#484: Nik Bhatia on Counterparty Free Money

Nik Bhatia is the author of the new book, Layered Money. He is an Adjunct Professor of Finance and Business Economics at USC Marshall. In this conversation, we discuss an overview of the monetary system, layered money, the recent OCC ruling, coexistence between bitcoin and CBDCs, and counterparty free money. ======================= The Stacks 2.0 mainnet launched on January 14, 2021. Stacks, which you may recognize as Blockstack, is a layer-1 blockchain that uses the Bitcoin blockchain as a secure base-layer and enables developers to harness its power in new ways. Stacks makes Bitcoin more than digital gold, enabling apps and smart contracts on Bitcoin--unlocking innovation, new value, and a new way to earn BTC. Visit http://www.stacks.co for more information. ======================= Coinbase Wallets are adding support for .crypto and .zil domains through their partnership with Unstoppable Domains. Unstoppable Domains provides an all-in-one solution for blockchain domains. You can send money using these new domains instead of long Bitcoin wallet addresses, while also storing your domain in Coinbase's collectibles section. Go to unstoppabledomains.com in the dapp browser to register and manage your domains. ======================= As one of the largest and oldest Bitcoin exchanges in the world, Kraken is consistently named one of the best places to buy and sell crypto online, thanks to our excellent service, low fees, versatile funding options and rigorous security standards -- but this is only part of the story. We’ve been on the forefront of the blockchain revolution since 2011: http://www.kraken.com =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Nick Batia is the author of the new book Layered Money. He's an adjunct professor of finance and business economics at USC Marshall. In this conversation, we discuss an overview of the monetary system, layered money, the recent OCC ruling, coexistence between Bitcoin and central bank digital currencies, and counterparty free money. I really enjoyed this conversation with Nick, and I think you will as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Blockstack. Apps

• 0:41Anthony Pompliano?

  and smart contracts are coming to Bitcoin, along with a brand new way to earn Bitcoin. Stacks 2.0 will give developers powerful new tools, including a smart contract language called Clarity that was made for Bitcoin and jointly developed without grant, as well as a new consensus mechanism that rewards the network with both Stacks tokens and Bitcoin. Stacks, which you may recognize as Blockstack, unlocks new use cases and functionality for the world's most secure blockchain, Bitcoin, without modifying Bitcoin itself. The door for developers and entrepreneurs to activate the billions of dollars of capital currently passively held on Bitcoin are now wide open. Proof of transfer, or POX, is the groundbreaking consensus mechanism that makes this all possible. POX connects the Stacks blockchain

• 1:25Anthony Pompliano?

  to Bitcoin, opening up STX mining on the network and enabling stacking where STX holders can earn regular Bitcoin rewards for supporting consensus. Stacks, apps and smart contracts on Bitcoin. You can visit stacks.co for more information. Again, apps and smart contracts on Bitcoin, visit stacks.co for more information. Next up is unstoppable domains. They're solving the number one problem, human readable domains. Rather than having to send money to any sort of long string of random numbers and letters, unstoppable domains has now made it easy for you to get a .crypto domain name. That's right, I've got pomp.crypto. When someone says, "Yo, Pomp, I want to send you Bitcoin," I say, "Cool, go on."

• 2:10Anthony Pompliano?

  Your Coinbase wallet and send it to pomp.crypto. That's it. That's my wallet address pomp.crypto. And so if you want to have a really simple, human readable name like my pomp.crypto, you gotta go to unstoppabledomains.com and actually buy the domain name. Once somebody buys the name, it's gone forever. You can't get it. So if you want a .crypto domain name and make it easy for people to send you Bitcoin, you should head over to unstoppabledomains.com and buy it today. Whether it's your name, your company name, an idea you have, or something you think may be valuable in the future. First come, first served. Go to unstoppabledomains.com and get your .crypto domain today.

• 2:49Anthony Pompliano?

