it's just all kinds of Wild West type stuff happening. And it was fun.

00:23:41 Speaker_02
But, and so, you know, we flew around and actually met, you know, went to all these countries and met people in person because it's so easy to kind of sense what's going on.

00:23:50 Speaker_01
I think if people are looking for patterns in the future for this asymmetric opportunities They should expect to be having to machete their way through a jungle here, right? It shouldn't feel easy, right?

00:24:00 Speaker_01
The clues where you have to go fly and you see sketchy people and you can't wire the funds, you interpreted that as bullish. Weaker investors would interpret that as, I can't do it. I'm done. It's bearish. The whole asset class doesn't make sense.

00:24:11 Speaker_01
They don't have these wires. But to you, it's an indication of how early we actually were. So if that was the way to purchase Bitcoin at that time, How did you get investors on board?

00:24:20 Speaker_01
I know your memo talks about you flew all around the world and did 170 investor meetings that year. The sum result of that effort, we could only raise a million dollars.

00:24:31 Speaker_01
So talk about trying to raise the capital from people in this like magic internet money, sketchy drug deal money type of thing, which is Bitcoin. Were you just like trying to evangelize and they just kept telling you no? And how did those meetings go?

00:24:44 Speaker_01
And how did you persist?

00:24:45 Speaker_02
Well, so a couple of cool threads in there. The first one is you're right. Like, if you want to make outsized returns, you can't be investing in things that every Wall Street firm has, like, 20 analysts covering. Right.

00:24:56 Speaker_02
And stockbroker hedge funds are doing it, right? Like, by then, most of the alpha is out of the industry. So you really, you know, at least my style, I love these things that nobody's focused on yet, and they're still kind of funky or whatever.

00:25:08 Speaker_02
And we even have a little tagline at the bottom of our investor letter that says, put the alternative back in alts. And I really think that's true, is when I started in hedge funds in 1991 or whatever, they were super different.

00:25:20 Speaker_02
Like, hedge funds were really edgy, alternative. And now there's, you know, trillions of dollars in hedge funds and they're all kind of the same, right? And so, that's why I think blockchain should be in somebody's portfolio.

00:25:32 Speaker_02
It's alternative still, right? Like, it's different when most hedge funds are the same. But so, the funny thing is that that story you're quoting, that's not 2013. That's three years later. Oh, really?

00:25:45 Speaker_02
That's the real- 2016, this was during kind of the winter? It's like, you know, we got in, we were evangelizing, trying to get people to invest in Bitcoin and blockchain and our venture fund and everything. That was three years later.

00:25:59 Speaker_02
We're still doing it and nobody wanted to.

00:26:02 Speaker_01
This is because GOX blew up. There was like a negative 90% drop in Bitcoin price. That was the era of, you know, it's all about blockchain, not Bitcoin. There were these private ledgers. No one believed in a public chain.

00:26:14 Speaker_01
No one believed in Bitcoin, the asset.

00:26:16 Speaker_02
Yeah, so there have been three of those cycles. You know, I can't say, Oh yeah, that was the one. Cause it's happened three times where Bitcoin's gone down 85%. It just happened, you know, two years ago or whatever.

00:26:25 Speaker_02
Bitcoin traded 16,000 at like two years ago. Right. So in the first of those cycles, we started investing at $65 and went to a thousand and then crashed. And it was down from 2014 to 2017.

00:26:40 Speaker_02
And we came to work every day and did our job, but nobody really cared. And in 2016, did 170 investor meetings. We raised $1 million.

00:26:54 Speaker_02
Nobody care everyone's like oh doesn't that that thing that died or you know now gox or silk road guy you know just all the fun that people been saying all the time you know all that the management fees from that entire years worth of work was.

00:27:08 Speaker_02
Seventeen thousand one hundred thirty two dollars shows a hundred bucks a meeting. It was hard, right? So many people said no. Frankly, it's still the same.

00:27:20 Speaker_02
Obviously, we're raising more money in larger scale these days, but I still have that same feeling that so many people haven't said yes yet. They will. I feel like we really are still at the beginning of it.

00:27:35 Speaker_02
There are very few institutions out there who are just max long, right? You know, that they really couldn't put any more on. Most have zero or a tiny bit of it.

00:27:45 Speaker_01
What was your pitch for crypto and blockchain and Bitcoin then in 2013 and then in 2016? And what is it now? Is it the same pitch or has it changed?

00:27:54 Speaker_02
You know, yeah, that's funny. Either I don't have any new material or the old stuff's still good. And so it's still the same, like, and that's why I wanted to share

00:28:04 Speaker_02
my original thoughts in our letter that is on our website or twitter if anybody wants to see it but because it's still the same like i get this a ton where you tell people about the fixed quantity of bitcoin and you know so it can't be debased by fiat currency and you know all this stuff and then people like it's just like buying gold

00:28:25 Speaker_02
And I'm like, no, it's like buying gold in 1000 BC, right? Gold's been great for 5,000 years, but it's passed its sell-by date, and digital gold is the new version of gold, right?

00:28:37 Speaker_02
And so that's why I got so excited, you know, originally in 2013 still, is that Bitcoin is going to replace gold. Bitcoin is going to replace remittance companies. It's going to replace Visa, MasterCard, you know, all these huge use cases.

00:28:51 Speaker_02
And I'll admit it's going to take 20 years. Like it's not going to happen overnight. And so it's going to take a long time, but it will happen. And that's another reason I'm super convicted. It's inevitable. Blockchain is inevitable, right?

00:29:02 Speaker_02
Like it might take longer than I think. And we might invest in some companies that burn through all their money before it happens or whatever. Like there's definitely risks, but there's no chance.

00:29:12 Speaker_02
migrants are going to pay a month's wages to send money across the border five years from now, right? Like, no chance. And you're not going to pay 300 basis points to swipe a credit card. Like, those things, they're over.

00:29:22 Speaker_02
I don't know if it's going to take 10 years to be over, or like a year or two, but like, that's why I love staying long in this space is it will happen. Like, you know, big changes are certainly

00:29:32 Speaker_01
happening, but over the next 20 years, big change will happen. Where are we now?

00:29:36 Speaker_01
I think a lot of people looking at this, you know, asset class, they say things like, okay, well, you know, sure, Dan, when you bought Bitcoin in 2013, or even, you know, like 2016, there was asymmetric upside opportunity, but like, they're looking at the price of Bitcoin.

00:29:49 Speaker_01
They're like, I missed it. It just doubled this year. I'm not going to buy something that just like doubled in the year. So they think that it's like, okay, they're on the other side, they missed another bubble.

00:29:58 Speaker_01
It's like, it's kind of too frothy to get in now. How much more upside do you think there is, maybe first in Bitcoin and then just in the crypto asset class as a whole?

00:30:07 Speaker_01
Maybe another way to ask that is, what percentage of the way are we in terms of global adoption? Are we talking 20%? Are we 50% right now? Higher or lower? How do you think about that?

00:30:18 Speaker_02
I just had this line at CVC because I love it. Any normal asset class, if something doubles this year, you should not buy it, right? Because that's overvalued. It's totally crazy. And they asked, like, what do you think?

