#1286 Qiao Wang | Crypto Analyst Reveals His Big Bets for 2024

Qiao Wang is the Founding Member of Alliance DAO & Messari. In this conversation, we talk about speculation with VC's vs crypto users, degens & early adopters, the decentralized utopia, Coinbase's brand new blockchain, stablecoins vs bitcoin in Friedrich Hayek's vision, artificial intelligence, and more. ======================= Auradine, a leader in web infrastructure solutions including blockchain, AI, and privacy, has unveiled the world's first 4nm Bitcoin mining systems, featuring breakthrough EnergyTune™ technology, setting new standards in performance and energy efficiency. The Teraflux™ product line from Auradine offers best-in-class performance, efficiency, and total cost of ownership (TCO), positioning it as the optimal choice for Bitcoin mining needs. With EnergyTune™, a patent-pending technology, Auradine's Teraflux™ systems enable rapid demand response and optimal energy usage, fostering a symbiotic relationship with electrical grids, and contributing to sustainable energy practices. Designed and manufactured in the US, Auradine's Teraflux™ product line not only ensures cutting-edge technology but also mitigates supply chain risks and provides increased supply chain resiliency. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.auradine.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ for more information the Teraflux bitcoin mining systems. ======================= Cal.com is leading the charge of scheduling platforms in the open-source sphere, offering you the chance to harness the efficiency previously reserved for elite corporations and tech gurus. That's right, Cal.com is transforming sophisticated calendar management into an accessible tool for all via a user-friendly interface. Discover how countless users are optimizing their time in unprecedented ways. Use code “POMP” for $500 off when you set your team up with Cal.com. ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

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

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Chow Wang is the founding member of Alliance DAO and also a founding member of Messari. He is constantly one of the most interesting voices and has some of the most thought-provoking comments on Twitter, and so I'm really excited for you all to listen to this conversation.

• 0:44Anthony Pompliano?

  In it, we talk about speculation as the most contrarian idea among crypto VCs, get the most consensus idea among crypto users, D-gens, how they are synonymous with early adopters, the decentralized utopia, the base, Coinbase's brand-new blockchain that is becoming the default chain for regulated DeFi. Then we even go as far as to start talking about Friedrich Hayek, the Austrian economist, and how stablecoins come much closer to his vision than Bitcoin maybe. Stablecoins also are exploding in popularity across Africa. Then we also cover artificial intelligence and crypto. Chow has plenty of thoughts that will make you think more critically about the space and also where you may potentially

• 1:25Anthony Pompliano?

  deploy dollars. Very excited to get feedback on this episode, so here's my conversation with Chow Wang.

• 1:32Speaker 01

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

• 1:56Anthony Pompliano?

  This episode is brought to you by Auradine. They are a brand new startup led by a number of Silicon Valley legends who just raised $81 million to build the future of internet infrastructure. You're probably wondering what that means. Let me explain. There are numerous new disruptive technologies that are being adopted simultaneously from blockchain to artificial intelligence to zero knowledge technologies. In order to ensure that these technologies thrive in this new world, we need new infrastructure, and that is where Auradine comes in. They just launched their first product line called Terraflux, which is a Bitcoin miner powered by the world's first four nanometer silicon chip technology. These air-cooled, single-phase and dual-phase immersion cooling miners have unrivaled speed and efficiency.

• 2:40Anthony Pompliano?

  They have superior uptime, and they leverage a brand-new innovation called Energy Tune that allows miners to dynamically adjust the energy consumption and Bitcoin hash rate based on demand-response needs of the electrical grids. Auradine is an ambitious company working on hard problems. I'm really impressed with them, and if you want to check out more, you can go to Auradine.com. That's A-U-R-A-D-I-N-E.com. Go check them out at Auradine.com today. This episode is brought to you by Cal.com. What do I have in common with Chad Hurley from YouTube, Toby from Shopify, and Alexis from 776 and the co-founder of Reddit? We all use Cal.com instead of Calendly, and we are all early investors as well.

• 3:24Anthony Pompliano?

  Cal.com is leading the charge of scheduling platforms in the open-source sphere, offering you the chance to harness the efficiency previously reserved for elite corporations and tech gurus. If you like to have your calendar organized and be able to have an efficient exchange when scheduling, but you love all of the benefits of open-source technology, then Cal.com's for you. They are transforming sophisticated calendar management into an accessible tool for all via a user-friendly interface. You can customize it, and you can make your calendar work for you. Use code POMP for $500 off when you set up your team with Cal.com today. Again, go to Cal.com, C-A-L.com, and use code POMP to get $500 off when you sign up.

• 4:07Anthony Pompliano?

  Cal.com, an open-source tool that allows you to take back control of your calendar, be efficient when scheduling, and make sure that no one can steal your time.

• 4:19Anthony Pompliano?

  All right, guys. Bang, bang. I've got Chow here with me. Chow, I thought a great place for us to start is you recently wrote this excellent piece all about D-Gems and how they are the pioneers of crypto. And I pulled out three specific parts of what you said, and I just want you to expand on it. The first is speculation is the most contrarian idea among crypto VCs, yet the most consensus idea among crypto users. Explain that.

• 4:43Speaker 02

  I just noticed that, again, this is not all VCs, but many VCs are pretty disillusioned with the current state of crypto, which is obviously very speculative. But at the same time, if you look at Twitter, if you look at people around you, everyone uses crypto as a speculative tool. So it's the most consensus idea among the users, but the most contrarian among the VCs.

• 5:08Anthony Pompliano?