  You can't get pomp.crypto because I got it. So good luck getting whatever you want. Unstoppabledomains.com. Lastly is Kraken. Kraken, Kraken, Kraken. One of the largest and oldest Bitcoin exchanges in the world. Kraken is consistently named one of the best places to buy and sell crypto online. Thanks to their excellent service, low fees, versatile funding options, and rigorous security standards. But this is only part of the story. They've been on the forefront of the blockchain revolution since 2011. That's right. Kraken has been around. They've survived and they have thrived. If you want to buy crypto, head on over to kraken.com.

• 3:30Anthony Pompliano?

  Kraken.com is where you can roll with the OGs, the oldest and largest Bitcoin exchanges in the world. One of the largest and oldest Bitcoin exchanges in the world, Kraken. Consistently named one of the best places to buy and sell crypto online. Head on over to kraken.com. Again, that is kraken.com. All right, let's get into this episode with Nick. I hope you enjoy this one.

• 3:51Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 4:17Anthony Pompliano?

  All right, guys. Bang, bang. I've got a special treat for you here today. Nick is with us. Thank you so much for doing this, sir.

• 4:22Speaker 02

  Thanks, Pomp. I appreciate it, man.

• 4:25Anthony Pompliano?

  Absolutely. Let's just jump right into your background. Obviously, you wrote the new book Layered Money. But before you did that, kind of walk us through where you grew up, how you got into teaching, and then also how you discovered Bitcoin.

• 4:38Speaker 02

  Yeah, so I'm born and raised here in L.A. And I started working on a U.S. Treasury's trading desk several years ago. And that was always my goal was to work in the financial markets at a very high level. And I got to work on a Treasury's desk, trading, you know, billions of notional value of Treasuries almost on a daily basis. And I was really in my element on a desk. I got to be a global macro thinker, work in interest rate strategy, and help my asset manager invest on behalf of our clients. And that was, you know, really great for me.

• 5:19Speaker 02

  Well, while I was on the desk, I started hearing a lot more about Bitcoin. And this was around 2016. So Bitcoin had already been, you know, in the headlines over the past, over the past couple of years at that point. But it wasn't something that I had ever taken seriously or actually looked into. I had never read the white paper, et cetera. So, but 2016 was the year when I did all that. And while I was on the desk, doing my global macroeconomic study and trading, I was also on the side falling down the Bitcoin rabbit hole. And, you know, that came with reading Mastering Bitcoin, which a lot of it was over my head because it's a computer science textbook.

• 6:04Speaker 02

  But, you know, I did try to understand Bitcoin as deeply as I could as a software, not just as this new speculative asset, but, you know, really the fundamentals of what it was. And so in 2016, that happened. And over the past few years, my attention and my mind share just gravitated more and more toward Bitcoin. But the goal with Layered Money, my book, was to write something that really bridges my two worlds. So this world of Treasuries and traditional finance and investment management and this, you know, new exciting technology of Bitcoin and how to explain Bitcoin to people from my old world.

• 6:49Speaker 02

  And using that type of language. So and becoming a adjunct professor professor at USC happened over the last couple of years where I had the opportunity to to guest lecture there. And then they graciously invited me to teach the fixed income course. So what I teach at USC is the bond market. I don't teach Bitcoin is not part of that class.

• 7:14Speaker 02

  But I do hope to add something at USC where I am teaching Bitcoin as well. But I wrote the book again for both worlds, the traditional finance world, the people who are interested in Bitcoin, but maybe don't know anything about it and want a traditional finance person to walk them through.

• 7:32Anthony Pompliano?

  Yeah, it makes so much sense too, right? Is you've got to have an understanding of the legacy financial system in order to understand kind of this new financial system that's being built. I want to jump in. Most of the book or a good portion of the book is really explaining to people the monetary system and doing it in kind of plain English so that anyone can understand it. Let's just start with like a monetary policy or a monetary system 101, right? Like that. Everyone hears about monetary policy. They hear about interest rates. They hear about all this stuff, but they don't actually understand how the system works. And so when somebody says to you like, what is the monetary system and how does it work? What's the way that you explain it to them normally?

