#517: Jim Cramer on Bitcoin’s Performance and Future

Jim Cramer is the host of Mad Money on CNBC. He is a former hedge fund manager as well as an author and a co-founder of TheStreet.com. In this conversation, we discuss bitcoin, gold, corporate treasuries, Wall Street, Gamestop, and NFTs. ======================= Remote makes it easy for companies of all sizes to employ global full-time employees and contractors. We take care of international payroll, benefits, taxes and local compliance, so you can focus on growing your business. Learn more about Remote and their new Remote for Startups program at http://www.remote.com. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp =======================

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

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Jim Cramer is the host of Mad Money on CNBC. He's a former hedge fund manager, as well as an author and a co-founder of thestreet.com. In this conversation, we discuss Bitcoin, gold, corporate treasuries, Wall Street, GameStop, and NFTs. I really enjoyed this conversation with Jim, as always, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi provides financial products for crypto investors. Those products include a high-yield interest

• 0:44Anthony Pompliano?

  account that pays up to 8.6% APY, a US dollar loan product that allows you to deposit crypto as collateral and then take out a US dollar loan against it, and a no-fee trading where you can exchange your dollars for all sorts of different cryptocurrencies. So, go check them out at blockfi.com/pomp. I'm an investor, I sit on the board, I'm a very happy users, and I think you will be too, if you go to blockfi.com/pomp. There, you can also sign up on the waitlist for the new Bitcoin Rewards credit card. It's a regular credit card that pays you interest back, or cash back, but not cash, actually Bitcoin back. And so it's not dollars back, it's not airline miles, it's Bitcoin back on your credit card.

• 1:27Anthony Pompliano?

  Pretty cool. Head on over to blockfi.com/pomp today. Next up is Remote. In 2021, every business is a global business. But how do you pay your global team and comply with international labor laws? Remote handles payroll, benefits, taxes, and compliance to help companies of all sizes pay and manage full-time and contract workers all over the world. No matter where your team lives and works, Remote's global employment solutions keep your team, your finances, and your intellectual property secure. Remote never charges percentages or fees, just best-in-class global employment solutions for a low, flat rate. The world's top global companies love Remote. GitLab, the world's largest all-remote organization, trusts for Remote to manage their global team and so should you.

• 2:13Anthony Pompliano?

  Remote is funded by Index Ventures, Sequoia Capital, and a host of other top-tier investors. Learn more about Remote and their new Remote for Startups program at remote.com. Again, remote.com. If you've got to pay a global team, you should be using remote.com. Lastly is Choice. Choice is rebuilding the way we approach retirement, which starts with making it simple to include Bitcoin and other cryptocurrencies in your savings. More than 20,000 Bitcoiners, myself included, have already signed up to start investing. Whether we are talking about crypto or stocks, Choice lets you trade real Bitcoin and Tesla in the same place, all without paying a dime in capital gains taxes. And if you want to hold your own keys all the way to the moon, you can do that too.

• 2:58Anthony Pompliano?

  Either way, Choice is on a mission to give you full control over your retirement savings. So head on over to retirewithchoice.com/pomp. Again, retirewithchoice.com/pomp. Again, retirewithchoice.com/pomp and sign up for an account today. One more thing, you know how I feel about this, but if you have a pro that manages your money, don't take any BS. Choice has tools for them too. Take back control today and visit retirewithchoice.com/pomp. Again, retirewithchoice.com/pomp. All right, let's get into this episode with Jim. I hope you enjoy this one.

• 3:36Speaker 01

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

• 4:07Anthony Pompliano?

  All right, guys. Bang, bang. I have the man himself. He is back. Jim, what's going on, man?

• 4:13Speaker 02

  Here's what's going on. You made me a ton of money. And I had to keep out the expletives there. Because when someone's made me as much money as you have, you do want to kind of pepper it with the authentic language. I get exactly what you told. Now, I know you probably hear a lot of people say, you know what? I did what you told. Uh-uh. No. I went and called my CFO. All right. And I said, listen, I just talked to this guy, Paul. And I want tomorrow, and I'm gonna give you some numbers. I said, I want, I hope I don't get in trouble. I said, I want a half million dollars in this. And you can buy it over a couple of days, but I don't want any longer than that. Because this guy was the authentic deal. And I had studied it before. It wasn't like I just like, you know, I didn't just fall off the turnip truck.

• 4:55Speaker 02

  But I said, this guy is compelling. I even used, and I don't know whether you have any fillers or not, but the brokerage you suggested. And I mentioned the money because it's never happened to me before. I bought a lot of stocks in my life. But I want to thank you. Someone, the reason I called, I said, can I please come on your show and thank you? Because it happened. It happened just as you said. It also happened much faster than you said. But I'm very grateful. And you know who else is grateful? My kids. So, thank you very much.

• 5:25Anthony Pompliano?

  Well, listen, as many people who watched our first episode together, I think noted. The most compelling piece of it was how open minded you were and how intellectually curious you are. And I think that is something that people forget is important in the investing world. So, I can yell and scream from the rooftop all I want, but it takes courage and conviction for you to do something about it.

• 5:45Speaker 02

  Well, it comes from studying your work. And look, by the way, I mean, you can say, well, I'm sucking up. I'm not gonna suck it up. I mean, I just have tremendous respect. A lot of what you said to me, I have since, of course, told others. And we're not, you know, there are things that you could say. I mean, I always knew that there was a limited number of Bitcoin. I always knew that there should be protection, and I regarded it as an asset class. But I have, I have for years said that you should have gold. And I think that what I had going for me was the recognition that what you were saying is what I was really searching for with gold all along. But gold let me down. Gold is subject to too many vicissitudes, it's subject to mining issues, it's practically

• 6:30Speaker 02

  subject to failing in many cases.

• 6:35Anthony Pompliano?