  Why do you think it is that speculation is looked down upon, even though that is the thing that is bootstrapping some of these networks, right? And I say that from a perspective of I've gotten plenty of backlash when I talk about traditional finance. It's gambling, right? The stock market is a casino. Yes, some people are much better, right? You can be a professional poker player and go play in the casino, or you can be a drunk, you know, 21-year-old idiot and go play in the casino. But either way, you're playing in a casino in Las Vegas. Same thing in the stock market. You can have uneducated people or highly sophisticated people. It feels like that's the same thing that's happening in Bitcoin and cryptocurrency as well.

• 5:43Speaker 02

  Yeah, I mean, I have some hypotheses. But I feel like in general, the reason why speculation is so looked down upon is because most people think it's a zero-sum game, whereas, you know, in venture investing, people think of it as a positive-sum game, right? Like, the average VC makes money, but the average DGEN loses money. Or, well, loses money after transaction fees, right? So maybe that's why. But again, like,

• 6:16Speaker 02

  I think you have to take into account the fact that there's people around the world who are living paycheck by paycheck and they spend their entire entire childhood hustling for every single way to make money. And I think I personally don't see anything wrong, any moral issue with speculation, right? Like people have to make money and in fact crypto is the most open and transparent casino out there. So I don't see that as a moral issue at all.

• 6:46Anthony Pompliano?

  I actually would take a step further. I mean, people are speculating with their time. When they go and work certain jobs, they're definitely speculating with their money, including they're speculating with their money when they buy bonds, if they hold cash, if they buy real estate. And so the interchangeability of the term speculation and investing, I think, is a kind of one group of people saying, hey, we're sophisticated, the other group of people saying, you know, and saying to the other group, you're not sophisticated. But, you know, there are plenty of people who think buying a lottery ticket is investing. Right? I don't know if I would agree with them, but it is kind of maybe a little bit of nuance around words. Now, a second thing that you said in this piece is that DGENs, which is a

• 7:29Anthony Pompliano?

  a label or a name that is thrown around quite often, usually in a pretty lovingly way in crypto, but but DGENs is synonymous with early adopters, which changes the framework a little bit of how you think about these people. Explain this one.

• 7:42Speaker 02

  Well, so think back on the first time you bought Bitcoin. I don't know when was the first time you bought Bitcoin, but the first time I did was I wired some money to an unknown bank in Japan, which holds Bitcoin, the Mt. Gox Bitcoin into custody, right? That was like 10 years ago. That was DGEN as fuck. Like you're literally wiring your own hard earned money into an offshore bank that you have no idea about.

• 8:11Speaker 02

  And I'm sure a lot of people did this in the early days. So in my mind, the early adopters of Bitcoin were D gens. And then I'll give you three other examples. One is those NFTs, right? You know, the JPEGs, the penguins, the ducks, the dogs, right? The meme coins. People think of, or VCs actually think of NFTs as a way to create new IPs, right? To compete with Pokemon, to compete with Hollywood, et cetera.

• 8:44Speaker 02

  But if you look at Penguin, the Pudge Penguin, for example, the JPEGs have no utility yet, except for, you know, showing them on your Twitter, putting them in your Twitter PFP. And so the first people who buy the Penguin JPEGs, they are D gens.

• 9:05Speaker 02

  They're literally buying JPEGs that have zero utility. And they're just buying JPEGs, they're just buying the JPEGs for the speculation, for the upside. Right? So that's one example. And then another example is helium, right? The decentralized telecom network, right? The first time you buy helium hotspot or hotspots, it costs about a thousand dollars. And in return, what you earn is a very illiquid token.

• 9:35Speaker 02

  That's the helium token. Who in their right mind would do this? Right? Again, it's the D gens. So.

• 9:44Speaker 02

  And then people would argue, look, we still haven't seen a true, non speculative use case of crypto yet. But stablecoins are actually taking, the adoption of stablecoin is taking place all around the world at a mind boggling pace. And guess what? Even the first use case of stablecoin was also very speculative. People use stablecoin to do cross exchange arbitrage and to do lever trading. So everything that I can think of that's happening in crypto, the first adopter of everything, of all these different verticals are D gens.

• 10:22Anthony Pompliano?

  When I see stablecoins being spoken about in terms of speculation, I don't think people think about it that way. But it is a tool in the toolkit of a speculator is basically the argument you're making, right? And so you may not be speculating on the asset itself, but it is a tool that is used in the process of speculating. No different than the people who go and, you know, go west and try to dig for gold. They need a shovel, right? And so no one was speculating on shovels, but it is a crucial component of the process of speculating, which I think is, you know, a really interesting way of looking at this. The third thing that you said is the decentralized utopia needs the open minded, risk seeking, thrill seeking pioneers. And I thought this was interesting because when most people hear risk, they run away.

• 11:07Anthony Pompliano?

  When they think of thrill in financial markets, they run away.

• 11:11Speaker 02

  Yep.

• 11:11Anthony Pompliano?

  Are you making the argument that these people are running towards risk? They're running towards thrill and actually that's an important part of being a pioneer is being able to go and do that?

• 11:20Speaker 02

  Yeah. And the analogy I draw here is the early internet days, right? So in the 1990s, the first users of internet used the first email clients or those forums before the likes of SSL were developed, which is a security standard protocol. It just so happens that the internet is the information superhighway and crypto is the financial superhighway. So by definition, the first few adopters of crypto has to be those super risk seeking, early adopters, pioneers, right? They seek risk, they seek thrill.

• 12:01Speaker 02

  And without those, you know, those risk seekers, we actually wouldn't know how truly scalable and safe our infrastructure is, right? Because all these D gens that got hacked or paying super high gas fees, without them, we wouldn't know how bad are, you know, the layer ones or, or the oracles or the bridges are. And these D gens are what are the people that prompted our entire industry to focus on building better infrastructure.