00:30:30 Speaker_02
You know, Bitcoin's doubles in that wild and crazy. I'm like, it's not even interesting. Bitcoin doubling this year? We've been doing this for 11 years. It's done that on average every year.

00:30:39 Speaker_02
Seriously, our compounding annual growth rate of Pantera Bitcoin Fund is 89%. It basically doubles on average, obviously, every year for 11 years. And one pitch is, what if it does it one more year? You double your money, right? It's just not that hard.

00:30:56 Speaker_02
And again, you only should invest a small amount of your capital. that if it went down 85% your spouse still loves you, right?

00:31:03 Speaker_01
That's the measure, huh?

00:31:04 Speaker_02
Don't invest more than that.

00:31:05 Speaker_01
Don't invest your marriage in this asset class.

00:31:09 Speaker_02
If you can keep your sizing to that level, just hold it, right? It's doubled on average for 11 years. Yeah, and obviously the past doesn't necessarily predict the future, but I've been saying this for 11 years and it keeps doing it.

00:31:21 Speaker_02
So, you know, that'd be my logic. So it's getting large enough, you know, it can't go 1000x again, right? Because then it would literally consume all of the power of the planet.

00:31:31 Speaker_02
But if it went up another 10x, it'd be 15 billion for Bitcoin from when it hit the fourth, third order of magnitude. All financial assets on earth are about 500 trillion, so I mean, that seems doable, right? It really does.

00:31:46 Speaker_02
And again, I'm not going to try and predict where it's going to be 50 years from now or whatever, but in our lifetime of investing, you know, like, however long, you know, each of us, you know, can kind of hold a trade, you know, five, 10 year timeframe, it really can go up 10x from where it is today and still not be like,

00:32:04 Speaker_02
you know, crazy, overvalued. And then your question of how far are we, it's a fascinating one. I still think we're pretty early in this, right? Supposedly 300 million people have crypto globally. It's kind of hard to really know.

00:32:17 Speaker_02
And, you know, probably, frankly, a lot of those people aren't really doing as much with it yet as they are going to do in the fullness of time. So my main benchmark on that is

00:32:29 Speaker_02
The only thing you need to operate bitcoin is the possession of a smartphone. And there are four billion people that have one of those today. There's some cool projects actually trying to put

00:32:38 Speaker_02
That kind of stuff on feature phones too, like KaiOS is a cool company we're talking to now that does that. But let's just say four billion growing to five over the next 10 years or whatever.

00:32:47 Speaker_02
I mean, most of those people are probably gonna have digital currency on their phone, right? Like half of those people have photo sharing on Facebook, right? Like, you know, photo sharing is really cool and all, but like digital money is even cooler.

00:33:00 Speaker_02
So I really don't think it's hard to imagine three or so billion people using crypto in you know, 8, 10 years, something like that, it just really feels highly likely.

00:33:12 Speaker_02
And then once they start using it, you know, there'll be more applications and, you know, they'll start using it for more things in their life. But I guess the punchline would be, we can't be more than maybe 15% of the way into this.

00:33:24 Speaker_02
It really feels like it's not that many people yet, and they're not doing as much as they ultimately will do.

00:33:30 Speaker_01
So broad strokes, you think maybe we're 15% of the way into this crypto blockchain thing. You think Bitcoin maybe has another 10x in it over some indefinite time period.

00:33:38 Speaker_01
You made the point in your investor letter, just if the 89% compound annual growth rate, if that just continues, then Bitcoin would hit 740,000 in 2028. It's to be determined on whether that continues or not, I guess.

00:33:52 Speaker_01
But just in general, do you feel like the asset class, and Bitcoin in particular, has reached escape velocity? There was a time in 2013 where a popular narrative is like, the government's going to shut this down. They're going to quash things.

00:34:04 Speaker_01
This is never going to make it. It's a libertarian fantasy land. Now we're in 2024, a completely different picture. Is this escape velocity? Is that what this looks like?

00:34:13 Speaker_01
It's inevitable that it will continue, it will not be killed, it will propagate further?

00:34:18 Speaker_02
Yes, honestly, I think that the kind of biggest change recently, and I think the election puts it right over the edges, Bitcoin hit escape velocity, like it's not coming back. And I vividly remember in 2013,

00:34:34 Speaker_02
all the talk about the government outlawing it. And you know, at the time they were Silk Road guy and stuff like that. There's a lot of kind of, you know, high profile, not really great sounding, you know, newspaper articles about Bitcoin, right?

00:34:47 Speaker_02
And you read mainly that kind of stuff. No one was talking about, oh, two million Mexicans use it. to do remittance and save themselves a month's wages right now. Like, there was no good stories like that at the time, right? It was all bad stories.

00:35:00 Speaker_02
So, you know, it seemed possible the government would outlaw it. The U.S. government outlawed gold, right? Like, they criminalized the possession of gold when you could be walking around with plutonium at the time.

00:35:11 Speaker_02
Like, uranium, whatever, that was cool, but you couldn't own the financial element, right? And so, yeah, it was totally plausible, but now 50 million Americans own crypto.

00:35:22 Speaker_02
And then one of the themes we've been writing on, and it's going to go out tomorrow on our current blockchain letter, they vote. And I got to say, I think the Democrats misunderstood that. Let's do the math, right?

00:35:36 Speaker_02
The majority of Americans are under the age of 40. 90% of all the wealth created by the Fed's, I'll call them policy mistakes over the last three years, in Congress's money printing, went to people 70 or older.

00:35:50 Speaker_02
So there's been a huge wealth transfer from the majority of Americans, you know, my kid's age and, you know, all that, to a very small fraction that are 70 or older, right?

00:36:04 Speaker_02
you know this is not a poli sci podcast i'm not going to dig into that too deeply but let's just say those young people love crypto and they vote and we put a couple really cool stats on the change in voting behavior from the prior presidential election 2020 to the day of people under 40 amazing shift

00:36:27 Speaker_02
to a phrase I haven't heard in decades, young Republicans. It's amazing. Same guy running all three times, right? And the only thing different, in my opinion, well, the only difference that's unambiguously positive is crypto.

00:36:44 Speaker_02
President-elect Trump went super positive on crypto in May. Everyone that's been nominated to a cabinet position for him is super positive on crypto. and he's gonna have a crypto czar, you know, like it's just super positive.

00:36:58 Speaker_02
And I think when all the PhD theses are written, crypto's gonna have been the thing that changed this election. I think it's 100% that that's the fact, that that one decision to go super positive on crypto pushed the election.

00:37:12 Speaker_02
And in males under 30 years old voted for the Republicans for the first time probably in like generations, right? And again,

00:37:21 Speaker_02
Maybe it was some other thing but i think they're gonna figure it out that it was crypto that made people change their votes and so the other big thing that happened in congress is a ton of anti crypto senators and congress people got bumped out right.

00:37:36 Speaker_02
And i think that's the thing that the press really hasn't picked up on everyone talks about the red sweep and all that stuff but the big thing is.

00:37:43 Speaker_02
Wow, I totally don't get why Congress people were anti-crypto before, because who's the no voter out there? Who's the farmer in Kansas that's like, hey man, if you go pro-crypto, I'm going to vote for the other guy. I never understood that.

00:37:59 Speaker_02
But the people that are anti-crypto lost their seats, and a lot of pro-crypto people came in.

