How I Predicted The Rise Of Bitcoin (And What's Coming Next) - Alex Tapscott

Transcript

like even when they lose they win. I mean ultimately like how does how do they compete with Micro Strategy? Where do we draw the line with regards to institutions of ownership of these networks was FTX crypto's Chernobyl moment which is to say like yes blockchains are amazingly innovative technology and crypto asset is this crypto assets are these sort of tools we can use to reprogram the financial industry and so much more. But, you know, if you have a big disaster and it changes people's perception of the technology. Welcome back to the rollup, your home for technical talks and open conversations that shape the modular future. Nothing on today's show is to be construed as financial advice. You can

see our full disclosures list at the rollup.co/ventures. Sit back, relax, and enjoy today's episode after a quick word from some of our awesome partners. The intersection of AI and crypto is moving fast, and soon an agent will be managing your onchain transactions for you. But without guardrails, it's a disaster waiting to happen. Newton locks agents to your intent with cryptographic proofs and real penalties if they slip. Learn more at Magic Newton on X. What's going on, guys? Welcome back to the rollup. Today we have Alex Tapscott, the man whose father and himself wrote the book that got me into crypto. We're going full circle here. 2017 uh I was longing Litecoin on Kraken and trading Dragon Chain on the announcement of a Walt

Disney Corporation partnership on Bitrex. How the times turn. Alex, good to have you on, man. Yeah, thanks for having me. Yeah, man. You've got quite the tenure in in crypto um publications, uh board of uh directory of different boards in Canada, um and really just been a pioneer. So, it would be remiss to ask or it would be remiss to not ask, how did you find this weird esoteric niche world that we call crypto? Yeah, my tenure, it's actually a 10y year tenure, I think. Um, I think I'm in my 11th year of the of being in this space.

You know, I came I came at uh crypto um in 201 I think 13. And I I should I say crypto, but really I should say Bitcoin because this is actually before the word crypto really entered the vernacular and certainly it was before Ethereum or smart contracts, DeFi or any of these other topics. And I think like a lot of people I was interested in it. I at the time I was working in investment banking in a capital markets role. So I was on a trading desk and you know we were trading mostly cash equities but you know often someone would come with a novel idea and I think it was one of our young clients who said you know have you heard of this thing called Bitcoin? I

remember my head trader turned to me and he said Bitcoin have you heard about Bitcoin? Because at the time I was like one of the youngest guys on the desk and I said no I haven't heard of Bitcoin. He says should we buy it? I was like well do you know anything about it? He's like no but it just keeps going up. So I think that's like a lot of people kind of how I first learned about it. Um, what was the price back then? Like three or 4 hund bucks, I think. Um, nice. Hard to say. It may have been because, you know, at the time it was so volatile. It's funny because people think it's volatile now, but it used to be really volatile, right? Like I think I remember when it retraced from like, you know, $1,400 down to like 250 or something.

But anyway, um, so it was sometime in and around that period. And, uh, you know, I think like a lot of people, I got kind of curious about it. But the more that I looked into Bitcoin, the more convinced I became that while Bitcoin as an asset class, as an asset was really interesting, the underlying technology of the blockchain could be even more interesting. And so, um, that was sort of my thinking early on. Uh, I wouldn't say it went really far beyond that, but I was on a ski trip with my dad, who you mentioned at the outset, in Montlau, which is in Quebec here in Canada where I live, and he was asking me, you know, like, "Hey, son, like, what are you doing these days? what are you working on? What's interesting to you, you know, at the office? And I said, actually, I've been learning a

little more about this thing called Bitcoin. And this was right around the time that some Bitcoin miners were considering tapping the traditional capital markets to raise money. And Canada is a place that's always been really open-minded to new industries. We have a public market that supports early stage ventures. And so, I had actually seen a couple of companies come through our office that were looking to raise money. And so I become sort of like the resident expert in our firm, which is to say the only person who showed any interest at all in Bitcoin. Everyone else was like, you know, it's still like that. Like I was just at a a like pregame and a dinner with a couple uh of my older buddies who were in finance and they they were asking me to explain them

Bitcoin. And what helps now is that gold's going up and so people are like they understand gold. Yeah. But I I just want you to know it's still like that today. Oh yeah. And I I experience this too on the on a daily basis. And I think that digital gold analogy is useful um you know when thinking about Bitcoin as an asset class, but as a technology I think it falls short. It it underells Bitcoin's capability and its potential. And um anyway, so going back to that story. So he said, you know, that's really interesting because I'm looking at Bitcoin too. And I was like, you are? You know, my dad's a baby boomer, you know, but he's someone who's also a technologist. He's been um investigating the impact of technology on business, on society, on government, on culture for many, many decades. And he's written

several bestselling books. You know, he wrote a book called Wickconomics, which is the first bestseller about web 2. He wrote a book called The Digital Economy, which is the first bestseller about the web. Came out in 1994. So, you can see how early was. So, in a way, it wasn't totally surprising that he was interested in like this new new thing. But you got to remember at the time like Bitcoin had a market cap of maybe six or seven billion dollars. if it was a publicly traded company, it would have barely cracked the S&P 500. It would have been considered like a small to midcap stock. So, it's not like it was on everyone's radar at the time, right? But anyway, he was uh looking into it and he said, "We're trying to figure out if there's something there and uh we're doing this research project at the time

