80 - Ethereum is the Greatest Trade | Raoul Pal

Raoul Pal is the CEO and co-founder of Real Vision, the content production studio focused on democratizing access to financial knowledge. He’s an investor with a sharp eye on the global macro environment, and has a strong grasp on the relationship between history and economics. What has changed since the last time Raoul was on the podcast? His takes on Ethereum are fascinating and thought-provoking, and his bullishness does not come lightly. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🍵 MATCHA | DECENTRALIZED EXCHANGE AGGREGATOR https://bankless.cc/Matcha 🔐 LEDGER | SECURE YOUR ASSETS https://bankless.cc/Ledger 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ 📣 TracerDAO | Building DeFi Infrastructure. Join the Discord! https://bankless.cc/TracerDAO ------ Topics Covered: 0:00 Intro 5:00 Raoul Pal 7:31 The Macro World 11:48 Inflation 18:33 The Macro Crypto Story 31:43 Network Effects and Adoption 40:25 The Greatest Trade 46:25 Communities and Killers 52:50 The Ethereum Layer Zero 1:00:00 Raoul’s Allocation 1:03:27 NFT Mania & Culture 1:14:56 What’s the Metaverse? 1:22:07 Regulation, Social Tokens, Projects 1:25:43 Cyclical Markets, Predictions 1:28:41 Hope in a Rocky Decade 1:33:45 Closing & Disclaimers ------ Resources: Real Vision https://www.realvision.com/ Raoul on Twitter https://twitter.com/RaoulGMI?s=20 The World Is Waking Up To Crypto https://newsletter.banklesshq.com/p/the-world-is-waking-up-to-crypto ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:07Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. I'm Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, Raoul Paul on the podcast again, really interesting concepts and ideas. We had him on nine months ago. This was a different Raoul Paul to me, like similar in many respects, but some definitely some different theses coming out of this episode versus the last one, and a totally different portfolio. What was your take here?

• 0:43David Hoffman?

  Yeah, it's really interesting to follow Raoul Paul down the crypto rabbit hole. I think that's what why so many people enjoy the content that he makes. In addition to being just extremely articulate and extremely just informed about the way that markets work, we are all collectively watching Raoul Paul like discover crypto and formulate his own opinions. People kind of identify with crypto by the era in which they go down the crypto rabbit hole. And so we all get to watch Raoul Paul go down the rabbit hole late 2020, early 2021, and formulate his own opinions as what it's like to be in crypto in this specific part of crypto's history. Raoul is, of course, a big macro focused investor, which to me is a very like sobering perspective to take, right? It's like, you know, ignore, let's

• 1:28David Hoffman?

  ignore the regulatory FUD, let's ignore the market movements of, you know, 24 hours or seven day charts or months.

• 1:34Ryan Sean Adams?

  Big trends.

• 1:36David Hoffman?

  Big trends only, big trends only. And it's such a nice way to get clean signal from a very noisy industry. So that's always why I like to talk to Raoul Paul.

• 1:46Ryan Sean Adams?

  Yeah, totally agree. And I think Bankless listeners, if you have time, go check out the last episode we did with him in November. It's just a fantastic episode in and of itself, but it really shows kind of the the things that have changed in his thinking, but also the things that have remained the same. I think one thing that's remained the same is he is data driven, right? Metcalfe's law is how he makes his decision. Network effects, he has to see the data on chain. He doesn't think about it too. But he looks at the trends and we got into that discussion. He also said this time ETH is money. That's a big departure because we asked him, because Bankless Platform has been saying that for a while. We asked him last time if he thought ETH was money. He didn't, but what changed is he started seeing NFTs purchased in ETH and I think that's changed a little bit. He also gave us some ETH 2021 price predictions.

• 2:32Ryan Sean Adams?

  He talked about how a billion people would be in crypto by 2024 if the current trajectory holds. He also gave us a peek into his portfolio and last time it was 85% Bitcoin. We're not, let's not reveal it though, David.

• 2:47David Hoffman?

  Last time it was 85%.

• 2:48Ryan Sean Adams?

  Now though. 15% ETH and it is something else now. I will say he got rid of all of his gold. So you'll have to tune in to hear what his portfolio looks like this time around. All in all, man, I think Raoul gets it. He's not blinded by tribalism. He looks at this from a very analytical perspective and he has a gift for simplifying things. And distilling them to kind of base concepts that are very understandable and memeable. So huge respect. You guys are going to absolutely love this conversation.

• 3:19David Hoffman?

  Yeah, and let's just go ahead and get right into it. But before we do, we have to talk for a moment about some of these fantastic sponsors that make this show possible. Living a bankless life requires taking control of your own private keys, not your keys, not your crypto. That's why so many in the bankless nation already have their Ledger hardware wallets, which makes proper private key management a breeze. But the Ledger ecosystem is more than just a secure hardware wallet. Ledger is the combination of the Ledger hardware wallet and the Ledger Live app. And if you're used to seeing all of your crypto services and favorite D apps all in one place, Ledger is where you want to be. Not only does Ledger let you buy crypto assets straight from the app, but it also hooks into decentralized exchange aggregators like Paraswap,

• 4:01David Hoffman?

  which makes sure that you are getting the best prices on your trades without your assets ever leaving your control. DeFi never stops growing and the Ledger Live app grows alongside with it. So click the link in the show notes to see all the DeFi apps that Ledger Live has and stay tuned as more and more apps come online. And if you don't have a Ledger hardware wallet, what are you even waiting for? Go to ledger.com, grab your Ledger, download Ledger Live and get all of your D apps all in one place.

• 4:29David Hoffman?

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• 5:13David Hoffman?

  and make an overall better experience for your users, go to developer off chain labs dot com to get started building on Arbitrum. If you're a user, keep an eye out for your favorite DeFi apps building on Arbitrum. Arbitrum has been working with over 300 teams, including Ethereum's top infrastructure projects, and will be opening up to all users shortly. There are so many apps coming online to Arbitrum, so you may want to pack your bags in preparation for the great migration to the Arbitrum layer two. To keep up to speed with Arbitrum, follow them on Twitter at Arbitrum and join their Discord.

• 5:46Ryan Sean Adams?

  Bankless Nation, we are super excited to present our next guest to you. This is Raoul Paul. He's been on the podcast before. He is the founder of Real Vision. He's one of our favorite voices in the space, talking crypto, talking macro, talking investing in general. It's been about nine months since we last had him on the Bankless Podcast. That was November 2020. And oh my God, so much has happened since then. It feels like about nine years. So we want an update. We want to unpack his brain, particularly on the events over the last nine months and how he's thinking about markets today. Raoul, welcome back to Bankless. It's great to have you.

• 6:23Speaker 02

  It's great to be here. Two tropical storms and a power cut couldn't stop us doing this.

• 6:28Ryan Sean Adams?

  That's right. No one can stop us from doing this. We had to, for Bankless listeners, we had to reschedule this twice. We actually thought we were going to have to reschedule this time because as soon as Raoul jumped on the, on the, on our call, power went off, electricity in the Caymans went off. How are you guys doing? Is this typical for the Caymans?

• 6:45Speaker 02

  No, it's not. It's actually a pretty stable place where everything works. For some reason, I mean, I've been here seven years and we've had, I've had three storms in seven years, two of them within the last week. So either global warming is going exponential or it's just unlucky.

• 7:04Ryan Sean Adams?

  Maybe just unlucky, but we feel lucky to have you back here and we're glad we could actually have this conversation. You know, we thought we could do sort of a rundown of topics, Raoul, and just pick your brain on them. So we want to talk ETH, we want to talk DeFi, we want to talk NFTs in the metaverse and everything that's going on. We want to contrast that with our conversation nine months ago. But I thought what we could do is go from sort of top to bottom, big to small, if you will. And let's, let's start with sort of the macro and take us back nine months ago. What's changed in the macro world over the last nine months? Give us the update there.

• 7:43Speaker 02

  So what basically happened, so nine months ago, let's say we were talking about June, May, June last year, that my macro thesis at the time was that we were going to see, we were going to see some sort of insolvency phase, the overhang from this whole situation. That didn't happen because of the unprecedented amount of monetary printing that went on and the ongoing fiscal stimulus is. So then we look back and we realized that the worst recession in all recorded history only lasted two months.

• 8:20Speaker 02

  And that was all about, again, this stimulus. So if you are Janet Yellen and Jay Powell, you sit in a room together and go, that was pretty good, eh? It kind of worked. It worked for the financial crisis, and now it worked for the entire world closing down. Maybe we don't have to have a business cycle. Maybe we don't have to have risk anymore. So the marginal propensity for them to use to fire that gun again is extremely high. Well, the market sells off. Well, let's just add some stimulus. You know, we're still not sure that equality is quite right. We'll add some stimulus. Every answer becomes we can add stimulus.

• 9:01Speaker 02

  So the market currently has been looking for strong growth and Jay Powell was out today talking about potentially tapering because the growth numbers have been strong. But my work suggests that the economy is actually weakening. So China has a weak credit cycle and its GDP growth is falling sharply. Japan has got itself in a huge mess now with the COVID Delta variant. That's the third largest economy in the world. And, you know, Europe still stop-start, the US still not fully recovered. And it's normal. Normally it takes maybe two years to fully recover from a recession, and this was a big one. So after

• 9:44Speaker 02

  we call the end of a recession, generally the the central bank cuts twice again after it because growth isn't fully stabilized. So in this phase where growth, I think, is starting to weaken, we see it in things like, well, the most dramatic being the University of Michigan sentiment surveys for buying climates of houses and cars and big-ticket items. People have just gone, this is the worst buying climate we've ever seen. It's the worst numbers we've ever seen in these surveys because of the price rises that came from from the supply shocks beforehand. We see rollover in ISM and these other business cycle surveys. So we're going into a period where the Fed are talking about tapering. The market really thinks inflation is the big enemy.

• 10:30Speaker 02

  And probably we're about to see a slowdown. Now, knowing that every single recession since 1962, the Fed cut rates twice after it.

• 10:40Speaker 02

  And we saw this little spike in bond yields first. And then bond yields went back to the all time low, almost every time since 1990 for sure. So the probability is for me that the economy is weakening, the Fed cut again twice. There's probably more fiscal stimulus to come. And the markets haven't priced this in at all. Now, in the context of what does that do for asset prices? Well, I've talked a lot about the significance of this printing. It doesn't come up in CPI, the inflation that everybody talks about. It comes in the fall of the value of fiat currency, the denominator. And we see that because basically you can, you can divide any asset by the Fed balance sheet and everything's about flat.