00:38:04 Speaker_02
And according to a tally I read, and I'm not 100% sure it's the exact perfect one, but supposedly there's 274 pro-crypto people in the House of Representatives against 122 anti-crypto people.

00:38:16 Speaker_02
And then in the Senate, it's 20 pro-crypto senators and 12 anti. And what my prediction would be is if we look at this in four years, I don't even know if any of those anti-crypto Congress people will still be in Congress, because there's no upside.

00:38:32 Speaker_02
Hopefully they'll change their opinion, but if they haven't, they're probably going to lose the midterm election or the 2028 election.

00:38:40 Speaker_01
It was a bizarre cell phone to see the Democratic Party, like kind of like a shift to this anti crypto army sort of, you know, posture. And it was hard to see, I kept thinking, Dan, that I was missing something in this shift.

00:38:50 Speaker_01
There's some strategy, I don't see some cohort of voters, because it seemed like an obviously, like lose lose type strategy. I want to ask you about kind of 2025 and moving forward.

00:38:59 Speaker_01
And this is the context of crypto sort of reaching its escape velocity. This is the first time in history, I think we'll have a pro crypto administration, the executive branch, and also you mentioned Congress.

00:39:10 Speaker_01
Let's slice those two apart and talk about them separately, right? So Chris Dixon, you like made the comment to me earlier this year that, you know, the legislative is great, because that's how you hard code change in the system, right?

00:39:20 Speaker_01
You actually want to get persistent change across administrations, you pass laws, and that's one set of the change we can expect to see. But the first set is actually the administration.

00:39:30 Speaker_01
And under the Biden administration, the past four years, anybody who's listening to this, anybody who's been in crypto knows that there actually has been an Operation Chokepoint war on crypto, Gary Gensler's SEC.

00:39:40 Speaker_01
It seems like overnight, all of that is reversing. And I want to ask you what you think the biggest effects a pro-crypto White House might be. And maybe the first place we can start is this idea of a strategic Bitcoin reserve.

00:39:54 Speaker_01
It's hard to know how much power the executive branch actually has over this. Of course, listeners will know the US government currently holds 200,000 Bitcoin. This is from seizures. They haven't purchased this on the market, but they own it.

00:40:07 Speaker_01
And the default process, I think, under an anti-crypto executive branch would probably be to proceed to sell this. Maybe the Trump administration doesn't. Maybe the Trump administration does more and establishes a Bitcoin reserve.

00:40:20 Speaker_01
That sounds, if you were to go back in time to 2013, you, I don't know if you could have foreseen that, that sounds like fantasy land.

00:40:26 Speaker_01
That sounds like beyond your wildest dreams type of success for this asset class, that the largest economic power in the world would start stacking crypto on its balance sheet. And yet, this is what's being circulated.

00:40:39 Speaker_01
As recently as last week, Trump sort of semi-confirmed. I saw a Forbes piece, I haven't jumped into this, about Trump talking about a strategic Bitcoin reserve and what that might look like.

00:40:49 Speaker_01
What do you think the likelihood of that in itself is, and what's the impact?

00:40:53 Speaker_02
Yeah, so I think you're right to bifurcate things that can be done by the executive branch from things that require Congress to prioritize and pass legislation. It is my understanding that the executive branch controls the U.S.

00:41:07 Speaker_02
Marshals Service and can decide just to stop selling bitcoins. And that is very easy to do. And we participated in the first Marshalls election in 2013 or 14, whenever that was.

00:41:17 Speaker_02
Super cool to see their five-pointed star on a bitcoin sale poster, which is really cool.

00:41:23 Speaker_01
What do you mean by that? Some bitcoin was seized and you purchased it directly from the U.S. government?

00:41:27 Speaker_02
Yeah, so the U.S. Marshals Service is the entity that seizes assets from criminals and sells them. And they started doing Bitcoin sales in 2013 and 14. And they have a really cool logo. It's a five-pointed star like in the West Sheriff.

00:41:42 Speaker_02
And so it's my understanding that the president can just unilaterally decide to stop doing that. And as you say, the United States already owns 1% of the world's Bitcoins, right? So that's awesome. And if they stop selling, that's good.

00:41:54 Speaker_02
I'm not even going to remotely try and guesstimate what Congress can do because You know, it's a very wild animal out there. So that might be hard. But just not selling 1% of all the world's Bitcoin is huge.

00:42:06 Speaker_02
Because remember, the float on Bitcoin is pretty small. There's a lot of people, including Satoshi, never sell. They just have their crypto.

00:42:13 Speaker_00
So 1% is a big amount. The Arbitrum Portal is your one-stop hub to entering the Ethereum ecosystem. With over 800 apps, Arbitrum offers something for everyone.

00:42:23 Speaker_00
Dive into the epicenter of DeFi, where advanced trading, lending, and staking platforms are redefining how we interact with money.

00:42:30 Speaker_00
Explore Arbitrum's rapidly growing gaming hub, from immersed role-playing games, fast-paced fantasy MMOs, to casual luck battle mobile games.

00:42:39 Speaker_00
Move assets effortlessly between chains and access the ecosystem with ease via Arbitrum's expansive network of bridges and on-rifts.

00:42:45 Speaker_00
Step into Arbitrum's flourishing NFT and creator space where artists, collectors, and social converge and support your favorite streamers all on-chain.

00:42:53 Speaker_00
Find new and trending apps and learn how to earn rewards across the Arbitrum ecosystem with limited-time campaigns from your favorite projects. Empower your future with Arbitrum.

00:43:02 Speaker_00
Visit portal.arbitrum.io to find out what's next on your web-free journey. Are you ready to take control over your entire financial life? Crypto, DeFi, and fiat all in one place? Meet iYield, the free financial planning tool built for crypto natives.

00:43:18 Speaker_00
Unlike traditional portfolio trackers that just show you the value of your assets, iYield goes deeper.

00:43:23 Speaker_00
It consolidates everything, assets, debts, income, and expenses, offering you a complete financial picture across 16,000 tokens, 40 DeFi protocols, and all fiat currencies.

00:43:32 Speaker_00
With real-time DeFi yield tracking for platforms like Aave, Athena, Eigenlayer, and Uniswap, iYield ensures that you're always on top of your stake and rewards, investments, and cash flow. And the best part? It's 100% free with no ads and it's secure.

00:43:44 Speaker_00
No personal data, no ID requirements, no compromises. So head over to iYield.com to sign up today and get the guesswork out of financial planning. Uniswap Labs is making history with the largest bug bounty ever.

00:43:57 Speaker_00
$15.5 million for critical bugs found in Uniswap v4. This isn't just any update.

00:44:01 Speaker_00
Uniswap v4 is built with hundreds of contributions from community developers and has already undergone nine independent audits, making it one of the most rigorously reviewed code bases to be deployed on-chain.

00:44:11 Speaker_00
And with 2.4 trillion in cumulative volume process across Uniswap V2 and V3 without a single hack, the commitment to security and transparency is rock solid.

00:44:20 Speaker_00
Now, Uniswap Labs is taking an extra step to make V4 as secure as possible with a $15.5 million bug bounty. Head to the link in the show notes to dive in and participate in the Uniswap V4 bug bounty.

00:44:32 Speaker_00
All the details from eligibility and scope to the rewards are there.