• 8:12Speaker 02

  Yeah, so I think that what I do in layered money is I outline this three layered model for understanding how our current monetary system works. The actor between the first and the second layer is the Federal Reserve. What do they own? They own US Treasuries. So US Treasuries exist as the first layer of money in my framework. And what do they issue? What's on their liability side? They issue bank reserves and they issue cash so that those two forms of money are second layer money. So you and I, if we want access to second layer money, we would have to have dollar bills in our pocket, right? We don't

• 8:52Speaker 02

  have access to the Fed's reserves. Only banks do. And therefore, between the second and the third layer of money, exist commercial banks. And those banks basically have Fed reserves as their assets and they issue deposits as liabilities. Those deposits are the money that you and I have in our checking account. So when we have checking account dollars, those are actually forms of a third layer money again in this framework. And so this difference between first, second and third layer money is not something that's a commonplace terminology. Uh, but what I've tried to do is explain money in this, uh, in this approachable pyramid type of way.

• 9:36Speaker 02

  And I have graphics throughout the book that show actually the layers of money and how they evolved throughout time, starting several centuries ago. And so, um, you know, that's what I try to do here is explain money in this first, second and third layer way, in which people can understand that the, the form of money that they carry around is actually a third layer money. And it shows people how far removed they are from hard money. And, um, you know, hard money opens up a whole different topic where we can debate US treasuries versus gold versus Bitcoin. But I think that's the right, uh, context to think about Bitcoin is versus gold and US treasuries,

• 10:20Speaker 02

  not versus Fed reserves, not versus cash, and definitely not versus commercial banking deposits, um, which most people, the average American has, has their money.

• 10:32Anthony Pompliano?

  Why is it so important to be closest to the hard money, right? So in this case, uh, treasuries, like, why is that so important? Uh, and why does that come with so much kind of power and influence, uh, and really wealth generation?

• 10:47Speaker 02

  It all comes down to counterparty risk. And what we have in our financial system today is a lot of forms of money are exposure, direct exposure to some counterparty, whether that be a bank, an asset manager, or some sort of money market fund. We all, when we carry our money market funds or our checking account dollars, we all have this counterparty exposure to these single bank entities, which we have seen over the last decade and a half, are very vulnerable to failure and would have failed if not for the unlimited backstop and bailouts that have come from the Fed and other central banks around the world.

• 11:31Speaker 02

  So the answer to your question is, it's really important to be as close as we can to a counterparty-free type of money so that we avoid all the risk embedded in the system. And just because your bank will be bailed out tomorrow if they fail, doesn't mean that's a good reason to hold that bank's deposit as money. We have to hedge that risk. We have to hedge away the counterparty exposure. And so when people buy United States Treasuries as the "risk-free," and I use that in quotes, the "risk-free" asset of the dollar spectrum, they're doing so because the US government is the most counterparty, it's the most worthy counterparty that exists, no matter how you want to slice it,

• 12:15Speaker 02

  because it's always relative to the banking system. So then if we progress away from the dollar-centric system, that's when people start to buy gold and Bitcoin as hedges away from counterparty risk altogether, because we know that when you buy a Treasury, you have counterparty exposure to the US government. Now, the US government has never failed on that obligation, which is why people feel comfortable using the term "risk-free." But we do know that there's a denomination risk there and, you know, there is still a political risk there. So gold and Bitcoin provide that alternative. And Bitcoin, you know, I think you and I are on the same page here

• 12:55Speaker 02

  that Bitcoin provides the ultimate hedge away from the dollar denomination. It doesn't mean the dollar is going to collapse tomorrow. It just means it's a way to avoid the exposure to the dollar.

• 13:08Anthony Pompliano?

  Yep. And what's so interesting to me is this idea of the treasuries being hard money. And really, it's a counterparty game, right? So I am betting that the least likely to fail, or the least likely to put me in a position to be screwed, is the US government, right? And I think that people don't quite understand like what would have to be true for that perspective to be inaccurate or to fail as a thesis. I don't want to spend a ton of time on that, but maybe just help folks understand outside of the United States, where maybe their government is not as sought after and trusted and kind of believed in. We've seen where the quote-unquote "hard money" of a other economy

• 13:52Anthony Pompliano?

  or another monetary system has failed. And so walk through maybe kind of like what is the anatomy of when that happens, right? So kind of in the absolute worst-case scenario, if what you deem to be the hard money, or you deem to be that risk-free money actually ends up failing, what does that look like?

