#711 The Psychology of Bitcoin and Crypto Markets w/ Geoffrey Miller

Geoffrey Miller is an American evolutionary psychologist, author, and Associate Professor of psychology at the University of New Mexico. He is known for his research on sexual selection in human evolution. In this conversation, we discuss bitcoin, crypto markets, psychology, behavioral economics, the innovator’s dilemma, and how to convince the oldest generation to take the orange pill. . ======================= With 10M+ users, Crypto.com is the easiest place to buy, and sell 100+ cryptocurrencies. The Crypto.com Visa Card gives you up to 8% back instantly, and 100% back on Spotify and Netflix. Also, Crypto.com lets you earn up to 8.5% p.a. on BTC, and 14% p.a. on stablecoins. Get $25 when you download the Crypto.com App with code "pomp". Download the App now: https://crypto.onelink.me/J9Lg/pomppodcast2021 ======================= Matrixport is Asia’s fastest-growing digital asset platform founded by crypto veterans Jihan Wu and John Ge. With $10 billion in assets under management and custody. Matrixport offers one-stop crypto-financial solutions including fixed income, Defi in 1-click, structured products, Cactus Custody™, spot OTC and lending. You can earn a high double-digit yield with the Dual Currency Product or opt for the lucrative potential of our new product, Range Sniper. If you hold crypto and are actively looking to do more with your precious asset, then this app is one you don’t want to miss. Download the Matrixport App and enjoy a welcome offer of 30% APY on Fixed Income for new users. Visit invest.matrixport.com/en today. ======================= MiamiCoin is the first token to be released by CityCoins, a community-driven project built on Bitcoin. CityCoins aims to give people around the world a new way to support their favourite cities. The protocol has already generated over $7 million dollars in donations to the city of Miami and continues to grow every day. If you want to get involved Follow @minecitycoins on Twitter to stay up to date with the project. Visit chat. CityCoins.co to join the community discord and contribute to the movement.

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

• 0:02Anthony 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. Now let's kick this thing off. Jeffrey Miller is an evolutionary psychologist, author, and associate professor of psychology at the University of New Mexico. He is known for his research on sexual selection in human evolution. In this conversation, we discuss Bitcoin, crypto markets, psychology, behavioral economics, the innovator's dilemma, and how to convince the oldest generation to take the orange pill. I really enjoyed this conversation with Jeffrey, and I hope you do as well. Before we begin this episode, though, I want to quickly talk about our sponsors. First up is Crypto.com. They're helping to mainstream the crypto industry, signing major global

• 0:45Anthony Pompliano?

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• 1:27Anthony Pompliano?

  and Amazon Prime subscriptions. You also can get $25 when you download the Crypto.com app today using the code POMP. Again, $25 when you download the Crypto.com app and use the code POMP. Go click on the link in the description, or go to the App Store and search Crypto.com, then use code POMP and you'll get 25 bucks. Let me know what you think. Next up is Matrix Port. Have you lost your way in this low-yield environment while searching for a better store of value to beat inflation? Look no further. Invest with Matrix Port to get more from your crypto. They have very high rates of annualized yields on certain products. Matrix Port is Asia's fastest-growing digital asset platform founded by two crypto veterans. They have over $10 billion in assets under management and custody.

• 2:10Anthony Pompliano?

  Matrix Port offers one-stop crypto financial solutions, including fixed income, DeFi in one click, structured products, Cactus custody, spot OTC, and lending. You can earn high yield with the dual currency product or opt for the lucrative potential of their new product, Range Sniper. If you hold crypto and are actively looking to do more with your precious assets, then this app is one you don't want to miss. Go download the Matrix Port app by clicking on the link in the description or go to matrixport.com today. Matrixport.com, go. Let me know what you think. Last, but not least, are my friends over at Miami Coin. Miami Coin is a brand-new offering that has come to guest, you guessed it, Miami. As you may have heard, when we had Miami Mayor Francis Suarez on the show to talk all things

• 2:55Anthony Pompliano?

  Miami, including his excitement for a project, Miami Coin. It is the first token to be released by CityCoins, a community-driven initiative built on Bitcoin. CityCoins aims to give people around the world a new way to support their favorite cities. In short, the city of Miami was given $7 million and counting by private citizens to improve the city with no strings attached. A city government embracing crypto instead of fighting is a historic event. Do you want to get involved? Go follow them on Twitter at MineCityCoins, at MineCityCoins, or go to CityCoins.co to join the community Discord and contribute to the movement. CityCoins.co. All right, let's get this episode with Jeffrey. I hope you guys enjoy this one.

• 3:35Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:58Anthony Pompliano?

  Jeffrey, I think that we've got you here now. How are you?

• 4:01Speaker 02

  I'm great. Great to be here. Thanks for having me.

• 4:04Anthony Pompliano?

  For sure. Let's just start one with, you've got a very unique, multidisciplinary background. Maybe walk us through, when somebody says to you, "What the hell do you do all day?" How do you answer? Like, what is, what is the way that you evaluate both the disciplines and kind of experience and skillsets, but also your personal interest?

• 4:21Speaker 02

  I just try to understand human nature. It's really pretty simple. I've been doing this thing called evolutionary psychology for about 30 years. And so I'm a psychology professor at University of New Mexico. And my research is pretty, it's pretty broad, you know?

• 4:37Speaker 02

  I have like a limited attention span, so I like to work on topics for a few years at a time. And so I've worked on a variety of stuff like human sexuality and mate choice and how we fall in love and how we choose our partners. I've worked a bit on individual differences like behavior genetics and intelligence and personality traits, done a bit on consumer behavior. And, you know, after 30 years of kind of studying human decision making, I finally, finally got into crypto about a year ago. And that's, that's my new passion. We'll see how long it lasts.

