Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisntal and I'm Tracy halliway so Tracy that
Speaker 1: that whole game something was pretty crazy. Huh. I noticed
Speaker 1: you are putting that in the past tense. So you
Speaker 1: think it's over already. We're still in the midst of
Speaker 1: our Odd Lots game Stop series, So please don't say
Speaker 1: it's over. It's not over. I mean, I do think
Speaker 1: the squeeze and just like this incredible like moment where
Speaker 1: the squeeze got so intense that it was causing various
Speaker 1: hedge funds to not only uh put up massive losses
Speaker 1: of their short positions, but also have to liquidate some
Speaker 1: of their long positions to produce de gross overall. I mean,
Speaker 1: it feels like we're sort of in you know, we
Speaker 1: sort of faded a little bit, but obviously the sort
Speaker 1: of impact of this moment not in a way anytime soon, right,
Speaker 1: So I agree that the technicals for game stop look
Speaker 1: to be um diminishing at this point. You've got the
Speaker 1: short positions have mostly all been closed. The gamma squeeze
Speaker 1: probably isn't going to be as easy to achieve now
Speaker 1: because calls are going to be a lot more expensive,
Speaker 1: and of course most of all street bets is currently
Speaker 1: arguing with each other about what to buy next. But
Speaker 1: I guess that kind of brings us to the topic
Speaker 1: for this particular episode, right, And I mean, I think
Speaker 1: there's like a few things so obviously lots of concerns
Speaker 1: raised about market structure, how markets work, how markets settle,
Speaker 1: the whole big guy, little guy thing. Is the car
Speaker 1: is the deck, you know, stacked against the individual trader.
Speaker 1: I'm not really convinced it is, but so many questions.
Speaker 1: I think sort of like it was not a good
Speaker 1: moment for trust. I would say for traditional market it was.
Speaker 1: I don't think like by and large, even if the
Speaker 1: system did kind of war and some of these curves
Speaker 1: were put in place before it got completely out of hand. Like,
Speaker 1: I don't think traditional markets market structure that I don't
Speaker 1: think too many people came out like looking particularly good
Speaker 1: out of it. Yeah, I mean, I feel like market
Speaker 1: structure is always going to be a hard sell to
Speaker 1: the majority of people. And you know, I say that
Speaker 1: as someone who used to write market structure stories and
Speaker 1: had to pitch them to editors whose eyes would occasionally
Speaker 1: gloss over um, but the industry definitely did not cover
Speaker 1: itself in glory over the past week or so. And
Speaker 1: you can see a lot of the outrage online to
Speaker 1: talk about robin hood basically protecting hedge funds by shutting
Speaker 1: down or limiting trading of a bunch of different stocks
Speaker 1: and some other types of assets. The distrust is there
Speaker 1: for sure, right so coming into this of course obviously one,
Speaker 1: but also the second half of has been a huge
Speaker 1: sort of boom for crypto bitcoin surgery to new highs
Speaker 1: they shouldn't note or recording this February three, I think
Speaker 1: bitcoin is around thirty six thousand it had pre It's
Speaker 1: old high was around twenty thousand back And so we
Speaker 1: have this industry that's really regathered a lot of momentum.
Speaker 1: And there are many participants in the industry that say, look,
Speaker 1: you know this, uh, traditional finance stocks UM all kinds
Speaker 1: of issues with it, maybe some reasons not to trust it,
Speaker 1: you don't know the rules. How about crypto um, this
Speaker 1: is our moment something more transparent, something where the rules
Speaker 1: are much harder to change on the fly. And so
Speaker 1: I think there's you know, you already had this momentum
Speaker 1: for the industry coming into this moment, and I think
Speaker 1: probably a major attempt to seize on it by some
Speaker 1: of the big players. Yeah, I feel like there are
Speaker 1: probably two overlaps with the game stock situation here. One is,
Speaker 1: is bitcoin and asset that's going to get a lot
Speaker 1: of retail attention or as we see a bunch of
Speaker 1: meme stocks get more popular, is that maybe going to
Speaker 1: take away attention from something like crypto? And then secondly,
Speaker 1: this idea of decentralized finance, whether or not something like
Speaker 1: bitcoin could be an alternative to the existing financial system
Speaker 1: that a lot of people don't really believe in. Yeah,
Speaker 1: exactly right. So our guest today, I think is probably
Speaker 1: one of the best people to discuss all this because
Speaker 1: he really has seen both both sides of this divide,
Speaker 1: all the different worlds from multiple perspective, crypto, traditional finance,
Speaker 1: traditional big banks, hedge funds. We're gonna be speaking with
Speaker 1: Mike Novigrads. He is the CEO of Galaxy Digital, which
Speaker 1: will get a full description of but it's sort of
Speaker 1: this crypto investment bank with lots of different aspects in
Speaker 1: the crypto world. But prior to that, for several years,
Speaker 1: he was a global macro manager at Fortress, and prior
Speaker 1: to that he was um he did twelve years of
Speaker 1: Goldman Sex. So he really knows the financial world inside
Speaker 1: it outs in the traditional space, knows crypto extremely well.
Speaker 1: I mean, a lot of like u X finance names
Speaker 1: have gotten into crypto, but uh, Mike actually beat them
Speaker 1: all to it and was there when everyone was mocking it,
Speaker 1: and so he actually has a claim in a way
Speaker 1: that many don't. So we're gonna talk about all these issues.
Speaker 1: So Mike no reigrats, thank you so much for coming
Speaker 1: on an od lot. Thank you guys. How are the
Speaker 1: phones ringing off your hook? Specifically as a result of
Speaker 1: what we've seen with game Stop and the way that
Speaker 1: this sort of game stop story has become in part
Speaker 1: of crypto story. Yeah, listen, you know it's interesting. The
Speaker 1: last three months of crypto have been insane. We're hiring people,
Speaker 1: you know, one a day, trying to build a company
Speaker 1: up to kind of deal with the opportunity set. Some
Speaker 1: of our business has made more money in January than
Speaker 1: they did in the last two years combined, and just
Speaker 1: the activity level was up, and so I think that's
Speaker 1: great for the system. Right, there was a thesis that
Speaker 1: was put out there a while ago. Uh, and it's
Speaker 1: being validated as institutions and retail moved into mostly bitcoin.
Speaker 1: But now the entirety centralized space. I mean, I think
Speaker 1: it was in Games Stop. Was interesting because the start
Speaker 1: off as some really smart young kids figuring out, you know,
Speaker 1: a chink in the the armor of a bunch of
Speaker 1: the big hedge funds that they had sued the way
Speaker 1: too much of the stock that wouldn't be easy to squeeze.
Speaker 1: Now it was three hedge funds, that would have been
Speaker 1: illegal behavior, right if me and I called Paul Jones
Speaker 1: and the most patients said dude, let's squeeze this. Right,
Speaker 1: we had to go to jail. But what it's online
Speaker 1: and you know anonymous, you know, that wasn't illegal. And
Speaker 1: about one of those participants had enough individual weight to
Speaker 1: to move the stock. But collectively, the swarm of killer
Speaker 1: bees pushed the thing up. What was interesting was after
Speaker 1: the squeeze on day two three, you know, Game Stop
Speaker 1: goes from one, eight, three, three, fifty all the way
Speaker 1: to five. The energy that God created was the energy
Speaker 1: of a revolution. It was nihilistic, it was angry. Uh,
Speaker 1: it was let's tear down the system. Uh, it was
Speaker 1: David rus Goliath. It was endemic to what we're seeing
Speaker 1: in the country and in the world. Right, we've had
Speaker 1: this inequality gap that is so wide that we had
Speaker 1: it was very similar people tearing down the capitol. Let's
Speaker 1: burn burn it down. We don't believe you. And so
Speaker 1: when Robin Hood got overwhelmed with new orders, right, their
Speaker 1: business is booming, they didn't have enough regulatory capital, and they,
Speaker 1: in one of the worst corporate communications jobs I've ever seen,
Speaker 1: said Okay, we're gonna stop you from buying more game stock.