• 11:25Speaker 02

  And you can do the same with German property and ECB balance sheet or UK property. And the Bank of England balance sheet or Swedish property, it works pretty much consistently. We're lowering the value of fiat currency overall. So if the Fed are going to do that, we should see a rise in the value of equities, the value of real estate. Most assets and especially cryptocurrency.

• 11:48Ryan Sean Adams?

  So your take is we're going to continue to see asset price inflation. But what about CPI inflation? I mean, there's definitely been murmurs of that. Of course, we hear from the, you know, some of the Fed and economists that it's just transient. It's not, you know, permanent. Others say, no, this is going to be more pernicious. It may go down and up in cycles, but the trajectory over the next, you know, five to 10 years is going to be up from a CPI perspective. What's your take on CPI inflation?

• 12:16Speaker 02

  My big picture take on CPI inflation is it's almost impossible to make it go up. We have the baby boom generation. Who are now 70 and they're all retiring. So their consumption pattern falls significantly. And we've just seen over the last year, the largest wave of retirees in all of recorded history. And those people, once they retire, spend less money because actually that pot of final savings is not that big. But the ones that are still in the labour force are competing with their kids, the millennials. So you've got the two largest cohorts in all recorded history competing for jobs.

• 12:58Speaker 02

  Then we've got globalisation. So if it's not bad enough competing against your parents, you're competing against Chinese and Indians. And if that's not good enough, you're all competing against the robots and AI. So that backdrop is, and in a massive credit bubble. So that backdrop is wildly, wildly disinflationary.

• 13:23Speaker 02

  The relentless rise of technology is hugely disinflationary. So can you generate CPI inflation? I don't think you can. You can't generate even food because technology just destroys it because crop yields keep going up, price of food keeps falling. You can't do it in basic stuff like clothing and furniture, none of that stuff, because technology keeps changing. You 3D print tables and chairs now. It requires no humans. You can do it just in time. Technology need no inventory. And this is relentless. The only two real things that, three things that went up over periods of time, one was housing, which we're aware of.

• 14:02Ryan Sean Adams?

  Another asset, of course.

• 14:04Speaker 02

  Yeah, but rents have gone up as well. So that's, that's not been easy. Healthcare. Well, no shit, Sherlock. If you've got 76 million baby boomers at 70 years old, they're competing for healthcare. So the costs go up and that will continue. The other one was education. But that's collapsed the rate of inflation because the entire millennial cohort has now left university, pretty much. I think they're all out now. So I think it's Gen Z in university. So the cost, the marginal consumption of education's gone down. So I, I find it very hard to see this. Now, are you going to be able to?

• 14:46Speaker 02

  Keep the price of copper and industrial materials higher. Copper maybe because of the electricity boom that's coming. But overall, technology lowers the price of copper. You can extract more copper. We saw that with fracking and oil. That's technology. That's how technology stops price rises. That's probably the best example in the world is, you know, you cannot keep the price of oil higher because technology keeps dropping it lower. So, no, I don't believe in CPI.

• 15:13Ryan Sean Adams?

  That is a good example. So this is kind of a mental model buster, I guess, for me. So my model of things or my best guess going into this was like, hey, over the last 10 years, we sort of saw the asset price story, an asset price inflation story, right? Ever since 2008, kind of, you know, Fed printing, money supply increasing. Eventually, it's going to asset prices. You're kind of saying, and then I, in my mind, I sort of thought, well, the next 10 years might play out in some of that asset price inflation might sort of seep into CPI and become, you know, more pernicious. But you're saying like that the next 10 years might actually turn out to be similar to the previous 10 years.

• 15:57Ryan Sean Adams?

  We just get some increasing asset price inflation even more.

• 16:01Speaker 02

  The truth is wages in real terms in the United States have not gone on, gone up since 1974 in any meaningful way. So they've underperformed almost everything. So what that means is your wages, your income has remained static. Well, the cost of assets has gone up. So you're actually poorer. What is that? Why? What is an asset? An asset is delayed consumption. You put your money into the asset and in 20 years' time, you sell the asset and you spend the money. But that's the point of owning assets. They're delayed consumption. What it means is your future self has now got a lot poorer because this stuff keeps going up faster than your wages.

• 16:47Speaker 02

  This is the real dramatic problem. That equation of can you get wages up to create demand push inflation?

• 16:56Speaker 02

  No. Can certain cohorts wages go up? Sure. But overall, you can't because everybody in Silicon Valley's job is to drive costs lower.

• 17:09Speaker 02

  And it's a it's a really dramatic situation. This creates a huge amount of anxiety, social anxiety. People don't know why they're getting screwed, but they're getting screwed. And it's not just the Fed raising asset prices. It's actually the fault is of the silent generation who had too many kids after World War Two. That's if you want to blame somebody. And yeah, World War Two was a feature of World War One because they didn't pay the because the they refused to allow the Germans to forgive their debts. So it's a long story of how we got here.

• 17:49Speaker 02

  But it's not going to change.

• 17:51Ryan Sean Adams?

  We're all paying for the sins of our fathers. I guess probably while committing new sins without knowing it that future generations.

• 17:58Speaker 02

  You don't know the law of unintended consequences. I mean, nobody thought that this is what would happen is after the euphoria of World War Two. Seventy years later, you'd create a massive collapse in growth, which has happened in Europe, Japan, everywhere else that had post World War Two economies. They all did the same. The others are slightly older because they had a lower rate of immigration. The United States did. And what happened was they all started that their economy started slowing down faster than the US. But it's baked in the cake. It's difficult to avoid, almost impossible.

• 18:33Ryan Sean Adams?

  So that's the the macro story. Now let's maybe borrow another layer deeper here, but still related. I know you've had a thesis, Raoul, that that's basically like macro and crypto. Those two things will converge. That's going to become one in the same thing. It's just a it's a fast convergence, but people might not see it coming. What have we seen over the last nine months in the macro story of crypto? Has there been more of that convergence? Are they now close to one in the same or what's changed?

• 19:03Speaker 02

  So I think they're the same. So if I go to my peer group and the people I really respect from macro hedge fund space, right? So that's the pointy end of macro. Those are the guys, almost all of them have transitioned across in one way, shape or form, either entirely or partially.

• 19:21Ryan Sean Adams?

  Really?

• 19:21Speaker 02

  So like, yeah, I mean, very famous.

• 19:23Ryan Sean Adams?

  Is that like the last nine months?

• 19:26Ryan Sean Adams?

  Or how long has it been?

• 19:26Speaker 02

  It's been happening slowly, but it's increasing. You know, it's going exponential as all these trends do. So, you know, people like Alan Howard,

• 19:35Speaker 02

  who's one of the world's most famous macro investors based out of the UK, he personally is entirely crypto now. You know, Dan Tapiero, you know, good friend of mine, he's entirely crypto now. I'm pretty much entirely crypto. Certainly my investments are, I still look at them whole macro world. But one after the other, they're all seeing the superior returns and a solution for the set of problem macro problems. So macro guys generally tend to be pretty pragmatic. We've got a set of problems, solutions, what's going to make money, allocate capital accordingly. But everybody's going, well, this is the biggest opportunity we've ever seen because you start, everybody starts on the Bitcoin journey and ends up going, having the holy shit moment that everything is about to change. And I'm

• 20:19Speaker 02

  sure we'll talk about a lot of that later. So I think macro and crypto have merged. What you're seeing now is you're seeing a lot of noise from the latecomers to macro.

• 20:32Speaker 02

  People who only know either the latecomers from macro or the ones that have been around very long and are anchored to gold and certain kind of mean reverting ideas. What you're seeing is a fear of change. So the noise that you're getting at the periphery, the Peter Shifts of this world, for example, is not that Peter Shift doesn't understand that crypto is the future. It's that he doesn't want it to be. Because it's technology, it's fast.

• 21:01Ryan Sean Adams?

  We call that, we call that bag bias. Is that what you're saying?

• 21:05Speaker 02

  It's actually worse than bag bias.

• 21:09Speaker 02

  It's a fear of change, right? We're going through the fastest change in all history. So for people to understand what I'm talking about, the internet grew at sixty three percent a year from nineteen ninety to two thousand. The internet was one hundred and forty million users at nineteen ninety seven ish. Crypto is about the same now, but the crypto digital asset space is growing at one hundred and thirteen percent a year. This is the fastest adoption of any technology in all recorded history. People don't want to believe it. How can my very system of money change in front of my eyes? What does the central bank mean any longer? What does it mean for my savings? What does it mean for, you know, the thing that I've railed a gap about all the time is gold that'll save you from all of this. And now there's something else.

• 21:53Speaker 02

  Everyone has to drop so much of their kind of outward facing belief system and it's hard. So that is the, that will slowly change over time, but generally the macro people who are broad minded have entirely changed.

• 22:11David Hoffman?

  Will, I want to get more and more granular as this conversation goes on into some of the nitty gritty details about, you know, what's going on in the world of crypto. But before we do that, I want to just emphasize the role of the macro perspective when using that perspective to actually understand what's going on when we get to those nitty gritty details like NFTs and metaverse and whatever. And so let's just keep going on this. Why is, what is so powerful about the macro perspective? And what are the, what properties about, you know, Bitcoin, Ethereum and crypto make this obviously a macro conversation, right? You talk about internet adoption, you talk about like network effects and Metcalfe laws. Like, why does, why does the properties of crypto so neatly fit into a macro perspective?

• 22:55Speaker 02

  The easiest way of explaining it is by my journey. How did I get here? And my journey was, I was macro, macro for thirty years. It was nineteen ninety seven where the world changed. Ninety seven and ninety eight was the Asian crisis. The Asian crisis was a sovereign debt crisis and a corporate debt crisis that wiped off the value of Asian stock markets by ninety percent. Currencies collapsed eighty percent. It was a total wipeout of wealth in Asia and it was driven by debt. The answer to nineteen ninety seven and ninety eight was to cut interest rates.

• 23:37Speaker 02

  Long term capital management, the giant hedge fund blew up at that time as well. The answer to that, because it could have taken down the financial system was to cut rates. That led to firstly, a massive rally in equities and pouring of money into the internet boom. So that was a VC led rally plus all the stocks.

