Raoul Pal - How Bitcoin Is Eating The World & Why Ethereum Is The Biggest Gamechanger Of All

Full transcript: Raoul Pal on London Real

2:41 This is London Real. I am Brian Rose. My guest today is Raoul Pal, the British educator, investment strategist, broadcaster and entrepreneur. In 1997 you became the head of European hedge fund sales at Goldman Sachs before becoming a portfolio manager at GLG Partners one of the largest hedge funds in the world. Then in 2005, at the age of 36, you left the world of mainstream finance to start Global Macro Investor, your own advisory publication.

3:07 You first got involved in cryptocurrency by investing in Bitcoin in 2012, calling it quote the best trade you’ve ever found, and doubling your money in a month, in 2014 you co-founded the financial analysis streaming network Real Vision with the aim to quote disrupt the whole damn system and change the face of financial media. Raoul, welcome to London Real. Great to be here. Hey, it’s great to have you here. You know, it’s going to be a fantastic conversation.

3:32 I can’t wait to jump into a bunch of your ideas. We both have a background in centralized finance and banking, so I think it’s going to be really interesting. I started banking in New York City back in the ’90s in fixed income derivatives. I went to Chicago, I went to London. It was in the credit default market for a while, but 10 years ago I got jaded.

3:50 I started broadcasting London Real, but we weren’t just doing finance. We were doing all sorts of different things. But funny enough, Raoul, we dipped our toes into crypto over the years because it was current, so I had Max Keiser here back in 2013, screaming at the top of his lungs. I had Andreas Antonopoulos here in 2015, then he came back in 17. Then he came back in 19, Raoul, and he was talking about the internet of money, the future, you know, but we couldn’t see it happening yet.

4:19 So it was kind of weird, you know. It was he was talking about it, but it wasn’t there yet. Then last year we got really busy fighting for freedom of speech, went head-to-head with YouTube. This year we ran to be Mayor of London, and then after all that was over I looked at the DeFi space, and I was like, what is going on here? I’ve never seen this rate of innovation, this rate of adoption.

4:41 And again, I was in the dot com startup in New York City as a CFO, and I was like, I got to be involved in this. There’s something special happening here, and so we just decided to go all in. I started the DeFi Academy. We got hundreds of students going through and just trying to get involved in this market. I find it super exciting, and I want to get your thoughts on it.

5:02 Your video from back in April 30th of this year called Raoul Pal’s Introduction to the Exponential Age. It’s got over a million views and I encourage everybody to watch it, because Raoul, I think you were channeling some kind of higher energy on that day. I mean, like, I don’t know, but for 90 minutes you were flowing and you were dropping some terms I never heard before, things like pristine collateral, being irresponsibly long crypto, being call options on the future.

5:27 And maybe we start with you talking about this exponential age, because Raoul, you felt almost like you had surprised yourself. Like you already knew this market was big, but it felt to me like you were saying, wow, this is maybe even bigger than I thought it was. So tell me, first of all, am I wrong on some of those observations of you, and maybe you can walk us through this concept of the exponential age. Yeah. This whole thing, the more time I spend on it the whole crypto space, and there’s a the same is happening with technology at the same time, which is what the exponential age thesis is built on, is like we’re about to go through the fastest period of technological growth and adoption all recorded human history in the next five to ten years, and nobody is prepared for it.

6:16 Humans are simple creatures. We think in linear terms. We can’t understand exponentiality. It’s just not something that suits our brains. But let me explain what’s going on in crypto, because that’s our focus for today.

6:28 A lot is the internet between 1990 and 2000 grew at it. That’s the fastest period of growth for the internet, because it went from zero, or you know, from low numbers to larger numbers. That period the internet grew at 63 a year. It was the fastest adoption of any technology in all recorded human history, much faster than the mobile phone that came before it, and the telephone became forward. These are network businesses, and I’ll come on to that in a bit.

6:55 It’s a really important concept. So okay, how’s crypto doing? Crypto is growing at 113 a year. It’s the same number of users as the internet had in 97. Just before you decided to leave the world of finance and jump headfirst into it, people told you, oh my god, the dot-com crash, it was disaster.

7:19 Well, it wasn’t, because out of that came Facebook, Amazon, Google. I mean, you name it. It was the start, it wasn’t the end. So we’re growing at 113 a year. So this is double the fastest adoption of any technology in all recorded history.

7:33 Okay, that is exponential growth. So we’re at about 140 million users as of today of crypto worldwide. If you use, if you lower the rate of growth to 83 to be slightly conservative, you’re a billion people by 2024. That’s three years. It’s like, okay, I can’t get my head around this, but that’s how fast it’s growing, and it gets you to about three and a half billion by about 2027.

8:00 So basically you’re gonna get to half of the world by the end of this decade. So that is truly extraordinary. What is that? What is this adoption? The adoption is a network of money and all of finance.

8:18 In fact, it’s a network of value that sits above the internet. It connects all of this digital world into a way that the value is transfer, transferable, storable, ownable, recordable. We’ll get onto a lot of this stuff later, but this is the world of everything, from Bitcoin, which was really clever. Why Bitcoin was a big breakthrough was because we’ve developed a new business model that mobile phones have brought, and stuff like that. These are network models.

8:50 It was in fact a guy called Matt Carther, at Metcalfe’s law, which is you value a network according to the number of users and the kind of interconnectedness they have with each other. And that was mobile phone companies. If you had all of the mobile phone networks in the world added together, right, you got a multiple trillion dollar business. We just don’t think of it that way, because it’s fragmented. Then you had the network business models of Facebook, where they started, and Google, and Twitter, and Reddit, and you name it.

9:17 They started using behavioral economics combined with this data, and creating a network of people that were incentivized to post more, share more, like more, do things more. Now, for us as users of those networks, we got the benefit of finding our old school friends and keeping contact with your cousin, and all the stuff that we use social networks for. The shareholders got rich. We didn’t. In fact, they took the economics from us.

9:46 They monetized our idols and our attention. Then comes Bitcoin in 2008. So, and you’ve got something super powerful, because what you’ve got is a network where the users of the network have Bitcoin. The value of the network is Bitcoin. So it becomes a network like no other, with all behavioral incentives aligned, where everybody is incentivized to grow the network.

10:17 This is why it grows so fast. So Bitcoin starts the whole process, and then everybody realizes this business model of tokens, network effects and all of the technological benefits works for almost everything, and that’s the rise of NFTs, that’s the rise of DeFi, that’s the rise of social tokens, that’s the rise of so much. That’s all going on so fast it’s hard to keep up with. So that was a long answer to your short question. Yeah, and it’s funny, because right before I sat down here I wrote myself a question to ask you: is this bigger than the internet?

10:54 And funny enough, you answered it without me even asking you, but I would guess if you speak to most people in the public and say, is crypto bigger than the internet? Even investors, they probably say, bigger than the internet. I mean, that’s the biggest thing ever, the adoption of the internet. But it’s not right. Is it bigger than the internet?

11:12 No, not in terms. I don’t know. They’re part, they’re really the same thing. This is like a hyper-charged new version of the internet, but if you think about it as investors, you can’t. The internet was something that you had to make the right bet on.

11:29 Was it going to be Oracle? Was it going to be Juniper? You know, who was the right player? How did you make the money? It wasn’t as easy.

11:36 This is actually pretty easy in many respects, because, a, you’ve got Bitcoin, which is a monetary network. You’ve got Ethereum, which is basically a platform for all of this, and then you’ve got a bunch of other things that you can invest in. But the whole space is moving in size, and it’s much easier investable than, let’s say, the Nasdaq was in the past. You didn’t quite capture the value of the internet, because this is global. You know, when you bought Juniper Networks back in 2000, that was a U.S. firm.

12:05 Yes, it was global, but you weren’t capturing the global value of the internet. You have to go and buy a share in all of the incentives here. One thing fits all, and it’s, it is amazing. And it, yeah, I don’t know how big this is going to be, but it’s a lot bigger than anybody thinks it is. I would literally immediately and it’s, it’ll be the biggest thing in the past hundred years and maybe the next 100 years.

12:28 This point in time for the next 10 years, like you’re saying, as we go up and make three and a billion. Probably you can conservatively say that it’ll be the biggest, most exponentially growing thing we’ll ever see, and that is happening at the same time as AI goes mainstream exponentially, robotics goes mainstream exponentially, autonomous vehicles EV technology, genetic sciences, distributed computing power, all of these things 5G technology or space, Wi-Fi, are all happening at the same time and they all are connected, and then all driven by networks. So it’s kind of hold on to your hat.

13:11 Humanity’s not dealt with anything like this before, and it’s not going to be easy. You see it all over social media. There’s a fear of the future from some, because their value system’s changing. You know, it was gold and value investing. It was bonds, and it was you know, that’s what I know and that’s what I’m comfortable with.