Speaker 1: All of a sudden, it became the conspiracy theories. It
Speaker 1: was like Trump getting the election stolen, right, Stevie Cone
Speaker 1: called and stopped. All these guys are inspiring against the
Speaker 1: little guy. The reality was this was legislation from God
Speaker 1: Frank from the progressive side of you know, of the House,
Speaker 1: that came back to say, hey, if you're gonna participate,
Speaker 1: you need regulatory capital. Listen, the game stop squeezes over
Speaker 1: you asked that question and earlier names squeezes can't can't
Speaker 1: sustain themselves for two really simple reasons. I call it
Speaker 1: greeting gravity. Right, if you bought it at forty twenty
Speaker 1: or forty or fifty at four hundred, made a fortune. Right,
Speaker 1: there was a crypto thing called Doge that got squeezed.
Speaker 1: My daughter's boyfriend he participated. He sold his Doge and
Speaker 1: brought his first part right. At one point, the the
Speaker 1: impetus to take some of that money that feels like
Speaker 1: it's free, that you just like it showed up in
Speaker 1: your wallet happens. New people come in and they start buying.
Speaker 1: There were twenty three billion dollars of volume that traded
Speaker 1: in game stock on like the third day of the squeeze.
Speaker 1: That means billion dollars of people selling with new people buying.
Speaker 1: When the when that gravity starts hampening and it starts
Speaker 1: going down, if you bought it at four hundred, it
Speaker 1: feels pretty shifty at three hundred, and so then you
Speaker 1: get to collapse, at which we see game stock will
Speaker 1: go back to its old fundamental value, which is probably
Speaker 1: what really pissed the office that a lot of you know,
Speaker 1: senior people in finance, Cameron Winklevoss and them off, and
Speaker 1: even Elon Musk at one poin kind of encouraging the
Speaker 1: masses what they were encouraging was unsuspecting new investors. Not
Speaker 1: the smart guys that bought it at you know, before
Speaker 1: it was squeezed, but new guys that got caught up
Speaker 1: in the frenzy, spending their hard earned dollars and to
Speaker 1: buy the thing at four with nothing almost knowledge, like
Speaker 1: it was almost a certainty they'd lose all their money
Speaker 1: at that point, and so I think that was just
Speaker 1: it was frustrating to watch. Yeah, that was around the
Speaker 1: like four mark. Um. I have more game stop questions,
Speaker 1: but before we sort of dive into a lot of this,
Speaker 1: I have a very simple thing to ask you, which
Speaker 1: is what does Galaxy actually do? Because every time I
Speaker 1: see it described, it's usually in a really vague term
Speaker 1: like Galaxy is an investment firm in crypto, or Galaxy
Speaker 1: works in the crypto industry. I never see a really
Speaker 1: specific description of it. We're gonna try to be much
Speaker 1: more crystal clear. So we have you know, four or
Speaker 1: five businesses if any where to break it out. We
Speaker 1: have one business, which is where you know, we're a
Speaker 1: venture shop, direct investing, and so we've invested in eighty
Speaker 1: companies that are building out the crypto ecosystem from new
Speaker 1: protocols like one inch or Luna token, two exchanges to
Speaker 1: custody services. So anything that has touched the crypto ecosystem
Speaker 1: or quite frankly, the virtual world ecosystem, we're investing in.
Speaker 1: And so we have a giant portfolio of investments. We
Speaker 1: have a inventory of both Bitcoin of theory and other
Speaker 1: coins that I personally trade, uh and so buy it
Speaker 1: when it's going down and sell what's going up. And
Speaker 1: so that's our principal activities. Then we have what you
Speaker 1: would call a traditional sales let sales, training, credit business.
Speaker 1: We lend money to people that are participating in the space.
Speaker 1: That's miners, that's that are just normal customers lending on margin.
Speaker 1: We have a derivative business right where the second or
Speaker 1: third biggest market maker and options and so if you
Speaker 1: want to do a structured product or sell calls against
Speaker 1: your position or by puts, we're there. For institutions, we
Speaker 1: have an asset management business where we take other people's
Speaker 1: money and raise it. We have a bitcoin fund. We
Speaker 1: have the Bloomberg Bitcoin Crypto Index. We have a venture
Speaker 1: fund that focuses on the virtual world stuff. And we
Speaker 1: have an investment bank, a group of people that have
Speaker 1: great domain expertise in the space, and we'll give advice
Speaker 1: on mergers, on acquisitions, on on capital raising and so.
Speaker 1: And then we have a mining division. Right, we are
Speaker 1: mining our own crypto, and that's mining finance, it's mining derivatives,
Speaker 1: and it's us mining ourselves and so pretty broad and diversified.
Speaker 1: It's been focused on institutions, not retail, and so that
Speaker 1: was a painful position to be in until about April
Speaker 1: of last year when COVID happened. Right, I had said, oh,
Speaker 1: the institutions are coming, and then they were slow, and
Speaker 1: then COVID happened, and they went from walking at one
Speaker 1: mile an hour to trotting to sprinting, and now it's
Speaker 1: like a mile prower, you know, just mad dash. And
Speaker 1: so you've seen hedge funds, insurance companies, asset managers all
Speaker 1: entering the space since April, and that's why when we
Speaker 1: went through twenty we went right to forty in bitcoin.
Speaker 1: Those institutions are mostly buying bitcoin. But the moment you
Speaker 1: make a little money in bitcoin, you're like, hey, what
Speaker 1: else is in this space? And you look into the
Speaker 1: ethereum ecosystem and you're like, wow, that's pretty cool. Too,
Speaker 1: and so then they're putting some money in ethereum. And
Speaker 1: then the final spaces, well, where the real disruption is
Speaker 1: gonna happen is in defy. Defy really simply put as
Speaker 1: taking a blockchain and bring it to the financial system. Right,
Speaker 1: it is creating driverless banks, or driverless insurance companies or
Speaker 1: dry list derivative markets. And that while it's still I
Speaker 1: think in the sandbox, right, it's still working out the
Speaker 1: kinks and being exploit it's growing so fast that you
Speaker 1: could see the little guppies jump out of the sandbox
Speaker 1: and become frogs really fast. Uh. And so it's a
Speaker 1: really exciting time to be in the space. You know,
Speaker 1: there's tons of human capital pouring in, there's tons of
Speaker 1: interest um and it does you know, I got into
Speaker 1: the space I already had made a whole lot of
Speaker 1: money in my life. So if I was going to
Speaker 1: go back to work and work seventy hours a week,
Speaker 1: I had three things I cared about. One, am I
Speaker 1: gonna work with young people? Because I think if you
Speaker 1: work with young people, you stay young. Two is it
Speaker 1: a big learning curve? Right? You want to learn new stuff?
Speaker 1: And this is a fantastically cool learning curve? And three
Speaker 1: did I have something to add? And I thought, partly
Speaker 1: because I got in early and I have Wall Street experience,
Speaker 1: that I'm older than most people, that there was something
Speaker 1: I could add to the community, if not just being
Speaker 1: the spokesperson or the unofficial spokesperson, but mostly it was
Speaker 1: purposed of it. Right. Crypto at its core is not
Speaker 1: about making money. It's about systems change. It's people started
Speaker 1: Bitcoin and the theory because they said, Hey, the world
Speaker 1: is screwed up. It is stacked to the to the
Speaker 1: to the big guy. Can we make it more transparent? Right?