• 24:00Speaker 02

  That obviously ends up morphing into where we are today. The crypto could not have happened without the internet. But what happened over that period is a massive debt bubble in property. So the debt bubble continued, it in fact accelerated. Then it blew up the entire world's banking system in 2008. Nobody knew who'd owned what. So when Lehman went under, everyone's like, well, I don't know. How do I get my stuff back? And they're like, well, it's not your stuff. It's been rehypothecated 37 times. So you can fight it out in courts. And oh, by the way, it's held in the Cayman Islands, London, New York and Hong Kong. Figure it out yourselves, right? That was the mess we got into and people got wiped out.

• 24:39Speaker 02

  Then we cut interest rates to zero and invented concept of easing, which the Japanese have been kind of trialing beforehand. So now we're pushing money into the banking system and we have rates at zero. And so humans being humans go, well, great, we'll just borrow more money. And they just keep borrowing money. So all of us in macro have been watching this and talking about it for a long time. 20 years, long time. And we knew, you know, business cycles only come along once every five to eight years. And it all comes to a head in a recession.

• 25:17Speaker 02

  So 2008, you kind of knew was coming because of what had happened in 2000 and what had happened in 97. And the pipe was going to get paid.

• 25:27Speaker 02

  And the central bank figured a way out of it. Then suddenly this event happens last year. There was going to be a recession, but the accelerant was the pandemic. So it blows up everything.

• 25:41Speaker 02

  And the world could have blown up again, right? All, everybody should have gone insolvent because the world shut down for a year.

• 25:49Speaker 02

  But the government just said, no, here, take free money and the central bank will just print it.

• 25:54Speaker 02

  So we now know what it's doing to the value of our savings because these assets are going up. We're actually getting poorer in our future selves.

• 26:04Speaker 02

  And so the macro guys start thinking, well, how the hell are we going to get out of this cycle? It's either going to blow up spectacularly, but the odds are getting less. Or we're just going to get poorer slowly over time. So it's a matter of how fast you figure out what's going on. So once you figure out what's going on, you look at crypto and it solves a lot of this. So when Bitcoin first comes along, it's clear it's developed solely for this job. I mean, it's very clear in the white paper and it's very clear when they're looking at the banks being bailed out again, that somebody figures out, why don't we try a scarce digital asset and see if that works? And then about a year or two after that, people start figuring out, oh, blockchain. Oh, that kind of is interesting for other stuff because we've got now a trusted ownership structure, which the world didn't have.

• 26:49Speaker 02

  Then Europe blows up in 2012 as well. We almost lost the whole of the European Union and all of the banks. So we kind of know it's a big problem. And then Ethereum comes along with smart contracts. And then the kind of light bulb moment for everybody goes off is like, actually, we can rebuild the entire system from scratch. So as a macro guy, when you know you've got something fundamentally broken and there's only one set of outcomes, which is printing more money. We've got this low growth from this demographics and technology and all of these things that have been changing the world. So we've got, we've got low growth, massive debt, makes it hard to service the debt, increase the amount of printing. So therefore these assets go up.

• 27:33Speaker 02

  But the real macro opportunity is to invest in the new world.

• 27:39Speaker 02

  We've just discovered the Americas from scratch. Why would you not buy that? Because it actually answers all of the problems. It's got the scarcity, it's got the ownership, the transference. It's a new system. It doesn't have the fragilities of the old system. You know, and then the macro story gets better because it's like, you know, if you remember, go back nine months, go back maybe 18 months. I was like, we need a yield curve.

• 28:02Speaker 02

  Four months later, DeFi explodes and it's kind of this different yield curves everywhere and different risk curves and God knows what and then ETH and staking comes along and we've got now got a risk free yield. I mean, we've got everything we need. So this becomes a macro bet now. So how do you analyze a macro bet? Because for me, I can't understand all of the protocols or, you know, look at every single token, think about everything. So you need a framework, a macro framework. We need to simplify it. And so I spent a lot of time around kind of November last year, October last year, looking at the pushback people would give you in social media when you talked about Ethereum. And the Bitcoin guys would hate you, right?

• 28:47Ryan Sean Adams?

  Yeah. So I remember when you came on in November and one of the big, I could tell one of the big areas of interest for you at the time, Raoul, was like tribalism. Because I think you were, you were seeing all of the tribalism in crypto and being like, why can't everyone just get along?

• 29:03Speaker 02

  But that tribalism forced me to understand when I get these kind of pushbacks, right? So we talked about it before, the kind of gold crowd. Why do they push back? I don't get pissed off with them for pushing back. I try and understand why. What is the motivator? And then once you understand what it is, it's a much easier thing to deal with and also to reason with people. And this Bitcoin pushback about Ethereum, I was like, what is going on here? And, you know, we know all the stories of why, but they all had reasons why Ethereum was not the same as Bitcoin. And it's, it's obviously clearly not as an asset, right? It's a very different thing. But why would you not look at it the same way? You know, all equities you

• 29:46Speaker 02

  kind of look at the same way and all fixed income you do. And so why would you not? So then I just dusted off Metcalfe's law and realized that it fitted perfectly. It was absolutely perfect. And in fact, it matched exactly where Bitcoin was when it had the same number of wallet addresses. And it's like, oh my God, it's the same price as well. And then I realized the whole damn space was this. So then it was just a matter of adoption. I didn't have to be the guy in the weeds, understanding everything. I just need to understand how fast the adoption was. And when we're talking about adoption, there's two ways we need to think about it. One is investors in it.

• 30:26Speaker 02

  So we can see Doge, for example, classic example of a one side network effect. So price goes up because a bunch of investors, but if they go, it would all disappear. But Ethereum clearly had more developers working on it than any other ecosystem. And that was growing, the rates of change of that and the number of applications. So now you've got this kind of perfect storm of network effects. And that helps me understand stuff like Doge as well. I mean, people are like, this is a scam, blah, blah, blah. I'm like, no, it's not. If you've got $40 billion of value in it from investors alone, then all somebody needs to do is figure out the other side. And you've got a massive network. And the first person to do that was actually Mark Cuban.

• 31:12Speaker 02

  Mark said, fine, you can use Doge at Dallas Mavs.

• 31:16Speaker 02

  And then Elon had seen it as well. And clearly he's working on something to do with it, whether it's streaming, car payments, or whatever it's going to be. It's very clear that it's going to be used. And that's fine because you become less cynical about what these things are. And you can judge everything by, is it a real network effect or not? And that that's made the space much more investable, much more macro, much more understandable and much less tribal.

• 31:42David Hoffman?

  Absolutely. And there's this division in the crypto industry where people like to either perceive these things as monetary units or financial assets or technology. And we, on Bankless, we like to think these things as both, whereas Bitcoiners like to perceive these things as more, these are, it's a means to an ends to produce a financial unit. And there's other like platforms that are really all about the technology. But over the last nine months and since we last talked about, talked to, seen with you about what you're thinking about. It was largely all about the macro, the whole money printing, the trustlessness of the assets. But recently I've been noticing you talk more and more about like the network effects of the adoption of Ethereum.

• 32:25David Hoffman?

  So when you see the rate of adoption of Ethereum, do you perceive that as like a technological adoption? Or an adoption of the, the nature of the assets on Ethereum? Or is it really just one and the same?

• 32:38Speaker 02

  Well, what's so interesting about Ethereum, it's everything. You know, I actually bought my first NFT today. And look, everything's priced in.

• 32:48David Hoffman?

  Congrats. Was it a crypto?

• 32:49Ryan Sean Adams?

  You gotta tell us more about that, Ralph.

• 32:51Speaker 02

  Yeah, it's nothing. It's nothing exciting. I just thought I'd have to do it. We'll come on to that when we talk about NFTs in a bit, but it was priced at 0.75 ETH. So ETH is money. And I'd seen that because we commissioned for Real Vision, a kind of headquarters in crypto voxels, which we're just, you know, we're going to release soon, just for the fun of it. And the architects, we paid an ETH and the land we paid an ETH. So it's like, okay, well, ETH is clearly money, but ETH is technology. We know that too.

• 33:24Speaker 02

  ETH is also a platform of which people are building a lot of different applications. So whether we talk about community tokens, NFTs, DeFi, a whole bunch of stuff, DAOs, they're all going to be on ETH. Now, will ETH be the only chain? No. Clearly, people use Solana for stuff, people use, and there'll be a multi-chain world of which there'll be a few giants and a long tail of stuff. And that's pretty normal. But ETH has got really interesting because of this. And then, you know, I came out with a piece in Global Macro Investor last month called The Greatest Trade. And, you know, here's my macro head on again is, okay, we've got this adoption that is kind of exponential, right?

• 34:09Speaker 02

  It's growing at least twice, twice the rate of Bitcoin. It's by far dwarfing the rest of the space.

• 34:19Speaker 02

  Then

• 34:21Speaker 02

  the EIP 1559 comes along and that reduces the supply. So that's clearly bullish for the price. And then you look at the on-chain analytics and everyone is bloody staking it because now it's a pretty clear run between now and E2.0. So why would you not if you're a long-term holder? So everybody's staking it. So that's taken a ton of stuff off the exchange. There's tons that have gone into just holding, tons that are locked up in DeFi, tons that are locked up in NFTs. And you're left with, I don't know, as of today, 11% of the entire supply of Ethereum available and it's going down every day. And the demand is going exponential.

• 35:03Speaker 02

  The only outcome is an exponential rise in price. There's no other outcome.

• 35:10Ryan Sean Adams?

  Raoul Paul, you are an ETH bull, my friend. This is something that I think we've been talking about on Bankless for a while. But I think a lot of people haven't seen it until, because there's execution risk. I mean, I've been talking about EIP 1559 for three years, but everyone's like, yeah, well, is it there? When's it coming? What's the timeline for this? Now, things are happening and people are starting to see it. I want to talk more about ETH as the greatest trade in a second because I want to hear kind of your full bull case. But before we do, just doubling back to, I think, a key point of interest for Bankless listeners, because every investor in this space has a bias, a mental model for how

• 35:54Ryan Sean Adams?

  to evaluate crypto and these assets. I would say the Bankless mental model is technology, monetary phenomenon from the bottom up, we're building a new monetary system. It's going to be bankless, essentially, if I were to sum it up. It's a parallel financial system. So that's our mental model for how to evaluate the space. And I think it's useful, but no investor has everything right. And where I see some value in Bankless listeners looking at your mental model is you're not a monetary maximalist, you're not necessarily technology maximalist, you don't say this layer one versus that layer one. What I would paint you as, Raoul, is you're a Metcalfe's Law maximalist.