13:29 Somebody’s telling me this internet money is the future of everything I don’t want to know, you know. And then it’s, it becomes anger and resentment, and it’s, I don’t think that’s going to go away for a while. I think people are going to be a little bit it’s going to be very unsettling, this whole period, but incredibly rewarding. Yeah, I mean, you have a background in centralized finance. You worked in a bank.

13:50 I worked in a bank, and you know, maybe we just talked about this right now. I mean, I got a text message from NatWest last week that said to protect you and your money, we’re going to restrict you from being allowed credit and debit payments to Binance, and I thought, well, that’s very nice of you. You’ve never sent me a text like that in the past, and that was an interesting reaction to a centralized financial institution to this world of DeFi. What, what do you see the banks doing?

14:18 I’m sure you still know lots of people inside the banking world. Do you see them as just part of the Innovator’s Dilemma? This is something that always happens in disruption. Do you think they’re going to hold on much more, much longer, because they’re kind of ingrained in the whole government and financial system? Do you look at him as the bad guy, the good guy, or is this just a process?

14:39 There’s a lot at stake. A lot, a lot at stake. Yeah, I don’t think NatWest, having worked there in the past, they’re not brave enough to make this decision. What they’re terrified of is the regulator coming after them. They have no, they’re not thinking yet of Binance as a competitor.

14:59 We need to stop them. So I don’t think that’s happening. I think what is happening is the regulators are far behind we know they want to regulate, but we don’t know how, and nobody wants retroactive fines. All the banks are fed up with that, because they’ve been paying fines since 2008, and that hasn’t stopped. So they’re terrified.

15:20 The regulators are terrified, because there is a lot at stake because suddenly there is a decentralized financial system that is probably broader than finance alone. It’s the value of money, the value. It’s the internet of value, and they don’t know what to do. How on earth do you regulate it when you have things like dowels and decentralized exchanges that don’t exist. What do you do?

15:44 All you can regulate is your on-ramps and off-ramps. So they need to figure that out fast, and the central bank digital currencies is their answer to this, because then you know what connects with what. Right now, if not, it’s too difficult for them. So everybody’s scared. The regulators know where the world is going.

16:02 I believe, I don’t think they’re stupid, and I don’t think they’re going to stop it. I think they just want to slow it down so they get a chance, because what are governments actually interested in? They’re interested in taxes, and that’s what even KYC AML is about too. It’s really just tax collection. You know, a smaller black market economy, bigger tax collection, and having just gone through this period of excessive government spending over the pandemic and beforehand for the last decade and a bit.

16:34 They need to raise taxes, so they just want it within their web. They don’t want to lose the power of currency themselves, which is what the central bank digital currency’s doing, is trying to stop them losing currency, but they’re probably gonna have to share it, and they’re gonna have to share power, and this world is gonna evolve outside of their sphere of influence, and there’s not a lot they can do about it. So I think there is the, this, the dilemma is everybody knows they’re being disrupted.

17:04 Including the BIS, the IMF, the ECB, all the central banks, all of the main governments. They’re not stupid and they don’t really know what to do. There is a sense of arrogance which, you know, all of us in the crypto markets shows sees as their sign of weakness. The arrogance is the non-acceptance of what is really going on, and that usually means they’ll probably move too late because they’re still trying to regulate, you know, the simple things like exchanges.

17:33 Meanwhile, DeFi exploded, and then they get on to DeFi in four years’ time, and NFTs are now the biggest thing in the world. There’s no way they can deal with this pace of innovation. The sheer number of people at an entrepreneurial level that are involved in this is like nothing I’ve ever seen before. It’s more than I saw with the internet. So it’s huge now.

17:55 To go back to the question about, okay, what are my colleagues in the investment banking world? Well, that’s entirely different. The investment banks smell money, and they want to control the flow of it. Not in terms of centralizing money, but there’s money to be made from their customers who want access to it. So they too are scared of the regulators, but they’re pushing forward faster.

18:17 So Goldman has trading and derivatives in this stuff, JP Morgan everything else, and they’re all moving this way, because they know it’s coming. They also know, in the end and the regulators know that everything is about to be tokenized, the entire industry because you get T-zero settlements, instantaneous settlements of any transaction for any financial instrument in the world. If you tokenize it, the question is what blockchain does it go on? And the answer is, it’s not going to be a centralized blockchain, because they can’t innovate fast enough, because nobody can hire enough developers.

18:52 So it’s going to go to the private sector. Like we saw, the European Investment Bank launched a bond on Ethereum to test. So there is this world we don’t know what it’s going to look like, but it’s like when I was in the City back in the late ’80s. We had something called the Big Bang, where investment banks and commercial banks were allowed to be the same thing again, and this is that moment. There’s another Big Bang, but it’s the entire architecture of the financial system that’s about to happen.

19:23 They all know it’s coming. And they’re all working on it. Yeah, and like you said, if the customers keep calling and if they want the exposure, you know, you’re your best banker at Goldman and JP Morgan. I mean, they’re going to find a way to get them access. They’re going to find a way to do it.

19:41 They’re going to find a way to make money. But then there’s this whole issue of regulation. Do you think that there will be a point where a government, whether the US government or Bank of England or someone else is able to slow down the pace of growth, you know, to just pull a massive restriction? Or do you think that this really is unstoppable, that it won’t be able to pull it back 30 Well, China’s kind of doing it now, you know, until they get their stuff sorted out with their central bank digital currency.

20:08 Again, I don’t think their intent is to get rid of Bitcoin. It’s to clean it up. They’ve got wild speculation going on. They, they’ve already, they’ve got a problem with their private sector shadow lending markets anyway, and crypto’s being used for it. Also, they’ve got a problem with money going offshore, so they’re just trying to just say, right, stop, everybody we want to get this organized so we can deal with it.

20:33 I think we will see that periodically. You know, we haven’t seen it in DeFi, but that’s coming. you know, doesn’t, because there’s no disclosure of risks and stuff like that. Now the question is, I saw Gary Gensler yesterday the new head of the SEC talking about risk, and I’m struggling to see why. We understand there’s a lot of scams in the space, and things need to be.

21:02 There needs to be a hurdle, but why should somebody restrict somebody from the opportunity to make money? You know, in the US you have this term accredited investor. So I’m a credited investor, so I get to do anything I want, to make as much money as I want and lose as much money as I want, but somebody else is not allowed to. So you’re perpetuating the 99 versus the 1%, even though you’re trying to do the right thing. We need to change this.

21:32 Now we’ve seen some of the rules on crowdfunding change. We’ve seen some of the rules on who can invest in startups. Most cryptocurrencies are basically real-time mark-to-market venture capital bets. We just need to teach people how to take risk, not stop them taking risk. And humans are gamblers.

21:51 If they want to gamble, they will gamble. They’ll gamble on the horses, they’ll gamble on the football, gamble on anything. So if you think that by regulating who can invest in cryptocurrencies, you’re not going to stop gambling. You’re going to stop gambling crypto. Just go somewhere else.

22:06 It’s ludicrous. So they need a better understanding, really, of what is going on. And it’s hard, because it’s engaging young people at scale. Yeah, it’s a fascinating observation, and you can see it in the volatility. You can see it, and the people involved in this market, like you said, they, they’re getting access to risk that used to be held for accredited investors.

22:25 But why was it held for accredited investors? And that’s one thing I see that, with that, you’re doing well. You’re so passionate about the financial education, and I think you once said Bitcoin is the best chance for the median person to radically expand their economic horizons. And it’s an interesting concept. Just by trading crypto, you learn more about money, or you get more comfortable about money than probably you ever have in your life, and we’re taught from kids that you’re not smart enough to manage your money.

22:52 That’s what the fund managers do, that’s what these people do, and this is a way to have a real relationship with your money, in a way where a conspiracy theorist would say, okay, the governments, the banks don’t want you to. But regardless of the motivations, it’s been something that’s been missing in the past. But crypto changes all that, right? It really does, and also think about it. I try and think of the world in different people’s eyes, and let’s say you’re the typical millennial kid who’s now 32 years old.

23:20 I think the average age so you’re just starting to come into peak earnings. You’ve got no savings. You’ve still got your student debt you’re trying to get rid of, and then you look at real estate. So look at traditional investments. So what are investments?

23:31 Investments are basically future consumption. You buy something now, you hope to sell it at a higher price to give you consumption in the future right when you retire or whatever it is, right? That’s what an asset is to us in the investment world. So what assets do they have? They have the equity market, all-time record high valuations.

23:48 They have the bond market, all-time record high valuations they have the real estate market, all-time record high valuations. So traditional assets, to them they’re buying very expensively. Now if you look at the size of those markets, equities, bonds and real estate on a global basis. Like, global real estate’s about 100 trillion dollars. Global equities, global bonds, they’re all like the 200 trillion dollar market, and then you’ve got crypto, the fastest adoption technology in all recorded history, which is the internet of money, where all of these things are going to be tokenized, and will be part of this.