Speaker 1: Sunlight brings disinfectant. Can we bring it more transparent? Can
Speaker 1: we make it more egalitarian? And that intuition you saw
Speaker 1: last week or the week before, write what it felt
Speaker 1: like We're just getting screwed again, even though it wasn't
Speaker 1: the truth. When Robin had shut down, the little guy
Speaker 1: felt like he was just getting screwed again. And when
Speaker 1: you think about you know, I p O allocations all
Speaker 1: go to the rich guys, right, the invest in the
Speaker 1: coolest project early. You've got to be rich to be
Speaker 1: led to be an adventure fund or private equity fund.
Speaker 1: And so we have this set of rules that we're
Speaker 1: supposed to be set up to protect a little guy,
Speaker 1: but feel a lot like rules that are boxing the
Speaker 1: little guy out from the best investments, leaving them the problems,
Speaker 1: and the little guy got angry. And so I think
Speaker 1: one of the reasons crypto residents is that it's core
Speaker 1: the people are trying to rebuild the financial market infrastructure
Speaker 1: and the consumer infrastructure on a more fair platform. And
Speaker 1: again it doesn't always feel that way, right, crypto insiders
Speaker 1: still get a better deal than crypto retail. But the
Speaker 1: DNA of the space is really kind of a progressive
Speaker 1: social dna UM. Now it has a big libertarian feel
Speaker 1: to it, right, Uh, keep the government out. I want
Speaker 1: to be peer to peer right, peer to peer transactionally,
Speaker 1: I don't need the government. But you're not just keeping
Speaker 1: the government out. I don't think we're gonna get We're
Speaker 1: gonna in the long run have a system that there's
Speaker 1: no government regulation in UM. You're cutting out the rent taker,
Speaker 1: and that's really where it becomes progressive. You know, I
Speaker 1: mentioned it in the beginning, and you could be quick,
Speaker 1: but it's pretty cliche by this point to hear It's like, Okay,
Speaker 1: this banker, so and so jumps over to some crypto thing.
Speaker 1: Can you usually hear about it at market tops? It
Speaker 1: was very big in seventeen is very a lot more
Speaker 1: of these days. You actually were not one of those people.
Speaker 1: You were interested in it when it was not cool,
Speaker 1: when I don't know ethereum was a few pennies or something.
Speaker 1: I think it was a Bloomberg article that first sort
Speaker 1: of report on it, but sort of what is the
Speaker 1: quick version of when you got interested and why? You know,
Speaker 1: you always get a little lucky in life to be
Speaker 1: that early. Uh. A friend called me up and said,
Speaker 1: have you heard about bitcoin? And I hadn't, and I
Speaker 1: googled it and it was trading about ninety dollars and
Speaker 1: I was like, wow, has all the markings of something
Speaker 1: that could be a good speculative bubble. And so I
Speaker 1: originally bought it, thinking i've something cheap, you sell it
Speaker 1: when he gets rich, right when it goes up, and
Speaker 1: it was. It was good technology. It was at the
Speaker 1: time of the financial crisis number two, right, the European
Speaker 1: financial crisis. So we'd already had the financial crisis. Now
Speaker 1: we're at the European financial crisis. We're in que two.
Speaker 1: Their printing money, and so there was a group of
Speaker 1: people that thought, oh, we're going to debase the currency.
Speaker 1: There was gonna be hyperinflation. They were wrong, but I
Speaker 1: thought that, and there were libertarians that cared about it.
Speaker 1: There were cipher punks, and the Chinese were buying. So
Speaker 1: I'm like, dude, this is going up. So I bought
Speaker 1: it as a speculative hack. And because I talked about
Speaker 1: it publicly without knowing I was in the public, I
Speaker 1: started getting asked to, you know, give speeches and whatnot
Speaker 1: on it, and that forced me to dig in and
Speaker 1: really try to understand it. And the more I dug in,
Speaker 1: the more I was like, Wow, this is kind of
Speaker 1: a cool, coolly designed thing. But it's when I started
Speaker 1: touching with the community. It really accelerated when my old
Speaker 1: college roommate Joe Lubin, who was the founder of Consensus,
Speaker 1: I went over to see him and his is it
Speaker 1: seems like three months old, and I felt that spirit
Speaker 1: of all the people in his office that they were like,
Speaker 1: we're gonna disrupt the music industry. We're gonna disrupt the
Speaker 1: finance industry. And I was like, well, the music industry,
Speaker 1: and they were like yeah, we're gonna hook royalties right
Speaker 1: into the song, and so you you you're the creator,
Speaker 1: you're gonna get something whatever that song is played, and
Speaker 1: it's actually automatic. It's not some promise from a shady
Speaker 1: music producer. I was literally looking at this and I
Speaker 1: was like, dude, these guys are going to rebuild the world.
Speaker 1: And that's when I got really involved. That's what the
Speaker 1: theory was ninety six cents, and so I bought a
Speaker 1: ton of a theoryum and really started understanding the space war. Listen,
Speaker 1: two thousand seventeen was a bubble. So everyone thought, oh,
Speaker 1: this is just two loops, and they were wrong. It
Speaker 1: was a bubble for lots of reasons. It was such
Speaker 1: a powerful idea. Bubbles always happened around ideas that changed
Speaker 1: the world, like the Internet bubble of ninety nine. It
Speaker 1: was a bubble. It wasn't like the Internet didn't change
Speaker 1: the world. The Internet changed everything about the world. It's
Speaker 1: just those ideas get so powerful and they spread so quickly.
Speaker 1: You know, you get a rational exuberance, and that's what
Speaker 1: happened instead and team the market had less knowledge. But
Speaker 1: what was cool about it, and it is important to
Speaker 1: talk about, is that It was the first bubble that
Speaker 1: started from the little guy. Right, This was a retail
Speaker 1: lead global speculative mania. We never had one before, right
Speaker 1: where Mr and Mrs you know what, the Nabby in
Speaker 1: Japan and Mr and Mrs Kim and Korea and guys
Speaker 1: in India people will call him the Sings. So I
Speaker 1: could really get myself in political trouble, you know, when
Speaker 1: we had people from all over the world participating, uh
Speaker 1: in this story. Right when people buy apple stock, it's
Speaker 1: not the thing everyone talks about in in India, right
Speaker 1: A local markets usually traded local things, and now all
Speaker 1: of a sudden everyone was talking about this thing called crypto.
Speaker 1: And so I think we're in this transition, going from
Speaker 1: a retail driven market to a you know market where
Speaker 1: institutions are moving in fast. That will create less volatility
Speaker 1: in the long run. Right, institutions have deeper pockets. They're
Speaker 1: not buying it leveraged retail, especially in age, you love
Speaker 1: to play it leveraged. But that idea that this was
Speaker 1: the people's revolution, right, that this was our thing was
Speaker 1: both generational, right, millennial and gen z realizing that the
Speaker 1: baby boomers that screwed the world up right, they've leveraged
Speaker 1: the future, right, we have these giant deficits that probably
Speaker 1: can never get paid back, and so intuitively they know
Speaker 1: they need some of their own store value. And that's
Speaker 1: where bitcoin really works. It's a social money, right, It's
Speaker 1: kind of the Internet, the money of the Internet in
Speaker 1: some ways for young people. And so you have this rich,
Speaker 1: poor revolution and generational revolution happening at the same time.