• 12:35Anthony Pompliano?

  Now, you've also written a piece that basically looked at Hayek, and you made the argument that Hayek's vision of an alternative currency may actually be more akin to stablecoins than to Bitcoin. Now, I don't think you're saying Bitcoin is bad. Actually, you're saying the opposite, which is like Bitcoin is great, and it definitely fulfills some version of his view of the world. But explain a little bit the nuance here. If we now have, to some degree, a decentralized digital currency that's completely outside the system in Bitcoin, and then we have this almost like layered version of fiat currencies and stablecoins, and both of them seem to be putting pressure on the legacy system, but doing it in different ways. And so how do you view maybe what Hayek was really saying is the potential solution?

• 13:20Anthony Pompliano?

  And then how both of those fit into that framework?

• 13:22Speaker 02

  Yeah, so that post that I wrote was six years ago. I don't even remember exactly what I wrote, but the analogy I draw there was the exact mechanism of Maker, that the die in the Maker DAO system resembles the Ducat, which is the currency that Hayek proposed decades ago.

• 13:46Speaker 02

  But Bitcoin and stablecoins play very different roles today empirically, right? Bitcoin is a fiat debasement hedge. It's not an inflation hedge, but it's a debasement hedge. Whereas stablecoin, we see people around the world, especially those in Latin America, Africa, Middle East, and Southeast Asia, extremely strong demand from them for this, for the digitized dollar, right? Which is stablecoin. And in many ways, stablecoin is better than Bitcoin, and there's pros and cons, of course. But the ways in which it's better than Bitcoin, obviously, it's one of them is that it's less volatile, right? People want to hold a stable store value.

• 14:32Speaker 02

  And so as a result, they also use a stablecoin to pay each other more often than than using Bitcoin. Or actually, I don't know that for sure, but but the trend is certainly, you know, trending towards using more stablecoin versus Bitcoin.

• 14:48Anthony Pompliano?

  So it, yeah, it's interesting. I do believe that a stablecoin settlement volumes is higher than Bitcoin settlement volumes. They're both growing, right, which is which I think is a net positive tailwind for the industry. But it does feel like stablecoins for medium of exchange. Again, what are they doing with it? Very unclear. There are some questions about the metric itself in terms of when you're actually selling or buying. Is that getting caught up in some of the transactions? Put all that aside, like, it's definitely a popular use case. It seems that product market fit to use these stablecoins for medium of exchange. Now, with that said, a question that comes to mind is when Hayek is talking about this, he was talking about one currency. Maybe actually, should we have two?

• 15:32Anthony Pompliano?

  Like, you know, if you talk to Michael Saylor, Michael Saylor will say, well, I think that Bitcoin is going to be this amazing store of value. And it's going to be surge, serve as digital gold. And the enemy is gold, like, you know, drop your gold, buy Bitcoin. And at the same time that Bitcoin is growing in popularity and adoption and and price, the dollar is going to continue to strengthen. And so gold loses and weak fiat currencies of, you know, non-US nations, they lose. Maybe stablecoins actually are what he's talking about there in terms of US dollars. It's just in a digital form, right? It's the same dollar, same monetary policy, but it's Bitcoin and it's dollars that end up strengthening. Is that kind of your view? And then in terms of solving for Hayek's, you know, kind of utopia vision, we actually end up with two currencies rather than one?

• 16:15Speaker 02

  Possibly, because by definition, the problem that stablecoins still have is fiat debasement, right?

• 16:23Anthony Pompliano?

  Yes.

• 16:23Speaker 02

  US dollar just keep getting debased again and again over a long period of time. And so you're going to need a hedge against that, and that is Bitcoin. So it's very possible that both will exist. And you know, obviously, all reserve currencies, all fiat reserve currencies come to an end. So maybe in two to three, four decades from now, uh, stable coins, US dollar stable coins can come to an end. Right. In terms of dominance, but that'll take a long time.

• 16:52Anthony Pompliano?

  Yeah, it's fascinating to think about. Um, you've tweeted recently about African startups using stable coins and the popularity there.

• 17:01Anthony Pompliano?

  I was shocked at, uh, maybe the responses that people had. I think they were surprised. Some of them didn't believe it, right? Uh, but pretty much any company that I talk to anywhere in the world, from Argentina and, you know, Venezuela, where inflation is ravaging these economies, uh, all the way to, um, you know, economies even in the United, or, uh, companies even in the United States where, uh, sure, we've had some high inflation, but for the most part, people still have access to dollars. Stable coins, efficiency, speed, low cost transactions, uh, seem to be very attractive. How do you see stable coin adoption right now? If we took a snapshot of kind of the static, uh, environment? Is this something where it's just these D gens and kind of crypto forward or tech forward?

• 17:44Anthony Pompliano?

  Or do you actually see it seeping into what I'll call kind of the mainstream economies, uh, maybe outside the United States?

• 17:50Speaker 02

  Yeah, so I'll, I'll throw some numbers.

• 17:54Speaker 02

  Uh, last year, uh, this is according to a report by BH Digital, uh, fourteen trillion dollars worth of stable coin settled on chain. And that number surpassed the amount, the dollar amount that PayPal handled last year. It's mind boggling.

• 18:11Speaker 02

  Now, uh, probably, wouldn't know this for sure, but probably most of that volume is, uh, related to trading. Uh, because people need to move stable point across exchanges and then trade in those exchanges. But the percentage of non speculative usage of, uh, stable point is probably growing. And, uh, the emergent economies. So, uh, in this recent, uh, chain analysis report,

• 18:41Speaker 02

  uh, which analyzed, uh, the, the adoption of crypto.