24:23 Won’t all be Bitcoin. Bitcoin is one of the expressions of this. So that space is currently about one and a half trillion dollars today. So for it to meet somewhere around the equity bond market size, that’s a hundred x from here if it actually absorbs all of those markets. Well, that’s a 500x.

24:47 So 100x, you, me, nobody in history, anybody has ever been given a whole asset class, an entire asset class that can go up 100x to a hut to 200 trillion dollars. So, and it fractionalizes, so it doesn’t matter whether you earn twenty thousand pounds a year or you earn two hundred thousand pounds a year, you can both put 10 of your income in it because it’s fractional. So now you’re on the same playing field. Okay, that gets interesting. So we can all have the same percentage in Bitcoin, but then it’s going to get more interesting, because, like, if you’ve got a, an apartment in Number One Hyde Park that thing costs 200 million pounds.

25:38 Out of all of our reach, but the guy who owns it probably bought it for a hundred million. It’s about 100,100 million but we can’t, and you know, the average apartment, you know, in the outskirts of London hasn’t gone up as much. So how do we make the money? Well, we’re going to tokenize real estate too, because then maybe out of one of those fancy buildings one of those apartments gets tokenized, so you can put in 10 of your net worth into it, and I can put in 5 of my net worth, and somebody else can put in 50 of their net worth, and because it’s fractional and it’s tokenized, we all get to participate without it just being the rich get richer.

26:18 Fascinating. So there’s a lot coming, and so those millennials are looking, even if they don’t have a financial background they look in it like you said, these other asset classes, and they all seem at their peak, and then they see something that potentially could grow 100x to 500x, and they have access to it. And it’s native on social media. There is crowd sourcing of information, the quality of information that’s out there. Yes, there’s a lot of noise, but the quality of information, the people who are trying to help in this space, on Twitter, on Reddit and all of these forums, is extraordinary.

26:53 Even on TikTok. So people are trying to help you, because of network effects. It means if you bring more people into the network, it goes up in value, and also people passionately believe in the point of this thing. So it is engaging young people, because also all of those millennials grew up in 9/11, 2008, and now the pandemic. They have no trust in institutions.

27:20 They trust institutions implicitly in some ways, but finance is the big one that they don’t, because their parents lost their houses and jobs. And so when you’re seeing an opportunity that is social media in nature, that’s native to the internet, that they understand and live in, that offers them huge potential reward, and they can stick it to the man. Well, kind of gets interesting, right? And then that’s probably why you see this exponential option on the back of it.

27:48 And the way you kind of open this broadcast out with that incredible explanation, where, yeah, you had Facebook, and you had this whole information people layer here, but you never had the value layer, and you never had a value layer that was peer-to-peer and controlled by that peer group, which then leads to the adoption and the growth. And it’s an incredible way of visualizing what’s happening here. And I worry, I’m in a bubble here, Raoul, that I keep talking to people like you, and Michael Saylor, and you know, CEOs of Aave and Charles Hoskinson, and everyone’s telling me this, but when you say it, it just seems so clear.

28:21 Well, I go and have to head check myself, right? Because we’re all in this space we can get each other fired up, but I just use that adoption curve, right? If networks are valued in a certain way, then let’s just go back to first principles. Okay, how is this network growing? What is going to derail that?

28:39 Is bad news about Tether going to derail that? Highly unlikely. Is regulation gonna slow it down? Well, I think regulation speeds up adoption, because then the West won’t be saying, oh, don’t use finance. They’re like, okay, fine, you do what you want.

28:54 Here’s the rules. So it’s very difficult to find a world where adoption goes down. And at this pace of adoption, it feels very difficult indeed. So I’m just trying to first principles, keep out of all of this, because everything sounds amazing, and we don’t know what’s going to go to zero and what’s going to go exponential. But generally it’s that network adoption model.

29:18 That’s the truth. Yeah, that’s such a great point, and a great way to ground yourself whenever you feel like you’re in the echo chamber. Go back to the first principles and just look at the order. Look at that growth and say, okay, I can’t argue against this at all. Another one, the other easy one for people who don’t really know how to do that, is, you know, there’s free charting platforms like TradingView.

29:39 You can just chart a log chart. All exponential assets basically look like a beautiful trend channel in a log chart. So Facebook looks like this, Google looks like this, Apple looks like this. Well, actually, when you’re creating the log chart, there’s this lovely linear trend, log trend, and Bitcoin is the same, and if that changes, you know, that log trend from 2010 till current day, if that changes, then you can reassess. If not, the ups and downs, the noise, all of the screaming and shouting on social media, forget about it.

30:13 Just follow that chart. Right. Okay, and that’s that logarithmic graph that you’re looking at with the log chart. I encourage everyone to look at that. One of the things you talked about in this, in this black hole video, was Ethereum versus Bitcoin.

30:27 And again, it was fascinating to watch you almost realizing this while you were saying and showing it, and you were looking at again, you talked about Metcalfe’s law, you talked about all these data points and what Ethereum brought to the table and how you were just more and more convinced that this quote-unquote flipping would happen, or Ethereum would long-term surpass Bitcoin, or at least there was massive value in this network. And maybe you can talk a little bit about that. You know, I’ve been re-watching my interviews with Andreas Antonopoulos from 2015, ’17, and ’19.

30:57 He’s basically describing Ethereum before Ethereum really had the traction and he’s describing this whole potential future of smart contracts and these things, but it, it hadn’t really happened yet, and then we see it happen. Tell me what you were describing in that video, and what you see, and your thoughts on BTC versus ETH. So it started, you know, I’ve been involved in Bitcoin’s first, 2012-13, and I get the value proposition. I get what it is. It’s perfection as an asset, and it’s store of value, and yes, it’s still too volatile to be a store of value, but it’s compensated by the fact it goes up a lot, so you know, we don’t mind.

31:36 We have to accept the volatility. But then, you know, I was starting to become aware of smart contracts in about 2015. As some friends of mine started talking about it, I don’t really understand what that was, but when they explained I started realizing the future of everything, from insurance contracts to legal documents to anything, could now go on a blockchain. And that meant for me, also with my finance background, okay, that means all derivative contracts, which are complicated and messy, and we knew it when Lehman blew up.

32:04 Nobody knows who owns what. So I’m thinking, wow, okay, that’s all the finance. Probably there’s custody, and there’s clearing, and there’s, okay, these are a lot of things. So I reinvested in the space. I sold out in 2017, too early.

32:19 I then bought again in 2020, because the macro and crypto came to this point where that was like marriage made in heaven. The chart pattern was perfect the government’s going to print massive amounts of money. The financial system has got to be under massive strain, and Bitcoin is going to come, the shining light, and that’s exactly how it played out. So I was heavily invested. In fact, 100 of my liquid net worth in this, which is why irresponsibly long was the terminology, although I didn’t use leverage, so it wasn’t that irresponsible.

32:52 I’ve got income and other stuff, but anyway, so it was quite a lot. You’re all in. You really are all in. I’m all in. And then I started looking at the chart, because I love a chart of Ethereum versus Bitcoin and I’m thinking, this looks like it’s basing.

33:09 This looks like it’s going to break out. And this, I do a lot of my macro thinking. I start with a chart. Think, huh, why is it telling me that so then I start doing work about, okay, well, we know we kind of think we know how to value Bitcoin, because we’re using the stock-to-flow model that PlanB has, and we’re doing all this stuff maybe it’s something else too. Maybe it’s network effects.

33:30 So I start talking to people, thinking it through, and I start looking at Bitcoin in network effect terms, and it works. Metcalfe’s law. So I thought, huh, I wonder if Ethereum works, because everyone tells me, oh well, you don’t want to, you know, you don’t want to touch Ethereum. You know it’s a scam, it’s a s*** coin, it’s going to underperform. I’m like, once you tell me something like that, I’m going to look at it.

33:51 You know, if it’s something serious, so I did the work, and it’s like, not only is it a getting faster adoption than Bitcoin? It’s working perfectly in terms of price with Metcalfe’s law, and it is almost mirroring Bitcoin back in 2017, with the kind of lag by the number of years, except the network’s going faster. Then I looked at the quality of the network, like the amount of connections, and you see that people on Ethereum have built all of these applications, which is all of DeFi, all of NFTs, other uses of smart contracts.

34:28 We’ve got central banks using it, the European Investment Bank putting bonds onto it. We’ve got people wrapping Bitcoin on it. People are wrapping securities on it, and you’re like, okay, this is the platform for now. Things can change, Its adoption is twice the speed of Bitcoin. Just to get everybody’s heads around it, I mean, so the probability of Ethereum going up dramatically in price because of that alone is very high, then cuts it tomorrow.

35:04 So after this interview, this interview, once everybody sees it, we’ll have, will have implemented EIP 1559. What that basically does is Ethereum got quite expensive to use, because of gas fees. Well, what they’re going to do with fees is they’re going to start burning Ethereum, which is basically like a share buyback, which makes it rarer. So the issuance rate probably goes from four percent a year to we don’t know, but let’s take two percent. Okay, and then we’ve got another thing coming in Ethereum, which is Ether 2.0, which is moving to proof of stake, and what’s very nice about that is we all get record rewarded by staking our ETH.