• 14:09Speaker 02

  Well, what it looks like is that your purchasing power disappears. So if you didn't have something as the alternative, like physical US dollars, Federal Reserve notes, this second layer of money that I talk about as cash, people abroad in countries that don't have very credit-worthy governments, they actually hold physical US dollars to hedge against that type of collapse. And so if they didn't, if they didn't hold dollars or some sort of precious metal or some hard asset, their purchasing power completely disappears and they're, they're basically going to suffer whatever consequences their government hands down

• 14:53Speaker 02

  in the transition to the next monetary system. So that's why the dollar is so valuable on a worldwide basis outside of the United States, because it does provide that safety mechanism for people.

• 15:08Anthony Pompliano?

  Yeah, and so when we start to think about there's kind of quote-unquote "risk-free" or "better counterparties" rather than "non-attractive counterparties", that all seems to be in the fiat monetary system. You've got this idea of a "counterparty-free" money, right? Which is Bitcoin. Describe the difference structurally between a "good" counterparty, right, kind of that "risk-free" situation, with actually just no counterparty or "counterparty-free".

• 15:39Speaker 02

  Right, so think of a Treasury bond, US Treasury bond as a piece of paper. With that piece of paper gives you the power to redeem every interest payment and redeem the par payment at maturity. That's what a bond is. In that scenario, you still have to take your piece of paper to the Treasury to get cash back for it. So it has, you are exposed to a counterparty. That counterparty is the US government. But if you hold Bitcoin or gold, which is an important example to bring in here just to make it, to illustrate it. If you have a gold coin in your pocket or a Bitcoin private key, which we know is a number,

• 16:24Speaker 02

  you can have the number written down and put in your left pocket and the gold coin in your right pocket. Neither one of those things has exposure to anybody defaulting. The gold coin has value because people will pay for it. They will pay you something else, another form of cash for it. The Bitcoin private key, same thing. The Treasury bond doesn't have that intrinsic value because it eventually needs to be redeemed for cash. And so that's what I mean by a "counterparty-free" money. It's like any, Bitcoin is like any commodity, where if you hold it, you have it. And nobody, like cattle, is a commodity.

• 17:07Speaker 02

  If you have cattle in your ranch, that, nobody can default that cattle to you. The cattle is on your property and you own it. And Bitcoin private keys are numbers and they're a virtual commodity in the same way as any other commodities, as we call it a bearer asset.

• 17:26Anthony Pompliano?

  When you think through kind of the implications for this, let's talk just in the short term on an individual level, what is the advantage and why are people flocking to this versus kind of that risk-free or some of the other bad counterparty examples we talked about?

• 17:47Speaker 02

  I think the answer to that largely comes down to the politics and geopolitics that we see today in the world. There's an inherent distrust of government around the world and there is empirical data that shows governments and central banks show no restraint when it comes to bailouts. And so that type of wealth transfer, that type of money creation, and it's a wealth transfer from party A to party B, but it's also a wealth transfer from the future to today because taxpayers foot that bill. All of those things are driving people to find a

• 18:32Speaker 02

  form of money that doesn't have anything to do with a politician. And Bitcoin gives them that solution. Bitcoin gives them that power. And we in the West, in the United States, we're not intimately familiar with this idea that our currency could be worth nothing tomorrow. If we zoom out far enough, okay, we can have that healthy fear and have a good sense of history. But if you think about people in certain countries in Latin America, they have that fear today, right now. And if they can find a way to rid their current money and accumulate

• 19:13Speaker 02

  Bitcoin, private keys to their smartphone wallet, to their hardware wallet, to any form of custody, self-custody, they are doing their future self a great service by doing that today. And that's also fear-driven. That's not speculative-driven like a lot of people are doing. And I know that Your clients, they're, you know, a lot of them are trying to get in for the technology. They're trying to build products and they're also trying to speculate that this is going to be the winning technology out there. People in Latin America, they're not speculating on which technology is going to win. They know Bitcoin has market value. They know it has worldwide liquidity.