through the University of Toronto. Would you be interested in joining and writing a research report? You know, we don't have anybody who who knows much about Bitcoin or has any capital markets or finance experience and you have both. So why not? So I was still working my job at the time, but I had some spare time on, you know, evenings and and weekends. And uh I hadn't written anything longer than an email in like eight years, but I thought, yeah, sure, I'll give it a shot and write a research report. So that report came out in I think it was like August of 2014. And it was called the Bitcoin governance network. And it was basically how do we create um how do we ensure that this technology which is a decentralized sort of global public good

how do we turn this thing into how do we help it reach its potential what is needed what kind of you know um governance what kind of coordination is needed and that time that was actually kind of a controversial topic because you know Bitcoin didn't need governance it didn't need coordination it was supposed to be you know beyond um that it was decentralized But I think what we've learned is actually a little coordination can go a long way. So um that report became the basis of other work that we did together and that eventually uh his publisher or actually his literary agent got wind of this research that he and I were doing and he said do you think there's a book in this topic and so he and I got to work on a book proposal and shopped it around and it was uh his publisher of his prior

book Penguin Random House who bought the rights. They paid us a, you know, a nice healthy advance. And my dad basically came to me and said, "You've got this job. You seem to enjoy it. Would you be interested in quitting and retiring?" In fact, in order to write a book with me, even though, you know, you've never written a book. And I didn't have to think about the decision very long. You know, they say when you're offered a seat on a rocket ship, you don't ask which seat. You just kind of hop on. So, I was like, "To hell with it." So, I waited for my annual like my year-end bonus to clear and then the day after I hit my bank account, I quit my job and started to write the book. And um and that book uh came out in 2016. It's called Blockchain Revolution. And you

know, they say luck is the combination of preparation and good timing. So, we've done a lot of work on this book. We interviewed all the top people, people that you know these days um are hard to get access to if you were a new author, but back then it was easy. You know, we spoke to Jeremy Aair and Vitalik Bdderan and you know, Joe Luben, uh the the founder of Consensus. We were actually in Consensus's office the day the Genesis block was mined. And uh Consensus, which I think closed around at a seven billion dollar valuation recently, their office was smaller than my home office. There were there were not enough room for five people to sit down in this office. So, we really felt like we were kind of there, present at

the creation as the expression um says, right? You're present at the start of something. You don't really know what it is, but you feel like it's kind of a big deal. So, we did the prep the prep and then we got lucky with the timing. And that book ended up becoming really the the book a lot of people I think credit with getting their their start in crypto or or or helping to spark their interest in crypto. And um that's something I continue to hear to this day. So the with the launch of that book in 2016 um it really sort of set me on a trajectory that I hadn't imagined before that which is that I became completely involved 100% in crypto in educating consulting and as you said like advisory and board work uh investing in the space

um and uh and writing too you know blockchain revolution was a book I wrote with my dad and a couple of years ago I wrote my own book called web charting the internet's next economic and cultural frontier which really builds on some of those ideas from blockchain revolution um and updates them for you know the modern era. Yeah man. I mean I credit that book to my deep understanding of the core ethos of the space. This is blockchain revolution that I'm speaking about where you know when I look at the space today there there is an overexaggeration of certain aspects that are the result of you know the great social experiment that is permissionless

finance whether whether for better or for worse. But the core ideas of of the permissionless networks, immutability, censorship, resistance, really just this idea of like non-s sovereign uh or non-state form of money, sovereign hard money was particularly compelling. And this was also in my generation where, you know, I was 17 and I was just getting I just realized that you could actually start a career online. Like I remember I I I had this like ex-girlfriend or something and she was I I I'd be working on this online business. This is like 2018 or so after after I got completely wiped in the in the 2017 bowl. And and we were talking and the question was, you know, are you

just going to be working on your computer, you know, and just doing like computer work for the rest of your life and like not going into the office? And like crypto kind of started this entire idea for me. Um, but it was really rooted in the core ideals. And I think there's a discrepancy as as you look across who and which types of people have joined in certain times. Like the people that were join that joined in 2013, they probably far more hardcore libertarian than I am, right? But I I think the people that joined 2021, 2022 and and then who who have recently joined, I think they like less of the core ideals have kind of like stuck through time. And this is kind of worrying to me. I would say that I'm probably second generation. So

definitely like the first generation, the people who because remember this all began with Bitcoin. Um they they had a very um clear uh philosophical sort of motivation for getting involved with this 100%. And like if you think about Bitcoin and the um you know when the the um when Satoshi hash uh you know the cover of that English newspaper sort of saying that you know banks seek bailout from uh from chancellor of the ex-checker it was it was it began as a political exercise as much as it began as a technology experiment I think right and I think that's really amazing because you know a lot of um innovations begin with uh um or are motivated by