  Do you think that's what's gonna happen? Do you think that people are gonna drop gold and buy Bitcoin? Or what do you think's gonna happen now?

• 6:41Speaker 02

  If they listen to me, they're gonna drop half their gold. I've been saying 10% of gold since 1983. And now I say 5% of gold, 5% Bitcoin. And I did not say that before I talked with you. I had thoroughly researched it. I was skeptical and the reason I was skeptical is frankly because I said, you know what? I've done okay with my gold. You know, this is the old dog new tricks thing that I run up against with the Wall Street Bets people. Like they're constantly saying, oh, listen, you know, you're old baby boomer, you're forgotten. I think it has to do with how young your mind is. And I listened to you, a friend of mine, Kieran Goodwin, said, I heard you on POM. And POM's the smartest guy. I said, you know what? Damn straight.

• 7:24Speaker 02

  And I think that what matters isn't how old you are, it's whether you're young enough in hearing someone who knows more than you. And you know what? A lot of what you have to do is accept the fact that someone knows more than you. Now, we did in school. It's very funny because you walk into a chemistry class and you knew there were guys who were geniuses in chemistry and you're gonna get blown at. I walk into a Bitcoin class, what do I think I'm gonna know more than the Bitcoin guy? It's no different from a chemistry class, no different from an engineering class. I walked into the POM class and when I got not schooled but taught by POM, I said, what am I doing not protecting myself in what I have been saying to people could be hyperinflation? But even if there's just plain old inflation, why not get in?

• 8:07Speaker 02

  And I did the thing like, the only thing I was confused about was this notion, you gotta help me here, currency versus asset class. Cause I think that I am conflicted and I'm conflating. You can help me say what it really is.

• 8:25Anthony Pompliano?

  Yeah, so I think that there's three things people are using it for right now, right? So you have people who are using it as a medium of exchange. People are using it to store value and people who are using it as a speculative asset, right? And those three things serve different use cases for different people. But I think that a currency, obviously, medium of exchange to store value. It's hard to deny that people are storing value. I think that's pretty well accepted, kind of the digital gold narrative. And then when you look at like on-chain transaction volume, right? And some days now, it's, you know, 10, 12, 15 billion dollars in a single 24-hour period of this transaction volume. That's putting it into trillions of dollars on an annualized basis, which, you know, Visa and some of these guys are, I don't know, 8 to 12 trillion dollars in annualized volume.

• 9:07Anthony Pompliano?

  So you're talking about maybe 25 to 50% of the largest card networks in the world. So people are using it. Now, what they're using it for is very hard to determine, but they're using it as some sort of medium of exchange. And then I think the third one, and probably the one that everyone focuses on, is the speculative nature, right? People are absolutely, in some cases, buying it because they think it's going to go up in US dollar terms and they're going to sell it at a profit later. And so I think that what we got to figure out here is what's the dominant use case? Are most people speculating? Or are most people using it to store value? Or are most people using it as a medium of exchange? My guess is, when you look at the data, 60% of Bitcoin hasn't moved in the last 12 months. So that tells me that the majority is being used as a store of value over everything else today. Now, what happens in the future, we'll find out.

• 9:50Anthony Pompliano?

  But that's how I kind of think about, you know, from a use case perspective. And is it a currency? Is it an asset? Well, technically, it could be both, right?

• 9:58Speaker 02

  Right. Well, you know, for me, because of my, my, here's something that is old dog. I have always said to people, listen, if you could ever, ever, ever be in a situation where you can play with the house's money, you take out what you put in, then you're blessed and you never have to touch it. And that's what I've done. There were a lot of people who may have only took out that, took out the money I put in. But now I've been, I'm never going to touch it, Pom. I'm not, and I may never, because you traced out a scenario, and for those of us who, if those of you haven't watched it, you traced out a scenario that doesn't stop at 100,000, and a lot of people laughed. And I didn't, it was at 12,000, and I started thinking, I gotta get in before it got to 50, and I went home and told my wife, I said, Lisa, I'm doing this thing.

• 10:42Speaker 02

  And she said, why? And I described her, I described her talk, and she goes, you sound mesmerized. I said, no, I, I sound educated. These are two different things. It's not being mesmerized. It was educated. And the course that you laid out made me think, you know what, it isn't just a currency, I bought it as currency, but I realized it was a store of value and a better store of value than what I was using. And did I have the belief that it could grow up, go, I mean, I, I did believe there could be speculative staying power, but more importantly, what I realized is, uh, I deal a lot with a company square. And instead of saying that they, you know, that I'm gonna ride the speculation wave, I knew that that's this cash app. People, kids are buying, uh, they're buying, you know, a little bit of the schnitzel, as I would call it, they're buying slivers of Bitcoin.

• 11:26Speaker 02

  And I said to myself, you know what, I wanna be with them because they represent the future, but I also recognize they may be doing it for whatever reason, but I can be part of that wave too, and not feel that that wave is, is, um, uh, faultless. It's not faultless speculation, not after the wave that you laid, you know, you laid it out. And I am sure that you can lay it out for just in one minute, you gotta just lay it out again. I know that's a short capsule, probably not fair, but why, you know exactly what made me pull the trigger.

• 11:57Anthony Pompliano?

  Yeah, I mean, look, it, it's very simple. There's a fixed supply asset, and if demand increases, the US dollar price value has to go up. And what we're seeing now is historically, there was tons of retail investors that were coming in with retail dollars, but now every single financial institution and corporation are asking the question, what is our Bitcoin strategy? And when they show up, Tesla shows up with a billion and a half dollars, Michael Saylor shows up with a billion dollars, you know, uh, JP Morgan, Guggenheim, hundreds of millions of dollars. And so I think that naturally what you're gonna just see is continued upward price movement to accommodate everyone because the existing holders don't wanna sell. And so, you know, again, 100K, I think, is a milestone on a much longer journey. Where it goes and on what timeframe, who knows?