• 19:56Speaker 02

  And they want it as their primary form of money. And so we really have to step into the shoes of people abroad to empathize with them about why they want Bitcoin.

• 20:09Anthony Pompliano?

  Yeah, and it's really fascinating to me when you then go from the individuals. So let's say maybe we move kind of along the spectrum of organizations to now we get to the banks and the financial institutions. Right? So we're still not talking about the governments and the central banks. We're not talking about individuals either. What's the advantage to them, right? We saw the recent OCC announcement, for example, that really said, hey, banks, you can custody these assets. You don't just have to custody those kind of quote unquote, risk free or counterparty money. You now can actually go ahead and do it with this counterparty free money. So what's the impact on those financial institutions?

• 20:47Speaker 02

  What what the OCC just said was basically that you can now use Bitcoin and associated technologies for value transfer between yourselves in the banking system. So the rails themselves to the banking system where we're used to SWIFT and what we call Fedwire, these ways that banks send messages to each other in order to transact. They can now replace that completely with Bitcoin and their own stablecoin crypto infrastructure. And I mean, that is incredibly powerful, you know, as long as they follow the banking law was what the ruling said. As long as you follow banking law, you can use Bitcoin to transfer money back and forth to each other.

• 21:32Speaker 02

  And whether they want to denominate it in Bitcoin on their own balance sheet or strike everything in dollars when they transfer, it doesn't really matter. The truth is now that Bitcoin is starting to replace SWIFT. And and cryptocurrency technology is replacing this old messaging technology that the financial system is heavily reliant upon. So it is a very powerful thing and it doesn't directly impact, I would say, like the demand for Bitcoin explicitly, this rule. But what it does impact is, first of all, it's a green light from the United States government that says you can use Bitcoin. You can use these types of technologies.

• 22:15Speaker 02

  They now call it a independent node verification network of IVN, whatever, INVN. And so these INVNs, now the government has a way to describe Bitcoin in their own vernacular. These INVNs, like Bitcoin, can be used legally. And it's, it says a lot about how banks are going to deal with this technology in the future.

• 22:42Anthony Pompliano?

  Yeah, it's absolutely fascinating. If we kind of continue down this path, eventually we end up at central banks and kind of fiat governments. What I think most people have thought for a while is central bank digital currencies will be the response to Bitcoin and other kind of crypto assets. The central bank digital currencies appear not to be different in monetary policy. They appear to be the same monetary policies, just in a new technology form factor. So in some ways, it's kind of putting lipstick on a pig. Do we get in a world where there's coexistence between CBDCs and Bitcoin? Do we get in a world where Bitcoin replaces the fiat currencies and central banks have

• 23:26Anthony Pompliano?

  to adopt Bitcoin? Do we see a world where fiat currencies are now pegged to Bitcoin? Like, how do you just see this playing out in the two worlds of central bank digital currencies and Bitcoin colliding, coexisting, or kind of however we end up there?

• 23:41Speaker 02

  Yeah, so I definitely think that they are going to coexist. And the conclusion of my book is called Freedom of Currency Denomination, where it's an idealistic view of the future in which people can hold Bitcoin as a neutral, counterparty-free money. They will hold central bank digital currency because it's the currency they receive benefits.

• 24:05Speaker 02

  in and pay taxes with and they'll also hold stable coins or other bank issued liabilities in order to get a membership rewards in order to accrue interest to theirs to themselves. So I do view the future as a world in which a lot of currencies can coexist. I and I do think that central bank digital currency. So there are a couple of things there. Let's talk first about what CBDCs will look like and are they actually an invention in monetary policy? Or no, are they just lipstick on a pig like you like you described?

• 24:43Speaker 02

  Well, if they come in the form of wholesale money, which is like Fed reserves, money that they issue to banks, then you're absolutely right. There's no innovation there. It's just replacing one tool with another that, you know, mirrors each other. However, if they issue a retail facing CBDC, which is like digital cash that you and I can hold in our JP Morgan Chase app digital wallet, where we can have Fed coins in there. And I do think that that will eventually happen in the United States and in other currencies, even if the wholesale option is done first in order to test the technology.