some kind of new politics or sort of new way of thinking about the world, right? Like the Protestant Reformation went handinand glove with the invention of the printing press which was able to break the church's monopoly on information. Um you know if you think about the industrial era and the corporation that gave rise to a new kind of wealthy elite a counter elite to the agrarian landlords of the feudal era and led to all sorts of disruptions but that was because of industrialization and the corporation. um you know the internet um was this democratizing force that made access to information uh equal at least for people who had an

internet connection which is a big big caveat but still um and that broke you know the monopoly that uh traditional publishers have on information and also led to disinformation and all sorts of other issues but the point is that it created something new and so I think about like bitcoin is a technology fundamentally you You know, blockchain is a technology that makes it impossible to spend the same asset twice and creates a record of transactions that everyone can trust, which means we don't need an intermediary to um to coordinate and to move and store value. And that is something that is like fun fundamentally you know a technology innovation but it's embedded in that is an ethos that you can that people online can

voluntarily transact and coordinate and then do business without the need for middlemen and those middlemen can include financial intermediaries but they can also include central banks and governments that issue the currency. So to me that was the gen the first generation and I was influenced by that. I thought it was really compelling, but I was also interested in what was coming next, right? So, I think sort of like the Ethereum era um the idea that okay, well, if you can use a blockchain network to secure transactions in Bitcoin, could you use it as a way to secure transactions and other assets?

and could you program it to um perform a lot of the business logic that goes into you know commerce um you know contracting recordkeeping and so forth. So the idea of a general purpose blockchain that enabled smart contracts and other kinds of assets to me was like really really appealing and that was really like you'll remember Andy from reading the first book blockchain revolution. You know, our our thesis was basically that the internet was entering a new era that we had an internet of information and now we had an internet of value, a way to a public open network just like the web, but for assets instead of for information. And that was going to have an impact on every industry and financial services being the most obvious beneficiary because

it's the industry that deals in assets and is powerful and deeply entrenched. so naturally was going to be disrupted but also all sorts of other industries too. And in that book and in the work that we've done since you know we examined the impact on cultural industries on financial services on uh government on society and even on you know the corporation itself uh how we organize capability in the economy. You know you mentioned that you're primarily online. It's interesting that the online work from home sort of digital nomad revolution coincided with the innovation the blockchain revolution. Yeah. But also um the creation of new

organizational structures like Dows which make it possible for you to earn money without ever needing to be employed as or contracted by a corporation. And I think that's really interesting too. Yeah. I mean that is the epitome of of the idea that goes back to the core ethos dows themselves but then this this entire concept of internet of value it what that does for for people globally was also a really big uh peak of interest for me where it was like okay we have a form of effectively capital um formation appreciation and wealth creation that

that that that it can be accessed globally. Now, one thing that that I've learned through the in investing woes, upsides, downside is that crypto is very path dependent. There are a lot of things that have happened that you couldn't have predicted, but then these little forks in the road set the stage for the future of the space. You know, Tether is a good example where there there was so much Tether FUD in the past and had there been something that came out, right? Tether would would likely look far different than it does today with with regards to its status as being entrenched in every centralized exchange and effectively being the the largest stable coin uh in the crypto markets.

Ethereum is another example, right? there was all these different uh Ethereum killers and different um you know L1s and chains and you know had something changed with the way that Ethereum launched or or had the DAO uh kind of uh hack not planned out the like or played out the way that it did, you know, we could be in a whole different world where there's a different dominant smart contract platform, not Ethereum. Well, I'll give you I'll I'll give you another example of that, which is um you know, had FTX not uh gone under, right?

Or had Luna not blown up, we might be even further ahead than we are today, right? Both the examples you provided are ones where things went well and where as a result, you know, it advanced the ball forward, but there are a lot of examples where it has not. And that's something that to me is really interesting, you know, talking about path dependency when it comes to to new technology because like oftent times technologies come along that uh are so disruptive and so you know innovative that it's almost doesn't matter that there are setbacks and disasters along the way. You know, you think about the invention of like the steam engine. Like

the steam engine was originally used to clear the air out of mines in England to keep miners working for longer. And it wasn't until decades later that it was used in um railways, which is how we think about it today. And there were a lot of mine collapses and there were a lot of rail derailments and a lot of deaths um throughout this 18th and obviously the 19th century. But the railway and the steam engine were so powerful that they just sort of steamrololled everyone for lack of a better term. Um but then there are other technologies that have that seem to have the same potential but um get derailed in some ways. So the to me the best example of this um was shared actually by venture capitalist um who the very

thoughtful guy he said look at nuclear power. So um after the second world war when we learned to harness nuclear power for um ci civilian use for you know nuclear power generation um we had in our hands a technology that at scale could potentially allow us to wean ourselves off of fossil fuels and in the process you know address man-made climate change. But the problem was that in the 70s we had in the US Three-Mile Island and then in the 80s Chernobyl, right? Um the year I was born there was the biggest nuclear disaster of all time. And after Chernobyl, people stopped building

nuclear power plants and the percentage of the electricity generation that comes from nuclear flatlined and then started to decline. where Germany has been decommissioning nuclear power plants rather than upgrading them and now with Russia in a war with Ukraine has no source of energy um other than to pay through the teeth for Russian oil. So nuclear power was something that had huge potential but had a Chernobyl moment where the path was like this right but then at some point it tilted and started to go in another direction.