• 12:39Anthony Pompliano?

  But I think that it's pretty crazy that, you know, just a couple of months ago, it was 12K. And now we're sitting here and it's, you know, 55, $60,000, whatever it is. So, you know, kudos to you. What questions do you have? Let's, uh, let's do questions you have.

• 12:51Speaker 02

  Why did, uh, I suggested that corporate treasurers, which I one time handled a $100 billion fund for a corporation, that corporate treasurers should put a percentage of their corporate cash into Bitcoin. And I was laughed at universally. Should I have been?

• 13:13Anthony Pompliano?

  No, of course not. And what you're going to find is most corporate treasurers, I think, pride themselves on the fact that they're not running a hedge fund, right? They don't want to look at themselves as speculative investors. But ultimately, what their job is more than anything is risk mitigation, right? So everyone thinks of Bitcoin and they look at the upside. Oh, how much could it go up in US dollar value? But actually, if you look at it the other way, right? And we could talk about some of the kind of inflation concerns that probably you and I both have. It, you start to say, wait a second, the dollar actually may be the riskier asset out of these two. If you look at your bond portfolio, there's not a lot of bonds you can hold right now. They're going to really retain value in the same way. And so I just say to people, look, zoom all the way out and look at a 10-year track record, right?

• 13:57Anthony Pompliano?

  Bitcoin has grown in US dollar terms at a 200% compound annual growth rate. 200% a year for 10 years, right? 12 years, whatever it's been. And you can say all that you want in terms of, oh, that's because it started out really small and, you know, there was no exchanges or whatever and it grew. Well, the compound annual growth rate over the last 10 years has been going up this year. It started out the year at like 196% and now it's at like 205. And so naturally, like, you're just getting this upward movement. And so I think that ultimately what you're starting to see, whether it's MicroStrategy, Square, Tesla, et cetera, is absolutely the founders or the CEOs of these businesses happen to be individuals who are forward-thinking, who are technology kind of minded, and they see.

• 14:40Anthony Pompliano?

  That they're not going to go put 50%, but they're going to put a percentage, whether that's 1% up to, you know, Tesla thinks got 7, 8%. Michael Saylor from Michael Strategies taking a very different approach. He's saying, listen, I'm going to get the market to give me free dollars, right? At 0% interest rates and I'm going to take that as free dollars that are guaranteed to lose value over time. I'm going to convert it to this sound money, this digital sound money. And I think that what we're about to see, and again, I don't know exact timing. I don't know who kind of will break the dam even further. But I think we're about to see a lot of people do this. What, why would you not take free money? That you can then go convert to sound money and essentially watch it continue to appreciate. And so I think that what this is going to happen is this is going to go from on Wall Street.

• 15:25Anthony Pompliano?

  What was a contrarian idea has now transitioned to a consensus idea. Everyone has a Bitcoin strategy or is trying to figure out what it is. In corporate America with the treasurer is what you're about to see is we're probably on the precipice of the transition from contrarian idea to consensus idea. And when that happens, they're going to bring a lot of dollars with them, right? And so I think that you're just going to continue to see this super aggressive upwards price movement over some period of time. Maybe it's three months, six months, nine months. Who knows what it is? I'm sure that there will be a blow off top at some point, you know, kind of Q4 this year, Q1 next year, whatever. But the key now point is going to be Bitcoin is not going to die. It's not going to go to zero, right? It's not a, you know, Ponzi scheme, a bubble in the sense that it's going to pop and go to zero.

• 16:11Anthony Pompliano?

  Instead, what you're going to see is you're going to see the consolidation again, some new floor of the value of the asset. And then we're going to go through it all over again, because in 2024, we got another habit, another supply shock coming. And so it's just this like crazy beautifully designed asset that I think now you're starting to see Wall Street. You're starting to see corporations wake up to, and here's the crazy part that you'll understand that some other listeners may not. Is Bitcoin is probably the only asset that as it goes up in price, it actually becomes more attractive to the corporations because now it's getting to be big enough where they can actually play in it. And that's a wild concept, right? Because most assets, it's the exact opposite.

• 16:48Speaker 02

  Yes, that's true. And I think that there's a great miscommunication. There's a There's another disservice being done to Bitcoin, which is that we hear that the speculative juice has got it, say, from 15 to 50. Well, how about that I could say, no, see, when the Treasury prints 4 trillion that it doesn't have, that gets it from 15 to 50. I would bank on my reasoning as much as the speculative. When you print 4 trillion, and what are they going to make it back with a 1% wealth tax? I mean, are you kidding me? I think that there is no coincidence between the amount of money that we're printing and this run. And therefore, I don't think the run is over because we're obviously going to have to print

• 17:33Speaker 02

  to pay for all the printing. And every time you print to pay for all the printing, it makes Bitcoin worth more.

• 17:40Anthony Pompliano?

  Of course, it is the check to undisciplined monetary policy. Let's talk a little bit about inflation, right? So there's now $6 trillion in quantitative easing that's occurred. We've seen massive kind of lowering of the interest rates to emergency cuts last year to a zero rate environment. There's plenty of people who say, hey, we're in a deflationary environment. There's plenty of people who say, well, the demand can soak up all of the printing. The counterargument would be, well, food prices are going up, gas prices are going up, lumber prices are going up. What's your take? Like, is there inflation or the official numbers accurate? How should we think about it?

• 18:18Speaker 02

  Well, I think that there's two kinds of inflation. Obviously, there's the inflation of the food variety, of which I think will be taken care of, and the steel variety will be taken care of. And then there's just the, you can borrow money for so little if you have a decent balance sheet, only if you have a decent balance sheet, and go buy things of great value that you're going to keep doing that. And that inflation is very much in play. So, I mean, one of the things that I've been doing, my wife is in real estate, I'm out of dumb stocks. So she said, look, they're giving the money away, let's just go buy. And I think that that is, for people who have fortunately have been lucky enough to do well,

• 19:01Speaker 02

  the giving the money away, let's go buy is the inflation that's going to come.