• 25:28Speaker 02

  In the future, if that is the case and people are able to have CBDC in their wallet, Bitcoin in their wallet and, you know, bank coins in their wallet all at the same time, then we will have a world in which Bitcoin is the true ultimate form of digital scarcity. And all other forms of money will find their base price in Bitcoin, including central bank digital currencies. And so then one other aspect of your question is, will central bank liabilities and digital currencies be pegged to Bitcoin? Yes, I do believe in some countries they will do that.

• 26:07Speaker 02

  Well, they'll have a portfolio of Bitcoin and their open market operations will be basically buying and selling Bitcoin for their CBDC to try to maintain a peg. And I do think that that is possible and likely in the future. And remember, we have a couple hundred central banks around the world, or over a hundred central banks. So we are going to get different responses, and I'm excited to see which central banks are going to pave the way. We all know that the Fed will be slower than the rest to act. They'll, you know, it looks like they're going to be last of the big countries and the big central banks to enter this arena. But, you know, it'll be interesting to see how it all unfolds.

• 26:51Anthony Pompliano?

  One of the things I've been thinking a lot about, and I don't know necessarily if I have complete thoughts fleshed out, but is obvious to me, at least where we stand today, is you, I, and most people around the world live in a single currency kind of environment, right? I get paid in the US dollar, I save in the US dollar, I invest in dollar-denominated assets, I pay my taxes in dollars, like my life is in dollars. And if I'm going to leave geographically the United States, and maybe go somewhere else, for an everyday citizen, I will exchange my dollars into that local currency. I'll do that at the bank or through a currency exchanger at the airport. But that's basically kind of my life is a single currency.

• 27:32Anthony Pompliano?

  Part of that is because I get paid in it, and the assets around the air are denominated in it, and taxes are paid in it. But another part of it is that there's actually a very high switching cost between going from dollars to anything else. I gotta go to the bank, or I have to go to that currency exchanger. When we have CBDCs across the world, so every currency is digitized, whether it's dollars, euros, yen, R and B, whatever you kind of can pick, the friction goes down drastically, almost to zero, because now with the click of a button, I can switch from dollars to any other currency, whether it be a decentralized kind of digital currency like Bitcoin, a private currency maybe like Libra, or a state, nation-state backed currency, like a digital euro, for example.

• 28:17Anthony Pompliano?

  What impact does that have on life for an everyday person, right? When all of a sudden the switching cost drops dramatically and you can live a multi-currency life rather than a single currency life? Like, is that a material inflection point in any way? Or is that something where theoretically, yes, that will be possible, but most people will still just kind of live their life in a single currency and most things won't change?

• 28:38Speaker 02

  Well, I agree with you. I think that it's a very powerful development that will happen. And what we'll see is that all digital currencies worth their while will have interoperability with Bitcoin at the very minimum via the Lightning Network with atomic swaps. And so we'll be able to instantly transfer or exchange one Bitcoin for everything else in the digital spectrum and vice versa. And that will empower this dual denomination where I don't think people will have several denominations, but they will have two. They'll have their home and they'll have Bitcoin.

• 29:22Speaker 02

  And I think that a lot of Bitcoiners are already starting to think in a dual-denominated way. We can see that corporate treasurers are starting to think in a dual-denominated way. And as long as these digital currencies keep developing on this track where they'll have this interoperability with Lightning Network and atomic swaps, I think all of that will continue and friction will reduce, like you described. And it's a world where people are a lot more mobile with their money. And in layered money, I do describe this as a map, as a topography. And we have to be able to navigate between monies in the future.

• 30:07Speaker 02

  That's not, like you were saying, that's not something that people ever thought about 10 years ago, is that, oh, you know, how should I think in two different denominations at the same time? But...

• 30:21Speaker 02

  You know Bitcoin and this ability to exchange traditional currencies for cryptocurrencies in the future does enable all of that.

• 30:31Anthony Pompliano?