So I think about crypto a lot in that context. Like I actually wrote an op-ed for Coindesk two years ago called was FTX crypto's Chernobyl moment which is to say like yes blockchains are amazingly innovative technology and crypto asset is this crypto assets are these sort of tools we can use to reprogram the financial industry and so much more. But you know if you have a big disaster and it changes people's perception of the technology that can actually change the trajectory of the technology which is really what happened with Chernobyl. Chernobyl didn't prove that nuclear power doesn't work. What it did was it prevent it said every everyone said not in my backyard and you

know we just stopped building after that. So I think like there was a moment where crypto was appeared destined in a way to the back burner of of sort of history like it's one of those innovations that was really neat and had its moment but never reached its potential. But I think we've gotten over that and and I think that we're in this moment right now where we have another kick at the can to to fulfill some of that promise. But but it could go wrong again. And I think that that's something that we should all keep in mind. Well, as much as you Canadians despise Trump currently, uh I I I know because my my family's Canadian and I just had my cousins down. I was visiting them in

Florida and you know, they were telling me about the uh Canada flags everywhere, stickers on everything's made in Canada. People are being advised to not come to the States. In fact, my cousin was uh was getting was getting semi harassed by her friends for coming to the States. But, you know, family was a good enough excuse. That being said, Trump's election has also just gave another fork in the road where had had the Democrats won, I believe, in the states, had Gary Gendza remained in the SEC power, this would have been another somewhat of a perceived at least Chernobyl moment for the space where now it's actually turned out to be quite the

opposite for several reasons. Not just because Trump has and the administration has, you know, um has canceled SEC cases to the extent of seven, eight, nine against the largest centralized exchanges and players in the space. Pardon players uh like Arthur Hayes, others also actually moved to then make the Federal Reserve rescend their brokerage their broker dealer ruling as of yesterday. But due to the absolute rambunctious nature of Trump's campaign has now created less trust in institutions and governments than ever I believe as well as political in global instability

leading to potentially the further inflation of fiat currencies but also this flight to realization of wow perhaps having our store of wealth in a what is seen as a system where players of power can just put a few headlines out there, go do a few speeches, and the entire global economy is shaking. This is why gold's going up, then this is like this has been drawing the Bitcoin use case stronger than than I've ever really seen from a kind of more mass market appeal. So this little intersection in history has not only been favorable from the regulatory perspective, but all of the all all of the lack of approval of what Trump and

the administration is doing now is actually leading to more interest in Bitcoin and thus will will trickle down into into crypto. And so that has just been an extremely interesting uh social experiment per se at at the largest scale to watch over the last two-ish months. And I think the market looks, you know, whether it's going to go up, down, or sideways. The reality is I think the world's waking up to the promise of Bitcoin specifically, not yet the other cryptocurrencies or blockchain as a whole, but I think I think this little path dependency is going to we're going to look back and be like, "Oh, wow."

like that this like tariff era led to the mass adoption of Bitcoin as it's already been kind of all the dominoes have been kind of pushed and that was like it seems like it's being like the final bigger domino in in the picture for Bitcoin adoption at least up till now. Um yeah, it's been a very very interesting last couple months. Yeah, I I agree and there's a lot to unpack there. So, I think putting aside my feelings towards Trump, like as a Canadian who's lived in the US and has a lot of American friends, I think that most of us want to see the US succeed, right? And we want to see the US remain powerful and innovative and open and free as a country. Um, and we want the

US to engage in the world. One of the ways that it can do that is by continuing to be a leader in finance and technology. Crypto is a technology that um is in my view, in my view, sort of representing a new era of the web and so should be treated as such. And it was a dem Democrat in the 90s, Bill Clinton and Al Gore, who helped to draft and overhaul the telecommunications act and introduce legislation to allow the commercial web to thrive in the US. And so I view this as a similar moment in time where government has an opportunity to uh create the conditions and to set the ground rules for this new internet

of value to grow in America. And I also think that just as the government in the9s had a.gov website and tried to be a model user of technology to show that they were not only embracing it politically but also using it. I think the same thing can be true here. Um so generally speaking I think it's good that there is this shift within government towards a more open stance and not a lazy fair stance but you know like let's come up with some rules of the road and some basic guidelines for this industry to succeed and um I'm happy to hold those two thoughts in my head at the same time. you know, my Yeah, I mean, it's been just a pure

towards Trump as a Canadian. But course, what I will say is that um I I do worry that that Trump u sees this like he sees many other things as an opportunity for personal enrichment and to consolidate power. And so I worry that like a lot of the stuff his sons are doing and you know the memecoin and everything is actually undermining his case as a as a reformer. Um, and I think, you know, if you look at Paul Atkins in the SEC, um, or Scott Bessant, like these are serious people, thoughtful people, um, who can actually make a difference, right, in in how this technology is treated. But I think I think that, you know, uh, World