• 36:36Ryan Sean Adams?

  It's all about the network effect and what you're actually seeing in this on-chain data. What's really cool about this macro asset in crypto is you could see it all on-chain. So I just want to talk briefly about what sort of network effects you look at. I know I've seen some of your Twitter threads and it's been great, but is it address adoption? Is it number of holders? What is it?

• 37:01Speaker 02

  It doesn't really matter. There's a lot of macro guys that will be annoyingly kind of hand-wavy, like, if it's being adopted at speed, it's going to work. And everyone's like, well, what exactly can I model that in a spreadsheet? No, forget about it. It's irrelevant.

• 37:16Speaker 02

  If you look at the rate of adoption that's going on of the entire crypto space. And this is my, this is my true north. This is all I need to know. There's one single thing I need to know and nothing else. So we know that it's growing at 113% a year in terms of number of users.

• 37:35Speaker 02

  And we will assume that over time, that trend rate of growth falls a bit. So if it falls from this year and goes down to 83%, so that's a significant fall in the growth rate. And we saw the internet do similar, but it was at peak growth was 63%, we're 113.

• 37:53Speaker 02

  It gets by the end of 2024 to a billion people.

• 37:59Speaker 02

  And that gets us to about three or four billion people by 2027, 28. Okay, so a blind chimp can choose a cryptocurrency and get rich.

• 38:17Speaker 02

  If you look at the size of the assets.

• 38:21Speaker 02

  The entire crypto space as of today hit 2 trillion again, I think.

• 38:26Speaker 02

  Global equities are about 200 trillion, global bonds are like 200 trillion. Global real estate is about 100 trillion. 2 trillion, 200 trillion. I figure that's probably a hundred X. And we all know, almost all of us realize that

• 38:46Speaker 02

  all bonds, all securities, all assets are going on chain anyway. So it's probably even bigger than that. But the point being is that you'll never ever in your entire life, ever again and ever beforehand, were given 100 X in an asset that's already up 2 million percent when you look at Bitcoin. You've never been given this and you can basically choose anything and it will go up.

• 39:13Speaker 02

  So, once you do that, you don't, you're not scared of making the wrong bet and it stops you being tribal. Because within that, you know, some of them are going to be amazing. You take the pressure off. You own a, you take some basic bets, you know, Bitcoin, Ethereum, a couple of others here and there. And then you can just have a basket of stuff and over time decide, okay, I quite like that. Or that's getting faster adoption. So then you start to look at like Solana is clearly getting adoption. It's clearly happening and it's clearly happening in the price. Okay. So do you want to own a bit more of that? Maybe. You know, is Polka lot getting to where it should be? Don't know yet.

• 39:52Speaker 02

  But it's worth keeping an eye on. You know, there's a, there's a lot of stuff. And then, so that's how I tend to deal with it is forget trying to model it and look for fair values in this. It's like, as I said, you can be a three-year-old kid and be given a box of names of cryptocurrencies and take 10 out and you will literally make 30 times your money over the next 20 years and next 10 years.

• 40:17David Hoffman?

  So Raoul, what, if that's the case, which I definitely is, there's a lot of stuff that appreciates in crypto for no apparent reason. But why have you singled out Ether and Ethereum as the world's greatest trade? Like what about the adoption?

• 40:31Speaker 02

  So this is the typical way I'll approach macro and a lot of macro guys do. You've got this big thesis now, which is 100x the space in the shortest period of time. So then our job is, okay, how do I add alpha? Where do I find the better bets? Now, there will be probably 50 tokens or assets that will outperform Ethereum, but they're riskier. I don't know what they are. I have no, I have no ability to choose them. When you look at Ethereum, it has all of the elements of the lowest risk, highest quality trade.

• 41:10Speaker 02

  And it's, you know, it's a rewarding ecosystem with rewarding people in it. Because, you know, there's a social element to this, there's a cultural element to this movement as well. And it's rewarding. So it's a good space to hang out where you feel comfortable with the asset. You understand how many smart people are working on it. So when you say to me, oh, there's a risk in 1559 getting done. My answer was the risk is like minuscule.

• 41:38Speaker 02

  And so I didn't care about it like ETH 2.0, it's minuscule. Why? Because there's a lot of very smart people, smarter than I'll ever be, working on it. So the probability is extremely high. And that's what that makes, what makes ETH so rewarding.

• 41:57Ryan Sean Adams?

  So let's talk about some of the calculus coming up for ETH then, right? So we talked about YIP 1559, we talked about staking. Is the merge as well part of the calculus, right? Because we're going to see this triple point, this, this three-part halving. We're going to see like a massive reduction in supply. Is this the bull case? Is it mainly from the supply side or is there a demand side?

• 42:20Speaker 02

  Knowing how markets work, this is going to catch a lot of people by surprise.

• 42:27Speaker 02

  It is all in the run-up where the money will be made.

• 42:32Speaker 02

  My guess is the moment ETH 2.0 happens, half of ETH gets unlocked.

• 42:41Speaker 02

  And it all comes onto the market and the price will collapse. It's typical. Yeah, and that's a short-term thing. It might be an overhang for a year. I mean, who the hell knows, right? But that's pretty obvious that this is the best single time. That's why I call it the greatest trade between now and ETH 2.0. Everybody wants it to happen. They're going to lock up as much ETH as possible and get the yield. It's as simple as that. But when it comes out, the chance of ETH collapses. If you remember when Coinbase went public, everyone's like, this is so good for the space. Everyone's going to know about it. What did it do? Marked the exact high in Bitcoin. And I've mentioned that on Twitter beforehand. I'm like, this is what it's going to do, and it will. And this will probably mark the high in ETH.

• 43:25David Hoffman?

  Well, I have a counterargument for that, if you are interested in hearing it.

• 43:29Speaker 02

  Yeah, absolutely.

• 43:30David Hoffman?

  The people that are staking ETH right now, they're committing to that insolvency period, right? Like, it's the whole point. As soon as the merge happens, that insolvency period is up and they can withdraw. That's what you're talking about. The nature of proof of stake is that it actually rewards people who are the most bullish, right? And so the people that are committing towards that lockup period are the people that are inherently long on the Ethereum economy. And so while there will, and Ether definitely appreciated significantly since some of these, you know, amounts of Ether got locked up. And so by definition, there will be people who want to, you know, realize those gains. But they are also going to be the population of people that are most inherently tied to the health of Ethereum itself.

• 44:14David Hoffman?

  And they're most interested in the long-term success of Ethereum. So if there's any population of people that's not going to dump right after the unlock period happens, it's the people who are ready to take a year of insolvency.

• 44:26Speaker 02

  And that doesn't matter. It's the marginal change that matters. Right now, the marginal change is more and more people locking up ETH, right? The rate of change of people locking up is still extremely high. What will happen is the rate of change of people staking will fall.

• 44:42Speaker 02

  It's as simple as that. You know, the bull case is that, of course, there's a load of people who are just going to stake and just leave it there. And that's good, because that's the long-term health of the system. You know, nobody's in this for the quick buck, but there's a shit ton of people, yourselves included, who will end up selling some ETH because they want to buy a house or get married or do all the stuff that costs fiat money.

• 45:03David Hoffman?

  Buy some NFTs, though. You know, maybe that, maybe just that.

• 45:07Speaker 02

  Maybe, but at some time, you're going to spend some fiat money on something.

• 45:10David Hoffman?

  Well, what's your?

• 45:12Speaker 02

  And it could be NFTs.

• 45:13David Hoffman?

  What's your preferred narrative for Ethereum? So, and then do you have a different narrative for ETH, the asset, right? There's all of these different narratives.

• 45:22Speaker 02

  No, no, I think it's all being, everyone's, it's

• 45:27Speaker 02

  people trying to overthink everything.

• 45:31Speaker 02

  You know, ETH currently is a platform, you know, that that's how I think about it. You know, it's a platform from which to utilize their blockchain,

• 45:44Speaker 02

  to transfer value, to store value and to create applications on top. So, you know, is elements of it money as we talked about? Yes. Are elements of store, store of value? Yes. Are elements pure technology? Yes. I mean, it's everything. So, you know, it kind of is still the vision that Vitalik had of the kind of internet computer. I mean, is that, but that sounds a bit restrictive. It's kind of the, I call it the, the internet of value and you could call it the platform of value. And it doesn't, it's not exclusive because others can do similar things, but nothing has the scale, the scope that Ethereum currently has.

• 46:26David Hoffman?

  One thing that we've been seeing more and more recently, uh, and especially in the last quarter or so is Ethereum has become so large that it's started to be subdivided into different communities. We have like the DeFi focus community, we have the NFT community, but then we also have this like DAO phenomenon, which is actually instantiating actual borders around communities. Like, do you own the DAO token or not? Are you in the DAO Discord or not? How do you see the relationship between communities and Ethereum? We're inside of an industry that is so incredibly tribal, right? There's a lot of energy behind these communities. And does this conversation of communities on Ethereum like fit into a broader macro conversation?

• 47:04Speaker 02

  Yeah, I mean, I've noticed it myself because it's impossible now to keep up.

• 47:09Speaker 02

  So you have to specialize. And, you know, I decided that I'm not interested in DeFi really, because I came from the financial system and I don't care about yield. It's kind of boring to me. DeFi is very cool, right? I mean, I love it, love the whole concept, but for me, I'm a financial markets guy. It's less exciting than complete disruption of business models that NFTs and social tokens are. Or even, you know, ETH the asset is. So I just kind of drifted away from that. You know, I still own a bunch of DeFi tokens, but I don't get involved in it.

• 47:44Speaker 02

  And I think so that I think it's normal and it's good and it's healthy. The people will coalesce around what they think is where they can move the dial or the biggest opportunity lies. We're basically all just taking bets, asset allocation bets of our time and our energy and our money.

• 47:59Speaker 02

  Coalescing around that, building communities and getting stuff done. Perfect. To see the Ethereum community fragment like this actually makes it stronger.

• 48:11Speaker 02

  Because you're creating pools of excellence and large pools of excellence around. And I think that's great. They're not fighting with each other. They're just saying, hey, listen, you guys do that, we'll do this. Maybe we can meet up somewhere in the middle. I mean, that's brilliant. That's how to create, you know, a massive ecosystem. I mean, that, I think, again, just plays into the hand of the kind of Metcalfe's Law network effects. If, if, if you're now seeing all these nodes group together and create these super nodes around core elements of this, I think it's great.