• 5:11Anthony Pompliano?

  What is so interesting to you about Bitcoin and cryptocurrencies? Like, there's so much stuff that you do that I find fascinating, everything from what I would consider like traditional research just around human decision making, behavioral economics and that stuff, to even more of the like, what some people would consider the more controversial stuff and viewing, hey, we live in this mad, crazy, insane world. But cryptocurrencies, like, why is that the thing that now you're so interested in?

• 5:36Speaker 02

  I can, I can sort of look at the crypto space wearing a number of different hats. So one hat is just, as a behavioral scientist, what's going on with crypto? It's an exciting movement. It's also psychologically really confusing. And there's a lot of aspects of crypto that are extremely counterintuitive. Like, how do people think about value and networks and security and decentralization? And how do these protocols actually work? What's the kind of underlying game theory of how do you get, you know, consensus mechanisms that are resistant to attack? So there's kind of this like psychology of, of how people understand crypto. Another hat

• 6:18Speaker 02

  is just as an individual investor, how do you face the very, very steep learning curve of trying to understand what the hell is this industry? How does it function? How do you distinguish, you know, a good, solid project from a shitty meme coin? How do you kind of work your way into the industry without, you know, getting wrecked and losing everything? And then a third hat is just at a kind of social and political and cultural level. What's going on with crypto? How does it challenge traditional finance and vested interests? And what are the full kind of cultural and political implications? So all three of those are absolutely fascinating to me. And I love getting kind of red pilled by new

• 7:04Speaker 02

  You know, human phenomena, and I think crypto, no matter what you think of it as a movement or as this sort of investment domain, is absolutely fascinating if you have any interest in human nature or psychology.

• 7:20Anthony Pompliano?

  So let's start with a third one first. This idea of challenging the establishment, challenging the incumbents, whether they're just financial firms or something much bigger. How do you think about evaluating the current new technologies that we have versus that like old legacy world?

• 7:37Speaker 02

  The funny thing about the old legacy world, the way that fiat currency works, the way that banking works is it's really hard to understand the legacy world until you understand crypto, right? Because you just take the legacy finance world for granted. You just kind of think that's the state of nature. Obviously, that's how capitalism and finance and money and pensions should work. Because there's no contrast, there's no alternative. Once you get a serious contrast, a sort of alternative system, then you can start to kind of pick apart the legacy system and understand, oh, my gosh, like here's banking. Here's why Wall Street and banking have certain kinds of lobbying.

• 8:20Speaker 02

  Here's why they have certain kinds of political influence. And here's why it's oppressive and kind of constraining to people. So I kind of felt like crypto blew my mind about that because, you know, I've like worked in an economics department for four years at University College London, surrounded by people who do behavioral economics work. And in a way, they kind of know less about the existing finance system than even kind of crypto newbies who have just read a little bit, like, you know, Bitcoin Standard or watched your show for, you know, a few hours.

• 8:57Anthony Pompliano?

  And so when you think about that maybe difference in education, is it because they are incentivized not to understand? So if you're sitting at an academic institution, whether you're sitting in an elected official position or in an appointed position, let's just call them kind of the academics and theorists, if you will, rather than the market participants, is it a you're disincentivized from learning? Is it you don't need to? So you're almost complacent? Or do you actually understand? And you're better off not letting on the fact that you understand because that would then the game would be up, if you will?

• 9:28Speaker 02

  I think it's mostly just you're surrounded by group think, you're surrounded by like minded people who've all taken the same, you know, 200 level macroeconomics courses that say, this is how money should work. This is how you should manipulate the money supply in order to deal with financial crises, or promote growth, or manage unemployment. And if you get, you know, A's in macroeconomics, and then you become like a finance person, or a banker, or an economist, you figure, well, I got the seal of approval from traditional econ, I must know what I'm talking about. And everybody around me thinks the same way. So stepping outside of that is

• 10:11Speaker 02

  very difficult, because you're you're subject to immense professional pressures to kind of conform to that worldview. If you start talking about alternatives, you know, everybody you know, thinks you're kind of crazy. And also, you've got heavy professional disincentives not to make noise about that, because it'll limit your career options. For example, if you're an economist who wants to like advise governments about things, you kind of have to buy into like the IMF fiat worldview about these things.

• 10:42Anthony Pompliano?

  When you start to look at the behavioral economics of all of this, there's a lot of talk of game theory, right? Of kind of Bitcoin is inevitable. People have to adopt it at some point. And I think when people were saying that in 2010, 2011, 2012, that was like a pipe dream. And even the people that were involved then were like, yeah, I mean, we kind of believed it. But you know, that was kind of crazy idea. Now it seems to be playing out. We've got individuals in now, we've got financial institutions, we're starting to see some public corporations, we have one nation state that's made it legal tender and really started to kind of embrace it. Is this? Using history as like a guide, of course this was gonna happen, of course this is like the natural progression of something, or are you surprised by this given kind of the the mental models and experience that you have in some of these disciplines?

• 11:27Speaker 02

  The game theory here is really complicated, so there's kind of one level of game theory, which is at the protocol or consensus level of how do you keep any given protocol like, you know, Bitcoin or Ethereum or Cardano resistant to specific kinds of attacks? But then there is a larger kind of political game theory, which is, how do you get enough buy-in from existing power structures, including regulators and nation-states, so that they can't mess it up? So that, for example, enough politicians are personally invested in Bitcoin, or have family wealth in Bitcoin, that they no longer have the personal or political incentives to attack it really hard.