• 19:04Speaker 02

  And that's what the Fed is going to be faced with. I mean, at what point does Jay Powell say, you know what, I can't continue to have people make, you know, have a percentage of the people who are wealthy make even more money as I struggle to get the guy who's making fifteen dollars an hour to eighteen dollars an hour. We need structural change. I mean, I'm not talking about whether, you know, whether you're a Marxist or a Trump here, or whether you're a Reaganist or a Trump or whatever, but that that kind of inflation where you're still, you're paying three percent interest rates for something that is a tremendous store of value like I think land is, or tremendous store of value like I think that I think Bitcoin is, that's inflationary. And that's the kind of inflation that I think makes me want to talk to you because it's inflation that I can, I can do something about.

• 19:53Speaker 02

  I can't, I can't change the price of oil. I can't change even if oil goes to four, gas goes to four, but I have to take protection. I have to defend. And there are some people who defend by buying masterworks. I don't have the the hundred billion, million dollars to buy a special painting. I think that does preserve its value. I know that in Zimbabwe, certain mansions and huge amounts of land preserve value. In Weimar, Germany, gold preserves some value. And in the United States, Bitcoin preserves that. That's what you've taught me. And I am happy to learn.

• 20:25Anthony Pompliano?

  I think the craziest part about this is what we're essentially watching is a real life economics course, right? Where people are understanding that first, everyone doesn't experience the same level of inflation. The bottom socioeconomic statuses experience higher levels of inflation than the top, and they also experience different types of inflation. So the benefit accrues to the top in terms of asset inflation, right? Literally the stock market, gold, Bitcoin, real estate, all that's going through the roof. At the same time, the cost of goods that is the majority of expenses for the lowest socioeconomic classes is also skyrocketing. And so one is a very consumption driven type financial situation. The other is a very investing heavy. And so I keep going back to this idea of the system's working exactly as designed, right? The system's not designed to make a wealth inequality gap when it's designed to

• 21:14Anthony Pompliano?

  do is to devalue a currency slowly over time in order to, you know, drum up economic activity or investment. The problem is that only 55% of Americans understand that and are educated on that information. And so there's 55% of Americans who hold investable assets. The bottom 45% hold no investable assets. And so that's where you get that bifurcation, that continued kind of, you know, widening of the wealth inequality gap. And so to me, it's a financial education thing. If we could educate everybody and tell them, hey, invest, don't try to save your way to, you know, some sort of financial freedom, but you have to invest. I think we could actually put a dent in the problem. It's just, how do you do that in an efficient way?

• 21:53Speaker 02

  How do you do it? Now, look, I, I, look, obviously, I'm not denigrating the asset that I talk about all the time with just stocks. I am saying that I can't own individual stocks. So when something stumble, it comes along my way that I think can have some appreciation. And it's, it's not a stock. It's pretty fascinating, which it's been real estate and it's been what you talk about. I still think stocks are tremendous investments. By no means, by what we're talking about, am I saying, and that's why I say you gotta sell this, that, bit. We have tremendous stocks. They've created amazing wealth. But I think that where I've got to go next with you is I'm on a conference call for Nvidia, which is a stock that I've recommended since it was about 10 bucks. It's at 500. And one of the things that happened in 2018 was that people use their cards to mine.

• 22:37Speaker 02

  On the conference call, they talked about how in March, they're going to produce cards that are just for Ethereum mining. So the two questions I have is, one, there are cards, obviously, these are not swappable. You don't just say, oh, I'll do Ethereum, I'll do Bitcoin. And two, why is it in the interest of an Nvidia to do that? And who's buying?

• 22:58Anthony Pompliano?

  Yeah, so there's a couple of questions in there. First is, there's a specialized type of computer, specifically ASIC miner, that is specifically focused on Bitcoin mining. What the Ethereum network and other networks will use is a GPU, right? The graphic processing units. And so what you can do is, there is some level of variability in terms of you have GPU based miner. You could basically switch between a handful of these different. Different GPU based type mining protocols, but Bitcoin requires these ASICs. And so that tends to be kind of where you get the difference. And these businesses are set up to do the GPUs, right? That the kind of holy grail eventually is going to be that somebody sets up an advanced computing system or a center.

• 23:41Anthony Pompliano?

  And what they say is, hey, I don't care if I'm doing 3D rendering. I don't care if I'm doing some sort of computation for self-driving cars, mining some sort of cryptocurrency, whatever it is, I just do advanced computing and I have one set of hardware and I can kind of do all of it. I don't know how quick that's going to happen. But when we get to that world, then when it becomes really interesting is then you get a real free market dynamic at play that's going to push the price of a lot of the other types of advanced computing needs down. And when you start to all of a sudden say, hey, we can now do 3D rendering or we can do stuff for self-driving cars or other types of DNA sequencing or whatever, and we can push those costs down and lower the friction. Imagine all of the innovation and kind of breakthroughs we're going to have when you just lower the costs to actually do some of this stuff.

• 24:26Anthony Pompliano?

  And so I think that's like a big piece of it. Nvidia and others like it, I think are in a really good spot because they understand hardware, software and advanced computing. And so when you look at the Bitcoin mining businesses, they got to do Bitcoin mining, right? That there's no ability for them to kind of go into the other fields. And so I think that's really where you're seeing a separation between the two different types of hardware really dictate kind of what you can do with that hardware.

• 24:49Speaker 02

  Well, I mean, should I be buying Ethereum?

• 24:52Anthony Pompliano?