35:46 So we get through this 1559, probably everybody ends up staking the ETH, because the price is going to start rising, and so everyone locks away. So there’s a bunch of Ethereum get locked away. There’s a bunch of us who are also holders who’ve stuck it in our cold wallets. And then there’s all of DeFi, which is locking away billions and billions, tens of billions of dollars of Ethereum. So when you look at the analysis, the on-chain analysis, the free float of Ethereum going into this is 13, and it’s falling every day, and as this price starts rallying, which is doing pretty well, and starts approaching the new highs again, a, everybody’s going to stake their ETH because why not?

36:34 B, if not, you’re not going to keep it on exchange, because it’s going up in value, so you tend to put it in cold storage, and so this, there’s no supply, and you’re burning each, every day, so you’re, so the supply keeps going down, and the network effect that I’ve been talking about means that the demand is going up exponentially. So a limited supply asset that is becoming more limited, with a backdrop of exponential increasing demand can only equal exponential price rises. And your view on this hasn’t wavered much in the past, say, six months?

37:12 Not at all, not at all. Right? And yeah, and with this latest initiative as well, it just, like you said, gives even more and more reasons, and some of the complaints about Ethereum, about it being inflationary, it addresses all of those, and like you said, with the stake, we’ve never really seen that effect happen, and it could be big. You know, I wrote this up for Global Macro Investor, my kind of institutional research service, and I just titled it The Greatest Trade in the World, and I think the opportunity in ETH is better than the opportunity in Bitcoin in March 2020.

37:45 Wow. That being said, you still own Bitcoin? Yes. Okay, you still have it as part of that portfolio correct, but it’s just, it’s a lesser part. Your most heavily weighted Ethereum.

37:58 Yeah, I think 55 percent, each 25 Bitcoin. then I’ve got a basket of everything, from DeFi protocols to other big protocols like Polkadot, interoperability stuff, equally weighted, because I don’t really know, and I’m just not smart enough to figure it all out. And then I got a bit of a macro bet in metaverse and community tokens, but again, small. It’s really everything’s really an Ethereum Bitcoin bet for me still. Okay, look, while we’re here, now let’s talk about a couple of those things you mentioned, and the only thing that maybe we can see competing, if you will, with Ethereum, obviously.

38:35 Cardano is the big wild card making some moves in the next couple months. We got Charles here. I think about four weeks from today. We’ve got, like you said, DOT. It’s a lot of these kind of interchange pieces.

38:47 We’ve got these second-layer solutions like Polygon. But if you look at CoinMarketCap, there’s not a lot of other things happening, except for DeFi protocols up there that I can see. There’s some great apps, Uniswap and Aave and things like that. What do you see in those other competitors, if you will? I don’t, and I don’t know is the answer.

39:09 But I need to have an open mind, because this space is too close-minded The space is, because you’re rewarded to be tribal and back the only one true thing, true asset. As investors, we need to be careful of that bias. So I don’t know. So some very smart people that I know say, listen, you know, Polkadot is a really serious project and this could do this, you know, bilecoin, or, you know, there’s a bunch of things. That the people say, listen, you don’t really understand the use case yet, and probably in three years’ time we’ll be talking more about it.

39:46 So I kind of, so yeah, okay, I’ll keep an open mind. I have an open enough mind that I’ve, I even own DOGE, and the reason being is simply put, if the world is net is network effects, you’ve got a lot of retail owners, but there’s no network because it’s not being used, but then you’ve got Elon Musk telling you, hey, I want to build on this. Why? Well, because he’s got all these users, right? He can now raise infinite capital if he becomes, you know, the core side, the other side of the network equation.

40:23 Mark Cuban started accepting DOGE, because he realized it’s a social thing. People know it’s kind of fun, but it also has worked, so he started accepting it at Dallas Mavs for ticket sales and merch and stuff like that. So now you might end up building a network. So again, I keep an open mind to all of this. People are too quick to say this is never going to make it, like Cardano.

40:46 Right, there’s a huge fight in the community, you know, Cardano and his smart contracts, and, you know, is it going to amount to anything? Is it going to amount to nothing? I don’t know. And that’s okay. And we should all be a little bit more comfortable saying, I don’t know.

40:59 It’s pretty interesting. Let’s see how it goes. I can place a small bet, and I can’t, like, place a big bet yet, because I don’t know enough. Maybe you’re really in the space and you know inside out, and you think, yeah, you know what? I can see what’s coming down the pipe, on the plan.

41:12 I think this is gonna work. I can take a bigger bet that’s okay too, but you know, I can’t, because I don’t know. I just don’t have the bandwidth to take all this in. Yeah, that is the thing: is bandwidth. I mean, one of the things I’m getting all my students to do is we have a thing called a 10-coin rule.

41:27 You’re not allowed to own more than 10 coins, at least for your first year of investing. That’s probably too many, because there’s so many stories, there’s so many rabbit holes, but that there’s also seems like a finite number of potential players, and like you said, with Cardano, it’s interesting because it’s been a long time in the works. It’s a long-term plan, but it’s a, it’s a call option on something that could be big, and there’s not many places that are putting that much effort into that piece, so I guess it’s a kind of watch and to be continued.

41:55 Yeah, I mean, there’s the other one that came out that it’s going to take a while to sort this one out, and I don’t know which way it’s going to go, but you shouldn’t write it off, is DFINITY or the Internet Computer. So, unfortunately, it was backed heavily by VCs early on. The people who were allowed liquidity on launch had made tens of thousands of percent, and so retail got pretty burnt into that equation. That was ugly and not good and not honorable.

42:24 I’ve got several friends invested in it, and they’re all locked up still, but there’s a bunch that weren’t, so that was not good. What those guys have built, I don’t even understand. I can’t, you know, I’ve interviewed them. I don’t really know, but I kind of figure it’s big. It’s kind of like, you know, when we first spoke to Charles Hoskinson on Real Vision 2016, ’15.

42:47 You know, it was the same. It’s like, yeah, it sounds pretty big. I don’t know, and DFINITY, you know, it fell 90 something percent, you know. Is that a small call option on something? Could it be worth zero?

43:00 Possibly. I don’t know. We just have to keep our eye, because, you know, even though the adoption is exponential, each token has to go through its adoption curve or failure. And we don’t, you know, that takes a bit more time than we think. while we see the whole space doing this, it’s really driven by currently it’s really driven by Bitcoin, Ethereum and DeFi, the other protocols it’s going to take more time.

43:28 Yeah, but, and it’s interesting how I like how you are honest enough to say, I don’t know exactly what they’re doing, but all great tech investors from the past never really knew what the company was doing. I mean, did anybody really know what Facebook or Google were doing in the beginning? They knew, they probably passed the first principles. Oh, you’re doing this, this, listen to Peter Thiel: it’s a social network, they’re using their real names I’m in.

43:52 You know, there’s little things, but there’s a lot you’ll never know, and if you try to figure it all out, it’s too late usually. So I like how you’re thinking of these markets as it might have the potential. Let’s keep a small bit, but keep the core positions. I want to talk to you about the metaverse and your community IP, because this makes you very unique, Raoul. You really have a passionate way of understanding and looking at the communities, which I think you believe is everything really going forward, and how the future is these communities.

44:24 You’ve, you’ve touched on it while we’ve been talking now. You mentioned DOGE, you mentioned kind of the Facebook, but then the value over here. You mentioned since it’s peer-to-peer and people own it, you mentioned some of the passion behind some of these coins. Talk to me about community. It’s such a general word.

44:39 I don’t know if anyone understands it. If you’ve had a community, you kind of understand it, but it’s also, it also slips through your fingers too, doesn’t it? Because it’s, it does. What did the internet do for you and I We would have grown up in a town where we knew a lot of the people, and then you go to school, and your community is now the school plus the people in your town and your family, then your community goes. If you go to university, you know, it just moves around.

45:07 Then you go to a job, and you know, the bunch of people on your trading floor, if you’re working in a bank, whatever, right? And your community grows. You meet your neighbor, and you get into somebody else, that’s your community. It tends to be physically located around where you are, and you tend to lose connection with your old school friends when you leave. That was the nature of the world that we grew up in.

45:27 Yeah, we had to have a car. I’d have a car when I was a kid, because that’s how I connected to my community. My daughter’s 17 I couldn’t give her a car, because she has a community, right? That’s right. So our community changed in 2010, really.

45:42 It started earlier with AOL Instant Messaging, blah blah blah, but really Facebook changed everything because now I could be in a community of people who love Rhodesian Ridgebacks, and it could be a globalized community, and we can just talk about our dogs all day. And that didn’t exist before. You would read a magazine, but you didn’t have a two-way dialogue. You could write a letter. This now meant that at scale, humans were able to create communities around their interests, their general interests, that didn’t have any borders.