• 12:09Speaker 02

  As far as I can tell, there's a lot more game theory applied to kind of, how do we keep, you know, Bitcoin safe from a 51% attack, than there is game theory applied to that larger political issue? Or the issue of like, the sort of intergenerational thing of, how do you convince rich boomers to actually invest in crypto, rather than just young people who don't have any money, or middle-aged, you know, guys like me who have like, a little bit of money, and a little bit of understanding? So, when you're doing game theory and you're thinking, how do we make this crypto protocol resistant to attack? Attacks can come from many, many levels.

• 12:50Speaker 02

  It could be political regulation, it could be a kind of cultural level attack, like, if crypto somehow got associated with certain taboo beliefs, right? If it was smeared by association with certain unacceptable cultural associations, then nobody would want to own crypto, because the social cost would be too high. So when you're thinking about the game theory, you have to be very inclusive in thinking, what are all the possible vectors of attack that could mess up the crypto industry?

• 13:26Anthony Pompliano?

  When you think about, let's take the oldest Americans, the people who have the most capital, kind of that boomer generation, what would be your way to get them into this, get them familiar with it and get them to adopt? Like, what is the game theoretical way to say, okay, let's get the people who have the most money and have the most experience, let's convince them that this is the future?

• 13:47Speaker 02

  I think that's like literally the $10 trillion question, because the amount of assets that people over 60 have is vast, it's enormous. And if they started allocating even, you know, 5% or 10% into crypto, it would be an absolute game changer and it would kind of lock in crypto financially and politically in a big way. I think, you know, old people tend to be avoidant of novelty and avoidant of risk. So the big things you have to overcome are crypto is really, really confusing and counterintuitive at a psychological level.

• 14:29Speaker 02

  I've worked in a number of different fields and I've learned about a lot of new fields in my sort of career as a researcher. And what I've noticed is if you're like new to an academic field, the fields that are easiest to learn about are those that have taken pains to reach out and write like popular accessible books that are kind of pitched at a medium level of understanding. And I think that's what's missing in crypto. What you have on the one hand is a lot of populist outreach where like it's easy to watch YouTube videos by crypto YouTubers, kind of doing a surface level, you know, analysis of like, here's this new token and here's the technical analysis of it and you should buy it.

• 15:14Speaker 02

  And on the other hand, there's the incredibly deep technical details like read this white paper, learn how to run a node, you know, figure out exactly how the consensus protocol and the tokenomics works. That's really hard. What you're missing is the kind of middle ground where you have sort of books or blogs or videos that explain things in a pretty, pretty serious, but pretty accessible way to reasonably smart boomers who have vast amounts of money, but they're not going to invest in something just because some 25 year old YouTuber says it's good. So I think that's what's missing. We need a lot more material at that kind of medium level of like, it's serious and it's accurate, but

• 15:58Speaker 02

  it's accessible to people who didn't do PhDs in computer science.

• 16:03Anthony Pompliano?

  So when you start to think about that group getting in, those are also the same people that end up controlling a lot of the wealth at financial institutions, pension funds, endowments, foundations, like the whole institutional asset management world, all the way up to sovereign wealth funds. Is a thought process that once you start to kind of red pill or orange pill the boomer generation, then all of a sudden, all those institutions, they start to go kind of all in on this industry because they do it first personally and then they move their institutional assets?

• 16:32Speaker 02

  Yeah, I think if you orange pilled a significant percentage of boomers and they started going to their financial advisors and their pension funds, and you know, if they have a family office, if they have significant wealth, if the family offices start talking to the banks and they go, why can't we get exposure to this industry? Come on, you've got a fiduciary duty to allow us to invest in it. Why aren't you doing that? I think that's when the existing finance industry has to start taking this seriously. You know, if you've got a bunch of 30 year olds sort of writing emails to their banks saying, you know, I'm frustrated that you guys are making it hard to invest in crypto, banks don't

• 17:15Speaker 02

  care. If you've got a bunch of boomers calling up their kind of financial advisors going, why don't you know anything about this? You have a professional duty to learn more. That's an enormous source of leverage because it's not just in the financial interest of the Financial advisors to learn about it. It appeals to their, their kind of professional ethos. I really should respond to my clients, you know, these orange pill boomers and learn about this stuff. And I, I think that's one possible path to, to serious mass adoption and kind of integration of legacy finance and crypto.

• 17:59Anthony Pompliano?

  When you start to look at the legacy system, you had this great tweet at one point around fiat currency. It just makes me laugh when I read it. He said fiat currency is the intergenerational Ponzi scheme. Your great grandkids won't thank you for buying into it. Explain this more.

• 18:15Speaker 02

  Well, I try to take a very long-termist perspective. You know, I'm pronatalist. I think about future generations. I, I'm concerned about the long-term viability of civilization. I'm interested in kind of existential risks to humanity and civilization. So I'm always thinking, how will this play out in future generations? And even young people kind of understand, oh, if I have kids and grandkids, I will love them and I will care about them and I will become more interested in their future. But somehow that future orientation, that long-termism doesn't really translate that

• 18:55Speaker 02

  well into a lot of financial decision-making or into motivation to, to learn about how does money work? How does finance work? So when I do these tweets, I'm kind of trying to nudge people to think about, how can I connect my, my family's future real life interests to, you know, how I bother to spend my time learning about new topics? And I think, you know, every dad, every mom, every grandparent has a kind of

• 19:28Speaker 02

  Duty to their family legacy to get serious in terms of learning about fiat versus crypto.

• 19:35Anthony Pompliano?

  Another piece of this that I feel like is tangentially related is we obviously have the fiat currency through being devalued that ends up leading to this whole debt and the monetization of the debt and kind of where we've backed our central bankers and politicians into a corner. They have no other choice other than to go ahead and continue to do this. So that brings up the question, how do they fund it? And it always feels good to say, well, we're going to take money from rich people, right? And so specifically around this idea of unrealized capital gains, you have a tweet that says unrealized capital gains. One, they aren't gains. And two, are none of the government's business. I tend to agree with you, but walk me through how you evaluate kind of that entire conversation? And like, it feels almost like, of course, we should expect them to have the conversation.