• 48:42Ryan Sean Adams?

  So nine months ago, when we last talked, I think Ether wasn't necessarily in a bear market, but Bitcoin definitely had kind of center stage, right? And one of the criticisms at the time of Ethereum or the bear case for Ethereum was, hey, it hasn't figured out its, you know, its monetary policy. We haven't seen EIP 1559. The time we last spoke, ETH2 didn't have staking contracts live. Now it has all of these things and I feel like people are getting the picture. But now the bear case for Ethereum has moved probably to something else. I want to get your opinion on this, on the, on the bear case for Ether and Ethereum long term. And that's that a smaller, more nimble, more technologically advanced, let's say,

• 49:27Ryan Sean Adams?

  ETH killer will take center stage. And that Ethereum doesn't necessarily have a competitive moat against, say, a Solana, you know, a Terra, some other Layer One blockchain. A lot of these are vaporware, but some of them, as you point out, actually have some good tech and are interesting. They make trade offs with respect to centralization versus decentralization. But again, the bear case for Ethereum argument would be like, well, do users really care about those trade offs? What's your take on alternate Layer Ones competing against Ethereum and stealing its market? Do you think there's going to be a power law winner in this space? Or do you think this is going to be all shared? What's your take?

• 50:08Speaker 02

  My take is the space is going up 100x. And let's say Ethereum is 90% of that space right now. And it ends up being 60% of that space. 60% of.

• 50:22Speaker 02

  A $200 trillion market is a lot more than this. So of course it will not have its dominance over time. Like Bitcoin doesn't keep its dominance over time. It'll get splintered in different use cases. Other people will come in, there'll be great developments and all of these spaces will be, you know, a hundred times the size they are now. So I think people still think of this as a zero sum game and it comes from the early days of adoption, because that's what networks are, these kind of behavioral incentive adoption models that the cryptocurrencies are, which is why they're so powerful. At first, it's like if you don't get adoption, you can see it being fought out in like the

• 51:03Speaker 02

  hex community or some of these kind of more kind of risky, not real projects. They're fighting to keep them alive, right? So they fight against other people to get adoption. Ethereum doesn't need to do that any longer and actually not does Bitcoin. And one of the reasons that you're alluding to, why so many people have started moving across to Ethereum as an investment, was actually the Bitcoin community. They kind of screwed it up.

• 51:30Ryan Sean Adams?

  Go into that more.

• 51:33Speaker 02

  Because they were too toxic. There are some really smart people in that space and some people I really respect. Some people who say, listen, my view is I think over time, the monetary element is what I'm interested in and I think Bitcoin best reflects that. And I think there's an opportunity for it to be a larger part of the global financial system, so I'm going to focus on that. I totally get it. Is there a probability that Bitcoin is money in the end? There is a probability. So I get that path and that's their macro bet. But there's another group that was like, how dare you look at anything else? It's a shitcoin, it's a scam, it's, we hate you, all of this stuff, right? Which is the same stuff we were just talking about with these others is they took, they

• 52:17Speaker 02

  spent too long on a fight that was the past. And they should have said, fine, you guys do that, we're doing this, we'll probably develop some smart contracts in due course, we got the lightning layer, this is all great, look at the space, it's all going up 100x, we're all going to get rich and we can change the world while we're doing it and probably solve a lot of inequality. But they did the opposite. And that was, that I think was a huge tactical error because people in the institutional space don't like to see that. And whether people like it or not, institutional adoption is part of the story.

• 52:50David Hoffman?

  On Bankless, Raoul, we try and emphasize the role of what we call the layer zero, which Bitcoin, Ethereum, these are layer one blockchains. But ultimately, it's the communities that compose these layer ones that really kind of define the asset, right? Like, they kind of define what the thing actually is. So, and Ron and I have felt similar resistance from like the deep Bitcoin maximalists who like, as soon as we talk about anything that's not Bitcoin, we feel their teeth, right? How do you, how do you, do you have a perception as to what the Ethereum community is like? And how the Ethereum community defines the ether, the asset, and the role of people's portfolios? Do you have an opinion on this?

• 53:33David Hoffman?

  Or is it just that you were tainted by the Bitcoin maximalists?

• 53:36Speaker 02

  I don't see it as much in Ethereum. Yeah, there's a few people who throw out a few comments on Twitter, you know, some sort of ETH maximalist view, you know, and they don't mind baiting a few people with laser eyes and stuff like that. So you can see that. But generally speaking, I found that people in the Ethereum ecosystem are too busy building businesses to fight with each other or to fight with anybody else. You don't even see kind of ETH versus Solana. So, oh, that's an interesting project over there. They seem to be growing quite fast. I better get on with what I'm doing here. It's a very, very, very, very different mentality.

• 54:16Speaker 02

  And it's because, my guess is, the Ethereum ecosystem is not a finished thing. Well, Bitcoin is finished, really. And therefore, it also becomes a bit boring. And I know this is terrible to say, but I understand the boomer coin thing because it's a bit like gold, right? Gold's perfect. Gold doesn't have to do anything else. It's perfect. It's gold. And Bitcoin's perfect. It's Bitcoin. I mean, it's absolutely phenomenal. Now... So it's a bit boring to talk about. So then the sovereign adoption, that is interesting. You know, there's the institutional adoption, I think is very interesting. The lightning layer is a payments layer. That's interesting. You know, there is some interesting stuff.

• 54:59Speaker 02

  It's just not as intuitively interesting as the amount of innovation that's coming out of this space.

• 55:04Ryan Sean Adams?

  Yeah, I agree with that, Raoul. And like, Dave and I have joked before, like, love, we love Bitcoin. We talk about it often, but we would not actually want to have a Bitcoin podcast because I'm afraid we'd run out of things to say. Whereas with Ethereum, DeFi, NFTs, we just can't keep up, quite honestly. It's impossible to keep up with the inflow of content here.

• 55:25David Hoffman?

  We have six shows a week and we still can't do it.

• 55:27Ryan Sean Adams?

  We still can't do it. But so I have a question for you, though, on this. Our thesis has been Bitcoin's great, it's really cool, hold it in your portfolio, right? Ether is even cooler and it's going to appreciate faster. Hold that in your portfolio as well. What's your take on that? Do you think like, what's, what's the landscape that Bitcoin will inhabit? Do you think Ether will grow faster? Do you think Ether will flip in Bitcoin at some point in time?

• 55:59Speaker 02

  I think there's a serious probability that they will. Because a platform versus an asset, 10, you know, it tends just by the nature of what the Ethereum ecosystem is.

• 56:11Speaker 02

  It, it, it tends to attract more capital and have a higher market cap.

• 56:17Speaker 02

  So, yeah, it's definitely possible.

• 56:23Speaker 02

  And, you know, the adoption rates continue at the rate that it's going, it'll happen pretty quick. So

• 56:31Speaker 02

  people should own a bit of Bitcoin. There is an argument that you should never own Bitcoin.

• 56:36Speaker 02

  Because if you play it through and look at Bitcoin dominance or Bitcoin versus everything else, Bitcoin outperforms in bear markets and Ethereum and then going at the risk curve, outperforms even more. So yeah, we're seeing the risk curve here now, which is some of the other, the newer faster adoptions, let's say Solana and stuff like that, growing faster than Ethereum, because they're at a lower point in the cycle, you know, the less number of users, price goes up exponentially faster, NFT, stuff like that, when you're going further out the risk curve. So then, let's say, so that's the bull market, you shouldn't own Bitcoin because it's going to underperform. And in a bear

• 57:16Speaker 02

  market, you should own stable coins. So in which case, why should you ever own Bitcoin?

• 57:23David Hoffman?

  This is what David tells me all the time.

• 57:26Speaker 02

  And I've been thinking through this, and again, I am not saying this because I'm anti Bitcoin in any way, shape or form. I'm thinking through asset allocation and how you think about it properly.

• 57:38David Hoffman?

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• 58:21David Hoffman?

  to make limit orders on chain, so you can set and forget your DeFi trades and they will go through automatically while you're away. New to Matcha is an integrated fiat on-ramp, so you can purchase crypto directly with your credit or debit card and have that fiat be instantly traded for any token that has liquidity. When you're making a trade, head over to matcha.xyz/banklist and connect your wallet to start getting the best prices and most liquidity. You trade your crypto assets. Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries,

• 59:07David Hoffman?

  just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and we'll say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap. Just look at the size of the Uniswap Treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a uni-grant at unigrants.org and help steer Uniswap in the direction that you think it should go.

• 59:51David Hoffman?

  That's exactly what we did to get Uniswap to be a sponsor for Bankless and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless.

• 59:59Ryan Sean Adams?

  Well, so let me ask you this. So last time we talked, I was going to save this question maybe for the end, but let's talk about it now as we're talking about portfolio allocation. So last time, I think we got to the lightning round. We asked you, what's your allocation? And if I recall correctly, you said at the time, this is November last year, 25% gold and then three quarters crypto. And of that three quarter allocation, it was like 80 to 85% Bitcoin and then 15% Ether at the time. Has that changed? And how has that changed in your personal portfolio?

• 1:00:32Speaker 02

  Ridiculously. Soon after that, my Ether allocation started going up. I sold my gold almost immediately around then, maybe just before then.

• 1:00:44Speaker 02

  So I was 100% crypto and I have been for a long time now. My

• 1:00:49Speaker 02

  I'm now, depending where we are today, 55% ETH, 25% Bitcoin, and then a tale of an equally weighted basket of a mix of DeFi protocols, Layer Ones, interoperability stuff, and then some specific bets in kind of social tokens, Metaverse, and other longer-term macro bets that I want to express that view in. And, you know, I'm probably, I'm just following the chart very closely of the Bitcoin ETH cross, and I think it's about to explode higher again, so I may end up selling all of my Bitcoin,

• 1:01:33Speaker 02

  which is a weird thing. And again, I'm not anti-Bitcoin, but I'll sell that to ETH.

• 1:01:37Ryan Sean Adams?

  You may end up selling all your Bitcoin.

• 1:01:41Speaker 02

  Yeah, I've been fighting on their self for two months. Why not to?

• 1:01:45David Hoffman?

  A 100% crypto portfolio with the potential of having 0% of Bitcoin. That is, that sounds like you're in an Ethereum culture.

• 1:01:53Speaker 02

  Am I a total Dgen now? Is that what you're telling me?