  Look, I think that there's a lot of folks who basically look at Ethereum in a couple of different ways. So first is it's important to understand Ethereum and Bitcoin are going after two completely different things, right? Bitcoin is going after kind of the world reserve currency, right? It wants to disrupt gold, it wants to disrupt central banks and it wants to be this programmatic, transparent monetary policy. And my opinion and many people in the Bitcoin community is that it's going to achieve that goal, right? And so you can put whatever kind of percentage probability on that, but that's kind of what Bitcoin's going after. Ethereum basically was created by Vitalik Buterin and a few other folks. They wanted to build on top of Bitcoin network, but they said, hey, this is too difficult. And so we need to go build on something else. That has smart contract capabilities, etc.

• 25:37Anthony Pompliano?

  And so now we've ended up in this world where Ethereum, the network was built and there's all kinds of people building applications and and various products and services on top of that network. But also, we now have a lot of smart contract capabilities on top of Bitcoin and other networks as well. And so what you're going to end up seeing is probably coexistence in this world, right? And a lot of people, they they want to think that the world's binary. They want to say, hey, there's going to be one thing to rule everything. But ultimately, what we're seeing is we're seeing the market adopt certain things on the Bitcoin network in layer two technologies and smart contract type capabilities. But also, we're seeing that happen in a very big way on Ethereum. And in what I think is a really interesting area is like, what happens if it's just interoperable?

• 26:19Anthony Pompliano?

  So if you're on the Ethereum network, on the Bitcoin network, and we can actually transact with each other in some, you know, interesting way. I don't know where it goes. I'm not a developer in terms of having the the technical knowledge to say, you know, hey, here's the exact technology that's going to be the winner. But I do think that the most interesting part for investors is, look, there's a ton of innovation and experimentation happening all across this ecosystem. And the flood of intellectual capital coming into this from the world's best technologists is undeniable. And so you you just got to be in the space, right? You got to have the exposure and you got to start paying attention.

• 26:50Speaker 02

  You know, I it's funny, I I posited on one of these days when this GameStop went to 350 that, you know, look, I know that Nvidia is going to sell the GPUs for Ethereum. I mean, maybe GameStop should be in the businesses of selling those those cards. But you know what, after listening to you, I'm thinking maybe that's not so for fetched.

• 27:09Anthony Pompliano?

  Well, look, I I mean, if you really think about, so let's talk about GameStop, right? GameStop basically had this incredible run. One of the things that surprised me was there was no sort of capital markets activity, right? There was, as far as I know, there was no debt issued, there was no kind of equity raise at even with the inflated stock price. And so that kind of struck me as like, maybe a missed opportunity, or maybe there's something I don't know in in terms of why they didn't do it. But the second piece of it that I thought was really interesting is if you believe the kind of pitch from the company, my understanding is they want to go from pure, you know, product retailer in in a Physical presence, they want to get more into gaming, IP, they want to have a subscription product like all that kind of stuff.

• 27:50Anthony Pompliano?

  That's not really that far. If you got people coming into a physical location, you can now say them, hey, we know you're into games, but you're also very technical. You're also into kind of these virtual worlds. Why don't we sell you some sort of virtual skin? Or why don't we sell you, you know, some sort of cryptocurrency that's inside of a game, right? That isn't necessarily a token. What happens when all of a sudden you can take, you know, a sword that you get in one game and you can bring it to another world? Like, I don't know where it goes, but that all feels like that's right up there, Ali.

• 28:17Speaker 02

  Right. That's why this fellow, uh, he's but, you know, very bright guy, obviously, uh, Ryan Cohen, if he's, I'm sure he's watching. I'm telling you, he's, look, I love Chewy, uh, he is the co-founder of True, but that is what I'm talking, you have now put it far more articulate than I was, uh, and have been, but that's what I'm talking about. Make the game about, you know, it may get a contest, make there be e-gaming, and the winners are paid in a currency that you and I trust. A worldwide currency with worldwide games. And I don't want to mess with dollars. I need something that can store value. It's fairly funny when you look at, you know, I remember once when I was taking economics class at college.

• 28:58Speaker 02

  They said, listen, you know, what you have to do is every seven years, you know that your, your money's cut in half with the doll. I'd be like, so like, why do I sit here and just say, you know what, I'll just accept that. We would never accept the idea that every seven years a car is worthless. Or it's, it's going, it's depreciated 50%. Or how about a home? Oh, in seven years, you gotta throw that home away. I mean, it's supposed to be our principal asset. A- a- and so all of these things are made it someone like me. It's like an upside down world. But someone who's younger has the privilege of not having thought about the way that we've been stuck with. Which brings me to all of the newfound talk about buying thing, you know, art with tokens and doing what Musk is doing.

• 29:39Speaker 02

  Getting a, a discussion going that frankly is happening so quickly. I need your help. I just need your help.

• 29:45Anthony Pompliano?

  What questions do you have about NFTs?

• 29:48Speaker 02

  Okay, so why do I, when I think about NFTs, why, why do people talk about expensive sneakers and hard to value art? Why are those the things that people talk?

• 29:58Anthony Pompliano?

  So let's remember what drives a lot of value. What is drives the value of Bitcoin? Scarcity, there's 21 million of them. What drives the traditional art market? Scarcity. What drives the Supremes and sneakers and kind of all of that economy and culture? Scarcity. What drives trading cards? Scarcity. Now, when you get into the digital world, the best way I know how to explain it is, let's say I have a music file, right? And you want to listen to the same song that I have. I say, okay, great, Jim, I'm going to send it to you and I hit send. And in a generalized way, what it does is it sends you the computer file. You now listen to the music and I listen to the music. We both are happy because we get to listen to the song. But I don't know if you got the original or the copy of those files. And so when it's music, who cares? You're listening to the song, I'm listening to the song, all is good.

