Transcript+
Before we get into the episode, a quick reminder that this podcast is for informational and entertainment purposes only and nothing should be construed as investment or legal advice. If you are enjoying On RAMP media content, please like subscribe and share as it goes a long way in helping others find the signal through the noise. Now for a word from on RAMP. On RAMP is a Bitcoin asset management platform built on multi institution custody leveraging our partnership with Bit Go and their 10 plus year track record and securing assets and Coincover the premier digital asset risk mitigation company on RAMPS. Multi institution custody is a segregated institutional grade vault requiring two of three institutions at any point in time to sign once a client's unique permissions have been met At on RAMP we understand that your Bitcoin journey is a multi generational pursuit catalyzed by the ideals of perseverance, aspiration and legacy. That's why we're proud to introduce on RAMP Heritage, a suite of private client services dedicated to ensuring your Bitcoin legacy is preserved and passed on, embodying the true essence of wealth that goes beyond mere numbers. If you would like to learn more, please schedule a consultation. Let's be clear, Bitcoin is an international. Asset. We are spending like drunken sailors. Bitcoin is the only economic entity where the supply is unaffected by the demand. If you want to preserve your wealth, you have to convert that currency into an asset that's scarce desirable. Portable. Durable. And maintainable. Hello, this is Andy Edstrom and I'm happy to welcome you to the 9th episode of Scarce Assets, a show that examines scarcity, the most fundamental driver of economics and markets, and the scarcest asset of all which is Bitcoin. I'm delighted to be here with my great friend and Co host Jesse Myers and our guest, the legendary Dan Tapiero. I said Dan is legendary because he built a very successful career in macro trading and investing, including working with other legends like Julian Robertson and Stan Druckenmiller. And then he built his own investment strategies and companies in the industry and these include investment businesses in the gold industry and an agriculture in addition to being a macro investor. And today he's building businesses in Bitcoin and digital assets. So I honestly can't remember how we first found each other, Dan, but maybe we'll figure that out in this conversation and in case I'm thrilled to be talking with you today. So how are you? I'm great. I'm happy to be here. I think it was Bitcoin. I think we were talking on Twitter about back and forth. It might have been about Jan Pritzker's book Inventing Bitcoin. I think we both really liked that book. I think that was the genesis, right? I think that's right. I think that sounds right to me. His book had come out recently and I was still working on mine and I had made AI had made a a rule of making sure that I read every Bitcoin book that was already published. And so I think I was about to hit publish on mine or it was coming soon. And then his came out and so I realized, Oh my God, I got to read it cause 'cause now that's part of the, you know, the published record. And it is a great book. I know, I know you give it out to to people. It's a great. Sort of primer. So funny thing is, I bought all these copies and I was giving them out. This is in the end of 19 or 20. I can't remember exactly when, but I'd given them all out. I think I posted on Twitter that I'd given it out and the next thing I know I get this message from Yan. He says, would you like some free copies? And I said, well, who doesn't like a free copy? I was spending 20 bucks each. He sent me 100 copies and signed each of them and they're all given out. I have none. I have, I have none left. You know, anytime someone would ask me any investor meeting I would do or just even like, you know, casual conversation, I said, look, this is you got to make your way through this because it really does explain the functioning of the mechanism. You know it to me it's it's a little bit of an engineering type of yeah I would yeah an engineering type of not analysis but but framework and outlook. You know how the block chains fit together. Why does it work right. All these things that you you know if you don't do the deep dive you're you you just say Oh well you know it's it's it's it's digital money it's in the ether what is it etcetera but really understanding that functioning. Yeah. Do you do you think that's that's a necessary step for anyone to really understand Bitcoin is is to have to go through the like all right. I'm going to understand the the the mental model of the engineering and otherwise you it's just always going to be magic Internet money is is that a necessary. I do. I I tell you, I Look, you can get to it a lot of ways. And they're probably people who are mega Bitcoin advocates, who who who don't, Well, not mega, but, you know, people who you know who are Bitcoiners. But I just think you have to see it as this thing that was constructed by someone based on, you know, math and solving complex math problems, bringing together the solving of the Byzantine Generals problem together with all the other various things that that get brought in. And there's you guys have seen this and I show this to people all the time, that timeline of the 40 years of cryptographic research and science, these papers that were published starting in the early 70s. And you know, I've been a little more of an academic guy in my youth. And when I saw all of that academic support, not that these guys are great investors. I think academics tend to not be good investors. But the fact that there was so much work and research and it was so multidisciplinary, that was a light bulb moment for me in the sense that I started to understand why so few people understood it. It wasn't just that it was complex math and the proof of work algorithm is complex. It was that you had to kind of have this multidisciplinary understanding of 5-10 different areas, right? Like I. But if you understand how the machine works, at least you know to some degree, then you say, oh, OK, that's like this is a real thing that functions. And maybe that's just that Western mentality. You know, we wanna, you know, people build things, right? Like, we all played with Legos and we, we all construct things right, Buildings and roads. And so all of a sudden you see how this thing is put together. Engineered. Functions and then you're like, wow, this is real. Yeah, we all, we all often make the mistake of. I think everybody falls in the immediate trap of of