• 1:01:55David Hoffman?

  Yeah, yeah, if you fit right into us.

• 1:01:57Ryan Sean Adams?

  I think you fit right in here, that's for sure. Sounds similar to some portfolios I know, right, David?

• 1:02:02David Hoffman?

  Absolutely, yeah, no, it feels like mine.

• 1:02:05Ryan Sean Adams?

  Well, so what's, you said some things, like you're debating with yourself on whether to do that or not. What's, why wouldn't you do that?

• 1:02:15Speaker 02

  I don't know. I'm part of it. That's the, that's the, it's the part of the backlash in doing it. And also, I spend a lot of my time speaking to, for no reason than to help the community is, I speak to a lot of institutions, sovereign wealth funds, everything about adoption, and Bitcoin is the thing. You know, I get my sister-in-law into it, and you know, I get as many people as I can, so it feels disingenuous if I don't own it.

• 1:02:46Speaker 02

  I passionately believe in it. So it's a weird thing that as an asset allocation, it's suboptimal. But for the greater good, it's probably the right thing to do. So somewhere between not selling all of it and keeping some of it. So I can still say, obviously, I've still got Bitcoin, but it'll only be 5%. Something like that, I think.

• 1:03:04Ryan Sean Adams?

  We just had Ryan Selkis from the sorry on and he made it did it in the timeframe. Made a similar transformation to like more, more ETH. And part of the reason I think he mentioned he didn't sell more Bitcoin is for tax reasons. Right. Just large, you know, capital gains tax.

• 1:03:18Speaker 02

  I can't even use that live in a tax free Caribbean island.

• 1:03:21Ryan Sean Adams?

  My God, how nice is that? Wow. Everything is better than cavens.

• 1:03:27David Hoffman?

  We would be remiss to not talk about the just NFT mania going on on Ethereum lately, especially in the last week. It's, it's heated up really, really, just quite a lot, but it's really been going on for a number of months now. And one of the narratives that's emerging out of the Ethereum community is that Ether is culture money. Is this something that you consider when, when you allocate your portfolio? The, the relationship between culture, crypto culture that's going on inside of the crypto world? And kind of how it's largely kind of centered around the NFT phenomenon, which is largely based on Ethereum?

• 1:04:00Speaker 02

  Yeah, I'm not thinking of it as an Ethereum thing. I'm thinking of tokenization allows for the tokenization of culture, which is the, the release of value from culture.

• 1:04:11Speaker 02

  And I, I spend a lot of time in this space on a lot of things. I've got a project that I'm setting up within this space.

• 1:04:18Speaker 02

  And it's not to do with NFTs per se. I think NFTs are the first manifestation of culture. You know, I think the Dow movement is culturally interesting. I think the social tokens is going to be culturally enormous. I, I noticed that, you know, there is currently coalescing around cultures. Do you own a punk or do you own an ape or whatever it is? Some of that will last, some of it won't last. I mean, a ton of the tail of that stuff will not, is just vaporware, but that's fine. Everyone kind of knows they're having fun and doing it. But.

• 1:04:52Speaker 02

  Culture as an investment is the big thing that's coming. I can't express how big that is. But don't forget, for everybody, music is the soundtrack to your life, or sports, or all of these things. If you even think back, what was I doing in, in 2011? You kind of think back to what music was on, or what big events, what spot, they're all cultural. Culture is what is one of the things that drives humans or gives them. It's one of the great reward systems humans have is culture. And we've never been able to profit from it. In fact, just the brands did themselves that sold into culture. But this way, we get to participate in culture in a more meaningful way. I think it's, it's a revolution.

• 1:05:34David Hoffman?

  I know you just said that you don't think that there is a inherently an Ethereum phenomenon. But when you have a 100% crypto portfolio, do you think by having 100% crypto portfolio, you are having exposure to the next evolution of, of culture? Do you think the next evolution of culture is specifically a crypto phenomenon?

• 1:05:53Speaker 02

  Yes, without question. And obviously that ties into the metaverse because it's going all there as well. And we'll be able to kind of live in our subcultures. You know, we, we've gone from nation states and we're splintering into sovereign states. You know, Facebook is going to end up being a sovereign state essentially and all by, by all yardsticks, right? It's got a leader, kind of a mission, a, um, um, a set of rules. And, and it's going to have a system of money.

• 1:06:25Speaker 02

  And it's going to have defined borders because they're building their own metaverse, right? That's a sovereign state.

• 1:06:31Speaker 02

  You know, arguably, some of these DAOs are like sovereign states. I mean, but what's the difference between a corporation and a sovereign state? Not a lot. The difference between a corporation and sovereign state is they don't have their own money. But these do. So it's, it's, I mean, it's kind of mind blowing, right? People aren't ready for the change that's coming. People can't really figure out what this all means. But the, the way we've understood the world over the last three or 400 years is about to change. Because of the internet and then because of what tokens do to coalesce people around a particular cause or culture or belief or whatever.

• 1:07:09Ryan Sean Adams?

  Well, this this phrase culture as an investment is is super interesting and I I don't know, as I've heard anyone articulate it, just kind of in that phrase and that simply. But I'm curious what institutions think about this. So, you know, your friends that run large macro hedge funds, big investors in the space, how do you explain why a JPEG is worth five million dollars to them?

• 1:07:31Speaker 02

  So I've I've written a lot about this and I've, you know, if I've if I've spent time at the front of forefront of anything in this space, it's all of this stuff that I've tried to be a thought leader in it. It's very simply, if I go out in my office here, I've got a bunch of famous musician prints on the wall. And they're all signed by the photographer.

• 1:07:58Speaker 02

  Now, the JPEG argument would suggest they're worthless, but they're not because there are a limited number of prints signed by the author. Now, if I bought the one that had the negatives as well, it'd be worth even more.

• 1:08:11Speaker 02

  So

• 1:08:13Speaker 02

  people don't understand properly. Anybody makes the arguments, just JPEG doesn't understand authenticity and the human valuation of how we value authenticity, proven authenticity and scarcity.

• 1:08:26Speaker 02

  The same is true when people see digital art like Beeple, which I think is phenomenal in a different medium.

• 1:08:35Speaker 02

  And they go, well, this is nonsense. Well, they said the same thing about Dali, Jackson Pollock, they said the same thing about Banksy. You know, when Banksy came, started graffiti art, it was like, this is worthless. Well, guess what? It's not. Same with Damien Hirst, same with Andy Warhol, printing from the factory, limited replica. It's the same thing. So so I've explained to people, people get that pretty quick. Don't forget, a lot of people in the macro hedge fund space, they've been around a while, they've made a bit of money and most of them collect something, whether it's cars, watches, houses, artwork.

• 1:09:12Speaker 02

  And the richer they are, the more art that they collect, because there's nowhere else to, you know, there's a limit to the number of cars you can have.

• 1:09:17Ryan Sean Adams?

  Do you know what I sometimes wonder what it is, Raoul? If it's like, people understand why culture is valuable inherently, and they understand collectibles, and they understand authenticity. Everybody understands this already. If you're human, growing up, like, you know, every age, you understand these things. What they don't understand is how that translates into the digital. Like, they just, they can't seem to cross that part of the chasm. But when they do start to get it, and sometimes it just can happen with, like, maybe sending a Bitcoin transaction, or maybe seeing the first NFT that you actually want to buy. Well, then, once you do that, once you cross that bridge, you don't come back, because then you start to fundamentally understand

• 1:09:59Ryan Sean Adams?

  digital scarcity, and then you just extrapolate that into, oh, now Bitcoin makes sense, now Ether makes sense, now all of these NFTs make sense, now DeFi. Then it all starts to make sense, once they understand that transition of scarcity into the digital. What's your take on that?

• 1:10:16Speaker 02

  I think that's dead right. And look, people will get it very quick. Again, like, you know, I'm a big music fanatic, and on my wall in my bathroom is framed program from Live Aid, because I was at Live Aid, right? That has value. And it'll have more value in time, because it's scarce, and it's a cultural moment in time that all of humanity came together. Everybody does shit like that, you know, and the younger you are, the more you understand how this works, whether it's from being on TikTok or being on Instagram. So I think it's intuitive to most people. I think what is not intuitive, what is holding people back is the wallet experience experiences so bad.

• 1:10:59Speaker 02

  I mean, I, you know, bought my first NFT today. I've not been involved in NFTs, not that I didn't like NFTs or weren't interested. I'm super interested. I just.

• 1:11:11Speaker 02

  It's not something I'm particularly fussed about collecting. I'm focused on other stuff right now. So, you know, that having a punk doesn't, doesn't feel like the statement I want to make, whatever it is. But, you know, just messing around between OpenSea and my metamask wallet and getting it, it's like, I'm never gonna get-

• 1:11:29Ryan Sean Adams?

  There's gas fees associated with that. So like, now's the part-

• 1:11:32Speaker 02

  Gas fees are easy to understand, right? It's a transfer fee. We've all got that. You buy a ticket for an event. But to have to set up a special wallet with a stupid phraseology that you have to remember to buy something, you're just like, fuck it, I'm used to a credit card. This has to change for this space to get to where we all think it's going. Because, again, one of the things I argue is, if I'm going to send you a hundred bucks, we will not know and should not know or care over what blockchain it travels. It may start in XRP, go across the Lightning Layer, and then finish in something else. It's irrelevant. You know, it's not going to be one or the other. You're not going to choose any, I'm going to do it this way. It'll

• 1:12:14Speaker 02

  be whatever the cheapest routing is. Same as we do with mobile phones, right? We call each other, send each other messages easily. But people need to be able to have the experience where it all comes on this. That's where it's all going. Which is not there yet. You know, fascinating conversation with Ian Rogers, who's the Chief Experience Officer of Ledger. Ian's a super smart guy. He built Beats by Dre. He built some of the first music apps. He was then the head of digital at LVMH, the French kind of fashion and giant who understand culture. You know, people like him, they have to design our future. Because we won't get there without them.

• 1:12:54Ryan Sean Adams?

  Yeah, absolutely. It does feel like you're stepping back from a UX experience because there's this trade-off. Of course, we're dealing with bearer assets. I think, I remember that your last, our last episode with you said bearer assets are just a pain in the ass for institutions, for everybody. But I got to ask at this point, because I know the audience is wondering, so what did you buy? What NFT did you buy? And are you going to like, replace your profile picture? Is this going to be like your new identity? Tell us.