46:17 So it’s globalized communities. So that was the rise of social media. Now communities became so powerful that people developed what’s known as the influencer model, which is you create community by giving the community value, whether you’re entertaining them or giving them information or education, and in exchange they will, you’ll get money, because you get a lot of followers. And social media created that model, and then brands started doing it and other people started doing it.

46:53 So even at Real Vision, you know, we actively engage our community on social media. In fact, we built a social media platform called The Exchange for them so they can start posting content and talking, because people want to talk to each other. People don’t want to just be broadcast a product, whether it’s, you know, in video or television, or whether it’s in, you know, Nike shoes. They want to be part of the people who own those Nike. So then tokens come along, and, but basically complex adaptive societies, which are what communities are.

47:35 As our countries, religions, all of these things, they basically operate in the same way. To control large groups of humans, you need a leader, a mission statement, set of rules, and usually a value system. So if you think about religion, which is a classic way of of organizing large groups of people, you have a leader, a mission, set of rules. The value in religion tends to be, if you do this, you’ll go to heaven. If you do this, you go to hell or get reincarnated, whatever your religion is.

48:15 There’s a set of rules, and there’s a value system, and then below that’s a sub-value system. You know, obviously the Catholic Church got immensely rich from a value system which was a network effect of having churches and collecting money. Government is exactly the same. So that was missing from the internet communities, the final value layer that you and I have been talking about. And you now give this to a community, so now suddenly I can have ownership for being a community member, and I can derive value from being a member of that community, and if I add value to that, or the person at the middle of it, the influence of the brand adds value.

49:02 The value of my token is going to go up, and I can build a business on it. Maybe I sell T-shirts, and I sell them for tokens, and I, you know, we create an economy that suddenly creates a whole layer of value that exists above equity. It’s a whole different thing. It’s the value of being of members. Like, you know, we see how, you know, you’re in London, you know what it’s like with football clubs.

49:33 People live and die by their club. That loyalty, the closer that they could get to their club, the better. If they can make decisions and be part of it, and get early tickets, and get to know which bar the team are drinking, and once they’ve won the championship, whatever it is, right? That’s immensely valuable, because it makes you feel part of that community. And if that token has value as well in a monetary sense, then you can invest in culture, which is mind-blowing, because culture was a nascent thing.

50:14 Yes, you could buy a pair of Nike trainers, but you had to buy the rare ones for it to go up. But this is different. Once you combine this with NFTs, non-fungible tokens. Those are ways of also adding value to a community: here’s a scarce asset. I’m a rockstar, here’s an album, one person can own it only, and here it is as an NFT, or NFTs for tickets.

50:36 I’m gonna, we’re gonna sell our latest tour only using NFT ticketing. That means no Ticketmaster, no StubHub, and no scalpers at all. So you’ve knocked out all the high-frequency traders, all of the egregious fees and your direct ownership to your audience. So guess what? You can make the tickets cheaper, so everybody benefits, or you keep the tickets the same price, and if you say to all token holders, if we have an 80 sellout tour, the last 20 percent will burn the tokens, so you are now incentivized to go and tell all your friends to go to the tour, because you’re going to make money if they go to the event.

51:15 Right? This is genius. This is what I’m talking about. The power of this. So we’re looking at it for Real Vision.

51:24 We have a very passionate audience. I am speaking to people from world’s biggest music stars that have record labels and own IP, to media companies, and they’re all going, oh my god, I see it coming now. What do we do? Meanwhile, Facebook is about to launch Diem. Diem is a stablecoin, but they own it.

51:45 It’s on their platform. So it’s basically a community token. It just doesn’t go up and down in value with the value of the community, but Facebook share price will. But they’ve now built a digital rails of value for Facebook. And you and I can pay each other in Diem, and we can buy goods.

52:05 So they’ve created a social token, so they’re creating an economy. So think of that complex adaptive society, how to orchestrate them, and how to drive value. This tokenization is going to splinter the world into these things, and you and I, on our phones, will have our memberships, and our communities, and our investments, and our DeFi, and our identity all within this super secure wallet. And that is the way of the world. It’s like the subscription model has been very powerful, but this is one stage further, because it’s subscription plus community.

52:41 And if you can interact with that community and derive a shared sense of it, it’s incredibly powerful. So fast-forward 10 years, 2031. How is my life different now that this community has been tokenized and actually valued? I now have a deeper interaction with these products. I now have got tokens in different areas, and I’m more, you’re making money, you’re making money from your interests.

53:08 Right, right. If you, if you happen to choose the Rubik’s Cube before the Rubik’s Cube takes off, you’ll make money out of your own interests. Right. Think of what that does with TikTok and all of these things. Think of it with music.

53:24 You know, somebody, a big artist, no, a lesser-known artist says, right, I’m going to sell the IP, right, for the first year, to all of my songs on my latest album, and I’m going to send it to a restricted number of people who can buy the NFT. You love this artist. You think they’re the coolest artists ever, and that song that’s going to be a hit so you buy the NFT. You’re sticking your thousand bucks in. You’ve helped fund the artist’s recording studio time, and all of that.

53:51 You stick in your thousand bucks, and you have a share of that token along with others. And then you go onto social media, everywhere, trying to tell people to, hey, listen, this is a great song. You create your own video. You get, you get your daughter’s a dance routine on TikTok and whatever it is, and it goes viral. You make money out of that.

54:12 So, so what you find is you’ll be making money out of your own subscriptions to things. Think of it that way, you know. We’re solving for different ways of creating income by sharing the economics amongst more people. It’s more egalitarian, and yes, it’s going to be complicated, but I think you’ll, you’ll tend to coalesce around certain communities, not millions of communities, much like your 10-coin rule because it’s not adding you enough value to be part of it, or you’re not adding enough value to that community.

54:44 So it’s fascinating. You know, I think Disney, YouTube, Facebook, even Apple, they’re all tokenized, and you think this is one of the most exciting things. I think about the biggest thing I’ve ever heard, because you’re changing the global business model. So if you think of, like, DeFi, all of this stuff, yes, it’s revolutionary, but it’s basically putting things that we know, like yield, onto a blockchain. Right?

55:10 It’s a technology. What we’re talking about here is a change of how we do business. So for you, without question, for your Academy you’ll tokenize it. Why? Because the people who come through the Academy will have a token, and that will give them rights to network with each other.

55:28 So now they’ve come through the same experience, they can now network. Now, okay, so you do that, so then you bring recruitment into the equation and say, well, we’ll give you jobs now into DeFi, because you’ve been accredited and you’ve got the token to prove it. And before you know it, you’re building depth and value for everybody. That’s amazing. It changes the whole social infrastructure, all those interactions.

55:48 Yeah, it’s, it’s, it’s, it’s pretty mind-boggling. And like you said, DeFi, even look at the name, CeFi versus DeFi. We’re taking the old-school centralized protocols, and now we’re making them decentralized, but they’re just copies of what we did before, right? This is a whole different way of looking at things. Yeah, we’re, we’re we’re going to globalized communities where we will spend a larger part of my time, and then that leads to the next part, which is the metaverse.

56:21 Yes, tell me. So the metaverse is basically the digital representation, which is whether it’s the combination between AR, VR and real life all together, where we will spend most of our time. Are you a VR fan, by the way? Do you have an Oculus? I’ve got an Oculus, and it, I put it on, you go into that room when you start it up, and that’s a gorgeous room with this view.

56:42 Looks like kind of California in this. Yeah, I can stay. I could stay in the room for an hour. It’s pretty crazy. Me too, and the moment I saw that room, I’m like, okay, now I don’t care where I live, in theory, right?

56:54 You can live in this and then, you know, I played around with it. Yeah, it’s all fun, but then I started doing some more work in how people are earning money in the metaverse. You know, this year, Guild and people renting out swords in games, and, you know, people are earning stuff and creating a living, so people in the Philippines are earning more money in a virtual world by earning real money in tokens that they exchange that. I’m like, oh my god, okay, so this is like a whole new world, a whole new GDP, where all education will live in the metaverse.

57:32 There is no purpose in having bricks and mortar things. You create community, sure, but you can see each other in a room, in a classroom, but you don’t have to be there. So now you’ve, you’ve made the kid in Ethiopia on the same playing field as the kid out of Greenwich, Connecticut. So that’s super interesting. But it’s more than that, because somebody sent me a link in Crypto Voxels, so it’s like a web link, but it’s not.

58:02 It’s like a Google Maps GPS coordinate. So I click on it, and now I’m in somebody’s NFT gallery with music playing and stuff going on. I’m like wow. So that’s the end of websites, because I’ve now got this 3D experience. So I’m quietly building out in the background for a bit of fun, like a Real Vision headquarters and crypto boxes.