• 18:47Speaker 02

  In Africa,

• 18:50Speaker 02

  Nigeria, South Africa.

• 18:53Speaker 02

  Are probably the top two. I forget the number three, but Nigeria, South Africa are the top two. And coincidentally, most of the African startups that I've spoken with, that I mentioned in that tweet, are also from these two countries. So my empirical experience matches what the data shows. That's in Africa.

• 19:17Speaker 02

  People use, there's a massive shortage of dollar right now in Nigeria, for example. And that's one reason why people want the digital dollar. But another reason is, you know, there's, there's still a lot of migration happening in Africa. Africa is extremely fragmented with a lot of countries. There's a lot of migration between them. There's a lot of migration between Africa and Europe, for example. So one of the startups that I talked to recently is, they help African Nigerians who are studying in Turkey to do cross-border payment. So because of the migration, there needs, there is a lot of demand for remittance products, cross-border payment. And by the way, Turkey is also another really interesting country where crypto is happening.

• 20:03Speaker 02

  Some of you might have gone to DevConnect recently. But the startup that I talked to, they're not based in Istanbul, they're based in a smaller city in Turkey. And they told me that in that city, there's more crypto physical shops than bank ATMs. It's crazy. So that's Turkey. And then Latin America, mostly Argentina, Venezuela, and Colombia. Brazil, less so, because Brazil currency is relatively more stable than Argentina, for example.

• 20:39Speaker 02

  And yeah, those are the regions I'm mostly excited about.

• 20:42Anthony Pompliano?

  It feels like, you know, for a long time, when people talked about Bitcoin or cryptocurrencies as a broader industry, it was kind of like, I think Alex Gladstein from the Human Rights Foundation calls it financial privilege. We go to the ATM, money comes out, right? The dollar, yeah, it gets de-based, but not nearly as fast as elsewhere. And so it's hard to see some of the value proposition. But if you go to Turkey, Lebanon, Argentina, et cetera, it becomes very obvious. And it's not just what I'll call like the economic view of let me get a bunch of data and see how high is the inflation rate? Or let me see what, you know, some of them, interest rate decisions are. It's also simple things like, hey, I need to go to a physical store.

• 21:25Anthony Pompliano?

  I've got a friend who, he worked at Uber for a while. And one of the things that he was tasked with was fraud prevention, specifically in Southeast Asia. And so one of the problems that makes it so difficult is that there's a lot of cash payments, physical cash payments. Well, how does Uber make sure that the driver actually got paid? And how does Uber get their cut, right? And all these kind of nuances to it. And it feels like that's really what's happening is we're almost like modernizing the infrastructure to some degree of some of these locations and these geographies. That is as simple as moving from a physical, we're skipping over electronic and we're going right to digital. And so that disruption ends up actually helping them leapfrog.

• 22:07Anthony Pompliano?

  And we've seen this where, you know, I don't know, in Nigeria, for example, there's a very young population, very kind of high penetration of mobile phones and internet access. They never got to kind of 2.0 of the internet. They went from basically 1.0 to now they're jumping into 3.0. And that 2.0, you know, part where they were behind, in some cases, they may actually be ahead of the US, it seems like.

• 22:30Speaker 02

  Yeah. This leapfrogging phenomenon is very interesting because basically you're saying the 2.0 is not 10x better than the 1.0, but the 3.0 is. And therefore people just go straight from 1.0 to 3.0. There's also phenomenon like this outside of crypto. So for example, in China, two to three decades ago, people use physical cash for day-to-day payments. And then at some point, when mobile internet happened, people started using WeChat and use WeChat to pay. Leapfrogging credit card. Credit card is not a thing in China, but credit card is extremely widespread in the US, right? But

• 23:15Speaker 02

  Not that, not that many people use Apple Pay. So Apple Pay is like the next level, the, the, the 3.0, so to, so to speak. Not that many people use Apple Pay because Apple Pay is like maybe not 10x better than using a credit card for a lot of people. Whereas in China, people just went straight from physical cash to a mobile payment.

• 23:34Anthony Pompliano?

  When you see that, is it the technology or is it the user experience? And, and obviously they're intertwined, but one of the things that's interesting to me is, um, I don't know. I'm probably like habitually trained at this point. Bill comes, I reach for my wallet. I don't reach for my phone, right? And like, as stupid as that is, it's almost like a user behavior, the thing that you have to change more so than, oh, is the technology are better? Yeah, like, like obviously the technology is better, but there is friction or there's a hurdle to get me to reach for my phone versus reach for my wallet. When the bill comes or when I go to pay for something and it feels like that's really where the opportunity is.

• 24:12Speaker 02

  Yeah. Yeah, the, the UX needs to be 10x better and obviously it's the technology that enables that. I'll, I'll give you a related example of, uh, uh, in crypto, actually. So Madamask, yesterday, Rainbow, uh, launched a sort of a vampire attack on Madamask. Basically they tried to airdrop, uh, points to Madamask users in order to entice them to use Rainbow instead.

• 24:44Speaker 02

  I, I've always used Madamask in my entire life for the last five years. Despite all the UX pain I've gone through, like hundreds of failed transactions, et cetera, et cetera. It's really, really painful, but I continue to use it. And the reason why is, um, I've never lost money on Madamask. I've never been hacked on Madamask, so I, I trust the security. So basically the UX of Madamask is bad, but the alternatives are not 10x better for me to switch.