• 1:13:19Speaker 02

  Bizarrely enough, and this is not driven out of ego, I bought the one of myself that you see behind in my office in Grand Cayman, in the Real Vision office, which is done by the two quants. They've got this thing called the Real Vision Bot, you might have seen around on Twitter. And they created this this piece of artwork and I've got the print on my wall. And there's only five of them ever made. And I don't think it's going up in value. But I thought, you know what? I own the I've got the print because they sent me the print. I thought, you know, I should just own the NFT only because I wanted to buy the NFT. See how it worked with my metal mask, do all of that stuff. So it wasn't it wasn't a future value punch. And I didn't buy it because it had me in it. I just bought it because I just wanted to figure out how it works.

• 1:14:03David Hoffman?

  Sir, it's not going up in value. Yeah. It's one of one. A one of one, there's only one of it?

• 1:14:08Speaker 02

  I think there's five, actually.

• 1:14:10David Hoffman?

  Okay.

• 1:14:10Speaker 02

  And they've all been sold, I think, now.

• 1:14:12David Hoffman?

  Okay.

• 1:14:12Ryan Sean Adams?

  Yeah, not going up in value until this podcast, maybe. Maybe that's the case. We'll see.

• 1:14:17Speaker 02

  That's right. It's called irresponsibly long, which I, you know, I'm always happy with that, coining that term.

• 1:14:22David Hoffman?

  That's a fan. Yeah, no, it's burned. That one's burned into my brain for sure.

• 1:14:27Speaker 02

  Yeah, I can't believe how many of these things I've burnt into people's brains. Pristine collateral, that was me, irresponsibly long. There's a whole bunch of these that I don't know, somewhere down the line. Culture as an investment, that'll be the new one. Trademark, Ralpal, just.

• 1:14:40Ryan Sean Adams?

  That's a good one. That's a good one.

• 1:14:42Speaker 02

  All right, I told Gary Vee this in an interview and it stopped him in his tracks. Like, fuck, I've never heard that before. That's exactly right.

• 1:14:49Ryan Sean Adams?

  Yeah, it's.

• 1:14:50David Hoffman?

  Maybe we can get another one out of you because this one usually gives people a ton of trouble. We all talk about the metaverse as if we know what it is. But when everyone, when anyone defines the metaverse, everyone gives a different definition. So, Ral, in your mind, what the hell is the metaverse?

• 1:15:11Speaker 02

  The metaverse is where we live

• 1:15:17Speaker 02

  a larger percentage of our life in the digital world than we do in the physical world. That includes augmented reality, virtual reality, 3D and 2D. We are in the metaverse now, essentially, right? We're chatting as if we're sitting in the same room having a coffee, right? We're so used to it now that it doesn't feel like a barrier at all. That's the metaverse. The metaverse is when I can instantaneously pay you money.

• 1:15:45Speaker 02

  And we don't care what rails it goes across. That's the metaverse. The metaverse is the fact that Apple have now put things in your phone that ping five million times a second, I believe it is, that map out your everywhere you are and will create an augmented reality map of the world in granular detail. That map of the world will help you navigate everything. That is the metaverse. The metaverse is not just the Ready Player One gaming world. It's it's the digitization of everything where we spend most of our lives being digital. And right now, we wouldn't say, oh, we're we're living our lives digitally, but we are, right? Because the majority of what we're doing right now, even though we're living in physical spaces,

• 1:16:30Speaker 02

  we're actually concentrating and putting in the focus of our attention in the digital world. And that's how I think about it. It's that entire nexus where everything comes together and becomes digitally fluid.

• 1:16:43David Hoffman?

  So would you say what's the relationship between crypto and the metaverse? Would you say that crypto is perhaps like the epicenter of the metaverse? Because we can actually instantiate our digital assets? Or is that just the perspective of a crypto maxi like myself?

• 1:16:59Speaker 02

  Well, we've got to be honest with ourselves that gaming existed without crypto. But what crypto changed was proven ownership in a digital world. So that was a fundamental building block that I think was necessary. Much like we could, we had the internet, but we didn't have this transfer of value mechanism. So I think that that one in the same, you know, we also use the term web 3.0. It's all basically the same thing. It's that seamless digital integration where we don't need to use the physical realm. And I think that's

• 1:17:38Speaker 02

  And I think crypto is the only way that we can have ownership within that world. We can transfer other ways, but we can't have that trusted ownership, which I think is the most important part of it all. Because in which case it's nothing, right? It's not a world.

• 1:17:52Ryan Sean Adams?

  Well, I was gonna ask, like, do you think that's, there's like a socio-political sort of aspect of this, right? So, you know, so much sci-fi is dystopian. You look at something like Ready Player One, and it's a large corporation that owns everything. They can bend the rules in their favor. And as we're talking about the going into the metaverse, everything's becoming digital. Whether we want it to or not, we can try to resist change, but it's inevitable. Humanity is on this trajectory. And so we see Facebook entering in, saying they're going to become a metaverse company. You talked about Apple. Well, these are big tech companies. And what's striking is in the digital world, apart from blockchain, apart from crypto, you can't really own anything. An individual has no self-sovereignty over property without crypto or without blockchain.

• 1:18:37Ryan Sean Adams?

  So like, maybe sci-fi is dystopian because like, they don't really talk about crypto or blockchain. And large companies or large nation states own all of these things. Do you think there's some social, like, socio-political undertone of making sure that the future of the metaverse, that individuals have property rights and some of these basic guarantees? Is that important to your thesis at all?

• 1:19:01Speaker 02

  I think we've all been too led by sci-fi and think that there is one metaverse.

• 1:19:10Speaker 02

  I think the metaverse is a much more subtle, total existence that's not based around one thing. That's like saying we only use Facebook as our platform. We will choose which parts of the metaverse to interact with, much as we choose which parts to be online. But I do think it's extremely powerful that you can be a kid in Ethiopia. You can have an avatar and you could go to online Harvard and compete. And you can't have racism, sexism, or the fact that you're not in the same country and don't have the same advantages. These things are game changing for society globally. But it also means globally, we have to compete with a lot of people.

• 1:19:52Speaker 02

  And there's you're gonna you're gonna onboard a lot of people into the global workforce, but I think it's all good. I think it's it's going to create GDP in its own right. That is above this kind of GDP of the world of the physical world as we know it. And I talk about, you know, like social tokens being a layer of value above equity. I think the metaverse is a layer of GDP that exists outside of physical GDP. And I've talked of it akin to discovering the Americas. You discover a new part of the world that you didn't think existed, and suddenly your entire view of the world has to change. Because now you can create more.

• 1:20:33Speaker 02

  And people have this very pie view of the world and you take a piece of pie out and it doesn't work that way. The pie can grow, and I think this is the pie about to explode. Does that change this issue that we've got? With below trend GDP growth driven by demographics and the lowering of population, right? Because because GDP growth used to be. Used to be a population growth plus productivity. Productivity is going up, population growth is going down in almost every country. But maybe GDP per capita is about to explode because of the opportunities of discovering this new world. The other way I get people to get their heads around it is when I grew up, Russians were poor.

• 1:21:19Speaker 02

  And then something magic happened around nineteen about really, really happened about two thousand and two. Is Russians became rich, phenomenally ridiculously repulsively rich. In the it was the fastest accumulation of wealth in all recorded human history. Because basically, they just handed over all of the mines and the oil fields and the chemical plants to a bunch of Russians. And it went from state ownership to private hands.

• 1:21:49Speaker 02

  And that was new GDP. It's brand new, just came out of nowhere. Because you dug oil out of the ground and we're going to create a whole new metaverse and it's infinite in size.

• 1:22:00Ryan Sean Adams?

  Absolutely. This is Infinite White Space was the name of a podcast we did with a guest not too long ago. I think that's a great way to describe it. Raoul, as we, as we start to think about closing, we're wondering if you have time for a lightning round where we just ask some rapid fire questions. You had some time for that?

• 1:22:14Speaker 02

  I usually do bad at this, but let's do it.

• 1:22:16Ryan Sean Adams?

  Ah, no, you do awesome at this, which is why we had to include it. Let's talk about this. There's been some regulatory FUD recently. Maybe that's how some would describe it. Others would describe it as, look, there's some real regulatory threats and headwinds that are facing this industry. What's your take on some of the regulatory stuff that's going on in the US? Is this FUD? Is it real? Does crypto come out stronger? Or is this going to be bad for crypto?

• 1:22:42Speaker 02

  My one word answer is noise. It's just noise. We know there's going to be regulation and we know that they have to adapt to this new thing into the system and they know that they have to get their fair share of taxes. And there's no chance that they can get rid of it because of the scale of which it's growing. It's almost impossible. So, regulation is going to be part of our lives for the next 30 years in crypto. It will keep changing. Some will be bad regulation, some will be good regulation, but over time, it's not going away. And it's fine. It'll in fact drive adoption.

• 1:23:18Ryan Sean Adams?

  Are there any?

• 1:23:18Speaker 02

  Right now, I don't know if I can set up a business with a, with a certain type of token and end up going to prison because it's a security. It's ridiculous.

• 1:23:27Ryan Sean Adams?

  It is. Raoul, do you have any opinions as to how crypto is going to touch people first? Like, what is going to be the thing that really onboards a billion people on to?

• 1:23:39Speaker 02

  Social tokens.

• 1:23:40Ryan Sean Adams?

  Social tokens.

• 1:23:41Speaker 02

  Without question. Because we're all members of these communities. Some of these communities are massive. Global pop stars, global sports franchises. Some of these have absolutely enormous communities of which people want to participate in. Once you solve the wallet thing, people will just very, very naturally become community owners.

• 1:24:03David Hoffman?

  So does this mean everyone with the community launches some sort of social token and/or NFT?

• 1:24:08Speaker 02

  Yes, without question, because even small groups of people can coalesce around that. And you will have a number of these things, and therefore you're participating in a community of which if you add value to the community, the value of that token goes up. It becomes a great behavioral incentive and it becomes part of your asset base. It's really clever. It drives really vibrant communities and it's very powerful, I think.

• 1:24:34David Hoffman?

  I know you spent a lot of time in the macro, but do you have any other projects on your radar, you know, crypto related or maybe even otherwise?