• 20:18Anthony Pompliano?

  But my general take is that it's never going to actually be implemented, you know, at least in the current formula they're talking about.

• 20:23Speaker 02

  There's a couple of key problems here. One is just innumeracy. People don't understand numbers and they don't understand like how much wealth rich people have, which is vast, but it's not vast enough to cover federal spending for very long. Okay, so there's just a failure of what's called scope sensitivity, understanding the relative scope of like billions versus trillions versus tens of trillions. So people are just delusional in thinking that like, you know, Elon Musk could just allocate a tiny percentage of his income and like solve world hunger, right? That's not how the math works. So, you know, the failure of public schools to teach numeracy is one issue. There's also just kind of economic

• 21:08Speaker 02

  vengefulness and bitterness and resentment where like, some people are very rich and I'm not, and so I want to take them down. And there's a deep seated kind of primal human nature aspect to this that, you know, when you live in little clans, if there's like some domineering narcissistic alpha male, everybody wants to get together and kind of take them down, right? And reduce their arrogance. And that plays out politically in the kind of politics of economic resentment. But it just doesn't work practically. You can't tax the rich.

• 21:46Speaker 02

  Enough to actually pay for every, the entire welfare state of the sort that like, certain political parties are advocating. The math just doesn't work.

• 21:56Anthony Pompliano?

  When you start to think about the digital world, the digital world to me is a replication of the analog world, right? For the most part. And when we talk about human behavior, or one of these ideas that you talk a lot about of like evolutionary consumer psychology, is the digital world different? Like, are people going to act differently, think differently, or kind of execute certain actions differently in the digital world? Or is it actually a carbon copy of what we've seen for thousands and thousands of years of human history is now just going to get carried out in like a digital form?

• 22:30Speaker 02

  It's kind of hard to tell, but if I had to bet, I would predict that a lot of our, our basic human preferences and motivations will stay relatively constant. And then they'll just be manifest in all these new digital ways. For example, we seem to have an unquenchable desire to kind of be attractive and to show off our, our status and our attractive traits, and to show off our intelligence, to show off our moral virtues. And I wrote about this in my book, Spent, that that translates in the consumer world to predicting kind of what we buy, why we buy it, why we love branded goods, why we associate so closely, you know, certain brands with certain kinds of values and personal attributes. Like, oh,

• 23:11Speaker 02

  I'm into Apple, so I'm like, open-minded and progressive and liberal, whereas those people who are into like Microsoft are more conservative and closed-minded. And the way this will play out, I think in the digital world, like, let's say, virtual reality, or meta, or whatever, is basically like you'll take human instincts for being attractive and showing off. Like, 100,000 years, we might have put red ochre, iron oxide pigments all over our body and made body ornamentation. Now it'll be buying NFTs and digital avatars that make us look cool in virtual environments. But I think the underlying human motivations

• 23:54Speaker 02

  and kind of instincts aren't likely to change that much. I could be wrong, but, you know, if I was making financial bets, I would say, this, this desire to signal who you are, and why you're cool in the digital realm. That's just a limitless motivation that people have and it's very easy to monetize it.

• 24:20Anthony Pompliano?

  Is it fair to say that there is an entire investing strategy that has legitimacy? Where you essentially just look at how do people want to flex or show that social status in a digital realm? And if you can basically get to those items or those things first, then it is likely that you will quote unquote make money. Which feels like in the legacy world, that's not necessarily the case. If I go buy a Ferrari before you buy one, actually I lose money, right? Because it's a depreciating asset. In this new digital world, it feels to some degree if there's a Ferrari equivalent and I get there before somebody else, the financial gain is different. It's not just about can you flex it for social status, but there's also like a financial aspect?

• 25:02Speaker 02

  Yeah, exactly. I think, I hadn't really thought about that before, but I think you're right. If you can find bets on, you know, companies or protocols that are providing ways that people can flex, any of their traits that they might want to show off to other people.

• 25:20Speaker 02

  And people can send these signals in a way that's kind of reliable and hard to fake, right? This is what NFTs did. Once enough people understand how NFTs work and how ownership of these digital assets is reliable and is hard to fake. Then I think this could easily become kind of a major way that people kind of show off their, their identity and their values and their traits to each other. So this intersection of NFTs and gaming, I don't fully understand it. I'm not personally invested in it. But if I was smarter and younger, that's probably be, that would be where I would, I would pay a lot of attention. Because that seems to be like the future of social signaling.

• 26:04Anthony Pompliano?

  Yeah, I, I tend to think that there's a lot of people paying attention there and, and they agree with you. Joe, what questions do you have?

• 26:11Speaker 03

  Yeah. So you talk a lot about censorship and free speech and things along those lines. I just wanted to get your opinion on kind of where you think those issues stand today in America.

• 26:21Speaker 02

  I'm a little pessimistic about the free speech situation because, you know, I've been fighting for free speech in academia for a number of years, at least six, the last six or seven years pretty actively and, and both through social media and within, you know, the universities that I, I work with.

• 26:40Speaker 02

  There seems to be a widespread ignorance about basic civics. Like, it seems like there's a couple of generations that just didn't get taught about the First Amendment and what it means and why free speech is important and how it works. And so, you know, if you follow the organizations that try to promote academic free speech, like Foundation for Individual Rights in Education, FIRE, or Heterodox Academy, you just keep meeting the same kind of ignorant opposition again and again and again. People just don't understand how free speech works, how constitutional law works.

• 27:19Speaker 02

  So I'm kind of pessimistic that it's, that you can kind of re-educate a couple of generations that kind of don't get it and don't value it. I think what it'll take is alternative institutions. I think it'll take far-sighted, rich people and billionaires establishing new universities, new media companies, new ways of sharing ideas.