• 25:18Speaker 02

  And so that goes back to your point about whether or not the mobile phone is connects better enough than than than credit cards to entice you to use it.

• 25:29Anthony Pompliano?

  Let's talk about a recent development. You know, I, through one of the funds that I raised early on, have been an investor in Coinbase for a number of years. You know, it went public. I think that people looked at it very much as the leading US-based regulated exchange. Obviously, there's been some appetite for that from public markets, but it was essentially looked almost as like, you know, the New York Stock Exchange or the NASDAQ for crypto.

• 25:54Anthony Pompliano?

  Over the last couple of years, maybe even last 18 months, I think you and others have called out, they have done a fantastic job of morphing themselves while still keeping that business, still, you know, kind of being a dominant US-based regulated exchange. They've become much more crypto native. They've got the wallet, they've got the L2, all this kind of stuff. Let's talk about Base for a little bit. Maybe you can kind of talk through like, what is Base? And why do they seem to, one, being successful with it, but also, two, it feels like, you know, if I talk to Will Clemente from Reflexivity Research, he'll say, Wall Street is going to be completely blindsided by what is happening in Coinbase's crypto native side because they're only evaluating trading fees and kind of the, you know, Web 2 type business.

• 26:37Speaker 02

  Yep. So Base is an optimistic roll up on top of Ethereum and Coinbase is behind it. Now, I don't know exactly what the relationship is structured between Coinbase and Base.

• 26:53Speaker 02

  But I do think that Base will be a top three contender for the most important roll up in the coming cycle. And unfortunately, I don't think they will launch a token. So I don't know what's the best way to to gain exposure to to Base.

• 27:08Anthony Pompliano?

  Is it just by Coinbase? Is it just by Coinbase stock?

• 27:12Speaker 02

  The thing with Coinbase is, I mean, it has a lot of other things, right?

• 27:16Anthony Pompliano?

  Yeah.

• 27:16Speaker 02

  So it's not the purest form of bet on Base itself. I mean, I have an idea, but it's it's almost embarrassing to say, but the, my idea is to to buy the the most Lindy meme coin on Base. And it's Toshi. It's a cat meme coin on Toshi. There's not a dog coin yet, but there is a cat. So.

• 27:41Anthony Pompliano?

  Explain that a little bit more in terms of why, because I think people are fascinated. Again, we kind of get into the degen speculative, you know, ground here. Buying a meme coin on top of base, you think is the best way to play base potentially being successful? Why?

• 27:58Speaker 02

  Yes, unironically.

• 28:01Speaker 02

  And I say this both from a theoretical and empirical point of view. Theoretically, meme coin, I consider meme coins as a crypto is essentially tokenized mindshare, tokenized attention, right? You have all these different coins that in theory have zero utility. But why are they commanding like 10 billions of dollars of valuation, right? It's because of the attention behind them. And memes like Doge, Shiba, these things, Bank, Onsalana, these things, they capture a lot of attention. And that's why they're able to command an extremely high valuation. And so if base, the L2, the rollup doesn't launch their own token,

• 28:48Speaker 02

  the most, the bet that will capture the most value that will capture the growth of Coinbase, I think is a meme coin for better or worse.

• 29:02Anthony Pompliano?

  I mean, so far that has been a huge part of crypto in general. And, you know, I would even argue, I've had multiple people that are well known on Wall Street, like roll over and, you know, basically they want to kick me out of their office. I've been like, well, Bitcoin has been the most successful meme coin, right? In the sense of that there is this culture, there is this kind of memetic aspect to it. But yeah, Toshi is obviously very different and an interesting idea. Talk a little bit more about base itself in terms of just like becoming this like de facto chain for, I think you view it as like a regulated DeFi chain. What exactly does that mean?

• 29:39Speaker 02

  That's part of it. I'll explain, but base is probably the most interesting layer two because of the fact that it's the Coinbase is behind it. And the result of that is number one, Coinbase has over 100 million KYC user. And it would be a lot easier for them to put that identity, that KYC identity on chain, onto their own chain than all the other chains, right? The other chance they don't have this identity layer.

• 30:11Speaker 02

  So the moment you have KYC on chain, you can do some really interesting things that other chains cannot do. For example, RWAs, so real estate, real world assets. For example, tokenized US Treasury, tokenized US stocks, tokenized properties, that kind of stuff. Because these things typically require KYC. Some of them require accreditation.

• 30:37Speaker 02

  And in order for their users to be able to access these instruments on chain, right? And it's not easy for other chains to do it. So and therefore, it's not easy for other chains to to launch RWAs. Like this kind of products, RW product startups, they have extremely high startup costs due to compliance, due to legal, et cetera. And Coinbase solves some of that. So that's why I find Coinbase really interesting. So the first reason is the identity layer. And the second reason is even more obvious, which is the fact that Coinbase has a huge distribution. They can quite easily direct their existing centralized exchange users onto their own

• 31:22Speaker 02

  chain via Coinbase Wallet, for example. So the distribution and the brand matters a lot.

• 31:29Anthony Pompliano?

  Now, do you think that this is, when we talk about real world assets, are we talking about them literally, you know, putting real estate, putting stocks, things like that? Or they're almost like crypto native real world assets? It's something different?

• 31:41Speaker 02

  No, it's literally tokenized stocks, real estate, properties, not crypto native.

• 31:47Anthony Pompliano?

  And and what is the, we talked about user experience in terms of, you know, when the bill comes, I gotta grab my wallet versus my phone. What will it take to convince Wall Street or traditional finance folks to buy the tokenized version?