• 30:43Anthony Pompliano?

  But if all of a sudden that computer file is supposed to represent or does represent money, some sort of scarce art, some sort of digital good. It's really important that you know you got the original and you didn't get the counterfeit. And so that's where ultimately, kind of the need for some ability to understand what the original is in the digital world comes in. The other way to think about it is, and I forget who thought of this, but I thought it was a really interesting way to look at it, is a serial number. So take the Eiffel Tower, for example. In the physical world, the only Eiffel Tower that has real value is Eiffel Tower number 001. Every other Eiffel Tower after that has almost no value.

• 31:24Anthony Pompliano?

  And they've replicated it in Vegas, in the little trinket that you bring home. And they've even built, you know, real life models of it in a computer, all this stuff. But Eiffel Tower number 001 is really important and we all know where it is and we can go see it and touch it. In the digital world, it's really hard to do that. And so ultimately, what these kind of NFTs or digital goods are doing is they're able to prove that if you create something, this is the original, this is, you know, number 001. And so ultimately, when you can now prove scarcity. scarcity in a digital world, what do people do? They just look and they say, okay, what's the old stuff, right? That had scarcity as a value driver. And now I'm just going to bring it to the new world. It's kind of the equivalent of like a newspaper saying, oh, the internet. Like, let me just PDF my newspaper and just put it on a webpage and like, I win.

• 32:10Anthony Pompliano?

  But as we saw with the media companies, that's not all of the value that the internet provided. You couldn't change the headlines. You couldn't distribute it differently. You couldn't put multimedia, all that kind of stuff. And so what I'm really excited about is like, what happens five, 10 years from now? When people really understand all of the things that can happen here? And they start to apply it for new types of goods, right? And so, you know, whether it's these kind of virtual museums where you could buy a digital good, you could display it in a virtual museum and then Jim can go in virtual reality and go actually visit that place. Or what happens if all of a sudden now you look at like the music industry? And or you look at some sort of sports tickets? Those things have a secondary market and those secondary markets can be really, really high volume.

• 32:55Anthony Pompliano?

  But if I'm a sports team and I sell you on the primary sale that sports ticket and you go resell it? I only made money on the primary sale. But now if it's a digital good and I can actually code into the asset and say, hey, every time this trades hands, I want 10%. And I sell it to you, I make my money from the primary sale. Then you sell it, I get 10%. That person resells, I get 10%. All of a sudden, it becomes a pretty big revenue stream.

• 33:19Speaker 02

  But I need blockchain to be able to make that happen, that I can keep track of the revenue stream?

• 33:23Anthony Pompliano?

  Exactly. It's who owns what, when, right? Is essentially what ends up happening. And so I think that, you know, the key piece for people to understand is like, look, Bitcoin is going to be the global reserve currency. It's going to serve as that kind of world currency you talked about. But people are trying to figure out this technology, what else can I add to it? And I think we've got to be careful because just like when there's always this highly innovative disruptive technology, people will take it and they'll use it for good and they'll use it for bad, right? And a lot of times it's hard to tell who's who because you got good actors and bad actors all kind of doing similar things. And so I think we want to encourage the innovation, want to encourage the experimentation. But we also want to call out the people who are just doing cash grabs or who are just doing things that kind of are

• 34:05Anthony Pompliano?

  malicious, right? And so I think that's where you're seeing a lot in the community around debate and kind of controversy is just like, what is kind of the the things that people should be doing versus the things that people shouldn't be doing? Uh, but I think Bitcoin obviously has kind of risen above everything in terms of market cap. And now you're seeing kind of exploration in these other areas and some of it will work and some of it won't.

• 34:23Speaker 02

  But but where are we um, serious and where are we not? I mean, this is the Musk problem. You know, every time I mention Bitcoin, you know, people mention another coin. I I'm trying to take it as seriously as possible. And I feel like that uh, there are people who don't get the seriousness of the topic. Or maybe the people who feel like, you know what, it must likes it.

• 34:46Speaker 02

  Anything goes. I mean, where do you come out on Doge?

• 34:50Anthony Pompliano?

  Yeah. So well, here here's the really, really crazy thing, right, is I'm a huge believer that like the meme is the message. And so one of the most effective ways to communicate with a very large portion of the internet population today is via these memes and gifs and all this stuff. And so the easiest manifestation of that is literally I could put a picture with some words on it or whatever, and you and I laugh, but you you get the message, right? It's kind of like a good joke, right? There's a hint of truth and and a great humor to it. Um, but what I think that we're starting to see is, well, what happens when those memes are financialized? So what's the difference between Doge coin and GameStop? Well, some people may say nothing. Other people will say they're two completely different things, right? But what you're starting to see again is you're seeing that when you democratize access

• 35:35Anthony Pompliano?

  and you start to break down that wall garden uh, for markets and you say that people, it doesn't matter if you have a lot of money. It doesn't matter if you're, you know, wear a suit and tie to work every day. Anyone in the world with an internet connection can play the game. You get all kinds of weird stuff, right? And some people just say, look, I like the stock, right? Is uh, uh, you know, roaring kitty said, or you get Elon Musk who thinks that Doge coin, he just likes it. Okay, great, right? And so he goes and he tweets about it. And so I think we've got to be, um, you know, we've got to be cautious, right? We don't want people to, especially with large audiences, to kind of lead folks to the slaughterhouse. But at the same time, there is an element of uh, this is entertainment, right? And so what's the difference between going to buy a lottery ticket or buying Doge coin? I don't really know. There's much right other than the the education or the state gets paid in the lottery and in

• 36:19Anthony Pompliano?