00:44:36 Speaker_01
It seems like Trump could, or the executive branch could, not only not sell, but they're also, of course, executive branch over treasury. It's like Fort Knox, where, you know, the US keeps its gold reserve.

00:44:47 Speaker_01
It seems like the presidential branch would have some executive powers over that. you know, if you just sort of start custodying the Bitcoin that you haven't sold, that's kind of the beginnings of a strategic Bitcoin reserve.

00:44:59 Speaker_01
It may not be fully what people hope for. I know Senator Lummis was talking about like building up to a million Bitcoin worth of supply, which would have to come by way of purchase later.

00:45:09 Speaker_01
But like, can you see the executive branch just at least keeping the 200k and setting up some sort of custody type structure with its powers?

00:45:17 Speaker_02
Yeah, I think that one seems very likely, because as far as I know, it's within the executive branch's purview to do that, and so I would say the U.S., which is currently moving bitcoins around right now, the U.S.

00:45:28 Speaker_02
government, and selling them, moving them to exchanges, I think that'll stop, and then that'll be great, because it's a flow that at least neutralizes, you know.

00:45:36 Speaker_02
Prices reach equilibrium with buying and selling matching, and when you remove a seller, it, you know, helps the price go up. And I also think it's a great strategy, right?

00:45:45 Speaker_02
When you are the world's reserve currency, you don't have anybody else's currency to save in, right? Everyone else can save. Even the Chinese who, you know, are at war with us, saving U.S. dollars, right? So is Russia. Like, that's the reality.

00:45:57 Speaker_02
You have to save in the world's reserve currency. The U.S. is that currency, so we don't have somebody else's. You mentioned Fort Knox. It is totally anachronism that the U.S. stores 11 million years of wages in a stone pyramid in gold.

00:46:13 Speaker_02
Just like the pharaohs, like 40 centuries ago, right? Like it's so out of date. And so yeah, I would love to see the U.S.

00:46:20 Speaker_02
increase its holding of digital gold and then, you know, as a citizen, I'd love for them just to sell the old school gold because, you know, it's not really doing anything. I think that is coming, that the U.S.

00:46:30 Speaker_02
will stop selling, which is really important. The fun bit, though, is to remind people it's not radical. Like, Singapore's owned cryptocurrencies for five, six, seven years or whatever.

00:46:40 Speaker_02
Like, you know, very well-run countries like Singapore, they've been doing it. It's not like super crazy. Like, you know, they've all kinds of other assets. Like, why not own what I think is a very compelling asset, Bitcoin, right?

00:46:51 Speaker_02
So that's why I think we'll come around to it. And there is a petition in Congress to do this, to create a strategic Bitcoin reserve.

00:47:00 Speaker_02
And as you said, everything got really partisan, which is really weird, because like Ro Khanna, who's a very intelligent congressman from California and a Democrat, he said, you know, it's like the cell phone. Like, why is it partisan?

00:47:12 Speaker_02
Like, you know, I don't know why. And frankly, if anyone should have made it partisan, it's the Democrats. Bitcoin's like the progressives' dream. It's amazing.

00:47:21 Speaker_02
And there's a great congressman from the Bronx, Richie Torres, who's really fun to listen to talking about it. You know, I hope it isn't partisan. I hope that it can get done. But, you know, I think we will be storing at least the 1% that U.S.

00:47:35 Speaker_02
currently owns in Bitcoin for at least the four years that the president-elect will be serving.

00:47:39 Speaker_01
I'm wondering what you think that kind of kicks off. Let's say that's the base case, all right? That seems very doable. It seems like Trump has kind of the political capital and will and the powers to kind of pull that off.

00:47:48 Speaker_01
Just keep the Bitcoin you have, the 1%, the 200,000, right? Let's say we're not able to get to the kind of the bull case, which is, you know, Congress legislative body goes and passes some bill to go purchase more Bitcoin.

00:47:59 Speaker_01
But even at the base case, we keep what we have and we sort of announce that. project that to the world, right? You have to wonder what the game theory of other countries will start to do in the wake of that news, right?

00:48:09 Speaker_01
So what does the US's chief economic rival, China, do with that? Well, they also have around 200,000 bitcoin that they have seized from various seizures in their country.

00:48:20 Speaker_01
Do you think that they will proceed to sell that Bitcoin if the US is announcing that they're holding their own and possibly buying it? Or do you think they'll keep it as well?

00:48:29 Speaker_01
Do you think that some countries around the world will, whether they broadcast it or not, maybe many of them would be wise not to broadcast this, will start stockpiling Bitcoin? it seems likely that they would.

00:48:39 Speaker_01
So like what we're kind of kicking off is a, you know, expansion of Bitcoin and this sort of, you know, race to acquire more Bitcoin, which is kind of what people talked about, what you talked about in your memo from 2013, where you talked about, you know, Bitcoin being gold, except gold in 100 BC, before all of the different nation states and empires and powers, you know, collected a whole bunch of it.

00:49:01 Speaker_01
And so do you think the race is basically on if the US does this? And what does that do to price? Oh, you said it better than I could.

00:49:08 Speaker_02
Yeah i think a strategic bitcoin race is on arms race is on and it's gonna take ten years but it will happen where the us is gonna hopefully retain one percent of the world's bitcoins china hopefully will. And again, think of the irony, right?

00:49:25 Speaker_02
There's these regimes like China that are in, you know, kind of, you know, semi, well, let's just call it competition with the U.S. Why are they storing all their wealth in U.S. dollars, in U.S. treasuries, right? Like, that doesn't seem smart, right?

00:49:38 Speaker_02
And then the U.S. sanctions regime, like, can control every little check they write, you know? So, yeah, I think it seems pretty obvious that

00:49:46 Speaker_02
Especially countries that are antagonistic to the United States of the West would want to store their wealth in Bitcoin and even neutral countries like, you know, just seems smart to have some of your wealth in a different form of reserves.

00:49:59 Speaker_02
You know, that's why some people use gold because it has different properties than US dollars, which have to go through US banks and all that stuff. But Bitcoin, you know, it's another great alternative.

00:50:09 Speaker_01
Let's talk about Congress for a second. So this is the most pro-crypto Congress we've ever seen, like to your point. Do you think we'll pass any meaningful crypto legislation? The stablecoin bills have seemed like they're almost bipartisan.

00:50:22 Speaker_01
There's certainly a lot of wins that the U.S. can lock in from good stablecoin legislations. Basically, you know, maintain and preserve the world reserve currency status of the dollar seems to be one key win. Do you think that passes?

00:50:35 Speaker_01
What happens with a pro-crypto Congress?

00:50:37 Speaker_02
So I've been so excited about blockchain for 11 years. I come in every day with this list of super interesting things I could work on every day. Trying to figure Congress out is not one of them.

00:50:48 Speaker_02
There's nothing to add because it's just a machine that I just don't get. Like Chancellor Bismarck said, some things you don't want to see produced. laws and sausages, right?

00:51:01 Speaker_02
And so I don't, I literally spend no time thinking about Congress because I can't really influence anything and, you know, it's too hard for me.

00:51:09 Speaker_01
Talk to me about institutions then. Institutional ownership, this has been huge in 2024. People like Larry Fink basically saying, Hey, I was wrong. I was wrong back in 2021 about Bitcoin. And I've since revised my position.