• 32:01Speaker 02

  They're not letting me convince. They're not letting me convince. The reason, so by the way, I I've been skeptical of real world assets for many years until maybe three months ago. And I had an epiphany, which is that the first source of demand for RWAs is actually crypto natives. And the reason for that is, if you look at the market, the total market cap of crypto today is like 1.5 to $2 trillion. So there's $2 trillion worth of on-chain wealth.

• 32:31Speaker 02

  And at the same time, it's

• 32:35Speaker 02

  Likely that this will be the last cycle, the last 10x cycle, right? So Bitcoin, Ethereum have maybe 10x more to go before they reach more of a steady state. So at some point, the crypto natives, all these $2 trillion worth of on-chain wealth crypto natives, they need new ways to diversify, they need to diversify their wealth outside of crypto native assets. And RWAs are a pretty obvious way to do that, to enable diversification for the crypto natives. So basically RWAs solve the problem of diversification for on-chain D gens or people living in emerging markets needing new assets.

• 33:18Speaker 02

  And by the way, RWAs might still sound controversial to a lot of people, but if you really think about it, stable coins are a form of RWAs. It's tokenized US dollar.

• 33:31Anthony Pompliano?

  So many people either were not around or have forgotten, but back in 2017 and 2018, I would talk quite a bit about tokenize the world, right? And this idea was basically every single asset is going to get tokenized and brought on-chain. I came to two conclusions during that time period. One was, this is so far away that I should just shut up and like, you know, I'm going to be saying the same thing for literally a decade before this happens. And so like, it's always easier to see where the world is going, but it still takes time to get there. But two was, I thought that we were going to have to see the current generation of decision makers at the Wall Street firms leave

• 34:15Anthony Pompliano?

  and have the young people assume their positions of decision-making and capital allocation, and then it would happen. It's an interesting nuance and actually I could be convinced that you're more right in the sense of, no, it's not even the Wall Street firms. It's actually just the crypto natives end up actually being that first, you know, group of early adopters. And then to some degree...

• 34:35Speaker 02

  Against the D gens.

• 34:37Anthony Pompliano?

  Yeah, Wall Street has to follow the D gens, but the D gens are the pioneers.

• 34:43Anthony Pompliano?

  Yeah, it's super fascinating. The last thing I want to talk to you about is artificial intelligence and crypto.

• 34:51Anthony Pompliano?

  I have for a long time said that Bitcoin is an automated central bank. I don't think that means that it's artificial intelligence. I don't think that there's machine learning or anything like that. But to a degree, it is this fits in very nicely into our worldview of

• 35:06Anthony Pompliano?

  what I'll just call like automation in general, right? And so artificial intelligence is a piece of that machine learning, but also crypto assets as well. How do you see artificial intelligence and crypto kind of intersecting? Or where do you think the areas of opportunity are?

• 35:20Speaker 02

  Yeah. Okay, so first of all, I have no idea where AI will be going because

• 35:27Speaker 02

  AI is just happening as fast as crypto. And I spend all my time in crypto. And so there is no way for me to truly understand, deeply understand AI. But I do have some hypotheses.

• 35:40Speaker 02

  One idea is right now there is a massive shortage of GPUs.

• 35:47Speaker 02

  Because everyone needs GPUs to train models. And so where crypto might come into play is to create decentralized marketplaces of GPUs where, you know, consumers like you and I, we have idle GPUs on our laptop.

• 36:07Speaker 02

  If I'm not using my laptop, maybe I can contribute my GPUs to this network to help others to train their models and earn some tokens and money in return.

• 36:18Speaker 02

  But it doesn't have to be a consumer. It could be some idle GPU sitting in a big data center as well, right? So that's one idea. Obviously, there have been a few startups that have that got tens of millions of funding pre-product market fit, pre-product actually. So I think a lot of people actually see this already as a big opportunity.

• 36:38Speaker 02

  Another way where crypto AI could intersect is some time ago, there was a pretty big hype cycle around AI agents.

• 36:52Speaker 02

  And the way we can define that is AI agents that run autonomously rather than like a SaaS product or something, right? And so

• 37:06Speaker 02

  if AI agents, by the way, I haven't seen any truly useful AI agents yet by that definition. But if AI agents will happen, then at some point they need to make payments, they need to do make financial transactions. And guess what? Crypto is the most compatible form of payment and custody for AI. Because crypto is permissionless and it's programmable. And so is AI.

• 37:31Anthony Pompliano?

  It's almost like what you're saying is whether it's Bitcoin, stable coins, maybe even something else.

• 37:39Anthony Pompliano?

  It's money for machines.

• 37:40Speaker 02

  Yes, 100%.

• 37:42Anthony Pompliano?

  Yeah, and you need the automated transactions. Like for a long time, I've always said there is this belief that everything will become more and more automated and you will trust the algorithms. Obviously, you know, you trust Google to tell you where to go. You trust Spotify to tell you what music to listen to, whatever.

• 37:59Anthony Pompliano?

  But you can't use two day settlement time. So, you know, fiat, right? And it's a really, you're saying we need a different asset with a different settlement time to be able to unlock automation.

• 38:08Speaker 02

  Settlement time matters and programmability also matters. So imagine you have a personal AI assistant that runs autonomously. And you ask the agent to hire more specialized agents to do specialized work for you.

• 38:23Speaker 02

  To, I don't know, schedule meetings, that kind of stuff, right? And then your personal agent will need to pay the specialized agent. And guess what kind of money they're going to use to make that payment? It's going to be crypto because it's programmable.

• 38:41Anthony Pompliano?