• 27:45Speaker 02

  Hopefully, you know, if we have enough school choice, new K through 12 schools and school franchises that have different values, that are a little more libertarian and a less, a little less preachy.

• 27:57Anthony Pompliano?

  John, what questions you have?

• 27:58Speaker 04

  Yeah, Jeffrey, nice to meet you. Thank you for coming on. I'm curious, can you talk about like the psychological aspect of investing and kind of the shift that boomers have traditionally saved and then this younger generation of millennials are investing? Can you just talk about that a little bit?

• 28:12Speaker 02

  I mean, one big difference for me was just becoming comfortable with volatility, right? You know, like, my academic pensions invested mostly in index-tracking funds, it kind of like, S and P 500, oh, it goes up a little bit, down a little bit. The kind of daily fluctuations are like typically within a couple percent. Then you get into crypto and it's like, oh my God, I gained 50K last night and I'd lost 80K this morning and what the hell? That's extremely scary the first few months. And then you kind of get desensitized to the volatility after a while. So I think...

• 28:54Speaker 02

  You know, to attract boomers, it's almost like you need to convince them to kind of just put a tiny amount of money into these new volatile assets, just a tiny amount and kind of play with it and kind of track it for a while and get desensitized before the stakes are high. Just have kind of a pretend fund that you're playing around with on whatever Coinbase Pro Kraken and get used to this completely new way of investing because it really is, you know, to anybody over like age 40, extremely scary to see your kind of net worth fluctuating this much.

• 29:35Speaker 02

  And so we have this concept of habituation in psychology where you're just kind of exposed to a new environment and you have to kind of get used to it. And it's very hard for young people to understand how alarming that kind of volatility or that kind of novelty is. So I think we have to just be more welcoming and also a lot more reassuring. One thing I worry about is that you get a kind of Bitcoin maximalism or kind of crypto preachiness that says, yo bro, if you can't stand the volatility, get out of the kitchen. It's kind of macho posturing that's flexing, that's saying, I can handle the volatility, older people can't, that makes me better.

• 30:20Speaker 02

  That's a terrible message and it's not going to actually lead to mass adoption. Agree.

• 30:25Anthony Pompliano?

  When you look at that message around, what do you think the better message would be?

• 30:30Speaker 02

  I think the better message would be just honesty about, you know, the fact that this is a scary industry and the volatility is scary and it's complicated and it's hard to understand and it's technically intimidating. And if you're used to dealing with a legacy finance system that took most people kind of decades to master before they even understood a little bit about how does the stock market work? How does my pension work?

• 31:03Speaker 02

  It's very tempting if you know a moderate amount about crypto to kind of show off that knowledge and to kind of forget how intimidating the industry is to newbies.

• 31:18Speaker 02

  So I think you can personalize this a little bit, you know, if you're, if you're ever like making YouTube videos or tweeting about crypto, to imagine you're communicating with like an aunt or uncle who's kind of crypto skeptical, doesn't know much about it. How would they react to your, your video or your tweet? Would it entice them to learn more? Would it make them think, oh, it's a little scary, but these people are welcoming. They'd be open to me joining their, their weird little cult, you know, or is it off putting? Is it sort of like, oh, I don't want to get involved with it because it's a bunch of kind of macho assholes who, who are just doing their own weird thing and they're not actually

• 32:04Speaker 02

  reaching out to me in a sort of authentic and inclusive way.

• 32:08Anthony Pompliano?

  One of the things, Jeffrey, that I think is misunderstood, maybe in this entire thing is the psychology at play, right? So when we get these boom and bust cycles, retail investors, more so than anything else, tend to succumb to both the fear and the greed. In the stock market, there's lots and lots of computers playing against computers. And so it's a little bit different. It's not true kind of market psychology at play. But what we see in Bitcoin and cryptocurrencies is that we get these massive bull markets and then these drawdowns. Over time, that volatility will likely subside somewhat as just more people come in, there's kind of less of illiquid supply, et cetera. But until that occurs, is it fair to

• 32:49Anthony Pompliano?

  say that the price of these assets and the movements are essentially a proxy or an indicator for fear and greed? And like, that's a, that's one way to evaluate prices, relationship to the psychology of the, of the investors in the market?

• 33:03Speaker 02

  Yeah, totally. I mean, you know, crypto industry, as we all know, is highly sentiment driven and it's, it's emotional and it's herd psychology.

• 33:13Speaker 02

  Now, has it helped me very much having worked in psychology for thirty years and studied all this stuff? It didn't really. It didn't help me that much as a newbie investor. It was like, I've taught human emotions courses for decades. I've studied human decision making for decades. But when, when you've got skin in the game, when you've got your own skin in the game, you have to kind of relearn all these messages. In the abstract, you can know, well, buy low, sell high. When everybody else is, is greedy, I should be fearful and vice versa. But actually implementing that with discipline and self-awareness is really, really hard.

• 33:58Speaker 02

  And so there's kind of a gap between knowing the psychology in the abstract versus practicing, you know, implementing it and, and understanding it. So should crypto investors learn more psychology? Should they read more psychology books? Maybe, but just time in the market in a sense is, is your best mentor. You shouldn't necessarily start out pouring your whole life savings into this industry because then if a bubble pops and you lose eighty percent, you will never come back into it. You'll be like writing it off forever.

• 34:41Speaker 02

  So I think it's very important for, for crypto outreach and lobbying and influence to kind of warn newbie investors. Here are the pitfalls and here's how not to succumb to the fear and greed. And of course, there's, there's a lot of people, including you, who are very good at, at these warnings. But I think we just have to keep it up and remember how tough it is for newbie investors to confront that kind of volatility and to kind of keep them safe and, and.