00:51:23 Speaker_01
The ETF products, of course, have been smash hits. Absolutely insane. I think the last time we spoke, Dan, was like 2022. And it was sort of before all of this institutional wave of adoption.

00:51:35 Speaker_01
And even from Mike Novogratz, you know, your former coffee colleague and who you went to school with, I kept repeating this phrase, the institutions are coming, the institutions are coming. And it seemed like they weren't coming.

00:51:46 Speaker_01
It seemed like, where are they? Well, in 2024, the institutions did come. They're here now. We've got tokenization, we've got ETF products. But how here are they?

00:51:56 Speaker_01
What's the institutional ownership and adoption of crypto right now in terms of how far along we are?

00:52:02 Speaker_02
Yeah, so I think to kind of help Mike out on that is I think we all thought they were coming a few years ago. And we've had some big institutions invest with us for a decade, right?

00:52:14 Speaker_02
So there are some, but like when you're talking about like, you know, a huge stampede. Yeah, he said the herd.

00:52:20 Speaker_01
He used that phrase, you know, the herd.

00:52:22 Speaker_02
So we all, we did think it was coming, but FTX happened, you know, BlockFi, Celsius, Terraluna, GBTC, crush discount stuff, you know.

00:52:34 Speaker_02
And then the Security and Exchange Commission sued Coinbase and Ripple Labs and like all these great companies, right? Wow. Just polar ice cap on the whole thing, right? If you're, you know, public pension plan, what are you going to do?

00:52:47 Speaker_02
Run that up to your state legislature and go, hey, I'm thinking about Bitcoin today. Like it just, there's no chance, right? The thing I don't think enough people realize is how quickly that can go the other way, right?

00:52:59 Speaker_02
If we find ourselves in 2025 with a pro-crypto Congress, pro-crypto president and regulatory agencies that are at least neutral, which we will, right? I mean, that's how it seems like that's going to happen. Wow. Everything could flip.

00:53:13 Speaker_02
And that's why you're seeing the price surging. massive inflows into the ETF. And I think you're right, the ETF is such an important thing, right? You know, we launched the first crypto fund in the United States.

00:53:24 Speaker_02
And I thought, yeah, we launched as a Cayman hedge fund, because I thought, hey, it might take a few years to get an ETF through.

00:53:30 Speaker_01
That was 11 years ago, right? Well, didn't the Winklevoss's apply for an ETF back in 20, like it was around that time frame?

00:53:36 Speaker_02
Definitely a long time ago. Yeah. And my point being, wow, having waited for 11 years since we started in 15, I guess, since Bitcoin was around, that we were kind of repressing this desire to invest, right?

00:53:51 Speaker_02
And so it's not surprising that the Bitcoin ETF has been the epic huge thing. $35 billion has net flowed into Bitcoin ETFs. And you kind of have to also include microstrategy, which I know is not an ETF, but it kind of looks like one.

00:54:06 Speaker_02
That has 18 billion of inflows into it. Now in the NASDAQ? Yeah. So that's, you know, better, more than 50 billion into ETF or ETF-like products. And then this is a really cool stat. The flows into all of the gold ETFs on Earth are zero. Wait, really?

00:54:24 Speaker_02
So no money's flowing into old school gold, the 79th element on the periodic table. And 50 billion flowed into digital gold, Bitcoin ETFs. Like that's the change.

00:54:36 Speaker_02
And that was the thing I was thinking, you know, 12 years ago when we started is, hey, you know, Bitcoin's going to go up and, you know, replace gold. And it didn't happen.

00:54:43 Speaker_01
The ETF is helping it happen. Wow. So is that kind of a base prediction? I mean, when you were talking earlier about, you know, the 15 trillion, that's about gold's market cap. What's gold?

00:54:52 Speaker_02
I think it's gonna happen right cuz you know bitcoin does everything gold does but you can ship it more easily you can store it more easily you can do fractional sales all that stuff and so i think it will eat into gold's market share you know that the US like you said.

00:55:07 Speaker_02
Why do we store all that gold under Fort Knox? Like, it's crazy, honestly. And I'm not in any way predicting the U.S. will actually sell gold, but I think it will buy Bitcoin.

00:55:15 Speaker_02
So I think, you know, over time, countries and people will overemphasize buying Bitcoin and not gold.

00:55:22 Speaker_02
And we've seen that since January when the first ETF was launched in Bitcoin, 50 billion into ETFs and microstrategy and zero into all of the gold ETFs combined.

00:55:33 Speaker_01
So what do you think of institutional adoption for crypto right now? Like back to that percentage scale, how far along are we, right?

00:55:39 Speaker_01
It seems like with people like Larry Fink pivoting and you're talking about the setup for 2025, things could shift quickly, but there's still, you know, like Vanguard will not allow an ETF or crypto assets inside of the Vanguard ecosystem.

00:55:52 Speaker_01
There still seems to be some resistance. It doesn't feel like we're at 100% now. Like how far along are we with institutional adoption?

00:55:59 Speaker_02
Well, one of my favorite lines about this is so many people say Bitcoin's a bubble. And I'm like, how can you have a bubble nobody owns? The median holding of blockchain in institutions is zero. Wait, what?

00:56:17 Speaker_02
The majority of institutions have no meaningful exposure to blockchain.

00:56:20 Speaker_01
What do you mean by institutions? What are we talking about?

00:56:22 Speaker_02
Life insurance companies, pension plans, you know, endowments, foundations, you know, all the kind of institutional investors that hold real estate and equities and private equity. They still have zero? Nothing? I think the majority of them have

00:56:38 Speaker_02
a number that basically rounds to zero of directly held blockchain. Maybe they invest in some generalist venture firm that, you know, invest in one blockchain company or something like that.

00:56:49 Speaker_02
But I think it's still true that the majority of institutions have not actively written a material check to blockchains.

00:56:57 Speaker_01
Does that mean we got to 100K just on kind of retail, like literally retail front running the opportunity here?

00:57:02 Speaker_02
Yeah, the smart money isn't in it yet. It's all the dumb money.

00:57:06 Speaker_01
That's great.

00:57:06 Speaker_02
Yeah, so that's why I'm so bullish. I think, you know, we really just haven't started yet.

00:57:10 Speaker_02
And the point being, when you have institutions like BlackRock's biggest manager on earth, you know, and they're out there very publicly, and they have a great blockchain team. Larry Fink's, you know, always positively talking about it.

00:57:22 Speaker_02
That's very helpful. Fidelity was super early they started their whole blockchain project in two thousand fourteen they've been very supportive of the space you know all that is so helpful and i guess the reason i want to say that is.

00:57:35 Speaker_02
I have been evangelizing for blockchain for a long time and so. Many times I'd be in a room with a big bank or big whatever, institutional type investor, and they would say, we can't do it for compliance reasons. And I'd be like, huh.

00:57:50 Speaker_02
Essentially, I've run a couple of compliance departments and I have no idea what you're talking about. What is the compliance reason you can't do it? And they're like, it's because of compliance reason. Like, you know, it made no sense.

00:58:01 Speaker_02
They just use that as an excuse. There's no reason like you can't. investing, you know, a Bitcoin ETF or whatever. And so now BlackRock and Fidelity and Bitwise and all these people are selling very regulated, incredibly awesome products.