looking at Bitcoin and any other cryptocurrency and and thinking that each of them is it's an experiment, an isolated experiment. But you're right, like digging into the history of it. And there's a, there's a great YouTube series, little documentary called Cypherpunks write code that goes through the evolution of these schools of thought and how they influenced the development of cryptography and the building blocks. And it's really that Bitcoin is standing on the shoulders of giants of 30 years of work. And it's so hard for people who are not thinking in those terms. I mean especially business people. If you have a massive business and you know you're very successful in, you know, the financial world or or or in any real business, it's not like you have the time to go off and do some sort of academic exploration right into an area that may make no sense to you at all like cryptography. I can't even I I'm. Still beyond me. Yeah, I can't even start thinking about that, right. So I think in a way like we always ask ourselves in the space, you know, why is adoption taking so long, right? And I mean, I think that's the answer really. It is complex. And that's why that Inventing Bitcoin book by Jan is so good, because I thought he did explain things in English, right, In a way that even if I couldn't get every single concept, I kind of got it. You know what I mean? Agreed completely. Part of my journey personally was when I first got introduced, I probably did 10 or 20 hours of research online. You know about about Bitcoin and crypto And then I and I, you know sort of sat back in my seat, you know after reading non-stop for some period of time and I and I said to myself just tell me how the damn thing works and and and then literally almost at that moment I came across a a crunch base article which actually discussed block construction. You know, how does a how does a hash function work? You know what are the elements that go into the block, right. The hash of the entire history. You know, the time stamp, the nonce, the pieces. And then then the wheels in my head could turn about, oh, you know, how, how would one attack that thing? And therefore, why is it secure? And before that happened for me, you know, it just was, you know, nonsense as I think you said or one of you just said, you know, something in the ether floating around. So yeah, it's a technical hurdle and that makes it tough. I'm curious, Dan, let. Me, let me just say one thing to ask you guys but you know how cool was it that you could also you know interact on Twitter with Adam back. You know there's a real live person that was quoted you know of the what is it 11 footnotes or is it 8 footnotes in the white paper He's two. I think it's two of 11. Anyway he is it's just incredible you know to to be able to to do that. I mean, I I I just, I I reached out to him about something and he responded and we chatted a little bit. I mean that really, also for me, brought it to life. Yeah it's it's a strange outcome of of the Internet age where I think you need to have some sort of network effect some community to crystallize around something like this. But it's so engineering heavy that it's those those people are few and far between but the Internet brings them all together and you have this buzzing hive of of communication and and jokes and shooting the shit on Twitter and it's it's been a pretty remarkable 5 years I think in in in in Bitcoin Twitter history. It's it's it's going to it's, you know, they're going to be history chapters written about, you know, how this was a part of bitcoins evolution. Yeah, So what so you know technical aspect versus you know number go up and or investment opportunity. I'm curious, I do want to get into you know your funds and and what you're up to Dan, but maybe just starting higher level. What's resonating with let's say new investors that you're seeing you know arguably mostly institutional money. I mean could be you know ultra high net worth etcetera. Basically guys that are coming into your funds, are they sort of chasing the rabbit seeing number go up, want to be a part of it or are they engaging on the technical elements or you know what are you seeing what's going on in these guys heads? Well, I'll tell you no one is engaging on the technical elements. I'll I'll tell you that for sure. I mean not not any of them. Yeah, we look, we are, as far as I know, the only growth equity fund in the world exclusively focused on blockchain, crypto, Web 3, digital assets, whatever you want to call it. You know, the space is so new, it really hasn't even yet figured out like a single name for it. It's not. And so we've invested $1.2 billion into 24 mid to later stage companies in the space. We only invest in the equity and they're all private companies. Not because I have anything against the the crypto currencies or tokens, but we do have institutional investors that legally are not allowed to own cryptocurrency yet. So the Michigan pension fund MERS, for instance, invested $40 million with us. We have Texas teachers invested 30 million with us. We have a New York City pension union pension fund that is 50 million with us. So those are the, you know, I also have high net worth individuals and all sorts. We have 300 investors pretty much across the world and I would say, you know you asked me what's resonating with them. Now The thing is that our space lags the underlying price in Bitcoin and ETH. So for me, I don't know what you guys think, but I think Bitcoin and ETH are the core assets of the space. I'm not a, it's very funny, I'm a Bitcoin maximalist. But I also I'm a believer in the multi chain future, the multi chain world. And before I get into what the investors are interested in, I I will explain that a little bit because I think about how I think about Bitcoin and Bitcoin for me is something that you have on your Ledger and it's in a safe and I don't stake it. I don't do anything it it's just there. I don't think about it, it's done. And that to me is the proper way that it should be, let's call it used. It's a savings technology. It's digital gold, it's all the 100, I mean all the different things, but it is definitely not something that I personally would spend right or put out there. So I'm thinking if everyone eventually comes to my view then there will be no movement in Bitcoin. And I do think that the all these new use cases that are coming with all these other block chains, I do think that that world is real. I think stable coins are important, NF TS are important. You know I staking defy all these worlds that are growing up I think are important and will continue to