Speaker 1: And I think that's a powerful force. So I don't
Speaker 1: think that's going away. I noticed when you describe bitcoin
Speaker 1: initially you talked about being a store of value, and
Speaker 1: I'm curious, like what happened to the payments thesis around bitcoin,
Speaker 1: because that seems to have fallen by the wayside a
Speaker 1: little bit. And it's kind of interesting how the narratives
Speaker 1: on bitcoin change. But um, I'm curious how you sort
Speaker 1: of see the use case now and how that differs
Speaker 1: to when you first got into the space, so a
Speaker 1: bit quite Originally people thought it would be money, and
Speaker 1: that's why they called it a cryptocurrency, and for a
Speaker 1: bunch of different reasons. It morph part of the bitcoin
Speaker 1: technology is really cool, but it's not what gives it
Speaker 1: its value, right, what gives it its value is a
Speaker 1: social construct. I believe it's valuable, and you believe it's valuable.
Speaker 1: Therefore it has value because we could take the same
Speaker 1: code and call it bitcoin cash or call it novo coin, right,
Speaker 1: and it would be worth nearly as much. And so
Speaker 1: there was a debate about what it should be. There
Speaker 1: were storytellers, me being one of hundreds that said no, no no, no, no,
Speaker 1: this is digital gold and the story of digital gold one.
Speaker 1: And it's important in a lot of ways because gold
Speaker 1: doesn't get central banks and regulators nervous. Right, there's centrally
Speaker 1: lotters with the goal. No one's freaking out that it's
Speaker 1: gonna it's gonna ruin our ability to tax and it
Speaker 1: a citizens and whatnot. Normal cryptot get them nervous. But
Speaker 1: payments does, right, money does, And so you're gonna see
Speaker 1: a whole huge war in payments. Uh, fidelities getting into
Speaker 1: it with stable coins. But I think you're gonna see
Speaker 1: payments done on blockchain. But it's going to be done.
Speaker 1: And things that look far more like stable coins are
Speaker 1: traditional currencies wrapped in a token. Now they might not
Speaker 1: all be government issued stable coins. They might be algorithmic
Speaker 1: like in Korea, there's a thing called the Shy payment system,
Speaker 1: which is built on the Terra blockchain, which acreates value
Speaker 1: to the lunar token complicated systems. I'm along a lot
Speaker 1: of lunar tokens. I love it. It's one of the
Speaker 1: first applications where a fintech crypto experience has jumped out
Speaker 1: of the sandbox that is being used in real life.
Speaker 1: It is gaining traction, right, So it's really cool to
Speaker 1: watch because if you're a user, you don't care it's
Speaker 1: if it's built on a blockchain. You care about the
Speaker 1: user experience. That it's cheaper and it's faster, it's more efficient, right,
Speaker 1: And so keep your I on that that project as
Speaker 1: how this whole system could develop. But yeah, I don't
Speaker 1: think bitcoin will fight with being a with being a money.
Speaker 1: I think it'll be an asset. We should call them
Speaker 1: crypto assets in a lot of ways. And in that
Speaker 1: middle bucket, there's gonna be a monster battle, right. Facebook's
Speaker 1: coming out with the d M coin. You have USDC,
Speaker 1: you have tether, you have algorithmic stable coins like die.
Speaker 1: That space on how we move money, because reality, the
Speaker 1: real estate that everyone cares about, is gonna be your wallet,
Speaker 1: like what's in your crypto wallet? Bank accounts at Bank
Speaker 1: of America and JP Morgan are gonna be replaced with wallets.
Speaker 1: The banks will be dinosaurs if they don't quickly flip over.
Speaker 1: That's why the PayPal news was maybe the most important
Speaker 1: news of the year. PayPal has three thirty million customers
Speaker 1: that now have crypto wallets, right or that will have
Speaker 1: crypto wallets. That's a big deal. So if you're a
Speaker 1: Bank of America, they're like, okay, they have more customers
Speaker 1: than us. And you know, I think young kids are
Speaker 1: gonna want to go to the bank, tell or even
Speaker 1: deal with their bank. It's gonna be all on your phone.
Speaker 1: And so the real real estate that Facebook is gonna
Speaker 1: fight for it, I think everyone's gonna fight for is
Speaker 1: can you control? And you see that in China with
Speaker 1: you know Allie, you know Allie pay and and we
Speaker 1: chat and you know, and financial the innovation is literally
Speaker 1: having on people's telephones. No one of the like compared
Speaker 1: contrast the crypto ecosystem with say what we've seen in
Speaker 1: traditional markets lately, because people looked at what happened with
Speaker 1: robin Hood and even though there was no conspiracy Uh,
Speaker 1: you know, it's not great that people were in the
Speaker 1: middle of a trade and suddenly they weren't able to
Speaker 1: buy game stop shares, although ultimately they probably saved them
Speaker 1: a lot of money. But anyway, you know, that was
Speaker 1: it was a rare instance in which the rules sort
Speaker 1: of we're not ideal for a lot of people. It
Speaker 1: seems to me that with crypto you might avoid rule
Speaker 1: changes and the system might be transparent, but the day
Speaker 1: to day experience is not nearly is smooth. I mean,
Speaker 1: bitcoin transactions are slower. Maybe I assume with like stable
Speaker 1: coins itself, some of that can be fixed. If you
Speaker 1: have your crypto wallet hack, you could lose all of
Speaker 1: your coins if even if you know, if you have
Speaker 1: it on a private wallet, you can lose the key,
Speaker 1: the password. If you have your money and say coin
Speaker 1: base and someone logs in, those transactions are irreversible. So
Speaker 1: it seems to me, like, you know, there's a trade
Speaker 1: off where it's like, okay, you don't have these educations
Speaker 1: where suddenly the rules change per se, but the day
Speaker 1: to day experience seems inherently clunkier and riskier for many things.