58:23 Not that we’ll do anything with it particularly, but I just want to be involved in this, because I see where it’s going. You know, don’t forget, there’s been Travis Scott had a concert in Fortnite. 20 million people went. Marshmallow had like 10 million people at his gig. So this is and why?

58:45 Well, it coalesces this massive community of Fortnite users, which is one of the biggest in the world. More like Facebook, which is three and a half billion, which is the biggest community on earth, but there’s like 100,200 million people and you’ve now disrupted the music industry, because think of all of the trucks that they have to tour with, that all of the touring managers and all of this. Right? Well, basically, now you need a graphic artist and some tech guys and some sound guys, and you’re getting to 20 million people, and you have a front-row seat at the concert.

59:18 Everyone does right? Well, or you don’t, if you don’t have the NFT. Right, right, right, or you’re not community member, so you don’t have the social token. So sorry, only trust fans can be at the front. Now you’re driving value.

59:31 So, so these GPS coordinates get rid of websites. That’s gone, and that will go very quick. Next five to ten years, everyone’s gonna be setting up in the metaverse. No more 2D worlds. We won’t be looking at screens.

59:42 We’ll be in spaces. Yeah, and then, so, the next thing that happens is, once you go in there, you realize that I can create this little world. So I’m looking at you now. I’ve got my Bloomberg screens here, I’ve got another screen here with my Evernote open and other stuff, and maybe I’ve got Twitter open, and I’ve got this Zoom open, and I’ve got a bunch of other stuff. Right?

1:00:01 This is this kind of tiled effect of windows. Well, in the metaverse, I can create my own world where I can have 30 screens, and I can have my Twitter feed on my wall pinging me when something interesting happens, and I can be watching what’s on Netflix, and I can, I can create my own platform, so I don’t need a platform any longer. I don’t need the platforms, and I don’t need the software that comes with Apple or, or Microsoft. I can create my world how I want it to be, or, your Academy, you can create a classroom within it.

1:00:38 You can create the tools, and so here’s your place that you can work, and we’ve set you up with these, are the things we think you need. I mean, we can create virtual trading rooms, so then you can actually share knowledge with the person next year. Hey, how did you go on today? I had a [expletive] day because of this. This is the metaverse, and that’s only the start of it.

1:00:59 So if you go and look at Google, Mark Zuckerberg, The Verge. He just did a long interview in The Verge about the metaverse, and his last call at Facebook was 45 minutes of him talking about the metaverse only. He’s like, we are a metaverse company. This is where we’re going. We own as much of the IP rights as we can in virtual reality, you know, and don’t forget he’s got the system of money too.

1:01:25 You’re like, oh my god, they’re moving fast. Then yesterday, I think Microsoft, without talking about the same thing, it’s like, we’re headed towards the metaverse. I’m like, okay. So the big leaders are telling us there’s going to be a huge battle between the decentralized and centralized metaverses. How is it going to be interoperable?

1:01:43 Because these are the bad guys, like the banks, the bad guys as well. So there’s this big battle to come, but that battle, we’ll see, much like we’ve seen with the system of value and money. We’ll see acceleration, because so many people want to be involved in the battle. So it’s an arms race of technology, money and speed to market. So at breathtaking speed we go from starting Bitcoin to creating Ethereum, to creating a platform, to just disrupting all of the financial world, to then disrupting the world of value in this and the contractual world, to communities and adaptive societies, to then moving to live and reside and earn in a digital world.

1:02:31 And that’s all going to happen in this short space of time, and that is why it’s kind of terrifying but exciting, but it is happening. This, and what I’m not telling you is me being a futurist saying, in future we’ll all have flying cars. This is what is being adopted now. When Mark Zuckerberg spent, it was an hour and a half on that interview talking about the metaverse, and that they got 10,000 people working on VR. It’s coming.

1:03:03 It’s, it’s fascinating to hear you talk about this problem, because like you said, usually it’s a futurist. I think we both had George Gilder on the show. It’s fascinating to hear him talk about the future, but usually people in DeFi space are talking practical, and yet you’ve seen this link from here to communities to this whole metaverse. It’s, it’s quite rare, but like you said, if, if Zuckerberg’s talking about it, it’s happening. The Oculus investment they made a long time ago.

1:03:29 It’s just been on the DL for, what, eight years, but obviously not. There’s 10,000 people working on it. I’ve put those things on, but I also took them off. So it’s in a weird stage right now, but maybe you can take them off. So if you want to be immersive and go to the concert or go to the classroom, you have your goggles on.

1:03:48 Now they’re going to change too. Apple are working on AR. Apple are building out an entire map of the world in augmented reality so not only do you see buildings like Google Maps, but you walk into them. They’re creating 3D renditions of everything, so anything can be in this 3D or augmented reality world. So assume the goggles are not those goals two matches assuming you take it down and screw in front of you is the same representation been augmented as opposed to the virtual world.

1:04:15 It’s going to be seamless It’s going to be seamless. It’s hard to get my head around it, but it’s also super exciting. You know, You, you quickly jumped through NFTs there, and I was wondering if we could just spend a couple minutes, because so many people still can’t get their head around NFTs. You’ve described it really well. I’ve actually never heard someone link it so essentially to community, which you just did there as well.

1:04:39 Most people saw the article in The New York Times six months ago, right? The 69 million piece, and then they didn’t compute, and they still don’t really understand what it is. How do you explain it to your grandma? How do you explain it to these companies that are probably calling you saying, we need your help on how we get in this market, and you’re probably laughing and saying that’s the wrong way of looking at it. How do you explain it?

1:05:02 Yeah, but the answer to that is, do not issue an NFT if you’re a brand or an influencer or whatever, because that’s value extraction. What you’re doing is saying, I want money from my community, and I’ll give you something, really, that is not good. Build a community and then you can offer value to the community. It’s the wrong way around. So I, I really heard, I can see it happening.

1:05:25 Burberry just announced one today. All these brands are doing it. It will work, but they need to do the work first and stop just rushing into it. So there will be a bit of a backlash against it, but NFTs people are misunderstanding, because they sing art, and art is a really subjective thing and, you know, Jackson Pollock was ridiculed. Picasso was ridiculed, everybody was ridiculed, and then they became valuable.

1:05:53 Why did they, versus others, who the hell knows? And then we had, we’ve just gone through things like Banksy, you know, graffiti art, of this is ridiculous, to oh my god, I want to buy this. So now suddenly digital art is like, oh my god, well, it could just be a JPEG. Well, guess what? Photographic art has value too, and anything that’s signed by the photographer or has a the negative is immensely valuable, or the digital file, the original digital file.

1:06:24 So yes, every art can be replicated, but there’s only one that’s signed by the artist and painted by the artist, or in the case of photography that has the negative, or has the authenticity, or is signed by the, by the artist. So I’ve got photographs, I love music. I’ve got Mick Rock, who’s a famous photographer of the music industry, for the kind of ’70s and I’ve got lots of Mick Rock signed prints, and they’re maybe one of tens. You know, like there’s the 101s in existence, but they’re expensive, much more expensive.

1:06:56 So authenticity is something humans like and NFTs are basically authenticity guaranteed by the blockchain. So what they are is attracting, is attaching an object, firstly digital, and saying that digital asset you can own, and it’s proven that you earn it, and you might get some certain rights with it, or you might not get some rights. So people’s art gave him 10 or 20 every time it trades again. So which artists don’t currently get right? So Damien Hirst, all the art he’s ever made he doesn’t make any money when it trades again.

1:07:36 The art galleries make 50 okay, so you’re kind of disrupting the art galleries here and giving more money back to the artist. Okay, that’s good so why not digital music? Of course. Duh, it’s coming, that has to happen. So okay, so that’s an NFT.

1:07:54 We talked about ticketing. Well, I want to make sure this ticket is authentic. Eh, it can be a collector’s item if that ticket was an amazing gig with an amazing artist, but also it means it’s authentic, that you haven’t been scalped and somebody hasn’t extracted value from you. That’s an NFT too. Property on a token, that’s an NFT.

1:08:18 Basically, every exchange of value of a unique asset in a digital world will be an NFT. That’s how big NFTs are. So the first use case just happened to be art. Right? So don’t look at it only through that lens, because you’re me, you’re missing the big picture.

1:08:39 You’re seeing something super subjective, and you’re thinking, oh, it’s this and then you see the fools jump in and the scammers come out, and then you’re thinking, no, this is a, a long-term part of, of the community layer that you’re talking about. And that’s right. So it’s really interesting. There’s a guy who’s been on Real Vision a few times now, called Bill Tai. Bill is a VC investor, very early stage, super smart, invested in so many amazing things, and one of the key ones that he saw early.

1:09:14 Successful investors tend to join the dots and don’t look at where we are now, and look at where it’s going, which is what I’ve tried to map out with you today, is where I think it’s going and not where it is today. So Bill Tai saw CryptoKitties and said, this is the future. And it was nothing to do with CryptoKitties. It’s like okay, what is the power of this technology? These NFTs, because that’s what CryptoKitties were, and the next phase is the art market.