exist because I have a broader view that all things of value will eventually sit on a block chain and live in this what I call digital asset ecosystem. Now it may be the the Bitcoin code and Bitcoin is at the core at the heart of that system, but if I like am true to how I use Bitcoin, it's actually not going to be used in in a way. So now people have different views and now we have ordinals and people, you know, do borrow against their Bitcoin. There are all sorts of things that go on. But if if I'm true to my belief of how I think things develop, this broader digital asset ecosystem in my view has a lot of room to grow. And so today the value, the dollar value of that ecosystem. So that's all the crypto currencies and the value of all the equity in the space, the companies is around 3 1/2 trillion dollars. When I had the idea for this fund in the middle of 2019, it was only 300 billion. So the fund is a bet on the growth in the value that resides in the digital asset ecosystem. It's, it's an IT, it's a portfolio that we've constructed that I really believe and it's proven to be the case. You know we sat through the bare phase of the last two years relatively unscathed. We don't, you know we're not trying to make 100 XI think. You know the focus for us is to make A5 to 10X on the portfolio over the 10 year life of the fund. And so we take less risk and therefore also we'll have less reward. I'm not suggesting that we're going to be the best performing fund in the space, but I think for the risk, we definitely are. And I call it a sleep well at night exposure to the space, especially for my younger friends say joke with me and say, oh Dan, you're doing crypto for boomers, right? And I'm not. I wouldn't exactly call it that. But there are larger investors that really just can't for a bunch of reasons just can't handle the volatility and won't. And so for us we're just part of their private equity bucket, you know, just doing something a a little different. So yes, your description of our investor base is correct. I would say that you know what they're really interested in now is that the values in my area, so call it Series BC, I tend to invest in companies making you know at least 40 million in revenue. So and I generally pay something like never more than 10 to 12 times revenue. So that's 400 million in market cap that the value of some of the equity in the secondary market is trading at massive discounts and it's not because the companies are doing poorly. I have many companies that are at record or did record quarter, had record quarters in Q1. They want the quarter that just finished. And so it's not that the businesses aren't doing better, it's that there's still some distress amongst the holders or I would say you know or there's a need for liquidity. You have venture funds that have invested very early that would like some liquidity and they're selling some of the equity in these businesses well below what I think is market. There are also employees, C-Suite leaders who, you know, have all of their liquidity tied up in the equity of the company. And so we've had companies approach us as well. And so we are in the midst of you know we we're in the midst of launching our fund four. We are raising capital now, but I've already taken in capital. We've made five investments and these investments are all between 50 and 80% discounted from where I think the value is today. Forget about even where their last rounds were. And part of the reason I'm almost and part of the reason I think this exists is because the growth equity funds that came into the space and pushed prices up in 21 and 22 have moved out. And so I'm talking about funds like Tiger and CO2 and Toma Bravo and Tomasic and the Canadian pensions, A lot of these guys, they came in, they pushed multiples very high and unfortunately some of them actually invested in companies like FTX and other companies that got into trouble. And so they've just said, look, this isn't a material part of our business. You know Tomo Bravo is for example, is $100 billion tech private equity investor and they made you know a handful of investments in the space. And I think that some of them will work out, some won't, but you know he's publicly said that they have moved out of of crypto for now. So that's the reason that there are many things out there at a tremendous discount because there aren't investors yet. And I'm surprised I I, when I had the idea for this in 2019, I I thought within five years they're definitely going to be a lot of competitors. You know, the space is growing very fast, but it just hasn't happened because the bear phase knocked out quite a few of these traditional people and here we are just going about our business trying to make good investments in the more successful businesses. Nice. Well, have you sent a thank you gift to SPF for keeping the competitors out of the field for you? No, no. Too many. Too many people I know and too many friends of mine got hurt and thankfully we passed on FTX three times. It wasn't for us that difficult because he wanted such exorbitant multiples on the valuation. It was like 50 times revenue. So for us, I I don't want to say it was an easy pass, but I mean, we didn't even really need to do that much work on it. It was just it, it just didn't make sense to us. And I was buying companies at the time that were similar at 5 to 8 times revenue that we like better. So it wasn't really even a much of A decision. Yeah, fair enough. Yeah, it's it's such an interesting niche that you've you've carved out in in the space. You know the picks and shovels in digital gold analogy comes to mind and and yeah, it's it's a lot more comfortable. It feels better going to sleep at night knowing that you own pick and shovel companies rather than ethereal digital gold or upstart competitors to digital gold so that that makes a ton of sense and and and you you talked about how there's sort of in the secondary market people still feel like they're trying to get out from you know after the long bear they're they're trying to offload some of their equity and you know I I suppose we we see the same thing in the in the spot price. I was just taking a look at at how you know we've gotten stuck at the prior all time high here for a number of weeks and in the prior cycles we happen to do that at that point as well. So last cycle we got stuck for five weeks, the cycle before that for 15 weeks stuck you know roughly at the prior all time high because people who have been suffering for four years are happy to take that price that they regretted not selling it before. And you see that with a probably