00:58:15 Speaker_02
You can't say, oh, we can't invest for compliance reasons anymore. And even like Vanguard, right? Like, I don't know how long it's going to be defensible to say, oh, you can't have Bitcoin in there or whatever.

00:58:25 Speaker_02
Like, I mean, if $80 billion wants to flow in a micro strategy, like it seems relevant, right? Like, you know, who am I to kick them out or whatever?

00:58:33 Speaker_01
Yeah. I just love this story. I mean, part of the line of bankless from the early days has been front run the opportunity and it seems like there's still time to front run the institutions on crypto assets.

00:58:43 Speaker_01
No, no, it's a great line and it totally applies here. Talk to us about cycles. So you've been through a number of cycles here and it feels like we're in a bull cycle at 100k Bitcoin all time highs. I'm sure you'd agree with that.

00:58:56 Speaker_01
What happens this cycle? Is crypto inevitably going to play out in four year cycles? You know, traditionally, people have talked about that may be driven by the halvening.

00:59:03 Speaker_01
Others have talked about this is just kind of like global liquidity, you know, the ebbs and flows and these four year cycles.

00:59:10 Speaker_01
And so kind of when liquidity in the fiat sort of rushes in the market, then crypto has a bull market and it'll bull and then it'll kind of, you know, bust off the top.

00:59:19 Speaker_01
Is that where we're headed for in this current cycle is just repeating four year cycles forever? I think so. Really? That's your base case? You don't believe in the super cycle or that we just like break the mold? It just seems so obvious.

00:59:32 Speaker_02
Yeah, when I was in college, one of the professors wrote this very famous book, Random Walk Down Wall Street, about how everything in the market was totally efficient and all that stuff.

00:59:39 Speaker_02
And there's a great line, supposedly by Warren Buffett, that says, the difference between the market always being efficient and often being efficient is 80 billion, to me, you know?

00:59:48 Speaker_02
And that would be my thought here, is when I first heard about the halving, I had your kind of mentality, like, if we all know it's going to happen, then it can't happen, right? Right.

00:59:58 Speaker_02
I lived through that in 2013 and 12 or whatever that was, 16, you know, it's true. It's true. I totally believe it.

01:00:07 Speaker_02
And the reason it's true is, and it's the having, in my opinion, that does it, is miners sell every Bitcoin they get to buy more machines and more hardware and more electricity, right? And they just do that.

01:00:19 Speaker_02
And in any other market, like copper, if you said, hey, we're going to shut down half of all the copper mines on earth, on August 12th, 2023 or 2024, man, copper would go way up, right?

01:00:34 Speaker_02
And that's what happens here, is that every four years they shut down half of the production. And so when you have a constant demand and you cut the supply in half, it does go up. So the market's gone through very pronounced cycles.

01:00:46 Speaker_02
Here's the only thing that is different. The kind of amplitude of the cycle is moderating each time. The thing to remember is that in the first halving,

01:00:57 Speaker_02
The amount that was reduced over the next year was equivalent to 15% of all of the above ground bitcoin at the time, right? Like the halving was big and there weren't too many bitcoins outstanding.

01:01:10 Speaker_02
Obviously the next halving was half as big, and there were more bitcoins outstanding, so it was about a third as big as an impact.

01:01:16 Speaker_02
So each halving is getting lesser and lesser of importance, and obviously in 2136, the last halving, it's not going to have much of an impact, right? But right now, it still does have an impact.

01:01:28 Speaker_02
And I have the stats here is that we think our data is that the halving starts about 400 days before the actual halving, the impact, the low in the markets, and then the high is another 480 days actually after it. And it has done that each time.

01:01:44 Speaker_02
And two years ago, when Bitcoin's at 17,000, we forecast that it would hit 28,000 at the halving and then 117,000 next August at the 480 days after the halving peak.

01:01:58 Speaker_02
The trough was within a couple of days, I think, of what we had forecast, you know, that it did bottom in. And it's a bit ahead of itself right now. It's almost at, you know, it's getting closer to 117. But it has been predictable.

01:02:11 Speaker_02
In the last halving, we put out on Twitter a forecast where it'd be each month through 2020. And we said that in August 2020, if my memory is right, it'd be $62,642 on August 15th of 2020. It hit it that day. Like literally that number on that day.

01:02:31 Speaker_02
And so I still believe in it, right? It keeps happening. And so I think we are going to have a big bull market, and then we're going to have a bear market.

01:02:39 Speaker_02
But the only thing I would say is, I think that having done three 85% down drafts in the 12 years we've been doing this, the next one, hopefully, God willing, will be, you know, 50 or 60 rather than 80.

01:02:52 Speaker_01
At least for Bitcoin, maybe not the long tail of cryptocurrencies.

01:02:55 Speaker_02
Yeah, so I do think the four-year cycle is totally real. I think we're still kind of, you know, in the up phase of that. And then the next down draft probably be less.

01:03:05 Speaker_01
So the base prediction, just in case people aren't tracking this, right. So last year was the having was April, 2023, I believe. So we're, you know, 400 days, uh, I guess, uh, within that, something like this.

01:03:18 Speaker_01
And so if we just follow the four year cycle, does this mean 2025 is basically a bull market? 2026, we start going down.

01:03:26 Speaker_02
Yeah. That's the format that I would have in my head. And I think it was April 19th, 2024, this year that we had to have it. And so August of 2025 would be the peak. And man, everything's kind of setting up for that, right? It just seems too easy.

01:03:42 Speaker_02
I know, I know, I know. I get it. And we've had this conversation every four years for 12, so, you know, I know it sounds ridiculous to say, but at least we always forecast it moderating. That the previous halving cycles were way bigger in amplitude.

01:03:59 Speaker_02
This one is smaller, but, you know, I still think it's pretty real. And that's just the having thing. But everything in the political and macro thing is setting up for it to be great for crypto too. So it's hard not to be pretty bullish on 2025.

01:04:14 Speaker_01
What's your take on macro stuff? Does this impact things in a positive, negative way? Bitcoin impacting macro? Or the other way around? Wow.

01:04:21 Speaker_01
Bitcoin impacting macro is not the way I've typically heard that phrase, but maybe it's big enough to start impacting macro. I was thinking more macro on Bitcoin.

01:04:28 Speaker_02
Yeah, I would say from the macro side, I'm still super dubious on the ability for the Fed to cut. And in December of 2021, when- You have been consistently, because I've been reading the Pantera updates from you.

01:04:41 Speaker_02
In December of 2021, the Fed funds rate was zero and the 10-year note was 1.3. And I said, both were going to go to five and stay there for years. And I still believe it. The economy's booming. The Fed's going to cut. Have you ever been to an airport?

01:04:57 Speaker_02
Go to an airport and see if the Fed should cut. You can't even move. It's physically impossible to walk through an airport right now. Unemployment's as low as it's ever been. Wage inflation's really high. There is no reason to be cutting rates.

01:05:10 Speaker_02
And the stock market's at all-time record highs. People that think the Fed's going to cut are crazy, in my opinion. And rates should be. where they are. Fed funds, let's see, the real Fed funds rate, 140 above where core inflation is right now.