Speaker 1: So listen, when I was your age and it was
Speaker 1: probably two thousand and one, and I'm logging onto the
Speaker 1: internet to try to listen to a song I get,
Speaker 1: you know, like you know, bus pretty Go, that was
Speaker 1: pretty good. You know. Years later, I'm downloading any song
Speaker 1: in the world instantly, or I'm getting full movies and
Speaker 1: on galing three D movies, and so it takes time
Speaker 1: for systems to be built to perfection, right, like the
Speaker 1: U Actually I is a huge deal in crypto, but
Speaker 1: it's accelerating out of an amazing pace, and so the
Speaker 1: user experience is getting better by the day. But remember
Speaker 1: we say it's a twelve year old industry, it's really
Speaker 1: not right. Bitcoin started twelve years ago, but it was
Speaker 1: a it was a little backyard experiment. A Theorium started
Speaker 1: in two thousand four teen, So that's seven six and
Speaker 1: a half years ago. Like we're really call it four
Speaker 1: years of having tons of developers for you and working
Speaker 1: on this stuff. And so but if I could just
Speaker 1: put push back a little bit, and to me, it
Speaker 1: seems like there's more than just a UI or u
Speaker 1: X question because the block you know, like one of
Speaker 1: the selling points of blockchains, of the bitcoin blockchain, the
Speaker 1: Ethereum blockchain is it's irreversibility and what that It seems
Speaker 1: to me that that means you're sacrificing sort of like
Speaker 1: legal protections for the software, and so ultimately like that
Speaker 1: transaction can't no matter how good the UI gets on
Speaker 1: coin based or how good the UI gets on a
Speaker 1: you know, a USB wallet, you can't reverse it. There's
Speaker 1: no law that could ever reverse Whereas I have so
Speaker 1: many protections in my bank account, fraud protections. If someone
Speaker 1: steals my credit card, I call up the bank, and
Speaker 1: most of the time that can get reversed. Like it
Speaker 1: feels like for many day to day things, we're giving
Speaker 1: up a lot in terms of sort of legal protections
Speaker 1: and guarantees and comforts that not can't necessarily be fixed
Speaker 1: just with better U. I well, I think part of
Speaker 1: it is in the app start idiot proofing. Are you
Speaker 1: sure this is how much you want to send? You know,
Speaker 1: double check you know? So yeah, if I think I'm
Speaker 1: gonna send you because you're my buddy, you know, ten
Speaker 1: dollars worth of bitcoin, and instead I sent ted big
Speaker 1: coin like Jesus, I just send the country with thousand
Speaker 1: dollars right like, And so I do think part of
Speaker 1: that is building in a an idiot proof system to
Speaker 1: consumer crypto apps. The other stuff is interesting, right, We're
Speaker 1: gonna see regulatory frameworks built into the financial system. So like,
Speaker 1: why is government regulators worried about DEFY. It's because of
Speaker 1: k y C A m L. If I want to
Speaker 1: trade with you, I don't make sure you're not a
Speaker 1: drug dealer or a North Korean agent. Um there will
Speaker 1: be at a project built on the blockchain where the
Speaker 1: transaction goes to it. First, it just validates that you're
Speaker 1: you're a blue check, we know who you are, You're
Speaker 1: a decent character. And then it disappears. And so I
Speaker 1: think DEFY will run through another protocol that really becomes
Speaker 1: the compliance protocol. And so again this whole stuff is
Speaker 1: being dreamed up and built on the run. And so
Speaker 1: I can't participate as a US citizen in a lot
Speaker 1: of staking and DEFY on shore because of KYC concerns.
Speaker 1: And so I've got a vested interests given I want
Speaker 1: this system to flourish, to invest in projects. They're going
Speaker 1: to solve those k We see concerns, and I'm telling
Speaker 1: you they're out there already, they're being built. And so
Speaker 1: the system is evolving really quickly. It's not ready for like,
Speaker 1: we couldn't shut off traditional finance and ever move anything
Speaker 1: to crypto today, right Like this is a this is
Speaker 1: a ten year journey of eating away and eating away.
Speaker 1: But the reason it's so important, and you felt it
Speaker 1: with game Stop, is that we need to do something
Speaker 1: to change the system because the system isn't working so well,
Speaker 1: certainly for the little guy. And that's that's felt emotionally,
Speaker 1: it's it just resonates. And so crypto is trying to
Speaker 1: build a system that's more efficient, more transparent, more egalitarian,
Speaker 1: but it's not gonna happen overnight. So I have a
Speaker 1: related but different question, which is it. It feels to
Speaker 1: me like the user experience is improving primarily as more
Speaker 1: traditional financial institutions get into the space. So I mean
Speaker 1: you mentioned PayPal. The PayPal wallet is incredibly easy to
Speaker 1: use and you can just log in and start buying
Speaker 1: bitcoin right away. But I wonder if does increased participation
Speaker 1: from traditional finance the increased interest is that at odds
Speaker 1: with the spirit of defied, do you give something up
Speaker 1: in exchange for having traditional financial players involved in the space.
Speaker 1: And sorry, one more thing that makes me. Think about
Speaker 1: that is, you know, last week during the GameStop phenomenon,
Speaker 1: robin Hood curb trading in some meme stocks, but also
Speaker 1: curb trading in cryptocurrencies. So it felt like on that day,
Speaker 1: maybe you know, bitcoin wasn't so defy if you were
Speaker 1: trading it on a robin Hood app. Yeah, listen, robin
Speaker 1: Hood curb trading and all the things that people were
Speaker 1: piling into because of the regulatory capital so it's like, Okay,
Speaker 1: where's all this new money coming from. We need to
Speaker 1: slow it down. And so they were entering, they were
Speaker 1: opening up new accounts to trade crypto as fast as
Speaker 1: they were to trade games. Now, and you're right there,
Speaker 1: I think, listen, I'm sure they'll get their regulatory capital
Speaker 1: issues solved pretty quickly. We we call ourselves a bridge
Speaker 1: between the traditional financial world in the crypto world, and
Speaker 1: that's a hard road to walk. On the one hand,
Speaker 1: on pitching business at a big bank like Morgan Stay
Speaker 1: Only or JP Morgan. On the other hand, I'm saying, hey,
Speaker 1: this stuff is gonna put these guys out of business,
Speaker 1: and they're like, why are you talking about us? People
Speaker 1: put out of a a business? Right? Um? I say, I
Speaker 1: were a hoodie one day in a suit and next
Speaker 1: The spirit of crypto is to change the rules and
Speaker 1: spatch the rules down, and so lots of the rebel
Speaker 1: companies operate outside of the regulatory framework their life and
Speaker 1: the way regulation works. Gary Gensler, who's the new head
Speaker 1: of the SEC, gave a great lecture on this. He said,
Speaker 1: if you're a smaller company, you're allowed to break the
Speaker 1: rules a little bit. You're not gonna get that much struggle.
Speaker 1: If we didn't exactly say that, that's what he said.
Speaker 1: But if you're a big company, you gotta play by
Speaker 1: the rules. And so it kind of gives these new
Speaker 1: companies a leg up on getting set and that you're
Speaker 1: you're seeing that happen. You saw that with Uber, right,
Speaker 1: Travis broke every rule known to get Uber set up.
Speaker 1: And then all of a sudden people have done in
Speaker 1: trouble and he said, I don't care, and all of
Speaker 1: a sudden and the the laws changed to allow Ruber. And
Speaker 1: so sometimes change happens, you know, not by people playing
Speaker 1: by the exact rule set, but big institutions happened. I
Speaker 1: think tech is going to be a bigger threat to
Speaker 1: crypto companies, you know, being the dominant players than finance
Speaker 1: because the tech world is more used to you know,
Speaker 1: chewing off their arm to grow a new arm, uh,
Speaker 1: where finance wants to protect what they have. And so
Speaker 1: I think you're seeing companies like Visa and PayPal and
Speaker 1: you know, Facebook getting into this space. And when they
Speaker 1: get into the space, they get it with a tremendous
Speaker 1: amount of resource. Right, So you've got crypto companies that
Speaker 1: are raising capital and new ways, and you know that
Speaker 1: are small, and all of a sudden, you have you know,
Speaker 1: Facebook say okay, here's our eleven people or whatever they
Speaker 1: have working on a people and so, yes, they're gonna
Speaker 1: be threats that will help it accelerated. And I do
Speaker 1: think there's a middle stage in the evolution, right We're
Speaker 1: not going to scrap with figgers and have a whole
Speaker 1: diffinancial architecture and ecosystem, and so I think it's just
Speaker 1: a part of the process. The theory was not fast
Speaker 1: enough for the world to build on. Right When you
Speaker 1: talk to the guys that Tara why they did their
Speaker 1: own blockchain, they were like, well, the theory was too
Speaker 1: expensive and too slow for us. Since we looked at others,
Speaker 1: we decided to build our own. You'll see over time
Speaker 1: with to the etherory of blockchain grow and grow and
Speaker 1: get faster and faster than alonger. It will be a
Speaker 1: public utility. You know that it's worth a whole lot.