• 1:24:41Speaker 02

  Yes, I'm doing something I can't talk about yet in the, in this community token space. I'm working on that. I'm also working on something else to drive the ability to people to allocate over extended periods of time. Because there's still not enough vehicles, there's kind of the ETF we're waiting for. There's a bunch of VC funds, there's a bunch of things missing from the space that are people are used to from the traditional financial space. So I'm actually working on some stuff with that. And there's a whole lot of, yeah, there's a lot of things I can't talk about that I'm working on that the space just doesn't have yet. And that's great. And there's so much opportunity to do stuff, whether it's with real vision, with what we're doing or other stuff that I'm doing on the side.

• 1:25:25Speaker 02

  And, you know, I think if I speak to any of you guys, everyone's going to say, God, I've got so much going on. Why? Because it's exciting. There's a lot of opportunity. And, you know, one of you could be in DeFi and somebody else is in NFTs and somebody else is doing payment systems. It's fantastic, right? That's what's so exciting.

• 1:25:42David Hoffman?

  Well, historically, this industry has moved in cycles. Every four years, there seems to be a boom bust cycle. Bitcoiners believe that this is aligned with the halving. Do you think that that pattern of cycles, the cyclical nature of boom and bust, nature of crypto, is that going to continue? Or is this going to change now that we've kind of elevated ourselves into the mainstream?

• 1:26:03Speaker 02

  I think cycles morph and change over time.

• 1:26:08Speaker 02

  But humans by definition tend to be cyclical in what we do. GDP cyclical, credit cyclical, equities are cyclical, commodities are cyclical. So there's something inherent within how humans get excessively pessimistic and excessively optimistic. Then it's cyclical. Is it driven by the halving?

• 1:26:29Speaker 02

  Probably. Will that continue in due course? Maybe not. But there'll still be a cyclicality and it'll keep it'll keep moving around. You know, if you look at the GDP cycle, it used to be kind of every three years in a peak trough, peak trough, peak trough. Then we got to modern central banking and it started being like a four year cycle. And then we've seen, you know, the last one was was, you know, a significant period of time, 2009 till till 2020, 11 years.

• 1:26:57Ryan Sean Adams?

  How about end of 2021? Take us there. So do you have any price predictions? Let's do Bitcoin and

• 1:27:03Speaker 02

  Well, my Bitcoin, my price prediction has been ETH north of 20,000.

• 1:27:10Ryan Sean Adams?

  Wow.

• 1:27:11Speaker 02

  And that's pretty simple. All I did is just map over the ETH chart to the Bitcoin 2017 chart. They work perfectly and it gives you 20,000. So, you know, there's no great science to that, but it feels about right. I've also mapped the Bitcoin price versus Bitcoin 2013. They look pretty similar. And there's a bunch of other ways of I do it with Bitcoin with

• 1:27:34Speaker 02

  log charts and regression analysis, stuff like that. Generally speaking, I think it's somewhere between

• 1:27:42Speaker 02

  250 to 400,000 with an outside chance of a million. If we get an extended cycle.

• 1:27:48Ryan Sean Adams?

  We're talking the end of 2021 or are we talking longer term than that?

• 1:27:52Speaker 02

  End of 2021, March 2022, something like that.

• 1:27:56Ryan Sean Adams?

  Wow.

• 1:27:56Speaker 02

  Don't forget that they usually go up 10, five to 10x in the last three months of the year.

• 1:28:06Speaker 02

  You know, so, you know, we haven't even got to the ultimate high, but let's say Bitcoin goes up, you know, five X from the 60,000 high was 350. That'd be very normal rally for year end, considering we're about to have an ETF. And if I'm right, we might see the central bank pivoting to more printing. They may not print more money this year, but they'll start talking about it. Those two things alone are enough to drive Bitcoin to 350, 5X from here.

• 1:28:32Ryan Sean Adams?

  You do think we're about to have a Bitcoin ETF then? Gary Gansler's gonna.

• 1:28:36Speaker 02

  With that question, with that question, it's probably coming in October.

• 1:28:40Ryan Sean Adams?

  Fantastic. Raoul, I wanna, I wanna end with this question. It's always a pleasure to have you on Bankless. We gotta do this more. So many Bankless listeners said, hey, I love Bankless. I love Raoul. Now you guys are doing a podcast together. It's like blowing my mind. So I think we have some kindred spirits in both of our communities and you guys have grown a fantastic community. But I'm, I'm, I was impressed with something that stuck with me at the end of our last episode. When we asked you about, hey, the next 10 years and you were talking about how you think, like, you know, there's global inequality, there's all sorts of political macro forces, wage increases have an increase. It's going to be a rocky decade is what you said. I want to ask you maybe something hopeful about that.

• 1:29:25Ryan Sean Adams?

  Tell me, like, what is the most hopeful way we can come out on the other side of this rocky decade?

• 1:29:32Speaker 02

  My view has become somewhat different. Those factors are not going away, but we've got something else that I call the exponential age that's coming to the middle of this.

• 1:29:43Speaker 02

  Over the next 10 years, we're already all of us dealing with this crypto exponentiality, right? We're starting to get a head around what exponentiality means. When I say crypto goes up 5X in the last three months of the year, you kind of laugh, but, but you think, yeah, it's possible. But that's understanding.

• 1:29:58Ryan Sean Adams?

  I definitely do.

• 1:29:59Speaker 02

  That's what exponential means, right? We, we're starting to get a head around this.

• 1:30:04Speaker 02

  But we've got all at the same time, the largest confluence of technologies that are all into maturity, i.e. the exponential stage. That's AI, robotics, genetic sciences,

• 1:30:21Speaker 02

  EVs, green energy, we have distributed computing power, Internet of Things, wearable technology, there's autonomous vehicles, there's a whole bunch of these things that are game changing. Literally, we can't get our heads around what this all means. And it's all going to happen at the same time. Now, there is a decent probability that that changes the trend rate of growth finally. And then there is another probability that if you stick any money into any of these things, you can make some real returns, some

• 1:31:01Speaker 02

  really gigantic returns. And, you know, we talked about it in the crypto space. So a lot of people, I used to argue that the average millennial at thirty two years old was pretty screwed because their parents got an opportunity of all time, cheap valuations of equities, all time cheap valuation of property, all time cheap valuation of bonds and credit. They couldn't help but make money by just saving some money. They screwed it up by borrowing money, but that's what they did. And they borrowed money because their wages didn't go up. And I can, I've proven that out over time. It's amazing. If you adjust households debt for wages and look at the total savings, the total amount, it's basically say consistent, they're just topped up their loss of purchasing power

• 1:31:43Speaker 02

  over time. But the millennials were faced with all time record property prices, all time record equity prices, all time record credit prices, fixed income prices. So what was their marginal expected return was so low that they didn't bother saving? Then twenty twenty came along and it changed everything because you financialize the whole lot of them in one go. And crypto is a lot of this opportunity and a lot of them are investing in stuff like ARC, which is these long shot future things. Um, and I think that's dead right. I think there's a huge opportunity for people. Both in building businesses, investing in stuff and just the chance for society to adapt at a rapid pace.

• 1:32:25Speaker 02

  But it's going to leave a lot of people behind because people fear change. And if you're not used to it, you're going to get terrified. I mean, look at the narratives that are going on right now. Vaccine, anti-vaccine. What is that about? Technology. Elon Musk, self-driving cars, Tesla, the hatred and the love. What is that about? Technology. Kathy Wood. I mean, why people are creating an anti Kathy Wood ETF? That's beyond me. Why? Technology. What is going on with global warming? Why do people fear that? Technology. Why do people fear Bitcoin? Technology. Why do Bitcoin people fear Ethereum? Technology.

• 1:33:04Speaker 02

  It's this unprecedented rise in technology that is making us all feel like, Christ, I can't keep up. Um, and I don't want things to change as fast. And that's driving societal problems on a scale and that's not going away unless society participates in change and benefits. Um, but we're still fighting about a vaccine saying, you know, there's a benefit. Basically free for everybody and half the people don't want it because it's technology. Oh my God, you're messing with my DNA. I mean,

• 1:33:36Speaker 02

  but that will change every time. People get accepting of stuff that they weren't accepting of before. So.

• 1:33:42Ryan Sean Adams?

  What a fantastic way to end this podcast, uh, Raoul. It's been an absolute pleasure. Thank you so much for coming on.

• 1:33:50Speaker 02

  Not at all. And, you know.

• 1:33:53Speaker 02

  Over at Real Vision, we've got a bunch of stuff worth looking on, a lot of these themes. So, you know, if you go to realvisioncrypto.com, it's free. It's all there, you know, I built a whole free channel to try and get across a lot of the stuff that I'm talking about in crypto, to make it broad, to make it understandable, where there is no infighting of one thing versus another. It's like, if you want to find out about this, well, here's the guy who founded it and here's a really smart guy interviewing him. You know, the more that we all do this, you guys are good at it too, is the better it is. So, you know, I think it's important that people go to the quality source of information. So, Real Vision Crypto is a good place to go, you know, and I know the Real Vision guys love what you're doing as well.

• 1:34:35Ryan Sean Adams?

  Yeah, plus one on that, guys. I think the message at the end of this is, as Bankless, we often say, you have to position yourself for change. Position yourself for the crypto renaissance. We're just entering into the crypto renaissance. I think the message from Raul is similar. Position yourself for this exponential age. That means positioning yourself for exponential change. So, some action items for you here today. Go listen to our previous episode with Raul Paul. We will include a note in the show notes where you can go click on that. That's the first one. The second is, I'm going to do a plus one on everything Raul just said. Real Vision Crypto is phenomenal. They've got a community now with 100K plus members.

• 1:35:14Ryan Sean Adams?

  You find out about cryptocurrency, digital assets, really great at video in particular, and it's also completely free. You can get a membership, so go check that out at realvision.com/revolution. We will include a note in the show notes there too. Guys, as always, none of this has been financial advice. You won't hear financial advice on Bankless. You might hear some life advice, though. Bitcoin is risky, ETH is risky, DeFi is risky. You could definitely lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:35:54Speaker 02

  I pretty much know what it's going to do over time, as long as.

• 1:36:06David Hoffman?

  Oh my god, that is hilarious.

• 1:36:09Speaker 02

  What the fuck is going on? It's just now decided not to...

• 1:36:13David Hoffman?

  Can I throw that in the bloopers at the end?

• 1:36:16Speaker 02

  Yeah, you can. I'm just gonna do it without the fucking light, I've had enough.

• 1:36:23David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcasts, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where we summarize the week in crypto and other

• 1:37:08David Hoffman?

  fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless Nation.