  Yeah, it's super interesting. When you almost think about, you know, I for a long time have, I think I've even written pieces years ago about this like money for machines idea. But if you almost put together, how do I want to invest in artificial intelligence? You can go invest in large language models and things like OpenAI, whatever. Then there are, you know, maybe like products and services that are built using AI and kind of like end consumer opportunities. But maybe there is an even bigger opportunity. If you really want to own the payment rails of artificial intelligence, then you'd need to be investing in crypto. And if you were to put these investment opportunities next to each other, which one is more asymmetric?

• 39:24Anthony Pompliano?

  Right? Is there more kind of value to be captured by investing in what right now is being categorized as AI? Or is it actually to be allocating to, you know, kind of crypto? And that's where the value gets captured.

• 39:36Speaker 02

  By the way, you'll be surprised how many stocks are they're actually AI stocks, but people don't think of them as AI stocks yet. Because I spent a lot of time looking at AI stocks as well, especially semiconductors. There are quite a few of them that are, to me, really undervalued. And like everyone is talking about Nvidia, NVDA.

• 39:59Speaker 02

  By the way, Nvidia is the purest form of AI bed, but there's many others that are doing AI related stuff, both on the semi hardware side as well as application side.

• 40:10Anthony Pompliano?

  Talk us through maybe a couple that you're like, hey, these are AI companies, but no one has realized it yet.

• 40:16Speaker 02

  Snowflake is one that's more on the infrastructure side, so they provide database infrastructure. And at some point, people are going to realize a company like this is obviously an AI play.

• 40:31Speaker 02

  And there is a couple of semiconductor companies that are doing more and more stuff in AI. They're more, they're currently generalized semiconductor. But obviously, the AI force is so strong that it's going to convert them into doing more and more AI. So ASML, ACLS, these are the semiconductor companies that don't produce or don't fabricate the chips themselves, but produce the tools, the equipment for other fabs to create chips. So the supply chain goes like this. You have ASML, ACLS and others.

• 41:15Speaker 02

  They produce the manufacturing equipment and they sell the equipment to the likes of TSM. So Taiwan Semiconductor Company and Intel. And then these two, they have fabs, so they have like physical places where the chips are manufactured. And they manufacture the chips for Nvidia. Nvidia is fabulous. So Nvidia produces, designs the chips for OpenAI, for example. So that's, that's how the supply chain goes. And the most surprising thing about the hardware AI companies is that their profit margin is so incredibly high. It's like 30%, 40% or even more.

• 41:57Speaker 02

  And what that tells me is that their tech is, has extremely strong mode. They're probably 10 years ahead, five to 10 years ahead of their competitors. It's very hard for competitors to outperform, to outcompete them. That's why these hardware companies are so interesting to me. They're both undervalued and have extremely high profit margin.

• 42:18Anthony Pompliano?

  Now, are there companies that, I think CoreWeave was a big one in crypto that they had a bunch of infrastructure, mining equipment, et cetera. They pivoted very nicely. Are there other companies that maybe are getting categorized right now as crypto companies that you actually think are AI companies?

• 42:35Speaker 02

  There are a lot of crypto protocols that are doing AI related stuff. But to the best of my knowledge, there is none that is production ready.

• 42:46Anthony Pompliano?

  Got it.

• 42:47Speaker 02

  That that is simply because AI is already hard enough. And now you're slapping decentralization on top of it. You have two really hard problems to solve at the same time. So it'll take them quite some time to get to get ready.

• 43:05Anthony Pompliano?

  When you see capital flows, to me, it feels like there was tons of capital that poured into crypto. Right? More broadly, 2020, 2021, massive bull market. It's almost like the world. It's like that meme. You have the guy turned his head and all of a sudden AI took a lot of the capital flows and crypto kind of fell out of favor.

• 43:26Anthony Pompliano?

  In the future, is it just capital will flow into kind of, you know, pioneering tech and crypto and AI will be side by side? Or do you think we'll still kind of get this oscillating back and forth between two industries that maybe are, you know, tangentially related, but people will still keep them in separate buckets and and kind of go risk on crypto? And then pull back and go risk on AI?

• 43:49Speaker 02

  I have I have no idea, but empirically this year Coinbase point, the stock outperformed Nvidia. And by the way, Nvidia is the number one best performing stock in all of S and P 500. It's up like 250% or something and Coinbase is up like 300. So both went up. There's no capital flow that went from crypto to to AI or vice versa. And so whether or not this holds in the future, I have no idea. But I do think that in general, that the money will flow into high,

• 44:26Speaker 02

  you know, frontier technology sectors. And by the way, here's another thing I realized recently, which is,

• 44:34Speaker 02

  I wish I realized this earlier. You have all these macro LARPs that talk about how, you know, only five stocks in the S and P 500 drive all the returns in S and P 500, right? And the remaining of the 495 stocks hasn't haven't moved this year. But it turns out that maybe public stocks also also follow venture returns profile.

• 44:59Speaker 02

  Right, you have 500 stocks, but maybe only a few of them drive all the returns, just like in venture. And this certainly was not the case like 50 years ago. But today, it could very well be that that is the case because we're literally nearing the singularity. Like you have a bunch of technology sectors that are just evolving extremely fast.

• 45:24Speaker 02

  And all the top five or seven stocks in the S and P 500 that are driving all the returns are tech stocks. In AI and basically all of them are AI, if you think about it, right? Like Facebook is AI, Google is AI, Microsoft is AI, Tesla is AI, Nvidia is AI, all of them are AI, right? So maybe public markets also follow venture returns.

• 45:50Anthony Pompliano?