to a greater extent in the secondary market and then you are probably the beneficiary of the lag effect of like those, those big, those other big funds will step in again too late when it's frothy 12 months from now, but for now it's just you guys, huh? Yeah, yeah. I mean it is curious, but I think it goes back to the first part of our conversation which is that the space is so multi disciplinary. You know you have to understand currency, you've got to understand monetary policy, Fiat debasement of Fiat, what that means you have to know something about private equity, about deal structuring, about corporations, about business, about investment and then also about crypto in the weeds. You know, you have to be plugged into all the new developments as well. So if you just look at some of the larger private equity investors, they're not really used to investing in some in currency. And and this area is brand new. I mean people when I first started this there were only 14 companies in the world that had a valuation of over a billion dollars and today they're over 100 and that's down from 150 at the last peak. So you know the space has grown so quickly that's not really normal for private equity investors. They I think most of them still think that the entire space is venture but when you have a company making 23400 million in revenue, it's not really venture anymore. So it's this, it's this. You know, I think about there are a lot of concentric circles that are overlapping to, you know, that are overlapping in giving you a description of what it is and the skill set that you need, you know to be an investor in the growth stage. I think venture is a little easier because you have Silicon Valley and you have tech and then this is just an offshoot of that. But the real question is, is who is going to fund the winners from all of those Silicon Valley venture capitalist investments like the ones who the guys who invested in the seed round or in, you know, precede and all of a sudden the company goes from zero to making 50 million in revenue and wants to grow more. And some of the venture guys will do their follow on round, but many of them can't write a 50 or $80 million check. And I think that that's the question a year from now, two years from now, who's going to write those big checks? I, I, I don't know. It's a very interesting situation, say the least, Yeah. Yeah, it is. It is fascinating. I'm of two minds or I see a range of possible outcomes for the next, I don't know, 12 to 24 months, which is you know will the window open wide enough for public markets exits for IPOs. Essentially you know how many of these companies that have real businesses, you know will make it to go public? Maybe some will, very few did in the last cycle, although as you pointed. Out one Really. Coinbase is really, I mean, Galaxy 2 and the miners, but it's really just Coinbase. Yep. Yep. No argument. No argument there. So, yeah, lots of opportunity though for for growth equity fund like yours that can that can write sizable checks. I'd like to, I'd like to mix it up a little bit here maybe on a no names basis. I think you've told the story of of getting the endowment. You're on the board at Lawrenceville I think. Right. And I think you've told about you know that sort of interesting case and struggle And you know Jesse and I have had similar experiences with respect to conversations that go on and you know the mark to market and you're a hero and you're a villain and you're a hero again. And I'm just, I'm just curious are there other stories you have in that vein or are there any sort of fun stories you can tell us on a no names basis is fine. Probably those will be spicier with respect to, you know, conversations you've had with either friends or colleagues or former colleagues or people in the industry and and how they've sort of approached this thing and you know, whether they've gotten involved or not and how they've lived through the cycles, anything come to mind? Well, I mean the story you're talking about really is, is, you know, I I run the investment committee for the school's endowment and after some time was able to convince the committee because obviously I don't act unilaterally to invest 1% of the endowment into the space. And this is in the Q2 of 2019. And you know, I tell every investor pretty much the same thing in terms of asking me what should their exposure be? And the exposure should be I think you own a little Bitcoin, a little Etherium, a little venture and then a little growth and you have a basket and you decide how you want to break that. If you want that 8020 Bitcoin ETH and you want you know you want to have 80% in the cryptocurrency and only 20 in the funds and whatever whatever mix you you want to have that's up to you. And so that's what we we there were no growth funds at the time. That was sort of part of the way reason I I got the idea because I I was thinking like to invest in some of the the larger companies. There was no growth fund, but we invested in in two venture funds and then in Bitcoin and ETH and it was at the time 1% of the endowments it was $5,000,000 and that 5 million went up astronomically as you can imagine it did came down. So that's the hero to the villain. We never, we never went below our mark. I think our purchase on Ethereum was like 100, $50 or something. I mean, we've never something like that, Q. 2/20/19 that's that's pretty good timing. That's great. Yeah and yeah and and we spaced it out too. We did. I said to the to the advisor who advises us, I said look, you know every 4-5, six weeks just buy another clip, you know, a little. You know, dollar cost, average, don't worry about it. And I said to the community, I said, listen, I and none of them are in in in crypto. Of course I said we are not going to talk about this for 10 years like this is the bet. I don't want to have to talk about this at every meeting. It's tremendously volatile. This is 1%. If I if it all goes wrong, trust me, it's going to have no impact on anything. And of course it was talked about at every meeting and I'm sure the meeting I have coming up in a month or so, it's going to be a big topic because we went all we're all the way back almost. To you. Get out now, those. Highs. No, we're not. We're not getting it. Yeah. Yeah, but that's what. That's that's an over my dead body situation. So we're not, we're not getting out now. I think 18 months, you know 12 to 24 months from now. I do see Bitcoin probably up at around 2:00, between 2 and 300. I think, you know, if the committee, I don't normally make decisions by committee, but this is a rare case. If the