• 35:16Speaker 02

  Help remind them that there's a lot of crowd psychology here and if you just stick with it, hopefully in a few years volatility will be a little bit reduced and these asset values will be kind of fairly priced in relation to their actual use cases and what they're actually doing in the world.

• 35:33Anthony Pompliano?

  As a psychologist who understands so much of this and understands consumer behaviors, when we look at what I think most people would label as the most insane versions, so Dogecoin, Shiba Inu, etc., we see these absolute massive increases in prices and then we just see massive drawdowns in those prices. How do you evaluate what's going on there and like what is pulling people in to participating in these things? Is it pure profit or is there something else driving their participation?

• 36:04Speaker 02

  I think the meme coins are fascinating and I've actually been thinking about writing a paper on sort of evolutionary psychology of meme coins. It's partly pure financial speculation and kind of gambling and, you know, all the usual like FOMO and oh, it's gone up 10x, it'll go up another 10x, I'll be rich. But it's also partly an expression of identity and enthusiasm and interest and like, you know, there's so many people out there who are kind of like big Elon Musk fanboys. So whatever Elon supports, you kind of want to be on team Elon and so you want to like buy into whatever he's tweeting about. Not necessarily because you think it's going to make you rich, but because people are willing

• 36:47Speaker 02

  to spend a lot or even risk a lot to identify with a particular set of values or a celebrity, some kind of icon. And so it's almost like you're kind of paying a tithe to a church that you believe in, or it's like donating to a favorite political party. Not the people buying, you know, Dogecoin are consciously doing that, but I think they're getting a lot of subjective value out of feeling like I'm on team Doge and that's part of me and I'm willing to like spend a hundred bucks or whatever I invest if I'm a, you know,

• 37:28Speaker 02

  a Gen Z college student to kind of be part of that little subculture and to buy into it in a, in a real way.

• 37:38Anthony Pompliano?

  When you also look at other aspects of our society, so it's meme coins is one piece of it, but when you start to look at stocks also, you see GameStop, AMC, I'm assuming a lot of the same things are playing out there. Is this due to the rise of like social media platforms like the reddits, the twitters of the world? Or is this something that was always there? It was just on a smaller scale and private conversations. And now that it's kind of being thrust forward, the media is actually pouring gasoline on the fire because they're the ones who are saying, oh, look at this Reddit forum, which then leads to people joining the Reddit forum and people feeling like, oh, I'm getting legitimacy, I'm getting validation for participating in this. And therefore, I need to almost play the part. I need, I need to lean into it even more because the more that we lean into

• 38:23Anthony Pompliano?

  this, the further the coin or the stock goes, the further the coin or the stock goes, the more they talk about it in the legacy world, the more it validates what we're doing.

• 38:30Speaker 02

  Yeah, I think, you know, if, if you imagine maybe 19th century investors, like Victorian era guys who have a little bit of money hanging around in the gentlemen's clubs in New York or Philadelphia and talking about what stock they should invest in, which railroad should they support, or which steamship line, right? There'd be little bubbles of enthusiasm like, oh, we should support Union Pacific because that to us represents, you know, the future progress of America and, and colonizing North America. And that's something we can buy into. And I'm sure there was a lot of emotional appeal and a lot of those investment decisions 150 years ago. But now the scale of social media and the reach and, you know, millions

• 39:15Speaker 02

  of people getting involved in the same psychological dynamics, rather than just, you know, a few rich guys in little gentlemen's clubs. It just amplifies the, the speed and the volatility and the kind of intensity of the market.

• 39:31Anthony Pompliano?

  Yeah, what's fascinating to me is you get a younger generation that has bought into these memes, whether they're stocks, coins, whatever. But I always say that Berkshire Hathaway was the original meme stock, right? It has a whole generation of people that bought into it. There's this like Jesus and disciple mechanism where Warren Buffett has literally a playbook, a bible for value investing. People go on Mecca to Omaha every year to go and see and get FaceTime and to kind of get indoctrinated into it. And they literally talk about the experience as life-changing and all this kind of crazy stuff. Now, the legacy media, especially in the financial world, doesn't talk about Berkshire Hathaway

• 40:15Anthony Pompliano?

  as a meme stock. But what's the difference between Berkshire Hathaway and GameStop? Like, sure, they're different stocks, but there's a lot of similarities that I'd actually argue there's more similarities than differences when it comes to the psychology and the relationship that the holders of the stock have with each other, rather than the underlying fundamentals, right? The fundamentals are different, but there is a lot of psychology similarities, it seems like.

• 40:39Speaker 02

  I think that's a pretty astute insight, actually, because with the boomers, there is this kind of iconography of like the sage of Omaha and, you know, this kind of solid, sober, you know, older figure who kind of lives a little bit frugally and does like, I'm going to find you value investments and it's for the long term and it's generational and dynastic wealth, so trust me. So there's a little bit of, you know, a cult around that, just like there's kind of the cult around Elon Musk. I think it's extremely important for the crypto industry to understand the psychology of those Berkshire Hathaway

• 41:20Speaker 02

  investors. For example, how do we figure out how to reframe good crypto protocols as legit, long-term value investing, rather than kind of emphasizing the quick gains and volatility? And I think there are ways to do that, but you have to figure out,

• 41:43Speaker 02

  you know,

• 41:45Speaker 02

  what are the, the, the sort of, um, the tropes and the metaphors and the language that were used to convince Berkshire Hathaway investors to invest and to stick with them? And then how can we kind of appropriate some of those in the crypto industry to appeal to the boomers? Who are used to that kind of value investing concept? But it don't see a lot of, um, you know, crypto YouTubers connecting. Here's how, you know, investing in Bitcoin or Ethereum or whatever is actually similar to value investing.