Liberty Financial and and Milancoin make their job harder, don't they? Yeah, I totally agree. it it's it's it's it makes them have to answer kind of questions about that stuff. So to me like it would be better if all of the self-deing and you know personal enrichment side of this were just to go away and we were to get sort of lasting reform. Um in terms of the bigger picture, so that's like my take on that. Um in terms of the bigger picture which is you know is this creating a moment for crypto? Um I think that you're right and interestingly it was um in during the campaign I I can't remember who it was Mark Cuban. Mark Cuban basically had

this theory, you know, he's a Democrat and so he's like, why are all my, you know, VC buddies and founder buddies all supporting Donald Trump and his theory was, you know, his view was, well, tariffs and instability and chaos and all this stuff was going to cause the dollar to become a lot weaker and uh amidst that chaos maybe cause Bitcoin to increase in value. And at the time I I wrote that that seemed a little far-fetched that you know most of those people had investments in American companies and other and other pro projects in the crypto space and you know business can't succeed in a world that is failing um even if even if Bitcoin can but it and I'm not suggesting that the that the world is

failing by any stretch. I think there's a lot of over overkill in terms of like the commentary. But I do think that you're right like this kind of crazy moment where it's like the whims of a government, the words of a leader, you know, these decisions can have a huge impact on um capital flow in in the world. And um if you look at US markets for example, like US stock markets, they've had a decent week as we're recording this, but they're still down, you know, 10 to 15% from the top. Um European markets are actually up. And if you look at the US dollar, it's down against every single peer except for the Chinese currency because the Chinese and the, you know, may be trying to devalue it in order to remain competitive, uh,

keep their exports competitive if they have to, you know, be subject to higher tariffs. So, but like if you look at the yen, uh, well, you look at the euro and the pound and this frank, the sort of like store of value type currencies, they're all up big against the US dollars. and uh European mutual funds have taken in more flows um this year than they have in recent record as we've seen outflows from the US. So there's this we've lived in an era Andy like your whole life basically era of American exceptionalism and out when it comes to financial assets right like US market has outperformed the rest of the world since the global financial crisis the global financial crisis was a long time ago I forget like I'm older

than you like 16 17 years ago like you know since so since since you were a kid so it's it's hard to imagine almost a world where that doesn't happen. But and maybe this is a head fake and we return to form like you know people generally over they get o they they overemphasize the the the the recency of events right um but you know we could be uh in store for a real turning right like lots of people talk about this as a turning point or as a shift what have you and it's possible that this could be one of those shifts so what benefits in that shift well um you know the c the the shares of companies in other countries that are not exposed to this maybe. But more importantly is to your point gold

and bitcoin. You know, gold is at an all-time high. Um and it why is it at an all-time high? Because uh everybody's buying it. Like individuals are buying it. Um asset managers are now getting exposure and then governments and central banks. And if you look at there's an interesting article in Bloomberg that the big buyers of the big gold bugs this cycle are a lot of Asian buyers. And yeah, like you know, if you live in Asia where you can have currency debasement, where not the government's not necessarily, you know, democratic depending on which part of Asia that you're in, uh, where you're, you know, China adjacent and there's lots of geopolitical uncertainty. I can see why that would be an appealing thing. And

the same thing is true for Bitcoin. You know, I was um my firm 9point partners was one of the first to launch a closedend Bitcoin fund in the first launch one of the first to launch a Bitcoin ETF because in Canada they were allowed years before they were in the US. And you know in that initial raise I think we raised around 185 million US in that first um fundraising event. And this was and remains the the thesis that resonated most closely with people. It's like Bitcoin is similar to gold. you know, it's it's um it's hard to make, right? Uh in the sense that like, you know, to to mine gold, you have to pull it out of the ground and refine it. And in order to create new Bitcoin, you've got to do proof of work um mining, which is very energy intensive. Uh it's not

controlled by a government or corporation. Its ownership is decentralized. It's global. Um and it's becoming scarcer with time, right? It's harder to find big gold reserves and Bitcoin um block rewards are getting cut in half, right? So, it has similarities, but where those similarities end is where I think the story actually gets really interesting because Bitcoin is infinitely divisible, not infinitely, but it's very it's divisible down to fractions of a penny, whereas it's actually hard to you can't transact in physical gold in small dollar value increments. Um, you know, Bitcoin is easier to move, obviously. It's easier to store. It's harder to forge. It's impossible to forge, right? Um and it is itself a technology platform. You know

gold we know that gold is useful for lots of different things. Uh but industrial uses for gold represent like I think less than 10% of demand. So gold is a store of value asset and clearly that's something that can cause something to be worth a lot of money. But with Bitcoin, Bitcoin is a store of value asset but it's it's other it's other things too, right? It's like magical internet money. um it has other properties that I think give it more upside honestly. And we're we're actually experiencing right now like this um sort of second this renaissance of of um layer 2 activity and app development happening on the Bitcoin network which is really exciting for me because that was what got me interested

in it. Uh one of the things that got me interested in it to begin with. So yes, like we're in this moment. I talk about this, you know, as basically we're at this inflection point where sort of three things are all happening at once. Um, you know, you've got regulatory headwinds are now tailwinds. The technology is now ready for prime time and uh business attitudes have changed from being ambivalent to hostile to now looking at embracing this technology.