  Doge quite they don't get paid very much right but other than that I think that a lot of this stuff it's just pure entertainment and so you gotta let people have fun and and at the end of the day what do they say over a long period of time the market's a weighing machine right we're gonna end up figuring out what what actually has value and what doesn't but experimentation's important

• 36:36Speaker 02

  But I mean should I be on a stock exchange I mean should I be trading sneakers as part of a an asset call and some sort of store value I know what they've got a value

• 36:48Anthony Pompliano?

  Here's what I would say right is if you look at a traditional 6040 global portfolio I literally think you could take your cash and your bond position and throw it out the window and so now you got a bunch of liquidity right in your portfolio that you say what do I do with this and sure you can keep go piling into the stock market and buying more of the same assets but you're just getting more and more concentrated so you want some diversification yes I think people are buying some Bitcoin right which obviously you've you started to talk about but I think that they're also looking for other types of alternative assets and in some crazy way like you know timber used to be this crazy idea like we're gonna buy timber and that's an alternative asset well now that's a pretty well accepted especially in the institutional world like that is something that people will do well I actually think that every institutional investor

• 37:32Anthony Pompliano?

  in one day is gonna be buying alternative assets but they're gonna be buying sports cards they're gonna be buying sneakers they're gonna be buying all this stuff because again it all comes back to scarcity and when you live in a world where it is impossible for the Federal Reserve and elected officials to stop devaluing the currency and they have their hands tied behind their backs they can't raise interest rates you ultimately are gonna have this flight to safety but safety gets really really big aperture there's people are saying wait a minute I can't hold just real estate I can't hold just stocks I gotta get other stuff and you know look I there's all kinds of crazy stuff people are buying some of it'll be worthless some of it won't be but I I just think that there's a generation who they want the sports cards they want the digital art they want the sneakers right and so who who are you and I to say that they're wrong I don't know

• 38:17Speaker 02

  I'm reading a tremendous book called Titan and it's the biography of rock John D Rockefeller and he was the richest man and he figured out that currency that oil was going to have tremendous scarcity value people couldn't even figure out what it was going to be used for he had already decided that it was gonna have scarcity value so he buys every refinery in Cleveland And people don't understand why he's buying any of it because it makes no sense because people can't even envision, "Well, what the hell is he gonna do with it?" And then, well, what he did with it was he cornered, basically cornered, one of the most important markets in the world. But right now, there'd be you and me, we're Rockefeller and Flagler, which was his buddy.

• 38:57Speaker 02

  And they would be talking about the need to own all the oil in the world because there's only so much oil. And other guys would just say, "Here, here, take my oil for a hundred thousand." And it was worth a hundred million. But they should take it for a hundred thousand. Sometimes I feel like Bitcoin. Take it for six thousand. I'm so thrilled to get rid of it. All the people who sold the refineries for a hundred thousand thought they did great. They all thought they did great. They would be names on buildings and hospitals and schools and guys. But no, they thought they did great. And they thought they did great because they did not have the creativity that you had to take a look, or what Rockefeller had, to realize, "You know what? This thing may have tremendous, tremendous value." And a lot of people laughed at Rockefeller. He was a kind of a cranky guy.

• 39:43Speaker 02

  But he had a vision. And it was a vision that the stuff that was in a western part of Pennsylvania, where no one was willing to go, was worth a great deal. And you know, you and I are talking about this, and I do feel like it's Cleveland right after they decided, "You know what? Maybe it can light, maybe it can be used to light things up." They hadn't thought about anything else. And imagine, maybe we are like you talked about. Maybe we're gonna be in a virtual room like, like Jensen Huang has told me at Nvidia. "Listen, Jim, one day, maybe you go into a room and you're alone, but you want to talk to five people who love Mozart." Boom, I'll give you the five who love Mozart. Now, just like you also said, there's gonna be people who use it for evil. We have to be sure that doesn't happen. But right now, our minds are our limiting factor.

• 40:27Speaker 02

  And I find older minds really have to be careful because they're the ones that are gonna, that were ruined in Weimar. They were the ones that were ruined in Zimbabwe. And when I say ruined, I mean literally, they thought they had a lot of money. And it turned out that they didn't. And it's not necessarily any different from what you and I are talking about right now. We all may have fought before the government. Print four trillion dollars that we had a lot of money, but maybe we don't and we don't have oil. But we can buy if you're at Square. I mean, I am most appreciative of anyone who watches this and says, well, listen, I see Bitcoin at X, but I can go into Square or my Cash App and I can buy some, put some every a month, every month, put some away. I think you'd probably be appreciative of someone trying to do that.

• 41:12Anthony Pompliano?

  Absolutely. So you bring up John Rockefeller and one of my favorite stories about him is obviously he gets in a a little, you know, issue with a lot of the guys who run the railroads and what is probably one of the smartest things that he ever did was then he said, well, I'm just going to use a pipeline. I'm going to literally create pipelines. I'm going to push the oil there and I'm going to go around your railroads and you can kick rocks. So I think that

• 41:38Anthony Pompliano?

  Yeah, innovators innovate, right?

• 41:41Speaker 02

  Screw you.

• 41:42Anthony Pompliano?

  Absolutely. So innovators innovate, but here's an idea for you that I think the world hasn't yet woken up to that. When I sit back and I say, you know, what's a secret that investors, if they start to wrap their head around this, will start to change the way they invest is we talk a lot about commodities, right? We're talking about oil and all kinds of other commodities, but actually the world's most valuable commodity. Right? And if you go back to Cleveland and people realizing that this kerosene and oil was going to be so valuable for everybody else is computing power is the world's most valuable commodity. And so ultimately what Bitcoin is backed by is the world's strongest computing network, right? It is backed by the strongest commodity in the world.

• 42:23Anthony Pompliano?