Speaker 1: We will be talking about blockchain or defy when we
Speaker 1: talk about fintech, and then it will be just a
Speaker 1: user experience. Like I always think of it as like
Speaker 1: the back of the TV. I don't know how the
Speaker 1: kind of TV works. We just turned on and we
Speaker 1: watched TV and it's pretty cool. Like most people will
Speaker 1: care less that it was built on a block chain
Speaker 1: or that it's don't care that it's cheaper, more transparent
Speaker 1: and easy to use. I think we're just early in
Speaker 1: that innovation cycle. It's clear we're moving that way. It's
Speaker 1: not going to be linear. It's not gonna be straight line.
Speaker 1: People with vested interests are going to fight like crazy
Speaker 1: to stop it. Right. You see all these people saying, oh,
Speaker 1: we gotta be careful that bitcoins used for illicit purposes.
Speaker 1: Bitcoins used for like many illicit purposes, right tiny you know,
Speaker 1: Chain Analysis just in a report on it, though you'll
Speaker 1: see some other reports coming out a little bit of
Speaker 1: a sphere of change from older people. Uh and and
Speaker 1: it's it's what they call fun, you know, like bad,
Speaker 1: bad info for people who are trying to protect their
Speaker 1: vested interests. I want to push on this a little
Speaker 1: bit more, the question that Treacy asked about the hoodies
Speaker 1: versus the suits the cipher punks first, the bankers. I
Speaker 1: understand why the traditional finance industry does seem to be
Speaker 1: embracing Bitcoin and perhaps other cryptocurrencies. But bitcoin, for sure
Speaker 1: as an asset, as you described it, as a store
Speaker 1: of value, something for people to invest in. But what
Speaker 1: happens if that if the sort of like censorship resistant
Speaker 1: payments that I can make a payment to you person
Speaker 1: aid a person be without any person CEE saying no,
Speaker 1: you can't do that. You know this person is bad,
Speaker 1: This person is on some list, this person is on
Speaker 1: an industry that we don't like, so you're not allowed
Speaker 1: to make this payment? What it like, what happens if
Speaker 1: that goes away? Like, is there a risk that the
Speaker 1: sort of like cipher punk spirit of it all gets
Speaker 1: completely snuffed out as institutions take it on as an
Speaker 1: investment and institutions regulated institutions that probably have zero interest
Speaker 1: in that in that hoodie element. Yeah, listen, So let's
Speaker 1: let's start with, like what problem are we so worried about.
Speaker 1: Like if you ask the average American how many of
Speaker 1: their transactions there they really don't want anyone to see.
Speaker 1: It's probably only the cheating husband sending his girlfriend flowers
Speaker 1: and he doesn't want his wife to see. Like like
Speaker 1: most people aren't selling drugs or or uh, you know,
Speaker 1: shipping arms to North Korea funding terrorists, right, And I
Speaker 1: think there will always be pockets where the cipher punks
Speaker 1: live off off the space, but the bulk of the system,
Speaker 1: bulk of people that play in the system are pretty
Speaker 1: rule abiding peprit right. They buy groceries, they buy tennis shoes,
Speaker 1: They want to save money. Bitcoin right now is a
Speaker 1: great place to put a store of value against the
Speaker 1: basement of currency. And so there's nothing nefarious about almost
Speaker 1: what all the money we spend. We love to let
Speaker 1: our mind go to the fact that, oh, I'm gonna
Speaker 1: go with the back alley and buy some weed. Uh,
Speaker 1: but now weeds legal, you can buy weed, you know,
Speaker 1: like it pretty soon, well have to criminalize most drugs.
Speaker 1: At least I think we should decriminalize drugs. I think
Speaker 1: we will, And so we're really talking about a tiny
Speaker 1: little percentage of need in most Western countries now in
Speaker 1: places with authoritarian regimes a different answer to that. And
Speaker 1: so I think there's this balance between politics and the
Speaker 1: need for ultimate privacy. And I always think there will
Speaker 1: be systems the tech guys, you know, the guys on
Speaker 1: the on the tech front here are too good for
Speaker 1: the regulators to get. There'll always be systems that if
Speaker 1: you really want to, you know, send your listen. Just
Speaker 1: like there is I mean, horrifically for for kittie porn, right,
Speaker 1: people operate in this dark web, and there's all these
Speaker 1: horrific images of like no one wants that. I don't
Speaker 1: want that peer to peer. I don't want that to exist, right,
Speaker 1: That's a crime against humanity in lots of ways. And
Speaker 1: that's where like my philosophy or ethos differs from the
Speaker 1: pure libertarians. Not a libertarian. I have some libertarian you know,
Speaker 1: sympathy at time, but but you know, like ask yourself,
Speaker 1: do you think we should ban kittie porn? Now, again,
Speaker 1: if it's a huge issue, it's a big issue. Most
Speaker 1: of the issues we're talking about, our tiny, tiny issues. Um,
Speaker 1: I wanted to go back to your mention of Gary Gensler.
Speaker 1: So we have this new administration in place, and I
Speaker 1: think most people would probably agree that regulators have had
Speaker 1: a hard time keeping up with bitcoin. Now you sort
Speaker 1: of have this opportunity potentially to reset. You have Gensler, who,
Speaker 1: as you mentioned, has given lectures, has done quite a
Speaker 1: lot of workers or at least intellectual study on the
Speaker 1: crypto space. Do you think he's going to move the
Speaker 1: needle on some of the rules and regulations that have
Speaker 1: been held up. I think he will be a great
Speaker 1: SEC commissioner. He is I worked to be fair full disclosure.
Speaker 1: I worked with him in Hong Kong, had Goldman Sachs.
Speaker 1: I've stayed in touch with him. We are both political progressives.
Speaker 1: Let's he's progressive, So if you're progressive, you're looking at
Speaker 1: the rent takers in the banks. I think he's I'd
Speaker 1: be more nervous if I was a bank than if
Speaker 1: I was a crypto company. I think he's intellectually really honest,
Speaker 1: and so where crypto might be nervous is you know,
Speaker 1: if you look at the ripple x RP, was it
Speaker 1: a security issuance or not? You know Gary ol saying
Speaker 1: they failed the duck test. That looks looks like a duck,
Speaker 1: quacks like a duck, smells like a duck. It's probably
Speaker 1: a duck. He's gonna he's gonna my most likely think
Speaker 1: this was a security offering. And there's some other cryptos
Speaker 1: that were launched that way, and so it's not like
Speaker 1: crypto will have a free pass from Gary. But he
Speaker 1: understands it, right. He taught a class on crypto and
Speaker 1: m I T and the blockchain and m I T,
Speaker 1: and so I think that's a big deal because well,
Speaker 1: our experience has been there are plenty of people on
Speaker 1: the staffs of the SEC and the CFDC, of of O,
Speaker 1: c C of fitter that that get it. All. The
Speaker 1: young people get it, they trade it, they understand it.
Speaker 1: It's been the top which is a little more calcified
Speaker 1: in their views, and so to get people that really
Speaker 1: understand it, I think he'll be a huge us up
Speaker 1: to the space. So you mentioned, and I've observed this
Speaker 1: to this phenomenon of one of the rare sort of
Speaker 1: financial assets I guess bubbles at times that really started
Speaker 1: with the little guy and then has grown and gotten
Speaker 1: more and more respectable. And now we have the richest
Speaker 1: person in the world, Elon Musk, and his Twitter handle
Speaker 1: is just hashtag bitcoin. So in this new world that
Speaker 1: everything goes in reverse, isn't he the new shoeshine boy
Speaker 1: that like now by the time even he is rapping
Speaker 1: his identity in bitcoin? Is it? Who? What's left now? Like?