And then you set that against the backdrop of a an unstable and volatile world. And I think you do have the recipe for an extraordinary run um in the price of Bitcoin, but also in the adoption of the underlying technology. And not to mention, you have one of the greatest dgens ever known to man, Michael Sailor, levering up against Micro Strategy and buying Bitcoin. Then just this week, what what we have is Brandon Lutnik, the son of the US commerce secretary Howard Lutnik and his firm, his like finance firm Cantor, partnering with SoftBank, Tether, and Bitfinex to essentially create a billion dollar or multi-billion dollar spa special purpose accumulation

vehicle or some sort of like acquisition corp. Yeah, acquisition corp. I think it is more I think accumulation vehicle as a Yeah, there's no company being built here. It's just Tether getting into the US with this offshore entity and and hoarding Bitcoin. And they they've raised 200 mil. There's going to be $3 billion of Bitcoin in it. It essentially plays this the Micro Strategy playbook. Uh but also already has plenty of collateral to issue debt, use those proceeds to buy more Bitcoin. And effectively the administration gave its playbook away in, you know, prior to Trump getting elected. They said, "Look, we're going to make us the home of of Bitcoin and crypto." Uh, obviously, we

didn't expect, you know, a memecoin to launch on Salana and run to 80 billion, but here we are. And, and so now we've the, you know, I assume Lutnik's son and, you know, these these quote unquote insiders had this information. I mean, it was public. Use that time period to act on it to build now what is being called 21 capital. Uh, Tether is going to put up a billion and a half of Bitcoin. And basically they're going to go and they are going to run the micro strategy playbook at large and compete effectively with Micro Strategy or at least not an not allow for a pure monopolization of this idea of hoarding Bitcoin. Innovating finance global institutional and onchain deep liquidity

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Like even when they lose, they win. I mean ultimately like how does how do they compete with Micro Strategy? The only way that they compete is by um putting pressure on Micro Strategy's premium or by uh taking capital away, right? So when Micro Strategy needs to go to market to raise money, maybe someone's investing in 21 instead. But but the bigger picture is that it's going to create more buying pressure for Bitcoin, which is to me they're like bailing out Micro Strategy. Like all right, well, if you guys are doing Yeah. Like it's it's like we're going to do it, too. If you're a Bitcoin vehicle that buy another entity spending billions of dollars buying Bitcoin is probably a good thing. Yeah. Sailor's like, "Well, all right. So my liquidation price is safe now. 21 Capital has a new liquidation price.

someone's going to have to come in and put their liquidation price higher. But the question here for you, I think is that is more around the ethos, right? So I think Sailor Owns around in Micro Strategy and their in their convertible bonds in their debt offerings uh through those they've they've accumulated almost 3% of the supply like 2.7% of the total supply of Bitcoin, two and a half percent. Um 21 Capital is going to come in and assumably get, you know, half a percent. Where do we where do we draw the line with regards to institutions of ownership of these networks? And like was this on your bingo card when you were thinking about how Bitcoin adoption was going to

happen? Um, you know, I I kind of think of it as like this this this like global snowball of frankly like just degen behavior across the board. The over gamification and gam and gambling of kind of all industries. But the concerning aspect is like when is when is Sailor owning too much of the Bitcoin supply too much. Well, it's you know the predicting the future is always difficult to do and you know I used to say the the future is not something to be predicted. It's something to be achieved right it's up to whoever is in wants to take it on to to try and build it. So like sailor would be a person that did that kind of grab the bull by the horns so to speak.

Um, the future is always a lot weirder than you think it will be. I think this is the thing that I've learned. I think that, you know, we make a lot of predictions about how technologies will be used and what the adoption curve will look like. And um, you know, like I think about AI, you know, AI is going to replace call center workers because it can, you know, perform the same tasks as like a middle mid-level office worker. Well, maybe, but AI is going to lead to a lot weirder outcomes than that. Like that's not going to be the innovation.

The innovation is going to be something altogether different, right? Um like the the explosion of JD Vance memes that completely took over the internet and probably burned through like billions of barrels of oil on computing power. Um to to like you know basically I think cloud the record of what this guy will ever actually look like. We'll never really know if he was you know maybe he was fat or maybe he was handsome. We'll never know. Um but uh but like there's just so so many weirder outcomes. So you know in 2017 would I have predicted that the president would be launching a memecoin um using his likeness and that you know um they'd be talking about a strategic