  It's the largest kind of computing network commodity in the world. And so I think that what we're starting to see and it's starting early, right? There's still a lot of people who wrap their head around this is if you start to think of computing power as a commodity and then you start to say to yourself, well, who owns the pipes to the computing power? Well, Jeff Bezos and AWS doing pretty well. The Bitcoin network is backed by the strongest computing network in the world. So it's truly our asset now, right? And so you start to start to look around and say, where's the computing power, right? Where's that pointed to? Who's providing it? Who's the underlying infrastructure that's making that possible? I think that that whole world and that whole economy and industry is going to get really, really interesting.

• 43:04Speaker 02

  The pipes.

• 43:04Anthony Pompliano?

  But but there's another piece of it that gets me even more excited, which is if you look at some of these companies like Great American Mining, and there's a whole slew of them. What they're doing is they're saying, we're going to connect that old commodity world to the new commodity world. So they go out to the oil and gas guys and say, hey, you guys are killing the environment. You guys are flaring all this gas out here, and it's one of the most harmful things you can do, but you're doing it because you found oil. What if we could actually capture the flare gas and we could turn it into power onsite? And we could mine Bitcoin right here.

• 43:36Speaker 02

  Whoa!

• 43:38Anthony Pompliano?

  And that's what they're doing is they're literally powering Bitcoin mining equipment onsite at the oil and gas kind of wellhead. And they're capturing flare gas and they're mining because all you have to do is have an internet connection in these machines.

• 43:52Speaker 02

  All right. And so I just thought, all right, so I'm meeting with the CEO of Coca-Cola. And I say, how much you paying for the carbon dioxide? He tells me the price. I said, I got an idea. Why don't we take all the carbon dioxide that comes out of the wells when they drill and we'll send it to Coca-Cola? Here's the way I'm thinking. I'm thinking about a soft drink. You're thinking about Bitcoin. And that is the difference. But you see, after this interchange, I know enough with the CO2 and the Coca-Cola. You've got an idea that is brilliant. And it's like, if I take the Darren Woods tomorrow at Exxon, I'm going to say, what the hell? Why can't you diversify like this?

• 44:34Anthony Pompliano?

  Every company. Every single company in the world that has any sort of power generation is going to do this because the financial incentive is way too high. Every day right now Bitcoin miners are paid like 50 to 55 million dollars all around the world, every day. So we're talking about, you know, billions and billions of dollars in terms of annual revenue to Bitcoin miners. But the beauty is that you don't have to go buy equity in a miner to get that exposure. Exxon said, hey, you know what? We got a lot of gas flaring going on. We had a lot of access to power. Why don't we just buy some of these computers, plug them in, and then we'll start to get our own fair share of that revenue. You would see that not only are these companies going to have what a lot of people are referring to like a Michael Saylor referred to as a

• 45:17Anthony Pompliano?

  treasury strategy. How do I go ahead and buy Bitcoin and put it on my balance sheet and kind of use that to protect my shareholder value? But also what they're going to start to say is, wait a second, I need a P and L strategy. How do I actually participate in this economy and drive revenue and profits off of this? And so I think that ultimately the financial incentive for this system is going to be incredible. It's just that people are uneducated. They haven't spent the time. If you run an Exxon, this last thing in your mind is how do I mine Bitcoin? Over time, though, that changes.

• 45:46Speaker 02

  You just got to think like Rockefeller, who was this bumpkin, but he had thoughts like this. He, if he were, he wouldn't be rolling over his grave right now. He would be saying, you know what? I want to go right now and wring the neck of the Exxon guy that he hasn't thought about it, or worse, that he thinks it's small. That's what the people felt were the refineries. The 27 Cleveland fires, they thought they were small, but when you took them together, oh, my God. Well, anyway, look, I gotta go, shoot, I gotta go like, man, I gotta go lose money versus make money. You are pure joy.

• 46:20Anthony Pompliano?

  Let me ask, let me ask you one question before I let you go. What is, what has been, we talked last, I think in Q4 last year. So we're almost three months into 2021. What's been the biggest surprise in the financial markets for you?

• 46:33Speaker 02

  I think that the biggest, the biggest surprise is a belief that could actually turn out to be true, that the companies that we

• 46:49Speaker 02

  That the second half of 20, this is gonna be tougher for Jay Powell. That the second half of 2021 could be like 19, like 1990. I mean, not even, even better than 46, okay? Even better than 46. Or if you go read Grant, another great book, 1866, where there was this sudden, you know, 500,000 of our guys, remember, much smaller country, died. No one's able to do anything. And then suddenly 1866 occurs. And people don't even, like, nothing's happened in the country for six years. And then bingo, everything happens. And I think that, to bring it full square with Bitcoin,

• 47:30Speaker 02

  if you believe, and you have taught me, that my boom thesis is true, if you are not hedged against what a boom would mean in this country, you're nuts. I mean, literally, you're nuts. If my thesis is right on a boom, you're crazy not to have Bitcoin. And I don't care. I don't care if it's 70,000 right now. I'd be saying the same thing. I wouldn't be saying, and you gotta wait for a pullback to 53,000. No, I'd be saying, listen, if my thesis is true, and I've spent a lot of time on my thesis, the only way that you can protect your assets is gonna, you can obviously buy certain stocks. But I'm talking about protecting your assets. Insurance, the way I like insurance, and I buy insurance, is with Bitcoin. Pop, I don't know what else to do. The boom means Bitcoin.

• 48:15Anthony Pompliano?

  I, I will leave it at that because I definitely agree with you. And I think that people are drastically underestimating what we're about to witness. And you, you and I will talk later this year, and I think we will be having a lot of fun.

• 48:27Speaker 02

  We gotta talk sooner than that because it's too much fun. Thank you again. It's very rare that you ever in life get to say, listen, I owe you one, and I owe you one big partner. All right?

• 48:37Anthony Pompliano?

  All right, Jay, thank you so much. We'll do it again.

• 48:38Speaker 02

  Thank you, Pop. Appreciate it.