  For sure. Before we wrap up, I want to kind of zoom out for a second and look forward 25 plus years. Bitcoin seems to structurally be set up in a way where as more and more people adopt it, you'll get more liquidity, as you get more liquidity, you'll get more utility. And so it's kind of just getting started in many ways. There's also plenty of alarm bells and kind of red flags in the legacy system, whether it's in the United States or elsewhere. Again, kind of just structurally, the way that the monetary system is set up, it appears not to be overly sustainable, especially when humans can continue to intervene and manipulate markets and systems. Where do you see us 25 plus years from now, right?

• 31:14Anthony Pompliano?

  So kind of, I think in long term, what does that world look like to you? Or what are you hoping that we can kind of achieve?

• 31:22Speaker 02

  I think that we will get back to an era in which Bitcoin, like gold in the past, is the true neutral settlement mechanism of the world. And all currencies that exist today will likely exist. So let me hedge that a little bit. I think fewer currencies will exist in 25 years, government currencies that exist today. Bitcoin will exist and will be the dominant, most desired reserve asset, regardless of country or anything, it'll be the most desired in the world.

• 32:04Speaker 02

  And you'll also have, you know, a free market for other currencies. There'll be cryptocurrencies, stable coins issued by banks, stable coins issued by corporations, other types of tokens that are issued by entities that don't necessarily fall into any jurisdiction anymore, you know, other forms of decentralized currencies. I think all these currencies will exist with each other. We'll have less government currencies, the dollar, the euro will still exist, the red minbi will still exist. They'll all be digital, they'll all be digitized and and bitcoin will be that measuring stick for every single currency in the digital realm, in the digital realm. And I do feel that bitcoin will

• 32:49Speaker 02

  reach some sort of steady state in terms of its overall market capitalization, somewhere in the, you know, many trillions, ten plus trillion as we get there. And we can use the size of the stock market, the real estate market as context for that. Not everybody is going to sell their apartment buildings for bitcoin. Not everybody's going to sell their gold for bitcoin. Not everyone's going to sell their stocks for bitcoin. And people are going to sell their bitcoin for all those other things as the price rises. So there'll be an equilibrium and that will take, I think, about twenty five years to get to.

• 33:27Anthony Pompliano?

  Got it. Where can we send people to find the book Layered Money?

• 33:32Speaker 02

  Okay, so Layered Money, I got it right here. It's a short read, guys. You'll get through it in one day if you focus on it. I, you can find it on Amazon, Layered Money. You can find me at LayeredMoney.com and I have the links to Amazon worldwide and other places. So please go check out the book. You can follow me on Twitter at Time Value of BTC. But I really hope that you'll go read the book. It's on Kindle and in paperback and hardcover. And I know there are a lot of audiobook people out there. The demand is insane, the number of requests for the audiobook. The audiobook is coming. It'll be out in a couple of weeks. So stay tuned for that. You'll be able to find it on Audible.

• 34:16Speaker 02

  But right now, just the print and the ebook for you guys.

• 34:19Anthony Pompliano?

  The audiobook folks are absolute savages. They do not relent. They do not relent. Before I let you go, I always ask everyone the same three questions and you'll get to ask me one at the end. The first question is, what's the most important book that you've ever read? And you can't say your own book, but what's the most important book you've ever read?

• 34:38Speaker 02

  Yeah, so I'm gonna give a shout out to Jim Rickards Currency Wars. This is a book that I read in 2010, 2011, when Kiwi was just getting underway. And it really helped me see the history of the dollar and gold and its importance. So, you know, a lot of respect for that book in, in opening my eyes in a lot of ways about the monetary system.

• 35:04Anthony Pompliano?

  Amazing. Second question is a little bit more personal. It's about your sleep schedule. And this question is brought to you by our friends at Eight Sleep. The founder, Mateo, he, he hounded me until I started to sleep more. And they've got this like thermo-regulated bed, which basically just means it keeps it really cool for you. And it helps you sleep better. My life got changed when I started to sleep more. Are you somebody who sleeps three or four hours? Or are you somebody who sleeps like 10 hours? Where, how do you kind of put yourself in that spectrum?