1:09:42 But he’ll be thinking long before, further away in the art market, thinking, okay, so Disney, what’s the value of a Disney character NFT? Well, we’re already seeing this. Ashton Kutcher’s just started this. Gary Vaynerchuk’s just starting this. So that’s the next phase, where you can physically own the IP of of a franchise thing, you know, Star Wars character, whatever it is, and then once you build the Star Wars community around it, then that thing has even more value, because you’ve now got a community and you’ve got a system of money.

1:10:16 It’s huge. And one thing I have to admit, we all crave community so much, don’t we? Raw, we all crave connection. and somehow the digitized space makes us crave it more. And again, we all, and we want something always more and different, and it’s it’s this.

1:10:33 It’s the essence of being human, isn’t it? And so the better we can figure this out, I guess that is where the real value is on this whole planet, isn’t it? It’s all about our interactions. It’s like humans like to fit in, they like to be part of something, and if they don’t, they feel unanchored. and we saw that over the pandemic.

1:10:52 People who couldn’t go out, you know, they felt unanchored because they weren’t part of a community, and they didn’t have their place. We’re social creatures. We truly are, and so people poured online over the pandemic, and we all spent too long on Twitter, or too long on whatever platform we do, because we crave social interaction. And we want to be part of them, and if you look at football clubs and sports clubs, and people will be fanatical about their community.

1:11:20 We see that with religions, so people love that. It’s what drives us, to have us a sense of, we’re not just this little creature in this endless universe of nothingness. We just want to have a purpose in our own way, however ridiculous it might be. And, you know, we’re happy to be part of that. Couple more questions, and then I want to finish with a couple on you personally.

1:11:43 Talk to me about censorship. Do you think this is something that you’re going to be faced with at Real Vision when you continue talking about crypto? We saw a channel like BitBoy Crypto get taken offline for a few days last week, which was really surprised me, and we went head-to-head with YouTube last year for censorship, and again I’ve been broadcasting for nine years, having conversations in this leather chair in the studio. We live streamed one on April 6 of last year, the second largest YouTube live stream in the world, and 30 minutes later it was deleted and banned from YouTube.

1:12:17 First time I ever experienced it, and I wouldn’t have thought it was real before that, and I actually wouldn’t have thought they would have censored crypto content. What, what’s your read on it? Is this real? Is this a concern? And again, you’re a broadcaster.

1:12:32 No, I think it’s the same thing that NatWest’s message to you is. There is a big problem in the crypto space with scams. And people are selling stuff they shouldn’t be selling to people who shouldn’t be buying them, and they don’t know how to control it, and they know that there’s going to be one hell of a lawsuit if this goes wrong. It’s out of fear. Google have no skin in this game.

1:13:01 They’re just like, please, look, look what happened to Facebook over elections and all of this s*** right. Facebook doesn’t know how to get out of this and Google just wants to say, look, I’m sorry, but just, we don’t want this coming back to us. Now censorship, there is censorship, but the censorship is not driven by the platforms themselves. It’s just driven by social mood. It just is what it is.

1:13:30 You know, humans will censor each other because they don’t want to hear different opinions at various points in, in, in political cycles. So it is weird I don’t know how to deal with it either. Sorry, have you had to deal with it, or do you think you would? Are you are talking down. It’s like everybody knows that’s what happens.

1:13:50 You know, you can’t get a bloody ad together for anything that involves crypto, and it’s irritating, but I also understand it, because, you know, I meet people. I mean, it happened to me the other day in Little Cayman. So I mean, Grand Cayman, in my office today, but Little Cayman, a line of 140 people, about a year and a half ago, there’s this Argentinian barman. And he comes to me, goes, hey Raoul, I want to know about Bitcoin, and, you know, my friends in Argentina talking about it.

1:14:19 I’m sorry, you know, after a few drinks I was like, yeah, you know, this is what you should do, and so should you think about it, you know, think about how much you can afford to lose, and you know all the usual good stuff. Anyway, I don’t hear from him again. And then I, his girlfriend calls him up a year and a half later, saying have you been talking to him on Facebook? I’m like, no. He’s like, somebody’s impersonating you, and somebody said that You then introduced him to this person who will help him turn his five thousand dollars into twenty thousand dollars in two weeks.

1:14:52 And so he gave him five thousand dollars, and the guy stole it. That’s what’s going on. We can’t pretend it’s not happening, because it is, because the problem is the flip side of the there’s a 100x upside is greed, and with greed comes criminality. So it’s, it’s not, it’s not easy. I don’t want to be, it’s like, I never want to be a politician, and I certainly wouldn’t want to own a platform like Google or Facebook, because it’s a rock and a hard place.

1:15:21 It’s a miserable existence where you’re wrong in everything you do to somebody. Yeah, it’s a bumpy world out there. And I could talk your ear off about running for political office. It’s better, you know. No way they put you under.

1:15:36 You know, I just want to finish with a couple questions about you, you know, when people look at you, Raoul, they see a guy who’s incredibly accomplished. You know, Goldman Sachs and the GLG and all these incredible you know, broadcasting platforms and your advisory service, but when you look under the surface, you know, your teenage years, like, seem like you were just a real screw-up, and like nobody would hire you, and I’m just wondering, like, you must, something must have flipped in your brain, or did something change where you looked at the world in a different way and thought, if I do it this way, I can be successful? So, you know, I kind of, early on in school I did really well, and then afterwards I discovered cars, girls, in the pub, and I kind of started failing exams, and I wasn’t out of order.

1:16:26 I mean, my parents would never say, yeah, he was a rebel or anything. I just didn’t focus enough, and then I couldn’t be bothered, because I kind of think I could do it. I could wing anything, and sometimes it didn’t work, and then, so I ended up getting one offer to get into university, so it was the only university that would take me, and then I graduated right in the middle of the recession in 1990, and I wanted to go into finance, and there were no jobs in finance because everyone’s just been made redundant, so it was that that start.

1:16:54 But I always had a relative confidence in myself. My parents brought that in me, because my father was Indian, and one of the things that they would do is, dad was in marketing and then executive search, where he had his own kind of head-hunting company, and he would have these parties at the house where I was expected to pour drinks and socialize and as a 14-year-old or 13-year-old kid you get socialized with really interesting people, and you get to learn how to have conversation, and he stuck me through that, and it’s annoying, and anybody with an Indian father will know that is how it works, but it actually teaches you some skills, and the skill is how to get on with people and how to communicate, so I’d acquired that skill and a belief in myself, that if I, if I needed to, I could do it.

1:17:43 So at university, I, I basically didn’t get a lectures for two years, and in the final year they pulled me aside and said, listen, you’re going to get thrown out unless you sort yourself out. I’m like, yeah, I probably do, and so I just got my head down, and, you know, came out with a 2:1, which is a, you know, you know, second grade down from the top, and pulled it all together and got through it, and that made me realize, yeah, I could do anything. And then I learned the trick of, there’s two things.

1:18:09 The other thing that really helped me massively was I’m very broad-minded, and that was came from travel. I’ve been a financial travel. My parents got me, you know, traveled to India, traveled to Morocco as a six-year-old kid, you know. So I had travel experience. Broad, my mum’s Dutch, so multicultural.

1:18:29 So that gives you a sense of fearlessness and understanding of people, which I think is very good. And then I just learned that if I visualize something in the future, I can make it happen, because it gives you a path to go, and your path may be never straight. In fact, it’ll never be straight, and it may not be exactly the future you’re expecting. But you definitely get somewhere over there than if you don’t have a plan. So I visualize myself 10, probably about 10 years ahead and use that visual image of myself to try and make it happen, and that’s been my secret, and that’s something you came up with yourself, huh?

1:19:12 Well, it’s clearly working, and I love to hear the before and after story, and I want people to know it as well, because it’s easy to look at you and just say you’ve always so when I first started in finance I got into a firm that was quite prestigious, but it wasn’t in the U.S. investment bank league that had just come to London, right? So I was at a firm called James Capel, which was part of HSBC. It was the stockbrokers to the Queen, but he was, you know, a regional player.

1:19:38 And all I thought every day is, I want to work for Goldman Sachs. but obviously I couldn’t, because I had a terrible degree from a crappy university, and but I thought, you know, I want to work for Goldman, working for Goldman Sachs. So power, so powerful visualization, isn’t it? Wow. Yeah, you mentioned it ten years from now, and funny enough, that’s the exact question I was going to ask you.

1:20:00 2031, all your dreams come true, and I know that’s not necessarily the way you think of this world, but let’s say it is. What are you doing? Are you the king of the metaverse? Are you still broadcasting? Are you still where you are now?

1:20:14 What is your reality if everything goes to where you’re visualizing it in 10 years? There’s been part of the journey I’ve not got to fully yet and that is to do with wildlife conservation. So, and that is part of the journey. I grew up as a kid going to India. My cousins were involved in tiger preservation, wildlife.