Bitcoin reserve or that there'd be this DGEN Michael Sailor buying hundreds of billions of dollars or whatever you know billions of dollars of Bitcoin maybe soon hundreds of billions of dollars of Bitcoin. Absolutely not. Um, so you can never predict in terms of what how much is too much. I don't know what the answer is to that question. You know, I think that so long as the Bitcoin mining um, uh, sort of hashing power is distributed geographically and across different entities, then it remains, you know, decentralized. ownership of Bitcoin itself is very important but I I've always sort of felt that you know whoever um mints the blocks uh has the power. So that's something that I think

is probably more important and you know there are mining pools that have way higher concentration of hashing power than than Sailor has concentration of Bitcoin. So I don't know that that's like a issue that is top of mind at this point. Yeah. Yeah. I mean I think people people like to make claims around it. I think the bigger issue is around like ETFs are are are these paradox where it's so good for adoption but more and more of the ownership is just is just going to be in these institutional vaults effectively on behalf of um you know their clients. It it's just a very interesting future where back in like when you wrote that book blockchain revolution I remember on crypto Twitter back in those days the meme was institutions are coming and we never got

them. I mean they they were like they were five years away but like we were like all right we're going to get the institutions in. We're going to dump on them. It's going to be like the best thing ever. We're going to liberate ourselves, right? And so now we kind of fast forward and now we actually have the institutional adoption. So, you know, it's happened on Bitcoin, happened a little bit on ETH, and now we've seen a a whole slew of different ETF filings, SWE XRP, Pangu, you know, you know, insert your altcoin here. What's your take on the ETF status of nonBTC and ETH crypto assets? Are we gonna get ETFs or are are we just is that kind of a a far-fetched idea for something like you

know a Cardano or a or a SUI or a Pangu or these types of assets? Well, I think we will get ETFs in all those assets. Whether or not they gather any ass any any you know capital is a different kind of question. I mean there's so in Canada we already have Salana ETFs. they they actually were announced two weeks ago and three different companies have launched them and I think they're doing pretty well. Uh in Canada we already have rules around staking. So you know even today like ether ETFs in the US do not stake their ETH but in Canada ether ETFs do stake their ETH and Salon ETFs stake their soul as well up to 50%. And they the reason they can't go to 100% is because of redemptions. if someone you

know has to withdraw a huge amount of money in and you have an asset that's locked up then it's very difficult to sell right so um that's something that already exists in Canada and it will exist in the US and um the argument that you need a regulated futures market uh for in order to maintain like you know transparent well well well well functioning markets in these underlying assets I don't think is necessary because we have lots lot of ETFs with lots of different kinds of assets in them. You know, we have ETFs with municipal bonds in them. There's no futures market and municipal bonds that I'm aware of. Um, you know, there's ETFs for um, you know, for single stocks like individual equities. So, if you can have

a sing an ETF with a single equity, why can't you have an ETF with a single asset coin, right? So, I I don't see why in the next few years, I don't know if it'll happen quickly, but in the next, you know, few years, you won't see lots of different um filings that things that have been filed turned into actual products. Um will they gather assets? It's an interesting question. Um Bitcoin has amazing mimemetic power, right? Like it's the the digital for if you're a sales an ETF salesman talking to a stock broker, an adviser, you know, or or you're pitching online to do it yourself investors. This is Bitcoin. It's digital gold. It's, you know, store value asset.

It's a portfolio investment. You know, it's blah blah blah. It's easy to sell. Um, I think, you know, some people don't buy what you're selling, but it's still easy to sell. Uh, Ether and these other things, there's a lot more nuance, right? So, what am I buying when I buy Ether? Well, you're you're sort of owning the token that is part of this platform where people are building. Okay. Well, who's building? Well, lots of application developers. Well, are they building elsewhere? Yeah, they're actually building on other platforms. Well, why will E ether succeed? Well, because you know, and then blah. And then it's like and then you're into this whole like sales pitch where you're basically like selling it's more like, you know, comparing the Android operating system to the Apple operating system. Um, or you're comparing, you know, like one chipmaker to the next

chipmaker. you're getting into a certain level of granularity and detail that that requires an un a deep understanding um in order to invest. So I think that that and and I think that there's lots of crypto assets that are like that. And then there are lots of ones that like don't have value beyond their mimetic value and they're basically just speculative assets. And so it's like I don't know if you want to speculate on Litecoin or Doge and and and buy the ETF well okay you know it's a free country but I'm not sure like what the underlying rationale might be. Yeah. And I don't know how much they'll gather in assets as a result. Yeah. Yeah. Yeah.

It's going to be interesting to watch. I think the the first domino to fall outside of BTC and ETH in the US markets will be a big moment. Um because that'll signify that you know there's going to be others right. Yeah. The it was very clear like BTC came and then ETH came and was like okay they're going to stop there. But again that was with the old administration. this new administration seems to have a little bit less uh rules, let's say. So, Alex, the last one I got for you as we kind of look a Yeah, go ahead. Yeah. As we as we kind of look ahead into 2025, 2026, where do we think that the entire crypto silo, as I like to refer to it,

where do we think the breakthroughs are into what I would just consider like the real world, right? like where where are we seeing the largest real product market fit that will be expansive into sectors that will affect everyday people in concrete terms especially if you have any examples or clear kind of thesises as to why and even even better if it's outside of just speculative use cases. Yeah. Well to me the two big ones one is sort of rooted in my old world of traditional finance and the other one is more on the cutting edge. So the old world is tokenization of real world assets and um we already know that there's product market fit from stable coins. Stable coins have grown from 0 to