• 35:33Speaker 02

  No, I get a good seven, eight hours of sleep. I'm definitely an early riser. At being in LA in the bond market, I had to be on the desk at 5:30. So I had to be up at about 4:15. And I still, I'm not up at 4:15 every day, but I'm still up before 5:00 most days. And I'm, I'm to bed early to make sure I get a full night's sleep. Not when I was writing the book, though. I was up, I was up till past midnight, which is late for me because I still get up at 5:00. So past midnight every night, trying to hammer this thing up.

• 36:04Anthony Pompliano?

  Gotta get your sleep, man. I'm a believer. I feel like I'm an evangelist for sleep now after, after getting eight hours every night for so long. If I get like seven, I'm like, oh, man, I'm feeling it. Uh, third question, and then you'll get to ask me one is more fun. Aliens, are you a believer or a non-believer?

• 36:23Speaker 02

  Definitely a believer in aliens. Um, not based on physical evidence, but just on the probabilities.

• 36:31Anthony Pompliano?

  What do you think is more likely that they just exist somewhere out there and it's not like the green men in the movies and you know, who knows what it could literally just be, you know, kind of the equivalent of like a worm or something like that? Or do you think that it's more likely that some of these conspiracy theories about spacecrafts or UFOs or whatever are true?

• 36:52Speaker 02

  I think it's more likely that that our species has had an interaction with aliens than than

• 36:59Anthony Pompliano?

  You think so?

• 36:59Speaker 02

  I think it's more likely that than than not. And that's just kind of based on these drawings and things from, you know, the Hindu religion with flying chariots and things like that. So, you know, maybe thousands of years ago, we did have some interaction.

• 37:15Anthony Pompliano?

  Yeah, it would absolutely wild if we could confirm that for sure. You could ask me one question to finish up. What you got for me?

• 37:22Speaker 02

  Okay, so when when you go on CNBC and you're on Fast Money with these guys, and I know that it's your mission to to keep your cool, and what what has been the closest you've ever been to being totally triggered and just like losing it for the maybe the anti Bitcoin propaganda that might come from the network sometimes?

• 37:49Anthony Pompliano?

  I've never even come close, which may be surprising to some people. So the one secret that I have is I grew up in a family with four younger brothers. So there's five boys in my family. And people always ask me, they're like, hey, you know, one, how do you keep your cool? Two, like, how do you have such like, kind of witty, immediate responses? And I'm like, it's basically like me and my brothers just talking shit to each other, right? Like, like, if you put us all in a room and we all start talking, like, literally, it's just snark and like, everyone is just kind of zinging each other. And so when you get on television, like, it's pretty similar, right? It's just, maybe I don't know them as well. And maybe, you know, you got to kind of not curse and there's some boundaries to it. But to me, it's more of like a game, a little bit, right? Like,

• 38:33Anthony Pompliano?

  I don't take anything that they say personally. I don't think they take anything that I say personally. Generally, now, most of the hosts For the most part, like they're actually pretty positive and welcoming when it comes to Bitcoin. And so I think that like, one, the sentiments change. That makes it easier. Two is you have to remember it's like entertainment as well, like, you know, Kevin O'Leary and I have gotten to know each other and he's fantastic. And I really enjoy kind of spending time with them. But then, you know, he'll tell me before we go do it, he'll be like, and don't worry, I'm gonna treat you like the little, you know, rat that you are tomorrow. And it's like, okay. And so, you know, you gotta just remember like it's fun.

• 39:13Anthony Pompliano?

  I have a blast doing it, so I keep doing it. And so I think it's less, it's less likely you become triggered and upset when you kind of keep that mentality.

• 39:21Speaker 02

  Yeah, well, you do a great job and you set a good example for all of us.

• 39:26Anthony Pompliano?

  No, I appreciate it very much. So, all right, let's send people if you, if you want, I've actually got the PDF version. I read through the book. It's fantastic. Layered Money. Please go get the book. Just Google it, go to Amazon, or you can go to, is it layeredmoney.com? Is that correct?

• 39:43Speaker 02

  That's right, layeredmoney.com.

• 39:45Anthony Pompliano?

  All right, man. Listen, Nick, thank you so much for doing this. We got to do it again in the future.

• 39:48Speaker 02

  Thanks, Paul. I appreciate it.