• 42:20Anthony Pompliano?

  Does Warren Buffett run a cult? That's one of my biggest questions. Like to me, when you start looking at these meme coins or meme stocks, there's a ton of people who would say Bitcoin's a cult, right? I disagree, but that's what they would say. A lot of people would say, hey, Dogecoin is a cult. They'll say that GameStop is a cult. They'll say AMC is a cult. Does that mean Berkshire Hathaway shareholders are a cult? And therefore like Warren Buffett runs a cult? Or is there some way to decipher between? No, this is group think this is psychological kind of buy-in and comfort to some degree. And people are choosing to participate and they want to feel part of a group. But it's different than a cult. Like, how do you think about where's the severity of this? And how do you describe, uh, what these meme stocks or coins have versus what people I think have as a traditional thought process of like what a cult is?

• 43:03Speaker 02

  I think the crucial difference is, you know, Berkshire Hathaway versus like Amway or any kind of other multi-level marketing or, or pyramid scheme. Berkshire Hathaway is not just investing in itself. It's taking your money and investing in other real companies that have real assets and dividends and, you know, ROI. So it's kind of the middle, the middle man. You're not just buying Berkshire Hathaway token.

• 43:32Speaker 02

  That's only supported by, you know, additional inflows from other investors. I think crypto needs to figure out, how do we convince crypto investors that? Like Bitcoin or Cardano or Algrand or Ethereum aren't just investing in those systems themselves.

• 43:53Speaker 02

  But those systems are middlemen between you, the investors, and all the other investors and companies and sources of value that are woven into the network and the protocol. So I think you have to emphasize, like, how will these crypto protocols actually connect to real life or real dividends or real yields? And not just, you know, why are they a good, um, why are they just a better version of Amway? Right? That's, so it's kind of a shift in mindset where you have to think, we're not just investing in the crypto industry as an industry, we're investing in it as a way to connect all the

• 44:36Speaker 02

  other industries out there that will start playing in crypto rather than in legacy finance.

• 44:43Anthony Pompliano?

  When you look at the financial markets, is there a world where people psychologically are being driven to buy assets simply as a middle finger to the system? Like, to some degree, that was the narrative around GameStop, that was the narrative around AMC and things like that. It's like, oh, GameStop, there was a short squeeze opportunity, people were buying it because literally they wanted to take down Wall Street. And like, I don't know if that's true or not, if that's actually why people are doing it, but that narrative definitely has persisted. Like, there's an entire generation of people who saw their parents get burnt by the global financial crisis, they, you know, basically held this, uh, underlying burning feeling towards this one industry, and now every chance they get, they try to stick it to the man in, uh, doing this with like financial warfare.

• 45:27Anthony Pompliano?

  Is that how you evaluate it, or is that just like a nice story but doesn't really have a lot of kind of substance from a psychological standpoint?

• 45:34Speaker 02

  Oh my gosh, I think there's a huge amount of that. I mean, the whole initial, you know, launch of Bitcoin was very much a libertarian middle finger to, to fiat currency and to government control of the money supply and so forth. And Look, if people are willing to like, give up a year of their lives to like, campaign for some political candidate who they passionately believe in, or to do, um, you know, give 10% of their income to the Mormon church, just because they believe in the church, you better believe people are willing to make investment decisions partly on kind of political signaling grounds, where they're like, making some investment decisions,

• 46:15Speaker 02

  you know, to signal to others, to their spouses, to their friends, their coworkers, "These are my beliefs, and I put my money where my mouth is." Or they're signaling to themselves to kind of reinforce their own identity, like, "I'm a libertarian, and therefore I should be buying crypto." Um, and they're willing to, you know, take significant personal risks to do this kind of, uh, political signaling.

• 46:43Speaker 02

  I think for the crypto industry as a whole to succeed, it'll be extremely important for it not to be too closely identified with any particularly narrow set of political beliefs, because then it'll just alienate everybody who doesn't share those beliefs.

• 46:59Anthony Pompliano?

  Yeah. It's fascinating when you start to

• 47:04Anthony Pompliano?

  think through so much of the psychology is what's driving this, which, yes, that makes sense kind of from a legacy standpoint. But now, I not only can make my own individual decisions, but I can turn around and with the click of a couple of buttons, I can tell tens of people, hundreds, thousands, tens of thousands, hundreds of thousands, even sometimes millions of people, "This is what I'm doing, this is why I'm doing it." And then there's kind of the element of, some people will follow because Elon Musk did something, some people will follow because some great investor on Wall Street did something. And so if you bring it all the way back to Bitcoin, when Paul Tudor Jones and Stanley Druckenmiller came out and said, "Hey, we're gonna put Bitcoin in our portfolios, or we already have", to me,

• 47:45Anthony Pompliano?

  That was more important than like 90% of the other stuff that had happened only because now you have two people that all these folks on Wall Street looked at as these great traders or great investors and they just removed career risk. Even if everything went to zero, all these people in Washington, well, Paul Tudor Jones did it. So like, you know, he's smart. And you just remind you that like humans are humans, right? Like we can put on the suits and ties and play the game and like all this whole charade. But at the end of the day, we all have this like human hierarchical structure that we follow and the psychology takes over and we are incredibly, uh, you know, um, kind of exposed to succumbing to the fear, the greed and kind of that group think that, uh, you know, people warn you about over and over again, it feels like.