01:05:26 Speaker_02
So it's slightly restrictive, but not that much. So it just seems like there's not much room for the Fed.

01:05:32 Speaker_02
And then the fiscal thing in the US, and potentially globally, but I know the US better, we are running a $2 trillion deficit in the best of times. There's nothing better that could be happening. Everything's at record highs.

01:05:45 Speaker_02
Everybody who wants a job has a job. If we're running a deficit now, wow, I mean, there's some bad times coming.

01:05:54 Speaker_01
And that's hashtag buy Bitcoin, right? Okay. Yeah. Well, so translate all this. Is that effectively what the signs you're reading in macro of like, we're running at a deficit, you know, the US is continuing to print more money.

01:06:04 Speaker_01
They're talking about cutting. You don't think that's possible. Maybe they cut, maybe we keep like constant, but in general, what does all of this mean? Is this basically like money printing?

01:06:13 Speaker_01
And so commodities go up in particular digital asset commodities number go up?

01:06:17 Speaker_02
Yeah, you said it well. Our country, and then again, I don't know the other countries well, but in the United States, there seems to be an addiction to printing money. Like, there was a slide this direction prior to COVID.

01:06:33 Speaker_02
And then any fiscal restraint just out the window, like literally sending $1,200 to every person in America a couple of times, and they're like, wow, I wonder why groceries cost so much. Like, that's why you send money to all these people, right?

01:06:49 Speaker_02
The fiscal thing is very hard to see how to get out of because we're running a massive deficit, biggest ever, in the best of times, right? And so fiscal policy is supposed to be counter-cyclical, right?

01:07:00 Speaker_02
You're supposed to be holding everything back when it's ripping, and then you have some ability to ease when it's not. And so it does look difficult. The U.S. now spends more in interest than it does in the military, which is fascinating.

01:07:16 Speaker_02
And the current administration financed it with an adjustable rate mortgage. We brought the duration of the treasury debt down to an arm. And I think rates are going to stay at 5% or higher forever.

01:07:29 Speaker_02
So that's going to be very expensive because we've got to refinance all that debt at higher and higher rates. And so, again, I don't spend a lot of my time studying the fiscal and macro side.

01:07:40 Speaker_02
The only thing I know is I'd much rather own Bitcoin than US dollars. And you mentioned commodities. The way to think about it is,

01:07:48 Speaker_02
Not that gold's at a record high, and bitcoin's at a record high, and stocks at record highs, and housing's at record highs. All those things are actually kind of not moving. It's paper money is crashing. Denominator?

01:08:00 Speaker_02
Yeah, it's the paper money is crashing. Everything else is kind of doing its own thing, right?

01:08:06 Speaker_02
Bitcoin against gold against stocks against whatever real estate you know and so that's really the right perspective and we did a graph that i should update where he had the price of us dollars in soybeans in real estate in gold and that's the thing that's crashing and so yeah i think you can't wanna hold paper money.

01:08:25 Speaker_02
given what's going on on the fiscal side. I don't see how they get out of it.

01:08:29 Speaker_02
And even a former negative crypto person, Ray Dalio, just was on the tape, and I apologize for not having read the whole article, but I did see the headlines, that he's saying there's a debt crisis coming and you should probably own some gold and Bitcoin.

01:08:42 Speaker_02
And he's obviously a very smart guy, and at least I agree with that headline.

01:08:45 Speaker_01
It's notable, by the way. I've been following Dalio for a while because I think his ideas around monetary cycles are spot on. But his answer to it has been commodities and particularly gold.

01:08:58 Speaker_01
And this year has been the first time that he has also included Bitcoin as an answer to that, which is kind of notable coming from Dalio.

01:09:05 Speaker_02
It really is. And I think you're right to focus on these incredibly talented people.

01:09:09 Speaker_01
that used to be negative that now see it, right? They were just waiting for it to be a bit more consensus, I guess, right? Part of the monetary phenomenon here is money has to be... It's a consensus technology. It's a social coordination technology.

01:09:22 Speaker_01
So, it's not money unless... it has the deep liquidity of being consensus, right? Yeah. So that's part of the effect. Let's talk about some other crypto areas really quick. Tokenization, real world assets, that's kind of an institutional play.

01:09:34 Speaker_01
Do you think all of the assets basically come on chain?

01:09:37 Speaker_01
Are we now in kind of like an S curve where all the traditional finance assets, starting with stable coins, of course, the dollars on chain, which we're at 200 billion, but treasuries, then later stocks and bonds, does all of that begin to come on chain now?

01:09:51 Speaker_02
No it's a great point and that's again one of those serial killer type things we've been talking about that for 10 years and we made a few investments a little early that didn't work and now it is working right and you're right stable coins great example of bringing some.

01:10:06 Speaker_02
kind of normal and boring like treasuries, T-bills on the blockchain. But then it helps people do really cool things. And then projects like Ondo and others that are trying to help people get access to financial markets in the U.S., super important.

01:10:20 Speaker_02
So it's a really important thing. And even putting treasury bills on the blockchain, you're like, ah, whatever, that's not that big a deal. It's a really big deal because there are a lot of people that don't live in the United States, right?

01:10:31 Speaker_02
So you get eight billion people that would love access to U.S. dollars and to treasuries, but they can't. And then even American citizens, probably not too many youngsters have ever had one of these, but I used to have a treasury direct account.

01:10:43 Speaker_02
It's where you can buy treasuries directly from the U.S. Treasury Service. Wait, really? I didn't know that was a thing. Yeah, it's a thing. That was kind of back, you know, in the CD era and all that stuff.

01:10:52 Speaker_02
Like, you know, I know, you know, probably not that many people do it.

01:10:55 Speaker_02
And your age group but the hilarious thing about that is used to buy treasury directly from the US government you didn't have to use a broker and all that stuff if you want to send. Your treasury direct balance to a broker like maryland.

01:11:07 Speaker_02
You have to wait for a year we what is some government worker. of withdrawal requests for treasury direct that is so high, it takes a year to get your 90-day T-bill out of the government into Merrill Lynch. That's insane.

01:11:26 Speaker_02
And if that's not the best advertisement for blockchain and RWA,

01:11:30 Speaker_02
ever that's it is like you thought you were doing the smart thing you try to buy directly from the government you get locked up for a year so those are good another great example is figure markets which is founded by mike cagney who i've known for about thirty years super intelligent former founder of sofi doing what i started as a mortgage backed securities trader

01:11:52 Speaker_02
Mortgages go through so many little mouths that all take a little bite out of it. It takes 55 days to go from the person who borrowed the money to the person who actually is the owner. It's doing all that on the blockchain.

01:12:02 Speaker_02
It's a great example of taking all these inefficiencies out. And they have, I think, 10 billion of mortgages on the blockchain already, right? And it's a hundreds of trillion market. Like, that is massive.

01:12:14 Speaker_02
And so tokenization of real world things is happening.

01:12:19 Speaker_02
The only one I'd be dubious on is tokenizing things like hedge funds or, you know, private equity funds or even Pantera Capital's funds, you know, because we're not trying to distribute it to everybody with a smartphone.

01:12:30 Speaker_02
Like, you know, we're trying to sell it to people that are qualified purchasers by the SEC and all that stuff. So that's the one area that I don't share. Sometimes you hear people go, you know, all these funds will be on the blockchain.