Speaker 1: Where else is there to go? I'll tell you a
Speaker 1: year listen, I would tell you the big, big group
Speaker 1: that hasn't participated is the baby boomer wealth channel in America. Right,
Speaker 1: you can't go to Morgan Stanley, JP, Morgan Goldman, Sachs,
Speaker 1: Charles Schwab, ubs can call your broker and sad I
Speaker 1: want to buy bitcoin, you still can't. That's all gonna
Speaker 1: change in the next two years. I can guarantee it's
Speaker 1: gonna change because I'm seeing it. We're working with companies.
Speaker 1: It's gonna change. There's gonna be offerings first out of
Speaker 1: their wealth management division and then out of there you know,
Speaker 1: trading business. And so that's that's Those are the elephants
Speaker 1: that haven't moved in and that's where all the money is, right,
Speaker 1: news flash, all the money's old by the old people.
Speaker 1: Year olds own all the money. You know, we keep
Speaker 1: talking about this giant generational wealth transfer that will happen
Speaker 1: when they die off. Right, the average baby boomer is
Speaker 1: Donald Trump's stage. So it's Donald Trump, Bill Clinton, George Bush.
Speaker 1: They were all born the same year. It's crazy stat right,
Speaker 1: we had twenty years of presidency, twenty years of representation
Speaker 1: from guys born in the same year. I didn't realize that, Right,
Speaker 1: that's because we had this, babe, they had this population advantage, right,
Speaker 1: and so listen, I think it's been the shittiest generation.
Speaker 1: I think they have polluted our country and our world.
Speaker 1: They have not been great stewards of the of the country.
Speaker 1: They have if you look at the amount of debt
Speaker 1: we started with them what we have now, Like, you know,
Speaker 1: you have the greatest generation and fought World War Two.
Speaker 1: This was like the reverse Boomerang, what we should call him,
Speaker 1: the worst generation. Unfortunately, I'm a baby boomer by six
Speaker 1: days or thirty one days. I was born November four.
Speaker 1: If it was just Ji, I would not be a
Speaker 1: baby boomer. And I kind of hate it because I
Speaker 1: literally look at just the like there's this generational theft
Speaker 1: that has gone on, Right with all the debt, the
Speaker 1: guys in charge, and you can't say they haven't been
Speaker 1: in charge same birth year. And now Biden is four
Speaker 1: years older. He's he's a little bit what they called
Speaker 1: the Silent generation right after after World War Two, the
Speaker 1: Greatest Generation. He's a tweener. But really it was that
Speaker 1: to have about four or five more boomer presidents and
Speaker 1: then and then and then another generation will get a Jenny.
Speaker 1: I think the next president will jump down in age. Literally,
Speaker 1: I think, you know, my generation will get skipped. You're
Speaker 1: probably right. I guess we had Obama. Obama's a baby
Speaker 1: boomer officially, but he really wasn't either in spirit. Yeah,
Speaker 1: the people listening to this canseie. But we're watching Mike
Speaker 1: and he has a hoodie with a dragon on it
Speaker 1: and a bunch of really cool pop art behind him.
Speaker 1: So he's definitely he's definitely gen Z. Tracy Warring, Yeah,
Speaker 1: that's fair enough. I was gonna say, to Joe's point, though,
Speaker 1: is there a particular milestone that if you saw, you
Speaker 1: would think, oh, bitcoins finally made it? Like, is there
Speaker 1: one thing in particular that you're watching and you can't
Speaker 1: say it's for the baby boomers to tie I think
Speaker 1: we've crossed that, right. So one of the most important
Speaker 1: things that happened this year was mass generally a mass
Speaker 1: life one of the big insurance companies coming out in
Speaker 1: saying we bought bitcoin for our general account. So the
Speaker 1: general account of insurance company is like sacred money. Right,
Speaker 1: it's went back up. All the people that are insuring,
Speaker 1: they need insurance regulator approval, they need feed approval to
Speaker 1: do that. And I would tell you it's not just
Speaker 1: one insurance company. Now there are three insurance companies that
Speaker 1: are participating that I know of, maybe more. That's a
Speaker 1: big deal because that says the most conservative asset managers
Speaker 1: have now decided bitcoins the store value. It's a it's
Speaker 1: a macro asset, and so I think we've checked the box.
Speaker 1: Bitcoin is around us. Stay it's a macro asset. It
Speaker 1: doesn't always go up in price. It'll go up, it'll
Speaker 1: go down. But this idea, oh I could go back
Speaker 1: to zero. You should only invest what you're willing to lose,
Speaker 1: I will you know is wrong because now a matro asset,
Speaker 1: you should look. It's high volatility, it can trade. You know,
Speaker 1: it was just twenty thousands eight weeks ago. And and
Speaker 1: so could it trade backed out of twenty four thousand,
Speaker 1: of course it could um, but it's not going away.
Speaker 1: It's part of our architecture now. And so I think
Speaker 1: it's a big, big deal. Portfolio managers is are going
Speaker 1: to feel like it's irresponsible not to have some allocation,
Speaker 1: not that oh my god, I could get fired for
Speaker 1: having an allocation. And so we're in that shift, and
Speaker 1: so I kind of think I don't want to, you know,
Speaker 1: George bush It on that plane and say declare victory.
Speaker 1: But I think it's a really big deal that we're
Speaker 1: no longer I'm no longer going in and explaining, you know,
Speaker 1: how Satoshi came up with the White paper and the
Speaker 1: Byzantine General's problem, and you know that that that's that's
Speaker 1: where my conversations were seven years ago. And so I think,
Speaker 1: you know, we've we've crossed that crossed that bridge. This
Speaker 1: week is actually a big one for crypto because we're
Speaker 1: going to see the launch of CME futures for ethere Um,
Speaker 1: and I know that's one of the cryptocurrencies that you're
Speaker 1: very big on. What do you think how is that
Speaker 1: going to change the space? Because I remember, you know,
Speaker 1: back in December two thousand seventeen, when we saw bitcoin
Speaker 1: futures launch, some people were saying that that was one
Speaker 1: of the reasons is why the bitcoin price collapse. So
Speaker 1: I'm curious how you see this one playing out, um, Listen.
Speaker 1: I think any architecture that we build around these systems
Speaker 1: to bring in new players is good for the ecosystem.
Speaker 1: Like in seventeen, it was unbelievably timed in this zeneth
Speaker 1: of the market. And while it fields were all excited
Speaker 1: right here and we're hyped, I really feel it's different
Speaker 1: than seventeen, and so I think this is a good thing,
Speaker 1: not not the mark of the top. These futures always
Speaker 1: take some time to to get up and running. But
Speaker 1: what's interesting is I'm talking at Goldman Sachs, who only
Speaker 1: participates to futures right, and they went from like two
Speaker 1: hedge fund clients to fifty in bitcoin futures. So if
Speaker 1: you're already trading bitcoin futures, it's pretty easy to trade
Speaker 1: each futures. So I think the futures contract will grow
Speaker 1: far faster than the bitcoin futures contract in and it's
Speaker 1: I think it's gonna help eat price. I'm very bullish
Speaker 1: East right now. I think you look at the chart,
Speaker 1: it went through fourteen. It took out the old highs
Speaker 1: last night, after like four attempts. You know that to
Speaker 1: me measures all the way to I don't love to
Speaker 1: give prediction because people always say you said, doesn't it
Speaker 1: didn't happen, But I give a lot of producer Loggy,
Speaker 1: we would never do that to you, Loggy. Um. One
Speaker 1: more very quick question. Obviously we've been talking a lot
Speaker 1: in this discussion about the idea of retail pushing up
Speaker 1: against the big boys of the traditional financial system. Would
Speaker 1: Galaxy ever launch a retail fund or a fund aimed
Speaker 1: at retail investors? You know, we have looked at that
Speaker 1: a lot. I would never have ruled it out. You know,
Speaker 1: the how do you get into the business to buy it?