committee decides I'd like to take a little profit, then, you know, maybe but and then we also have you know, one of these venture funds that goes up 20X, down 90%, up 20X to 90%. So in net, net it's done. Great. OK. But you only can live with a very small exposure, you know to that kind of of fund. So that's I I I think that we were the first certainly high school I think endowment and we were one of the first high school or college endowments to invest. I think maybe one of the Ivy League schools had invested before us. I mean, I don't. I don't. I don't really recall and I would quote me on this, but. Good. Good on you. Forget forgetting that exposure. Good on you. And I had help too. There was a another, a, an emeriti board member who was also very helpful in getting people. He was another sort of Bitcoin or older guy that people respect. One of the few older guys, I mean as you guys know, the space is really demarcated by age and maybe that leads to another funny little story 'cause you asked me do I have a, of course I have a million stories, but in in different ways. I I would say that generally and I've talked to probably over 1000 investors for the fund in the last five years. And I would say, you know it's it's come to the place where I know my perfect demographic for an investor who will be interested in the fund and I the the perfect demographic is a 38 year old you know guy or gal who's managing their family office. They may have a little Bitcoin. They don't really know too much about it. The the father's 80 year old and his you know, is handing over the reins, of course doesn't believe in Bitcoin or anything about the the space. And then, you know, you have a conversation with someone that age, who's switched on, who's managing a decent pool of capital. And my hit ratio is very, very high in terms of connecting with them. I rarely, if ever, speak to people even let's say over 55 or 60. I mean, it's very, there's just not, there's no interest there. There's no understanding, however, and I'll tell you this is funny. However, at the end of the fundraise for my third fund, I got an e-mail from a guy out of Brazil, and it was the day before the close and the emails guy says, you know, is the fun still open? Would you take what was a pretty significant chunk of capital? I don't, I don't want to get into too much detail. And I thought to myself, what the hell is this? I mean is this, is this a money laundering thing or is this guy a gun runner like I you don't normally just have someone cold send you an e-mail saying you know, and so I said well let's get on a zoom and we'll talk and we're still open-ended up talking with this guy believe it or not. Guy's 90 years old, my oldest investor, extremely savvy, very well respected, but of course virtually unknown because the people who know him for the most part have passed already And so but for like the generation below in that country, him, you know, he mentored many of them and so he sort of is, is well known in that sense. But imagine, think about the kind of person who's 90 years old to invest in the 10 year life fund and in a crypto fund. Just think about the kind of mentality like that person has. And I would say that's been a really exciting thing for me. And moving into this space is that the people who are of like mind they really they battled to get to the place where I am. You know they really and he he's a he's he has a big big Bitcoin position big bitcoiner, you know sees our fund as a different type of exposure but just imagine how how much of an entrepreneur, how creative an investor is a guy of that age making a significant investment in the space. So that's one of the things I I love about being in it is that again, it's you almost. It is regardless of age. But when you find somebody who comes from a similar background, he was in macro trading, you know for a long, long time and gets it, it's, you know, it's like a fireworks a little bit because most people still don't. I get even with the Bitcoin ETF, I still get a lot of pushback, you know, for all the, you know, reasons. Even though, look, Larry Fink has done a great thing for the space, I mean, he really has, you know, converting from two years ago when he said it was a fraud to championing the Bitcoin ETF, and I'm sure the ETF too now, but people still don't believe it. And we saw just yesterday or was it 2 days ago, the woman from Goldman Sachs coming out and saying she doesn't even think it's an asset class? Well then so like, what is it? I I just, it's it's kind of crazy, right? So it's exciting to meet people who have gone through that struggle and have come out the other end. And now really, obviously, we're all benefiting in a tremendous way. Thanks for tuning in. If you're interested in exploring any of these topics further, or want to learn more about how we can help you secure a new or existing Bitcoin allocation, get in touch with our team at on rampbitcoin.com. We look forward to supporting you on your Bitcoin journey. It. It does. It requires fresh thinking. It. It requires you know it's what monger Buffett are not willing to do and take a a really fresh look at like what am I missing and digging into something and and discovery and that's antithetical to how many people who have had a long career want to think. So if you're if you're older and you're able to engage with crypto and find excitement in it that's a really fresh special mind. Yeah. So we'll we'll tip our hands a little bit Now Dan, we're we're basically a pure bitcoiners over here, I know. I know. Yeah. Yeah. So, so I do have a question for you though I see. I see myself as a pure bitcoiner too. I just, I I do. I see myself as a Bitcoin maximalist. I don't think that there's anything like Bitcoin. My I guess differentiating view really is that, you know, everyone. To get everyone to believe and see only one thing is going to be hard. I just think the human condition, the human, the DNA of human beings. Just is not going to allow it. It may be optimal. OK. It may be optimal, but you know I'm a I'm an investor and you know I read what the markets tell me and I've been in that mode for the last 30 years and you know I have strong views and have views with conviction, but in when it comes to money and value, it has to be rooted in the market, not rooted in sort of an ideology I would call it. So even though I may agree with you and think yes, it is optimal, a lot of this stuff is garbage, which it is. We're going to have you know out of the 20,000 cryptocurrencies, 9019 thousand 900 or 0 or whatever the number is. I still think I that and as I described to you before