01:12:41 Speaker_02
They might, but like, it's not broken right now. Like we connect with sophisticated investors pretty easily. But all these other things like treasuries, yeah, you know, it's a great use case. And you know, honestly, that's the funny thing about the U.S.

01:12:53 Speaker_02
government. They should love blockchain. They totally should. It's going to help pump the deficit to anybody on earth with a smartphone, right? That's great. for the US government.

01:13:04 Speaker_01
Yeah, 200 billion in net purchasers of treasuries. That's what stable coins are doing. That's a huge use case. A big plus one on like, I own some kind of treasuries in the money markets locked inside of Fidelity, right?

01:13:16 Speaker_01
I tell you, Dan, if that was an ERC20 and I could like do things with it, if it was liquid, it was portable, if I could, you know, spend it, if I could transfer it, that would be incredible user experience.

01:13:26 Speaker_01
I mean, the fact that we're not there yet, and but we can go there with crypto is like all the upside you need.

01:13:31 Speaker_01
I want to ask you about one other area before we close, which is, do you have any thoughts on like crypto and AI and everything that's going because so another s curve right now, I don't know if this is, I guess a few years ago, it would have been a huge asymmetric upside opportunity.

01:13:44 Speaker_01
And you know, many folks say we're still early, is artificial intelligence. But that is now meeting crypto in a very interesting set of ways, right?

01:13:51 Speaker_01
So with crypto, we've created programmable money, effectively, particularly with chains like Ethereum and others, which is like, you could do things with them, you can program with them. Now we have AI,

01:14:02 Speaker_01
which is basically like some of these agents are literally machines that, you know, are they going to prefer money you can't program or money you can program? I think it's programmable money, right?

01:14:11 Speaker_01
And so we've built this entire blockchain ecosystem effectively for them. What do you think the intersection is going to look like with crypto and AI? Are you looking into sort of AI stuff?

01:14:21 Speaker_02
Oh, definitely. No, it's a great question. Super important. Obviously, AI is huge and it's coming at a rapid rate. There are two very important reasons why blockchain and AI really do have to go together.

01:14:34 Speaker_02
The first one is, you know, AI is so important and it's gonna be so impactful for society. It just seems obvious it'll be better for us all if it's

01:14:43 Speaker_02
Decentralized and open rather than you know for profit single person running it all that so we invested in a handful of projects like sent in sahara that are helping build out the ability for a to be built in a decentralized way.

01:15:00 Speaker_02
One kind of small point on that is these models have already read the entire internet, right? There's nothing more to learn from, right? And so next generation AI models need data that's not yet free.

01:15:14 Speaker_02
And wow, blockchain is really good at providing incentives. And so if the next generation of AI models needs stuff they can't get for free, they have to incentivize people somehow, and blockchain is a great way to do that.

01:15:25 Speaker_02
And then the last one about whether these AI agents want to use you know, a normal kind of money or programmable money. Yeah, they probably want programmable money, but they certainly can't get a Chase Manhattan bank account.

01:15:38 Speaker_02
And so they have to use digital money of some kind. And again, like, I'm sure there's somebody out there with some idea of something other than blockchain, but it seems like it has to be blockchain, right? That if you're having

01:15:49 Speaker_02
You know, computer agents interacting with each other, they have to use computer money, right? And so I think both of those are hugely important. And it just doesn't seem like AI is going to be able to function without blockchain.

01:16:02 Speaker_02
And obviously, you know, blockchain, you know, there's a lot of overlap already, but I think, you know, in the next five or 10 years, it can be even more.

01:16:09 Speaker_01
So as we close this out, Dan, I want to get your takes on just some general advice for investors, you know, like right now. So the Bitcoin fund, the original Pantera Bitcoin fund, I said this in the intro, is up 130,000%. Okay, guys, like 130,000%.

01:16:24 Speaker_01
Is there anything like that? Is that like a once in a generation type of return profile? Or do you think there are opportunities, there will be opportunities like that for investors in the decades to come?

01:16:38 Speaker_02
Well, I'm a huge fan of promoting or suggesting blockchain to anybody entering business, you know, like any young person is I'm all in. I think it's gonna be so important. And, you know, I'm devoting the second half of my career to it.

01:16:53 Speaker_02
But if you're starting out, definitely get into blockchain, right? Because what if I'm wrong? You spend a couple of years, then you have to go back and get a real job. You know, so you should definitely be in it.

01:17:01 Speaker_02
And the same thing with investing, and this is another thing that politicians haven't figured out, is these policies that Congress and the Fed has pursued have really frozen out a younger generation that is very difficult to afford to buy a house.

01:17:15 Speaker_02
It's very difficult even to think, how should I save for my down payment? And all these old people are super negative on blockchain and, you know, talking about all this negative stuff, but they get it, right? The young people totally get it.

01:17:28 Speaker_02
Blockchain is super important. And so I think it's entirely rational that they're saving slash speculating, investing, whatever you want to call it, in blockchain, right? Because, you know, policies have been tough on them in other markets, so why not?

01:17:41 Speaker_02
Can front run the opportunities you said against the old people who don't get it yet right and so i'm a huge fan of young people investing in blocks and the only thing i would say is trying by a more diverse.

01:17:52 Speaker_02
Portfolio don't just buy one mean coin you know and hope it works you know by enough stuff. So, you know, if a couple of things don't work, a couple of things do work, you end up doing well.

01:18:03 Speaker_02
But again, you know, if you're just starting out, I really actually do think it's a great thing for young people to really invest big time in crypto.

01:18:10 Speaker_02
Obviously, the older you are, and if you have a spouse, you got a mortgage, you know, you got to dial everything back. But, you know, I think it is just such an important space. And the cool thing is the young people are ahead of the older people.

01:18:22 Speaker_01
Dan, what are your plans for the rest of this decade? What are you planning to do? Just continue with Pantera, doing what you're doing? I mean, there's some spots opening in the government, I would say, in terms of pro-crypto policy.

01:18:34 Speaker_01
I don't know if you're going to get involved there. What's on your horizon?

01:18:36 Speaker_02
Yeah, I'm just focused on doing everything we're doing, bigger and better. We manage money for our limited partners. It's a huge honor, but we don't want to sway, get distracted away from that. There's no other business lines we want to be in.

01:18:50 Speaker_02
But we just want to keep doing what we're doing, you know, bigger and better.

01:18:53 Speaker_01
Amazing. Dan Moorhead, it's been a pleasure. Your ability to identify these asymmetric opportunities has been pretty legendary. Bankless listeners, we'll include some notes in the show notes here with the investor letters that I mentioned.

01:19:04 Speaker_01
It's kind of historic. And Dan, thank you for guiding us through the patterns to help us identify these opportunities. And your bullishness on crypto is certainly infectious. So I appreciate everything you're doing. Thanks, been a blast being back on.

01:19:15 Speaker_01
Bankless Nation, gotta let you know, of course, none of this has been financial advice. Crypto is risky, a lot less risky than when Dan started, but you could lose what you put in. But we are headed west. This is the frontier.

01:19:25 Speaker_01
It's not for everyone, but we're glad you're with us on the Bankless Journey. Thanks a lot.