Speaker 1: You know, exchanges really aren't exchanges their brokerages, right, So
Speaker 1: like quain Basis is amazing roverage firm. I look back
Speaker 1: on it and was like, you know what a knuckle
Speaker 1: had I spent all this time building a brand, personal brand,
Speaker 1: firm brand, and I didn't have a retail outlet. And
Speaker 1: so it's certainly I think about a lot right now.
Speaker 1: It's quite expensive to acquire these retail outlets, and so
Speaker 1: we'll we'll think of either builder by at one point.
Speaker 1: But I think to be part of crypto in the
Speaker 1: long run. Right, it's peer to peer and it's touching
Speaker 1: as many people as you can. And so you found
Speaker 1: a kink in my arm, chink in my armor. I'm
Speaker 1: not really having that that accessibility. I also, though, believe
Speaker 1: you know, do what you're good at first, and we
Speaker 1: understand institutions. We understand how they think. I was joking
Speaker 1: about half past suit and half a hoodie. It's not
Speaker 1: a joke, right. You literally need to walk institutions in
Speaker 1: a very calm way so they understand it and they
Speaker 1: feel they feel comfortable with it, very different than the
Speaker 1: seventeen year olds or the nineteen year olds. And so
Speaker 1: we're balancing that all right, Mike now regrets. Thank you,
Speaker 1: Thank you so much. That was a great conversation. I
Speaker 1: think the timing was perfect. And uh, looking forward to
Speaker 1: seeing where where you going there? What your next thing, guys,
Speaker 1: Thanks to take care of Mike. Thanks Mike, I really
Speaker 1: appreciate it. I really enjoyed talking to Mike. I really
Speaker 1: do think his sort of having been in both worlds
Speaker 1: made that a fresh conversation. You know, I'm gonna say
Speaker 1: something a little rude, and this is not about any
Speaker 1: of our guests that we've ever had before, but I
Speaker 1: talking to some crypto people can get a little bit repetitive,
Speaker 1: like the same thing now, yeah, I know, the same
Speaker 1: lines about money printing and blah blah blah. And I
Speaker 1: thought that was super fresh. Do you remember when people
Speaker 1: used to say, it's not about bitcoin, it's about blockchain.
Speaker 1: No one says that anymore, no, I know, So that's
Speaker 1: that's progress. But people used to repeat that all the time.
Speaker 1: So I totally agree. No regrets is um or Mike's
Speaker 1: position sort of straddling crypto and traditional finance in the
Speaker 1: form of you know, Goldman and Fortress. That's definitely an
Speaker 1: interesting position to be in, and I don't envy him
Speaker 1: in some respects having to pitch to bulge back bracket
Speaker 1: banks about a potential competitor. I will say one thing
Speaker 1: that I was thinking about. This is the second time
Speaker 1: this week in our game Stop series where we've heard
Speaker 1: people talk about this transition from a baby boomer led
Speaker 1: economy into something new, and the idea that we're in
Speaker 1: this transition period and it's throwing up all sorts of
Speaker 1: new opportunities. And I think Mike's analogy of the two
Speaker 1: thousands tech bubble was a right one was the right
Speaker 1: one because people went crazy for the story of the Internet.
Speaker 1: They bought a bunch of Internet stocks, and of course
Speaker 1: a bunch of them lost value, but some of them didn't.
Speaker 1: So if you can recognize the turning point, and if
Speaker 1: you can recognize the box or the companies or in
Speaker 1: this case, the cryptocurrencies that are going to be winners
Speaker 1: from the transition, you do have this opportunity to make
Speaker 1: a lot of money, sort of like once in a
Speaker 1: lifetime type money, you know what I feel like. Also,
Speaker 1: it didn't really get that into it, but there are
Speaker 1: a couple of things he said that I thought, we're
Speaker 1: sort of these like hints into what makes a good
Speaker 1: trader or someone who is like a good trader's intuition,
Speaker 1: Like I liked his whole thing with a game stop
Speaker 1: about the idea of like eventually gravity takes over. You know,
Speaker 1: you might talk it might be fun to ride the meme,
Speaker 1: but if you like suddenly made enough to buy a
Speaker 1: car overnight, a lot of people are just gonna want
Speaker 1: it to even it's fun as the meme is to trade.
Speaker 1: It's gonna want to um by the car. But then
Speaker 1: the other thing he said to I love that point
Speaker 1: about like buying bitcoin at ninety and it's like, oh,
Speaker 1: all these people don't QUI two hyper inflation was gonna happen,
Speaker 1: And you sort of got the sentence like he understood.
Speaker 1: It's like, you don't actually have to believe that hyper
Speaker 1: inflation is going to happen. You just have to believe
Speaker 1: that other people are going to believe that hyper inflation
Speaker 1: is going to happen. And I feel like a lot
Speaker 1: of people ever think these things, like, well, that doesn't
Speaker 1: make any sense to buy this on hyper inflation fears
Speaker 1: because QUI two is just an asset swab of elong
Speaker 1: dated treasuries for short dated treasuries and blah blah blah.
Speaker 1: But it's like, if you have like a sort of
Speaker 1: like good intuition about markets and stuff, it's like, yeah,
Speaker 1: a bunch of people are going to believe that I'm
Speaker 1: just gonna buy bitcoin at ninety. Obviously it's paid off
Speaker 1: quite a bit. Yeah, this is my bolish on bitcoin thesis,
Speaker 1: which is that you know, I used to think that
Speaker 1: all these weird and different narratives around bitcoin were a
Speaker 1: weakness in the buy case because people were pitching it
Speaker 1: is all different types of things, you know, like a
Speaker 1: hedge against inflation, but also a way to do transactions UM,
Speaker 1: which seems at odds with the store value thing. But
Speaker 1: the more I think about it, it's actually like the
Speaker 1: more stories you have, the more appealing it is to
Speaker 1: a wide variety of people. So all those different narratives
Speaker 1: sort of appealing to um different types of people. Ultimately,
Speaker 1: I think, increase the network um and get more adoption.
Speaker 1: So you know, some people are going to see bitcoin
Speaker 1: as a way to undermine traditional financial architecture and they're
Speaker 1: going to buy it because of that, to take a
Speaker 1: sort of moral stance. Some people are going to see
Speaker 1: it as a way to get rich and they'll buy it.
Speaker 1: Some people see it as a store value against hyper
Speaker 1: inflation or whatever, and so on and so on. But
Speaker 1: the network gets bigger. Yeah, that's really well put, And
Speaker 1: that is why Mike is a massively successful career as
Speaker 1: a traitor because he sort of has that intuition. And
Speaker 1: we don't, okay, and we're podcasting, shall we leave it there? There?
Speaker 1: All right. This has been another episode of the All
Speaker 1: Thoughts podcast. I'm Tracy Alloway. You can follow me on
Speaker 1: Twitter at Tracy Alloway and I'm Joe Wisn't thought you
Speaker 1: could follow me on Twitter at the Stalwart. Follow our
Speaker 1: guest Mike Novigrads. He's the CEO of Galaxy Did It All.
Speaker 1: His handle is at No Regret. Follow our producer Laura Carlson.
Speaker 1: She's at Laura M. Carlson. Follow the Bloomberg had a
Speaker 1: podcast Francesca Levi at Francesco Today, and check out all
Speaker 1: of our podcasts at Bloomberg under the handle at podcasts.
Speaker 1: Thanks for listening.