and I did that specifically, I I see a use and a need for the lesser quality protocols, right. It's how I would call it. So I it's funny, I I I don't know anybody else who has exactly this view. But you know, that's OK. I I don't need to have company. I I I'm sure Andy has a question here too. But I think this segues to my burning question on this topic of like I I agree that I think that crypto outside of Bitcoin will grow. But I think that what you said at the beginning about store value is just such a huge use case that all of the almost all the value will flow to that. And so in my mind, you know and I've put together some analysis on this in the past but I think that you know the potential for Bitcoin is like $200 trillion in the global landscape and that I think the potential for crypto is 10, maybe 20 trillion. But you know, if right now they're kind of half, half in terms of market split, then you know one of those will be a relative gainer. Well, this makes a market, right, differences, differences in in view. I do want to put one to you Dan, though, which is I think it's very difficult maybe that supports your thesis. I think it's very difficult to invest in Bitcoin only companies. I mean, partly because there aren't that many of them, just, you know, pure. Pure numbers gains. I've been looking for a while. Yeah. But I mean at scale, like ones that are larger, yeah, Yeah. Yeah, Yeah. So I was, I was just curious on your your view on that on that opportunity, is it kind of you're you're looking and you're you're interested? In. Yeah. There's one I'm looking at very closely now, but I I really, it's too early for me to talk about it publicly. Yeah. And I and I'm about to invest in a a smaller Bitcoin miner and I only have one miner out of the 24 companies. On that is bit Fury. And of course Bit Fury up until very recently owned about 80% of cipher mining which is the low cost one of the low cost producers public company. But Bit Fury is sort of the only exposure to mining. But I'm looking at another one right now that I like but I like for sort of non traditional reasons. Non obvious reasons I should say. But up until even just a few months ago, I even this company, this Bitcoin focus company, I'm looking at it it it's really not yet producing the kind of revenue that I would like. I think it will. So I I think. But you know The funny thing is I don't really, I I don't really deeply believe in like the Bitcoin ecosystem. Like I believe there's Bitcoin and I would never want to. No, I think the Bitcoin ecosystem is going to thrive, OK, I really do. And the layer twos and everything else, Lightning, I think it's all fantastic. I do, and it's all gonna grow. But I am never going to use it myself. And so my own, my. What I do for myself is sort of what guides me in terms of what investments I'm gonna make. So even though I will never be involved in that, do I think that there are companies that will make money and grow and be big and successful in the Bitcoin ecosystem? I do. So you know, I I can have AI can make an investment that doesn't necessarily tie to my own personal how I personally would respond if I see the opportunity there, right? Understood. So So what I'm getting here is Dan does not keep most of his Bitcoin on a on a hot lightning wallet on his phone. And he's not. Using it to pay for coffee? No, but that's just. For me, so right, that's just, that's just for me. I I and I can't, you know. But as I said to you before, the human condition, human being doesn't allow for everyone to do just the same thing. It's I always use this burger example like people think, let's say McDonald's is the best burger in the whole world and all they're going to eat is McDonald's. But then you have Burger King, and then you have Wendy's. And then you have every local place has got different burgers and you can't tell a human being, Listen, this is the only burger you're going to eat. And human beings don't are not OK with that. Anyway, you're going to have some guy who's going to say, you know what, I'm going to set up a stand across the way and my burger is going to be better than, you know, McDonald's. And so I have a very sort of realistic view because it is tied to what I believe the reality is rather than what I want it to be. So what I might want it to be maybe looks like the way you're thinking about it, but the realistic, you know I think investment market oriented view allows me to make sort of wider investments. The the market oriented view is is is a more pragmatic approach. I I certainly am guilty of allowing the ideology to, but. That's OK. My thinking about it, but you know what? That's totally fine. Like, that's totally fine. I yes, I am much more pragmatic because I've grown up managing money in the financial markets for 30 years. So I've had ideology about things before that didn't work out great. I've had ideology before about things that worked out great. So it just, you know, I I it's just my approach. I'm not saying it's the approach for everybody. And I'll tell you the truth, you know, having that ideological intensity allows you to hold through the volatility. And if you're a younger person and you've never experienced this kind of volatility, it's crushing. I'm telling you it is crazy and things are illiquid. It's not just volatile, it's illiquid too compared to the traditional markets. So you know, I I don't, I'm not blaming anybody for any approach that they have, they got. If it works for you and it's helped you stay in your Bitcoin, then that's great. So let's so Speaking of liquidity, I agree completely and it is a good reminder you know to those listening who are earlier in their investing journey and learning about investing definitely listen to market signals. You're not going to be right 100% of the time. If you're right, even 60% of the time that's a that's a win. But with respect to liquidity, Dan, I want to go back to your comment about the fund structure and you know private equity style structure. I have had a hypothesis for some time now that as the private equity industry generally has grown a substantial portion of the appeal is the lack of mark to market. In other words, I I have to ask myself how many LP's are telling themselves, oh, you know, if I put money with the guys with strong track records, you know I am going to get a higher risk adjusted return in the long run. But really you know what percentage of the appeal is. Oh, and also, I don't have to mark down My Portfolio. You know, when, when asset prices in general are down. Look, I think that's definitely part of the appeal and that's part of the reason I structured