$240 billion. They've increased by 25% in the last three months and we are just barely scratching the surface for what stable coins can achieve it right now. um you know stable coins are buying like less than 1% of US treasuries but at $3 trillion of circulating supply they would own more um US debt than China, Japan and the UK the three biggest owners combined. So this is something that is happening and it's growing very quickly and the same for the same like so why do people own stable coins? Well, because they want an easy, fast, convenient way to store and move dollars. Well, people also want a way to access other kinds of assets um that they can't otherwise access. you know, financial assets, so and so forth. So, I

think that the next like couple years are going to see a the stable coin market grow like crazy, but the share of stable coins as a percentage of all RWA shrink because right now they're like 99%, right? And I think with time they're going to shrink because the rest of the market is growing. And I think that that's just an innovation that is unstoppable in the same way that ETFs completely transformed the asset management business allowed you to buy into different strategies, geographies, you know, asset classes through a common unit known as a fund like you know an ETF fund unit. The token is like a new kind of plat like a wrapper to to allow you to move and store and access capital and other kinds of assets like that is happening. Um the second thing would be that the intersection of crypto and AI

and you know this is something it had a little hot start at the beginning of the year with Salana and a lot of meme coins and how much of them had real value is debatable but there's a basic sort of insight which is that um if AI is going to do more and more knowledge work in the economy and if it's going to have any kind of autonomy to enter into business agreements or do transactions. It can't do that by incorporating. It can't do that by opening a bank account because it's not a legal person. So, the only way it can do that is with crypto and with the with the crypto um sort of toolkit of smart contracts, Dows and so forth. You know, you can it can create a

Dow, it can have a contract paid, you know, fee for service that gets paid in stable coins and it can accumulate that in a wallet which it controls. That's all possible already, right? We already know this to be the case. So, um I think that probably the agent narrative is overblown in terms of what agents can do, but like both of these technologies, but what what I find so fascinating is like AI and crypto are um tech overnight overnight success stories that have been kind of decades in the making and um and are both sort of hitting this inflection point at the same time. And yeah, it makes sense that like you know, machine money should be used mostly by machines and that's basically what crypto is. So I think that that's something that we

have to pay very close attention to and you know it's it's incredibly interesting as an investor looking at this space where to put your money because if you're a VC and you're like imsh imshed in it and you're talking to founders and you're you know doing deep diligence that's one thing but if you're sort of looking at the market as a whole you know one agent project to the next agent project it's incredibly difficult to to to know right in my opinion. So in the same way that buying ETH during the DeFi summer was a good way of getting exposure to like sort of the DeFi phenomenon. Um I think similarly there's going to be platforms that emerge that where AI is well suited and we're going to see the growth of those underlying platforms do really really well. And I think probably they're going to be you

know layer ones of high throughput that are geared towards those kinds of use cases whether it's soul or suite or say or you know avalanche. Um, I think that all of those different networks could do well in the same way too like during that last cycle a lot of like EVM compatible all layer ones actually did very very well and outperformed ETH during that cycle. So like thinking about how to play it and this is not financial advice. I'm just sort of like you know speaking extemporaneously. Um looking at like the the more that gets built on the platform the better the platform does know because more fee revenue generates more yield for stakers right it's actually like a mathematical formula. So being able to pick the right platform I think is going to be really important.

Yeah, I think that's been the underlying infra thesis for a while but specifically for AI you I think we may even see new emergence or as you're saying the the platforms which focus being able to stay focused uh on that and and you know invest in it and invest in builders there uh will likely be the ones who who are able to capture that value. Stable coins, RWAS also very very interesting. It seems like like this barbell of crypto adoption right now has been driven by payments. Stable coins on one side, RWA is there as well and then on the on on the other side more these speculative DeFi kind of uh 247 uh transactions, yield farming, NFTts uh

kind of community uh games per se. And so I'm excited as we see more of that like kind of middle of the barbell get filled out. Well, the other thing too which would be nice to actually work this time around are decentralized applications um for things other than transacting and crypto assets, right? And you know in the book web 3 in my new book I talk about you know decentralized social media and how social networks are only valuable because of their users. Their users contribute the data. They make the social connections. They are the ones whose activity gives the platform value and you know the way we monetize that value in web two is through advertising by taking that data and reselling it.

But why not compensate the people directly for being the you know platform owners in essence and every attempt at doing something like this has failed spectacularly. Yeah. No, I mean but this was also one of the things that like got me most interested back in the day. It's like the token big token incentive and everyone's like yield farming and then like you know they suck it all up and then they move on to the next thing and it's like nobody ever wants to use the underlying platform and so like what what I've read in the past is like the do tokens inherently corrupt like web applications or can you find a way where you know ownership is incidental to usage meaning like you use something and then you own it but you own it you know and owning is is a nice to have not a

need to have or it's like doesn't become the main priority. Right? Because I think right now it's like, oh, there's a new crypto project. Let's figure out how much we can how much of the token we can kind of accumulate um through our actions and then move on to the next thing, right? And I think that that's that's been harmful actually for the development of crypto. Yeah. Yeah. I agree, Alex. I appreciate you your time and your insights here from the macroeconomics to the ethos to investing in the space and more. And um really appreciate your work back in the day.

It's what got me into the space. Forever grateful for that as well as just to be a part of of uh this investing journey as well as personal growth. Um and thanks for your time, man. Yeah, thanks Andy. That was a great chat.