• 48:27Speaker 02

  I think that point about career risk is absolutely crucial. If you can convince enough financial advisors that, you know, other respected financial advisors are getting serious about crypto, then you're no longer the odd man out who's sort of, you know, the wacky crypto cultist. You're simply following the most respected and most successful people in your, your industry. So I think, you know, celebrity finance, um, gurus and famous people on Wall Street getting into it, that's important. But also can you imagine what would happen if like Billie Eilish or some other pop culture icon came out strongly in favor of any particular

• 49:11Speaker 02

  crypto project, right? That would immediately have a massive impact in terms of sort of millennial and Gen Z investing. So I think outreach to, you know, Wall Street icons is important, but I also think crypto should pay quite of a bit, a bit of attention to just outreach to, um, pop, pop culture celebrities and, you know, Hollywood actors and musicians and stand-up comedians and.

• 49:41Speaker 02

  The people who actually have enormous influence, even if they're not, you know, finance experts, that's where, that's where the cultural power is.

• 49:52Anthony Pompliano?

  You guys have any other questions?

• 49:54Speaker 03

  No, thanks for coming on, Jeffrey.

• 49:56Anthony Pompliano?

  Jeffrey, I could talk to you for hours, man. This is like, I'm fascinated, as I said a couple of times now, around, when you unpack this, when you understand what's happening, it's easy to see how there are some folks who prey on this stuff, and then there's some folks who become a kind of experts at commanding it. And like, one of the things that, there's a book, I don't know if you've read this, but it's called, Richard Weiser Happier, William Green wrote this book, and he basically goes and he talks to 25, 30 different of the best investors in the world, and he talks them about, how did you make your money? How do you have your investment process? What's your portfolio look like? How do you actually balance work and investing with your, your home life, etc.? And one of the things that

• 50:37Anthony Pompliano?

  you find is the best investors in the world, they have very small concentrated portfolios. They do not have 250 stocks that they gotta keep track of and everything. They actually sit on their hands and don't do a lot. They just buy great assets, hold them for a long time. And on top of that, they almost never had special access to the deals. So they literally went in the public stock market, for example, and, and bought it. And so, one of the things that blew my mind was if you ask somebody like a Charlie Munger, Charlie owns like three stocks. Berkshire Hathaway, he owns Costco, and I forget what the other one is. And people are like, what do you mean you own Costco? He's like, well, and he walks you through the evaluation of it or whatever. He goes, and I've owned it for years and

• 51:17Anthony Pompliano?

  I don't plan to sell it. And so, to some crazy degree, you have an entire generation of people that are growing up with all these platforms that there's flashing lights and bings and dings and this, and like, it's like, it almost feels like a video game. But that is the exact wrong environment to emulate what the best investors in the world have been doing for decades that has worked. And so, you know, my brother, John, is he's 25 years old. And he said to me, and I've talked about this on the show a million times. He said to me, once, none of my friends invest in anything unless they think it's going to go up 10x, right? And it's like, that sounds great. But like, how much of that is because they feel like, you know, fiat currency, I can't get ahead? How much of that is because of the tools

• 52:00Anthony Pompliano?

  that they're using make them feel like it has to go up a lot, right? And there's, you know, big green numbers and all that. And how much of it is just, you're just a young person, you don't have a lot of experience and like, that was happening, you know, 50 years as well. I don't know what the answers are, but it does feel like there has been a very material shift in the way that young people are thinking about this stuff.

• 52:20Speaker 02

  Yeah, and it's sad because they they kind of are acting as if life is really, really short. You know, I'm, I'm 56. And like, if I'd invested seriously, starting at age 20, and even if I was getting like, 5 or 8% a year compounded, I'd be extremely rich by now. If you're getting 2x per year, and consistently for decades, you're gonna be in awesome shape. So I think it's, you're absolutely right. It's, it's important for young crypto investors to pay attention to what were older, wiser investors doing that really, really worked consistently over time. And don't, don't emulate everything they're doing. Don't necessarily

• 53:02Speaker 02

  buy Costco stock. But adopt that mindset, that you're, you're in it for the long term, you're in it for generational wealth, you're in it to be able to leave a legacy to your grandkids. And, you know, 10x gains every three months. They're not going to be sustainable anyway. I mean, once crypto gets big enough, you know, it's, it's going to reach an asymptote. And like, all the world's assets are in crypto, it's not going to go up 10x after that. So, patience, and, you know, wisdom, and learning from older generations of investors, they don't understand the technical details of crypto. They don't understand

• 53:44Speaker 02

  Fiat, they don't understand crypto's potential, but they do understand the right mindset for making sustained long-term gains.

• 53:51Anthony Pompliano?

  Where can we send people to find you on the internet? I've got your Twitter account here. I'm gonna drop the link right now in the chat. I highly suggest people go follow you on Twitter. Is there anywhere else that you want us to send people? I feel like you just have such a clear way of thinking about this stuff that people should absolutely follow you or consume some of the other content.

• 54:07Speaker 02

  Thanks. I've got a website primalpoly.com and all my papers, my books, my research. A lot of my videos are up there. And yeah, I've written some books like The Mating Mind and Spent and Mate, which is dating advice for young, single guys. So I've worked on a lot of different stuff. And so, but yeah, if you just follow me on Twitter, primalpoly, you'll get a sense of my quirky view of the world.

• 54:37Anthony Pompliano?

  John, you gonna get the book?

• 54:39Speaker 04

  Yeah, probably.

• 54:42Anthony Pompliano?

  I love it. All right, Jeffrey, listen, thank you so much for doing this. Again, I highly suggest people go check out the website primalpoly.com or follow him on Twitter. I dropped the link in the chat. Make sure you go check him out. And we will definitely have to do this again in the future. I'm very excited to watch you continue down the rabbit hole. I've seen a couple of tweets and I'm like, oh, okay, here we go. So I feel like if we do this again in the future, you'll have a ton of thoughts on it. But thanks so much for coming on today.

• 55:07Speaker 02

  Thanks. It's been a pleasure.

• 55:08Anthony Pompliano?

  All right, talk soon.