it the way I did because I've lived through that volatility in many markets. I've made mistakes many times. I don't make them so much now as you know, when I was younger. But you know, I wanted to prevent my investors from feeling that panic, from wanting to get out, from trying to get out at. And of course it's always at the lows, you know, but so I explained you know very clearly from the beginning, part of the point of the fund is to lock you up. So people just, they make their allocation and then that's it. And I said come back in five years, come back in eight years and I think we will make multiples return on our money. And so it it it in this space, I think it's especially valuable to be able to do that. I mean look at the people who were in you know, well no, no, I'm saying the the more recent companies that went under where you know if the if the investors had been able to sell, they probably would have sold in Q422. But because the company was in bankruptcy, the holdings were still there and now of course everything is up 3X and 4X and like FTX claims I think are trading at like 95% or something they were down at wherever ten, 2030%. So it's a very look, I know how dangerous this market is. It's a it's the most difficult market I've ever seen, extremely difficult to manage a liquid live portfolio 24/7, 365 and it just there's so many different people on your team that you need to have to be able to do this well that I think you know fantastic. My hat's off to those guys. I'll make a little less return I guess I'll have less a heartache. I I do think that not marking to market but we mark every quarter of course. But I think part of the, the advantage also in owning private equity is that I have lots of embedded protection in the investments that we make. So I often in half the businesses we invested in, I have a liquidation preference. So we're senior in the cap table and so when the market goes down and revenues drop, if I'm investing, if I've invested in a billion dollar company and the revenues get cut in half, but I'm the 1st 50 million out. In case there's a, you know something that goes wrong, that's a great position to be in. It's do I think the billion dollar company I invested in could be worth less than $50 million in a bankruptcy or with a problem? No. So I have like a massive portfolio of embedded puts in the portfolio. So even when things go down, I've got protection. It's not the same thing. People say, well, you know, Dan, why would I want to pay fees? I can just own Coinbase. That's a public company. My broker can buy it. It's Liquid. And Coinbase is a great company. But what you own there is common stock and and it's public and it moves around a ton and you don't have those protections and so you know. It has debt ahead of you in the cap structure too, by the way. Yeah. But I mean they're the only ones, yeah, not a lot and they're the only ones, but but but no, you're right. So I there are a lot of benefits to being able to structure a portfolio that's leveraged to like to growth in the overall space, right. And I I like being protected on the downside because just out of respect for how difficult this market is. Yeah, no, that's smart, smart to own, preferred, be relatively senior in the capital structure, protect your downside, makes all the sense in the world. I want to shift it a little bit back to one of your other businesses, which is gold and loop it into Bitcoin. And my question for you is how are you thinking about the potential for Bitcoin as an investment and gold as an investment and you know, pick whatever time frame you like, you know maybe 10 years is useful. Are you seeing them as substitutes? Are you seeing one taking share from the other? Are you seeing growth across the board and you know they both win? How you thinking about it? Well, gold today just hit an all time high right today and silver is exploding. I don't trade silver, but I think it could double here. I put these comments out on Twitter over the past few months. I did with my Co founder and partner found this company GBI Gold Bullion International. We sell and store and vault gold, silver, platinum, Palladium. Today I think we're the third largest vaulter of gold in the world outside of the banking system. It's a phenomenal business they're doing fantastically. I think that no asset can really compare to a Bitcoin. So you look at the performance just the last 10 years, 10 to 12 years. And I said this the other day talking to I think it was POMP in New York that every asset in the world is down 99% against Bitcoin in the last 10 to 12 years. So it doesn't really matter what you what you owned. In fact, I made a broader comment that it's not just Bitcoin, but every asset outside of sort of the digital asset ecosystem is down 99% against even Ethereum and even Ripple. You know, even some of these crypto currencies that you would never touch, right, If you look at them against assets in the old world, even Ripple is up 99. I mean I'm sorry the NASDAQ is down 99% against XRP. Now this is not a comment to go out and buy XRP. This is a comment to understand a broader view that many of the things that are growing up in this digital asset ecosystem are massively outperforming the assets in the old world. And so it's a Fiat, the Fiat based world where there's a tremendous amount of debt where money supply just continues to go up at any number. There's a realization maybe now just beginning that we don't have that in the digital asset world. The supply of Bitcoin is finite and actually many of the other crypto currencies as well. I wouldn't call. I think Ethereum is is is has a tighter monetary policy than the US, just as an example. So I as a macro trader often trading currencies, always looked at things relative to each other. So you may say, well everything outside of Bitcoin is crap. OK, but then why did the NASDAQ with all these great companies? Why did it go down 99% against Ethereum in the last eight years? Couldn't be that crappy. So my perspective is a little different because I I've spent my whole life in the old world and I know real crap, right? You know what I mean? And maybe in the pristine perfect world of the digital asset ecosystem, only you know Bitcoin is something that's worth something. That may or may not be true, but it's remarkable how much many of those assets have outperformed even things that you think are blue chip in the traditional world like Amazon, like fancy real estate, like art, all these things have gone down massively. People in the old world are losing purchasing power at a rate that I'm not sure they're aware of. So like