  I'll take it a step further. I have a letter to investors sitting in my drafts that is called the power law era. And it talks about this, but not just the five stocks in the S and P 500. It does two things. One, it looks at all markets across market cycles, across asset classes, et cetera, are power laws. And actually happened for a long time, people just didn't realize it. And I got this idea because there are two brothers from New Zealand called the Chandler brothers that a lot of people don't know about. But essentially, the story is their parents started the largest department store in New Zealand. Kind of, you know, the Neiman Marcus, if you will, of New Zealand. And they went to college.

• 46:36Anthony Pompliano?

  And when they came back, they were like, hey, guys, we don't want to run the department store, but like we like investing. Why don't we sell the family business, get the cash and then like we'll go invest? They did. When they sold the family business, they got about $10 million at the time. And in a 20 year run, they turned $10 million into $5 billion. So no outside investors, just pure investing. And when they looked at all of their investment portfolio and returns, it boiled down to about five investments they made over those 20 years that drove all the returns. And so when they looked at it, they realized about 5% of all the decisions they had made drove 95% of the outcomes. And so they became very interested in this idea of power laws, et cetera.

• 47:18Anthony Pompliano?

  And so if you then go and you actually extrapolate this outside of financial markets. In your life, power laws dominate everything, right? You probably have five to 10 personal relationships that actually are the outsized, you know, kind of contribution to happiness or to meaning. If you think of, you know, trips that you make, right? If I ask you, hey, where have you, you know, traveled to? You probably will think of three to five trips that you've made in your entire life, of all the days you've been on earth, right? And those are the things that you kind of remember. And so it is this very weird dynamic where like, maybe actually power laws are the default across financial markets, across life, across all these different things. But because the human brain really can't think in exponentials and understand power law, we just assume it's the opposite.

• 48:03Anthony Pompliano?

  And so what you're really getting at here is like, we're uncovering in some weird way because of our access to information and also the severity now of underperformance and outperformance, what's actually been true for, you know, decades in financial markets as well.

• 48:19Speaker 02

  And by the way, this is why the hodlers, Bitcoin hodlers were so prescient. Like if Bitcoin goes up two X and you sell it, you're never going to be able to capture this power law. The, in my 10 years in crypto, my best, basically 95% of my money comes from just holding for 10 years and never selling.

• 48:45Anthony Pompliano?

  I wrote a piece earlier this week and I said that Bitcoin essentially took financial discipline and codified it by really looking at, if you look at, you know, to use Bitcoin, but, but I think across crypto, this ends up being true. All of the great details and nuance of great investors are part of the Bitcoin culture. Warren Buffett, buy great assets and never sell them, right? Dollar cost average, right? Don't look at the price, just buy consistently over a long period of time. When things go on sale, buy more, right? I mean, you just kind of look at all these different components and you realize like, wait a second, in some weird way, crypto, although there is speculation, although there's degen's, although there's all these things that people kind of, you know, thumb their

• 49:28Anthony Pompliano?

  nose at, it's actually taught an entire generation how to be great investors. And that I think kind of blows people's mind. And if you go and you, you know, if you walk into a hedge fund on Wall Street and like, yeah, the crypto people actually understand investing better, you know, you'll get thrown out, but.

• 49:46Anthony Pompliano?

  You know, if you dollar-cost averaged since the beginning of January 2021. So basically, you said, "I rode all the way up the market, and I rode it all the way down and back to where it is now." And you were buying Bitcoin when it was overvalued, you were buying it when it was undervalued. You're up like 50% by simply just dollar-cost averaging on a daily basis. And so it is a very weird phenomenon.

• 50:07Speaker 02

  Hundred percent.

• 50:09Anthony Pompliano?

  What are you most excited about, let's say, in this coming bull market?

• 50:16Speaker 02

  I've already mentioned a few: payment, stablecoin, RWAs. They're all under-discussed, just because speculation is what drives all the attention. Stablecoin is boring. RWAs boring, they're boomer even, but I'm really excited. I think both are still fair to contrarian.

• 50:36Speaker 02

  Baze, I'm excited. Baze, again, probably top-three contender for the most important layer two on Ethereum. Solana, I'm very excited. Obviously, there has been a lot of hype recently. But Solana is fundamentally different from Ethereum, making good trade-offs.

• 50:58Speaker 02

  I'm excited about that.

• 51:01Speaker 02

  I'm excited about meme coins. I'm excited about penguins, Pajee Penguins on Ethereum.

• 51:10Speaker 02

  Matlads on Solana. Bongkong Solana. Hoshi on Baze. All these DGEN stuff, I'm excited.

• 51:21Speaker 02

  I'm excited about Coin, the stock. Oh, I'll throw another name: Circle. If Circle successfully IPOs next year, I think Circle will be the purest form of bet on the growth of stablecoin around the world, because that's literally the only thing they do, USDC. So, fingers crossed. I was an art investing in Circle, by the way. Fingers crossed on them successfully IPO next year. What else?

• 51:52Anthony Pompliano?

  That's a pretty good list.

• 51:53Speaker 02

  Yeah.

• 51:55Anthony Pompliano?

  That's a fantastic list. Chow, where can we send people to find you on the internet or find out more about Alliance Style?

• 52:03Speaker 02

  You can find me on Twitter, QWQIAO. So my initials, my first name.

• 52:10Speaker 02

  Alliance Style, our website is alliance.xyz.

• 52:16Speaker 02

  And yeah, that's it.

• 52:19Anthony Pompliano?

  Awesome. Well, I really appreciate you taking the time to do this. Your tweets are awesome. They make me think every time you tweet. So please keep it up and I'll definitely get in the future.

• 52:28Speaker 02

  Thanks for having me.