1:20:36 My uncle used to run a tea plantation. We’d be surrounded by wildlife, and I live, you know, Little Cayman is like a pristine paradise, and I’d like to get involved in using the same kind of problem-solving skill sets and ambition to play my own small part in that. So I think that’s where the end of the journey goes to me. You know, my viewpoint has never been, I want to be the richest man in the world, but I’ve got a point to prove to myself. I don’t like competing with other people.

1:21:09 I’ve never have, I’m terrible at it. I don’t play ball games, card games. My wife hates me for it. I don’t like competing. I don’t like doing it, and I spend my whole time solving puzzles in my head all day.

1:21:19 I can’t think of anything worse than going to play a board game where you’re trying to solve puzzles all night as well. It’s just not relaxing. So, so yeah, I’m not competing with anybody but myself. So you know, I’ve got a point to prove to myself right now, and can I build a successful business? You know, what can I do?

1:21:36 I’ve now got this passion for this new space. I think, you know, this is something I could really, I want to be involved in. I want to be involved in a movement, you know? Being involved in the movement, whether it’s music or fashion or technology or whatever, is a immense feeling. You feel part of something and empowered by something, and then after that it’s, okay, what else can I do that can use that skill set in another way?

1:22:00 Yeah, I, I’m kind of the same way. I don’t compete with others but I compete with myself too much, too much, and so and again, being part of a movement, it is the most exciting thing. maybe back to that community and that purpose and that connection we feel, so that’s, this is an exciting time, and the space that we’re in, if it’s a net incredible positive energy, and maybe it’s back to what you said, because everyone’s kind of self-invested, but it is an amazing space when it comes to energy.

1:22:31 And again, I’ve seen a bunch of looks into different ones, and I’ve never seen anything quite like this, so it’s kind of a special moment in time. A couple last personal ones. I always try to ask my guests, best day your life and worst day your life, because it kind of tells me a little bit about you. I don’t think in those terms, but, you know, life is a journey, and it has to have the ups and downs, and without the downs you don’t realize how good the ups are.

1:23:01 And so I, I kind of forget bad things happen to me but I do appreciate the good things when they do. So for me, it’s moments in time, and you just know them when you’re living them, and it doesn’t have to be a big thing. It doesn’t have to be your wedding day, although that was one of those amazing moments, but it also could be when you’re just out for a walk, and just suddenly, just, you know, everything suddenly feels alive, those little magic moments.

1:23:32 So I don’t have those days, and I, I think if you think in those terms a lot of people will look back to the past well, that’s when I was, that’s when I did, no, no. The world is in front of you. These are just your collection of experiences that you bring with you that make you the person you are. Yeah, incredible way of looking at life. I always wrap up with a few questions at the end, and I’ve been asking these for about 10 years.

1:24:01 If you could pick up a phone and ring up that 20-year-old Raoul, I guess you’re at Plymouth, you’re failing out, not showing up to school, you’re about to get your act together. If you could give that young man some advice, what would you tell him, and would he listen? I wouldn’t tell him anything different. I wouldn’t, I’ve, I’ve had with all the ups and downs, an incredible journey, and, hell, life is a journey and you should be slightly battered and bruised at the end of it.

1:24:34 And no, I’d say go for it. Yeah, what’s that? Do you want one? What’s the line from Fight Club? I don’t want to die without any, that’s scars, that Pitt says.

1:24:44 Best advice you ever received, it could have come from your dad, or from a mentor, or, you know, you don’t seem like a guy that does the mentor thing too much or from a guest, or is there anything that came in your mind? A classic example is, it was that 1990 period when I was now out of a job, out of, out of university and no job, and it was my father’s birthday, which is actually today. And I was speaking to a friend of his at one of these parties that I was always expected to attend, and the guy said, sorry, what are you going to do?

1:25:20 Dave graduated. I said, well, I’m thinking between marketing, because that’s what Dad was in or finance. He’s like, really interesting. He goes, let me give you a little piece of advice. I said, sure, great, thanks.

1:25:36 He said, you know, Mars, they’re an incredible marketing company, you know, fast-moving consumer goods. It’s amazing. You can work there for a few years. You can work, work anywhere, but the best thing about Mars is you get free Mars bars. He said, but if you can work for a bank, you get free money.

1:25:52 And I’m like, yeah, that’s a good choice, because basically you’re going into work every day trying to use your brain power work hard, do the best you can. Why not go to the place that pays you the best? This wasn’t, these weren’t passion things, like, I’m not an artist, a struggling musician. This is, you know, I want to be involved in commerce and business, and have a career. So that piece of advice, that was bloody priceless.

1:26:18 It’s beautiful advice. And yeah, I actually majored in mechanical engineering. I worked at Ford Motor Company, and then a company called the Aerospace Corporation, but once I had a whiff of finance, I just, I had the same realization you did. I said, wow, this is where the action is. This is where people are getting paid for decisions, and, and then I completely went the other way.

1:26:38 You know what it’s like when you’re in a dealing room, and people don’t know this, the speed at which everybody thinks, talks, and acts is ridiculous, which is why many of us have moved over to crypto. Because, you know, people don’t understand. I had 42 telephone lines in front of me. I was a salesman at Goldman 42 telephone lines, with Tiger, Soros, Tudor, all the biggest hedge funds in the world, all screaming and shouting, plus a squawk box from the CME, with the futures pit, the squawk box from the life pit.

1:27:08 All of this stuff, hearing what the FX guys are doing across the floor. I’ve got like a meter of space at my desk, and there’s a thousand of us, and it’s immensely noisy, and everything is happening. You’ve got two telephones on the same time and still listening to three conversations and trying to talk at the same time and finish everybody’s conversations, because you haven’t got time, which is an irritating thing finance people do, is finish up these conversations, because you don’t have the time.

1:27:35 That is incredibly exciting, exhausting, but exciting. Oh my god, you’re bringing back memories. Memories for me. I had a foam board like that, like Gekko does in Wall Street. Yeah, like 100 different lines, again, squawk box to the Mercantile, spock box, Board of Trade, again.

1:27:51 If people don’t understand you have two phones, and you have a clicker on each phone, so one person can’t hear you and the other person can hear you. You’ve got three or 500 alpha males and females on the floor. I mean, I saw guys at pancreas trust threatened to kill each other, threatened to piss in their skulls, threatened to bodily harm, and it was all because they were posturing for the bonus at the end of the year. I mean, I saw so much behavior, and this is happening 12 hours a day.

1:28:16 Meanwhile, you’re trying to quote a price, and if you’re off by, you know, two bips, you just took a bath, and it’s just, yeah, it was crazy. And I’m sure it doesn’t exist today on that level. I don’t think so, but it was an amazing beautiful, weird thing that I can’t really describe. So I’m glad you know what I’m talking about. Absolutely.

1:28:38 Final question, or our thoughts from you to that 20-year-old that’s listening to us right now, who grew up, you know, with Facebook who grew up maybe with cryptos to a certain extent, who grew up with a digital identity role that maybe is bigger than their real identity, who’s listening to us. Just final advice to them, to deal with, the advice of them is concepts. The computers are coming after your job. Understand that. Understand multiple streams of income.

1:29:09 Understand to go for lit, to start your career further in the future, because if not you’re going to be doing this all the time and looking behind you, because the world is changing very fast, and artificial intelligence and robotics are replacing surgeons. What choice do many of us have here? So embrace this new future. Crypto stuff, like this, there is an opportunity here. But be careful what you do, and I know that sounds ominous, but the last thing you want is to be 38 years old and out of a job and replaced.

1:29:45 Wow, powerful words of advice. Really good advice. You know, strange enough, my daughter’s looking at colleges right now, and we’ve got someone helping us, and she said the same thing. She said a lot of these jobs aren’t going to be there because of AI in the future, and it was like, oh my gosh, these are the majors you and I grew up with. You get to be this, this, or this.

1:30:04 But those might, might not be there. So yeah, you got to be creative, stay ahead of the game, stay on top of the ball. And fantastic advice. Well, I really appreciate the time. I appreciate all the content you create.

1:30:16 I highly recommend everybody to start off with Raoul Pal’s Introduction to the Exponential Age. There’s a link below. I do think you were channeling some higher energy there, and it’s a great introduction to a lot of your IP. Thank you for doing what you’re doing. Please keep doing what you’re doing, and wishing you all the best in the next few years.

1:30:33 Yeah, and also, if people are interested in crypto, Real Vision, dot com forward slash crypto. It’s free. There’s interviews with all sorts of people. It’s very complimentary from what you’re learning with the Academy and other stuff, so just knock your socks off, go there and binge on content. But thank you so much for having me.

1:30:50 I really enjoyed it. Dude, my pleasure, and you got me even more excited about this market, so I’m super pumped. All right, thank you. Thank you so much. Thank everybody for watching.

1:30:57 We’ll see you next time on