that's the the context you know that I in which I I think about things. And and that's very again, that's the the perfect pragmatic deployment it's it's the we're living through the ultimate rising tide, lifting all boats and you know that rising tide is what matters ultimately and that's the digitization of value. So long as you recognize that mega trend and you're in the ball game, that's what really matters here. To to to the old people in the old world with all the money you would think, but before you can get there, to the digitization of all value, I bring it back to our very conversation in the very beginning. I really think you need to understand how it works. Right. And I think that if you don't understand how it works, it it it just, it's too far on a concept, it's too distant, it's too hard. You go, how do you convince A billionaire real estate developer, OK, who builds buildings and owns buildings that value, which he spent his whole life building actually accrues much faster in the digital world. I mean, he's never going to get that. Think about how many fortunes in the US are real estate fortunes. So you asked me about physical gold, I would just say, or gold that I think gold is the best hedge within the Fiat system. So I think if you're worried about debasement of your currency now in some countries you really need to worry about your currency proper. It's not just the money supply expanding. You know I saw a story today, I don't know if you guys saw it, that Zimbabwe of course the biggest basket case out there has now tied their currency to gold. They have a gold backed Zimbabwe dollar. The story's out today, so. You. Also have to understand that much of the world is not as sophisticated as you are or as sophisticated as US monetary. And I don't want to say fiscal authorities, 'cause I don't know how responsible they are at the moment, but but if you, you know, you look at Argentina and Nigeria, lots of these emerging market countries, Turkey, a gold is, is a lifesaver for many of those people, especially I think this recent leg up was is being driven by the Chinese actually as they've started to re stimulate, their economy's been weak. The real estate sector has been a complete mess. And I think they've been starting to, you know, you know, their interest rates are still very low and they're the largest buyers of gold. With the Indians in the world, it's not Americans don't really own that much gold. The Chinese and the Indians, I think own 2/3 of the OR. They're out of annual demand. I think they're like 2/3 of it. So remember, it's not always about what we think that drives the price. It's what the market thinks. And the market includes a lot of people in China, in India and emerging countries. So for them, I think gold is an important asset. They can buy jewelry as well. That's what the big thing is in India. But nothing in the Fiat world is going to outperform Bitcoin. And I would say also, you know, you guys might not want to hear this outperform all the other stuff as well. As long as that other stuff doesn't go to zero as we know, there's plenty. And that's where the danger is. And I tell people, listen, Bitcoin, Ethereum, they've achieved network effect, their Metcalf's laws kicked in. Those are real assets. Everything else is a venture project. That's my, that's my view, it's a venture project. Some of those venture projects are going to do great. That's not for me to determine. I'm not a venture capitalist, but so I think gold has an important place to play in people's traditional portfolio and I think that certainly institutional adoption of gold is very, very low. So maybe you know if we're in this position now where our fiscal deficit here in the US is 6% of GDP, that's kind of a crazy number. I mean I don't know about you guys, but I always grew up with the idea that around 2 to 3% was OK, but when you start going 6 to 10%, it's like Banana Republic time, right. So I don't know the these current leadership in the USI not thrilled about. We're, we're, we're just old enough to remember when balancing the budget was was a major political battle and the talking point and everybody took pride in that and that's gone for the last 1520 years, 22 years since we last balanced the budget. That's it. Well, this has been a phenomenal conversation. Dan, really appreciate it. Your insights, where do you want to send people Twitter? I think your DTAP cap. But other than that, where can people learn more from you? Well it just sent me an e-mail DT at 10 T fund.com and you know we have a website and but you know Twitter is a good place. That's how you and I connected. And LinkedIn, I actually, I never, you know I never did Twitter or LinkedIn anything until coming to this space. You know the old hedge fund world. Everyone is super buttoned up about their words and proprietary and you never, I never did any public talking about anything for 20 years. And I get into this space and I do one interview with Raul Powell in 2019 and the interview gets 300,000 views. And all of a sudden it's like there's a demand that I, you know, keep speaking about things out there. And you know, I, I, I like doing. And I think that all of us in the space do have somewhat of a responsibility if we are clearly spoken people, you know, helping other people understand, you know what we see. And and I'll tell you, people are really thankful. I was at the Blockworks conference in London and people were coming up to me thanking me for suggesting this book, thanking me for, you know, a guy came up to me and said, you know, after I heard one of your interviews, I went out. I bought Bitcoin. It changed my life. I left my job in the old world. He now works for a company in the crypto world. I mean it just, it was you know, so I think that's how we drive the network effect for the space. And again, I have a broader view and I think that bringing people into this world is just going to help them. And you guys also, you speak very clearly, you've done a lot of research and you published, you know these are important things to do. So let's just keep doing it right until we until, you know, we get to a few billion people. Right. That's it. Well, thank you. Thank you for those kind words, Stan. Completely agree. It's actually taken me. The education process for my, you know, wealth management brethren has taken longer than I thought it would. But we will persist, we will all persist and we will all continue to bring knowledge and information about Bitcoin to to the rest of the world. So thank you again. Really appreciate it And this has been scarce assets.
Transcript source: fountain